CNN Money must be a fully owned subsidiary of the NAR, there is no other explanation for this article.
NEW YORK (CNNMoney.com) -- As housing markets deteriorated over the summer, and a liquidity squeeze buffeted credit markets, delinquencies and defaults jumped. And now one forecast predicts that these numbers will climb even higher over the next six months.OK sounds good so far.
The Core Mortgage Risk Monitor (CMRM), an index of foreclosure risk compiled by First American CoreLogic, increased by 1.6 percent compared with the three months ended June 30.
And who is this First American CoreLogic outfit? Why none other than a Real Estate firm. And gee what a surprise a Real Estate firm says real estate is a good investment. Who woulda thunk it? By the way CNN, why no mention of this?
The brilliance continues with:
While the national risk average has risen, scores among metro areas vary widely. "It's not necessarily a national problem," said CoreLogic's chief economist, Mark Fleming. "It's focused on local markets."Uhuh. See here for my retort to this argument to the above and below.
By contrast, the lowest risk markets have low unemployment, high-paying jobs and solid job growth, moderate house price appreciation, low foreclosure rates, and minimal fraud and collateral risk. Overall, the rankings strongly support the assertion that mortgage risk is concentrated in specific regional or local markets.All real estate is local is total bullshit. We had a national boom from 2001-2005 and now we have a national recession. The odd city here and there where prices are still steady are anomalies. The vast majority of areas are in a housing recession. Many are in a housing depression and that list is growing fast. Atlanta's economy is doing very well, lots of job growth and yet the area is near the top of metro areas with foreclosures.
Continuing with the article..
Less at risk are cities where the economy remains healthy but prices never ran up at breakneck pace. If home prices are still rising, it further reduces risk. That insulates places Salt Lake CitySLC eh? You mean SLC in Utah which according to the FBI is #1 in mortgage fraud? That SLC? And the same SLC where asking prices for homes is down 3% since this time last year? This is the same city that is insulated from foreclosure list? Does anyone at CNN Money check facts? McFly anyone home?
And finally this gem
The fourth market category is made up mostly of what has been dubbed "Superstar Cities," places so attractive that even though homes are very expensive, people still line up to buy them. New York, San Francisco and Los Angeles are good examples.Los Angeles:
median asking price in April 2006: $579,000
median asking price in Oct 2007: $510,000
median asking price in April 2006: $654,000
median asking price in Oct 2007: $589,000
What the MSM tools still don't get is that this was a Ponzi scheme. People bought homes with the idea that in a year or two they could sell the home for a profit. They didn't buy because it made sense to buy. They bought for the sake of buying. And eventually like all Ponzi schemes you run out of buyers and the whole thing falls apart.
In addition, everyone went HELOC crazy. Doesn't matter if you live in a city where there was minimal appreciation. Your neighbor most likely borrowed against his house to buy the plasma and the Hummer and the boat. So even a slight drop in prices will mean your neighbor is under water. And if your neighbor forecloses, the value of your house falls as well. It is a vicious cycle and it happens very quickly.
This is not even Econ 101, this is Econ 099. And yet reporters from a so-called Money web site still don't understand what is happening.