The big news today in housing is this, from Bloomberg:
American Home Mortgage Investment Corp. shares plunged 89 percent after the lender said it doesn’t have cash to fund new loans and may have to sell off assets. …
American Home caters to borrowers whose credit scores fall just short of standards for top-rated mortgages. The announcement provides fresh evidence that defaults may be spreading from subprime borrowers with the worst credit records to homeowners with more reliable repayment histories. The biggest U.S. mortgage lender, Countrywide Financial Corp., said last week overdue payments rose among some of its most creditworthy clients.
Shares of American Home, halted by the New York Stock Exchange before yesterday’s regular session, plummeted $9.32 from their July 27 close to $1.15 in 2:50 p.m. New York Stock Exchange composite trading. They changed hands at $6.39 in pre-market transactions yesterday. Two years ago, they fetched almost $40.
Banks pulled the money out because of fraud. Nice. Now the problem is that there is a second side to this. Housing prices are collapsing too. The Big Picture has the details, about among the hardest hit? Las Vegas, Miami, and Denver. Three swing states. Here’s their summary:
Pretty astonishing fall from the peak. And, based upon inventory levels and present sale rates, we are not remotely close to done.
Defaults and foreclosures. Falling house values. Those do not make for a good environment for economic optimism, which Republicans need to win elections.
2 Comments
Alex Forshaw · July 31, 2007 at 10:49 PM
Don’t make too much out of this — yeah, subprimes are a mess. Ritholtz has been prophesying this for years, so he’s finally having a feast fit for a bear. Some housing markets, particularly in the South, are still booming, and it varies quite a bit by region.
It’s going to suck for Nevada for sure, and certain parts of a few other states, but I don’t see it turning the election (particularly because subprime mortgages are not exactly a partisan issue).
eye · August 1, 2007 at 2:51 AM
Well, I blogged a couple of weeks ago about the collapse of the housing market in Georgia. There is plenty of evidence that Georgia is the same thing.
Now the Fed is saying that it is spreading beyond Subprime.
And, as to the partisan issue, it is clear that this is effecting people across the economic spectrum. However, when Republicans are in charge and people start losing their houses, it hurts us. Another part of a very bad right-track/wrong-track number.
The only people that I know who are saying that things are fine work in real estate. And most of my friends who work in real estate won’t even say that any more.
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