Thought it was getting better?  Think again.  I've been saying for months that this isn't going to bet any better for a few years... except for oil and gas will slowly creep up into the expensive range again... which it has.  Check out earlier articles with predictions on gas prices.

Read more about housing here.

"We're now in Barack Obama's world where money goes into the most inefficient parts of the economy and we're bailing everyone out," says Daviowitz, who opposes bailouts for banks and the automakers. "The bailout money is in the sewer and gone."

This outlook is based on the following main points:

• Unemployment - unemployment rates are rising into double digits... and there's millions more that are "underemployed" in jobs paying half as much as their previous.  Consumer spending accounts for about 70% of economic activity and Americans aren't spending like they used to.
• Housing - The $8 trillion negative wealth effect of housing means more Americans will default on mortgages... as well as student loans and auto loans and credit card debt and any other kind of loan they managed to get.
• Commercial Real Estate - More consumer loan defaults will hit banks and commercial real estate is also headed for a crash... remember the recent bankruptcy of General Growth Properties?  This is a huge deal.  

15.4 million homeowners are now upside down on their homes... they owe more than the home is actually worth.  This is up from 13.6 million only four months ago.  The number will probably hit at least 20 million by the time this is all over. 

Read more here.

"We've never seen two consecutive months like this," said Rick Sharga, RealtyTrac's senior vice president for marketing. "It's the volume that's surprising."

How stupid are the people in the industry?  What are you surprised about?  Foreclosures are going to keep happening because no one has a job to pay their mortgage and even if they find another job it's not paying as much as the previous... America got into a nasty habit of buying more house than they can afford and foreclosures will keep happening for years to come because of all the funky loans that financed this irrational buying. 

Read the full story here.

The home price crisis continues.  You can be the proud owner of a home in Michigan for as little as $1,000.  Yes, it probably needs an extreme home makeover from Ty what's his face, but still... you can't buy the tile in the bathroom for that much at Home Depot.  

 This crisis isn't even close to over until home prices stabilize... and with all the FOR SALE signs around I don't think that's happening any time soon.  If you've got the cash feel free to buy now in depressed markets like Arizona, Florida and California... but don't be surprised if prices fall another 15 percent. 

Check out these great buys in Flint, MI on craigslist.  What a steal!

Read more on $1,000 homes here.

Hopes of a recover waned today as jobless claims unexpectly jumped and existing housing sales fell month over month.  It appears that we're not in the midst of a recovery, more of a sucker's rally.  The stock market will test previous lows and housing has another 20 percent to fall.  Watch out.  Read more here.

I hate to say it... but I told you so.  The housing debacle is not over, home prices have another 20 to 30 percent left to fall in most places.  Home prices are still out of whack in relation to income.  Did you really think your house could double in value over a few years while household income remained relatively flat?  Exactly.  A nice fantasy, but go play Dungeons and Dragons somewhere else... this is reality.  There's a zillion unemployed people living on savings right now and the employment picture is still looking like kindergarten fingerpaint, not Picasso.  Here comes round 2.  Check out more here.

Thanks to Seeking Alpha for the below graph.

The National Associaton of Homebuilders/Wells Fargo housing market index climbed 5 points to 14 in April.  This number is derived from a survey taken by 360 residential homebuilders nationwide.  Let me repeat that... it's a survey.  So take this information with a grain of salt... or a 50 pound bag of salt. 

The $8,000 tax credit for first time homebuyers is creating some buying traffic, but keep in mind that an index reading under 50 indicates negative sentiment about the market.  We're still at 14, historically a very low number.  It's kind of like the homebuilders went from feeling absolutely terrible to feeling really terrible.  Don't let the headlines fool you.  Read the full story here. 

There are a lot of misconceptions about buying a home. Real estate buyers are usually only concerned about the price of a property; however there are many other factors that ultimately determine the total cost of a real estate transaction.  First of all, these days you need a down payment.  For a $200,000 house that means you’ll need $40,000 before you even have a chance at getting a loan.  So with $40,000 down on a $200,000 home, you’ll be applying for a $160,000 mortgage.  Let’s go over some of the factors that come into play.

The higher your credit score, the lower your interest rate.  And a few points difference on your interest rate can vastly change the amount of interest you’ll pay for the life of the loan.  For the first several years the majority of your payment goes toward interest, not principal.  The lender makes sure they’re getting paid first.  After 15 years on a 30-year, $160,000 mortgage at 5% interest, you’ve only put $51,386 towards principal.  You don’t own half of your home, you own about 32% of it.

Another factor is the length of the loan.  The most common loan lengths are 15-year and 30-year loans.  There are benefits to both of these loan types.  A 15-year loan will save you a bundle on interest and you’ll have it paid off in half the time, however a 30-year loan is easier to qualify for, has lower monthly payments, and allows you to purchase a higher priced home. If you go for a 30-year loan make sure the terms allow you to pay off the loan early.  This way if you end up having extra money you can put it towards the principal and ultimately save a significant amount on interest. 

Another thing to keep in mind is the $8,000 tax credit for first time home buyers and the fact that you can write off all interest payments on your taxes.  That’s a huge tax benefit, especially for the first 15-20 years of your loan when interest is the majority of the payment.

Home buyers often go with the first mortgage person they meet under the assumption that all the rates are the same and that a percentage point isn't going to make that big of difference. As you can see above, a point can make a huge difference in your mortgage payment.

Obviously price is a very important factor when buying home, but make sure you look at interest rates and the length of the loan more closely to ensure you’re getting the best deal possible.  Now go buy something. 

Tagged in: Housing, Personal Finance, Interest Rates

According to the Associated Press, Pulte Homes Inc. is buying Centex Corp. for $1.3 billion in stock... thus creating the nation's biggest homebuilder and the nation's next recipient of bailout money! This deal gives Pulte a large amount of land in Texas and the Carolinas, both places where I would definitely stay away from when it comes to real estate.  Home prices have not yet bottomed in these areas and more bad news is yet to come.  We still haven't seen commercial real estate take a freefall... give it another 6 months. 

One positive is that Pulte is keeping their name and also the headquarters in Bloomfield Hills, Michigan... This way they're close to the automakers and easily learn how fail miserably.  This will inevitably lead to more layoffs in an already decimated Michigan job market.

"We believe the combined companies will allow us to return to profitability quicker than a standalone. Secondly, the cash position allows us to pay down debt while at the same time provide ample liquidity for the future," said Richard Dugas Jr., Pulte's president and chief executive... Good luck buddy.  Don't take a private jet to the congress hearings.

As part of the deal, Centex shareholders will receive 0.975 shares of Pulte common stock for each share of Centex that they own.  These can be redeemed at McDonalds for a Happy Meal Toy.

Pulte and Centex are trying to capitalize on what the executives see as the beginning of a recovery in the housing market, but this is just the beginning of a short-lived summer rally.  The unemployment and commercial real estate dominos have yet to fall.