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Archive for July, 2008

Greenspan Says Housing Prices Nowhere Near Bottom

July 31 (Bloomberg) — Former Federal Reserve Chairman Alan Greenspan said falling U.S. home prices are “nowhere near the bottom” and the resulting market turmoil isn’t showing signs of abating.

More Americans filed claims for unemployment insurance last week than at any time in more than five years, the Labor Department said. Fed policy makers have cut the benchmark rate to 2 percent from 5.25 percent since September, halting the reductions in June amid rising concern about inflation.

Gas Prices Fall to Seven Week Low

It’s all relative I guess.

NEW YORK – Oil prices sank to their lowest point in weeks Friday as investors questioned whether crude has cooled enough to reflect a serious deterioration in demand. Prices at the pump eased to nearly $4 a gallon, and AAA said a gallon of gas could cost as much as 25 cents less by Labor Day.

In the latest sign that Americans continue to struggle with soaring energy prices, filling station operators hungry for business ratcheted down the average price for a gallon of regular by 2 cents, according to auto club AAA, the Oil Price Information Service and Wright Express.

Although supply concerns have taken a back seat to demand over the past two weeks, analysts note that prices could rebound, on even a temporary cut to supply.

Foreclosures Double As Home Prices Continue to Slide

July 25 (Bloomberg) — U.S. foreclosure filings more than doubled in the second quarter from a year earlier as falling home prices left borrowers owing more on mortgages than their properties were worth.

One in every 171 households was foreclosed on, received a default notice or was warned of a pending auction. That was an increase of 121 percent from a year earlier and 14 percent from the first quarter, RealtyTrac Inc. said today in a statement.

Nevada was the state with the highest rate. One in every 43 households received a foreclosure notice in the quarter, four times the national average and an increase of 147 percent from a year earlier, according to RealtyTrac.

Foreclosure filings tripled in California, where one in every 65 households was affected, the second-highest rate among states. Arizona had the third-highest rate, with one every 70 households, a more than threefold increase from the second quarter of 2007, RealtyTrac said.

Florida, Colorado, Ohio, Michigan, Georgia, Massachusetts and Illinois rounded out RealtyTrac’s top 10.

When Will Home Prices Stop Falling?

The answer is critical to millions of American homeowners who are watching their home equity melt away or are unable to move because falling values have sent potential buyers to the sidelines.

In the latest evidence that prices are still sliding, the National Association of Realtors reported Thursday that the median price of existing homes sold in June fell to $215,000, down 6.1 percent from a year ago. Sales fell 2.6 percent from the month before — far more than analysts had expected.

For starters, a lot depends on whether anything can be done to stop the ongoing wave of home foreclosures. As the inventory of bank-owned properties keeps rising, lenders have become eager sellers, hoping to get those properties off their books before prices fall further.

For the same reason, potential buyers are either waiting on the sidelines or making fire-sale bids. A surplus of motivated sellers and a dearth of interested buyers is pretty much the formula for further prices declines.

Congress this week finally passed a major housing bill after nearly a year of debate, but the measure is expected to help relatively few borrowers.

Ford Posts $8.7 Billion Loss

Ford Motor Co. announced plans to transform its vehicle lineup and reported a massive second-quarter loss Thursday.

Ford (F, Fortune 500) stock fell about 8% in early trading.

“Because of deteriorating economic conditions, demand has declined dramatically, especially in North America,” said Ford CEO Alan Mulally, who also blamed rising gas prices for the decline.

Ford said that three large truck and sport utility vehicle plants in Wayne, Mich., Louisville, Ky., and Cuautitlan, Mexico would be switched over for the manufacture of small cars. Re-tooling will begin in December, the company said.

In addition to converting the three plants in North America, Ford said it will ramp up production of small utility vehicles at its Kansas City, Mo., assembly plant, including the Ford Escape, Escape Hybrid, Mercury Mariner and Mariner Hybrid.

Ford has been offering buyouts to the hourly employees among its 54,000-strong workforce. But only 4,200 workers accepted, far short of the company’s goal. On Monday, Ford said that a new round of buyout and early retirement offers had been made to workers at 17 facilities.