The nation's top three home-builders have posted bigger losses in this year's first quarter than in last year's first quarter. Potential buyers of new homes are avoiding them for fear that they will continue to lose value and are purchasing low-priced foreclosures instead. This is the time of year when new-home sales are supposed to pick up but so far it has been worse than most expected.
This morning John Malone, head of Liberty Media, was interviewed on CNBC. He said that there is a disconnect between what is going on in New York and Washington DC and middle America. He said, and as reported in the media, that banks are claiming there is a little loan demand, but these claims are coming from the monster banks like Bank of America and Citibank. He pointed out, however, that small business people and potential entrepreneurs and job creators cannot get loans to start up or expand. The nation's community banking sector that is the lifeblood of small business is for the most part upside down. Their existing loan portfolios are in such bad shape that they are unwilling to place any new loans. He also said that, in his opinion, that the housing crisis has another 3 to 5 years to play out.
A couple of weeks ago I went to a affordable housing Summit here in Atlanta. This was primarily for real estate agents but Fannie Mae and Freddie Mac representatives were there and I wanted to hear what they had to say. The speakers were primarily addressing various programs in place to help agents sell the large numbers of foreclosures that are currently on the market such as Housing and Urban Development's new website, and new programs to speed up the short sale process. I asked the Fannie Mae and Freddie Mac representatives how their current foreclosure inventory compares to six months ago, and what their forecasters are predicting for six months from now and a year from now. They didn't have any figures with them but they were able to say that the current foreclosure inventory they have on the market is smaller than what was on the market six months ago because of the foreclosure processing debacle that came to light last fall. Now that that problem is getting straightened out they think that the number of foreclosures coming onto the market will increase as this year goes on.
