Economic Report: Housing Bust Is Worst Since First Bush

[Omaha Steve]

http://www.laborradio.org/node/4929

Economic Report: Housing Bust Is Worst Since First Bush

Economic Report:

By Jesse Russell

The housing market is on its biggest decline since the senior George Bush was in office - and it’s taking the rest of the economy with it. The economy slowed to a growth rate of 2 percent in last quarter. The construction of new homes was cut by 18.7 percent. U.S. workers also had a bad news last week, with an increase of 9,000 new workers on the unemployment roles bringing the number to 315,000 filing for unemployment status.

[Tandalayo_Scheisskopf]

1. Anyone who...

Did not see this coming in the housing market had their hands over their eyes.

[opihimoimoi]

2. Bushies limp answer:: DENIAL and "GO SHOPPING"

[NoAmericanTaliban]

4. I heard that in the last press conference & it made me

want to puke. That is what Jesus was all about - shop till you drop - max out those credit
cards and go into the red just so some stores can make a profit. What about saving for your future. Saving rates are the lowest in decades. Two trillion $$ in cosumer loans and counting. Just wait for the housing market to drop and the shit will hit the fan.

[NoAmericanTaliban]

3. You couldn't tell that by the way the stock market has gone up

Talk about false profits.

[hatrack]

5. Absolutely horrifying LA Times story linked in this post re: option ARMs

My favorite stat - in 2003, 8% of all mortgage loans originated in California were option ARMs - that is, loans where you have the option (oh boy!) of paying a minimum amount and having your principal increase.

No, I'm not making this up.

Anyway, last year, about 20% of all CA mortgages were option ARMs, and through the first eight months of this year, nearly one-third of applicants chose them.

Article:

EVERY day, Will Hertzberg owns a little less of his three-bedroom house in Corona.

Like hundreds of thousands of other homeowners around the state, Hertzberg has a mortgage that lets him choose how much he pays each month.

Like many of them, he always chooses to pay as little as possible.

For the moment, this allows the 56-year-old Hertzberg to continue living in his tract home despite being only marginally employed. But his debt is swelling, and his mortgage company controls his fate.

"I am rather screwed," he said.

And here are his payment options:

One of his options is to pay $2,513 a month. That would cover the principal and interest as if it were a traditional 30-year loan.

A second possibility is to pay $2,279, which would cover only the interest.

But each month he always takes the cheapest option: paying $1,106 and promising to make up the shortfall later.

EDIT

http://calculatedrisk.blogspot.com/2006/12/la-times-loan-thatll-get-ugly-fast.html