PMI on Sacramento: 96% Chance of Lower Home Prices in 2010

From the CVBT:

Increases in foreclosures and unemployment have heightened the risk of further home price declines over the next two years in the Central Valley, according to a report Wednesday from Walnut Creek-based PMI Mortgage Insurance Co....PMI’s risk scores translate directly into its estimated percentage risk that home prices will be lower in two years.
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The risk of future price declines rose across the Central Valley...Sacramento is...at 96.3 percent, compared to a first quarter risk index of 84.4 percent.

From the Merced Sun-Star:

"Our entire industry is fraught with rumor and innuendo," [bank spokesman Thomas] Smith said. "Rumors are pretty much rumors until it becomes action." Though County Bank, much like all other lenders, has been dealing with bad loans, he said he intends to be at his desk next year talking about how the housing market has recovered.

From the Sacramento Bee:

Call it another casualty of the Wall Street bailout. A hotly debated down payment assistance program that started in Sacramento and helped fuel thousands of home sales nationwide came to an end Tuesday. Last-ditch efforts this week in Washington by Sacramento housing giant Nehemiah Corp. of America and others failed to save the program, which needed congressional approval.
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In a region where some say up to 40 percent of first-time buyers are using the down payment assistance program, its demise raised alarms that it will trigger a noticeable slowdown in the capital region's real estate market. "I think we're going to see a dramatic difference in sales next month," said Jeff Johnson, Citrus Heights branch manager of Platinum Home Mortgage.

Others said it might not be huge, but "it will be meaningful and noticeable in the Sacramento market," said Andrew LePage, analyst for La Jolla-based property researcher MDA DataQuick.

From Globe and Mail:

Wyatt Kenoly doesn't have a lot of time to watch politicians haggle over the $700-billion (U.S.) rescue package for Wall Street or follow the stock market gyrations. He's too busy trying to stave off foreclosure of his home in Stockton, Calif. The monthly payment on his $425,000 mortgage is about to double to slightly more than $4,000. He and his wife bought the house in 2004, taking an interest-only loan that has been resetting at higher rates for the past couple of years. While the loan payments have soared, the value of the house has sunk and it's now worth about $240,000. The couple just can't pay the mortgage any more. “It is grim,” Mr. Kenoly said Tuesday after spending the morning negotiating with his bank, HSBC Bank. “We can only hope and pray.”

Mr. Kenoly's predicament reflects growing concern about the U.S. housing market and whether the problems that have plagued the sector are getting worse. Housing is at the root of the turmoil on Wall Street and at the heart of the proposed bailout package. Treasury Secretary Henry Paulson has said that even if the bailout is passed by Congress, everything depends on a recovery in housing. Experts say that recovery is far off.

From BusinessWeek:

American savers, take a bow. This is your moment of vindication. Your hour of glory. And you earned it (in a manner of speaking). You resisted the siren call of plastic teaser APRs, dutifully living within your means to store money for a rainy day. You never took out an interest-only mortgage. Never had to pawn the copper pipes from your exurban McMansion to pay the reset on your liar loan. Your credit score would have gotten you into Harvard at age 12.

Good for you! Your reward: injurious savings yields, inflationary rot, and election-season neglect, all served up with a dollop of institutional insecurity...All of which might be tolerable to the lonely and beleaguered saver if he weren't taunted daily by lopsidedly pro-spending, pro-creditor news stories. Forget about moral hazard. Forget about rewarding profligacy. Washington is hell bent on putting a floor beneath the housing market.
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Maybe savers' ultimate vindication will arrive when and if every asset is so deflated, credit is so choked off, and misery is so prevalent that only those with cold hard cash can lob in lowball offers for homes, cars, and everything else.