The company’s data includes over 80% of all mortgages.

Here are some points from the press release:

• Over 7.5 million mortgages or 18% of all properties with a mortgage were in a negative equity position as of the end of September 2008. There are an additional 2.1 million mortgages that are approaching negative equity. These are defined as mortgages within 5% of being in a negative equity position. Negative-equity and near-negative equity mortgages combined account for over 23% of all properties with a mortgage.•

The distribution of negative equity is heavily skewed to a small number of states. Nevada and Michigan have the highest percentages of negative equity – Nevada led the nation with an estimated 48% and Michigan was second with 39%. Five other states have negative equity shares in excess of 20%: Florida (29%), Arizona (29%), California (27%), Georgia (23%), and Ohio (22%).

. New York has the lowest share of mortgages in negative equity at 7%, followed closely by Hawaii (8%), Pennsylvania (9%) and Montana (10%).

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That doesn’t mean you hop on the idiot bandwagon and listen to a person BEING PAID ON COMMISSION by how BIG of a loan you take out. Making an attempt to get a loan for Z and a payment WAY ABOVE ZZ…

Home prices fell in August for the 25th consecutive month and prices in 10 major markets plunged a record 17.7% year over year, according to a key index of real estate values released Tuesday.

The S&P Case-Shiller Home Price 10-city index dropped 1.1% for the month.

The 20-city index recorded a record year-over-year decline of 16.6% with a 1% fall in August.

“It’s Economics 101,” said Jared Bernstein, senior economist with the Economic Policy Institute. “You have a huge speculative bubble leading to a severe inventory overhang. And now home prices will have to decline accordingly.”

That inventory overhang includes many vacant homes. The U.S. Census Bureau reported on Tuesday that the number of vacant homes on the market held steady in the third quarter, at about 2.8% of all housing. That’s 65% higher than the long-term historic rate of 1.7%, and represents an excess inventory of nearly a million homes.

This number is critical to home price trends since owners of vacant properties – especially banks – will slash their prices to get deals done. That pushes prices down even more.

The Case-Shiller indexes compare the sale prices of the same homes each year to determine price trends and are considered one of the most accurate home price gauges.

The hardest hit of all 20 cities on a year-over-year basis was Phoenix, where prices plummeted 30.7% during the past 12 months. Las Vegas prices plunged 30.6% and Miami sank 28.1%.

The cities that held up the best were Dallas, which saw a decline of just -2.7%, Charlotte NC (down -2.8%) and Boston (off -4.7%). No city showed a price gain during the last 12 months.

In August, San Francisco saw the biggest price declines, down 3.5%. Phoenix (-2.9) and Las Vegas (-2.4) also reported sizable losses for the month. Two cities showed gains in August; Cleveland prices rose 1.1% and Boston prices inched up 0.1%.
Price declines picking up

Of course, the August indexes don’t reflect the financial market meltdown that hit in September and severely restricted access to credit, according to Richard DeKaser, chief economist for National City Corp (NCC, Fortune 500). He believes the pace of price declines has picked up since then.

“There are two explanations for these steeper declines,” he said, “neither of which are encouraging. One is that the difficulty in obtaining credit has further constricted demand. The second is that home sellers are finally capitulating on prices. They’ve been holding out for months, refusing to sell except at their prices. Now they’re throwing in the towel.”

Bernstein agrees. “Buyers and sellers have been staring at each other to see who blinks,” he said. “Sellers may be blinking first.”

That is reflected in existing home sales volume, which ramped up 5% in September as prices fell. Even new home sales went up slightly in September.

Much of that statistical trend is being driven by data from hard-hit western states like California. The California Association of Realtors reported last week that home sales volume jumped a whopping 97% in September compared with the same period a year ago. But the median price of an existing home has fallen 41%.

If that trend spreads to other states, price weakness could last for many more months, even as sales volume picks up. What happens after that largely depends on the confidence bolstering effect of the government economic stimulus packages, according to DeKaser.

“I’m optimistic,” he said. “More credit will be available and housing inventories will be reduced. The deterioration will give way to a more balanced market.”

But not everyone agrees that the stimulus packages, which are designed to loosen up tight credit, will prove helpful. Peter Schiff, president of broker-dealer Euro Pacific Capital, believes the impact will be decidedly negative.

“The goal of all these plans is to give consumers more money to spend. However, excess consumer spending is part of the problem, not part of the solution” he said. “After a decade-long spending orgy, market forces are finally trying to restrict consumer spending and dampen credit. But the stimulus looks to provide a new source of funds after savings, income, and credit have been exhausted. Our imbalanced economy is in desperate need of retrenchment, but stimulus plans will effectively hold the firemen at bay while throwing gasoline on the flames.”

Schiff explained that the housing boom’s exotic mortgages, which let people buy homes with zero money down, have vanished. Now people must save to afford a home. But easy credit means people will buy more consumer goods and save less to put towards housing. As a result, he expects home prices to fall a lot more.

“They’ll surrender all the gains they made in the past 10 years,” he said, “and be even lower than they were 10 years ago.”

Check out http://money.cnn.com/2008/10/28/real_estate/August_Case_Shiller/?postversion=2008102816 for some of the graphed out pictures…

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The weak dollar has made the American real estate market look attractive to foreign bargain hunters.

The U.S. rose to the top of lists of the “most stable and secure” countries for real estate investment and the countries with the best opportunity for appreciation, according to the 16th annual survey of the Association of Foreign Investors in Real Estate (AFIRE)released Jan. 28. New York City and Washington D.C. were the top two global “Cities for Foreign Investors’ Real Estate Dollars,” according to the survey.

China is also growing in popularity. Shanghai rose to No. 5 from No. 9 a year ago on the list of top cities for foreign investment. And China is now No. 2 on the list of countries with the best opportunity for appreciation.

The survey of 200 AFIRE members was conducted in the fourth quarter 2007. AFIRE members hold $700 billion of cross-border real estate, including $230 billion in the U.S.

Here are the survey results:
Global Snapshot
Top Five Global Cities for Foreign Investor’s Real Estate Dollars
1. New York; up from #2 in 2006
2. Washington, DC; up from #4 in 2006
2. London; down from #1 in 2006
4. Paris; down from #3 in 2006
5. Shanghai; up from #9 in 2006

Other significant changes:
• Singapore, up to 6th place (tied with Tokyo) from 24th place in 2006
• Sydney, up to 9th place from 15th place in 2006
• Hong Kong, up to 10th place from 11th place in 2006

Most Stable and Secure Countries for Real Estate Investments
1. U.S. – 56% of vote
2. Germany – 11% of vote; up from #3, with 4.5% of the vote in 2006
3. United Kingdom – 8.8% of vote; down from #2, with 11% of the vote in 2006
4. Australia – 8.8% of vote; up from #5, with 3% of the vote in 2006
5. Japan – 5.3% of vote; with 3% of the vote [tied with Australia], unchanged from 2006

Countries Offering the Best Opportunity for Capital Appreciation

1. U.S. – maintains ranking; increases percentage of votes to 26.2% from 23% in 2006

2. China – moves into 2nd place from 3rd; increases percentage of votes to 21.4% from 14.8% in 2006

3. India – falls from 2nd to 3rd; decreases percentage of votes from 18% to 16.7% in 2006.

4. Russia – moves from 5th to 4th; although percentage of votes decreases to 7.1% from 8.2% in 2006

4. Mexico – moves from 7th to 4th (tied with Russia); increases percentage of votes to 7.1% from 4.9% in 2006
U.S. Snapshot
Top U.S. Property Types
Within the U.S. property market, the most dramatic change was a total reversal of investors’ preferred U.S. property types, with every property category shifting and, most dramatically, office properties falling into fifth place and retail properties rising to first.
1. Retail – from 5th place in 2006
2. Hotels – from 3rd place in 2006
3. Industrial – from 4th place in 2006
4. Multi-family – from 2nd place in 2006
5. Office – from 1st place in 2006
Top U.S. Cities
The ranking of the top five U.S. cities echoed respondents’ choices in 2006:
1. New York
2. Washington, DC
3. Los Angeles
4. San Francisco
5. Seattle

Climbing up the ladder:
• Las Vegas from 16th place to 8th
Appetite and Opportunity: U.S.
The resilience of the U.S. real estate market among seasoned international investors is underscored by the timing of the survey, conducted during the fourth quarter of 2007, after the much-publicized credit crunch and sub-prime mortgage crisis. In spite of this news:

• On average, survey respondents say that slightly more than 50% of their real estate planned acquisitions in 2008 will be allocated to the U.S. While the percentage allocated to the U.S. remains roughly the same as 2007, the actual dollar amount is expected to increase by 16%.

• Eighty-five percent of survey respondents say that recent fluctuations in the dollar have not prompted them to increase their U.S. allocation.

• The percentage of respondents saying it was “very difficult” to find attractive U.S. real estate fell to 22.8% from 37.5% in 2006. This represents the smallest percentage expressing this sentiment since 2003.

• For the first time since 2004, a measurable number of investors declared investing in the U.S. to be “somewhat easy.”

• For the first time in years “distressed assets” are mentioned by AFIRE members as a new strategic focus.
Appetite and Opportunity: Global
While U.S. real estate continues to hold sway over real estate in other countries, its dominance is being challenged by other global opportunities.

• On average, survey respondents say they plan to increase global spending on real estate from $1.394 billion in 2007 to $1.692 billion in 2008, an increase of more than 20% (compared to a 16% increase in planned U.S. acquisitions).
Posted by: Prashant Gopal

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