Housing's Roof Collapsing
There are fresh signs the housing market could be headed for total disaster.
Or check out Standard Pacific (SPF), a builder heavily leveraged to the California housing market, whose stock has dropped about 40% in five days on no new company news but a plethora of liquidity worries.
Falling housing prices, coupled with high consumer mortgage debt payments, are causing homeowner defaults and delinquencies to increase. This is leading to larger loan losses, which has hit homebuilders, mortgage lenders and large financial institutions like Citigroup (C) and Merrill Lynch (MER).The drop in housing prices is causing most of the pain. A report from real estate information firm Zillow.com released Tuesday shows that U.S. home values fell 6% in the third quarter, the largest decline in the last 10 years (since the firm began tracking the data). On top of that, nearly 16% of homeowners who bought houses in the past year now have negative equity in their homes, meaning they owe more than what their homes are currently worth, the report says. On Tuesday, Freddie Mac, the second-largest purchaser of U.S. mortgages, reported a $2 billion loss due to increased reserves for loan losses and impairments of existing loans. Freddie Mac is now facing a problem where it has to put aside money to protect against past loans, rather than put that money to use in new loan purchases.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV