Housing Update

admin | July 4, 2005 11:06 pm

After a nice long weekend, a little reading …

NY Times on Australia: Hole in the Housing Bubble

The Australian housing boom has come to a halt, in a move that many see as the first signs of the end to a housing bubble, not just in Australia, but also in the U.S.

Baltimore Sun: Investors heat up housing market Investors have bought 2/3 of all houses sold so far this year in Baltimore. Talk about speculation!

Two out of three houses sold in Baltimore this year have been snapped up by people who don’t intend to live in them, an unusually high amount of investor activity that is adding fuel to the city’s efforts to revive itself – but could endanger housing values down the road.

Investor purchases turned up in 2002 and have accelerated ever since, painting a picture of increasing frenzy. In 2001, about one out of three arms-length home sales were to “non owner-occupiers,” according to data from the state Department of Assessments and Taxation, analyzed by The Sun. Two years later, they accounted for half the sales, and in the first four months of this year, 67 percent. Early statistics for the following weeks show the trend strengthening.

Last week I asked who the potential “bag holders” were – and from the San Francisco Chronicle: Investors now shouldering the risks for home mortgages

If the housing market weakened or collapsed and homeowners started to default on their mortgages in big numbers, who would be left holding the bag?

Thanks to the growing secondary market for home mortgages, much of the default risk has been transferred from banks and other lenders to investors who buy loans or, more often, interests in mortgage-backed securities.