Media Advisory 6/19/08

Thursday, 19 June 2008

U.S. housing starts drop to lowest level in 17 years

May building permits fell and housing starts dropped to their lowest level since 1991 in a sign of continued weakness in the housing sector, the U.S. Dept. of Commerce reported on Tuesday.

MAKING SENSE OF THE STORY FOR CONSUMERS

· Housing starts fell 3.3 percent to 975,000 in May, down from a revised 1.08 million in April. The May figure was down 32 percent from the same month a year ago and was slightly lower than the 980,000 starts expected by economists. In the West, which includes California, starts were down by 10 percent.

· Building permits, a signal of future new construction trends, fell to 969,000 ? a 1.3 percent decline but slightly better than the 960,000 level economists expected.

· The growing inventory of foreclosures, higher mortgage rates, tighter qualification criteria and continued declines in home values are behind declining builder confidence, which fell to a record low in May, according to a survey by the National Association of Home Builders and Wells Fargo.

To read the full story, please click here:

http://www.bloomberg.com/apps/news?pid=20601110&sid=aVrx2EuK2NzU

CNNMoney.com

73,000 homes lost to foreclosure in May

California, Nevada and Florida continue to outpace other states in the number of foreclosures as 73,000 more Americans lost their homes in May a 158 percent increase from May 2007. Foreclosure filings jumped 7 percent from April and were 48 percent higher than a year ago. May was the twenty-ninth consecutive month of increases, according to RealtyTrac

MAKING SENSE OF THE STORY FOR CONSUMERS

· 20,000 California homeowners lost their homes in May and 72,000 mortgages were at some stage in the foreclosure process. That means one of every 183 California households was affected in May, putting California right behind Nevada, with one out of every 118 households affected.

· Nine of the 10 most affected cities were in Florida or California. Topping the list was Stockton, with one in 75 households affected by a foreclosure filing. Merced ranked third, Modesto was fourth and Riverside was fifth.

· RealtyTrac expects foreclosure rates to continue to rise as Alt-A adjustable rate mortgage (ARM) loans originated during the waning months of the real estate boom begin to adjust upward.

To read the full story, please click here:

http://money.cnn.com/2008/06/13/real_estate/foreclosures_may/index.htm?postversion=2008061308

Los Angeles Times

Housing woes hit community banks

Heavy investment in residential real estate development throughout inland California communities during the real estate boom is taking its toll on community-based banks, as noted in a Federal Reserve regional report issued last week.

MAKING SENSE OF THE STORY FOR CONSUMERS

· Many community banks gave up mass-market products like credit cards and mortgages in recent years in favor of the high fees they earned making loans to residential developers and home builders. As new home developments sat empty in the wake of the sub-prime mortgage crisis and both land values and home prices plummeted, community banks were left holding a portfolio of loans worth dimes on the dollar.

· Regulators are acting to require that banks write down the value of troubled loans and generate more capital to cover the write-offs. These losses are increasingly apparent in regulatory filings and shareholder earnings reports.

To read the full story, please click here:

http://www.latimes.com/business/la-fi-smallbanks17-2008jun17,0,4723238.story

In Other News

The Associated Press

Real estate close-up: San Francisco

To read the full story, please click here:

http://ap.google.com/article/ALeqM5h-be0d4jS06NJwR2-olYNRf3jeWQD919B9C80

Los Angeles Times

Gas prices latest worry for real estate market

To read the full story, please click here:

http://www.latimes.com/news/printedition/front/la-fi-homes17-2008jun17,0,7677060.story

San Francisco Chronicle