This morning, we heard that housing prices had a record year-over-year plunge at 16.3%. They went on to say that “Las Vegas prices plunged the most at nearly 30%,” and some economists see no sign of a bottom. Some economists aren’t even looking for signs of a bottom on the horizon until the end of the year.

I have been listening to the experts talk about “returning to the trend line” on housing prices for quite a while now.  And it makes sense:  housing prices grew at a phenomenal pace a few years ago;  it makes sense to return to the levels they would be at if housing appreciated at a “normal” rate. So when I look at the latest chart of the Case-Shiller index, I am looking for that sort of action.

If you follow the Money Green line that represents Vegas, and hold a straight-edge up to the trend we had earlier in the decade, we are now below that trend-line. Sure, we have a lot of foreclosures, but we also have a lot less inventory than at the beginning of the year (and frankly an impending shortage of rental housing). We have under 7 months supply of single family homes, and under 8 months supply including condos and townhomes.  There are almost 2000 homes available for less than $85 per square foot. And our population keeps growing every month.

Nationally, we may indeed be nowhere near a bottom.  But here in Vegas we are in the process of putting in a bottom.  It is a slow process, and won’t be done until the foreclosure rate drops substantially — now we are merely absorbing the foreclosures and not really getting ahead of them.  But it’s in the works.

UPDATE: Many thanks to the House of Representatives for making almost everything below obsolete by defeating the bill. Since some reincarnation of it is almost certain to ensue, it’s still a good idea to let your Congresscritters know what you think. Here’s some ideas about what the bill should say. It is worth noting that according to CNBC, Wall Street is just shocked that this thing didn’t pass (as I write, the DJIA is still/again down over 500 points). I’m just shocked that they’re just shocked that Congress did constituents wanted instead of what lobbyists, the Administration, and some wealthy financial institutions wanted.  It is 5 weeks before a national election, you know.

Here’s what I wrote to my Senators, supporting links added for your benefit:

As more details about the proposed Bank Bailout are known, the more insane it looks!

Not only does it give vast powers to the Secretary of the Treasury, not only does it do very little to help homeowners in Nevada and elsewhere keep their homes — I hope you have not forgotten that the Sun reports 1 out of every 91 Nevada households is in the foreclosure process — not only are economists on the right and left convinced it could make things worse, not only does it do nothing to keep bank executives from running off with excessive final paychecks while normal employees and depositors get the short end of the stick.

I am now reading that reserve requirements for some banks may be reduced to zero! That’s called “insolvency” by most people, Senator.

Further, the stock shares that the government will take in return for the “free money” in the bill won’t even be voting shares! For pity sake, if Joe Average buys 100 shares of a bank, he’ll get more of a vote than the entity giving them millions or even billions of dollars? I don’t think so!

This bill is bad for the American people, bad for the American economy, and bad for any Senator who hopes to be re-elected.

If you want to read the thing for yourself, a link to it is at Economist’s View. If you have a viewpoint you would like your Congresscritters to know about, grab a peice of recent mail with your Zip+4 on it so you can look up your Representative on the House website.  As I write, the House site is particularly slow, since thousands of people are all trying to reach it at the same time.  Remember, your Rep probably has a local phone number that you can call.  All you’ll need to get hold of your Senator on that site is to know what state you live in.  Feel free to copy/paste if you like what I wrote.  If you aren’t in Nevada, you might want to talk about your own state in that sentence.

What the heck! I went out for the evening and came home to find that Washingon Mutual had been closed by the Feds and its assets sold — sold already! — to J. P. Morgan.

It’s the 13th bank failure this year, and the biggest American bank failure ever, outstripping a record set all the way back in 1984.  An FDIC spokesperson admitted that they usually do these things on Friday afternoons so the markets have a chance to digest the information before trading begins anew on Monday morning.  They had to pull the plug earlier, to the surprise of board members, because of media leaks.  News of failure is almost a bigger deal than failure itself in the markets.

I can’t honestly say I am shocked. My dealings with WaMu as a customer are well documented (if you were to Google for “talk to a human at WaMu” the first hit is a post at my personal site;  I get visitors each month searching for that info).  Less documented are the troubles colleagues and I have had dealing with them as a mortgage originator, and as a lien holder on short sale properties.  Wall Street wasn’t terribly surprised either, if a one year stock chart is anything to go by.

If you have less than $100,000 in accounts at Washington Mutual, have no fear: the FDIC will see to it you get all your money. If you didn’t follow the gem of wisdom at the end of my last post, and you have more than $100,000 in accounts at Washington Mutual, you will definitely get $100,000 back but the rest may be a different story. Mortgage pending?  Call them in the morning, but be ready for your second call to be to another mortgage broker.  Buying a property they own, or a short sale where they are the lien holder?  Keep breathing because it’s gonna be an interesting ride ahead.  I wouldn’t blame J.P. Morgan for wanting to know what they had before selling it off.

I sincerely hope this is the only surprise government takeover this week. FDIC only insures deposits to $100,000.  Please, if you still have more than that in any one bank, diversify!

USA Today tells us that a lot of Americans spend more than 30% of their monthly income on housing. And as the map shows, renters are not much better off. By way of comparison, here’s CNN on housing affordability.

And so, what’s the obvious solution? USA Today tells us about that too! Just like in the old sitcom, it’s multi-generational households.

Let me close out with a few items on the proposed Wall Street bailout that is supposed to magically fix the mortgage markets: here’s Dave Johnson on the root causes of the current problems; a nice comparison of the current issues, the Great Depression, and Japan’s experience over the last few decades; the Stalwart gives us more on US/Japan comparisons; a bird’s eye view of the Paulsen plan; and the BondDad on the true costs.

Make sure you don’t have more than $100,000 at any single bank, ok? It’s still a madhouse out there in financial-land.

I will be attending BlogWorld this weekend. Specifically, I will be on a panel Saturday called “The Political Blogosphere In Transition.”

Here’s the official description:

The political blogosphere was born after the divisive 2000 presidential election and has matured rapidly in the eight years since. The selection of a new president in 2008 will be a key transition for political bloggers who have been inspired or infuriated by the policies of George W. Bush. How will the “netroots” and the “rightroots” react?

Moderator: Austin Bay

Panelists: Pam Spaulding, Rob Neppell, Bridget Magnus, Roger Simon

Many thanks to Joe Gandelman of The Moderate Voice for recomending me.  I will be representing them as well as myself.

As Baby Boomers get older, they are going to push real estate in a new direction:  homes with “senior friendly features.”

While some states and municipalities are focusing on things like “no steps at the entrance, a bathroom on the ground floor and wider doorways,”  there are other things to make a home more senior friendly.  Many of these features are also just plain family friendly.  My community, for example, has lever door handles that are easily operated by arthritic hands (or an elbow, when my hands are full of laundry or groceries!).  Large sized lightswitches are only about 4′ off the ground, easily operated by someone in a wheelchair — or a child.  Many of the multi-level floorplans have a downstairs bedroom that can also be used as an office.

Unfortunately, Vegas is being pushed in two different trends at the same time:  on one hand, our huge retiree community and the aging Baby Boomers mean we need plenty of single-story housing;  on the other hand, the simple geography of limited space in the Valley means we need to build more land efficient, multi-story housing.  As a result, single-story floorplans will very likely sell at a premium for the forseeable future in Vegas.

Breaking News…

I may be at REBlogWorld this Friday after all, and sticking around for BlogWorld.  More details as they become available.

Do not get me wrong.  It is a good idea to make sure your dogs and cats can’t reproduce. Every pet I have ever had was spayed or neutered.  Well, fish don’t count. However, I think the mandatory spay and neuter law favored by Clark County Animal Control is misguided at best.  Admittedly, the statute is unavailable to me and so I cannot know exactly what it says.  However, a number of questions spring to mind.

How exactly do they intend to enforce it?  Does it account for animal breeders?  For feral cats?  Many sources say cats and dogs should be spayed at 6 months, but the proposed law insists on 4 months;  is that really a good idea, and safe for the animal?  The proposed law is based on one enacted by the City of North Las Vegas;  how well has it worked out for them, or is it too soon to tell?

Will this effect Sigfried and Roy?

More questions than answers.

Minyanville has an interesting take on the story that Towbin Hummer will be closing down sales:

If any American city is emblematic of the Hummer, it would be Las Vegas. Surrounded by endless desert, Sin City is home to all things big and bling.

Which is why General Motors (GM) should be particularly concerned that Dan Towbin, the owner of one of Hummer’s largest US dealerships, has decided to close up shop. If the Hummer can’t make it here, where can it?

Instead, they will be selling Smart Cars!

I am forced to wonder what impact this will have on certain selected parking lots around town.

Fannie Mae and Freddie Mac are now officially subsidiaries of the Federal Government. Because we all “know” that it is best to minimize government involvement in the private sector.  Ok, strictly speaking they are not “subsidiaries”, but rather they are in “conservatorship” managed by the FHA.  TheStreet.com also tells us that “The current CEOs of the two firms will depart after a brief transition. At Fannie Mae, CEO Daniel Mudd will be replaced by Herb Allison, former vice chairman of Merrill Lynch… and chairman of TIAA-Cref. At Freddie Mac, CEO Richard Syron will be replaced by David Moffett, former vice chairman and CFO of US Bancorp…. Allison and Moeffett’s ‘compensation will be significantly lower than the outgoing CEOs,’ said Lockhart.”

Something that makes me nervous about the plan is that the government will be buying Mortgage Backed Securities from Fannie and Freddie.  Regrettably, it is now difficult to figure out just how secure those securities are.  As many funds and companies have found themselves behind the 8-ball as a result of these MBSes, what happens if the United States Government ends up in over their collective heads?

It’s all part of a massive, four-part, rescue plan that will cost taxpayers tens of billions of dollars. Tens of thousands of millions of dollars, if you prefer. And remember, we “have to” bail them out — after they spent years trying to circumvent the regulations that should have kept them out of trouble, and outright lied to investigators — because of the massive fallout that letting them fail would have on our already-troubled housing market.  Personally, I am willing to go out on a limb and say Phil Gramm is probably ultimately to blame for this.

I honestly figured they would wait until Monday morning.  However, this way, all the bad news is out there ahead of the NYSE opening tomorrow morning at 9:30 EST.

Also in today’s Federal Takeover News, Silver State Bank has been shut down by the FDIC.  It’s the 11th failed bank this year.   Interesting take on it here, from somebody who remembers the Savings and Loan crisis of the 1980s. As with IndyMac, if you have pending business with Silver State Bank– accounts, mortgage application, buying property they own — you will want to check status and develop a backup-plan on Monday.