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According to this Marketwatch article, the price to rent an apartment is under downward pressure, and consumers may be able to get their rent prices reduced just by asking.  Mike Haskins, a Raleigh area renter, was profiled in the story.  He took advantage of his local market circumstances – new rental units which had just been built in combination with a low capacity in his own building – to negotiate a rent decrease.

It took some pushing — and a threat to take his business elsewhere — but before long, Haskins made a deal. When he renewed his lease, his rent was $100 lower…

In response to vacancies, 68% of landlords said they were lowering rents and 68% also said they were giving one or more months of rent free; 38% said they were reducing deposits; and 18% were offering upgrades or allowing more leniency for breaking leases or changing status, according to the Rent.com survey. Fifteen percent are offering storage or parking at reduced rates, and 8% are relaxing pet policies.

The Seattle rental market is also facing downward pressure on rents, according to this Seattle area blogger, who recently negotiated an offer from his landlord from an increase of 3.5% into a decrease of 5%.

Do you have any rental reduction stories to share?  Post them here in the comments.

It’s been in the news for qute some time now.   Underwater homeowners with no skin in the game (no down payment) are “walking away” from their homes and intentionally going into foreclosure.   Here are a few story links describing the situation, which shows no sign of slowing down:

• Underwater homeowners deliberately walking away
• More in foreclosure choose to walk away
• Facing the Mortgage Crisis – Deciding to Walk Away
• What happens when Banks Walk Away

There is quite a bit of debate on both the law and the ethics of walking away.  Many think that signing a legal contract with a bank for a loan comes with an ethical obligation to adhere to the terms.  But others cite the clear distinction between ethics and the law.

Here is one of my favorite comments on the subject from a reader on Mish.

Mortgages are not ethical documents, they are legal contracts. The typical residential mortgage for an owner-occupied home gives the borrower two options: pay on time and in full, and keep paper title to the house, and full entitlements to any appreciation upon its later sale after the mortgage is satisfied; or, stop making payments, and hand the keys back to the lender.

Morality and ethics don’t even enter the equation. Either option is perfectly legal for the borrower, and the only criteria should be business-based. All the ethics you need are contained within the four corners of the pages of the mortgage contract.

There is no doubt that consumers do have a legal right to walk away from any contractual obligation, as long as they are willing to accept the legal penalties of that obligation, as stipulated in the contract.

As for ethics, you decide.

Also check out:

• Choose Foreclosure – The Case To Walk Away
• Seattle Housing – Microsoft Layoffs And Mortgage Walk Aways
• Total Bailout Cost Now $12.8 Trillion
• Yearly Budget Deficit Tops $2 Trillion

It’s pretty difficult to find unbiased information on housing price trends in any of the local press.  Take the Seattletimes as an example.  They used to generate significant income from selling ads in their real estate section.  And the staff writer stories accompanying that section were always positive – even at the height of the bubble.   If you pick up a Seattle newspaper today, the real estate section is mostly void of paid advertisements.  But the staff writers haven’t stopped pushing their obviously biased opinions in the hope of luring back their potential real estate advertising customers.

Consider a recent article in the Seatltetimes - June home sales are highest in King County since Oct 2007.

A new report provides the strongest evidence yet that buyers are starting to return to the local real-estate market.

The number of closed sales of single-family homes in King County in June was up 4 percent over June 2008 — the first year-over-year increase since the market peaked nearly two years ago, the Northwest Multiple Listing Service said Monday.

The county hasn’t recorded that many sales in a month since October 2007.

As for the headlines from national publications, which don’t depend on local advertising from struggling home developers, the take is a little different.

• Expect more home price declines almost everywhere – Wall Street Journal
• Plenty more downside in real estate – Business Insider

The April Case Shiller index values have been released and the results show continued price drops in most cities forecasted.  In a strange twist, however, prices appear to be levelling off in several of the forecasted cities.  Potential buyers should beware of false hopes for a bottom as this may just be a mirage before the continued storm of relentless price drops.  Don’t forget that interest rates were artificially deflated for a few months due to the Fed’s intervention in the markets.  The artifically low 4.5% 30 year mortgage rates were short lived, and jumped almost 30 percent in a single day at the end of May.

If you are watching the Case Shiller index values to find a housing bottom and time a buying opportunity, here are a few guidelines you may with to consider:

1. Look for a trend based on at least 3-4 months of Case Shiller values.  False bottom signals can appear frequently and give the potential buyer false hope.
2. Don’t get fooled into rushing your purchase based on the $8,000 tax credit.  The $8,000 is not going to help the buyer who loses $20,000 to $50,000 or even more from a 10% annual depreciation.
3. Don’t get fooled into buying because of low interest rates.  Real estate agents love to push this bad advice on perspective buyers – “Buy now before rates go up”.  The best time to buy is when interest rates are high and demand and prices are low!

And now, here are the latest Case Shiller values.  The chart below has the last 4 months of data transposed, but you can get the raw data here if you like.

The boys from Dilbert have it right.  Home “owners” lose, and the smart money is still renting.  It is NOT time to buy a home yet.

It’s hard to keep track of all the nonsense on foreclosure moratorium’s these days.  What is clear is that all layers of government are insistant on rewarding incompetence, and irresponsiblity, and punishing responsible taxpayers.   The nationwide foreclosure moratorium may have ended, but don’t think for a minute we have moved any closer to a market based economy.  Here is just a sample of the new ridiculous anti-market, anti affordable housing, anti taxpayer initiatives hitting the news lately.

• NEW California foreclosure moratorium starts today – In addition to the already lengthy time to evict a non paying home “owner”, the taxpayers are now on the hook to bailout the banks for an additional 3 months of free living to non paying home “owners”.
• Ohio House approves foreclosure moratorium – When the bill becomes law, homeowners across the state will be given the green light to pay only 50% of their mortgage bills, and stick the other half to taxpayers.
• Citizen revolt in New York demanding foreclosures to stop – There are obviously no responsible apartment renters anywhere in the protest, just plenty of bailout beggars following the queue from big banks, and big government.
• Boston City Council pushes for 6 month foreclosure moratorium – From the article, “the second petition would impose a 180-day moratorium on foreclosures for owners of some homes. The moratorium would be limited to borrowers whose loans were considered unfair.”
• Minnesota pushes for record breaking 2 years of foreclosure moratorium (HR2233) – From the link, “The foreclosure process shall be stayed effective as of the date of service of the notice of right to stay.  The stay shall continue in effect for a period of two years from the date of service of the notice.”
• Maryland 90 day foreclosure moratorium

Bernanke and the Fed insist on fighting the market forces, but the market just delivered a swift kick in the Jimmy to Bernank, his cronies, and the American people.  So much for those artificial 4.5% mortgage rates that were supposed to save the housing market.  What’s the next trick of stupidity that Bernanke will pull from his sleeve to combat the market?

From The Wall Street Journal:

Bond markets continued to gyrate Thursday after a sharp run-up in 10-year Treasury yields the day before. The bond market pushed yields of 10-year Treasurys down to 3.674% from 3.70% Wednesday, but they remain well over mid-March’s 2.5% level. Yields on mortgage-backed securities continued to climb, pushing 30-year fixed-rate mortgages to 5.44%, the highest since early February.

The market has spoken, and it has clearly said that it wants higher yields from ALL BONDS.  If the government insists on printing more money and thus increasing the risk of default, then the market demands  a higher yield for loaning out that money.  And those higher yields translate into the mortgage market as much as the treasury market.

Anyone care to guess what will happen when mortgage rates continue rising, and lending standards remain tight?

• A)  Loosen lending standards and resume making $500,000 no money down, negative amortization, option arm loans to McDonald’s Fry cook’s everywhere.
• B)  Watch as bankers everywhere resume their bailout begging when the value of their mortgage backed holdings continue to dwindle, as home prices accelerate their downward spiral – especially on the coasts and big cities.
• C) Social unrest in the U.S. as more and more home “owners” are thrown into the street.
• D) Social unrest in the U.S. as more and more responsible renters get stuck with the bill for their irresponsible neighbors mortgage bills.

Stay tuned…

Barry Ritholz was on Fast Money today speaking about the reality of housing, and the lack of any bottom any time soon.

Ritholz also has a new book out entitled Bailout Nation

Dennis Cardoza, representative of California’s 18th district, has one thing right, and that’s the fact that some areas of the country have been harder hit by the housing crisis than others.  His congressional website mentions that he is pushing HUD secretary Donovan to recognize that California needs more help (translation: more bailouts for irresponsible government and mortgage borrowers)  than the rest of the country.

President Obama will go down in history as Mr. Bailout, presiding over and supporting uncountable bailout initiatives to reckless speculators of every kind.  Dennis Cardoza desperately wants Ovama to add another notch to his bailout belt, another notch that will undoubtedly be paid for by the Chineese or Saudi government.  Or perhaps the foreign bond holders have had enough, and the Fed will step in, yet again, to monetize the debt – essentially printing whatever it wants without regard to accounting for the total.

With the Home Act, Dennis Cardoza does *NOT* want affordable housing.  Instead, he calls for more reckless lending and reckless re-financing to people who gambled on insane home price appreciation.  He does not recognize that underwater and tapped out home “owners” would be better off renting much more affordable apartments.  Instead, he calls for:

• Artificially low teaser mortgage rates of below 4% to spur a renewal of reckless lending
• Loan guarantees by insolvent and now government (taxpayer) owned Freddie Mac and Fannie Mae
• Unaffordable housing and artificial “floors” in home prices to keep would be responsible borrowers on the sidelines
• Doing whatever it takes to ignite an artificial and unsustainable new bubble in home prices
• Lengthening the average fixed mortgage term from the current 30 years (perhaps 100 years?)

Here are the exact words from his irresponsible Home Act:

This home purchase and refinance program will use the conservatorship of Freddie Mac and Fannie Mae to stabilize the housing market.  From the date of enactment until Dec. 2010, Freddie and Fannie will guarantee to lenders that they will purchase any mortgage meeting the stipulated qualifications (4% or better interest rate and a fixed term of at least 30 years)… This activity in the housing market will create a floor for home prices and trigger a stabilization and subsequent increase of home prices.

If you are a subscriber to Barron’s, and you are not yet tired of all the negative housing news, then you should read their latest take entitled “More Meltdown”.  For those who are not subscribers, let me block quote the essential summary of the entire financial fiasco (aka housing gone mad, Wallstreet gone stupid), direct from Barrons.

To produce ABSs and CDOs, Wall Street needed “a lot of loan product,” of which mortgages proved a bountiful source. It’s unfortunately quite simple to generate ever-higher volumes of mortgages. All you need do is lend at “higher loan-to-value ratios, with ultra-low teaser rates, to uncreditworthy borrowers, and don’t bother to verify their income and assets.”

The only catch is that the chances of such a mortgage being paid off are just about nil, a trifling caveat that bothered neither lenders nor pushers one whit. The result of that cavalier approach, as we all have reason to lament, in the end has been anything but happy: Today, mortgages securitized by Wall Street represent 16% of all mortgages, but a staggering 62% of seriously delinquent mortgages.

The Barron’s author shares the same opinion as T2 Partners, who just released the second edition of their famous and richly detailed housing presentation.  The newest version is entitled “An Overview of the Housing / Credit Crisis and Why There is More Pain To Come“.

The presentation is freely available at this link, and it is definitely worth reviewing – especially if you are considering a new home purchase, and don’t want to lose money.   The smart money is still building equity by renting, and patiently waiting out the declines.  What are you doing with your money?

Notable quotes from the T2 presentation:

• “24% of homeowners with a mortgage owe more than the home is worth, making them far more likely to default”
• “Foreclosures in February [2009] rose 30% year over year and 6% sequentially”
• “Realtytrac estimates that over 1.5 million bank owned properties are on the market, representing about a third of all properties for sale in the U.S.”
• “Home prices need to fall another 13% to reach trend line”
• “We expect housing prices to decline in the 45-50% range, bottoming in mid-2010″
• “The wave of resets from subprime loans is mostly behind us, but a wave of Alt-A resets is ahead of us“
• “The timing indicates that we are still in the middle innings of the bursting of the great mortgage bubble”

The T2 partners report is not all gloom and doom, though.  Near the end, the presentation details out the best opportunities amongst the wreckage, including:

• Some blue chip stocks such as McDonald’s, Johnson and Johnson, Coca-Cola, Wal-Mart and others
• Out of favor blue chips such as American Express and Target
• Balance sheet plays – companies that are cash rich and with little to no debt.  EchoStar and Delia’s are listed as examples
• Turnaround plays such as Winn-Dixie, Crosstex and Huntsman

The T2 Partners group also has an excellent book coming out in May:

More Mortgage Meltdown + URL: 6 Ways to Profit in These Bad Times by Whitney Tilson