Thursday, October 11, 2007

 

The subprime debacle continues at home and abroad

Eoin Callan reports that "Moody’s, the ratings agency, found that lenders had eased terms on only 1 per cent of subprime loans resetting at higher interest rates in January, April and July this year." The Bush administration's call for lenders to renegotiate mortgages in order to save homes is as ineffectual as everything else the administration does—other than tyrannize the population.

Fresh forecasts from the National Association of Realtors on Wednesday suggested the housing market was set to fall further, as the group reduced its expectations for the tenth time this year.

Sales of newly-built homes are likely to decline 24 per cent to a 10-year low, while purchases of existing homes are likely to fall 11 per cent to a five-year low, NAR said.

Keep in mind that being upbeat about real estate is part of the NAR's job description! Isn't it great what deregulation of the financial markets has brought us?!

Now Ireland, the "economic miracle" of Europe is feeling the pinch—

Ireland has already seen its religious orders selling off land. Now it is the members of some of the country’s exclusive golf clubs who are voting to cash in their greens and fairways to make way for new housing.

Some clubs have pulled off attractive deals with developers, but others may be too late to the party amid signs the Irish property boom has come to an end. Gerard McDonnell of Pembroke McDonnell estate agents believes the reality is rather worse. “Prices are down 10 per cent and that’s if you get it,” he says.

The debate now is whether the country can engineer a soft landing – as most local commentators believe – or be plunged into an economic recession which some outside analysts think will be hard to avoid.

The general economic backdrop is certainly worsening for Ireland, one of the best performing European economies of recent years. Gross domestic product contracted by 1.4 per cent in the second quarter, giving a year-on-year growth rate of 5.4 per cent, compared with 8.1 per cent in the year to June 2006, according to the Central Statistics Office.

Fall in revenue from house sales has converted the Irish government's projected surplus into deficit.

From an environmental standpoint not all of the consequences are bad. The St. Joe company, which was assisted by Governor Jeb Bush in its plans to pillage the Florida Panhandle at taxpayer expense, is having a comeuppance of sorts.1 According to Stacy-Marie Ishmael,

St Joe, Florida’s largest private landowner, will slash its workforce, sell 100,000 acres of land and scrap its dividend as it shifts from real estate to project development.

The company will cut 760 jobs – more than 75 per cent of its workers, sell 190 homes and about 1,200 developed home sites, it said on Monday.

It isn't exactly a victory, but it's something.

St. Joe became Florida's largest private landowner by buying up property during the Depression. Another great opportunity for the wealthy appears to be in the offing.

Related post
A note on understanding elites (9/3/07)

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