October 9, 2011
By Robert Pear

WASHINGTON — In a grim sign of the enduring nature of the economic slump, household income declined more in the two years after the recession ended than it did during the recession itself, new research has found.

Between June 2009, when the recession officially ended, and June 2011, inflation-adjusted median household income fell 6.7 percent, to $49,909, according to a study by two former Census Bureau officials. During the recession — from December 2007 to June 2009 — household income fell 3.2 percent.

The finding helps explain why Americans’ attitudes toward the economy, the country’s direction and its political leaders have continued to sour even as the economy has been growing. Unhappiness and anger have come to dominate the political scene, including the early stages of the 2012 presidential campaign.

President Obama recently called the economic situation “an emergency,” and over the weekend he assailed Congressional Republicans for opposing his jobs bill, which includes tax cuts that would raise take-home pay. Republicans blame Mr. Obama for the slump, saying he has issued a blizzard of regulations and promised future tax increases that have hurt business and consumer confidence.

Those arguments may be heard repeatedly this week, as the Senate begins debating the jobs bill. The full bill — a mix of tax cuts, public works, unemployment benefits and other items, costing $447 billion — is unlikely to pass, but individual parts seem to have a significant chance.

The full 9.8 percent drop in income from the start of the recession to this June — the most recent month in the study — appears to be the largest in several decades, according to other Census Bureau data. Gordon W. Green Jr., who wrote the report with John F. Coder, called the decline “a significant reduction in the American standard of living.”

That reduction occurred even though the unemployment rate fell slightly, to 9.2 percent in June compared with 9.5 percent two years earlier. Two main forces appear to have held down pay: the number of people outside the labor force — neither working nor looking for work — has risen; and the hourly pay of employed people has failed to keep pace with inflation, as the prices of oil products and many foods have jumped.

During the recession itself, by contrast, wage gains outpaced inflation.

One reason pay has stagnated is that many people who lost their jobs in the recession — and remained out of work for months — have taken pay cuts in order to be hired again. In a separate study, Henry S. Farber, an economics professor at Princeton, found that people who lost jobs in the recession and later found work again made an average of 17.5 percent less than they had in their old jobs.

“As a labor economist, I do not think the recession has ended,” Mr. Farber said. “Job losers are having more trouble than ever before finding full-time jobs.”

Mr. Farber added that this downturn was “fundamentally different” from most previous ones. Historically, other economists say, financial crises and debt-caused bubbles have led to deeper, more protracted downturns.

Mr. Green and Mr. Coder said the persistently high rate of unemployment and the long duration of unemployment helped explain the decline in income during the recovery.

In the recession, the average length of time a person who lost a job was unemployed increased to 24.1 weeks in June 2009, from 16.6 weeks in December 2007, according to the federal Bureau of Labor Statistics. Since the end of the recession, that figure has continued to increase, reaching 40.5 weeks in September, the longest in more than 60 years.

The new study by Mr. Green and Mr. Coder is based on monthly census surveys, rather than the annual data that appeared in last month’s census report on income. The monthly figures allow researchers to measure income changes more precisely during a recession or a recovery and provide more current information. The annual report is based on surveys conducted early in the following year, and people sometimes confuse how much money they are making at the time of the survey with how much they made the previous year. Additionally, recessions usually do not line up with a calendar year.

A committee of academic economists at the National Bureau of Economic Research, a private group widely considered the arbiter of the business cycle, judged that the most recent recession began in December 2007. The bureau defines a recession as a significant, broad-based decline in economic activity.

The economists said the recession ended in June 2009. In every quarter since then, the economy has grown.

Some economists see signs that the United States may be in or about to enter another recession, though the evidence is mixed.

In their new study, Mr. Green and Mr. Coder found that income dropped more, in percentage terms, for some groups already making less, a factor that they say may have contributed to rising income inequality.

From June 2007 to June of this year, they said, median annual household income declined by 7.8 percent for non-Hispanic whites, to $56,320, and by 6.8 percent for Hispanics, to $39,901. For blacks, household income declined 9.2 percent, to $31,784.

Mr. Green and Mr. Coder, who both worked at the Census Bureau for more than 25 years, found other income changes over the four-year period examined.

For example, income, after adjustment for inflation, declined fairly substantially for households headed by people under age 62, but it rose 4.7 percent for those headed by people 65 to 74, many of whom are not in the labor force. The change was negligible for those 62 to 64.

The type of employment also made a difference. Real median annual income declined to a similar degree for households headed by private-sector wage workers (4.3 percent) and government-sector workers (3.9 percent), but fell much more for the self-employed (12.3 percent).

Family households generally had larger declines in real income than other households. Men living alone showed a bigger decline than women living alone.

Education levels were also a factor. Median annual income declined most for households headed by someone with an associate’s degree, dropping 14 percent, to $53,195, in the four-year period that ended in June 2011, the report said.

For households headed by people who had not completed high school, median income declined by 7.9 percent, to $25,157. For those with a bachelor’s degree or more, income declined by 6.8 percent, to $82,846.

May 5th, 2011
By Andrea Ruse

Forbes magazine last week ranked the Manhattan Beach Unified School District sixth in the nation on its second annual “Best Schools for Your Real Estate Buck” list.

Results were published in Forbes’ April 26 online issue, in a list described as “a look at the places in America where your housing dollar will go the furthest in getting your children a great education.”

“That came out of nowhere,” said MBUSD Superintendent Michael Matthews. “It was one of those unbelievably delightful surprises.”

The publication scored districts in 17,589 towns in 49 states based on standardized test scores and the progress of randomly selected students, ranking MBUSD the highest among districts in areas where median home prices exceed $800,000. The school district in the affluent town of Falmouth, Maine, with a median home price of $351,550, took first place on the Forbes list.

“The resulting lists once again demolish the idea that more money equals better schools,” reads the Forbes article. “Falmouth’s performance outshone that of big-dollar school districts like Manhattan Beach, Calif., and New Canaan, Conn., both of which have median house prices above $1.1 million yet scored sixth and 19th, respectively, on an absolute scale. In fact, towns with homes costing between $200,000 to $399,000 represented a sweet spot in the list, grabbing more schools in the Top Ten than any other grouping.”

“That shows that if you’re from an area of high housing prices, it’s harder to get on that list,” Matthews said.

New Canaan came in second among districts in areas where median home prices exceed $800,000, though Nick Williams, chairman of the New Canaan Board of Education, still can’t seem to let go of reaching number one.

“[Manhattan Beach] may have better surfing, but if I read the break correctly, we have a better school system,” Williams humorously remarked to The Daily New Canaan last week.

The honor came two weeks after State Superintendent of Public Instruction Tom Torlakson named Mira Costa High School one of 97 public middle and high schools selected as a 2011 California Distinguished School.

The recognition program, in its 25th year, honors the state’s most outstanding and inspiring public schools with the award; Costa joins more than 5,300 public schools that have been awarded the honor since the program began.

“It’s more and more of a big deal,” Matthews said of Costa’s recognition. “It relies on test scores and every group must continue to improve. When you’ve been improving for seven years, it’s hard to keep improving. We were fortunate [Costa] made a big rise last year.”

Costa principal Ben Dale praised the community’s connection to the school for contributing to its success.

“We constantly and continually feel love and support from parent, business, and civic organizations,” Dale said.

Both distinctions were based in part on the Academic Performance Index (API), a composite measure of student testing results. The district as a whole ranked third in the state on API scores last school year, with Mira Costa showing the biggest increase in scores of all schools in the district. ER

By Alejandro Lazo, Los Angeles Times
September 26, 2011, 6:02 p.m.

Uncle Sam is about to take a first tentative step out of the mortgage business by lowering the size of home loans that the federal government will guarantee, and it's already hitting California neighborhoods with higher costs and bigger down payments.

The downward adjustments have ignited outcries from California politicians and sparked a campaign by the state's largest real estate group and its national partner to extend the higher limits; they argue that the Golden State's housing market and economy can ill-afford another setback to recovery.

"This is just going to kill us," said Beth L. Peerce, president of the California Assn. of Realtors. "You don't want the real estate market to get any worse than it is, and it surprises me that our congressmen and senators don't understand that."

But with Washington focused on slashing deficits, few observers predict any further extension of the 3-year-old policy that was intended to throw a lifeline to higher-priced housing markets. Most of the nation's biggest mortgage lenders have already stopped making loans at the old limits, concerned that they will not be able to get them off their books before the official Saturday deadline.

The move to lower loan limits is the first major effort by the federal government to reduce its footprint in the mortgage market. The government currently supports about 90% of new mortgages — essentially propping up the home loan market after credit dried up and home sales plunged in the wake of the subprime mortgage crisis.

The loan limit determines the maximum size of a mortgage that the Federal Housing Administration, Fannie Mae and Freddie Mac can buy or guarantee. So-called nonconforming jumbo loans that are offered by the private mortgage market typically require bigger down payments and carry a higher interest rate, driving up monthly payments for borrowers.

In February 2008, with the housing market and economy reeling, Congress raised the limits for the types of mortgages eligible to be insured or bought by the FHA, Fannie Mae and Freddie Mac. The limits, which are based on a county-by-county analysis of home values, have been extended by Congress every year since to give housing a boost.

FHA borrowers in Los Angeles and Orange counties will see loan limits drop to $625,500 from $729,750, a decline of $104,250. Other pricey areas facing the same change include San Francisco, New York and Washington.

Under the new FHA loan limits, Monterey County would see the biggest drop in the limit, falling $246,750; followed by Merced, down $201,450; Riverside, falling $164,650; San Bernardino, declining $164,650; Solano, dropping $157,300; and San Diego, down $151,250.

Fannie Mae and Freddie Mac loan limits will also follow those changes except when they call for dropping the limit below $417,000, which was the old jumbo limit for Fannie and Freddie loans. When that happens, the limits will drop to no lower than $417,000.

Real estate professionals are bracing for the policy change to hit California hard, as buyers begin learning that they may no longer be able to afford the higher-priced homes they had been considering. The California Assn. of Realtors estimates that more than 30,000 California buyers statewide will face bigger down payments, higher mortgage rates and stricter requirements under the adjustment.

Syd Leibovitch, president of Rodeo Realty in Beverly Hills, said many deals by his brokers involve loans done at the highest amount allowed under the old limits.

"It is not going to be good," Leibovitch said. "The majority of our deals are 729-FHA loans because they are the easiest to qualify."

Sen. Dianne Feinstein (D-Calif.) co-sponsored a bill in early August that would allow the higher limits to stay in place for an additional two years. The real estate and mortgage industries also have been lobbying hard to keep those limits.

With the nation still recovering from the credit crisis, there is virtually no mortgage market outside the loans eligible for government guarantees. Still burned from the subprime mortgage meltdown, very few investors want to buy a mortgage unless it carries government backing, said Guy Cecala, publisher of Inside Mortgage Finance.

But as time runs out, pleas by industry groups appear to be going nowhere. The government is arguing that taxpayers can no longer afford the cost and risk of subsidizing home loans on a grand scale.

"Everybody is asking California to take one for the team," Cecala said. "It is the largest mortgage market in the country, it is the largest state in terms of mortgage activity and it is also the highest cost, where more mortgages are made at the limit than in any other state. It is basically ground zero to a downward adjustment in the loan limits."

The lower limits arrive at a time when lenders are eyeing borrowers more closely than ever to make sure they can make their loan payments.

Major banks are concerned about being forced to buy back loans that don't adhere to certain standards, so qualifying for mortgages has become an increasingly onerous task, with banks demanding more paperwork and higher credit scores.

"The bottom line is Fannie and Freddie will scrutinize any loan that has any performance issue," Cecala said, "so the way to avoid that as a lender is make sure that they are pristine."

Manhattan market stabilizes, while rest of country plays catch-up
August 01, 2011 07:00AM

By Peter Kiefer

The gulf between New York City's real estate market and the rest of the country has always been wide. But that disconnect appears to be growing.

"Manhattan seems to be one of the lucky ones," said Jonathan Miller, president and CEO of Miller Samuel, who called the Big Apple one of "the best housing markets in the country, relatively."

For example, Manhattan's median residential sale price in the second quarter was only 17 percent below the market peak in 2008, according to the most recent report from brokerage Prudential Douglas Elliman, which is prepared by Miller. That's an improvement from the worst depths of the downturn, when Manhattan prices were 25 to 30 percent below the high, said Miller, who also does market research for Las Vegas, Washington, D.C., Baltimore and Miami.

By contrast, homes in Las Vegas, one of the hardest-hit markets in the country, have lost around 60 percent of their value over the past few years, Miller said. And, the nationwide average decline from the peak of the market is currently around 30 percent.

Unpleasant housing statistics have also abounded elsewhere outside New York City, leading many experts to conclude that a "double dip" in house prices has already begun nationally. According to the Standard & Poor's Case-Shiller Index, national housing prices dropped to a "new crisis low" in March, though they did bounce back slightly in April -- jumping 0.7 percent for the 20-city data set that was studied. Meanwhile, the index found that the number of existing home sales rose in May nationally, but is still roughly 15 percent below last year's volume.

Here in Gotham, by comparison, residential prices have remained stable.

In the second quarter, the Manhattan median sale price dropped 5.5 percent to $850,000 from $899,000 in the same period last year, but rose 8.7 percent from the previous quarter. And, sales volume, while down 3.8 percent from last year's second quarter, jumped 10.7 percent between the first and second quarters of 2011.

In the commercial sphere, Manhattan is also rebounding faster than the rest of the country.

According to data from the CoStar Group, the price per square foot for commercial office rents has been increasing here since the second quarter of 2010, while the average price per square foot nationally for urban markets declined over the same period (with the exception of 2010's fourth quarter, when there was a slight uptick).

Indeed, the average asking rent peaked in the Big Apple in the second quarter of 2008 at $63.82 per square foot. While rents dropped to a low of $42.63 last year, they've since risen 8 percent to $46.05, according to the CoStar data, which includes all building types.

Nationally, however, office rents are moving in the opposite direction.

While asking office rents for urban markets peaked nationally at an average of $24 a square foot in the first quarter of 2008, they dropped to a new low in 2011's second quarter, to $21.34.

CoStar's senior real estate strategist, Chris Macke, said when compared solely to the country's 10 "major" office markets, Manhattan also outpaces its counterparts. While some of those cities, such as San Francisco, are performing strongly and seeing rent increases, others, like Phoenix and Philadelphia, are clearly struggling.

But on the bright side for the nation overall, Macke noted that the rate of decline is slowing down and the amount of office space being taken by tenants (also known as the net absorption) saw a big boost in the second quarter.

Plus, Macke noted that while Manhattan is rebounding faster than the nation as a whole, it also fell harder because there was a much bigger run-up here during the boom.

Indeed, that seemed to bear out on the investment sales side, too, where the most recent figures show that Manhattan saw three times as much growth as the rest of the country.

According to preliminary numbers, Macke said Manhattan saw about $8.4 billion in building sales for the second quarter of 2011 -- a 189 percent increase from the $2.9 billion it logged during the same time in 2010. By comparison, nationally there was $73 billion in building sales for the second quarter -- only a 65 percent increase from the $44.5 billion registered during the same quarter in 2010.

Defying history
Explanations for New York's relative strength range from the obvious (ties between the Manhattan economy and Wall Street) to the more esoteric (the condo and co-op conversions of the 1990s strengthened lending standards and decreased financial exposure here).

"We have been buoyed by foreign buyers, and the weak dollar is certainly helping, and Manhattan employment is better than the national average and the region," Miller added. "And then you have total Wall Street compensation, which is up, and a much lower market share of distressed sales in foreclosure activity."

Manhattan obviously has not been immune to this downturn (during the darkest days of 2009, residential sales volume dropped almost 50 percent). Still, Robert Sammons, vice president of research services at Cassidy Turley, agreed that employment is one of the key reasons Manhattan hasn't been hit as hard as the rest of the country.

"The key to this has been job growth, and in New York we have had incredibly good job growth in 2010 and year-to-date in 2011, and that really surprised a lot of people," he said. "We gained jobs, and [more] important for commercial real estate, we gained office jobs."

In May 2010, the unemployment rate in Manhattan stood at 8 percent. A year later, that figure dropped to 7.1 percent, significantly below the national average of 8.7 percent, according to the New York State Department of Labor. Some of that has to do with the fact that Wall Street firms were bailed out during the recession, insiders said. But it's also is a testament to Manhattan's diversified economy, which includes tourism, media, fashion and technology.

Another factor is that the early 1990s crash prompted changes that still "reverberate today" in New York, according to Steve Malanga, a senior fellow at the Manhattan Institute.

That downturn resulted in bankruptcies for entire residential co-ops buildings, he said, which in turn caused many boards to institute new restrictions on sales and financing, which, 12 years later, ended up limiting Manhattan's exposure to subprime lending.

Similarly for the commercial market, Malanga said a speculative building boom in the 1980s made speculative financing much harder to secure in the city, thus limiting over-development and the creation of a glut of new, tenant-less buildings.

This is not to say brokers, buyers and sellers in Manhattan should break out the bubbly. While Manhattan is doing better than the rest of the nation, insecurities abound in both the commercial and residential markets.

"It is not that we are booming again, it's that we appear to be stabilizing while a large portion of the county is looking at more declines over the next couple of years," said Miller. "I still think New York City metro is looking at general price declines over the next couple of years which will be under the rate that we will see nationally, and I see Manhattan in the best case scenario as remaining flat."

Other skeptics, like CoStar's Macke, noted that recent high-profile building sales in Manhattan are somewhat misleading, and there is more demand for "trophy" properties than other market segments. "When you drill down into sales, there is a real split between properties in high demand and everything else," he said. "It is not as if the overall market is doing as well as the trophy ones, which are leading this charge."

Macke added that some of the prices being paid for trophy properties are highly dependant on strong rental rate growth -- which is clearly not a guarantee.

In addition, Miller warned against thinking that the city is completely protected from the market forces that impact the rest of the country, noting that viewing Manhattan in a vacuum could provide a false sense of security.

"The brokerage sales pitch often is that this is an island and they don't make land here. Come on," he said. "Technically we are an island, but that is a geographic fact, not an economic fact."

August 01, 2011
By Kenneth R Harney

Picture this nightmare financial scenario: You've taken out a $150,000 home-equity credit line to remodel your house, you've already pulled out thousands to pay contractors and owe thousands more, when suddenly you get a curt letter from the bank.

Effective yesterday, it says, we've shut down access to your credit line. Although we haven't physically appraised your property, an automated valuation indicates it is now worth significantly less than when we approved your application. If you wish to hire an appraiser, chosen by us but at your own expense, you can appeal our decision.

You're in shock. You can't pay bills you've already contracted for, you can't touch the money you confidently believed you had. Plus, you know that house prices in your area have been relatively stable since you took out the credit line. How could a bank effectively devalue your real estate using nothing more than a computer program?

Welcome to the world of what class-action attorneys estimate to be massive numbers of homeowners -- 1 million customers at one national bank alone -- who had their credit lines reduced, frozen or canceled without appraisals during 2009 in the tense months following the near-collapse of the capital marketplace.

Now a federal district court in Chicago has given the green light to clients of JPMorgan Chase Bank to proceed with a consolidated suit alleging that their equity lines were yanked or reduced illegally, costing them billions of dollars in lost borrowing power. Judge Rebecca Pallmeyer rejected the bank's motion to dismiss the case, clearing the way for a possible giant class action.

The litigation pulls together eight separate suits seeking class certification filed by homeowners in California, Minnesota, Illinois, Texas, Arizona and Ohio. It is considered a bellwether test of the rights homeowners enjoy under the Truth in Lending Act and state consumer protection statutes when they take out equity lines of credit.

But it also shines light on the controversial computerized tools many lenders use to make quick, inexpensive assessments of property values in lieu of more costly professional appraisals. Suits on similar grounds are pending against other major lenders, including Wells Fargo, GMAC Mortgage and Citibank, according to attorneys.

The plaintiffs' lawyers not only are challenging JPMorgan Chase's legal right to rescind or limit credit lines without adequate documentation that property values have dropped "significantly" -- as required by the Truth in Lending law -- but are also mounting a side attack against automated valuation models (AVMs) that they claim are frequently inaccurate and unreliable.

Steven Lezell Woodrow, a partner with Edelson McGuire LLC, the Chicago law firm representing the plaintiffs, said in an interview that the computer valuations used by JPMorgan Chase were found to be "grossly in error," based on subsequent physical appraisals.

A spokesman for JPMorgan Chase, Tom Kelly, said the bank does not comment on ongoing litigation. However, the bank's filings in court argued that federal law does not specify the type of valuation technique lenders may use in reviewing equity line collateral, and that the homeowners did not demonstrate that the AVM values were incorrect.

The allegations in the consolidated suit include a credit line suspension on a house in Mountain View, Calif. Originally valued at $1 million and devalued to $826,000, a subsequent physical appraisal found that the house had actually increased in value to $1.07 million. The bank later reinstated the owner's credit line. On a house in Arlington, Tex., originally valued at $172,000, an AVM lowered that to $151,000. On appeal, the owner presented a physical appraisal completed 10 days before the bank's action that put its market value at $165,000. Nonetheless, the bank refused to reinstate the credit line, based on a revised requirement lowering maximum loan-to-value ratios on total debt to 70 percent from the previous 80 percent.

Though the litigation will be contested primarily on the grounds of alleged violations of Truth in Lending procedures and state consumer protection laws, the accuracy and use of automated valuations will be hovering in the background. Leaders in the AVM field such as Tim Grace, senior vice president of CoreLogic, say "commercial-grade AVMs have proven over decades of testing to provide accurate, independent and consistently reliable estimations of property value."

But lawyers for the homeowners say nothing should distract attention from the context surrounding JPMorgan Chase's mass freezing of credit lines shortly after accepting $25 billion in emergency liquidity funds from the Treasury, which the bank has since repaid.

"They took the government's money, which was supposed to help them to lend to people who needed credit," said Woodrow, "but instead they cut them back."

August 26, 2011
Reporting from Washington By Don Lee, Los Angeles Times

Mortgage rates tumbled to the lowest level in the history of Freddie Mac's weekly survey, with 30-year fixed-rate home loans being offered this week at an average 4.15%, down from last week's 4.32%.

Freddie Mac said in its weekly report that loans with variable interest rates also hit record lows, as did shorter-term fixed-rate loans. The 15-year fixed-rate loan, a popular choice with people refinancing their homes, was being offered at an average rate of 3.36%, down from 3.50% last week, Freddie Mac said.

The devastating recession that started four years ago hit a nation flying high on a housing boom and helium-inflated clouds of consumer spending. But the current slowdown is striking a nation already on its economic knees.

"That's the danger right now: You've got an economy that didn't recover," said Ethan Harris, Bank of America's chief economist for North America.

"We've had some healing," he said, noting that banks are in better financial shape, as are some households. "But the rehabilitation hasn't been completed," and a relapse would be like "hitting an already sick patient."

On Friday, Federal Reserve Chairman Ben S. Bernanke is expected to discuss the economic outlook and the central bank's role in the months ahead, but he is unlikely to announce any immediate policy changes despite widespread anticipation of new action.

Also, new numbers scheduled to be released Friday on overall economic growth are not expected to brighten prospects.

What worries economists such as Harris is that an economy that shows little or no growth does more than cause immediate pain. It inflicts damages and costs that have lasting effects.

The last recession, which technically ended in June 2009, was the worst in six decades. It cost the country about $2.5 trillion, including the government's stimulus spending, losses at mortgage lenders Fannie Mae and Freddie Mac, and additional funds for unemployment benefits, according to Moody's Analytics.

As the weak economy lingers, the tab to taxpayers will keep growing and put additional pressure on the already strained fiscal budget. Additionally, the lost income, lost business opportunities and other private-sector costs were far higher.

Economists worry about the possibility that the growing disparity between the rich and everybody else will widen, that the nation's entrepreneurial energy will be sapped and that a generation of young workers whose earning power and confidence have already suffered will decline even more.

"These are things slowly undercutting the underlying resilience of the economy," Harris said.

The likelihood of another recession has risen sharply since spring amid signs of deteriorating employment, manufacturing and business and consumer confidence — accompanied by wild swings on Wall Street.

Many analysts see at least a 1 in 3 chance of a fallback into outright economic decline in the next six months or so.

U.S. gross domestic product in the first half of this year is now seen as having grown by even less than the tiny 0.8% rate previously estimated. A negative GDP rate, which measures the change in goods and services produced, would be one sign that the nation is in recession. Another sign would be declining employment.

GDP expanded 3% in 2010, but the size of the U.S. economy still hasn't caught up to where it was at the fourth quarter of 2007 when the Great Recession hit. And total payroll employment remains nearly 7 million jobs shy of where it was at the end of 2007.

By comparison, China's GDP has surged more than 40% between 2007 and 2011, and economists at IHS now see the Chinese economy overtaking the U.S. in 2019 — much faster than what analysts were predicting only a few years ago.

The GDP comparisons are more than just academic. They also speak to economic clout and people's living standards, which for many in the U.S. have been further eroded in the last few years.

Little by little, economists have been ratcheting down their forecasts for the rest of this year. Layoffs and new jobless claims have been climbing again. And with the housing market still depressed, state and local governments cutting back and industrial production wavering, it's hard to see from where the U.S. economy could get a big lift.

Paul Dales, an economist at Capital Economics, said a second recession probably would be mild and short, if for no other reason than that the "fat-purging process" has already taken place.

August 19th, 2011 by Scott Reckard

Mortgage rates tumbled to the lowest level in the history of Freddie Mac's weekly survey, with 30-year fixed-rate home loans being offered this week at an average 4.15%, down from last week's 4.32%.

Freddie Mac said in its weekly report that loans with variable interest rates also hit record lows, as did shorter-term fixed-rate loans. The 15-year fixed-rate loan, a popular choice with people refinancing their homes, was being offered at an average rate of 3.36%, down from 3.50% last week, Freddie Mac said.

The survey includes loans made with minimal payments of fees and points to lenders. The borrowers getting 30-year loans this week would have paid 0.7% of the loan amount in upfront fees and discount points, and borrowers would have paid 0.6% of the loan amount for the 15-year fixed loans, Freddie Mac said.

The rates, available to the lucky folks who have weathered the recession and housing debacle in solid financial shape, are the lowest since Freddie Mac's survey began in 1971 -- and almost as low as anyone can recall.

Long-term fixed-rate mortgages backed by the Federal Housing Administration averaged 4.08% for a several months in 1950-51, according to the National Bureau of Economic Research. FHA loans, which have additional costs, are available to people who are greater credit risks than those in the Freddie Mac survey.

Long-term mortgage rates tend to track the yield on the 10-year Treasury note, which has tumbled in recent weeks as investors bailed out of the stock market and loaded up on Treasuries, seeing them as a less-scary investment option.

The Freddie Mac survey's previous low for the 30-year loan was 4.17%, recorded last November after the Fed said it would buy $600 billion in Treasury securities, creating demand that drove down the 10-year T-note's yield.

This week's drop in loan rates came on the heels of the Federal Reserve's announcement last week that it expected to keep short-term interest rates low for at least two more years because of the economy's faltering recovery.

Despite the low rates, the housing market remains sluggish. About 70% of all home-loan applications in the first half of this year were for refinancings, not home purchases, Freddie Mac economist Frank Nothaft said.

Freddie Mac surveys lenders across the nation each week from Monday through Wednesday, asking them for the combination of rates and fees they are providing on popular mortgages.

The rates are available only to borrowers with solid credit, enough verifiable income to support payments and a 20% down payment for a purchase or 20% home equity for a refinancing.

Well-qualified borrowers who shop around often obtain slightly better rates, and it's possible to lower the rates further by paying additional upfront fees known as discount points.

August 16th, 2011 by Roger Vincent

Prices paid for California homes dipped last month as distressed properties continued to make up more than half of the market.

The median price paid for new and resale houses and condominiums statewide last month was $252,000, down 0.4% from June, and down 6% from July a year ago, real estate data provider DataQuick said.

The state’s median — the point at which half the homes sold for more and half for less — has fallen year-over-year for 10 consecutive months. The median’s bottom for the current real estate cycle was $221,000 in April 2009, and the peak was $484,000 in early 2007.

An estimated 34,695 houses and condos were sold last month. That was down 11% from June, and down 1.4% from July 2010. A decline from June to July is normal for the season

Of the existing homes sold last month, 34.6% had been foreclosed on during the past year. That was down from a revised 35.1% in June and down from 35.2% in July a year ago. The all-time high was in February 2009 at 58.5%.

Short sales –- transactions in which the sale price fell short of what was owed on the property -– made up an estimated 17.3% of resales last month. That was down from 17.4% in June and down from 18.6% a year earlier.

Indicators of market distress continue to move in different directions, San Diego-based DataQuick said. Foreclosures have declined sharply, but remain high by historical standards. Financing with multiple mortgages is low, down payment sizes are stable, and cash and non-owner occupied buying has eased a bit in recent months but remains relatively high.

The July median price in Southern California fell 4% from a year earlier to $283,000. A total of 18,090 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in July, down 4.5% percent from July 2010.

The median price in the Bay Area was $374,000, down 7% from July 2010. A total of 6,887 new and resale houses and condos sold in the nine-county area including San Francisco, up 1.7% from July 2010.

September 7th, 2011 by Alene Tchekmedyian filed in Manhattan Beach

Manhattan Beach Unified School District maintains its ranking as third in the state for kindergarten through 12th grade districts, right behind San Marino Unified and La Canada Unified, according to the district’s analysis of the Academic Performance Index scores released by the California Department of Education last week.

The district scores are at an all time high of 932 out of 1,000, up 5 points from last year. The scores are calculated based on the results of the STAR tests, which cover English and language arts, different levels of math, history and science for grades two through 11, and the California High School Exit Exam. The state set a target score of 800 for every school.

As schools in the district get closer to the score ceiling of 1,000, it’s difficult for them to maintain significant levels of growth each year, said Carolyn Seaton, executive director of educational services for Manhattan Beach Unified School District. However, there’s always room for improvement in the classroom, she said. “Regardless of how high our scores may be in certain areas,” she said, “we always look for ways to improve.”

For example, during the 2007-2008 academic year, the district was able to hire a science specialist for each elementary school to teach a hands-on lab class, an initiative funded by the Manhattan Beach Education Foundation.

That year, Meadows Elementary School students increased their standardized science test scores to 91.7 percent, up from 75.4 percent the year before.

This year, 91.4 percent of students – those from grades five, eight and ten were tested – performed proficient or advanced on the science STAR tests, up 3.9 percent from the year before. “It’s no surprise that students comprehend and retain scientific concepts at a deeper level when they have multiple opportunities to interact in a lab setting,” Seaton said in a press release, adding, “Hands-on science transforms abstract scientific theories into relevant concepts.”