By Kathleen M. Howley
(Bloomberg) — A record 19 million U.S. homes stood empty at the end of 2008 and home ownership fell to an eight-year low as banks seized homes faster than they could sell them.
The number of vacant homes climbed 6.7 percent in the fourth quarter from the same period a year ago, the U.S. Census Bureau said in a report today. The share of empty homes that are for sale rose to 2.9 percent, the most in data that goes back to 1956. The homeownership rate fell to 67.5 percent, matching the rate in the first quarter of 2001.
The worst U.S. housing slump since the Great Depression is deepening as foreclosures drain value from neighboring homes and make it more likely owners will walk away from properties worth less than their mortgages. About a third of owners whose home values drop 20 percent or more below their loan principal will “hand the keys back to the bank,” said Norm Miller, director of real estate programs for the School of Business Administration at the University of San Diego.
“When you’re underwater and prices continue to fall, you tend to walk,” Miller said in an interview. “It’s a downward spiral that’s tough to stop because it feeds on itself. Foreclosures encourage other foreclosures and falling prices discourage buying.”
Obama’s Plans
The figures demonstrate the intensity of the U.S. housing crisis as President Barack Obama considers ways to help homeowners.
The Obama administration is considering government guarantees for home loans modified by their servicers, seeking to stem the record surge of foreclosures that’s hammering U.S. property values.
The proposal, which may also have taxpayers share in the cost of reducing mortgage payments, is aimed at shielding lenders from default after they loosen loan terms for struggling borrowers. Comptroller of the Currency John Dugan, who regulates national banks, said yesterday that “working out the details of it is still something that’s ongoing.”
Congress and the new president are grappling with how to repair the housing market as the recession enters its second year and unemployment rises. The U.S. economy shrank the most in the fourth quarter since 1982, contracting at a 3.8 percent annual pace, the Commerce Department said on Jan. 30.
Legal Wrangling
The U.S. had 130.8 million housing units in the fourth quarter, including 2.23 million empty homes that were for sale, the Census report said. The vacancy rate was 3.5 percent in urban areas and 2.6 percent in suburbs, the report said.
In addition, the report counted 4.1 million vacant homes for rent and 4.8 million seasonal properties.
“Wealth loss and housing in combination with loss in the equity market will have ripple effects,” said George Mokrzan, senior economist at Huntington National Bank in Columbus, Ohio. “The silver lining is that while home prices are coming down, incomes have stayed about the same, and in a lot of markets we’ll hit equilibrium this year. That’s a good sign for the long term.”
Most foreclosures are contained in the report’s “other” category, which includes homes tied up in legal proceedings as well as properties that are empty because the owner is renovating and living somewhere else, according to the Census Web site. There were 7.8 million homes in that category in the fourth quarter, up from 7.3 million a year earlier, the report said.
Bank Holdings
There were 2.22 million new foreclosures in 2008, an average of 6,090 a day, according to Washington-based Hope Now Alliance. Those resulted in 917,000 property sales, according to the group that represents 27 mortgage lenders and servicers.
U.S. banks owned $11.5 billion of homes they seized from delinquent borrowers at the end of the third quarter, according to the Federal Deposit Insurance Corp. in Washington. That’s up from $5.4 billion a year ago.
The U.S. housing market lost $3.3 trillion in value last year and almost one in six owners with mortgages owed more than their homes were worth as the economy went into recession, Zillow.com said in a report today.
The median estimated home price declined 11.6 percent in 2008 to $192,119 and homeowners lost $1.4 trillion in value in the fourth quarter alone, the Seattle-based real estate data service said.
By Paulos Milkias
I do not believe that Ethiopia’s dictator Meles Zenawi is going to quit. He is simply posturing. Here are reasons why?
An official who is determined to quit will not qualify it by another possibility. An excellent example to announce quitting: “I shall not seek, and I will not accept, the nomination of my party for another term as your president.” This, as you know, was President Lyndon B. Johnson’s announcement on March 31, 1968, after the setbacks of the Tet Offensive and the violent student demonstrations against the war in Vietnam made his life unbearable.
Mr. Meles is saying he has decided to quit but will respect his party’s decision regarding it. Anybody knows that neither the current TPLF leadership nor what remains of the EPRDF officialdom can survive for long without Mr. Meles’ political machinations. What he is saying is, I will say I will quit and my party caucus will put pressure on me through parliament. Then I will have little choice but to respect their wishes!
Second, he says he will quit as Prime Minister but will remain as the party leader. That is impossible in the present political framework in Ethiopia. If he has to resign as Prime Minister, he also has to resign from the Party leadership. Ethiopia has adapted a parliamentary democracy. In parliamentary democracy, the party leader is automatically the Prime Minister. Do not forget that the Front Benchers are selected and directed by the party leader. The Back Benchers also seek direct guidance from the party leader whose dictates they follow without fail.
Mr. Meles’ posturing is more in tune with that of Gamal Abdel Nasser. When the Egyptian President’s army was decimated in the Six Day War by June 9, 1967, Nasser tendered his resignation as President in a televised broadcast only to “change his mind” when his decision was “rejected” by Egypt’s National Assembly totally controlled by his National Democratic Party. So, come 2010 elections, rest assured that history will repeat itself.
(The writer, Dr Paulos Milkias, can be reached at [email protected])
By Tedla Asfaw
I followed the interview Meles Zenawi gave to an Ethiopian audience this past week. For the question of making Ethiopia an exporter of power while there is domestic power shortage including in the capital Addis Ababa, the answer he gave and caught my ear was the completed Tekeze Dam a year ago which is still not operational.
The completed Tekeze Dam reservoir is too low to generate power accodring to Meles. If we build the dam based on hydrological study of the area dry seasons will force a lower capacity. The other reason might also be a grander structure for political reason and if that is the case we will never have enough discharge to fill the dam to its capacity. The truth will be known on the coming year or years.
Unaccountable regime like Meles Zenawi do not take responsibility for the cost of such huge projects. If this huge dam never to be operational because of lack of water the cost will be for poor Ethiopians since it was built with foreign loan. If the catchment area of the dam is deforested as many believe it is not only we will have shortage of water but we will have unavoidable silt problem.
We have silt problems affecting dams in Ethiopia and the Awash Dam which was built more than fifty years ago is at the end of its life mainly because of silt problem but Tekeze is the first dam in Ethiopia not to be operational for lower reservoir capacity on its first anniversary.
MALAWI (Nyasa Times) – Police in Mozambique are keeping in custody about 100 Ethiopians arrested this week for illegally attempting to cross Malawi for South Africa.
The 100 are said to have escaped from Dzaleka Refugee Camp in Dowa and were reportedly on their way to South Africa to seek asylum and employment.
They were arrested by Mozambican Police at Zobue Border after successfully beating the Malawian security system and other authorities all the way from Dowa.
Immigration Officer-In-charge at Mwanza Boarder Jika Ndovi confirmed the development saying the East African asylum seekers were being held by Police in Tete, Mozambique pending repatriation to Dzaleka.
In a similar development, another cluster of 20 Ethiopians has also been nicked for questioning by Balaka Police.
Balaka Police Public Relations Officer Chiyanjano Ligomeka said the 20 who could not clearly explain how they found themselves in the district are believed to have entered Malawi using uncharted routes.
Addis Ababa, Ethiopia (APA) – Ethiopian security officials on Saturday arrested a South African man with over 70 capsules of suspected drug inside his stomach.
The arrest of the South African man happened a few days after the death of two Tanzanian men who were also arrested with over 60 drug capsules in their stomach.
The two Tanzanians died last after undergoing medical treatment in hospital in Addis Ababa.
According to the Ethiopian police, more than 77 drug capsules were found in the stomach of the South African who was traveling from Dubai to Tanzania on Ethiopian Airlines.
The man is reported to be safe and getting medical treatment at the Ethiopian Federal police hospital.
The Ethiopian Federal police crime prevention and control department said that the man was apprehended at the Bole International Airport by members of the Airport Drug Control Division.
“The individual was admitted to the hospital after he was apprehended with this huge amount of drug capsules inside his stomach. The capsules were taken out of the man’s stomach with medical treatment,” said police.
Meanwhile, the Ethiopian federal police also announced the seizure of a large amount of cannabis while being smuggled to Britain in more than 40 mail bags via the Ethiopian postal service.
However, the police say no arrest has been made so far in connection with the postal cannabis mail and that they are continuing with investigations.
ADDIS ABABA, Ethiopia (PANA) – Ethiopia’s financial sector will miss out on the possible investments from American major financiers because of its lack of a domestic stock exchange market to help attract foreign capital, an investor said.
An American investment consultant, Jonathan Auerbach, said in Addis Ababa Thursday that Ethiopia’s lack of a stock market was making it difficult to direct Amer i can institutional investors to put funds in the country’s vibrant economy.
“You have got to make a decision on whether you need a capitalist or a socialist system,” Auerbach said, adding “Ethiopia is the only country in the world with a big population that does not have a stock-market… you need to have a stock market.”
Ethiopia does not have a stock market but the country launched the first commodities exchange late last year, allowing for coffee trade.
The American says Ethiopia’s vibrant banking industry will inspire confidence fr om global investors if the country has a system of tapping in foreign direct investments into its economy.
“Major banks would be drawn back into Ethiopian market. Ethiopia is the fifth largest economy in the sub-saharan Africa in terms of the Gross Domestic Product,” he said at a press conference.
“There is no transparent platform to allow people and companies to invest in Ethiopia,” Auerbach, who is on an 11-country tour of Africa, said, noting that his firm was prospecting for business opportunities in Africa.
The firm of investment advisers is seeking to put its clients’ funds in Africa’s most promising sectors such as agriculture, finance and the telecommunication companies.
