Today's Local Real Estate News: "There's still a lot of pain that's ahead of us."

The Palm Beach Post reports on pending home sales:

“A near-record low for an index that forecasts near-term home sales suggests borrowers in expensive areas are struggling to finalize home purchases amid mortgage market troubles.”

“The National Association of Realtors said Wednesday its seasonally adjusted index of pending sales for existing homes fell 16.1 percent in July from a year ago and 12.2 percent from the prior month. July's reading of 89.9 was the second-lowest ever for the index and its lowest since September 2001, when the economy was jolted by the terrorist attacks.”

“The pending home sales index is designed to predict sales levels over the following two months. A reading of 100 is equal to the average level of pending sales activity in 2001, when the index began.”

“‘Numbers like this should put to rest the belief that we've reached the bottom’ in the housing market, said Joel Naroff, chief economist for Commerce Bancorp Inc. ‘There's still a lot of pain that's ahead of us.’”

Officials testified in front of Congress yesterday on this issue:

“The worst housing slump in 16 years and upheaval in financial markets have cast a shadow on the economy, leading lawmakers to question federal regulators about the path ahead for anxious consumers.”

“A House panel was expected to examine the potential impact on consumers during a hearing Wednesday, five days after President Bush put forward a plan to help struggling borrowers keep their homes amid rising foreclosures. Regulators who oversee the markets, from the Treasury Department, the Securities and Exchange Commission, and the Federal Deposit Insurance Corp., were scheduled to appear.”

“An estimated 2 million adjustable-rate mortgages are scheduled to ‘reset’ this year and next, jumping from low ‘teaser’ rates for the first two or three years to much steeper rates that could cost borrowers their homes. The wave of resets could crest during the presidential and congressional election campaigns next year, and the issue already has brought politically tinged debate over possible responses by the government.”

“Defaults have spiked in recent months on high-risk subprime mortgages, loans that were extended to borrowers with weak credit histories. The rising tide of soured loans forced a number of lenders into bankruptcy, while hedge fund and other big investors in securities backed by subprime mortgages took deep financial hits.”

“The turmoil spilled over into global credit markets in recent weeks as investors faced the prospect of not being repaid. Credit tightened, even for more creditworthy borrowers. Stock markets around the globe gyrated wildly and key market indexes were knocked down. The Federal Reserve and other central banks swooped into the markets, pumping tens of billions of dollars into the financial system to help banks and other institutions get through the credit crunch and continue to make loans.”

The Sun-Sentinel reports on the high rate of subprime mortgages in South Florida:

“Up to half of home loans and refinancings in Broward and Palm Beach counties last year were made at above-market interest rates, and minority borrowers were far more likely to have such high-cost loans, a study issued Wednesday said.”

“The study, by the ACORN group of housing advocates, covered 172 communities and said Palm Beach County ranked 17th and Broward County 35th among areas with the most high-cost loans.”

“‘In 2006, adjustable-rate loans made up 80 percent of all subprime loans, a huge increase from 1999,’ said the study, titled ‘Foreclosure Exposure.’ ‘These loans fall disproportionately on minority borrowers,’ it said.”

A story in The Miami Herald refuted the Realtor®-created myth of population growth in South Florida (see my previous post on this issue):

Tenet Healthcare, the area's dominant hospital operator, is cutting 346 jobs at its hospitals in Miami-Dade, Broward and Palm Beach counties because of a continuing decline in patients, the company said Wednesday.

That translates to 174 jobs at its five hospitals in Palm Beach County and North Ridge Medical Center in Fort Lauderdale. It is cutting an additional 172 jobs at its other Broward and Miami-Dade county hospitals.

''This is a response to the protracted period of time that our volume and patient activity has been in somewhat of a downward spiral,'' said Mitch Feldman, vice president of Tenet's Palm Beach Network.

Feldman said hospital admissions were down last winter because fewer snowbirds came to South Florida. He said the slowing population growth and the downturn in the housing market is contributing to the reduction in patient demand.