St. Joseph is a Catholic saint who has long been believed to help with home-related matters. And according to lore now spreading on the Internet and among desperate home-sellers, burying St. Joseph in the yard of a home for sale promises a prompt bid. After she and her husband held five open houses, even baking cookies for one of them, she ordered a St. Joseph “real estate kit” online and buried the three-inch white statue in her yard.

These statues are flying off the shelves as an increasing number of skeptics and non-Catholics look for some saintly intervention to help them sell their houses. Talk about desperate measures. You might as well put your house up on eBay and/or Craigslist and see if anyone makes a bid. Regardless, I guess at this point I would try anything and everything to help sell my home.

You can read the entire article on the RealEstateJournal website.

Update: I received an email from the seller and her house has sold! Congrats to her and apparently burying St. Joseph in her yard helped.

The honest answer is no one knows. Optimists have been saying for more than a year that the worst is behind us, while the pessimists have been saying recovery is still a year, or years, away.

So far, the pessimists have been right about the weakness in the housing market, but their forecast that the collapse in housing would lead to a general economic malaise has, at least so far, failed to pan out. The economy has slowed, but has not fallen into recession, as consumers and investors adjust to a world in which home prices don’t automatically rise 5% or 10% a year.

The only thing that’s clear now is that the housing market has gotten worse since the spring. The market was in a free fall in September. Sales of existing home fell 8%, while inventories of unsold homes rose to a 10.5-month supply. It could take 320 days for a home to sell.

Sales of existing single-family homes are down 20% in the past year, the fastest decline in 16 years.

Median prices have dropped 4% in the past year, in part because fewer expensive homes are being sold, but also because the typical home is worth less than it was a year ago.

Homes are only worth what someone is willing to pay for them, and right now, most homes on the market have no buyer in sight. Prices may have to fall much more to bring supply and demand back into balance, economists say.

Builders have almost no confidence. The home builders’ index fell to a record low in October (the index dates back to 1985). New construction on single-family homes has plunged 31% in the past year, but still the inventory of new homes on the market, after adjusting for cancellations, is at the highest level since the early 1990s.

As if the fundamental sickness in the housing market weren’t enough, a secondary infection has developed. The credit crisis in the mortgage market that erupted in the summer has left huge numbers of potential buyers without any access to mortgages.

The subprime sector has essentially died, with the newly reinvigorated Federal Housing Administration able to replace only a tiny segment of what was once a huge market of home buyers.

The top end of the market was also frozen out, as jumbo loans (those with mortgages above the conforming level of $417,000) became more expensive or completely unavailable.

The jumbo freeze-out devastated sales in pricey areas such as the San Francisco Bay area, where jumbo loans had accounted for about 52% of purchases in August, but just 39% in September.

There’s some evidence that the jumbo market is slowly returning, but it’s not functioning normally yet.

So where does the market stand now?

“We are seeing the first buds of spring” in the recovery of the jumbo market, said Stephen Stanley, chief economist for RBS Greenwich Capital. “It’s a slow, glacial recovery.”

Stanley believes home sales will be “really bad” for two or three more months, before the credit markets begin to function more normally. “It won’t return to where we were six or 12 months ago.”

At that point, the secondary infection would be gone, but the underlying illness would still be there. The market will really begin to recover only after sellers capitulate on prices.

And then home sales might level out, Stanley said, acknowledging that he’s one of the more optimistic analysts.

Historically, housing corrections take a long time. After the market softened in the late 1980s, sales fell for five years, then took three more years to return to the peak level. Prices took just as long to recover.

Some analysts say the fundamentals will worsen in coming months. The main problem is that so many adjustable-rate mortgages will reset to a higher interest rate. The typical family with an ARM will see mortgage payments rise by $10,000 a year, according to Andrew Jakabovics of the Center for American Progress, a progressive Washington think tank.

Millions of these home owners will be unable to refinance their current loan and will either have to scrounge to make the payments, or lose their home through a fire sale or foreclosure. That would throw even more supply onto a saturated market.

“The mortgage crisis is neither wholly contained nor likely to abate in the near future,” said Jakabovics. “Default and foreclosure loom ever more menacingly as borrowers are unable to find a reasonable payment option and unable to sell their homes.”

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The Mortgage Bankers Association predicts the housing recession will last until the end of the third quarter next year. And if confidence isn’t restored in the credit markets, the wait could extend until 2009, the group’s chief economist said.

In the meantime, the slowdown in housing has become a primary cause in the slowing of the national economy, said Doug Duncan, chief economist of the group.

“Tough times,” he said, after sharing the group’s loan production estimates during a briefing with reporters on Tuesday. Tough times indeed.

On Wednesday morning, Duncan is scheduled to deliver the MBA’s economic forecast to its members at the group’s annual convention. The forecast calls for home sales to bottom out in the third quarter of next year and for housing starts to hit their bottom slightly earlier, in the second quarter.

Existing-home sales for 2007 will total 5.72 million units, a 12% decline over 2006 sales, he said. Sales will decline another 10% in 2008, before picking up by 5% in 2009.

New-home sales will total 819,000 units in 2007, down by 22% compared with 2006. Sales will also decline an additional 10% next year. In 2009, sales should rise by 6%.

Home prices for new and existing homes will follow suit, with national median prices declining 2% this year and another 2% in 2008, before flattening in 2009, Duncan added.

“We have a ways to go in the housing recession. It is clearly a deep recession; at this point, we figure that will dissipate at the end of the third quarter,” he said.

Supply and demand

Local real-estate markets will vary, but overall there’s a great deal of housing inventory that needs to diminish before housing recovers, Duncan said.

“Anyway you look at it, there are massive supplies of homes that have to be worked off the marketplace before we return to an increase in activity, and certainly in terms of construction,” he said.

In fact, the publicly reported inventory numbers are likely underestimated, considering they don’t include contract cancellations for new homes or foreclosed properties that aren’t being marketed by a real estate agent, Duncan said.

On the demand side, there are also constraints, he added, as a restricted supply of credit and tightening lending standards curtail housing demand. Borrowers seeking nonconforming loans are especially facing tougher times getting a mortgage, including those who need jumbo loans, which exceed the conforming loan limit currently set at $417,000. Conforming loans are those that may be purchased by housing agencies Fannie Mae and Freddie Mac.

That said, borrowers of conforming loans shouldn’t see too many surprises in the near future: The last MBA estimate of mortgage rates clocked the interest rate on a 30-year fixed-rate mortgage at 6.4%, and the group predicts the rate will rise only slightly, to 6.6%, by early 2008.

Industry outlook

As for the mortgage industry, the market conditions naturally amount to sharp declines in the volume of loans that can be made.

The group predicts that total mortgage production, including both purchase and refinance loans, will be $2.31 trillion in 2007, down 15% compared with 2006. Originations should decline another 18% next year. In 2009, they will drop an additional 6%, as purchase loans pick up but loans to refinance an existing mortgage decline.

Already, the industry has seen between 60,000 and 70,000 layoffs since housing markets in many areas turned south; by early next year, the number could reach 100,000 or more, Duncan said.

Overall economic growth will continue to slow through the rest of 2007, then should return to normal in the second half of 2008 and into 2009, according to the forecast. Also in the forecast: a quarter-point rate cut by the Fed, due to the spiking of energy prices, increasing of food costs and other stresses on household budgets, in addition to the decline of housing prices, Duncan said.

“We have not yet seen fully the impact of the credit shock to the U.S. and world economies,” Duncan said in a news release announcing the forecast, “and the severity of that impact will depend on how long it takes for the markets to return to normal functioning and where credit spreads ultimately settle.”

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Sales of single-family, re-sale homes fell 10% from July and were off 39% year-over-year. Year-to-date, home sales are off 23.6% in San Jose,CA and are at their lowest level for the past ten years. The median price for homes fell 0.5% from the month before, but is up 6.1% compared to last August. The average price fell 3.2%, up 2.8% year-over-year.

The median price for condos rose 2.7% to $482,500, good for an annual gain of 0.5%. The average price rose 2.4% to $509,538, up 1.3% year-over-year. Condo sales fell 15.2% from July, and were off 35.8% year-over-year. Inventory continued to grow, with single-family homes up 10.3% from July and up 41.3% year-over-year. Condo inventory was up 10.4% month-over-month, and up 32.9% compared to last August. The sales price to list price ratio for single-family homes and condos stayed at 98.9%.

Our days of inventory indicator for homes rose 45 days to 245 days. The indicator for condos gained 51 days to 168. My advice? For buyers, having a loan in place before buying is of utmost importance in this market. Sellers aren’t going to tie up their homes with offers from buyers who don’t have their loan in place.

For sellers, pristine homes in the best neighborhoods are still getting multiple offers, but that is now the exception rather than the rule. Over-priced listings are not even getting offers. If you get an offer, a rarity in this market, work it. Do not reject any offers out of hand. You may not get another. The real estate market is very hard to generalize. It is a market made up of many micro markets.

So which contender is the superior long-term bet today? CNN Money has an interesting article talking about this and Robert Shiller, author of Irrational Exuberance seems to think the real estate boom is over.

You can also read some interesting information about the 100 biggest real estate markets. McAllen, Texas is predicted to have the highest return thru the next year at 9.8%. Now this data is for single family homes and doesn’t affect the multi-family home investor. I only purchase multi-family homes (apartments, duplexes, fourplexes) since they are a safer investment. Less volatility and one vacancy doesn’t mean 100% vacancy.

In fact, the first building, called the Lobby Tower, set a record for the highest single-day residential sales in Mexico at $120 million. While those of you who acted quickly were able to secure units, some of you were shut out, and the least expensive units were, of course, the first to go.

Now, you have an opportunity to participate in the release of Trump Baja’s second phase, the Spa Tower. And the good news is, there are some of those less-expensive units available. Prices start in the mid $300,000s.

Five-star Luxury
The Trump Ocean Club Resort Mexico will be a 525-suite luxury condo hotel resort located in North Baja, Mexico, just 30 minutes from downtown San Diego. It will have a dramatic, cliff-side location overlooking the Pacific Ocean and the Coronado Islands.

It will encompass three 26-story towers. The second tower, which is what we are currently offering, will be the middle building with 171 condo hotel units.

Situated on 17 acres of pristine land, overlooking the Pacific and the Coronado Islands, Trump Baja will be North Baja’s first resort to combine luxury resort amenities and services with property ownership. It is expected to earn a five-star rating, as do all of The Donald’s condo hotels.

“Trump Ocean Resort Baja will set the standard of premier property ownership and excellence in service for all of Northern Mexico,” said Donald Trump

Consistent with other Trump properties, Trump Baja will cater to owners and guests with a vast collection of amenities and services including:

* 6,000 – 8,000 sq. ft. spa
* State-of-the-art fitness center
* Lobby bar & lounge
* Pool house bar & café
* Fine-dining restaurant
* Infinity-edge resort pool
* Lap and family pools
* Tennis courts
* Walking trails
* 24-hour concierge services

Now these condos are not for the new investor and require a 30% cash down deposit. The towers are scheduled to be completed in 2009 so it’s more of an investment in a luxury vacation spot for yourself. I’m telling you about this project more because it’s interesting news and not a good short-term investment. If you can afford one of these Trump condos, great. They will be beautiful and are very convenient for those of you living in California looking for a short weekend vacation destination. For more information, visit their website.