More than a quarter of those who own a house in the United States now owe more on their mortgage than their house is worth, Karen Weaver, an official at Deutsche Bank, recently told Fortune magazine. Weaver said that figure is expected to soar to 48 percent by 2011.
Currently we estimate that 14 million homeowners have negative equity, she said. However based on our home price forecast, as prices continue to fall we think that number could reach 25 million by the end of next year.
According to Weaver, of those who have subprime and Alt-A mortgages, the two categories with the highest interest, one in three is now more than 60 days past due. Many of these are workers. Now, with more than a third of the unemployed out of work for at least six months, they are losing those homes.
While existing house sales rose for the third consecutive month in June, the median price for these is 15.4 percent below what it was the previous June. According to a recent survey conducted by Campbell Communications, two-thirds of house sales from April through June were either the result of foreclosure or banks agreeing to take a loss on the mortgage. Of the remaining sales, only 31 percent were unforced or optional.
RealtyTrac reports that foreclosures set a new monthly record in July. A total of 360,149 properties received a default or auction notice or were seized last monthone in 355 households. Foreclosures are now running about six times higher than they were four years ago.
As economic pressures build, working people are buying fewer things at retail stores. The U.S. Census Bureau announced August 13 there was a 0.1 percent decrease in retail sales from June to July. The July figure is estimated to be 8.3 percent below what it was in July 2008. Gasoline station sales were down 32.5 percent from last year and building material and garden equipment and supplies sales were down 14.7 percent.
Banks continue to face turmoil, with 77 closed so far this year, compared to 25 last year. On August 14, the Alabama State Banking Department shut down Colonial Bank, which had some $25 billion in assets, in what was the largest bank failure yet in 2009 and the sixth-largest bank failure in U.S. history, according to the Wall Street Journal.
In face of the deepening capitalist crisis, bosses have been trying to increase their declining rate of profit by squeezing more labor out of workers in less time, what the capitalists call increasing productivity. Through speedup, job combinations, and disregard of job safety, workers are forced to produce more for the same or less pay.
The average amount a boss gets for what a worker produces per hour rose by 6.4 percent at an annual rate for the second quarter of 2009, which is the highest increase in nearly six years. Labor costs fell by 5.8 percent as hours worked declined 7.6 percent last quarter. In the previous quarter, hours worked dropped by 9 percent, the highest drop since 1975.
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