It’s Really Unprecedented Historically
It’s Friday desk clearing time for this blogger. “One in four homes sold in the Twin Cities in March through June was in some stage of being repossessed, a foreclosure report out Thursday shows, up from fewer than one in 10 a year ago. The flood of listings ‘has had substantial effects on the Twin Cities housing market and doesn’t appear to be going away anytime soon,’ the Minneapolis Area Association of Realtors reported.”
“The findings jibe with the National Association of Realtors’ survey estimating that about one-third of homes on the market nationally are foreclosures or short sales. ‘It’s really unprecedented historically,’ said Walt Molony, spokesman for the national group.”
“Sean Kirschner tried for a year to sell his three-bedroom home in Montrose but got only five showings even with a price reduction. After marrying and moving in with his new wife, he’s trying Plan B — renting the house until the real estate market turns around.”
“A growing number of homeowners are doing the same thing, say those who work in real estate and with rental properties.”
“Steve Cunningham owns a house in Ramsey that he’s trying to sell. He has been renting a split-level in Maple Grove with his wife and children for $1,895 a month since deciding he wanted to live closer to work. He said he doesn’t see buying again soon.”
“‘I like the freedom of not being locked into living in one place and having the long-term financial commitment,’ he said. ‘Renting gives you lots of options for the lifestyle you want to live.’”
“Demand for housing in Hampton Roads has decreased even as a staggering jump in foreclosures has flooded the market with cheap properties. Scott and Annette, who asked that their real names not be used…remember when they bought that house in 2004, how different the market was then. ‘Houses were going like hotcakes,’ she said. ‘Everything we found, it was gone in a minute. Our other house, we sold it in one day.’”
“‘Right now, we owe more than what the house is worth,’ Annette said. ‘It seems like they are driving us into foreclosure to tell you the truth. I feel like we were fiscally responsible. I can’t help what’s happened. This is beyond our control.’”
“The Department of Public Works announced a building moratorium for Mayo on Wednesday, seeking to alleviate stress on the overtaxed sewage treatment plant that serves more than 3,000 properties in the area.”
“The moratorium came as a surprise to Karen Drott, who said she received no notice. She and her husband own a property next door to their home on Maryland Avenue, which they had hoped to sell to get out of debt. ‘I’m upset,’ she said. The moratorium ‘won’t just make [the lot] unattractive, it will make it useless.’”
“After surviving a burst in the dot-com bubble about a decade ago, Patricia Hunter is trying to weather a collapse in the real estate market. Hunter lost her job as an appraiser eight months ago and has been looking for a job ever since.”
“She and her husband, also an appraiser, bought their San Marcos home for $570,000 in 2004. As sales dropped by 20 percent to 30 percent in North County during 2007, so did the appraisals. Last December, she lost her job.”
“Now the couple are saving money in preparation for a move rather than pay for their home, which has lost thousands in value. Hunter has already started to look to rent in a cheaper market to the north. ‘Unless a miracle happens, we can’t stay here,’ Hunter said. And she does not want to buy another home in a depreciating market —- she expects prices to fall through 2010.”
“More foreclosure signs are going up around the Bay Area in places we are not used to seeing. No part of the Bay Area is now immune from the housing crisis. Foreclosures are skyrocketing in the wealthy counties of Marin and San Mateo.”
“South San Francisco’s Pedro Jimenez and his wife make $3,500 per month as restaurant workers. For two and a half years, they managed to make their $4,500 per month mortgage payments. That was until six months ago when those payments escalated to $6,000 per month.”
“Jimenez, who has five children, has not lost his home yet, but is headed that way. ‘We’re going to be struggling for the next, I don’t know, months, months. I don’t want to leave, but if they tell me to leave, what else can I do?’ says Jimenez.”
“In 2004, Cliff and Doreen Humphries bought one of 117 apartments off the plans in central Takapuna on Auckland’s North Shore. Using money from the sale of a Northland beachfront property, they paid $750,800 for the two-bedroom, ninth-floor apartment, with two car parks and sweeping views over the Hauraki Gulf. On Thursday they sold the apartment for $475,000 a loss of $275,800.”
“Doreen Humphries, 68, said she wasn’t happy with the final selling price and estimated the couple’s total loss on the apartment to be $300,000, including advertising. ‘But we can’t worry ourselves into the grave. We have to grin and bear it,’ she said.”
“Cliff Humphries, 73, said nobody liked losing that sort of money. ‘We wanted cash out of our property to enjoy life,’ he said.”
“Statistics by the Calgary Real Estate Board for July showed the average sale price of a single-family home in the city dropped 9.79 per cent compared to July 2007.”
“Laurie Hicks has had her home for sale in the northeast Mayland Heights neighbourhood for nearly three weeks. ‘For us, we honestly believe there are enough young professionals that want to be within five, 10 minutes of downtown. I believe the right buyer is going to walk in there and say, ‘You know what, nothing has to be done to this house for 10 or 15 years,’ said Hicks, who has owned the house for more than a year.”
“‘So, we are optimistic, but having said that, we need to have the right buyer,’ she said. ‘We know what we could have got last year but we were a little bit unfamiliar with what happened with the housing prices until just now.’”
“Douglas Porter, deputy chief economist with BMO Capital Markets Economics, said, ‘pricing power is in full-scale retreat across many major markets. We downplayed June’s price decline, since it was so narrowly based,’ he said. ‘However, the drop in July spread to a number of cities, including even the previously untouchable Vancouver market.’”
“Two years ago, when Bonnie Hughes, a certified financial planner in Miami, and her husband divorced, he kept their vacation house by a Tennessee lake, and she retained their main residence, a 3,000-square-foot home in Chattanooga, Tenn. He was able to sell the house at the lake; she was unable to get rid of what had been the family home.”
“‘I was planning on just selling it,’ Hughes says. ‘I had already moved to Atlanta.’ Even though the asking price is almost $100,000 lower than they had paid for it, the house in Chattanooga remains unsold at a list price of $329,000. ‘It’s in inventory with homes that are just like it,’ she says.”
“While real estate agents described the local housing market as being best for buyers, the overall market in Jackson appears to be recovering. ‘The market is stabilizing,’ said Jon Putt, partner in Five Star Real Estate Services. ‘Last year the market was over priced. The foreclosures were undercutting the rest of the market.’”
“The market is creating an opportunity for long-term home buyers, said John Orr, managing broker for Coldwell Banker Real Estate Now. ‘When you look back five years from now,’ he said, ‘there will be a lot of people who wish they had bought property, and they will be kicking themselves that they didn’t.’”
“I am always amazed how some people blame everyone but themselves for some things…It started with people wanting something they couldn’t afford, followed by real estate and escrow agents who sought huge commissions, followed by banks that looked the other way. Anyone with half an ounce of brains could see what would happen down the road. After five years of greed, selfishness, lies and tricks, here we sit, with a housing market that will be remembered as a huge blunder of human making.”
“People lost their homes, or tried not to. That meant not buying as much in the stores. This leads to employee layoffs, which leads to more people not buying anything in the stores and not being able to make their payments. Car dealers suffer, fast-food restaurants suffer, stores suffer - all creating even more layoffs. Everyone suffers, all because real estate agents, buyers, escrow offices and some banks got greedy.”
“And now real estate brokers are crying because they can’t sell anything. It’s called payback.”
“Delaware’s housing market continued to slump in the second quarter, with existing home sales plunging. Don Ash, president of the Delaware Association of Realtors, said real estate agents in the area are showing plenty of homes. But prospective buyers are being more conservative than they were a few years ago, leaving homes on the market for longer.”
“‘People are concerned about energy prices, they’re concerned about food prices,’ Ash said. ‘There’s not a lot of free money out there.’”
“The Maestro just can’t get the hang of this retirement thing. Here he is, writing op-ed pieces for the Financial Times, giving interviews to the Wall Street Journal and CNBC and adding a new chapter to his recent best-seller in what looks like a desperate attempt to buff up his legacy in the face of rather compelling evidence that . . . well, that he screwed up big time.”
“It’s been nearly a decade since Greenspan’s stock hit its all-time high with the now-famous Time magazine cover during the Asian financial crisis — the one that featured Sir Alan, Bob Rubin and Larry Summers as ‘The Committee to Save the World.’”
“What’s so remarkable is how Greenspan can spin out his analysis without mentioning his own role in the creation of the massive housing and credit bubbles.”
“Reading or listening to him, you’d never know this was the Fed chairman who kept interest rates too low for too long, who denied that there was a housing bubble until it burst and who refused to use the powers given to the Fed by Congress to prevent abusive practices by mortgage lenders and brokers.”
“What’s surprising in Sir Alan’s latest musings is not that they are intellectually dishonest or disingenuous — we’ve seen that before. No, what’s striking is that, coming from somebody who has seen so much over so many years, they are singularly unwise.”
“‘Live Richly.’ That catchy slogan, dreamed up by the Fallon Worldwide advertising agency, was pitched in 1999 to executives at Citicorp who were looking for a way to lure Americans to financial products like home equity loans. But some in the room did not like it. They worried the phrase would encourage people to live exorbitantly, says Stephen A. Cone, a top Citi marketer at the time.”
“Still, ‘Live Richly’ won out. The advertising campaign, which cost some $1 billion from 2001 to 2006, urged people to lighten up about money and helped persuade hundreds of thousands of Citi customers to take out home equity loans - that is, to borrow against their homes. As one of the ads proclaimed: ‘There’s got to be at least $25,000 hidden in your house. We can help you find it.’”
“Since the early 1980s, the value of home equity loans outstanding has ballooned to more than $1 trillion from $1 billion, and nearly a quarter of Americans with first mortgages have them. What has been a highly lucrative business for banks has become a disaster for many borrowers, who are falling behind on their payments at near record levels and could lose their homes.”
“None of this would have been possible without a conscious effort by lenders, who have spent billions of dollars in advertising to change the language of home loans and with it Americans’ attitudes toward debt.”
“‘Calling it a ’second mortgage,’ that’s like hocking your house,’ said Pei-Yuan Chia, a former vice chairman at Citicorp who oversaw the bank’s consumer business in the 1980s and 1990s. ‘But call it ‘equity access,’ and it sounds more innocent.’”
“Ads for banks and their home equity loans often portrayed borrowing against the roof over your head as an act of empowerment and entitlement. An ad in 2002 from Fleet, now a part of Bank of America, asked, ‘Is your mortgage squeezing your wallet? Squeeze back.’ Another Fleet ad said: ‘The smartest place to borrow? Your place.’”
“One in 2006 from PNC Bank pictured a wheelbarrow and the line, the ‘easiest way to haul money out of your house.’”
“In 2003, one from Citigroup said a home could be ‘the ticket’ to whatever ‘your heart desires.’ It continued: ‘You’ve put a lot of work into your home. Isn’t it time for your home to return the favor?’”
“In 2004, Banco Popular said in its ‘Make Dreams Happen” ads: ‘Need Cash? Use Your Home.’ ‘Seize your someday,’ a Wells Fargo ad advised in 2007.”
“Little by little, millions of Americans surrendered equity in their homes in recent years as home prices seemed to rise inexorably from one peak to the next. As a result, the United States has become a nation of half-home owners. For the first time since World War II, the portion of home value that Americans own has fallen to less than 50 percent. In the 1980s, that figure was 70 percent.”
“Citibank’s home equity ads portrayed housing as a revolving account similar to the plastic card in your wallet. One in the mid-’80s, for example, bragged: ‘Now, when the value of your home goes up, you can take credit for it.’”
“Banks thought they were in safe territory. A Merrill Lynch executive, Thomas E. Capasse, told The New York Times in 1988 that home equity loans were safe because bankers believed that consumers would spend the money on wise investments and not ‘pledge the house to buy a blouse.’”
“Mr. Capasse worked in the bank’s division that was repackaging mortgage loans into bundles of loans to resell to investors, a practice that enabled lenders to make even more loans. In 1993, Mr. Appezzato helped come up with the pitch line ‘less than perfect credit,’ a phrase he said was meant to refer to people whose credit was only slightly problematic.”
“But by the late 1990s, the phrase was co-opted by subprime lenders like Countrywide Financial, Washington Mutual, New Century and Ameriquest.”
“Ameriquest ran an ad in 2004 during the Super Bowl, one of the biggest advertising events of the year, that has come to symbolize the excesses of subprime lending. The ad showed a woman on an airplane climbing over the man sitting next to her to reach the aisle. The plane’s lights go off during turbulence and the woman slips, landing on the man’s lap. Other passengers gasp because it looks as if they were in a sexual embrace.”
“‘Don’t Judge Too Quickly,’ the ad said. ‘We Won’t.’ Two and a half years later, Ameriquest went bankrupt.’”
