September 6, 2017

The Lack Of Skin In The Game

A report from CNBC. “It will come as no surprise to anyone out house hunting today — buying a home is becoming ever more difficult to afford. Prices just keep soaring while incomes fail to keep pace. Even historically low mortgage rates are not helping enough. At the end of July, of the top 50 markets, based on housing stock, 46 percent were overvalued, according to CoreLogic. Home sales have been weakening throughout the summer, as demand far outpaces supply and affordability weakens. Redfin reported 35 percent more requests for home tours in July, compared with July 2016. It also, however, reported that the number of offers dropped 11 percent.”

“‘Buyer demand has been stronger so far in 2017 than last year, but the combination of low inventory and rising home prices is taking its toll heading into the fall,’ said Nela Richardson, chief economist at Redfin. ‘Sellers are still in control of the market, but their advantage is narrowing as buyers are becoming less willing or able to chase escalating prices.’”

The Union Tribune in California. “A mortgage that is as close to zero out of pocket as one can get is available in San Diego County from a Utah-based Native American tribal corporation. Aimed at low-income buyers, the Chenoa Fund has looser requirements than many down payment assistance programs. Michael Whipple, vice president of Chenoa Fund, said the fund is different from so-called ‘liar loans’ popular before the recession. ‘There’s a need out there in the marketplace,’ he said. ‘People confuse down payment assistance with some of the easy credit that was available (in the housing crash). This kind of financing isn’t what caused the meltdown.’”

“Mark Goldman, a loan officer and real estate lecturer at San Diego State University, said he understands the lack of ’skin in the game’ argument for low down payment options but that it might be the only path to homeownership for some. ‘Anything that helps people come up with the down payment is useful to a lot of families,’ he said. ‘I think it creates additional risk when someone purchases a home with no skin in the game. But, should it be required every time? No.’”

The Naples Daily News in Florida. “Broker analysts reviewing the July 2017 Market Report released by the Naples Area Board of Realtors (NABOR), which tracks home listings and sales within Collier County (excluding Marco Island), said a 9 percent increase in closed sales during July was very good. ‘The median closed price went down 16 percent for condos in this $500,000 to $1 million price category. I believe this is a reflection of smart pricing strategies finally taking hold,’ said Kathy Zorn, broker/owner, Better Homes and Gardens Real Estate Pristine.”

“For months, broker analysts and NABOR have warned against setting unrealistic pricing, a strategy that Dominic Pallini, NABOR President and Broker at Vanderbilt Realty, said can ‘hurt a homebuyer because a home is often overlooked if it’s overpriced.’”

The Post and Courier. “According to North Carolina mountain agents, the time’s ripe to make a purchase as prices continue to lag from the late 2000s recession and housing slide and sales are also slower than typical. ‘The number of transactions is not like 10 years ago,’ says Philip Borneman, sales associate with Premier Sotheby’s International Realty in Blowing Rock, North Carolina. ‘It’s a good buying opportunity,’ he says.”

“Jennifer Merrell, broker with Steve Owen & Associates. acknowledges that ‘inventory is certainly down’ but that hasn’t boosted values. ‘It’s still a buyers’ market,’ says Merrell, who reduced the price to $549,500 on a well-placed house within walking distance of downtown Brevard, North Carolina. Meanwhile, new construction has picked up speed. While new homes cost up to $300 a square foot, builders are available and can sometimes raise houses at lower prices than existing properties. As a result, Merrell says, ‘I’ve sold a lot of people land.’”

The Sidney Herald in Montana. “With more than 100 houses on the market in Sidney, the community is experiencing a record total of availability. ‘This is historically a high amount for us,’ Leif Anderson, owner of Beagle Properties, said of the houses for sale in the community. ‘When demand is high, prices go up and inventory is down,’ Anderson said. But the opposite has occurred starting in 2015. ‘When the demand declines, inventory goes up and prices go down,’ he noted.”

“He says that prices for ‘entry-level homes’ have dropped dramatically. Prices for ‘mid-range homes’ are decreasing but not as dramatically. ‘Prices aren’t going down as quickly as they went up.’ Homes on the high end, $300,000 or above, aren’t seeing much of a change. He said some sellers are facing challenges when they purchased a home during the oil boom and now are needing to sell the same house for a reduced price. Anderson said there have been more short sales, foreclosures and deeds in lieu than in the past.”

“He’s hopeful the market will turn around fairly soon, but he doesn’t have any predictions. ‘I’ve never felt less sure of what the housing market will do than I do now,’ Anderson said.”

From NY 1 in New York. “Across the city, rising rents are forcing businesses large and small to close. That’s a longstanding problem in New York, but what’s different now is that in many cases once those shops close the space remains vacant for months or years, NY1’s Michael Scotto reports. Average retail rents in key Manhattan corridors soared 90 percent from 2010 to 2014. This, as many businesses saw customers desert them for online retailers. Natasha Amott runs a kitchen supply shop near the Flatiron Building. Customers make no secret of comparison shopping online.”

“‘We’ve definitely had a lot of people come through, definitely look at the pricing, ask about, ‘Well, Amazon is charging this, can you match that?’ But we’re not always able to; in many cases, Amazon is charging below the minimum advertised price,’ Amott said.”

“For many retailers - even chain and luxury brands - the double whammy of rising rents and Internet competition is too much to bear. The commercial real estate firm CBRE says Manhattan’s major retail corridors had 203 empty storefronts at the end of the June, one third more than a year ago. Along Broadway, Third Avenue, Madison Avenue, Bleecker Street, and the streets of SoHo, for rent signs are everywhere.”

“‘Bleecker Street represents the problem of high-rent blight, which is where businesses are forced out by landlords who look for the next big thing and then the next big thing doesn’t pan out, and often these storefronts remain vacant for years as a result,’ said State Senator Brad Hoylman.”

“Analysts say landlords who have owned buildings for decades have low carrying costs and can afford to wait for high-paying tenants. Then there are new building owners who bought at the height of the market, with borrowed money. Those loans guarantee a certain rental income. Without that income, the underlying value of the property falls. ‘Landlords are faced with the prospect that if they accept lower rent then they might face a situation where they might go into default with their lender or be asked to put more capital in, and so they’re trying to avoid that by just holding out until they find a deal that meets their terms,’ said Nicole LaRusso of CBRE.”

“When Jimmy Vezyrakis opened his pizza shop in 1981, everything fell into place. ‘I created a life. I had my family. I bought a home,’ Vezyrakis said. Thirty-six years later, the pizza-man says his life is falling apart. He says he shut his Caesar’s Palace Pizza shop on Amsterdam Avenue near 84th Street this summer because his rent soared to more than $16,000 a month, a staggering hike of nearly 80 percent. ‘I was living the American dream, and just one day, someone came out and pulled the carpet out of my feet,’ Vezyrakis said.”

“With college tuition for two kids, he’s now driving for Uber - earning only a third of his previous income. ‘I thought I was going to sign a decent lease and continue going. Like I said, I wanted to retire there,’ he added. That space is still vacant, though, another store gone to high rent.”




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76 Comments »

Comment by Ben Jones
2017-09-06 08:52:35

‘Meanwhile, new construction has picked up speed. While new homes cost up to $300 a square foot, builders are available and can sometimes raise houses at lower prices than existing properties’

And FB’s start getting minted left and right.

Comment by oxide
2017-09-06 09:44:36

Here is the well-placed house in Brevard reduced to $549K:

https://www.zillow.com/homedetails/106-Grandview-Dr-Brevard-NC-28712/102291160_zpid/?fullpage=true

It’s worth clicking on just to see the dated decor. (the lap pool is nice, maybe ol’ Bill in LA would like it.)

Would you pay $549K for that? Brevard is sticksville.

Comment by Ben Jones
2017-09-06 09:48:11

Price History
Date Event Price $/sqft
08/24/17 Price change $549,500-3.2% $124
10/13/16 Listed for sale $567,500+3.2% $128
08/06/16 Listing removed $550,000 $124
01/05/16 Listed for sale $550,000 $124
12/03/15 Listing removed $550,000 $124
11/11/15 Listed for sale $550,000-1.8% $124
10/02/15 Listing removed $560,000 $127

Comment by oxide
2017-09-06 10:04:00

That house just screams “Greatest Generation-era Mom finally died; left paid-off house to greedy kids who won’t give it away.”

It’s easy to tell from the decor and cut-corners renovation. Somebody took out the walls on the first floor (leaving a fireplace out in the middle) and re-did the kitchen without changing the old eat-in footprint, but nobody spent money to remove the wallpaper. I see that a lot — they’ll install granite countertops and new carpet, but won’t touch the walls.

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Comment by Larry Littlefield
2017-09-06 10:08:06

Greatest Generation, followed by Greediest Generation, followed by screwed generations who are paid less and expected to pay 45% of their income for the mortgage under Fannie/Freddie guidelines, up from 25%.

And to save 30% of their income, because they won’t be getting Social Security and Medicare.

And to pay 30% of their income in taxes, to pay the pensions and old age benefits of prior generations even as public services collapse.

Wait a minute — that adds up to? Well, they can always live off the credit card and drive for Uber.

 
Comment by Ben Jones
2017-09-06 10:14:33

Technology should create jobs and increase incomes while making life better. Something’s broken here. Since when were taxis and websites tech?

NYC CRE doubled in price from 2014 to 2015. Sure, the rent for the pizza place is up 80%! But it’s vacant.

This reference about amazon pricing so low: the easiest way to go into business is to sell for less than cost. I can do that all day every day as long as I can sell my stock for gobs of money. This is the dry cleaner effect on a massive scale and it’s not benefiting the economy.

 
 
Comment by Mafia Blocks
2017-09-06 10:23:36

09/6/17 Construction Cost $221,370 3.2% $50/sqft(lot, labor, materials, profit)

9/6/17 Construction Cost(depreciation adj) $143,365 $32/sqft actual value

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Comment by Blue Skye
2017-09-06 13:29:44

“While new homes cost up to $300 a square foot…”

Until you run out of idiots.

 
Comment by Mr. Banker
2017-09-06 15:02:56

“Until you run out of idiots.”

… who have access to money. There is no shortage of idiots but there may arise a time where there is a shortage of idiots who have access to money.

 
Comment by MWR
2017-09-06 18:25:36

Mr. Banker.

Spoke to a friend of mine from the bank I used to work at (top 10 bank). He said Wall Street is expecting solid loan growth in 2018. No one know where the loan growth is going to come from. Only 2 ways I know of to get loan growth when things aren’t booming.
1) Cut Margins and steal from the other bankers, and
2) Lower lending standards (or a combination of the 2)

I think Wall Street and Freddie & Fannie are leading us down the same path in an effort to keep the stock prices up. (and Sr. Mgt’s. bonus in place)

 
 
 
Comment by Sean
2017-09-06 10:32:38

Wow! That wallpaper! What kind of drugs did these folks do in the 60s?

Comment by oxide
2017-09-06 13:35:40

That looks like ca 1990 wallpaper. So I guess it’s a late adopter c or early adopter h.

Wallpaper is expensive to remove because it’s so labor-intensive.

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Comment by Blue Skye
2017-09-06 14:14:18

Consider that the wallpaper may have been added as an upgrade. BTW, it is not difficult to remove at all if you have the right tools. It is the plaster defects that may be hiding beneath that are a pain.

 
Comment by sod
2017-09-06 18:10:52

Just do what the GC did during my renovation: skim coat over the wallpaper and then paint. It lasts long enough to pass the issue on to the owner.

 
Comment by redmondjp
2017-09-06 22:42:48

Or just cover it over with 1/4″ thick wallboard. Regardless of what you do, pay a crew of guys to do it for you. I’ll do paint myself, but large-scale drywall/plaster jobs are far better to hire out.

 
 
 
Comment by rms
2017-09-06 18:45:01

“Here is the well-placed house…”

Wow, that’s a huge house. I’d shoot for half that size and add a “man-cave” shop out back.

 
 
 
Comment by Senior Housing Analyst
2017-09-06 09:03:07

Panama City Beach FL Housing Prices Crater 33% YOY

http://www.movoto.com/panama-city-beach-fl/market-trends/

Comment by strawman
2017-09-06 09:09:52

Been thinking for a while that I’m ready for double-digit-only updates, but if you want to cut straight to crooked handles I can live with that too …

Comment by Ben Jones
2017-09-06 09:25:36

‘I’m ready for double-digit-only updates’

‘The median closed price went down 16 percent for condos in this $500,000 to $1 million price category’

Comment by strawman
2017-09-06 09:37:42

That’s fantastic, but I couldn’t figure out where you got the median closed price at that link. Was that from another source?

(by “crooked handles” I meant “crooked numbers” for the percent handle - 2x%, 3x%, etc. But yeah 16% is a nice stop on the way down …)

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Comment by Ben Jones
2017-09-06 09:45:13

It’s in the Naples article.

 
Comment by strawman
2017-09-06 10:02:57

Doh, of course. Thanks.

 
 
 
 
Comment by jeff
2017-09-06 09:18:12

Look, Panama City is closer and prettier than ever!

https://www.youtube.com/watch?v=Ddz0GWcPUjM

Comment by Mike
2017-09-06 11:55:38

also,
median list price = $305K
median sales price is often less than half that in many neighborhoods (not all though)
source:
https://www.trulia.com/home_prices/Florida/Panama_City-heat_map/

 
 
Comment by Mike
2017-09-06 11:49:48

that is a crater, inventory up 153% in one year

Comment by Jingle Male
2017-09-07 04:08:54

Inventory of 418 last year to 1,061 this year is 250%……pretty serious market shift.

 
 
 
Comment by Ben Jones
2017-09-06 09:30:51

‘With college tuition for two kids, he’s now driving for Uber - earning only a third of his previous income’

And the former taxi driver does what?

‘he shut his Caesar’s Palace Pizza shop on Amsterdam Avenue near 84th Street this summer because his rent soared to more than $16,000 a month, a staggering hike of nearly 80 percent’

How many pizzas do you have to sell to cover 16 grand a month? And the central bank wonders why there’s deflation. BTW, I read another rat jumped that ship this morning.

Comment by Ol'Bubba
2017-09-06 09:38:48

How many pizzas do you have to sell to cover 16 grand a month?

At $20 bucks a pop, you’d have to sell over 5,300 pies a month, or about 175 a day.

That’s a lot of expensive pizzas, every day of the week. (All of this was predicated on rent accounting for 15% of gross revenue.)

 
 
Comment by Senior Housing Analyst
2017-09-06 09:49:32

Kensington, MD Housing Prices Crater 15% YOY

http://www.movoto.com/kensington-md/market-trends/

 
Comment by Rich
2017-09-06 10:32:28

Aimed at low-income buyers, the Chenoa Fund has looser requirements than many down payment assistance programs.

I watched the snappy music video on the link and this caught my eye, “It will give 3.5% down payment as a gift provided the applicant makes 115% or less of the median income”
Could someone break down the math on this statement to see if you have a job (or jobs) you can live in this area with little to no income ? Is there cut off line in the “less” end of it ?

Comment by Lesser Fool
2017-09-06 12:15:09

The cutoff on the “less” end is presumably when your Debt-to-income exceeds 55%.

 
 
Comment by 2banana
2017-09-06 11:02:53

So WTF is Native American tribal corporation?

Most likely, it means they like to play by American rules when they are making money. But then hide behind “native american sovereignty” when they have to pay off debts.

Heads I win. Tails you lose.

So they are probably lending money to any/all mirror foggers and selling the notes as fast as possible. If they get caught in a squeeze, they won’t even default. Just claim immunity.

Casino tribes in others states defaulting on debts — with few consequences
October 7, 2010 - JDSUPRA - Sanford Millar

Last November, the Mashantucket Pequot Tribal Nation in Connecticut failed to make $7 million of a scheduled $21.25 million payment on a $500 million debt. The collateral on the deal was their Foxwoods Resort Casino. If they had been a normal business owner, they would have gone into a default, and creditors could have gone after the casino.

But the Mashantuckets aren’t a normal business owner. They’re an Indian tribe, with the rights of a sovereign nation. Legally, the creditors couldn’t take the property or force the tribe to pay.

In fact, Michael Thomas, the tribe’s council chairman at the time, acknowledged the tribe had the money to pay. But with 2009 marking the first time Indian casino profits dropped from the previous year, making the payment would have meant that tribal members would have gotten smaller payments — something he refused to do, even though some tribal members were getting $120,000 a year in payments.

++++++++++

The Union Tribune in California. “A mortgage that is as close to zero out of pocket as one can get is available in San Diego County from a Utah-based Native American tribal corporation. Aimed at low-income buyers, the Chenoa Fund has looser requirements than many down payment assistance programs. Michael Whipple, vice president of Chenoa Fund, said the fund is different from so-called ‘liar loans’ popular before the recession. ‘There’s a need out there in the marketplace,’ he said. ‘People confuse down payment assistance with some of the easy credit that was available (in the housing crash). This kind of financing isn’t what caused the meltdown.’”

 
Comment by 2banana
2017-09-06 11:11:38

In a time before obama trillion dollar deficits, ZIRP, QE to infinity, negative interest rates, bailout after bailout, housing bubble v2.0, etc.

This would have never happened.

Storefronts empty for years? But the landlord won’t lower the rent?

+++++

“For many retailers - even chain and luxury brands - the double whammy of rising rents and Internet competition is too much to bear. The commercial real estate firm CBRE says Manhattan’s major retail corridors had 203 empty storefronts at the end of the June, one third more than a year ago. Along Broadway, Third Avenue, Madison Avenue, Bleecker Street, and the streets of SoHo, for rent signs are everywhere.”

“‘Bleecker Street represents the problem of high-rent blight, which is where businesses are forced out by landlords who look for the next big thing and then the next big thing doesn’t pan out, and often these storefronts remain vacant for years as a result,’ said State Senator Brad Hoylman.”

Comment by Junior_kai
2017-09-06 13:22:47

One of two jewelry stores in the main mall in my county just went under. Vacancy is probably about 40%. Get to work mister Yellen!

 
 
Comment by 2banana
2017-09-06 11:17:59

These are many multiple of millions dollar houses.

I wonder if they went “cheap” on the boring engineering.

And will Rich Branson be alive tomorrow?

++++++++

Hollywood stars’ disaster epic: Johnny Depp and Eddie Murphy among A-listers with homes in Irma’s path while Trump’s St Martin mansion is set for a battering - but Richard Branson refuses to leave his Necker Island retreat
Iain Burns For Mailonline - 6 September 2017 - Mail Online

A host of celebrities could see their homes wrecked by Hurricane Irma as it smashes into the Caribbean.

Mass evacuations are set to take place in the Florida Keys and the Caribbean after the hurricane - the size of France - was declared the most powerful storm ever recorded in the Atlantic Ocean with 185mph winds.

This morning, the ‘potentially catastrophic’ hurricane slammed into Barbuda just hours after officials warned people to seek protection from Irma’s ‘onslaught’ in a statement that closed with: ‘May God protect us all.’

But homes belonging to the likes of Johnny Depp, David Copperfield, Oprah Winfrey, Mick Jagger and even President Donald Trump could also be hit.

Richard Branson is refusing to leave his 74-acre Necker Island complex in the British Virgin Islands despite the ‘extremely dangerous’ hurricane being on his doorstep.

The storm was moving towards the west at 14 miles per hour, and is expected to drop between four and eight inches of rain when it hits land.

Comment by palmetto
2017-09-06 11:54:39

Trump’s got a pad in St. Martin? Who knew? The article says it is “set for a battering”, but I would say that by now, it’s already been battered.

Property in the Caribbean is something that is better rented, no matter how wealthy you are. IMHO, anyway.

Comment by Professor 🐻
2017-09-06 19:42:15

On the other hand, the structures on a property are throw away money for a billionaire.

 
 
Comment by oxide
2017-09-06 13:44:51

FWIW, it looks like Necker has some high ground. My guess is that Branson built a bunker/safe-room into the rock.

 
Comment by snake charmer
2017-09-06 15:04:57

I don’t know what Branson’s thinking. I saw a photo of his employees, hanging out in a bunkroom and grinning like this was a slumber party. Maybe he’s trying to prove that, with enough money, you can enjoy a Category 5 hurricane in comfort.

 
Comment by MacBeth
2017-09-06 18:14:18

Forgive me for my stupidity, but…

Who the heck is Richard Branson?! I’ve never heard of the guy!

Comment by GuillotineRenovator
2017-09-06 22:27:42

Just another oligarch.

 
Comment by snake charmer
2017-09-07 06:53:15

He’s an extremely successful British entrepreneur, one of these people who starts commercial ventures as a teenager. Among his businesses is the Virgin Atlantic airline. He’s cultivated a swashbuckling, devil-may-care persona and maintains a high public profile, with numerous television appearances. Famously, he also is dyslexic and did poorly in school.

While I don’t like the stunt of riding out a hurricane on a private island, there are plenty of worse super-rich people out there.

 
 
 
Comment by 2banana
2017-09-06 11:27:13

This could be the biggest news of the year barely covered by the fake legacy media.

Or a big nothing burger.

I don’t know enough to speculate.

But if hawks are nominated, the QEs stops, rates rise and the Fed starts to unload the balance sheet…

Housing go boom.

++++++

Janet Yellen’s No. 2 at the Fed is stepping down
Yahoo | 09/06/2017 | Myles Udland

Federal Reserve vice chair Stanley Fischer is resigning from his post at the central bank effective in mid-October, the Fed announced Wednesday.

Fischer cited “personal reasons” in his resignation letter to President Donald Trump. Fischer’s term as vice chair was slated to end on June 12, 2018.

Fischer is seen as the second-most influential member of the Federal Open Market Committee — the Fed committee that sets monetary policy — behind only Chair Janet Yellen. His early departure from the Fed also adds another layer of intrigue to the upcoming decision from Trump on who to appoint to the Fed’s top spot; Yellen’s four-year term is set to expire in February 2018.

Reports have indicated that Yellen and Trump’s chief economic advisor Gary Cohn, formerly the president and COO at Goldman Sachs (GS), are the top two candidates for the role. Were Trump not to nominate Yellen for a second term, it would mark the first time since 1978 that a sitting Fed chair was not renominated by a new president. Yellen’s predecessor, Ben Bernanke, served two terms from 2006-2014, spanning both the Bush and Obama presidencies.

Comment by Mafia Blocks
2017-09-06 12:18:52

….. baling like a one eyed rat from the tuna boat shithouse.

 
Comment by Professor 🐻
2017-09-06 19:43:37

Trump now has a chance to give the Obama-era Fed a complete makeover.

 
 
Comment by 2banana
2017-09-06 11:39:35

Wow. The data speaks.

And it says “new FB are now being minted by the thousands”

Plus a surprise interest rate hike!

That alligator just got very expensive. Even in C$…

+++++++

Toronto Home Price Bubble Descends into Bear Market
by Wolf Richter • Sep 6, 2017 • Wolf Street

Home sales in the Greater Toronto Area, the largest housing market in Canada, plunged 34.8% in August compared to a year ago, to 6,357 homes, with sales of detached homes and semi-detached homes getting eviscerated:

Sales by type:

Detached houses -41.6%
Semi-detached houses -37.3%
Townhouses -27.5%:
Condos -28.0%.

Even as total sales plunged, the number of active listings of homes for sale soared 65% year-over-year to 16,419, with 11,523 new listings added in August, according to the Toronto Real Estate Board (TREB).

And the average price of all homes, at C$732,292 in August, plunged 20.5% from the crazy peak in April (C$920,761). By this measure, it has now entered a bear market.

Even the Bank of Canada has been warning home buyers – particularly speculators – all year long about big potential losses. Then in July, it raised its target for the overnight rate by 0.25 percentage points. Another rate hike was expected in December, to match the Fed’s presumed rate hike.

But today, in a surprise move, it raised rates again by 0.25 percentage points, to 1% – and there are now expectations that it might raise its target rate a third time later this year. In response, the loonie jumped 1.3% against the US dollar this morning.

Variable-rate mortgages account for about 30% of all mortgages in Canada. So these rates ticked up after the July hike; they will after this hike; and if there’s another hike later this year, they’ll tick up again. A 0.75 percentage points increase in the interest rate on a C$800,000 mortgage would raise the annual interest costs by C$6,000.

Comment by 2banana
2017-09-06 11:49:41

And as a FYI -

Canada is a full recourse country. Meaning that when FBs stop making payments as their “investment” as it goes underwater, the banks can still come after them for what they owe…

https://www.cmhc-schl.gc.ca/en/corp/nero/jufa/jufa_018.cfm

“In Canada, mortgages are typically “full-recourse” loans, which means the borrower continues to be responsible for repaying the loan even in the case of foreclosure. Lenders can take legal action to recoup money from the homeowner if a foreclosed home is sold for less than the amount owing on the mortgage. In some U.S. jurisdictions, mortgages are “non-recourse,” which means that borrowers can often walk away from their homes and the associated mortgage debt, leaving lenders with no recourse beyond the property.”

Comment by aNYCdj
2017-09-06 13:20:18

well they cant be sued in the US, so time to make america you new lifetime home

 
 
Comment by Professor 🐻
2017-09-06 19:58:59

Luckily for U.S. homeowners, after so many years of punting on interest rates, the Fed realizes that the slightest follow-through on announced rate hikes could trigger a crash. They have boxed themselves in real good.

 
 
Comment by Ol'Bubba
2017-09-06 11:48:20

Here’s the link to the hurricane cone graphics for those of you who are watching.

http://www.nhc.noaa.gov/graphics_at1.shtml?cone

Comment by Professor 🐻
2017-09-06 20:03:23

Does that big black M on the Southeast side of Florida stand for Miami?

Comment by Ol'Bubba
2017-09-07 06:08:24

No, the black dots signify the storm’s forecasted position and that it’s still hurricane strength. The M signifies the winds are forecasted to be greater than 110mph and that it’s a (M)ajor hurricane. Check the legend in the lower right corner of the graphic.

Comment by Hi-Z
2017-09-07 06:55:40

I think the Prof comment was tongue-in-cheek.

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Comment by Mafia Blocks
2017-09-06 11:59:18

Nothing says ‘lack of skin in the game’ like 3% down payment subprime mortgages. Nothing.

Comment by oxide
2017-09-06 13:47:14

What about 0% down, honeybunns?

Comment by Mafia Blocks
2017-09-06 13:54:43

Hey Donk

 
 
 
Comment by Lesser Fool
2017-09-06 12:24:24

Goldman said high rent prices in San Diego make the monthly payments on a house comparable

I thought rents were raised exactly because house prices went up, and therefore (a) specuvestors “needed” the higher rents to cover their costs, and (b) because there were enough people who would pay this increased amount (how/why I don’t know).

So now because rents have risen to match mortgage payments, its somehow advisable to buy a house and acquire a debt burden on top of that?

Does that mean if rents fall this guy will be advising people to sell their house and rent?

Comment by oxide
2017-09-06 13:53:13

So now because rents have risen to match mortgage payments, its somehow advisable to buy a house and acquire a debt burden on top of that?

If you can stay in the house 6-7 years and you don’t buy at the top of a bubble, then yes, it can pencil out. Not that it’s advisable, but it’s not a disaster.

Comment by Lesser Fool
2017-09-06 14:38:06

Yes I forgot to add that part about being at the top of bubble. But then that’s what many thought in 2015 too. My house has appreciated a fair bit since then. The top is clearly visible only in hindsight. Having said that, I firmly believe we are either at the top, or within 3 months of it, plus or minus.

 
 
 
Comment by Lesser Fool
2017-09-06 12:29:08

it might be the only path to homeownership for some

This assumes that “homeownership” is a right, or predestined end state for everyone, which it is most certainly not.

Also, this puts this lender in a benevolent light. Surely these loans are being offered because there is some value/profit for the lender and not out of compassion for the unfortunate souls (earning up to 115% of the median income by the way) who somehow “need” a house?

 
Comment by Lesser Fool
2017-09-06 12:30:38

“Anything that helps people come up with the down payment is useful to a lot of families,” he said.

Really? I would think it would be useful to ALL families.

 
Comment by Lesser Fool
2017-09-06 12:33:11

Mark Goldman, a loan officer and real estate lecturer at San Diego State University

Is this really a thing? What are these “lectures” like? Does he talk about how to get the best loan program, or principles of flipping? Can one actually get college credit for this?

 
Comment by Lesser Fool
2017-09-06 12:38:49

“I think it creates additional risk when someone purchases a home with no skin in the game. But, should it be required every time? No.”

What does he mean by “required” here? Does he mean forcing people to accept this gift? I think he means is the program recommended in every case. And he says no. So then it becomes a question of how much “additional risk” he thinks is ok, and who is going to take on that risk. The lender obviously feels that charging a higher interest rate compensates for the risk - assuming they hold onto the note which they apparently don’t. So the “additional risk” is sold to the buyer of the note - again presumably for the lender’s profit. But the buyer obviously thinks this is a good deal for them too - perhaps they are confident of getting bailed out if things go south. So the taxpayer would ultimately bear the entire risk (assuming the homeowner walks).

Bottom line: Why not “require” it every time if there is no “additional risk”? Everyone is happy and the taxpayers keep electing governments that rape them.

Comment by Junior_kai
2017-09-06 13:29:09

He’s not a loan officer, he’s a loan shark, and that skin in the game is the pound of flesh (((shylocks))) like him are always after, one way or another. Hell isnt hot enough for vermin like this. Lecturer? Do they have classes taught by pimps too?

 
 
Comment by Lesser Fool
2017-09-06 12:41:27

[Goldman justified the program by noting that] many loans from the Department of Veterans Affairs, called VA loans, already allow veterans to get into the house with zero down.

Ok so because one group has some privilege (based on some arbitrary criteria) this means that others also have a right to this same privilege based on some different arbitrary criteria?

This is like saying that since my neighbour sold his beautiful, well-kept house with all the upgrades for top dollar, I can ask the same for my place because it has the same square footage.

 
Comment by Apartment 401
2017-09-06 12:49:32

Realtors are liars.

 
Comment by Senior Housing Analyst
2017-09-06 14:26:20

Wilkesboro, NC Housing Prices Crater 6% YOY

https://www.zillow.com/wilkesboro-nc/home-values/

 
Comment by Professor 🐻
2017-09-06 19:39:20

I’m gonna lmao and say “I told you so” when Bitcoin goes to Beanie Baby heaven.

Why Beanie Babies make for a better investment than bitcoin
By Shawn Langlois
Published: Sept 5, 2017 4:02 p.m. ET
‘Ultimately, most of the cryptocurrencies will go out at zero. Don’t say I didn’t warn you’

At least Beanie Babies have the alternative use for kids to play with.

– David Merkel

Safe to say the Aleph blog’s David Merkel is not a fan of digital currencies.

In his latest bearish slam lobbed at bitcoin (BTCUSD, -1.15%) “Where money goes to die,” he explained why he believes most of the players in the crypto market will eventually disappear along with the fortunes of late-to-the-party speculators.

“The lure of free money brings out the worst economic behavior in people,” Merkel wrote. “That goes double when people see others who they deem less competent than themselves seemingly making lots of money when they are not.”

He says that digital currencies have three primary weaknesses: They’ve got no intrinsic value, can’t be used to settle all debts — public and private, and are less secure than insured bank deposits.

While bitcoin, as is typically the case these days, managed to shake off the declines brought on by an announced crypto crackdown in China, Merkel didn’t back away from his grim outlook.

In fact, he gave China credit for trying to limit the emergence of new cryptos.

“A good argument could be made that they all should be made illegal,” he wrote in his blog post. “It’s almost like we let any promoter set up his own Madoff-like scheme, and sell them to speculators.”

 
Comment by Professor 🐻
2017-09-06 19:53:48

‘People confuse down payment assistance with some of the easy credit that was available (in the housing crash). This kind of financing isn’t what caused the meltdown.’

This is a distinction without a difference. Neg-am, low-interest, low-down, no-down, low-doc, no-doc and every other variety of subprime loan used to finance home purchases has the same purpose: to drive up home purchase prices and amounts financed to far in excess of what households can otherwise prudently afford to borrow and repay.

Comment by Ol'Bubba
2017-09-07 06:20:28

“what households can otherwise prudently afford to borrow and repay”.

Back in the olden days of yore, the ability to manage your finances so that you could accumulate a down payment was a great indicator that one could prudently afford to borrow and repay.

Imagine that: a world where prudence, personal responsibility, and repayment of loans was the expected norm.

Comment by Prime_Is_Contained
2017-09-07 23:17:15

Imagine that: a world where prudence, personal responsibility, and repayment of loans was the expected norm.

Dreamer!

 
 
Comment by rms
2017-09-07 08:22:46

“This is a distinction without a difference.”

You’re starting to sound like ‘da gimp. :)

 
 
Comment by MarkinSF
2017-09-06 21:39:56
 
Comment by taxpayer
2017-09-07 06:57:58

fisher quitting
smart, as central bankers will meet the same end as chow-chess-que

 
Comment by Senior Housing Analyst
2017-09-07 07:09:10

Gold Beach, OR Housing Prices Crater 11% YOY

https://www.zillow.com/gold-beach-or/home-values/

 
Comment by taxpayer
2017-09-07 07:09:40

can I stay in a FEMA taxpayer funded motel while they raise my mansion up 4 feet?

house of moral hazard

 
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