Bits Bucket And Craigslist Finds For July 12, 2006
Please post off-topic ideas, links and craigslist finds here.
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I’ve been following prices in the Clairemont area of San Diego (zip 92117) for the past year — a mostly working class/middle class area. For awhile you couldn’t find any SFHs for
Just looked at the SF Bay Craigslist Real Estate for sale -
a search on “reduced” now yields 533 items. Earlier this year it was running in the 200 range.
QUESTION: Is this a REAL story ?
Does the Mister Johnny Moon Sr. story in Florida really exist?
A old drug addict with 1.00$ in the bank, dies with five loans on five houses in Florida. Is the real estate bubble that bad?
Have you heard of such a story in Florida?
Is this Johnny Moon Sr. story a fiction or is it a true story?
——————————————————————————-
The Dark Side of the Housing Market
____________________________________
Because of this, the competition in the credit business is intense. And like any good business, lenders have adapted their programs to meet the needs of borrowers everywhere. This has led to some potentially dreadful results.
Let me explain.
In their zeal to loan money to everybody and anybody, literally everybody and anybody can now qualify for the loan of their dreams. In fact it has now gotten so bad that practically any loan officer would tell you that they could qualify a ham sandwich if they had to.
I’m not kidding. As long as the ham sandwich had a social security number, it could be done.
Take for instance one such ham sandwich named Johnny Moon Sr. At the time of his death he left behind a watch, a flashlight, and wallet containing the grand sum of $1.00. In short, he was dirt poor and homeless.
But despite his untenable financial situation and his lifelong mire of poverty and drug addiction, Mr. Moon died with a startling secret: He had qualified for and received a total of six loans to purchase Florida real estate at a cost of over a half a million dollars.
Now how Mr. Moon was able to pull off this feat is murky at best. He certainly may have been an unwitting pawn in a flipping scheme, but the truth is he may have indeed been a legitimate real estate investor.
The records that exist, however, do make two things abundantly clear: Mr. Moon was able to attend all of his closings and he somehow managed to qualify for the loans. But regardless, how did he manage to pull it off? I mean, Mr. Moon clearly had no business borrowing money and buying homes. He was homeless!!!
But borrow money and buy homes he did. And as startling as his accomplishments were, Mr. Moon simply could not have pulled off this feat without the help of a lender with an insanely liberal loan program that was desperate to do some loans.
It is here where the competitive excesses in the lending business have created a slippery slope for borrowers everywhere, creating the speculative bubble in housing we find ourselves.
Sorry! Mister Johnny Moon Sr. died with SIX loans on six houses.
I can’t believe such a story. They must be kidding ? Right ?
It’s true. And it’s stories like that that add fuel to the fire of “price collapse”.
The lending industry went berserk.
This was cross-spammed to the Boston craigslist real estate board (it’s actually in Atlanta):
$750000 - Desperate! Desperate! Desperate! 4 A Buyer
My mansion is up for grabs, I have priced it 100k below value we must sell in 20 days goto http://www.milamhouse.zoomshare.com
We are only asking $750,000.00 for our home!
Why Sell Now: Bluntly business has been slow for a while and we must sell our “Dream”, better to take a step back than hurt ourselves. We offer our personal “Dream” home to you and hope you enjoy it and soon make a great return on your investment. We need to close ASAP.
This is almost half way to Alabama out of downtown Atlanta! 30 miles…the commute times he talks about are Sunday morning at 4am.
This is the kind of housing that Kunstler talks about in The Long Emergency just dying…perhaps a good 6 family home of farm workers to farm the surrounding area in 2020 or so? Future slum, if you ask me…who will want it?
Looks very nice. I think that we could fit in just fine in about one-fifth the space.
One thing about buying a mansion though. You really need to be rich to the point where you paid cash for it, can maintain it indefinitely and never be in a hurry to sell it. Otherwise, you’re just faking it.
Desperate, indeed.
http://www.google.com/search?hl=en&q=hollowayconstruc@bellsouth.net&btnG=Google+Search
now that is funny. gotta love google.
how dare he not include dc craigslist! we might want that gem too!
Here’s his homepage. http://hollowayconstruction.tripod.com/index.htm
It appears he is a small time electrical sub-contractor. How on earth did he end up owning an 8,400 sq ft house?!
Regards,
Loafer
http://www.sun-sentinel.com/business/local/sfl-zhomesbr12jul12,0,26733.story?coll=sfla-business-front
Sellers are revolting against using realtors to sell their homes.
I sold my first house 3 years ago. We went the FSBO route. It took about 2 months to sell, but we eventually got a little more than our asking price and also got to keep the 6% that would have otherwise gone to a realtor.
We had a buyer’s agent walk in one day and she acted like she could sell the house for whatever we wanted. Act in your client’s interest much, buyer’s agent? She wanted us to sign a piece of paper stating that we would give her 3%. We told her to take a hike.
IMHO, real estate agents are a scam. Who knows, though. Maybe it would have sold more quickly if we had had it listed. I doubt it, though.
w the net it seems agents are a thing of the past- I made deals before the net and it’s easier now- when the MLS craks it’s over for agents
One thing I want to point out is, don’t underestimate the power of the Realtor Clowns and their powerful lobby.
A few years ago, I think it was Ford was experimenting with the idea of selling cars online, directly, without the involvement of a dealership. Well, dealerships have a powerful lobby (NADA) and the resulting crapstorm caused Ford to back off.
The internet sure is a threat to the Realtor Clowns today, but as time goes on and inevitably, more people catch on to using the internet as an FSBO tool, the Realtor Clowns will descend on Capitol Hill and next thing you know, some B.S. legislation will pass in their favor. It will become law to have a Realtor present at closing, you know, to protect the consumer.
Craven,
They’re already doing it. Check out RealtyTimes.com. They usually have some recent articles about the DOJ and NAR fighting about the “consummers’ interests”. They’re even trying to kill the flat-fee and discount agencies.
[Now with new, improved syntax]
I’ve been following prices in the Clairemont area of San Diego (zip 92117) for the past year — a mostly working class/middle class area. For awhile you couldn’t find any SFHs for less than $550K; now there’s suddenly several (4BR/2BA) appearing in the $450-500K range, about a 15% haircut. klunk.
Easy come, easy go…
I think there are some for sale now for $420K. About six years ago we thought about buying in Clairemont until a friend living there told us these stories about how in the mid-90’s the area was infested with tweakers. There were all these houses with tinfoil taped inside the windows (aparently sunshine and meth do not mix) and people out mowing their lawns at 2 am by flashlight. The areas we looked at were pretty trashy with every other house having some kind of homemade unpermitted wierd construction attached to the house. (In addition to the occasional weed infested, tinfoil taped to the windows place.) We did not buy.
BTW Clairemont High was the inspiration for Fast Times at Ridgemont High.
Topic on bubble sitters and interest rates: For those planning on buying after prices fall in your area what do you expect interest rates to be at the time and what type of financing would you use?
Short rates on 5/1 hybrids have gone up above 6% and 30yr fixed are up to 6.8% or so.
Do you plan on purchasing in late 2007, 2008, or later? what do you expect the interest rates to be? Will you be at the top of the rate cycle where it makes sense to use ARM financing or will you get a fixed rate for safety and spend the money to refinance later?
I am currently planning on purchasing in late 2007 as we are already seeing significant price declines in many neighborhoods in my area. I fear this may be the peak of interest rates as a recession and a rate cutting campaign may be starting in 3Q ‘07.
Not sure when I will buy. Working on a promotion to Atlanta from West Palm Beach in the next few months. I’ll probably rent a cheap apartment and stockpile money for 2 years and then assess the situation. I’ll probably put 20% down (at least) and get a 25-30 year fixed rate. At the end of each year I will send an extra payment in order to pay it down faster. Does anybody on this board know how over-vauled the Atlanta area is currently? It can’t be as bad as West Palm Beach. I’m thinking of getting a 2/2 or 3/2 condo or townhome inside the perimeter. I’d be a first-time buyer so I don’t need to go crazy, especially since I am single.
Atlanta is two markets; if you are at our outside the perimeter of 285, housing is very reasonable and hasn’t moved much more than inflation.
However, if you are deep inside the perimeter, and specifically in the Buckhead, Va Highlands, Emory, etc. areas, most homeowners are still reasonably confident that their homes have come close to doubling in the past 4-5 years due to scarcity value, etc. They still aren’t approaching Washington DC or Florida values, but they are pricey relative to the local wage. A reasonable “deal” on a nice 3 bedroom in one of the aforementioned neighborhoods will cost you $600k+, whereas a few years ago it was closer to ~$400k.
BUT, it’s changing, slowly but surely. No real data/news coverage to speak of, but anectdotally sales are down, there are a TON of properties on the market, and clearly overpriced properties are sitting indefinitely until they either are removed from the market or drastically reduced.
Hope this helps.
Thanks for the info. I had heard where sales were slow and the inventory has exploded. How is the condo/townhome market inside the perimeter? Has there been the rampant speculation to drive prices to insane levels like here in Florida? I saw on the MLS where many (which looked OK on the Internet) where in the $200K-$250K. The equivalent here is about $350K-$500K. Many condos (excluding conversions) are “worth” more than SFHs in our area. Is a 10%-15% corrections reasonable for those properties I mention? Thanks again for the input, I appreciate it.
after re-reading your post, i can offer a few more specifics. Condo market is definitely starting to cave-in, so a 2/2 condo can be had for $250-300k (by the time you are buying much less as condo contstruction is continuing unabated here with few end buyers in sight and many sellers already).
A fixer-upper/starter 3 bedroom house can be had for $425-$500 (depending on how far in you are).
Many of the new construction condo’s are trying to get those $400-$600 prices (for two bedrooms) but in my opinion, it aint’ gonna happen. There aren’t enough buyers at those prices in a place like ATL.
So, my advice would be to hang tough for 1-2 years as you mentioned, and yes, absolutely 10-15% price cuts are absolutely likely. In fact, it wouldn’t surprise me one bit to see many of the high end, marquee new construction condo’s in buckhead to be eventually selling for 25-35% off original list prices of $400-$600k for a 2 bedroom.
Thanks again for all of your advice. It appears condo markets across the country are totally out of control. I totally agree with your analysis. I have to get promoted first, then I’ll worry about buying a place.
I cashed out of Westchester and moved to Atlanta last year. I also lived through the crash in Austin in the 1980s.
Rule of thumb…buy in best school districts, close-in, where they aren’t building any more (can’t) and supply is constrained. These properties will hold their value the best if you need/want to buy to live in. This will be more so this time with gasoline prices going up and up with possible rationing or shortages over the next several years.
Here’s my take on Atlanta…there are more than two markets.
1. Condos…beware…too much being built..cost more than equivalent SFH for less space. Townhomes are better.
2. Outside the permimeter…vast tracts of new housing to 20 year old stuff….supply growth unlimited…this is where things are hurting a lot. The further out you go the worse it’s going to be…Traffic is a huge concern. Gasoline will be more so in the future (perhaps will ease traffic in the long run by default).
3. Inside the perimeter - lesser school districts and working class neigthborhoods - increasing foreclosures, prices are decreasing slowly or are stable. Lots for sale.
4. Inside the permiter - gentrifying neighborhoods - Grant Park comes to mind…best upside, but non-trivial risk, however. These remain surrounded by lesser to bad neighbohoods…so far, most of these are doing increasinly better as people want to be close in to reduce commute.
5. Inside the Perimiter, Upscale negithboorhoods, mix of schools. These are stable in prices with less on the market than 1 year ago…this is particularly true of Morningside and Garden Hills. Va Highlands and N Buckhead less so.
I bought in Morningide - 3500 sf 4 BR, 5 living areas, 3 full and 2 half baths, plus full above ground 2000 SF basement in excellent shape, remodelled in 1999 well done… $700K.. Bought to live, not as an investment. There are a lot of solds in Morningside now in the past 3 months and what’s left (less than half of what was on the market in 2005) either needs lots of work or is overpriced by $100K (e.g., house across the street from me is smaller with dirt basement for $800K). I expect to break even or lose a little bit over the next 3 years…scarcity and the best school district helps a lot. For $25K, I may add a geothermal heating/cooling system to save money and add value to the house (get off natural gas heat). The few new houses being built in Morningside (replacing $500K tear downs) are not much bigger/better than mine and are going for $1.1-1.4 million. These are the 4000-5000 sf places people want that are moving in from outside the perimeter. They will likely drift down in value some to be closer to mine ( built in 1935) over time.
Mornginside is just north of Va Highlands. 4 miles from downtown, 2-3 miles from midtown and 4 miles south of Buckhead. Fulton county/Morningiside has the best schools inside of the perimeter…DeKalb County / Morningside / Johnson Estates has much lesser schools.
Atlanta median is around $200K….must be counting out 40 miles or so to get this…. still for a large city, one of the better values. People like me are coming from the NE, so there is population growth that has money to buy even with higher interest rates.
I’d not buy for investment and be prepared for +10 to -15% in the best neighborhoods over the next 3 years and up to minus 25% is average neighborhoods in the perimeter. Luxury condo’s have 30%+ downside. Townhomes will do better but still be net losers.
All bets are off ourside the Perimeter…builders will drive the market into the ground (like they did in Austin 20 years ago) with oversupply. Commutes and gasoline will put additional pressure on these neighborhoods over time (with the possible exception of the very rich and best schools, assuming those aren’t being over built too).
Many of the people around me in Morningside are not just dependent upon wages to pay for their mortgages and/or upkeep. Many have significant assets that yield dividends or interest, etc… or own businesses.
Wage rates are not the driving factor for houses in some of these neighborhoods in Atlanta.
with all due respect, relevant wage rates are always the predominant driving factor in residential neighborhoods, unless you are talking about retirement or SUPER upscale communities (think the Prado in Ansley). Sure, what the local policeman or teacher earns isn’t going to set home values in morningside, but what the local lawyer/doctor/architect earns will.
Now, I don’t know your age bracket, but I am younger (30) and I know this as a certainty from looking at my friends and colleaugues - while you are right that plenty of people in-town atlanta have independent wealth, own their own businesses, etc., there are also plenty who are younger, just starting out, and mortgaged to their eyeballs b/c they “know” that real estate only goes up. So, to them, wages are what dictate their ability to afford their home. It only takes a few motivated sellers to bring values down - not the majority.
My point is that no neighborhood is immune from potential price declines, only some less so than others (as you pointed out in your outside perimeter vs. inside perimeter analysis). In fact, it would seem to me that prices in morningside/highlands are stagnant at best this year vs. last (possibly down 3-5% or so already).
Morningside is 3-4% up year-to-year anecdotally. About 1/2 the inventory of last summer. Most of what is left either needs a lot of work or is over priced or is over $1 million and takes time to sell. One direct comparison point is a house around the corner from mine just went under contract for about $775-$800K - new redo…nice 5 BR about 3000-3200 sf. Mine…bigger, but 1999 redo … $700K last fall. That is the strongest comparison apples-to-apples. Another, on Rock Springs…about the same size as this redo, 4BRs….just went for upper $700Ks…
Another house on the market for several months down the street from me but only 2700 +/- SF just went for $650K…another which was 4BRs and around 2200 sf or so went for upper $500Ks on the same street. Fixer upper across the street from this is FSBO for $700Ks, but needs $150K+ of work…should sell for $550K to 600K.
VA Highlands is a bit weaker than Morningside…more rental…probably flat.
This area can experience a decline, no doubt, but my experience in Austin 20 years ago (when I was 20 something) says it will be less so at worst than most. May even go up some with commute/gasoline dynamic which was not present in the 1980s/90s as the affluent 20 miles out reconsider (assuming they can get out). Then there still is significant migration here from the NE and midwest…Also Georgia electicity is generated from coal, nuclear and hydro mostly, not natural gas, which will be a problem for some regions…a plus for the area (except for the enironmental impacts of coal of course).
Pemberton/Enfield in Austin held up much better than Plfugerville/RoundRock in the 1986-92 bust.
Finally, compared to the NE, Calif, etc…these houses are less than 1/2 price for size, quality and location and a great place to live.
If we have a depression, well then, it will be tough everywhere…but worse in some places than others.
To your lists of positives, I would add the large negative that Georgia in aggregate (and thus surely Atlanta in-town by association) has the highest percentage of ARM usage in the country.
As for your points about current in-town Atlanta market conditions, I guess we will have to agree to disagree, and that is where the lack of aggregate market data is frustrating. From my perspective, while I do see that homes are selling (this is, after all the prime selling season), total sales # seem to be down from last year and Inventory (in my opinion) seem to be up BIG from last summer.
Everywhere I look, there seem to be 1-2 houses on almost every block of the highlands/morningside for sale. Now, I agree with you that many are poorly priced for their condition and/or location but it is inventory nonetheless; I would assume at some point this at least a fraction of this inventory will become more motivated than it is presently. This is not a new concept; it is occuring nationwide. I would venture to guess that the majority of current inventory is over-priced for current market conditions.
To me, a more accurate assessment of the present in-town Atlanta market would be “Properly priced sells”. Which is about what you would expect at this point in the cycle nationwide. There are very few “suckers” left to be picked off by poor pricing, but the overall sentiment is still reasonably decent and reasonable financing is still attainable, so if someone has resigned themselves to purchasing a home, a price more or less comparable to last year will seem acceptable.
xmas eve 2007 may be good- only give the seller 10 minutes or see em on the court house steps
where’s your hood?
in 22151 we;re off 5% so far
12 miles and 3 lights from the pentagon
i live in the sfv area of los angeles. our market correction is in it’s infancy. i could never speculate on when to get back into the market. while i don’t have to ride this thing to the bottom, the sfv has alot of correcting to do before i’m putting my money back into it.
SFV is a split story too. The higher end stuff in the Valley isn’t really budging (think Encino or Woodland Hills) at least not yet. But Tarzana is off like 20% yoy for May. That is a huge correction. Other places like Chatsworth and Northridge are pretty steady. Then, many of the lower income areas (NoHo and Van Nuys for instance) are still moving up fast.
Tricky place to try and pick a time to enter. I would suggest just picking an area here that you like and watch it closely.
No…I disagree. Van Nuys has been flat for about 8 months. I would consider Studio City and South of Blvd(Longridge Estates) higher end than Woodland Hills . There are many priced reduced and market expirations in the N. Hollywood area and I would expect an imminent decline of prices.
You may be right about interest rates peeking this year.
But I don’t think prices will bottom for a while. It’d gooing to be a bad one. Many forclosures/foced sales. This hasn’t even started yet.
Things to watch for to gage the bottom:
Deep economic ressision with substaintial layoffs
Wars and terrorism escalatiing
Coporate fruad in the news again
Pension funds failing
This ones going to be a doozy!!
I thought folks would be amused by the Children’s Literature winner of the 2006 Bulwer-Lytton bad-first-sentence-of-a-novel contest:
OT, new article on the SPP legislation that apparently just got fast-tracked by the administration. This looks like plan B for when the U.S. dollar takes a dump. If this doesn’t get you writing your senator then nothing will. Start boning up on your spanish as well! http://www.humaneventsonline.com/article.php?id=15954
Just spent a week on Cape Cod and saw some interesting things.
1. Normally there are no Hotel vacancies in the area we stay. This time, there were plenty.
2. Speaking to a realtor, summer rental rates have been coming down.
A sign of too many people paying too much for their homes…
Anyone else seen this at their vacation spots?
In June, we enjoyed a 10-day road trip from LA to Mendocino and pretty much across the board, along the entire CA coast, vacancies were plentiful (and such a deal to rent a house vs. owning a vacation home). Add to this the reports from gallery owners & jewelry shops that business is down at least 20% from same time last year - and you couldn’t blame bad weather as it was 70 & sunny nearly every day, except for SF.
Absolutely! Saw it up and down Long Beach Island, NJ a few weeks ago.
Funny that you mention Cape Cod. I saw a local news report that all of the New England beach towns (except for the New Hampshire coast) had a big spike in summer rental vacancies. Cape Cod vacancies were up by something like 25% compared to last year.
I don’t think the constant rain has helped them any.
I think that is BS. I live in a new Jersey vacation town and things are slow. Plenty of parking which started to happen last year. Boardwalk is way less crowded.
Florida’s on Sale!
We’re currently on vacation in Clearwater Beach. Yesterday our room wasn’t ready when we arrived, so we took a drive over to Sand Key.
The first mile or so is comprised of a dozen massive condo towers. Beyond is miles of SFR and little condo complexes, stretching through Bellaire Beach and Indian Rocks Beach.
We drove a four mile stretch through these three areas. On the right (ocean side) are the majority of the residences on this main drag. On the left is 50/50 homes and shops.
Total number of “For Sale” signs along this 4-mile stretch: 123.
been there - the condos are empty and locals are bitchin cause now there’s less people year round
With Maple Grove (Twin Cities, Minnesota) and other fast-growing suburbs seeing a townhouse building boom, officials are debating how many townhouses is too many.
The Maple Grove City Council will vote Monday on a new rule that would limit townhouse development in most of the city.
“We wanted to bring a better balance to our housing stock,” said City Administrator Al Madsen.
The proposed rule would limit townhouses to just 10 percent of any housing development.
Developers seem to be reacting to a strong desire in the real estate market for maintenance-free townhouses, Madsen said. But city officials are worried that the real estate market might soon “correct” itself, and the number of townhouses will out-strip demand.
Full story at
http://www.startribune.com/106/story/541568.html
Wondering what thoughts are about this situation. Friend of mine bought a house 4 years ago for $250,000. He received a letter from a local company offering to buy his house now for $275,000. The house is in decent shape, but could use upgrading. Let me put it this way - I’d be perfectly content living there even without the upgrades so it’s not what I consider a fixer-upper.
I went to an appreciation calulator just to see what kind of appreciation rate this home will have gotten if my friend takes this offer (which he’s likely to do). As I calculate it, the appreciation rate is 2.5%. How crummy is that after the gains of the last 4 years?… And Zillow’s zestimate is $358,500.
Am I missing something?
The local company is probably doing serial lowballing, trying to get places on the ultra cheep to then refurbish/flip. If you lowball by $100k, consistantly, and you do this often enough, you might find someone desparate enough. So do this for every piece of property for sale and then some.
Check out this picture of all the condo construction on the edge of downtown Washington, DC.
http://bubblemeter.blogspot.com/2006/07/condo-condos-condos.html
David
Bubble Meter Blog
Wow. There are some very angry people over there!
Last time I saw that many cranes the ship I was on was in Metro Machine Shipyard in Norfolk, VA.
i’ve given up reading the comments on this blog because there are so many ridiculous angry ignorant housing bulls…things must be really starting to crash in the dc area huh.
Driving by a Vegas neghborhood yesterday, I went through a section of new development that has been in sell mode for about a year. Number of lights on in the whole mile long row of houses…3.
Simmsssays…Fire in a Pinch
http://www.americaninventorspot.com/fire_in_a_pinch
My husband just asked a good (IMHO) question. As we’re thinking of buying (later, when things drop more), should we be concerned about the strength of whatever bank/finance company we use to get our mortgage? That is to say, if we get a traditional 30-year fixed-rate with Company A, but because of other (and bad) loans they made in 5 years Company A goes under, what would happen to our loan?
I said I assumed that it would get sold to some other company and that our rate, payments, and other terms would stay the same (as long as our contract with the original company was good). Is that right? Or could it change?
Thanks for any info–and thanks Ben for such a great resource!!!
-L
I wouldn’t worry too much about your mortgage company’s strength (or lack thereof) as they will likely bundle it with other mortgages and sell it just after the ink on them dry.
Your mortgage is a binding, legal contract and the terms are not at all likely to be affected by the future health of the mortgage company
Nothing will happen to your loan. If the bank goes under, the terms of your mortgage will not change at all.
I would add a minor clarification to the above. The terms will not change; however the lender’s willingness to foreclose may. When you deal with a local bank whom you know and work with on a regular basis, they tend to be more “fair” i.e. they won’t accelerate the loan and call the balance if you are a few days late on a payment because you were out of town or whatever. Long-distance lenders feel no such compunction and, if under financial or other pressure, they may suddenly demand strict adherence to the letter of the contract, meaning your payment must be in their hands by the due date or they can exercise their remedies. I suspect that many of the MBS firms will become harsher as the pressure builds, so you should at least inquire who the loan will be sold to and do a little checking on their reputation first.
We had our loan sold once a long time ago. What can happen is that the company that they sell your loan to (or that winds up with it) is considerably different in how they service your loan.
We had a noticeable drop in service quality compared to our loan originator. Of course you could get better quality too.
I’ve read some stories where you might have thought that the loan service companies intentionally screwed things up so that you’d pay more in fees and fines.
This is an interesting point, and it brings up yet another potential thorn in holders of risky mortgages- I wonder if the loans can and will be sold to outfits who will be more aggressive in the fine and fee dept because that will be where the money can be made …?
Some companies have a policy of harassing borrowers by phone if they are late on the mortgage payment . One company I heard about did this phone thing because they discovered it actually cut down the foreclosure rate .
Anyone know if it’s possible to buy back your own loan.
If you took out a loan from a bank you like and trust to buy back your own mtg? A sort of refinancing.
Well, your loan can get securitized and wind up just about anywhere. I think that you’d have to refinance to do what you’re talking about and then that bank could just turn around and sell it again. You’d have to have a really bad service firm to even think about doing this as you’d have to pay closing costs again.
If you’re not up on them, I’d suggest reading about CDOs and the repackaging of debt. I first learned about them from Doug Noland many years ago on his Credit Bubble Bulletin. I imagine that mortgages are packaged in this way now so your mortgage could be owned by a bunch of people all over the world in little pieces.
Well of course it’s possible to buy back your own loan!
At least, it’s almost always possible, barring some nasty prepayment things that you probably don’t have in your mortgage and don’t have to worry about.
All you need is the amount of cash shown on your remaining principle line. But…. Ouch! That’s probably a lot of money.
Your options otherwise are:
(1) Refinance via another mortgage lender (cost $$$), or
(2) Borrow unsecured money (much higher interest rate)
Option (1) will likely get you a higher interest rate than you have now, assuming you got tha current mortgage in recent years when rates were low.
Option (2) might not even be possible. Would your friendly local bank loan you, say, $280,000 on your signature alone? If so, you probably wouldn’t even be asking the question you posed!
I’ve had mortgages sold out “from under me” and had no problem, but others have. If you have escrow account for tax and insurance (I never did, always avoided that and paid those things myself) then watch that colsely; that’s a prime area for the new company screwing up. Otherwise, it’s generally just a matter of where you send your payment.
That Atlanta McShitbox is now becoming their “Nightmare House”. Yes, it is big and looks pretty. But, unless you have the money to hire a staff for maintenance (gardner, butler, maid, cook, etc), it would be a full time job just to try and keep it together. Not to mention the utilities costs to heat/cool, etc.
I don’t know what’s going on but I have lived in the OC for like 15 yrs now, and driving south on 405 thru L.A. to get home last Sat. nite was the first time ever I did NOT get caught in nasty traffic. Smooth sailing. My buddy I was with and I were both flabbergasted.
Interesting. We drove from SD to LA last Saturday (traffic is usually unpredictable on Saturdays), and had the best drive ever (native So Cal residents of almost 40 years). Maybe people are pulling back on driving?
I did the same drive in reverse on July 2 and it was good, but I think it’s just normal summer light traffic.
Drove this weekend from the OC out the 91 East to the 15 South to North San Diego County. Smooth sailing. Usually nasty.
Dreaded coming back Sunday night with all of the desert-seekers and Las Vegas returnees. Smooth again! The economy, or the fact that people know there are weekend restrictions for the freeway improvements to Las Vegas? Or are more Californians going to Morongo (where they can see the Yucca fires?)
I am considering a possible move to east tennessee. anybody know if the market is softening there. it seems like a lot of south floridians are relocating there, to get away from high property and homeowners insurance (we can deal with the hurricanes).
I need some help,Please!
I am renting in Bakersfield ,Ca. My rental is an approx 1700 sqf 2 storey house. The A/C (not evap cooler) is not doing a good job of cooling the house. I get temps of better than 90deg, at 10:00PM with the A/C running.
The landlord says A/C is working well & correctly. I get temps of approx 80-85deg at the vents. A/C unit is 40-42 years old,and runs about $350-$375 per month to run.
What can I do. This house is now un-liveable. Landlord is very friendly,very old man. He has already stated that as long as 40 Yr Old A/C unit works,AND he can still obatain parts for it,he’ll not replace. Can I report this to anybody?
Should I just give up and move? Ty to just make it through summer,(ugh!)
I need advice. Thanks, Thunder–
I’d complain daily. This happened to a tenant in my building - she complained, landlord disagreed that it was a problem, she complained each and every day until he gave up and replaced it for her.
Of course in the meantime, I’d probably buy an $85 window a/c unit at Wal*Mart and pop in the window just to keep cool…
Make a couple of “impact adjustements” if it still works make a couple more, then call the landlord.
Attempt to perform percussive maintainance.
ANSI/ASHRAE Thermal Environmental Conditions for Human Occupancy. See the comfort envelope chart in this PDF:
http://www.energycodes.gov/comcheck/pdfs/300text.pdf
I would give notice and move ASAP.
Thanks for the PDF. Printed it out.
How do I explain this to the landlord? Who do I contact ? Fair Housing,or someone else? I do not expect Gov’t to help,but the threat of filing a complaint may do more than this chart will. Like I said, He is a nice Ole Coot,but stubborn about spending Money on a50 year old house.
Also,Window A/C is out. I have so called “Miltary windows” Verical hinged,single pane windows. Too narrow for an A/C unit to fit.
Call a local attorney who is knowledgeable about your state’s tenant rights. They vary. The remedies vary greatly, from self-help (replace at your cost and deduct from rent) to move-out, so you need binding legal advice from a licensed, experienced California attorney. Otherwise, you’re guessing without proper information, and you don’t want to do that.
Thanks.
You’re correct. I do not want to be guessing.
Portable A/C units will sit in the room and have a hose for the exhaust. Giving notice seemed like the better idea, though.
I hear that wrapping/tying a plastic garbage bag over the outside compressor/fan unit for an hour or two will usually result in a good test of whether your 40 year old compressor is able to handle the stress of summer heat. There is, though, a chance that it might burn itself out, and in an old unit, that can be so expensive that you’d have to replace the whole thing, so be careful.
Hmm.
That would be a tragedy.
Wow. Nasty looking yield curve
http://tinyurl.com/av8wa
House price in ounces of gold.
I roughly figured the price of a typical house in my area in ounces of gold. Most of the houses have doubled in price in the past 5-6 years.
I assumed the house appreciation is equal every year, and just estimated the gold prices by squinting at a 5 or 10 year gold chart.
2001, 150K house, $260/oz = 577 oz
2002, 180K, 300/oz = 600 oz
2003, 210K, 350/oz = 600 oz
2004, 240K, 420/oz = 571 oz
2005, 270K, 440/oz = 614 oz
2006, 300K, 560/oz = 536 oz
Today, $300K, 640/oz = 460 oz
House prices seem to be leveling off or decreasing, and the price of gold seems to be increasing. The price of a house, in oz of gold, is getting lower by the month. The peak price of a house in oz of gold seemed to have peaked in 2005.
Would be interesting to see what this would look like for a house in a really bubbly area, like PHX or SD.
Time for some morning news: Sorry for any typing errors as this is from PDF
From the St. Louis Federal Reserve
Federal Reserve Bank of St. Louis Review, July/August 2006
“…Countries can go bankrupt, but whether or not they are bankrupt can’t be discerned from their “debt” policies. “Debt” in economics, like distance and time in physics, is in the eyes (or mouth) of the beholder. …
No one knows for sure, but there are strong reasons to believe the United States may be going broke. …”
Caution 16 pg pdf
http://tinyurl.com/g9kwc
From the land of Hoz - No comment needed
Urban Renewal vs. Street Squatters
From the LATimes: (subscription)
“The push to clean up Los Angeles’ skid row reached an unlikely milestone Tuesday morning when downtown business leaders moved in to steam-clean the sidewalks on one of the district’s filthiest streets.”
“The fact that the simple act of cleaning a sidewalk became a political battle underscores just how sensitive the issue of gentrification on skid row has become.”
“The protesters — homeless advocates — blockaded the city trucks, saying they objected to what they consider an increasing campaign to harass homeless people and ultimately drive them from the area.”
“LAPD Capt. Andrew Smith, who oversees the Central Division, said officers often accompany the maintenance crews for their protection. He said that sometimes people in “drug-induced states or with psychological issues … attack the street maintenance guys.”"
Boy oh Girl, do I feel sorry for the suckers who bought those condo conversions in downtown LA. If the streetsweepers need armed escorts, imagine what it must be like to go outside at night. “Skid Row” in downtown LA is defined by the Times writer as a 50 square block area. I call that an optimistic assessment.
Your Golden Years Don’t Have to Be Tarnished
by Ben Stein
(Finance Yahoo)
July 12, 2006
…This country is in terrible trouble. First of all, we are major debtors to the rest of the world. We borrow a billion dollars a day just to buy oil. We have a net debt to the rest of the world of about $3 trillion dollars, which is very roughly the value of all the assets in a large, powerful state like Ohio. We’d have real trouble financing our lavish standard of living if we didn’t have the rest of the world to lend us money.
Inevitably, barring some strange turn of events, this means that foreigners will want to hold less of our currency and bonds. This will lower the value of the dollar and raise the value of the currencies of other nations that export more then we do. This, in turn, will mean that oil and gasoline and other commodities will be more expensive in dollars.
This immense debt to the rest of the world might also mean that we have to pay more interest on our bonds to attract foreign lenders. This will raise interest rates and further increase the cost of living. Scared?
…”
http://tinyurl.com/zlr6h
To look on the bright side, the US economy will be considerably more energy efficient in ten years because of high energy prices. A falling dollar will boost the chances of keeping manufacturing in the US to serve the home market. And housing will be more affordable…
JOE, one of my fave shorts from last year, appeals to the value crowd now:
http://tinyurl.com/qd4dy
I found a gem of info from a Realty Times posting about Manhattan Beach, CA. Summary: median income for a couple with kids: $198k. Median SFR price: $1.6M. Median couple affordability: $800k. Fundamentals support a 50% cut in prices.
Median income there is almost $200k??? Wow, what do they do for a living in Manhattan Beach?
Sell houses to each other.
Hawaii newspaper gone wild comparing 2005 and 2004 data. http://starbulletin.com/2006/07/12/business/story02.html
I see they’re on the ball with the latest, hottest headlines.
Stay tuned for the 2006 numbers, due in July, 2007!
For some light summer reading, try todays Richard Daughty, The Mogambo Guru - The Daily Reckoning
“…Another interesting part is when they get into the coming devaluation of dollar. How big a devaluation will it be? Well, they quote a guy named Jarrett, who lists “fourteen estimates of the dollar depreciation that would be needed to restore the imbalance in the US current account deficit. These estimates range between 12 per cent and 90 per cent.” …
http://tinyurl.com/j274p
To be frank, I’m getting tired of the Mogambo exclaiming the dollar’s demise. His analysis is very one-sided. All major economies are inflating the h*ll out of their currencies. All major economies are experiencing major asset bubbles (housing and stocks). To go back to what previous posters have said: prepare for a deep recession, not for the end of the world as we know it.
LOL that is why I called it light summer reading! If you want some serious summer reading try:
First Deputy Governor Eva Srejber of Sweden’s Riksbank
June 28, 2006
…”Those who maintain that there is too much uncertainty to dampen a price rise via interest rate adjustments are thus of the opinion that it is better to wait until a correction of abnormally high asset prices is a fact, and take action then. Many believe that it is important in such a case to act forcefully, so as to prevent a deep recession.
“However, in my opinion and that of others, the risk of such an approach is in overdoing it and thereby delaying a necessary adjustment of balance sheets and debt levels. New imbalances in other markets could then arise, and the process will begin again. When the situation turns next time in other asset markets, there is a greater risk of reaching the zero-interest rate level. Many central banks have acted in this way, which may be the reason why a house-price bubble has been created some time after a share price bubble.”
From Bank for International Settlements pg 6 of caution pdf
http://tinyurl.com/ktgrt
I think there will be deflation first as people buy US dollars as a safe haven. The Mogambo’s latest article seems to acknowledge deflation is coming.
If real estate goes down as it did in the 1930’s (debt is higher today) then it will be the end as we know it; we’ll probably get a more socialist economy, which will impoverish most people. I’m hoping for an economic collapse just for the interesting news.
You have to admit that his logic makes more sense than saying that cutting taxes across the board actually increases tax revenue (you have to separate out the idea of whether the rich or poor get more of a break or you’ll never see the bigger issue/misconception). If you hold the money supply constant, it is mathematically IMPOSSIBLE to increase revenue by cutting taxes across the board, no matter how small. In order to make the magic work, you have to create enough money to offset the decrease in taxes. That IS INFLATION. Yes, a lot of countries have been doing it, but no one is in debt (totals, not percentage of GDP) to the extent we are. The percentage part gets skewed by how much money is being created. Everyone holding dollars is getting taxed enormously by creating more money (INFLATION). Those holding hundreds of billions are bearing the brunt. I find it very hard to believe they are going to keep letting us tax them, which is EXACTLY what we are doing. The Mogambo may be one-sided, but I’d prefer to be on the side of 2+2=4 vice 2-1=4. With the housing bubble going down, we’re all going to see what 2+2 really equals.
The point that both MG and Eva Srejber make is essentially the same: Get out of dollars. Sweden has gotten rid of dollars in its reserve currency holding, MG has bought hard metals. The question I have since the housing bubble has burst is where the “New imbalances in other markets could then arise, and the process will begin again.” What is the “new market”?
Hoz,
I’d say ask yourself what you really need, and that is the next hot market. Added to that, ask yourself what you’ll need without taking out a loan to get. In other words, where to put your saved money that isn’t based on trusting someone else. The oil money will be coming from the countries that need it. I’d buy it, but I can’t store it, and I’ll be trusting the “paper” I have saying someone owes me. Instead of oil, I’m buying physical gold. Not the unallocated/paper gold, but the stuff I can put in my hand. I don’t think commodities will be fueled by borrowed money or by speculators, but by people who are trying to preserve their savings. CD/Treasuries are fine, but still trusting people. You’re trusting the banks in that they actually have it (based on stated reserve requirements they don’t). You’re trusting the Treasuries in that the gov’t can pay you without creating more money to do it. They don’t since they’re in debt to the tune of trillions. They’ll have to resort to printing more which will kill whatever interest rate you’re getting.
Kerk - I agree with you on gold! And when November comes around and the Fed opens the liquidity flood gates again a new bubble will occur! Gold is for preservation of my capital.
I know there will be a new bubble (not in housing) I just don’t know in what.
If you hold the money supply constant, it is mathematically IMPOSSIBLE to increase revenue by cutting taxes across the board
Well, no. The government, like stock brokers and realtors, makes much of its money from “churn”. Some taxes, like property tax, are collected whether money/assets change hands or not, but most taxes, like sales/payroll/income taxes, are collected only when goods/services/money changes hands. The higher the churn (allegedly due to increased trading and economic activity), the higher the tax revenue.
This is what enables the curious situation of potentially (note I say potentially) collecting more cap gains taxes when marginal rates are lower. That lower rate can reduce disincentives that cause people like my older relatives to hold onto stock until they die, rather than pay the capital gains taxes now and move the money to some other investment (or spend it on themselves, like they ought to be doing, rather than leaving it to us lazy kids).
I disagree. With a constant money supply, that “churn” would be the extra money you had in the form of a tax break. The gov’t is only getting a portion of that money back in the form of “churn”, which they could have had the total amount. It is the increase in money supply that gets the bang out of the “churn”. I’ll give you an example with the money held constant.
There are 10 homes each worth 10K. One realtor gets a 6% commission on all homes. That realtor decides to stimulate demand by cutting the commission to 3%. Now, instead of getting 6K, they get 3K for those 10 sales. Someone uses that money to buy a property worth 3K (the extra). They get 3% of that for 90 bucks. Total of 3,090. Not the same as the 6K they could have had. If they were able to collect property taxes on all the homes, that extra tax on the extra property isn’t going to recoup the loss. You have to have an increase in money supply to make the game work.
Like I said before, cutting taxes as well as increasing the money supply obviously does increase the total revenue. With a constant supply of money, it isn’t possible. This is simplified, because savings someone may spend isn’t accounted for. However, with a constant supply of money, at some point, those savings will need to be replenished, decreasing money available for taxes. It is the fundamental basis of an ever expanding increase in money supply. As the Fed continues to expand the supply, they HOPE they can keep it from going into places included in their calculations of inflation. When faith begins to erode, it WILL end up in hard assets/commodities. I assume you aren’t proposing that it is possible to sustain growing tax revenues while conintuing to cut taxes with a constant money supply. That is simply unsustainable.
I’ll give another mathematical example. I’ll use $1 as an example, and assume a tax rate of 50% (any rate will work, but the 50% makes math easier). No matter how many times that one dollar the gov’t could have had is changed hands, (each time taking out the gov’t tax of 50%) it will never equal the original dollar they could have had. Like I said, without increasing the money supply, it isn’t possible to take $1, pass it around minus the tax rate each transaction, and have the total from each tax add up to the original dollar. That would be magic.
.50 First tax revenue from the dollar
.25 Second tax of 50% from the remaining orig. $
.125
.0625
.03125
.015625
.0078125
.00390625
.001953125
.0009765625
.00048828125
equals
.99932171875
The gov’t didn’t make anything by letting me keep that dollar, they lost money.
What are you guys thinking?!? You think that once the government gets the tax money, the money disappears?!? It most certainly does not, but that seems to be where your arguments are headed.
The government, just like private business and individuals, cycles that cash back into the economy. (That was actually a big part of Keynesian economics: The power of government to spur the economy via tax and spend.)
Or maybe you know better and work in the government in the Secret Department of Money Shredding, destroying tax dollars as they roll in, instead of spending them…
Nova,
I’m not saying it disappears. The mathematical example I gave simply shows that by giving you a tax cut and holding the money supply constant, you can pass that tax cut around, and the tax revenue you can create from that same cut will NEVER equal the original amount. I am saying that tax cuts DO NOT create an increase in tax revenue, no matter what the “churn”. It IS mathematically impossible. The gov’t doesn’t create productivity, they drain it in the form of taxes. Whether it is a direct witholding of money or a tax in the form of creating money/inflation, it doesn’t matter. Your purchasing power went down. Even as the FED says they are fighting inflation, they are still expanding the money supply. They have to. When you get to the point in the game that we are at now, that is the easiest option for politicians. Once enough folks realize this, the sooner we’ll be able to move forward in this bubble, and stop creating additional ones.
You know it’s really bad in Florida when people are posting bulletins on myspace trying to off load their house. I found this on my bulletin page this morning.
Subject: for my friend Jen Gotta sell this house here in Ormond Bch
Gotta sell this house here in Ormond Bch!!!!
Check out my house and please please copy and resend it out!!
We have the dropped the price down to $312,000. thanks so much
http://www.homesandland.com/Listing.cfm?Zip=32174&ListingId=9087450&VideoTour=1&MagId=0455
Took a look at this listing ,don’t know anything about that area ,but ,seems like a nice house for the price . Of course I have tainted eyes because I live in California .
My contribution for today:
Quote:
Seasonally adjusted application volumes were up 1% on a week-over-week basis, but they’re down 36.3% in the past year.
http://tinyurl.com/na5vk
Also, on Marketwatch.com, check out Freddie Mac’s Chief Economist Berson talk about “why affordability is slipping away” ..however, now is a great time to buy. Houses are a “wealth creation tool.” FOr most households, owning a home “has been key to increasing weath”
According to Realty Times, all is well:
Despite rising mortgage interest rates and many economists and pundits predicting a turndown in the economy, two leading organizations say housing sales are still on track to end the year near previous records.
It’s the halfway point, and outlooks are positive say the National Association of Realtors and Freddie Mac.
San Diego, down year over year:
http://www.signonsandiego.com/news/business/20060712-1110-bn12homes.html
High fives all around to fellow bubble heads!
I raise my glass to you and all the other patient SD bears. Cheers!
From today’s MSN money: My apologies if anyone beat me to it.
“A decline in boat sales hits boat manufacturers
Shares of Brunswick Corp. (BC, news, msgs), fell 7.7% today after the maker of Sea Ray and Boston Whaler boats and outboard motors said that second-quarter retail demand had declined significantly. The company didn’t say why.
The report left a number of traders wondering if the sales decline was a signal of declining buying sentiment among high-end consumers.
Competitor Marine Products. (MPX, news, msgs) was down 6.1%, and West Marine (WMAR, news, msgs), the big retailer of boat supplies, was down 2%. ”
I zeroed in on: “second-quarter retail demand had declined significantly. The company didn’t say why.”
Bet a few of my fellow bloggers know why.
good catch
If you can’t sell boats in the summer, you can’t sell boats. period.
10 months of supply in large Northern Virginia county
4,000 inventory; 400 settlements
http://www.nvar.com/market/marketstats/jun06/losf0606.PDF