A ‘Trillion Dollar Tsunami’ In Florida
The Palm Beach post reports from Florida. “Mortgage trouble is creating some of the biggest bargains this side of eBay, allowing buyers to snap up homes for tens of thousands of dollars less than what they might have paid just a few months ago. Notices of pending foreclosures are piling up, in what many believe to be the first wave of a trillion-dollar tsunami: The dollar volume of home loans with interest rates that will be ratcheted upward over the next several months.”
“New Palm Beach County foreclosure filings rose by 34 percent in June compared with June of last year. Clients these days are from such well-to-do areas as The Acreage and Wellington, Jeff Pashkow said. ‘They’re mostly (middle class) people who have financed it to the hilt, and there’s really not much you can do for them.’”
“From March through May of this year, the average sale price of a home in Palm Beach County sold at foreclosure was just $195,705. That’s more than $200,000 less than Palm Beach County’s median home price in June 2006, which was $405,500.”
“It’s a fraction of the $582,000 average Palm Beach County home price in May. And it is almost exactly the amount considered affordable for a worker earning the median income in West Palm Beach, according to the Florida Housing Coalition.”
“Realtor Diane Corbin cites the case of a local developer who was selling a home a week, and who is now selling a home a month. ‘It’s killing them,’ said Corbin.”
The Herald Tribune. “Jade Homes, a Sarasota-based builder with 75 houses in varying stages of construction in Sarasota, Charlotte and Manatee counties, has shut down its operations and closed its main office and six sales centers.”
“Andrew Coles said he hopes Friday’s closure will not be permanent, but added that he is meeting with his lawyers to examine options. ‘We are having to downsize because of the slowdown,’ Coles said.”
“Jade, which has built more 500 area homes since its founding in 1997, sold 123 in 2005, according to Coles. This year, Jade sold four. ‘That tells you the nature of the problem,’ Coles said.”
“Jade Homes is one of three builders that have models at a northeast Manatee County subdivision with large lots where homes are priced from the upper $500,000s to $700,000. On Tuesday, four lots there had Jade Homes’ ‘Sold’ signs on them and two Jade houses were under construction. One of those had a roof ready for a tiling crew. On the other house, the roof had been sheathed with plywood but tar paper rolls sat unattended on the roof.”
“Smaller construction-heavy communities such as North Port, Nokomis, Osprey and East Manatee will likely be hit first and hardest. North Port’s construction permitting activity speaks to that. A year ago, 300 to 400 permits were granted each month in the city. That number has shrunk to 65.”
“With thousands of homes already permitted and waiting to hit the market, the inventory surpluses will likely peak at the end of this year, said Jonathan Dienhart of Hanley Wood Market Intelligence. He remains uncertain about the long-term impact on labor. ‘The constant state of labor shortages in the industry will be assuaged,’ Dienhart said.”
Thanks to the readers who sent in these links. From the Miami Herald:
‘Cara Mantovani, a broker involved with Mirador condo sales who said she will be selling Mondrian units, too, said most rooms will sell for between $600,000 and $700,000. The announcement coincides with a downturn in the condo-hotel market. ”The situation with regular condos right now is pulling down condo-hotels,’ said Guy Trusty, a commercial broker.’
Can anyone tell me what is the best way to track and play the foreclosure market?? I mean, which web sites are the most accurate and up to date?? Do you buy foreclosure homes the same way as any other home or does it require full cash on hand the moment you make the offer?
Thanks.
This is just the first wave of foreclosures, IMO. If you’re going to try to bid at auction you better do some leg work. The county has records. Yes, you need to pay, check with the county for their terms.
Head to Barnes & Noble, Plenty of how to guides there, try to buy guides based on your state since auction rules vary. If you wait long enough using a regular realtor is advisable since you want to personally inspect property before bidding.
Head to Barnes & Noble, Plenty of how to guides there, try to buy guides based on your state since auction rules vary. If you wait long enough using a regular realtor is advisable since you want to personally inspect property before bidding.
Head to Barnes & Noble, Plenty of how to guides there, try to buy guides based on your state since auction rules vary. If you wait long enough using a regular realtor is advisable since you want to personally inspect property before bidding.
Dataquick or something similliar is your best source for tracking most of the websites are dated or gimmicky. If you don’t want to pay and have the time go to your county recorders office and pick up the daily tapes if they have them available.
As far as buying you are going to have to shed a little more daylight on what your trying to do.
After having had a few m drinks sitting by the lake I turned this on and find somebody asking when to buy in a foreclosure. LOL - What dumb F**K stands in the way of a tsunamai? I frankly do not see buying for 10+ years
“It’s a fraction of the $582,000 average Palm Beach County home price in May”.
This has to be a typo. More like $382,000?
Congrats on the Newsweek article (I think it was Newsweek, I saw it on MSNBC.
“From March through May of this year, the average sale price of a home in Palm Beach County sold at foreclosure was just $195,705… It’s a fraction of the $582,000 average Palm Beach County home price in May. And it is almost exactly the amount considered affordable for a worker earning the median income in West Palm Beach, according to the Florida Housing Coalition.”
Well, I guess we know who will be selling at the market clearing price, what people can actually afford: foreclosures. Enough of those, and the market may snap back to fair value rather quickly.
What happens to your credit if you are forclosed on? You surely can not skate away from the loss can you? The law in CA says that if it is a re-fi or Heloc they can come after your Hummer and Jet Ski….not just your house.
They probably dock your pay for years too.
Americans will be pissed to find that border fence now blocking their exit to Mexico and beyond. Funny that the fence will be going up and essentially keeping people in rather than out. That was probably planned and discussed to when they changed the bankruptcy laws.
History has a nasty tendency to repeat itself. In the heydays of Communism, they built long fortresses to “keep the proletariat out” of the communist paradise. Funny thing though was that the machine gun barrells faced inwards….
Here in SoCal the border is going to be the ultimate protection from bankruptcy. Oxnard, Santa Ana, IE, AV are gonna wake up one morning to tens of thousands of missing FBs. The houses will be stripped, the mortgage 90 days late and the place rented out to a half dozen unsuspecting families none of whom speak English or know the owners personally.
So True Robert, Same thing here in Ventura. Next street over there are about three families renting one house that is in foreclosure. Did you see the article in the Star today, regarding Real Estate Fraud in Oxnard?
‘Real Estate Fraud in Oxnard’ is redundant.
Did you read the article?
Yes, that stuff has been going on for as long as I can remember. Phantom co-signers, lend/lease arrangements, beards, fake marriages, illegal subdivides, immigrant exploitation. Hispanic on Hispanic predation is perhaps the worst aspect. No doubt as price increases slow and interest rates rise a lot more of these deals will be exposed by the receeding tide.
Thanks for you insight.
Thanks for your insight.
“Hispanic on Hispanic predation is perhaps the worst aspect.”
You got this one right, Mr. Cote. I’m seeing all sort of cases were Hispanic LO’s and realtors are fleecing their own. And it’s not just Hispanics. I had a couple come in my office the other day in a panic because they didn’t know the nature of the Neg-Am loan they were sold. They were a Philippino couple. They explained to me that there is a great level of trust within the Philippino community, so when a Philippino loan officer was going around to all their family and friends selling a great way to lower your payments to nothing, they never questioned it. Of course, when they decided to look closer at their monthly statement and noticed their principle amount had jumped $8,000, the bells and whistles started to go off.
Good point, Robert and nnvmtgbrkr.
I have seen evidence of this even in some relatively small ethnic groups. And I’m sure you remember the guy in the OC that was using religion to con people last year.
Affinity group fraud is is big business - the SEC even has a page on their website about it:
http://www.sec.gov/investor/pubs/affinity.htm
This race-based mortgage lending is something that was not mentioned in the recent reports claiming ‘racism’ in the mortgage lending industry…
It’s really funny: In an industry with no standards, how can there possibly be racism?!? LMFAO.
I agree about the femce keeping people in. Think about it. We’ve been allowing laborers to cros the border for over 100 years. Why the fence all of a sudden?
But of course that’s why I’m called Suspicious!
Your credit is hosed. It’s better to have a BK on your credit over a foreclosure or NOD. I can do loans for people just days out of a BK, but even most of my subprime lenders will make a person wait 18 months after foreclosure to even consider the deal. I always tell me people, if you have to be late, be late on anything but the mortgage.
Someone else will have to give you the scoop on the new BK laws. I haven’t stayed abreast of what’s going on there.
The new bankruptcy laws are a joke and will slowly be dismembered in the courts, I’m sure. I am also sure that by the time the ‘08 elections roll around, the bankruptcy laws, and who voted for them (Hillary) will be one of the top two or three issues. It’s a Main Street issue, along with this ludicrous housing bubble.
The new bankruptcy laws were probably the only legislation passed in the true spirit of non-partisanship. We had legislators from both sides of the fence who couldn’t get their pens out fast enuf to sign on. It’s all one party anyway, Republicrats or Demublicans. Their job is the same, to work for the business and financial interests to the detriment of their constituents.
Bull$hit….it was the entire Republican party and a few select Democrats who were bought off by the credit card industry. One of those bought off Pols (Joe Lieberman) got sent off packing by the Democrats yesterday and that was one of the main reasons behind it.
The 2 partys are not the same at all and you are incrediby ignorant for saying it. All you have to do is read their platforms and watch what they do, but that would be a lot too much like work for you wouldnt it?
25 Democrat senators voted against the bankruptcy bill. All republicans voted for the bill and 17 democrats too. Watch it with that broad brush, you are making a mess.
And Hilary abstained from the vote. Can’t hang that on her.
Chill out, Kos. Sorry, I had the bankruptcy bill mixed up with the vote for the Iraq war.
And yeah, I paint politicians from both parties with a broad bush full of shellac. I’m just equal opportunity that way.
Eff off Rush.
You are an equal opportunity A$$hat.
Why arent you fighting in Iraq?
Oops, so sorry, I keep getting your name wrong, Kosrove. My apologies. I meant the vote on the Patriot Act.
Read thier platforms? … Ha ha ha you’ve got to be kidding me. Are familiar with the concepts of all talk and no action… say one thing and do another?
Republicans vs Democrats; Liberals vs Conservatives is all a smoke screen to keep you working and paying taxes (don’t forget mass consuming). Wake up you IDIOT (since you like calling people names) it’s all about the wealthy calls vs the working class!!! That’s all it’s ever been.
You do your own homework!
I agree…Politicians work with Business to keep you working for the man the rest of your days. You staunch partisans have got to stop drinking the kool aid. Those clowns you send to washington could care less what happens to you.
Suspicious 2 and cashedin05, you nailed it. The difference between parties doesn’t matter anymore. The country is ruled by the “Elite”. The average working stiff doesn’t have a clue that we are in a very class based socieity where generations of “Elite” big money are the ruling class. The percentage of wealth controlled by the elite is increasing, while the middle class is being eroded. The politicians pander and give hand outs to the masses only to gain power, not to do what is good for the common man. It would be great if an Independent could win an election, but that will never happen.
I thought you got to keep your house in Florida if you declared BK. Don’t they have some provision in their state constitution protecting property in cases of BK? Why wouldn’t these people declare BK before going into foreclosure?
Yes, but it’s primary residence only, on 1/2 acre or less. It’s not the panacea that it appears to be.
I may be wrong, but I also don’t think that the FL bankruptcy laws protect collateral. (i.e. your house can’t be siezed to pay for unsecured debt like credit cards).
Mof the folks who abuse the FL laws are “business men” who milk a business for all it’s worth park the liberated cash in a mansion(no mortgage). They then declare BK when the business folds, and sell the house later to free up the liberated loot.
Most other states and the fed rules only protect a small amount of “equity”, so you have to sell the house, pay off the mortgage and then you get to keep around $30k and the rest goes to your creditors.
You can keep your residence if you declare BK, provided you pay the mortgage. If you don’t pay the mortgage, house will get foreclosed anyway.
And that’s the key. It’s not like you can declare BK and the mortgage is written off for you. That would be great, everyone would be doing it. It’s the mortgage resets that will be getting these folks in trouble. They hummers and boats and toys will have to be sold off to service the house debt, delay the pain, and then foreclosure anyway.
ric’s right. And of course the FBs have no or negative equity so being able to “keep the house” and its negative worth is not a good thing.
In 1986 when former Texas Gov. Connally( the one shot by Oswald) declared bankruptcy, he kept his house, but his creditors held an auction to sell off everything in the house but the furniture and one car ( all of his art work, collectibles, cars).
Also, The Florida law is superceded by the the Fed BK laws that put a cap on the value amount of the house that can be protected (which if I rememeber correctly was in the mid-$300k range- but don’t quote me on that).
A close relative in FL recently filed bankruptcy after his business failed. He had paid down his mortgage before filing; the court, after his BK was contested by creditors, made him pay back a small amount of what he had sunk into his house. Still way ahead of the game.
If you have HELOCs or it is a re-fi; in some states it is called a “recourse loan” and yes, the lender can go after other assets. The theory is that you have gutted the collateral base [your home] by removing the equity value, and the lender wants that value back. They can go to court to seize other assets to cover the equity pulled out by the free-spending homeowner.
For a house, if you walk away from it and the bank takes it back, if any amount you owe to the bank is written off it will be counted as income and you’ll now owe the IRS rather than the bank.
This is what I remember from a class a few years ago and am not sure if the tax laws are still the same.
That tax law still applies. It also applies to charged off unsecure debt, such as credit cards and the like. However, the IRS has a loophole that says if you can prove you were insolvent at the time of the write off, you may not be responsible for the taxes.
It isn’t just speculators who are toast, according to Newsweek.http://www.msnbc.msn.com/id/14251743/
This article focuses on average, unsophisticated Joes and Janes who just wanted a house, overpaid with no money down adjustable rates, and are now going broke. The real dark side of the bubble.
This isn’t even in the shadows. The dark side, and I hate to be morbid but we need to be ready, is divorce, domestic violence, criminality, suicides, etc.
Robert, you’re exactly right. A mere glance back at history will bring to recollection many who have jumped out of their 20th story office on Wall Street for a whole lot less than what this bust is going to do to the economy.
unfortunately very true Cote;….it could get ugly depending on the severity of the downturn….
what do any of us care? Only criminality may impact us - the rest I call ‘weeding the herd’.
Indeed. Be on the look out for pissed off people. And can’t imagine what the So Cal “road rage” scene is going to be like in a year or two from now. Maybe the next business opportunity will be in bullet proofing vehicles. Hmmmmm……
Were I of the mind I’d put up a sign where the CA-14 northbound crosses the California Aqueduct reading:
Welcome back 17 hours later to your homes in the Antelope Valley. $4/gal to get back to a house worth $200 less than when you left this morning. Get to bed early, you’ll need to be on the road by 4:30am to beat the congestion to do this again tomorrow.
I’m trying to remeber the name of the movie with Michael Douglas where he just loses it and goes postal.
‘falling down’
Falling Down (1993)
Unemployed aerospace engineer in LA loses it
Falling Down.
Welcome back 17 hours later to your homes in the Antelope Valley. $4/gal to get back to a house worth $200 less than when you left this morning. Get to bed early, you’ll need to be on the road by 4:30am to beat the congestion to do this again tomorrow.
Cote;…You forgot to leave your name and address on this…
Cote;…You forgot to leave your name and address on this…
Oh. Sorry:
This has been a public service announcement of the Sierra Club, LADOT, Caltrans, LAMTA, APTA, Smartgrowth America and CNU.
Did you have any company last weekend Cote from the fellow poster who needed a room?
No unfortunately. I’m not really an irrascible curmudegon spouting doom and gloom. I only play one on the internet.
I spent the weekend on my HELOC funded home addition. With girls 15,12 and 6 separate bedrooms are a necessity thus my building a new office. Awesome location, priced to move, million dollar views, priced right, handmans special. $15k and some sweat for 300 sf? Quite the bargain. Not having the siblings kill each other? Priceless.
3 girls 1 guy eeh Cote;….Now I understand why you use the Blog to vent….
Stephen Leeb’s “The Coming Economic Collapse” states that keeping a very low profile, wealth-wise, will be key to surviving the coming storm.
The problem with that will be that people are going to figure out that the real wealthy people are the ones that don’t look it. They’ll figure out in a hurry that the fancy Betty, adorned in all the latest bling, riding in the fancy Escalade, was after all just a fellow debt junky.
If they didn’t figure it out from “The Millionaire Next Door,” they never will. I agree. No reason to show your wealth if you want to keep. Live simply, drive an old car and family and friends won’t be hitting you up for money. Complain a lot about your (nonexistent) credit card bills too.
Good dream - doesn’t work.
Wasn’t it “LA Story” in which they had free-fire days on the freeways?
Up until this speculative nonsense, the rule of the three D’s always applied in real estate. You won’t get a good deal unless there is death, divorce, or destitution involved. In other words, it has to be a forced sale for the deal to be any good whatsoever.
It appears we may get all three in spades. There is a time coming when real estate will be so despised that it will seem to defy common sense to even consider it. Now THAT will be the time to buy.
Try world war.
I’ve said it before. It will be very sad for all of us. Even those of you who feel insulated and smart because you’re not part of the sheeple.
People make stupid stupid stupid mistakes. No doubt about it. doesn’t mean that they don’t deserve a little compassion.
Yes I know even the regular Joes speculated on home appreciation… but how many regular people could have understood that 2000-2005 was such an aberration? (especially those that bought in 2000-2003)
clouseau
It would be immoral and a hindrance to their development as responsible citizens to intercede and shelter them from facing the full consequences of their actions.
I believe in consequences for ones actions. Although I do feel sorry for some of these folks, it would be wrong to shield them from the results of their choices. “You reep what you sow”.
I really do not feel sorry for the “equity locust ” ,in all the forms they came in . I think we will find that there was a lot of fraud on the loan applications with the locust in their quest to amass wealth. Regular Joes who were just buying a house to live in that take a bath are the ones I’m concerned about .
“It would be immoral and a hindrance to their development as responsible citizens to intercede and shelter them from facing the full consequences of their actions. ”
Well said.
Funny, I recall a Counselor talking to our Grad studies class about his experience working in a youth group home…he said, “these kids don’t need prozac, they just need a good ass-whuppin!”
DOC
Very well said.
I agree Inspector;…Whats wrong with a little compassion particularly if (like Cote has suggested) there could be much suffering ?? As I have mentioned before, how many here that “Thirst” for blood participated in the DOT COM fiasco ?? If they did, and they now want the flippers to “DIE” are they not hypocriticle?
The problem with cmpassion in this case is that it isn’t compassion. I have an infinite supply of compassion. Anyone with a modicum of humanity can manufacture more at any time. No, what people are trying to pass off as compassion is actually spreading pain to those of us who don’t deserve it. Money handed to stupid people or even people with money problems is no more compassionate than give heroin to addicts. Worse, all the offers of compassion to date have been in the form of people offering these FBs my money. It is my money and calling its forcible confiscation “compassion” doesn’t make it compassionate. Look into my children’s eyes. Tell them we cannot visit grandma this year. Tell them they cannot afford the “free” California College education they earned despite being accepted. There, tell them about compassion and needing that money to resuce somebody who paid 4 times as much for a house as they could afford thus pricing these children out of their childhood communities when they grow up.
Go ahead, be compassionate. Just don’t call anything less than the necessity that they face the consequences compassionate.
You are describing bleeding heart democrats…
“I agree Inspector;…Whats wrong with a little compassion particularly if (like Cote has suggested) there could be much suffering ?? As I have mentioned before, how many here that “Thirst” for blood participated in the DOT COM fiasco ?? If they did, and they now want the flippers to “DIE” are they not hypocriticle? ”
Dave: I’m glad you get it.
People confuse the word “compassion” with “absolution” often.
Just because I have compassion for somebody’s situation, and feel that their situation is sad, does not mean that I necessarily feel that they should not be culpable for their actions. It doesn’t mean that I don’t think they need to be responsible for their actions. It just means that I feel empathy for their situation, and realize that IT COULD HAVE BEEN ME.
I often use stories of those around me when addressing this housing bubble. (like my friend in SD who’s way underwater, the neighbors who have their rental property, and so on). It is because to me this credit bubble has PERSONAL ramifications.
If it were just a bunch of random digits buzzing around from bank to bank, I’d hardly care so much.
But instead, these random digits buzzing around have direct consequences to my friends and family. On who will be able to live in a house vs a rental. On who will be able to retire after all. On who will be able to go to college. On who will be employed.
And then, directly or indirectly, it will impact me too. Will I be able to retire when I want? Will my best-friend neighbors lose their homes, and be replaced by icky people? will my neighborhood turn into a slum? will I lose my job if enough people lose health insurance that they can’t come and see me? will my country turn into a Banana Republic?
It’s the personal aspect of this credit bubble that really has the true meat and bones.
And thus, I have compassion.
clouseau
Well said Doc;….And, I agree….It was the Bush Admid that turned this into a “Ownership Society”….It was Greenspan and the drunken sailors in congress that decided to give every stiff “free money”….Now, the consequences…..
scdave,
You sound so American.
Is it not conceivable that “It was” stupid people that caused all this? Regular folks did this - not easy money or politicians. Blame Clinton, Bush, Greenspan, whoever - nonsense. People (not saying you) need to take responsibility for THEMSELVES.
Blaming the free money just because it’s there? How about this, a woman wanders into your neighborhood naked and helpless. When she is raped, will you blame this event on the circumstances? Is it her family’s fault for throwing her out? Society’s for not finder her sooner and getting her to a shelter? Could it not possibly be the guy who decides to walk up and assault her - sure that there will be no negative consequences - who is to blame?
THIS is what has been going on with the housing bubble lately. Stupid people doing stupid things. They don’t see or don’t care who they are hurting, and they certainly don’t believe that anything bad can happen to them. I don’t care HOW intelligent or educated they are, they lack wisdom and common sense. They are STUPID.
We rent;…Stupid people ? Greddy specuflippers Yes…People buying beyond the means Yes….John & Jane with little Johnny & Jill trying to ground themselves in their community No !!! Problem is, everyone gets caught and the honest/innocent go down with the scum….
We Rent;….Stupid people ?? The specuflipper Yes…The person/persons purchasing beyond their means Yes…The John & Jane with little Johnny & Jill trying to settle into their community NO !!!!! Problem is, the honest/sincere get buried along with the deserving scum….This is where I use “Compassion”….
“But instead, these random digits buzzing around have direct consequences to my friends and family. On who will be able to live in a house vs a rental. On who will be able to retire after all. On who will be able to go to college. On who will be employed.”
So are you saying your friends and family are in trouble here? And, by God, I can’t believe you wrote, “live in a house vs. rental”. Get educational loans to go to college like I did and pay them back. You guys old enough to remember why educational loans were eventually exempted from discharge during bankruptcy? Because people abused them. As for retiring, I think we’re all going to have to look at that when the time comes. You’ve hardly described people starving to death here - this is normal, everyday life.
but how many regular people could have understood that 2000-2005 was such an aberration?
Any adult with half a brain and a functioning memory of the previous five years should have understood it was an aberration.
You’d have to have a heart of stone not to laugh at them.
You have more faith than I do in the average middle-class citizen. Many people have limited or NO understanding of fundamental economics. They believed that housing and land was forever to be in short supply. They believed that we had entered a new-era economy where house ownership was the road to riches in retirement.
Many of my friends (we’re still pretty young) get the glazed look in their eyes when I explain we are in an abberation and use history as a lesson (tulip mania, railroad mania, 1926, 1980s Houston, Denver, etc). Many people assume that we have learned from the past but I am most certain we have not.
I hope when this bubble is gone that Congress mandated both macro and micro economics as a prerequisite for high school graduation. In our society that is just as important as mathematics and science.
I disagree completely - why waste resources on that? Most graduate at 7-9th grade levels - if we are lucky. Their reading, spelling and basic math suck. Why run before you can walk? Most are no more able to understand acid ratios than they are textbooks in Latin.
WTF?
Oh yeah, most Americans are right up there with the rest of the world in the areas of math and science. They’re more likely to know that Paris said she wasn’t going to have sex for a year. F* tards can’t even add without a calculator.
It’s not even a matter of knowing about the previous five years - it’s a matter of people being GREEDY and buying more house than they could afford, because they ASSUMED they would turn around and sell it in 2 years for 100K more than they paid for it.
My personal risk-taking guidelines have always been to not risk more than I can afford to lose - simple, and rather commonsensical. We weren’t stupid enough to buy a house that we KNEW we couldn’t afford (ie, we bought with a fixed rate, 30 year mortgage whose PITI could be covered by one income - the LOWER income, not the higher one!) - assuming, that in the WORST case scenario, we would actually have to PAY that money back.
Ya know, that’s really the root problem. People were taking out mortgages with no intention of paying them off - so really, what did it MATTER how much it was? They could always sell.
And my friends would always look at me crazy when I asked - but what happens if you CAN’T sell it?
Now, I guess we’ll all get an answer.
Exactly. The buyers never had any real intention of paying for the house, so they weren’t concerned with the purchase price. All they wanted to know was what the monthly payment was, and then they assumed that they would sell or re-finance when the mortgage was going to re-set. And the loan brokers were telling them to do this (no conflict of interest there, huh). It sounds good, but you have to ask what is the risk? The risk is that property prices fall and your underwater. What are you going to do then? These buyers didn’t have an answer (and most never even asked the question). It appears that the answer is going to be foreclosure.
This gets me so irritated. I think I have to go blow off some steam by making some ridiculous lowball offers.
That’s the first MSM article I’ve seen that has pretty much all the elements that we’ve discussed for a year. They still haven’t made the connection yet between the dollar, inflation, and job loss. But they did mention job loss, but qualified it as, “Everything should be ok if unemployment stays low.” They haven’t made the connection between the US consumer society and the ‘jobs’ that it’s created the past few years. When they go, then we’re phucked.
Dr. Evil says; “O_N_E T_R_I_L_L_I_O_N_N_N_N dollars.”
Let’s put that in perspective. How many households could cough up an extra $100 per month? Nearly all could but most would notice. Half the households and $200? Some could not, all would feel discomfort. 1/10th and $1000 extra per month? Welcome to the definition of unsustainable.
One trillion dollars. Two thousand very large suitcases stuffed to the gills with thousand dollar bills.
Of course I’m sure that there AREN’T that many $1,000 bills. They were last printed in ‘45 back when that was a serious amount of money.
How about twenty thousand suitcases filled with $100 bills then?
Actually, I believe that total currency and coin in circulation is less than $1 Trillion.
Not to worry, they’ll be printing them again real soon. The Wiermar Republic ascendant!
http://exurbannation.blogspot.com/2006/05/thats-per-second-louie-per-second.html
By my calculations the US housing equity value is losing $115,740.74 per second. Thank the gods for HELOCs and SELOCs.
$100?
that is too conservative… most of the ARMS were written with 2.25-2.95 margins on treasury and LIBOR indices with a 2% annual cap. It will be far worse when they watch their rate of 5.5 jump to 7.5…
check out moneycafe.com for 10 years of historical data of all the major indices and you will see what I mean. Unfortunately this is the perfect storm with the deflating RE values and the above increases….
margin+index equals rate…. option(suicide) ARM
I remember the words of a friend who bought a house two years ago in Florida for $600k…. “Everyone’s moving to Florida and they’re not making any more land, this house will be worth 1 million dollars in a couple of years, just watch.”
Remember the old saying….. If it sounds too good it usually is!
Hype is the way the bubble has been and many people who fell for this old trick are going to be burned.
The Palm Beach Post is really getting the message and reporting honestly. I find that quite intriguing insofar as the RE complex must be a large part of the economy there and must have attempted to exert at least some editorial pressure.
TC
realtors up my way are having a tough time convicing sellers to price their houses for this market. maybe the realtors are putting pressure on the papers to hep the sellers along. After all all they need are sales. really doesn’t matter what the price is.
Yes. I probably sound like a broken record, but it’s only a matter of time before realtors nationwide realize that lowering prices is in their best interest. I wouldn’t even put it past DL to nail down seller’s expectations as the problem (once his paycheck is threatened…)
OT… CFC News
8:10am 08/09/06 Countrywide Financial July home equity loans up 4% to $3.8B - MarketWatch
8:10am 08/09/06 Countrywide Financial July mortgage loans down 19% at $36B - MarketWatch
I shorted the CFC today.
I’d be careful, most bankers see the storm coming and are taking necessary precautions (layoffs,budget cuts, etc..).
“Jade, which has built more 500 area homes since its founding in 1997, sold 123 in 2005, according to Coles. This year, Jade sold four. ‘That tells you the nature of the problem,’ Coles said.”
Now we see the true nature of the demand for FL housing. What a telling quote.
I wonder what happens now that all these builders go out of business and can’t provide warranty for their shoddily constructed homes?
Speaking of shoddy: Friend of mine just had some carpet replaced in her builder-built house. Despite being fastidious with her shoes and avoiding tracking in dirt, she kept getting dirt stainson the white carpet on the ground floor near the front door. Even with professional steam cleaning, the stains never seemed to come out. Come to find out, when the carpet was ripped up years later, the original builder (or his hires) didn’t even sweep the mud off the concrete before they laid carpet down! Lazy idiots!
So there was a layer of red clay under various areas of the carpet pad, and every time she gave it a really good cleaning and drying to get rid of the stains, all it would do is dissolve a bit more red clay to wick up into the white carpet. Thanks, Mr. Builder. (Who is now long gone…)
I always thought it was odd that people in various cities:
1) put carpeting anywhere near the front door
2) don’t take their shoes off every time they come in the house.
In MN you always take your shoes off before going into a house. Even if you’re just running in quick to grab keys off the living room table or something.
But in CA you just walk right in! Doesn’t matter if there’s a storm or anything. I see the same thing in DC and in charlotte NC too…
clouseau
Nasty, isn’t it?
Moman, I’m wondering the same thing. I posted some thoughts over on the bits bucket thread on the crazy eminent domain abuse that has developed along with the housing bubble and I’m wondering if the local governments can declare these failed developments blighted and hand them over to someone else. As far as I am concerned, we already have many “blighted” developments in the Tampa Bay area. If it is a statewide problem, then perhaps the state will be doing the eminent domain taking.
” On Tuesday, four lots there had Jade Homes’ ‘Sold’ signs on them and two Jade houses were under construction. One of those had a roof ready for a tiling crew. On the other house, the roof had been sheathed with plywood but tar paper rolls sat unattended on the roof.”
In Phoenix circa 1982-1985, I remember playing golf at Arrowhead Ranch, where a number of partially constructed homes sat for years, and they were golf course lots! Some were just foundations and wall frames.
Wasn’t the big drop-off in sales to be expected? Historically home ownership rates have hovered around 67%, but in the last couple of years have touched 70%. This had to represent significant pull-ahead sales from 2006-2008.
The Eminent domaing debacle was planned ahead by urban development authorities, and goes something like this:
1. City has a housing issue. Too many people, not enough low income housing.
2. City identifies low density urban area, preferably old neighborhoods with even older citizens.
3. City blights said neighborhood, for the good of the citizens of course, and gives development rights to large devloper.
4. Large developer builds and sells to flippers. Towers are generally dark at night during a football game.
5. Flippers flop, and go foreclosure route, Bank takes over.
6. Bank holds properties aproaching 70% of said dark towers. City urban development makes them an offer for 30% of price, and instantly has affordable rental housing, paid in part by the banks, and the floppers.
Thanks, pinch, never looked at #6 as being part of the plan. Maybe those wily local governments have been smarter during this bubble than I’ve given them credit for.
Ideally what was supposed to happen was 100% ownership, with people still fighting over getting there hands on more housing because of ‘demand’ and they’re not making anymore land, and they’ll be priced out forever, and that of course only goes up in price, that they can then trade with other people that can’t get enough and are willing to pay anything to get it so that the seller can retire in a million dollar house, and of course that was supposed to work for everyone. Not sure why that didn’t work out as planned.
Actually, the historical rate is around 64%, which is why Greenspan himself stated that the recently added 5% were likely at risk. He’s right… these people never should have had homes, and very soon they won’t (again).
I think the question will be: How much will it overshoot? ie, will the ownership drop to 64%-5%= 59% on the downside, or will it go to something like 55%?
It is gonna get complex and messy. I can easily see picking up a few more houses at the bottom and “letting” my children stay there for tax and management reasons. Are those owned? They’d answer no to the question as posed above but that isn’t the whole story.
Anyway. The messy part is because the rise in recent ownership was disproportionately minority and woman owned properties. There’s goona be social angst when theis bubble hurts minorities the most.
Headline: “ASTEROID TO DESTROY EARTH TOMORROW - WOMEN AND MINORITIES HARDEST HIT”
Same period, I remember flying over several developments in Navada with a friend in a light plane….tract upon tract with fully improved lots (Street, street lights, curb, gutter etc.) with weeds growing on every lot…Kinda scarey….
I grew up in a development in WA like that. I thought everywhere had miles and miles of empty streets without a house in sight built just for the kids to ride their bikes in.
Now really, was this that hard to see coming? We on Ben’s blog have been saying this since it began. They just now figured it out? Fools and greed. Let em’ all turn to toast.
I spend one week/month in Central Florida, and this is my week. I talked to a few people about the housing crash, and the foreclosures.
One said to me “5 houses on my block are for sale…they’ve been for sale for months. I hope the prices don’t fall a lot, otherwise, the wrong type of people may move in!”
I just took a sip of coffee and nearly spit it out laughing. As if people that buy houses that can’t afford with “exotic mortgages” are the “right kind of people?” Ha!
As I wrote before, borrow a few billion, it is the banker’s problem.
Borrow a few trillion, it is OUR [taxpayer's] problem.
Sigh…
Haven’t the MBS’s been sold to foreign investors?
No tax payer will be immune: not just US but those in other countries will suffer from factory workers and outsourced IT workers to those retirees dependendent on MBS both foreign and domestic.
just as 29 crash followed up with a global depression, 2005/2006 crash will not leave other countries untouched, if you ask me…
does not matter, they live within thier means and are accustomed to a simple life. i would love to see the people here walk to the store and carry home thier groceries.
Okay. If all of above is true about homes sitting what is this writer smoking in Phoenix?
http://news.yahoo.com/s/prweb/20060808/bs_prweb/prweb421240_1
That’s just a ridiculous PRWeb.com news release. The company putting it out, labelled JW Marketing, seems suspiciously-closely named to *J*ohn *W*esley who wrote the article, perhaps just some local realtor or investor trying to pump things up. Those PR newswire things are sometimes the source of so much worthless blather…
Just throw that “press release” in the garbage/bit-bucket.
At least he had to pay for that pile of rubbish to be released. Sizzling Market indeed !
OK, if foreclosures consist of one-third of sales, then when do we see 10 percent drops coming immediately that will precipitate capitulation in one year? Will statistics simply vanish into thin air and we won’t be able to see the crash accurately? Are we already getting misleading statistics demonstrated by constant downward revisions?
Is anybody here still ignorant enough to think that we live in a free-market Democracy? I saw John McCain on Leno and wanted to puke, and he’s supposed to be a lone voice in the wilderness calling for transparency in government.
there is so much denial in southeast florida. everyone is waiting for the baby boomers and claiming that money doesnt matter. when gas is 5 dollars a gallon, what are they going to say. also, ben just to let you know, in pbc there is alot of land. my job has me driving all over pbc and south florida. only broward county is in a bit of a bind. the problem is that people dont want to live in a neighborhood that is not protected by the police (from dixie to the turnpike in broward) and (from dixie to military in pbc) most of north miami-dade and parts of south miami-dade. and if your home is not in a A or B rated school, forget it. the govt. never thought of having a real redevelopment project, so people are not moving back to most working class areas. in miami-dade, there is a huge land area that is protected by ubd. mainly west of the turnkpike, north of tamiami trail, all the way to the broward county line. the new marlins stadium may go there and there is a push for development for upper and middle class people in miami-dade.
if this area opens up, thousands of properties will be developed.
THERE IS NO LAND SHORTAGE IN SOUTH FLORIDA, JUST SHORT SIGHTED PEOPLE.
I’m sure Miami-Dade wants to attract upper and middle class people, but they forget that for every upper class person to acutally live here, you also need three middle-class people to run their business, teach their kids, and keep them safe, and for each of them three lower-class people to mow their yard, take care of their parents and kids, and wipe their asses. Try to alter the capitalist fomula by rasing the cost of basic living to intolerable levels in a geographic region, and it all falls apart. This is where So FLa is headed. We need the peons!
the issue is traffic. many upper and middle class people that work in miami-dade, live in broward and even palm beach county. so flo govt has forgot the poor and middle class. they are paying the price and this is just the beginning. every new program or now this so called push for affordable housing is a joke. PEOPLE YOU CALL PEONS, know the game and well, south florida is on its own now. dont hate the game, us peons are not buying shacks for a half a million anymore.
PBC is very interesting. Have some family who live in an affluent development down there. It’s quite interesting to go out with them; outside of their gated community is a trailer park and plenty of people wearing camoflauge filling the local restaurants.
“people wearing camoflauge”?
THAT is funny!
Those enclaves over in SE Florida are really something. I’ll never forget visiting some friends in Boca in a new development. To get to it, you drove past several migrant worker camps (fruit/vegetable pickers). Talk about night and day.
They’re actually building a Marlins stadium? I thought Loria was being anal with the city to have an excuse to move them to Vegas?
Spoke with a realtor friend of mine about buying a place in Delray Beach, FL. Looked at a few places on realtor.com and could not believe the level to which these prices have gone.
My old house sold for $240k in 1998 is now listed for $600k and that’s after the price reduction. I see so many house that have “reduced” on them, but the prices are still 2X or more what they sold for 5 years ago. I understand real estate has appreciated but this is ridiculous.
On a brighter note, my friend who has been a realtor for 25 years and is a real professional told me that he has never seen anything like this before. No traffic, no offers, and he has a huge office in So. FL. I’m waiting for now. Maybe I should get my butt down to the Palm Beach County Courthouse and strike a deal.
Problem I see with that is, the banks’ attorneys normally bid the $$$ amount of the mortgage. That will do us no good. They’re going to have to own a lot of RE before we see them start to unload.
You have a realtor friend too?!? I thought I was the only one with a realtor friend… or should I say friends….my step brother, my coworker, my long-time friend of the family, my bandmate, my ex-girlfriend….I could probably name ten more if I got into my aquaintances!
Now repeat the excercise for all who you know that are laon officers.
My brothers former roommate, my coworkers girlfriend, the drainage contractor at a construction site I was at recently…
Realtor and friend? That is an oximoron.
Estanley mentioned the need for workers in the Southeast market to sustain the wealthy. There was an article posted on Bloomberg Tuesday, Aug 7th titled “Bubble City: Workers Flee Naples, Florida High Home Prices. The article is all about the workers leaving. Those middle income workers who bought several years ago are selling and moving. The Herald Tribune had an article last week with the owner of a popular mexican restaurant “Two Senorita’s” in Sarasota having to provide affordable housing for her employees. She won’t expand to a third location because there just isn’t enough help. It’s too expensive. Areas of Florida are becoming just for the rich. Problem is when they can’t staff enough police officers, nurses….. crime goes up, healthcare goes down….The media is covering this stuff because they can no longer ignore it! Real estate revenue or not, news is news.
Miami-Dade has the highest rate of child poverty in the U.S., a result of the huge income disparity. I also think that is a reason that this area also was listed as having the rudest people in the U.S. Everyone seems pissed off about something, especially the lower working class. Moving here from the San Diego area, this part of Florida reminds me of a second-world nation. I lived & worked in South America for two years and Miami-Dade reminds me more of that than anyplace in the U.S. I went to school orientation for my son yesterday who is starting middle school in South-West Broward. School lunch is going to cost $3.25 per day. You’ve got to be kidding me. Also the schools here give each student a huge list of things to buy, which predomantly are things for the teacher to use during the school year. Also, even though the school is only a few years old it looks like a dump. Very reminicent of the South American city I lived in. Since the teachers are underpaid, I can only assume that the tax money for schools here is sucked off by several layers of corrupt administration. There is such a huge difference between here and San Diego in regard to basic infrasturcture that it is alarmingly noticable. The funny thing though is if you have nothing to compare it too (like most of the people here), then it all seems normal. That is the scary part and leads to complacency in making improvements that would benefit the middle class.
My mom is a teacher in Palm Beach County. She told me a story of her principal, who bought an expensive couch for the front office using school funds. She then bought a cheap courch from Walmart that was similar to the new couch and switched them out over the summer. Just an example of corruption….but yes, the attitude is that they are underpaid, so they do what it takes to compensate themselves.
Seems we’re not in for such a bad season…yet. Forecasters are now pulling back. (see link)
A Few Less Hurricances in 2006
Doesn’t mean squat.
All it takes is one, like Hurricane Andrew.
Yea - and you know all the weather men/women geeks are seriously bummed so far.
Though, just like the article said, the “meat” of the hurricane season hasn’t kicked in yet. Mid-August, which is next week….stay tuned.
Since when have weather forecasters been right? Most of the time, it seems like they can’t even predict the weather accurately one or two days in advance. Here, they’re trying to forecast for several months. And, as seen by this correction, they’re now saying their earlier forecast was wrong, but this one is right. Why should we believe this one is any more accurate? Pretty much like the NAR, who first said we would be at a permanently high plateau, then said that prices might drop a little. Both predictions were wrong.
True - it would be a laugh if this hurricane season amounted to nothing. That’s not exciting news!
I just wonder how much we, the sane people who save and work, are going to suffer in this coming meltdown. After all, letting the stupid people hang themselves from their own mistakes just isn’t allowed in America!
Category 5 Hurricane is going to hit China today.
No hurricanes should lower prices more. It seems like after every hurricane prices go up not down (less supply, more demand). Also BB did not increase the interest rate this time around which should take some pressure of buyers, to hurry..
What beats me is that in my building prices keep going up since the 2005 peak ( i live in North Bay Village , 1 mile from Miami Beach, used to be a poor folk area, now it has been discovered by the $$$$ crowd). Also, the rents are getting to be outrages. My rent has not gone up but I do not have a lease and am worried every month that my rent will be raised. I make 40k py and hubby not even 30K and with one child I have seen our rates for just about anything go up. Health insurance up by 22%, food is up in the supermarket, school lunches up, gas up, I know I missed the boat big time by not buying and even though I am sooo greatful for this blog, I really have my doubts.
Today they mentioned on the news that they want to change the property tax law that people can take their “old” taxes from their inexpenisve home to their new home. This to keep the market going and not imprissoning people in their old homes because they can’t afford the tax on the new one. Great idea but my point would be, WHAT ABOUT THE RENTERS WHO WANT TO BUY?? Where is our tax break. Yes, I am getting desperate..