‘Desperate Times Call For Desperate Measures’
Several readers posted comments about a topic on the real estate industry. “Desperate times call for desperate measures. As the reality of the bubble popping seeps into the RE sector, desperation may result in some blatent illegalities. A SoCal RE eCONomist openly called for collusion amongst agents last week in a feeble attempt to prop up prices in his Mid Year report.”‘
“What are the ways RE may be quickening their own demise. What are the most transparent acts of desperation you are seeing/hearing/reading from RE this week? Who in the regulatory sector should be watching more closely as things unfold. What measurements are the best and how could these be standardized?”
“IMHO RE needs to be regulated in the same manner as securities. Falsification, decepetion, misrepresentation and collusive tactices are fraud and should be punished. Changing statistical measures on the fly in ways that prop up the sellers/RE side as we saw this week with the affordability index seems just plain crooked. How does a whole industry get away with this crap?”
“I am in no way suggesting that consumers are devoid of responsibility. Just looking for honesty, truth, and some semblance of ethical behavior in an industry that is showing itself to be blissfully free of all three.”
Another said, “RE actually affects many more people, and much more severely, as a majority of most people’s money is tied up in RE, not stocks. There is no doubt that these people need to be regulated if their statistics, predictions and recommendations are published in the MSM with the intent of influencing buyers’ and sellers’ decisions.” And another,
“As a ‘data’ source for MSM, REIT has shown it’s colors and needs to be regulated or replaced. As RE now moves to ‘educate’ the sellers on ‘realistic’ pricing I imagine that many sellers will take their business elsewhere hoping to get the max profit.”
“I also imagine that any attempts to introduce regulatory legistlation will be met with very stiff opposition from the RE lobby. But, as this gets increasingly uglier our esteemed representatives may start looking for scapegoats and if the choices are RE vs lenders I suspect RE will take the hit.”
One replied, “In the past, my house has always been my home, not an investment. But it seems that in the time that I’ve owned, things have changed and real estate is now an investment. If that’s true, then yes, regulation is in order. And if that’s not true, and a house is really still just a home? Then let the prices reflect that reality. Either way, a change is overdue!”
Another concurs, “I agree, for the most part residential real estate purchases were not investments in the past. People bought houses to live in. There were always some purchases for rental and cosmetic fixup and turn over for profit. But these latter I feel were a small percentage historically.”
“Something did change in this cycle and I believe it has to do primarily with how captial gains taxes on property were changed to encourage activity in the sector. Here in OC the shift was noticable 5 years ago. Real estate became about profit rather than housing families in communities.”
“I also believe that the ways that real estate is measured have always needed to be changed irregardless of the agenda of the buyer. It has always been a cryptic maze of moving numbers that agents and brokers have manipulated/skewed/slanted to CONvince buyers and sellers.”
The US News and World Report. “With home sales down by nearly a third in Florida last quarter, thousands of those who hoped to cash in on the real-estate gold rush are now facing the cold reality of working in one of the country’s most cyclical businesses. ‘Everyone’s getting out,’ Jiany Massad says of colleagues who have already traded in their real-estate licenses for jobs in the jewelry trade and Internet sales.”
“‘There’s somewhat of a time lag here, but everyone’s eventually going to feel it,’ says Jay Butler, of the Arizona Real Estate Center near Phoenix, where housing-related commerce accounts for about a third of the local economy.”
“In Florida, where in some coastal areas housing now accounts for as many as 1 in 5 jobs, the number of real-estate agents alone has increased by more than 40 percent since 2001, to 305,000. Brokers’ ranks have also surged in California, to more than half a million-about one for every home the California Association of Realtors expects to be sold this year. ‘The numbers just don’t add up,’ says Vince Malta, CAR’s president, who predicts a coming shakeout as less experienced agents find they can’t earn enough to stay in the business.”
“‘It was quick, easy money, but then rates go up and it’s over,’ says mortgage trainer Christopher Cruise, who recently visited one mortgage lending operation in Rockville, Md., that let all 71 of its loan officers go.”
One posters quote and comment from the previous thread:
‘HomExpert spokesman James Angstadt said it was difficult to pinpoint how long it took for those homes to sell. ‘Many Realtors take a million-dollar property on and off the MLS database a few times to make it appear like a fresh listing,’ Angstadt said. ‘In turn, this causes the days-on-market number to be inaccurate.’
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‘Is anyone else sick of this sh@t?! Who polices this industry? It is literally run like a criminal organization that has no sense of honesty or credibility!’
I had that feeling long ago with the multiple bid baloney, next time they pull that crap on me I’m not going to blink and ask to see them. Buying a house shouldn’t be lowered to the sleazy practices of car dealers.
I bought a commercial property near redwood city (just off highway 101) two weeks ago. The sellers agent I was dealing with told me there were a couple other offers on the table that were 50k higher than mine, and she mentioned that she really shouldn’t be telling me this but if i raised the offer by 60k I’d win the deal.
Right there, on the spot, I looked her in the eye and told her: “That’s the oldest scam in the book, do I look like a rube to you? Tell you what- take my offer or leave it.”
That SAME AFTERNOON my agent called back and said they had accepted.
You should have reduced it, on principle, by 10K, “take it or leave it.”
That’s exactly what I would have done.
I would have walked away.
I would have kicked her in the gonads, and then walked away.
i already e mailed the zip realty agent in san diego that i refuse to even look at never mind buy a listing with a price range.just tell me how much you want for your stinking property.
Used car dealers have more ethics! Unless of course they were former realtors.
What is it about people that makes them arrogantly think that they are the only one’s in the universe considering buying a piece of property when it comes on the market. I’ve had instances where I have had within three hours of putting a property on the market no less than 10 offers come over via fax and email. It does happen and it happens more often than not. Bubble or no bubble. In a instance last year I had a piece of crap property that within 3 days I had 35 offers. The seller waited till the weekend before he would even respond. In total I winded up with 50 offers on one piece of crap. Typically I don’t encourage my clients to participate in that kind of action. But even with that advice they still choose to throw their hat in the ring if they want it bad enough.
I remember a few years back when I worked for a brokerage. Some smart guy buyer was complaining and threatened to sue. The broker pulled the agent in the office and the guy slapped 25 offers down on the desk while the smart guy was sitting there. All he could do was drop his head and walk out the office.
The arrogance of people sometimes is amazing.
I remember a few years back when I worked for a brokerage. Some smart guy buyer was complaining and threatened to sue. The broker pulled the agent in the office and the guy slapped 25 offers down on the desk while the smart guy was sitting there. All he could do was drop his head and walk out the office.
There are too many pronouns and too little background for this to be comprehensible.
How’s this.
Some a$$hat idiot buyer made a fuss because he was told there were multiple offers on a piece of property he wanted to buy and thought he was entitled too. Down market, plenty of R.E.O.’s, M.L.S. hemmoraging with inventory.
This a$$hat thought the agent was ramping up the price of the house simply because he the idiot was interested in buying it.
He called the broker of the company, the broker called him into the office for a sitdown and promised to remedy the situation if what he was accusing the agent of was true. During this meeting he threatened the broker with legal action, reporting him to the DRE etc. etc.. Typical a$$hat gibberish.
Halfway thru the meeting he calls the listing agent in. Brings the listing agent up to speed of what he is being accused of. Agent denies it. A$$hat idiot buyer gets beligerent. Agent walks out of meeting and returns with 25 offers he had received over a 2 day time frame. Broker asks a$$hat would he like to submit a competetive offer or any offer for that matter. A$$hat drops his head and walks out with no further comment.
Bottomline multiple offers happen on a consistent basis in any market. Especially if the property is halfway attractive in either price or location. What I tell people when they complain about it when I’m the listing agent… Go away or get over it and get in the game. I don’t encourage my clients to do it but ultimately the decision is theirs not mine.
Sorry for the incoherence I was trying to be brief.
I had a friend that looked at Condo. They offered on it, and it got rejected, told they needed to bid higher. They said no. Magically, their offer was okay then. Smells fishy to me. Him and his wife decided to wait (thank god). Salaries here don’t support the prices, and that is why one neighborhood was reported to have 9 years of inventory sitting there, and the home builders can’t figure out how to sell them (uh, lower the prices?).
Not too man asshat buyers around here, just asshat lying sellers. A friend I couldn’t talk out of buying, made an offer on a house, they were told here was a better offer. They said, no deal. Magically, the other offer “fell through”, but they still need to raise their price.
Find the asshats?
You say: more than 50% of the time, regardless of market conditions, 10 or more offers arrive within 3 hours of going on market. What county, please?
Ain’t Jacksonville!
I put in an offer back in 2001 for a Condo. I was told I had to bid over asking 1.5% x #other biders (7) this came out to nearly 10%.
My offer was accepted. Before I signed any papers, I found out my company was going to be acquired. So I backed out of the deal. I found out 6 months it went 2% above asking.
So where were the other bids at? I still have all the papers regarding offer and acceptance.
BTW, This was really bad in Australia RE market with their fake or dummy bidding. So much so they passed laws banning the process. Oddly, this was the time bids started to collapse in the Austr. RE market.
Google Austrialia RE Dummy Bidding and read more.
I think lawsuits are afoot - just got notice in the mail about a class-action lawsuit against Coldwell Banker. They were charging bogus “transaction coordinator fees” and/or “documentation compliance fees” on some home sales. Somebody took them to task and the result is, if you can provide documentation with one of said line items you get $200 back.
CB is not admitting culpability, just stating they will reach a settlement to avoid future expenses. I’d rather pitch a tent than buy another house - it seems there are lots of opportunities to slip in garbage fees here, there, and everywhere.
That’s nothing new. That issue has come up on average of every 3 yrs since I have been in the business. They were sticking that fee to their agents at first then some smartguy manager figured out how to stick it to outside agents and their clients. Most folks just tell them to get bent..
It doesn’t matter. By the time THIS real estate shakeout is over in the mid 2010’s, Coldwell Banker will be long out of business.
Lying is so accepted by this industry that I think a lot of realtors don’t even think it’s wrong to do so.
Last Fall a Seattle realtor told me about the practise of removing then putting back on market as a “good sales technique that kept properties looking fresh”.
She seemed to think it was an OBVIOUS thing to do and anybody could see the brilliance of the strategy.
I’m also seriously questioning the whole “bidding wars” thing. Did those ever really happen?
I guess I can see it for the odd VERY UNIQUE property. But did Americans really bid prices up in every mundane neighborhood on every typical home across the country?
Yes, it would be a good thing if realtors were, somewhere along the line, expected to be to be truthful. Much like it’s expected in other professions.
Right now, the business model seems to be “But we sell more houses at a higher price the more we lie!”
“I’m also seriously questioning the whole “bidding wars” thing. Did those ever really happen?”
Yes, all the time.
“Last Fall a Seattle realtor told me about the practise of removing then putting back on market as a “good sales technique that kept properties looking fresh”.”
That doesn’t make any sense when all it takes is a 30 second history search to find out how much of a dog it really is.
“I guess I can see it for the odd VERY UNIQUE property. But did Americans really bid prices up in every mundane neighborhood on every typical home across the country?”
Consider the fact RE agents all belong to local state and national assocation. They all meet and discuss … many things. HUM!!!!!
I sold my condo in March of 2003. It was a 2 bdrm, 1 bth 1000sqft unit thirty minutes southeast of Boston and five minutes from the commuter rail. When I sold it, I had 4 offers in hand.
I’d say that yes, it is fairly common to have multiple bidders on a property, especially if it has desirable qualities such as low price (i.e. needs work) and/or desirable location.
my house sold in a bidding war last summer. buyer waived inspection, too, even though the house is 100+ years old. Those days are gone…
“In the past, my house has always been my home, not an investment. But it seems that in the time that I’ve owned, things have changed and real estate is now an investment. If that’s true, then yes, regulation is in order.”
True. Just as Nigerian emails, beanie babies and Amway should be subject to regulatory oversight - anything to save the idiot Americans who are stupid and greedy enough to fall for the scams.
Greedy and stupid people do not deserve to be saved from themselves.
I see this sentiment a lot here, and it really bothers me.
I don’t think that people need to be saved so much as they need to be protected. Should the government guarantee all financial transactions like it does make deposits? No, that would obviously create too great a moral hazard and be very expensive. But that absurdity of one extreme doesn’t mean that we should embrace the opposite: laissez-faire economic and social policies (there’s a HUGE overlap between the two) will only give us a divided society filled with social unrest.
The simple fact is that most Americans are not and will not be financially literate, because they lack either the aptitude or the knowledge. And that’s OK. We’re not all going to be brilliant investors, and we’re not all going to spend a great deal of our individual resources in learning about economics–and that’s a good thing, because it leaves us free to persue other activities that are more beneficial to society (like our primary profession).
In the past, it seems like there actually was some consumer protection, and that it actually worked and was beneficial. You couldn’t take out a loan unless you’d demonstrated that you had the financial maturity to assume the debt, and you had enough of a down payment that you weren’t likely to go underwater on the house. This protected the consumer and still allowed lenders to make money.
But it seems like any noblesse oblige that lenders may once have had has now vanished, and the entire industry seems to have geared towards short-term profit at the expense of its customers (a pattern that seems to have become pervasive accross many industries).
Regulation will be an important part of the long term answer to this problem, and that’s OK because the government isn’t evil and can do good things (even if it does kinda suck at the moment).
Very well put ex-Californian. I totally concur.
Very very well put ex-Californian. I too, totally concur. Now, is there anything any of us can help to do about it?
If you understand finance, the “games” and “things to look out for”, volunteer at local community centers to give free education to the elderly and less fortunate.
At least you might save some folks that way.
I really think there we will be a demand for educational protection against the business world in general as most industries are tilting further towards modern day piracy.
Makes company “ethics” training look more and more useless.
What about: “Don’t buy or invest in something if you don’t fully understand what you are buying?” Isn’t that just sage advice and common sense?
I agree that mortgage lending is a racket. One that the government should NOT be subsidizing in the form of Fannie Mae and Freddie Mac. Companies will not let crap loans go through if they don’t have the GSEs sucking them up. When government gets involved in economics, they foul it up. Oversight and legislation must be carefully prescribed…
We already have regulation. Regulations cannot save people from themselves. It merely creates work for an army of lawyers and accountants who then learn to navigate around the new regulation without breaking it. (Sarbanes-Oxley did not prevent the current stock options scandal, and won’t prevent future investment frauds.) We don’t need more regulation, we need more education of our populace. At some point, people have to be responsible for their own welfare, and their own actions.
There will always be a criminal class of people out there preying on the desperate and uniformed, now we have “Foreclosure Experts” out legally cheating people out of their homes.
The desperate and uninformed should inform themselves, before making financial commitments. If they are incapable of caring for themselves they should hire expert advice, or become wards of the state. We are talking about adults here.
If they are mentally and emotionally incapable of something so simple as buying a house without getting ripped off - then build zoos to house the greedy stupid animals in.
the problem with regulations is that laws are meant to be patch up jobs with loopholes because it is essentially a compromise between competing interests. unfortunately, we want everyone (or at least a majority) to contribute to it. having a dictator won’t work either because that represent even more limited competing interests.
The simple fact is that most Americans are not and will not be financially literate, because they lack either the aptitude or the knowledge.
Banks take full advantage of this fact to fleece most Americans of all of their wealth.
Just like a good “crack dealer”. First you give free crack, to get people hooked, then you’ve got an army of slaves doing anything to get you the money for more “crack”.
Total BS…The government is mostly to blame for this mess and
regulation never helps!!!
That’s baloney.
The government has some responsibility—in the sense of not regulating sufficiently strictly. The problem with Fannie & Freddie were not that they are government sponsored, but that they acted like private corporations hell-bent on short-term profit maximization for all. The carping from Republicans is sponsored mostly by jealousy from the private banks who want to move in on F&F’s business.
There are plenty of private companies who purchased and repackaged all sorts of toxic mortgages. In fact, thanks to that “evil” government regulation, Fannie & Freddie’s loans have to be “conforming”, meaning smaller size, and signficantly more conservative in LTV and terms versus the subprime option-ARM disasters pushed entirely by the private sector.
Regulation does help protect against many scams in the stock & bond securities industry; compare to pre 1933 SEC act.
The government created FAnnie and Freddie and their abuse of their governmnent charters has been an important contributor to a culture of riskier and riskier loans. Who knows what kind of junk sits on Fannie’s balance sheet? And who will take responsibility for the mess they have wrought? Hard to say. What is easier to say is that you and I and everyone else in America will be on the hook for their profilgate ways.
Well, since F&F are government entities, taxpayers are ultimately responsible since we’ll be paying for cleaning up the mess.
It’s hard to argue with this statement, although there is a broader context to put it in. In the past, the banks themselves were the ones taking the risks associated with mortgage loans. Now, the loans are securitized and sold on the world bond market as Mortgage Backed Securities, and the world demand for MBS has been huge. This market is over 10 trillion dollars in size.
Since the banks aren’t taking the risk, they have a disincentive for doing due diligence on the people taking the loans. That’s why “anybody with a pulse” can get into a loan.
I find it hard to blame anyone in these circumstances. Mortgage brokers can’t make a living if they don’t make loans. Buyers of MBS investments know there’s a high risk associated with any bond purchase. It’s hard to argue that anybody takes a loan out these days thinking they won’t have to repay it, even if they don’t have “demonstrated financial maturity”. And nowhere is it written that you’re guaranteed a positive return on any investment, even if “housing prices never go down”.
Last time I checked, there are no debtor’s prisons in the U.S. It could be a lot worse.
To some level, I blame the Fed; they should have greatly increased reserve ratios for these risky MBSes. That’s much better than bluntly raising interest rates, which will cut off credit to good productive non-real estate business and real-estate trash alike.
“I find it hard to blame anyone in these circumstances. Mortgage brokers can’t make a living if they don’t make loans.”
This is the kind of thinking that perpetuates ilk of all varieties. What a crock of non-accountable irresponsible crap.
Mortgage employees shoveling loans at folks that they KNOW should not be borrowing in the first place–is nothing but callous greed. Pure and simple. The “got to make a living” argument is so weak in the context of this situation from an ethics perspective, It’s a joke. These greedy guys are greasing the wheels to the poorhouse for folks that should’ve been told to read the fine print before they sign. But no, instead they assert,”hey, they’re grown up, I didn’t hold a gun to their head, I gotta make a living.”
Yeah, you didn’t hold the gun to their head, but you sure loaded it for them.
DOC
“that’s OK because the government isn’t evil and can do good things”
That’s what people said when the government created the bullshit programs that created this mess. Fannie and Ginnie encourage the moron bankers, and it’s further exacerbated by the absurd home mortage deduction scam (subsidized by people like me) that encourages the moron buyers.
The government should not be involved at all except to police existing rules. If you do not understand the terms of your loan, it is your fault. Pay a shark a few hundred bucks to look it over if you don’t undertstand the document you’re signing.
The government has an annoying habit of fu**ing up everything it gets involved with, in case you haven’t noticed. Single-family housing is no exception.
ex-Cali-
agreed.
There’s a fine line between regulation and over-regulation, though. We are almost certainly headed for the latter in the wake of this catastrophe.
ex-californian,
I also agree with what you said. Contrary to what many people think, Fannie and Freddie have not had much involvement with the truly exotic mortgages (though they are desperately trying to change those rules). Most of the really toxic stuff is going to other lenders (pension funds, hedge funds, bond funds, etc.).
IMHO, the real culprits will end up being the ratings agencies who rate the MBS securities. The final lenders are relying on their ratings to determine what the risk is. NO WAY the ratings on these are correct. Lenders would not be giving out loans/buying mortgages to people who cannot afford to pay back the principal without relying on constant housing appreciation. I think this will be where all hell breaks loose. That, and the derivatives which many think are insuring against much of the default risk.
Just MHO.
No, it’s not a “good thing” and it’s not more beneficial to society. That you needn’t/can’t/shouldn’t bother to learn about finances is a lie sold to you by financial advisors who want to sell you their products. It is a lie swallowed hook, line, and sinker by those who are too lazy to get off their ass and do it. Hell, you don’t even have to get off your ass. Learning the appropriate investments is no more difficult than buying a car. Should the government tell me which car to buy as well? Do you go to the car dealership and say “Gee, I don’t know too much about cars, can you tell me what I should get and how much I should spend?”
The government should be there to watch for fraud and force. Nothing more. And there has been enough fraud in this to keep it busy for awhile. But we do not need the government approving loans otherwise. When it goes beyond that it exacerbates the very problems it attempts to solve by making people even dumber in the long run. The housing bubble being exhibit numero uno.
The noblesse that you lament is gone PRECISELY BECAUSE the government has gotten it’s sticky little fingers into the process. The bankers could throw loans around because they will get bailed out by our benevolent leaders if they fail. Now they’ve abused this largesse and the next step is more government intrusion. When this results in even more corruption the next step is removing those pesky private banks entirely.
Read The Road to Serfdom for more info.
feepness,
I agree with you completely. Fraud and force is all I want gov focused on as this debalce unfolds. Some young buc Assistant Attorney Gen is going take on this tiger in his state and ride it to the top.
I would like to recommend another excellent book on this topic, “The Berenstain Bears, Mad, mad, mad toy craze”. In this book the bear children get caught up in the bearie bubbies craze and spend all their allowance money. And yes you guessed it, even Pappa Bear gets caught up in the mania. Dont’ worry, it has a good ending those crazy bears finally learn their lesson before they lose their house.
Great book to read to all Bear children.
Ex-Californian — glad you posted and good for you that several posters agree with you. I do not. In fact, I disagree with virtually everything you posited. Anyone who thinks they will make something for nothing deserves what they get when it doesn’t work for them. They just happened to be too late into the game. As for lenders, there is not and never was any “noblesse oblige.” At the time (such as for my first couple of mortgages) when lenders wanted to know the brand of your underwear before granting a mortgage loan, it was because their personal butts were on the line if the loan defaulted. Government and its creations (the Fed) are the causes of the current loan problems, not the solutions. We each are responsible for our own actions and the results thereof. Why are you not haranguing the mainstream media? They are the ones who should have rescued you and those for whom you feel sorry, by broadcasting warnings about the toxic loans that are, essentially, the source of this discussion. All IMO, of course.
Chip- good post, I agree with you completely. It all goes back to noone taking responsibiliity for their actions. When I bought my first house for 120k and was making 50k (10% dn, full doc), I was thinkign I was stretching it, now you have idiots “buying” houses for 500k making 60k a year-100% financing. Not to worry tho, real estate always goes up and you can just refinance.
“Government and its creations (the Fed) are the causes of the current loan problems, not the solutions.”
Absolutely and completely wrong. It is the failure of the current crop of incompents inhabiting our government that is the problem. For example, the failure of the levees in New Orleans was NOT the failure of someone’s individual actions, but rather the failure of the government to do its most fundamental job: to protect its citizens.
“‘There’s somewhat of a time lag here, but everyone’s eventually going to feel it,’ says Jay Butler, of the Arizona Real Estate Center near Phoenix, where housing-related commerce accounts for about a third of the local economy.”
- That ‘time lag’ will begin to shorten very quickly. Christmas is not far off and the harsh reality of these crazy loans that allowed the unqualified to own a piece of the dream will sadly be in the toilet. It was only a short lived dream that your friendly realtor / loan agent lied to them about.
On a dark desert highway
Cool wind in my hair
Warm smell of construction
Rising up through the air
Up ahead in the distance
I saw a billboard sign
My greed grew heavy, and my mind grew dim
I had to stop for a time
There she stood in the doorway
I missed the tolling bell
But I was thinking to myself
This could be Heaven or this could be Hell
Then she lit up the entrance
And she showed me the way
There were voices down the corridor
I thought I heard them say
Welcome to the Condo California
Such a lovely place
Such a lovely place (background)
Such a lovely face
Plenty of room at the Condo California
Any time of year
Any time of year (background)
You can find it here
You can find it here
My mind is Tiffany twisted
I’ve got the Mercedes bends
I’ve got lots of mortgage broker types
That I call friends
How they dance in their adverts
‘Bout the deals you can get
None dance to remember
All dance to forget
So I called up the brokers
Please get me my line
They said
We haven’t had this interest rate since 1969
And still those voices are calling from far away
Wake you up in the middle of the night
Just to hear them say
Welcome to the Condo California
Such a lovely Place
Such a lovely Place (background)
Such a lovely face
I’m livin’ it up at the Condo California
What a nice surprise
What a nice surprise (background)
I have closed my eyes…
Roaches on the ceiling
Ripple wine on ice
And I said
We are all just prisoners here
Of our own device
And in the blogger’s chambers
They gathered for the feast
They stab it with their steely knives
But they just can’t kill the beast
Last thing I remember
I was running for the door
I had to get a refi back to the place I was before
Relax said the banker
We are programed to recieve
You can cash out any time you like
But you can never leave
I was running for the door
I had to get a refi back to the place I was before
- Doses ‘running for door’ = FLIPPER?
And the Ripple reference - way cool.
Here’s the original I posted on Mish’s Blog:
Link
Down a desolate highway
Blowing dust in my hair
Warm smell of diesel fuel
Blowing around in the air
Up ahead in the distance
I saw an amazing sight
The desert filling with a million new homes
Springing up overnight
To a young couple in the show model doorway
I heard the Realtor tell
If you can’t pay in a year or two
You could always sell
Then she lit up a smile
And she showed them the way
How to sign on the dotted line
Now they can really say
Now at last we finally get to own one
In this desert place
In this really hot place (background)
In this scorching place
At least we finally get to own one
But my well paying job
But my well paying job (background)
Is 100 miles from here
They got their ARM loan twisted
By their mortgage guy
Now that they’ve found that they’re upside-down
It’s impossible to refi
Now they sit in their backyard
Soaking in their sweat
Their electric bill is way too high
And they’re too far in debt.
So they called up their agent
Please put up your sign
She said
We haven’t had this much inventory since 1989.
And every month those bills push them closer to judgment day
Toss and turn in the middle of the night
But they just can’t pay
Commuting two hours just so we could own one.
Such a faraway place
Such a lonely place (background)
Such a scorching place
Working two jobs just to be able to afford one.
What a long drive
What a terrible drive(background)
So much gas to buy
Since their ARM has no ceiling
Called Mom and Dad on the phone
And they said
We need to borrow another twenty grand
Just another small loan.
And in his manager’s office
He checked the balance sheet
The numbers no longer added up
So layoffs begin next week
Last thing I remember
I pushed them out the door
I told them they should go back to renting just like they were before
Relax said the Agent
We are programmed to deceive
You take out a loan any time you like
But you’ll never be free
Has anyone had a crack at this one yet?
Well, since my title left me,
I need a new place to dwell.
It’s down at the end of if-only street
at Bankrupt Hotel.
I’ve been so lonely baby,
My loan was interest only,
well I’m so lonely I could die.
Oh although it’s getting crowded,
you still can find some room.
For broke and busted flippers
to cry away their gloom.
They’ve been so lonely
Their loans were interest only,
well they’re so lonely they could die.
Well, the Realtors’ tears keep flowin’,
and the Banker’s dressed in black.
Well they been so long on HELOC street
That they cannot go back.
and its so lonely baby,
their loans were interest only,
well they’re so lonely they could die.
Well, if your title leaves you,
or you’ve got a place to sell.
Just take a walk down if-only street
to Bankrupt Hotel.
you’ll be so lonely
your gonna need interest only,
you’ll be so lonely you could die.
All of these are great — good fun.
I notice that the “other side” is not having much fun lately.
BRAVO… BRAVISSIMO !!!!
Okay, try this one:
ARTIST: Madness
TITLE: Our House
Agent wears his yellow vest
Broker’s tired he needs a rest
The comps are falling fast out there
Buyers sitting this one out
Flippers all just huff and pout
They can’t mark it down
Our house, in the middle of our street
Our house, in the middle of our our street
Our street it has a crowd
Of “for sale” signs down the block
And they’re rarely coming down
Our dad, he’s so house-proud
Doesn’t let the price go down
No, “reduce” is not allowed
Our house, in the middle of our street
Our house, in the middle of our street
Father calls the HELOC guy
Mother sits and starts to cry
Then she sells the SUV
As the market starts to hiss
False equity they’re going to miss
In lots of ways
I remember way back then when everything was true and when
We would have such a very good time
Such a fine time, such a happy time
And I remember how we’d play, trading condos every day
Then we’d say nothing would come
Between us, real dreamers
Our house, in the middle of our street (3X)
Our house, in the middle of our
Our house, was our castle and our keep
Our house, in the middle of our street
Our house, that was where we used to sleep
Our house, in the middle of our street (3X)
Smooth!
bubble version -not authorized- Hotel California by the Eagles.
posted 8/13
…
Welcome to the condos California
What a big surprise
What a big demise
They sucking it up at the condos California
Bring your no-doc ARMs, bring your alibis
Hummers in the driveway,
Granite in the kitchen
And we said ‘You are all just prisoners here, of your own device’
And in the master’s chambers,
They gathered for the feast
They slapped it with their crazy prices
But they just can’t sell the beast
Last thing I remember,
They were running for the door
They had to find the passage back
To the place they were before
‘Relax,’ said the realtor,
We are programmed to deceive.
You can buy it any time you like,
but you can never sell!
I’ve been reading this blog for quite a long time, and I want to thank Ben for this blog. But enough of that. My wife and I are both natives of southwest Florida, and the things that made this economy work are in serious jepordy. The tourists that used to flock to Florida from all over the world arn’t coming like they used to. The price of gas, and the fear of flying due to terror threats are taking thier toll. Tourism is down tremendously. A thousand people a day came to Florida at one time, but now the numbers have changed dramatically. Most came for the jobs in construction or the medical field. However with retirees moving away and the baby boomers whom everyone claimed would save every tourist area in the U.S. are not wealthy enough to afford the exuberant housing prices in California, Florida, Arizona, etc.. Has everyone forgotten what the stock market crash of 2000 did to 401ks, and let’s not forget our friends ar Enron who singlehandedly affected pensions throughout the entire U.S.. In our area ( Ft. Myers/ Cape Coral ) almost every person I talk to is either already or planning on moving out of the state. The industries that saved us from other housing booms in Florida are dying a slow and painful death. Citrus growers have been selling off thier land to northern developers with big dreams and a lack of awareness of history. Cattle ranchers found it was cheaper to sell than deal with all the regulations. Medical…with the average retiree priced out of the market, it’s just a matter of time before that market is also in trouble. Manufacturing… most of these companys are moving elsewhere due to the cost of electric,Insurance, and the iability to pay 98,000 a year for thier employees to afford a median priced home. Construction…82% of the working population are directly or indirectly dependant on this field to survive. It used to be very common to see out of state plates on our roadways. Unfortunately, now the out of state plates usually contain illegal workers looking for jobs so they can ship thier money to thier families back home. So in a nutshell Florida is in deep trouble, but denial and greed as always, is just making a bad situation worse.
The tourists that used to flock to Florida from all over the world arn’t coming like they used to.
- It’s true they might not come from ‘all over the word’ - but they will soon be coming from about 40 miles south offshore
..Cuba.
c’mon. they”ve been coming to florida even before you were born.
“almost every person I talk to is either already or planning on moving out of the state”
Sounds like people are voting with their feet. We have a similiar situation here in Long Island, NY. New York has the largest net outflow of population, of any state. New college graduates are immediatly leaving the state. I’ve head the comment from several people that ” You can’t hire talent from out of state, because of the cost of living, nobody want’s to move here”.
This is also true of California. While we can still hire the recent graduates as rent hasn’t budged, its become impossible to hire anyone with experience from out of state. Why would they? We have branches or competitors in Pheonix, Dallas, Atlanta, Albequerque, and other more affordable places.
My blog has bit on the “u-haul index” from Cali:
http://recomments.blogspot.com/
Neil
Neil — glad to see that you’ve got a blog — I’ve enjoyed your posts here. I especially like the idea of using U-Haul figures to track “voting with feet.”
“This is also true of California. While we can still hire the recent graduates as rent hasn’t budged, its become impossible to hire anyone with experience from out of state. Why would they? We have branches or competitors in Pheonix, Dallas, Atlanta,”
Yep! I worked at the client’s Los Angeles (South Bay) office area for 3 years and they moved my work to Phoenix (since I’m already renting in Phoenix) to kind of do me a favor, as well as staff an important project. The deal is the Los Angeles office has had a terrible time trying to hire qualified engineers there in the last 4 years. Now they are expanding the Phoenix office space in hopes to steal more engineers from other Phoenix-area high tech firms. If we can only get the corner office area, we’d have the whole side of the building’s top floor with southern, eastern, and northern views. Cool!
Management told me that they cannot find people who want to move to California, but more engineers would consider Phoenix due to affordability.
Bill,
Thanks for your tidbit. Its so true that experienced engineers just cannot afford to take their families to California.
I cannot wait to see Wednesdays and Thursday’s home sales reports.
Neil
Just the other day, a new HR person at Lucas Arts contacted me and made the recruiting pitch which included brqagging about their new facility on the Persidio (SF). My response included a description of my current home in Texas and what I paid for it, and my asking what it would take to provide the equivalant for my family.
Her response included “I started to calculate my house compared to yours, but it was too depressing to finish”.
I am afraid that Seattle might end up being a “rear view mirror city” like all those other bubblicious cities in CA, FL, AZ, NY, etc.
Prices here are STILL going up (Zillow).
So what is going to happen? Every one moves to Iowa?
BTW…it is not just FL that is f*cked, it is the whole country and to some extent…even the world. It is going to be grim everywhere. Cash will be king to the few who have any left after RE and SM both tank.
“So what is going to happen? Every one moves to Iowa?”
Sure. I spoke to my uncle in Des Moines yesterday. He told me they have really overbuilt and all the houses sit vacant.
Free Iowa houses for everyone?
Same thing in Iowa City. I talked to a friend there just last week and he said that, in what was traditionally a very robust market from February-July, everything just sat. Rampant overbuilding there as well, and this in a place where “everybody” doesn’t want to move.
Here in Southeastern Virginia (Norfolk/Virginia Beach), it seems like a good number of people are cashing out of their markets and moving here. The problem is, it has made everything unaffordable for the locals. There is a decent amount of jobs, but most are tied to the gov’t (contractors, big military bases).
i wonder if prices drop in other regions, if people will begin to move out. The only super high paying industry here is rap music, and hip hop environments tend to unease the wealthy foreigners.
BTW…it is not just FL that is f*cked, it is the whole country
http://www.drudgereport.com/flashpjb.htm
I’m not sure the likes of Goldman Sachs or Lehman Brothers have problems drawing in talent from around the country (or the world for thast matter).
The tourists that used to flock to Florida from all over the world aren’t coming like they used to.
Used to be cheap, laid back, unspoilt. I remember staying in little beach shacks up the street from the dock at Coral Gables as a young child. Now, it’s just humid and busy. My great-aunt owned a square mile of oranges in central florida. While there are still citrus it is all agribusiness now. Remeber asking my dad why all the little towns were in tight little clusters and he told me matter of fact like that anybody trying to build away from those places got wiped out by hurricanes. Right now these people had better be praying for a hurricane because hurricane insurance is gonna get them next year. I mean talk about signalling a punch. The way storm insurance works the tripling some people are see in rates now is because of the 2004-05 season. The 05-06 season isn’t factored in yet. I think it was Allstate that asked for 79% but was granted 50%. What does anyone think it will be next year? Get back to me when lizard infested (good, they eat bugs) shacks near the water are available again.
Robert what you said is so true, homes on the water were just fishing shacks,That was a place for the fisherman to sleep in run season, I just love when someone who moves here tells storys about storms. they live on a sandbar and board up the windows, (I dont know if thats to keep the fish in or out). Donna in 1960 was a cat 4 storm. It flooded this area real bad with stormsurge of about 16′. most of the areas that have been built in the past 10 years are in 5′ or less flood plains, Charley in 2004 was a cat 4 ,but it was very small storm. if it was larger it would have had a 18′ stormsurge. Now think about insurance. its not too dumb to pull out of Florida.
“My great-aunt owned a square mile of oranges in central florida.”
When I drove to and from college in the early ’60s, I used to love to cruise past the orange groves out Highway 50, in Clermont. They smelled wonderful, looked great and reminded me (then) how blessed I felt to live in Florida. I suppose, in hindsight, that it was just as well the freezes killed those groves, rather than developers for the most part. At least the freezes were natural events.
So in a nutshell Florida is in deep trouble, but denial and greed as always, is just making a bad situation worse.
Hey look on the bright side: “Jeb 2008″ is toast.
don’t bet on that. last time i checked they are still using those diebold machines.
I have been lurking on this blog for a long time too and am a native of Mass who transplanted to Rhode Island several years ago due to the high prices THEN. I’m just biding my time waiting for some sanity to return. In the meantime, this story showed up on Boston.com that I thought would be perfect for a “desperate times call for desperate measures” post. It’s just too funny…
“If sales of the beige, 5-inch St. Joseph statues are slow, it means the real estate market is strong. If sales are brisk, the market is weak. Lately, all signs point to a real estate meltdown: He’s selling 300 statues a month.
‘We can’t keep them in stock,’’ he said. ‘‘Everybody comes in here looking for them. Realtors are buying a dozen at a time.’’’
If that link doesn’t work, I apologize, I’m a little new at this…
I’ve heard that many use astrology in their stock trading too.
“‘It was quick, easy money, but then rates go up and it’s over,’ says mortgage trainer Christopher Cruise, who recently visited one mortgage lending operation in Rockville, Md., that let all 71 of its loan officers go.”
It wasn’t rising rate thet made it end, rising rates exacerbated the buying frenzy. Rates have been rising for the last year and a half, there was a rush to buy before rates went up, then like any pyramid scheme it reached a natural peak. Rates are still historically low. If anything the Fed should have put controls on lending standards, to control excessive speculation and loose lending. Then this could have been streched out for another 5 years, and appreciation would have been less severe. Now we face the prospects of a severe correction.
To Vmaxer: “Rates are still historically low.”
I always like to ask how you can stomach saying that when the price of the asset has doubled, tripled, or even quadrupled, and is at the most unaffordable point in history in many places versus wages.
I watched Neil Cavuto on FAUX news interview the CEO of Ethan Allen about the housing market and it’s affects on his market, and all he kept saying over and over was “rates are still historically low.” Neil didn’t have the balls to ask my question…
Lots of furniture retailers in the LA/OC area having “Going Out of Business” sales lately. Tip of the iceberg?
I think it’s important to remember that real estate agents can’t make money if there are no transactions taking place. These guys only care about themselves. As the market cools, they’ll drive prices down by refusing listings and making comments in the media about “realistic” sellers etc.
Spot on Max………
Yup. Which is why there should be what seems like a very quick (within six months) turn, which is probably already happening. The Realtors push, push, push that the prices are going up… and then they will push on the sellers that it is a weak market and that they need to lower.
Of course, they will say that we’ll always be right at the bottom of the slump as well.
For his part, Massad is trying to adjust his clientele, too. The founder of FloridaRealtyFinder.com had specialized in helping investors buy preconstruction condos. But with investors all but vanished from the Miami condo market, he has recently taken to walking his neighborhood to drum up residential sales. “A lot of other agents don’t want to work that hard,” he says. “But in six or nine months, they’ll be out of business, and that’ll just be less competition for me.”
No, you sleazy 3 year Real Estate “Professional” that whose prior career was window treatments- yeah - “in the SAME industry”, YOU will be out of a job in 6 months to a year with 75% of the other trolls hocking real estate.
He reminds me of the rookie stockborkers & ANALysts (not a mispell) in the late 90’s that had NEVER seen a down market. They were responsible for the loss of million in savings and ruined many people’s lives.
I agree there NEEDS to be regulation in the Real Estate field similar to the investment field. Whether it is a Low(n) officer, Real Estate brokster, or number hitter( appraiser), they all need to be liable.
There needs to be an agency similar to the NASD or SEC to regulate and enforce these crooks, many of which have zero training or background other than sitting 20-40 hours for a class and passing one test.
I am not letting the FB’s off the hook as the responsibility ends up on them, but when you have the rampant fraud going on as we have had, those responsible need to be held accountable as well.
( I get off my soapbox.)
Here’s my two cents: I’m a licensed broker in Texas and while not in the business fulltime, I do keep up with the MLS and all the other RE-related information. The truth is that people should contact the state commission on real estate with complaints again agents and brokers who pull shady deals. Even here I’ve seen houses taken off the market and placed back on a short time later as a “new” listing. I think it would be fair if buyers had the same access to information as realtors. If everything is above board, the transaction can be done in honesty.
I think it would be fair if buyers had the same access to information as realtors. If everything is above board, the transaction can be done in honesty.
————————
Amen to that! I cannot see a single, solitary reason why RE information isn’t readily available to the public (right now, you can’t even pay for good MLS info if you’re not a broker/agent).
If we had totally transparent markets, then we could hold the FBs fully responsible. Until that time, it is the REIC that is responsible for this bubble disaster, IMHO.
“DRIVE BY APPRAISAL” My brother refinanced his house in Dallas about two years ago for a lower interest rate and to take out some cash. He said they appraised it by just driving by to see if the house was still there. They didn’t even bother to get out and look inside. Is this normal practice or just more fraud???
To Russ: If someone wanted to have fun and expose some bogus appraisals, they should start researching VA (Veteran’s Administration) loan appraisals. Here in Southern Maryland, the VA Appraiser gives the house the exact amount of the loan. I bought a house and the appraisal came in for my exact loan amount. Nine months later I sold it for a profit and the new VA buyer got a loan again for the “exact loan amount,” that he requested.
You have to ask; how is the VA looking out for a veteran’s interests and the taxpayers when they do this?
On the last house I sold in 2003, I could not even get them to drive by the place, they just used computerized comps. Kind of throws out the idea that you will get any $ benefit from the interior decorator touches.
Kind of makes you wonder why, exactly, it costs $450 (or whatever) for the appraisal…
the signature.
Speaking of Florida, is it just me or did Condoflip.com’s business model change recently? I remember they were supposed to go national, but now they are selling nothing but overpriced Miami condos that desperate flippers can’t find a sucker for.
There are definitely a few areas that I believe the Government should start getting involved in. I’ve covered these indepth on my blog, but I’ll briefly mention them here.
First is the MLS numbers. I find this one unbelievable, but it’s not againt MLS rules to keep giving a house a new MLS number as long as the contract expired or the Seller withdraws it temporarily. This falls under the DOM (Days on the Market) stats, and it gets reset to zero when this occurs. What isn’t supposed to change is the DOMP (Days on the market property), which is supposed to stay with the house unless it is removed from the market for 180 days. The sleazy agents will slightly change the street address of the property to reset this to zero when a listing is renewed.
Next is the “average list price and sales price” stats they like to tout; saying things like “listings are bringing 97.7% of sales prices. What they are lying about are the numbers that they use are after price cuts. If we start a house off at $400k and reduce it 4 times to $360k, then sell it for $355k, the Realtors use the $360k as the sales price and $40,000 of stats disappears.
The most incriminating stat of all that no one is putting out would be how much of sales are investment/second homes in an area? It’s available in tax records, but almost impossible to compile without doing massive research.
I agree that knowing the number of investment/rental/2nds in a school district or zip is a valid data item, and should be available.
I had to use census data statistics to learn that our town IS 60% rentals, which has a direct bearing on the quality of the school district here. Of course, private schools have a field day. This should absolutely be a disclosure item on a home sale. Scary that it’s not. Anyway, proach@ftc.gov has been hearing from me lately. Feel free to visit the FTC’s special Webpage for submitting comments about the real estate industry. But get in line behind me.
http://www.ftc.gov/bc/realestate/index.htm
Good stuff Patch, I would like to see a list of metrics and measurments compiled by this blog that would represent the most useful and accurate decision support information for both buyers and sellers. Insofar as price I have seen people say that a range of between 100 - 150 times rent is a good metric for figuring out what a price for a property “should” be. Some comments on the use of mean, median, and average prices we see listed in the MSM as well as the time frame for comparison of the data. There has been some talk here on the use or abuse of YOY, MOM time frames or more accurately, predictions that when a specific time frame no longer tells the story the presenter wants, they just change the time frame until they get what they want. The best anyone can do is to expect accurate and truthful data and be aware of the tricks used to skew it. When the consumers of this information are educated and can catch attempts to manipulate the information they can reject not only the information as bogus, but also take their business elsewhere and thus penalize the offneding party. This works at the agent level, but if the information is being manipulated at the higher levels there may be no other alternative sources. For example, as you point out the MLS system is supposed to track DOM and DOMP, but why is it we never see DOMP listed? It is this type of omission that is just plain wrong. Another example is the recent change of the definition of the Affordability Index. Instead of changing the types of loans that are used to calculate the AI, it would be more useful to track and report on affordability for each of the different loan types. The issue as I see it is that the reporting agency is not at all concerned with providing useful information to the public consumer. Instead it appears as if the reporting agency is attempting to provide statistics that can be used by the RE industry to convince buyers to “buy now or forever be priced out” or whatever the sales mantra du jour is. As a member of the consuming public this type of manipulation seems fraudulent to me. I have a naive expectation that the State and Federal Gov. would protect me from this, but the gov has a poor record when it comes to manipulating statistics themselves. So I guess it falls back on education of the consumer and the hope that an educated consumer will boycott products being misrepresented by the offending organzations. Which is in a way happening now, but I doubt it is because the general buying public has any real comprehension of the apparent deception and manipualtion in the RE industry. It is simply that prices are too high.
US News article: Housing Slump Threatens Jobs
http://tinyurl.com/jm235
finally, someone makes the obvious explicit to the general public.
Has anyone bought today’s L.A. Times? I can already tell the real estate market is going through sufferin’ succotash because the RE section has gotten noticeably thicker….
Did you consider the reason the RE section is thicker is because many people are smelling danger and putting their overpriced houses up for sale at too-high-prices? Many buyers from 2004 want to see if they can get that capital gains tax break now.
I live in a condo complex and had a conversation with a Chinese family that now realize the games up, really can’t afford the payment and want out, NOW. There are 8 or 9 for sale in the complex, after RE fees, and dropping the price for a quick sale he’s thinking about doing a quick refi, taking the cash and going back to China. I said good plan I would ( I wouldn’t) but he said others are doing it, why not.
Anybody hear about people doing this.
Has anyone seen the TV ad showing an Asian couple waiting at the airport for a RE agent? As I watched this ad I wondered if the underlying message was “we’re marketing to the Asian sector too, so buy now or an international customer will snap it up.” I wonder how risk averse Asian buyers may be considering their exposure to the Japanese RE crash?