‘Heeding The Signs Of A Bursting Bubble’
Some housing bubble reports from Wall Street. “The housing market is looking sicker by the day. Economist Ian Shepherdson said that the housing market is so far gone that ‘it’s not rescuable anymore. The housing market is beyond the control of the Fed.’ He compared it to a football game played on a mountaintop. Once the football goes off the edge, he said, it doesn’t stop until it reaches the very bottom.”
“Even the homebuilders, long an optimistic bunch, are all but throwing in the towel on the current market’s condition. ‘We’re running our business today as if we’re in a prolonged downturn,’ CEO Ara Hovnanian of Hovnanian Enterprises told analysts.”
“Heeding the signs of a bursting bubble, St. Joe is bowing out of the Florida homebuilding market. Markets that went up too much, too soon will let gravity guide the way down. The news is unlikely to get any better in the near term. The overabundance of new and existing homes on the market will make this a buyer’s market for some time.”
“The strategy shift will result in job losses, the company said. Jacksonville, Florida-based St. Joe said it expects to take a $10.7 million charge, including $2.3 million for termination benefits.”
“Lennar Corp. Friday became the latest home builder to warn that earnings would fall short of Wall Street’s expectations. ‘The U.S. housing market has continued to deteriorate,’ Lennar CEO Stuart Miller said.”
“Miller said new orders appear to have declined 5 percent in the quarter. But higher sales incentives and ‘certain land adjustments’ were the primary factors behind the company’s lowered estimate, he said.”
“‘The market is very weak and may be staring at a hard landing,’ said Paul Puryear, managing director of Raymond James & Assoc. ‘Housing is a key driver in the economy, and consumers are in for some bad news in regards to the value of their homes.’”
“First Horizon National Corp. has laid off about 350 loan officers as the slowing housing market has taken a toll on its mortgage operations. At the same time, the holding company of First Tennessee Bank has decreased its staff by nearly 6 percent since the end of last year, a total of 759 employees.”
“‘What management appears to be doing is eliminating some of the cost in the infrastructure,’ (analyst) Kevin Reynolds says. In this case, the costs are people.”
“New Century Financial said August loan production fell 5% from a year ago to $5.8 billion. The company said interest-only loans fell to 17% of nonprime production in August from 35% a year ago. California-based loans slipped to 32% of nonprime production from 37% a year ago.”
“Washington Mutual said it is dealing with a tough interest rate environment, softening housing prices, an overcrowded mortgage business and overall economic uncertainty by placing less emphasis on residential home lending, pulling back on the number of branches it opens, closing others and continuing to cut employment.”
“WaMu CEO Kerry Killinger said he’s been cautious about the housing market for 18 months, feeling that prices had gone up more than fundamentals justified.”
“The market also has been plagued by too much capacity chasing declining demand, leading some lenders to aggressively price their loans which, when combined with the current squeeze on interest-rate margins from actions by the Federal Reserve, meant ‘the whole industry is earning a substandard return right now,’ Killinger said.”
“Killinger said WaMu recently has been selling 71 percent of its Option ARMs; in good years it would have kept most of that production. ‘I do expect delinquencies rates to rise because they’ve been at unsustainably low levels,’ he added.”
Macro Data on Housing Not Adding Up;
http://www.xanga.com/home.aspx?user=russwinter&nextdate=9%2f8%2f2006+23%3a59%3a59.999
This is a really important finding by CS. It’s amazing that reporting of national data could be so sloppy. I am not an economist, but as a science professor, I do use statistics and quantitative models. Anyone who tried to publish such data in scientific journals would get shot down very quickly.
That’s why I raised the question several days ago about the relevancy of the govt’s new home sales report. It uses a 90 percent confidence interval, does not capture cancellations, and is subject to downward revisions.
In addition to the new home sales report, the govt’s OFHEO quarterly report should be subject to similar skepticism. It is highly inactionable b/c it takes 5 months to collect and produce. By the time you read it, you’re already screwed!
The OFHEO quarterly report is not entirely worthless, however. It’s value is more academic and confirmatory. The report echoes what we have been saying on this blog in real time, confirmatory. In additon, it will help future business students explain and quantify the irrationality that gripped the housing market in the early part of this century, academic.
The problem with the OFHEO data is that is uses only SFR financed with CONVENTIONAL, CONFORMING loans that meet FNM & FRE guidelines. In high priced metro areas this is the very bottom segment of the market in terms of price; and then would exclude many sales due to the loan terms not meeting GSE standards (believe it or not, the GSEs do have standards tougher than many lenders, esp sub-prime, etc). So, this data for areas like LA and NY becomes based on a teeny tiny segment of the market.
That’s a great point. It’s not really a good cross-section of data.
Why stop at the OFHEO data? You think that is the only gov’t data being massaged? The numbers in the CPI are being tortured to within an inch of it’s life for pete’s sake and no one seems to notice or hesitate quoting the number. This whole experience reminds me of a bad “alice in wonderland” adventure.
If anyone has a copy of the Credit Suisse piece mentioned by Russ, I’d love to get my hands on it.
nnjbubble@gmail.com
grim
Here’s a great clip from ABC news about how we got here (hilarious!):
http://www.youtube.com/watch?v=7RTqk1NbKJU
Terrific Deb, that should have been required watching for everyone taking out I/O loans.
Absolutely hilarious!
I love the fact ABC realized they needed to put this message into cartoon format to get the dumb average person to 1.) be able to understand it, and 2.) actually sit through the entire FOUR MINUTES of a story about something other than the latest celebrity breakup or American Idol voting update.
… or just maybe no FB agrees to appear on the program b/c doesn’t want to look dumb before the whole world or, even worst, still in denial…
When was that aired? If they’re just getting to IO loans now they’re further behind the curve than I thought.
What a great clip! Thanks so much for posting it.
Oh, the carnage! This story is way too late to help FBs.
Americanomics 101
http://www.youtube.com/watch?v=fMudzRcPxLc
hahaha wickedly funny. What a concept!
I remember that SNL skit..I laughed my u know what off through the whole thing.
thanks for the link. oddtodd is great - hope he got some good dough.
“Economist Ian Shepherdson said that the housing market is so far gone that ‘it’s not rescuable anymore. The housing market is beyond the control of the Fed.’ He compared it to a football game played on a mountaintop. Once the football goes off the edge, he said, it doesn’t stop until it reaches the very bottom.”
Was he looking at this chart when he cooked up that mountain analogy?
http://tinyurl.com/f5boq
sound bites from the realtor in chief David Lereah throughout this house bubble.
1- got to buy before you miss the boat.
2-prices are supported by strongs economic fundamentals and immigration.
3-bubble, what bubble.
4-sales decline, just part of healthy cycles.
5-market normalizing.
6-it’s a buyer market.
7-price will decline for 2-3 months but it will increase again.
8-look at me, i can say all this without laughing.
How about the title from his book: Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade - And How to Profit From Them
Next book: Are You Missing the Foreclosure Boom?
outstanding
“If you listened to my advice in 2005, then probably not.”
your friend,
David L.
What’s really interesting there is the lead-in : clearly she is still totally out of touch with what is happening in the market now. And this is important…until most people understand the market is imploding, the damage will be relatively limited. Funny thing is, later this year, everyone will know, just in time for the $1 trillion of resets.
More Deception from David Lereah:
http://tinyurl.com/gmvyl
David
Bubble Meter Blog
And the funny thing is there are people who are seriously considering lowballing now. Once they clinch the buy, they are stuck, and there will be bigger fish who will lowball them! Today’s lowballers are the FB’s tomorrow.
I am praying that some lowballs are accepted (but hope that nobody from this board is the newly minted FB). I can see those lowballs becoming the new comps and speeding us down to a quick(er) trough. Rinse and repeat for the next 36 months and maybe there won’t be any dead cat bounces, but lowball speedbumps instead.
And lowball speedbumps are painful.
We put in a lowball offer with a builder. The base price of the house is $650k. We offered them $650k with $240k in options. Options include culdesac lot $50k, Upgraded wood all through the home including stairs. Granite, upgraded appliances, upgraded cabinets, upgraded pool and spa, upgraded crown molding…… Our theory is that the Florida market is 40% over valued. We are taking a risk by purchasing now. So with close to 40% in options we should be okay. Of course the builder was insulted and said no way. They were willing to give $75K. We told them to call us if they change their mind. They may never agree, but we’re not risking our hard earned money and that’s about the only way we will even consider buying!
“We put in a lowball offer with a builder.”
Even though they didn’t accept it, I’ll bet it really got their attention. Like the first cold winds of a long, hard winter to come.
On the plus side ,its a good thing the market is correcting so quickly .Can you imagine how big the fall would of been had this boom gone on for another 2 to 5 years . The market needed a correction , it was long overdue . It’s to bad that some people are going to have alot of pain and setbacks . Greed and fear fueled this market and finally its getting exposed for what it was .
IMHO , I think the Builders/NAR/Realtors thought the party would at least last for 2 to 5 more years . Apparently these people didn’t count the number of households they have in America and how many potential qualified buyers would be out there that would be able to buy after the flippers made their exit . Anyway ,anybody want to buy about 8 million homes .
“On the plus side ,its a good thing the market is correcting so quickly .Can you imagine how big the fall would of been had this boom gone on for another 2 to 5 years .”
No need to imagine; it did go on for another 2 to 5 years, based on the fact that many knowledgable folks (Ken Rosen, Ed Leamer, The Economist magazine, etc.) were talking about problems with an overheated housing market long before we were.
I know GetStucco ,but I’m just trying to be positive that it could of been even worst and believe me I agree with you that it went on 3 to 5 years or more longer than boom should of already .
I totaly disagree. Prices in my area remain at almost 4 standarde deviations about normal. 90% of the people cannot afford the median home. Prices have more than doubled in 5 years and have fallen about 10% from the peak.
Hardly a fast fall. This is and will be a long, painful experience. Wait until the 1 trillion in arms start to reset in 2007. Then you will see the momentum pick up.
IMHO the corrections will go faster now . To go from a full blown mania boom with all its inertia in 2005 to a minus 10% from peak in 12 months is pretty fast .
waKE ME UP AT 120 X RENT
AH FCK IT, MAKE 100X RENT
100 X rent = 65% off the peak in SD
wow, in my hood rents have only gone up 15% in 5 years whiles prices went up 2.5 times
22151 15 minutes to pentagon
flatplan - Condos in good, NW DC neighborhoods were going for around 50 x one month’s rent in the mid ’90’s. No joke.
Look out below.
maybe W will grow some balls and start chopping heads
man, I miss Regan
I can remember getting a condo offer in dc back in 98 for 1br (Forgot square footage) - $67,000
I’m thinking that some areas could be 150xrent and some areas 200xrent depending on the area ,especially if there is jobs in the area . Location , location ,location still comes in to play .
The problem is, when you start to get into numbers like 200X rent, and figure normal appreication of the home (no 30% gains) it makes more sense to rent. The cost basis between rent and buy really makes the decision easy. When your looking at 2X the monthly payment to own something then rent it.. Well, frankly, your much better off renting; assuing normal appreciation.
Exactly. Unless the laws of economics and the historical long-term relationship between rents and prices has somehow been severed, I’m not buying any “New Paradigm” pablum. If an area is “so desirable” that all the rich people want to live there and are willing (and able) to pay more, then rents should steadily rise until the monthly rent-to-price ratio eventually reaches the historic average of 100-120X.
Yes but Harm if you go to a 100x rent in some areas in California let say ,you would be going back to 1985 pricing on homes and I don’t know that its possible to dump that far .( Im not talking about just ultra rich areas ).
There is a disconnect here and there might be some interesting reasons for it .
you would be going back to 1985 pricing on homes and I don’t know that its possible to dump that far
And why not?
tj&the bear .I guess anything is possible but there has always been areas ,( even before 1999 )that sold for more than 100xrent ,in California at least . Some kind of a premium for weather ,more job opportunity in some of the higher paying jobs,maybe prop 13 ,close to activity , entertainment ,high quality hospitals ,sports ,some good colleges etc.,a coastal premium.( I’m talking past tense actually because conditions might be changing ).
In New York City they seems to sell for more than 100xrent as another example of a premium added ,(maybe because of higher paying jobs and location to job centers ).
I’m not saying that the current prices aren’t inflated big time ,I’m just saying some places have always had prices that were more than 100x rent .
Also the single family residence seems to sell for more than 100x rents even going back 20 years in LA County .
Would it be safe to say that areas that have 50% or more speculation non-owner occupied ownership combined with a massive inventory might drop the most ,at first at least ?
Housing Wizard,
Agreed that some places always have and always will command a premium. However, in a severe recession / depression it’s likely that rents will drop, too. Therefore prices could easily drop below 100x today’s rents while still maintaining a premium.
If we go into a 1929 type of depression than all bets are off because God knows how extreme it could go .
I’m in WeHo. 100x rent in my building would be about 60% less than what the last two bedroom in my building sold for. And I absolutely believe it will go down that far.
In Marina del Rey, my building is going for about 350-400X rents.
I am with you on that one. People are SO out of touch; don’t they realize that’s a real rule of thumb. People look at me like I just grew a 2nd head when I tell them that’s a “balanced RE market”.
Also, people really need to get in touch with the numbers; what it takes to really afford a 400K home. Yes, IO negative am, you can afford it. But to afford a 400K home, you really need to imagine paying about 4K a month on all your housing expenses. That means you have to make 8-10K a month. Hmm.. That means your making about 150K a year? Hmm.. And the median household income is…. 50K a year? Hmmmm…
More kool aid please!
who buys WaMu and all these crap loans ?
Why, your 401(k), of course
Didn’t WaMu say they were only holding 30% of their loans.
And various public, private and municipal pension funds, etc.
Question is: How widespread is MBS and REIT among funds out there for retirees [soon to be ex-retirees] or employees who have to delay retirement….
Dr. Shepherdson has been a housing bear for nearly a year- and thus far-along with Dr. Shiller and David Rosenberg at ML -all have been totally on target.
The rest are highly paid prostitutes captive to the numerous brokerage houses and the republican party.
Oh, please.
Yes, we should not lose sight of the fact that, despite AG dropping rates to 1% under a solidly Republican Congress & Administration, the housing bubble initially got started under a Democrat (Clinton). The 1997 $250/500K cap gains exemption, relaxation of 1031 exchange rules, and pro-expansion/zero-oversight policy towards the GSEs all got started under the Dems’ watch. There is ample blame to go around for BOTH parties.
the housing bubble initially got started under a Democrat (Clinton).
Absolutely correct, HARM…
Yes, and we would have needed a correction. But a 1% Prime, creative financing and NO lending standards are all far more recent. And they will mean a crash.
Peter-You are right, those guys have been warning for 2 years.
better read “da community bankin bill, yo
Did you see hidden in the Lennar news the line about “certain land adjustments.” OH MY….
Housing wizard - slight disagreement - while I agree that the NAR, and realtors, probably thought they’d find a way to keep this going and figure out some way out of the IO/NegAm issue (the one way out is if price growth slows to 1%, but once you are flat to down, it’s toast) but the Builders surely knew last year the game was up. Just look at Toll’s insider sales. Says all you need to know. They pulled a massive pump and dump, and are still making money on it, even with the current incentives. They know what’s coming down the pipe will hurt, and now they are just trying to find enough FBs to save their asses with all the new crap that’s still being completed out there. Bunch of scumbags, but hey, bidness is bidness, right? ya, right.
Yea ,I think your right that Toll knew and some of the other big builders, but look at all the permits that were issued so alot of builders must of been in la la land .
I must be trying to be more upbeat today .
Youre not completely wrong, because the two arent inconsitent. It’s a win win, they cash out and make GIANT bank, and if it’s a downturn, they are safe. Any upside at that point is just gravy they dont need, and it’s a safe bet for the most part since the thing has to tank sooner or later. It’s better for them to ride it to the top, then discount like hell to grab some new clueless FBs to bail them out partially. Then they laugh laugh laugh even to themselves while they are sitting in front of Congress, not under oath, I might add.
During these tough times (Slow) when originators are getting laid off and appraisals are few and far between I am glad that I saved a little nest egg during the 3 years refi boom 2000-2003 and I can cruise through and wait for it to back around however when will it come back is the 64K question. I figure the 07 I/O reset appraisals will be difficult, almost not worth doing due to the tremendous pressure to make it work with declining comparables. 08 I might see some steady sales activity, but I am thinking the days of doing 2-3 appraisal inspections (appt+data collection–type them later during the week/weekend) a day are gone for @ least 7+ years. It was actually too busy I had no life, but now I have all the time in the world.
During these tough times (Slow) when originators are getting laid off and appraisals are few and far between I am glad that I saved a little nest egg during the 3 years refi boom 2000-2003
HA-Sure hope you got your t’s crossed, i’s dotted, and E&O insurance paid up.
I see a real future for lawyers representing the FB lynchmob lookin’ for scapegoats.
Individual, independant appraisers are an easy target.
Woah be to those sleazebags who were puttin’ out 3 to 5 canned crap reports a day. I went out with a gal, who said she and 3 other housewifes (all unlicensed) were goin’ out to Springfield, MA and doin’ mult-unit inspections, and writin’ reports that the hack shop operator signed off as doin’ them himself. They made $100 per report. He grabbed $550.
I’ll gladly give expert testimony to f*ck these azzholes.
“…but now I have all the time in the world.”
That says a lot.
I am starting to notice a definite change in tone from soft landing to hard landing. Anyone else notice it too?
Simmssays…your house is too small if…
http://www.americaninventorspot.com
Bond market participants noticed. The 40bps downslope in the yield curve between the 6mo T-bill and the 5-year T-note is screaming recession.
http://www.bloomberg.com/markets/rates/index.html
Robert Toll said it best yesterday and it’s really worth repeating b/c it cracks me up every time I remember this coffee-spitting quote. He said, “It’s not a soft landing. It’s harder than a soft landing.”
Would that be a “hard-soft landing” a “soft-hard landing” or a “crash and burned alive” landing?
Actually, I think what we are seeing is sadly more of a “crashed, caught under wreckage, flames slowly licking over your clothes, skin beginning to blister” kind of landing. Its almost painful to watch what’s happening to these people; its like torture.
How was work? Great, I made 300 dollars today, and our house depreciated another 3 grand. We are going to be here for the rest of our natural lives. And the really good news? Once prices hit bottom, then all our neighbors are going to move in with all kinds of money in the bank, while we whittle away at a morgage payment that is 3X what they pay.
Ever see that commerical for a debt rescue company “My names Bob, I have a nice house, 3 kids, nice yard. And I’m up in debt to my eyeballs. Somebody help me”. I feel like that’s what I am seeing all around me. A bunch of Bob’s begging for help.
That’s a great ad. Cracks me up every time I see it.
However, don’t forget about the poor bastards that levered up and bought 2 or more homes. Its bloody carnage out there.
Sadly, I don’t predict that most of the FB’s will learn from this. It will be harder for them to get a loan to be sure, but I have noticed that people who have financial problems tend to have them for life. If they get a raise they just spend more. It seem to be some type of an obsessive compulsive disorder that it is not necessarily related to intelligence. No, I am not a shrink (engineer).
The FBs and their apologists will blame everyone but themselves. There will be Congressional hearings, media hand-wringing, and new regulations for the mortgage industry.
Interesting question whether people learn from their mistakes. I’ll bet if a shock collar was involved they would. My dogs recently went through rattlesnake avoidance training and now they even act cautious around certain garden hoses.
Replace the rattlesnakes with I/O Loans but keep the shock collars — call it Interest Only Loan Avoidance Training — and you’ve got a great business.
That is the funniest post I have seen in a while.
Shock collars for FBs.
Put that on a bumpersticker.
In others words, its like a fully loaded semi going over a cliff! Look out below>>>
Just wondering how flagstaff’s housing market is fairing ben? I assume you know. I sold my overpriced manufactored home there last year. I was born and raised in Flagstaff……….taught there and have left there………the town is a shell of its former self
dave,
Prescott here, and we’re in bad shape…as is Sedona, Flagstaff, etc. Northern AZ is a train wreck, for sure. Actually, per capita, there are more houses for sell up here than in Phx metro.
Sickening, isn’t it?
The inventory on the MLS has doubled since Feb when I started tracking it. I’m keeping a chart on my site if you care to check it out.
When you think about all that inventory and how unaffordable those homes are for people earning the average Flagstaff income, well, it’s just scary. Who the heck is going to buy all those homes now that the flippers and 2nd home people are bailing out?
My guess is that a lot of people are going to get hurt around here, especially those that bought into the “Ponderosa Trails” development within the last couple of years. I foresee major pain ahead for Flagstaff…
wow, LIErah’s book came out in feb ?
by feb who didn’t know RE was crashing
most markets started down in 7/05
the title of his book has changed once or twice, the February release was I believe the latest version. the original was released in early 2005 if I remember correctly.
Hey Folks:
While we’re all clucking about all the FB’s out there going over the cliff - this is going to bite everyone. The housing crash is going to pull the markets down too and who knows what is going to happen to all the MBS paper out there. (How much MBS paper does your 401k or pension fund hold)
All of us who have been prudently investing in our Roths and 401K’s need to watch out that this dosen’t suck us down the tubes too.
I’ve moved as much as I can into treasury bond mutual funds. What are other folks doing to protect your retirement savings ?
Buying oil companies and gold mines.
be careful with those oil companies. oil prices tend to tank during a reccession.
cash cash cash, at the moment. But then, the stock market has never been kind to me.
I switched as much as I could to my credit union. They are paying 5+% on their IRAs and CDs. One thing I did do was look at their last financial report. As of June 30, they are 7% invested in real estate. And 1/3rd of their investors are in IRAs. They should be safe for now.
sorry, I’m ignorant, what is MBS paper? The only thing I know about my 401k fund is the sector allocation, both very low in consumner discretionary and staples.
Regarding mutual funds, I’ve always wondered if it made more sense to save money for house downpayment, or use it to buy mutual fund shares and just sell them in a couple years when I’m ready to buy.
MBS = Mortgage-Backed Securities. They’re bonds made up of bundled mortgages. There are trillions of dollars worth of these bonds outstanding thanks to the surge in mortgage lending from the housing boom. So naturally, fixed income funds, pension funds, Asian central banks, etc. have bought up huge chunks of this kind of debt.
Why would anyone buy MBS given all the housing industry trouble out there? These securities pay higher interest rates than Treasuries. Investors have made the judgement that even though MBS are not backed by the full faith and credit of the U.S. government like Treasuires, most of the underlying borrowers will continue to make their mortgage payments.
Another important note: MBS come in all forms and all risk levels. The junkiest securities are made up of bundled subprime mortgages. The lowest risk ones are made up of conforming, or conventional, Fannie Mae and Freddie Mac-type loans.
Hope this helps. I talk about some of the problems in risky lending and other mortgage/interest rate trends at my blog, and do my best to help out by posting here too.
If you’re interested, go to …
http://interestrateroundup.blogspot.com/
“…most of the underlying borrowers will continue to make their mortgage payments.”
I think that is why it will be bad enough for us to get back to fair (1999-ish) prices on housing by the end of the bust, but it won’t be so bad that it’s a Krakatoa to the US and world economies. A lot of money will be lost on a lot of paper, but not nearly all of it; a foreclosure doesn’t represent zero value for the underlying asset. And a bad/deep recession won’t be the end of the world, though it might seem that way to a lot of people who will lose their toys.
It’s ironic that many of us, once prices get back to or even slightly below the long-term mean, will think those prices are a great deal. But they won’t be a great deal — they’ll just be prices that shoulda’ been there all along.
most of the underlying borrowers will continue to make their mortgage payments.
Says who??? We’re in uncharted territory, and this sounds like more wishful thinking.
How do you think these people are getting loans to buy houses that are depreciating rapidly? That is right…with fractional reserve lending, it is with YOUR money. It isn’t even in the bank. You try to take it out after other people realize the same thing, there won’t be anything. Oh yeah, you’ll get your FDIC alright. The purchasing power of that amount will be able to buy a gumball at that point. Same thing with the T Bills. You’ll be getting that 4% in USD. That is the same medium/currency they’ll be giving out the FDIC insurance. Think about it.
Altria, always.
Read somewhere that Sacramento looks like it is picking up. Can anyone verify this? I’m short up to my eyeballs on these HBs. Do I need to start closing out my long term puts?
Making money hand over fist on the short term volatility of these HBs. I really can’t believe people are stupid enough to keep buying these guys. Buy short term puts on 200MDA test, cover at 50MDA. Rinse repeat……its a gift that just keeps on giving.
Where did you hear that? I’m in Sacramento and it’s NOT picking up unless something happened last night.
Check out Lander’s Blog: http://sacramentolanding.blogspot.com/
http://www.thestreet.com/_yahoo/newsanalysis/homebuildersconstruction/10307988_4.html
The comment is anecdotal quote from a Realtor though so I want verification. Personally I think its realtorspeak but I have too much money on the table to not follow-up.
Seriously….. believe what a loan officer/mortgage banker says before you go by what a realtor tells you.
Not much comfort, I know, but some of us on the inside of lending actually admit to what is seriously wrong with this whole situation.
“WaMu CEO Kerry Killinger said he’s been cautious about the housing market for 18 months, feeling that prices had gone up more than fundamentals justified.”
Are you serious???? I walked into a WaMu branch in San Francsico to use the ATM the other day and they had a flyer up touting a $1M Option ARM with a 40yr amoritization with a 1% teaser rate.
Doesn’t sound cautious to me. Sounds like a last, desperate attempt to keep originations up.
My brother who’s the golf pro at a country club in NJ, said one of the members who’s underwater for a few million to some heavy hitters on a commercial development deal, collapsed from stress out on one of the fairways.
hehehe…10x the ‘90/’91 collapse…
“underwater for a few million to some heavy hitters…collapsed from stress out on one of the fairways.”
Stress — assuming there wasn’t a barely perceptible “Pfffft” sound from the nearby trees.
St. Joe is no stupid company. If they say it’s time to stop building, it’s time to stop building. Since they already own so much land, and have for a long time, they can start up new “developments” cheaper than some of their competition in Florida (who probably should have stopped building a year ago!)
JOHNNY THOSE ARE MORTAGE BACKED SECURITIES.
DAVEY YOU CAN FIND THE RATING OF ANY CREDIT UNION OR BANK AT THE BAUERFINANCIAL WEB SITE AND THERE SEC FILINGS WITH RATIOS ABOVE OR BELOW INDUSTRY AVERAGES. THEY HAVE A 6 STAR RATING SYSTEM. I’M GETTING SOMEONE OUT OF A CREDIT UNION WITH A 3 STAR RATING, WHICH MEANS ADEQUATE. A 2 STAR MEANS PROBLEMATIC.
Appraiserboy — thanks for the site. Went to it and got great information on Florida institutions. The only thing that puzzled me just a bit is that Countrywide Bank gets 4 stars (out of 5).
Yep Chip some of the ratings puzzled me to . Could it be because they are allowed to declare negative amortizing as income earned ?
test