Gambling On The ‘Ritual Of Creative Financing’
The Santa Rosa Press Democrat reports on home lending from California. “Gren Clarence and Shidler, like two out of three Sonoma County home buyers and owners, joined the fast-growing club of borrowers in high-cost housing markets who financed purchases and home equity loans with low-payment mortgages that explode into much higher payments within a few years.”
“Now, the first wave of borrowers faces a costlier mortgage bill. Some will be in over their heads if they can’t afford to pay more. Darren Seliga is busy working with clients who need to refinance and figure how to budget $350 to $650 or so more for monthly house payments. ‘My job is to find a creative way to get them into something and help them find something different down the road,’ the Santa Rosa mortgage broker said. ‘Sooner or later you’ve got to face the music or sell the house.’”
“The ritual of creative financing to keep payments low, followed by a new round of financing in an attempt to stay in a home, has High housing costs are constantly shifting the bedrock beneath a home that serves not only as a shelter but as an ongoing investment. ‘I’m just hoping this all works out for me. It’s always a risk. But you’ve got to take some chances,’ Gren Clarence said.”
“‘It’s already started. I think it’s going to go for a while because we’ve made so many loans on that interest-only product,’ said Randy Blankenbaker, for Chase Home Mortgage. They account for two thirds of all purchase and refinance loans in Sonoma County, compared to a quarter of loans three years ago—and have supplanted long-term, fixed-rate loans.”
“‘Sooner or later, they’ve got to pay the true cost of a loan,’ said John Klein, branch manager for Charter Funding in Santa Rosa.”
“Gren Clarence bought a $500,000 home and put 25 percent down. ‘That’s how you maximize your savings. Yet you’re gambling,’ Gren Clarence said. ‘This is all just cross our fingers and hope it works she said.”
“‘It’s a smart thing to do if you’re responsible with your money,’ Shidler said. Shidler used one to refinance his Santa Rosa home five years ago. The $800 a month he saved with the minimum payment went into investments and to buy rental property out of state. Two years later, Shidler refinanced again, this time to pull out equity for home improvements. This option mortgage saves about $700 a month.”
“For Shidler, the first option mortgage added $1,500 a year to the loan. His current one adds $4,000 a year. ‘The option ARM was really sweet. But I didn’t like the way it was going up,’ he said.”
From the Reporter. “One of the byproducts of the frenzied pace and appreciation that marked the previous real estate cycle was a proliferation of ‘piggyback’ loans. Some of those piggybackers, namely those unprepared for the ramifications of a slowing housing market coupled with newly adjusting rates, are beginning to find themselves without a financial leg to stand on.”
“‘Of all the escrows that closed in ‘04 and ‘05 in all of Solano County, I bet you that 40 percent of the escrows that closed were situations that wouldn’t have qualified in 2000,’ reflected loan officer Jim Porter. ‘That’s testimonial to how easy it is to buy a house today. The loan products have changed, and the mortgage companies and the banks have become hyper-aggressive, hyper-competitive.’”
“‘Borrowers may not be prepared for the increased payments they will face as interest rates rise,’ said the PMI study’s author, Charles A. Calhoun.”
“Piggyback loans, he said, initially ‘appear to support a rapid rise in housing values by qualifying borrowers for larger loans at higher loan-to-value ratios; but I expect that as interest rates rise and house price appreciation slows or declines, defaults will rise and borrowers could lose their homes. It’s particularly worrisome given that borrowers may not fully understand the risks they face.’”
“Realtor Kathy Shuster of Vacaville agreed. ‘Clearly, 100 percent financing is more popular, (because) people don’t have the money to put down,’ she said. ‘It’s allowing people to get into properties they otherwise couldn’t. But if you owe 100 percent, and the values drop as they have, you’re in trouble.’”
“Even borrowers who took out mortgages five years ago are being adversely affected, explained Porter. ‘Customers that have these really high mortgage loans and high payments are starting to stress a little bit, and maybe even fall behind,’ he said. ‘That was OK in ‘03 and ‘04 - ‘05 even, because if they started to fall behind, they had 50 percent equity increases because of the huge appreciation in ‘03 and ‘04.’”
“That allowed for them to borrow against the home’s equity, Porter said. ‘So many people are robbing Peter to pay Paul. (But) if they owe $500,000 against their house and it’s only worth $500,000, they can’t borrow against their house.’”
“Because of such situations, particularly where homeowners end up owing more than their home’s value, some Realtors foresee an increase in short sales, in which a home is purchased for an amount less than the debt owed by the seller. Solano-based Kappel & Kappel Realtors, for example, recently held an educational seminar on short sales for its agents.”
‘Orange County new auto sales continued their downward drift in August, as consumers put the brakes on buying new trucks and SUVs, the Orange County Automobile Dealers Association reported Friday.’
‘Total August sales fell 7.6 percent to 17,713 vehicles. For the month, sales of light trucks, a category that includes sport utility vehicles, plunged 19.4 percent.’
‘During August, automakers offered generous financing terms, seeking to clear showrooms for 2007 models. Over Labor Day, Ford offered zero percent financing on 72-month loans. The terms didn’t help. Ford sales fell 48 percent in August to 1,193 vehicles.’
‘Buick, Cadillac, Chevrolet, Chrysler, Dodge, GMC, Jeep and Lincoln experienced double-digit sales drops as domestic automakers saw the number of new vehicles registered nosedive 35 percent compared with August 2005.’
Looks to me like more and more signs of deflation.
Stagnant wages. High debt levels. Falling home prices. Lack of job creation. Layoffs, especially in real estate. Baby boomers retiring.
DownSide “Looks to me like more and more signs of deflation.
Stagnant wages. High debt levels. Falling home prices. Lack of job creation. Layoffs, especially in real estate. Baby boomers retiring.
Yep! I think you got a good consice over all picture. I doubt anything will change the facts you you have stated.
I wouldn’t quite call it deflation (according to CPI) my rent went up $100 a month and I notice prices in the stores are also slowly going up. I see the beginning of a good recession though. Now if the feds would raise the interest rates a couple more time so that I can get more interest out of my savings……
Same here. I would call it stagflation. Rising unemployment, rising inflation.
Are the ’70s really back? Jobs that pay well, especially at entry level, are non-existant. Gas prices are falling lately but still much higher than a year ago.
Most of what we buy is finally inflating due to higher energy costs that retailers have eaten heretofore but finally feel comfortable in passing on to consumers.
Feels like stagflation to me, without the long gas lines. (yet) Citgo=Hugo=Don’t Go?
The shift away from SUV’s and trucks in Orange Co is driven by three factors: The price of fuel changing buyer’s preferences, over supply of SUVs and trucks including used vehicles, and taxbreaks on hybrids that allow a solo driver to ride in the CA carpool lanes.
I see far fewer SUVs and Minvans and more mid-sized cars and hybirds in my daily commute.
no more carpool lane stickers for hybrids in CA (new vehicles)
Reduced construction spending is a direct reduction in truck volume too. The reason the F-150 and Silverado are the #1 & #2 selling vehicles isn’t because everyone likes driving their family around in a truck.
Wow–Ben’s post above on trucks and SUVs is really important. Looks like a slowing housing market can have some effect on consumer spending. That’s a matter of great debate among economists and investors right now.
Maybe housing is not the only factor, but consumer spending and housing are probably affecting each other.
Maybe?
i manage retail in westlake village.the recession started this spring and its getting worse.
Interesting… that’s an affluent area, too.
Locations–a lot of people on this blog talk about localities without identifying their state, region or county. Where is Westlake village? I am often wondering, since this is a national, international blog.
CA, just SE of Ventura.
Lots of celebs.
city SFH’s/ zip homes sold yoy/ CONDO figures
Westlake Village 91361 4 $925 -34.6% 2 $437 9.3% $413
Westlake Village 91362 3 $720 -4.6% n/a n/a n/a $459
Indeed westlake village is an extremely hi-end community with attractive shops, retail establishments, and some hi-end companies. It is puzzling that, as the above figures show, that WEstlake viilage is seeing such YOY declines in it’s two zips. This has occurred in other hi-end LA areas also(Westlake village may be in Ventura county):Note: only seven homes sold, which may provide a partial clue.
community zip hmssold price YOY :
Playa del Rey 90293 4 $1,024 -30.8%
Calabasas 91302 25 $1,330 -11.3%
Encino 91436 12 $870 -9.8%
Hermosa Beach 90254 12 $1,218 -16.0%
Bel-Air 90077 4 $819 -58.0%
Venice 90291 21 $1,050 -12.5%
This is not to infer that all LA hi-end areas show sharp YOY declines: some zips still show increases, and in any case the no of homes sold may be too small a sample to come any conclusion. Too many variations in each ZIP for LA but in general the higher the ave median in a given zip the more likely it will show yoy declines.
Things that are completely obvious to the average observer are generally debated to death by professional economists.
House price crash leads to fewer cars purchased. Duh, how hard is that to figure out?
Most economists are more concerned with following the economic herd and not rocking the boats of those who pay for their salaries and studies than they are with examining simple economic truths.
always have , allways will
it’s differnet this time by a factor of 2 x 3 ?
Its like “stupid” is the new smart. How can somebody buy a $500,000 piece of property and not even understand the ramifications of their loan? Based on IQ, these people barely rate a trailor park. Of course, given our President, I guess stupid is in! Let’s bring back the 19th century “Know Nothing Party” for these dopes.
- Gren Clarence bought a $500,000 home and put 25 percent down. ‘That’s how you maximize your savings. Yet you’re gambling,’ Gren Clarence said. ‘This is all just cross our fingers and hope it works she said.”
Ah-oh! Gren is in a poker game and pushed her chips ‘ALL IN’.
If we read between the lines - I think that Gren is going to lose her down payment of 125k….
I want to remind us all that as an investment, a home purchase is always a gamble. Always. I think Glen is wise, not foolish to recognize this risk and she spoke intelligently about ARM vs Fixed. And putting 25% down used to be a smart thing to do and still is.
Lastly, “With two incomes, they can afford to pay both principal and interest. “
Uh, buying a house just before a major price decline and likely recession is not a smart thing to do, regardless of the down payment.
If you buy a house with the intention of LIVING in it put 20% and use a convential 30 year fixed loan buying a home is NOT a gamble. It’s a place to live.
Stupid. It’s the new black.
“I’m just hoping this all works out for me. It’s always a risk. But you’ve got to take some chances”
maybe it’s just california, but man, I’d like to take a calulated risk with a $500,000 asset. I wouldn’t be crossing my fingers. I’d cross my fingers when something pencils out and seems like a good deal, not when I have to hope and pray.
Just got back from visiting the new Portola Springs developments largest housing option (Standard Pacific) in Irvine, O.C. They are 3,800-4,150 sq.ft. homes listed at about $1.4 mil . . . but you get $75,000 in free upgrades. Decent traffic, but this is the weekend before the first release so subpar traffic in my mind. Great homes, for which I would maybe pay $900,000. The one interesting thing was that when I inquired about the expected absorption, they are releasing them VERY slow. This makes me think they might not even build all the units, but the large carry would be ridiculous. Who knows — told my wife we will check back after Xmas and I bet her the free upgrades would be alot higher.
Went thru that area and had a peak at the gigantic mega-housing/mixed use/planned sprawling development collectively called Portola Springs. Most of the project still going up or in the beginning dirt-clearing stage. but some tracts may be ready for occupancy. A city/community by that name will emerge eventually over next year or so, with the surrounding clusters of planned residential gated communities. This area accessible off Jamboree going eastbound on Portola springs rd all way to 241 toll hwy. It is north of the old el toro marine base.
i like the way everyone thinks there’s an easy out. a short sale must be the way to go, the lender will just let you walk away from the property and take a $50,000 hit. they wouldn’t want to offend you by foreclosing on your ass and coming after everything you own and make. from what i remember, a short sale was only accomplished when you could convince the lender that you didn’t have two nickels to squeeze together and their losses would only be higher in they foreclosed. now realtors are attending seminars and buying books on how they can make “wild profits” by negotiating short sales for their sellers. figures.
Yes, but who’s buying at the short sale? Who’s going to come along and pay 80% of the wishing price while the market is falling?
Calling all knife-catchers!
At the very least, Mr. IRS man will want to have a talk to you about the forgiven amount. At worst, you have a loan with recourse, or have committed mortgage fraud (inflated income loans, fictitious income loans, and fake owner occupancy anyone?) and the bank comes after YOU for the rest.
I think a good analogy to a short sale would be an offer in compromise to the IRS. They won’t let you off the hook unless it’s clear that it isn’t worth pursuing you. That won’t stop the hucksters from advertising that they can get the job done for you though. Should be a cottage industry/informercial fodder before much longer. Hell, they can make it a twofer - claim to be able to negotiate the short sale and then offer them to “investors” out the other end.
But anyone who voluntarily goes through life with a name like “Gren” is a lost cause anyway.
Offers in Compromise are very difficult to negotiate, at least in my district. If you’re working, the IRS will present value a 5 year stream of income net of allowable expenses, and then demand you offer that amount to settle. Not easy.
Ah! Short sale. Does any one know what happens to the poor seller in a short sale? If the value of the short sale is: say,$50,000 under what is owed to the bank the $50,000 is reported as income to the IRS and the seller has to declare this as income and is taxed on it. He cannot walk from the IRS!!!!
It is true that the difference between the negotiated short-sale price and the loan will be taxable income (loan-forgiveness), but keep in mind if its an investment property, the income will be offset by the capital loss on the house.
But the capital loss can only be taken against a capital gain, right? Otherwise it is charged just so much a year versus regular income, correct? My tax is rusty.
That’s right, Ben. The loan forgiveness is ordinary income, and can be offset only to the extend of 3k in capital losses.
Still, some might be able to argue that their flipping activity was a “trade or business”, in which case all losses can be taken against ordinary income. If they quit their jobs to pursue this activity, I don’t see why not.
“Gren Clarence bought a $500,000 home and put 25 percent down. ‘That’s how you maximize your savings. Yet you’re gambling,’ Gren Clarence said. ‘This is all just cross our fingers and hope it works she said.”
Imagine losing $125,000 in one year of money you saved up because you failed to do a simple rent to price ratio calculation. I think P.T. Barnum has some insight into this sort of thing.
I cannot tell you how many times I had the in-laws telling us how we need to buy and get in while we had a chance even as late as early this year. I’m like excuse me a $500,000 loan on a junk house in a bad neighborhood means a $4000 payment (PITI) and maintenance. They were like no, you can get loans for just $2000 a month which is what you waste on rent and we all know how you like to bitch about taxes… I’m like exactly what part of third grade math did you miss?…
You go, GH. Tell ‘em she’s mine now and if she ain’t listenin’ to you no more I sure as hell ain’t.
It is a lot tougher than third-grade math. I remember my first Finance class where most of the class struggled as they didn’t have the ability to understand interest rates, present values and future values and values of cash streams.
Your relatives were only looking at cash flows and just assumed appreciation.
An idea for a website would be where the
user can enter the loan amount, the market value of the house, and enough of the loan data particulars so that a table of interest, principal reduction (or increase) and true cost of money could be displayed on a web page so that people could really see how badly they would get (or are getting) screwed by proposed or existing loans.
“I cannot tell you how many times I had the in-laws telling us how we need to buy and get in while we had a chance even as late as early this year.”
Ah, the lousy RE advice given by in-laws — probably responsible for the majority of bad buys by first-time home-buyers in recent years. I sometimes wonder if my in-laws are secret private contractors working for Leslie Appleton-Young.
Mr. Clarence will be fine, provided, he’s got a fixed 30 and plans to stick around. You don’t loose, or win, until you sell and cash the check.
Dc
That “You don’t lose until you sell” bull is what mediocre investment advisors tell the gullible.
If an asset you hold loses value it is lost. Your accountant and the taxman might not know it but that doesn’t make it any less so.
The act of selling that asset only removes the chance that it may recover it’s value.
That’s if you’re dealing with an investment. In this case, it’s a place to live. Or a place to generate income.
Take a look at a chart of PVX and then the historical record of dividend payments. In 2002, they were essentially giving away money. Divvy yield was 33%. You got back your investment in a few years.
Paying $500K for a house seems like a lot to me but if you have the income to pay it off and plan to live there for 30 years then I don’t have a problem with it.
Of course I’m a trader when it comes to stocks and LTBH for housing. Both have worked out very well.
Why not “loose”?
Creative financing is the backbone of this bubble, it seems to me.
What fundamental factor would account for the commonplace 100% to 200% rise in prices?
Yes, without creative financing, no amount of stupidity, greed or speculation would have allowed prices to rise above that which could be reasonably afforded which would have locked prices to incomes.
Posted “Creative financing is the backbone of this bubble, it seems to me.
What fundamental factor would account for the commonplace 100% to 200% rise in prices?”
If this is so the same should be true on the down!
‘My job is to find a creative way to get them into something and help them find something different down the road,’
Classic example of a loan consultant that works for the realtor and not his actual clients, Mr & Mrs Homebuyer. Instead of getting your clients into a loan by any means possible, did you ever think of doing the right thing like advising your clients of potential disaster? Oh No!!….that would piss your realtor off, wouldn’t it? You know, the one that has you stuffed in his/her back pocket. Can you start to see who the true real estate whores are in this game? (can you also see that this is a subject that chaffs at me just a little)
The easy money financing of the last couple of years is the reason a term used by defensive homeowners doesn’t apply. What term? Bitter renter. There is no such thing. It’s just a phantom term created to throw at folks using common sense today. Why, you ask? Because every one that could inhale or exale could get into a home these last few years. Heck, we’ve even documented a case where a homeless person was buying investment properties. The point is, if you wanted to be a homeowner all you had to do is go down to your corner broker and apply. Bingo, you were in. That being the case, renting today, for the most part, is a CHOICE, not a relegation. Your not bitter if you can easily remedy your situation.
Along the same lines, this leads me to my second point. The RE industry keeps talking about the recovery soon to come. I don’t see how. Since the easy credit spigot has been turned wide open, any GF-soon-to-be-FB has already bought a home. There was nothing to stop them. All the “old-fashioned” roadblocks that kept idiots from purchasing homes went the way standard underwriting procedures…EXTINCT. ANYONE COULD BUY A HOME. There was a time a homeowner could be proud, because homeownership said that he had earned the distinction. What does it say now?
So, the pool of idiots has been greatly depleted. The investors are either getting burned as we speak or thanking the god of the heavens that they got out. The rest of us with half a brain in our heads will sit tight and watch this play out to fruition. No, I don’t care how low the Fed drops the rates, no housing recovery in ‘07, or ‘08, or ‘09…….
AMEN! if you are ever in the wine country i’ll buy you lunch.i’ve been a loan broker for only a couple of years,and have killed more deals than i have made,but i haven’t had to wear a kevlar vest since i stopped managing properties in east oakland.you did not mention the prevalence of fraud in stated income loans,MBARL.org did a study showing it was above 80%.click on facts,it is stunning.as far as michael coit,i have spoken to him,he gets his info strictly from brokers,and rick laws at coldwell banker writes the pd’s monthly real estate report.i asked him if he EVER factchecked or verified the information given to him by brokers,and he became quite offended,and told me he trusted his sources.pi$$ on him and the brokers he shills for.
A guy who I help with his retirement account is a mortgage underwriter there in Marin/Sonoma area. He’s been through the last 2 cycles there going back to the mid 1980s. You’d recognize his name. Nicest guy on the planet and an eternal optimist but guess what? He sold his place in Sebastapol in July of ‘05 and is now renting.
Tom Stone — that MBARL.org site is very good and well worth reading, especially the “Articles” and “Facts” links. Bookmarked it, for future reference when the stated-income lies become the fodder of the MSM.
“The easy money financing of the last couple of years is the reason a term used by defensive homeowners doesn’t apply. What term? Bitter renter. There is no such thing. It’s just a phantom term created to throw at folks using common sense today. Why, you ask? Because every one that could inhale or exale could get into a home these last few years.”
Yes! “Bitter FB’s” would be the more appropriate term to describe the defensive homeowners.
New York Times on ARMs: “It Seemed Like a Good Idea at the Time.”
http://www.nytimes.com/2006/09/24/realestate/24cov.html?pagewanted=1&ref=realestate
Fixed rates are still really low. Those who weren’t right on the edge may have one last chance to refinance into house poverty and avoid foreclosure.
Ben’s comment about auto sales is spot on. How long can we expect to sell 17 Million new vehicles every year? Since most cars now are, 1/2 to a full years median wages,that would limit the pool. Unless you HELOC for the car. So we have been,and setting records for vehicle sales numbers while we were at it.
But, as with everything else, at some point, the music stops.
When it does, I think we will see vehicle sale falling. Best estimates now project 2006 sales at 16.3 million. That spells doom for Detroit.
What saddens me is that all the folks on the sidelines (secretly hoping) for the Big # to fall (or fail) do not seem to see that a big hit to the Dometics will affect many,many more people than just the UAW,and the Big # fatcats.
Dealership employees,parts suppliers,and others will all take the hit, as well.
many of these jobs are (relatively) low-skill, high pay, the kind we can least afford to lose. They also ahve the virtue of being local and non-transferable,unlike the actual building of the cars, which can be outsourced.
Pray that Detroit does not fall. Weakened as they now are, they can still take the rest of the House of Cards down with them if they go.
I don’t think Detroit is going to make it. Along with housing this is going to be a nationwide catastrophe.
There are some really nice places there - Birmingham and Bloomfield Hills are about 25 mi north of downtown Detroit and both have some beautiful homes. I think in a year or so you could pick up real bargains for maybe 75% off todays prices which have already dropped in the past couple of years.
These two areas are where the execs from GM and Ford live. Rather, I should say ex-execs? Many of the homes there will match anything anywhere in the US. I’m seriously thinking that a 3000-5000 sq ft (any style you wish) home will go for a couple $100k. And they also have some very, very nice smaller houses as well.
I’m thinking at some point I’d like to live there, the only problem being the very real possibility of long-term vacant neighborhoods.
Detroit RE has been going down for 2 years now. using the formulas of wage, payment and what our RE is going for, all lists put us at the top of affordability.
It is sad about the Auto industry, they have signed the contracts and are paying the legacy cost now for them. I know, boo hoo for them.
But, Michigan workers are one tough bunch.
I have a 4000 sq ft home there on 2 acres , I built this home 14 years ago, the most I could have got for it 2 years ago would have been $650k…. if I choose to sell today maybe I might get 500 - 550K, maybe. But, electric bill for my home last month was $140.00
If I could add, built so big because I designed in a apartment area for sick elderly parents . Have 2 kitchens 2 heating plants, and was built with handicap occupants in mind. Now our daughter is living in this area.. This I think will be seeing happening more of and the remodel business, home depot etc, might have some impact.
I wonder if the home started at $475,000 and she Bid up the home to $500,000.
Matter of fact, were are all these poker players that were in bidding wars and they think they “won” at the time.
the Playa field is still warm suckers.
“Matter of fact, were are all these poker players that were in bidding wars and they think they “won” at the time.”
They pushed all in without checking their cards first and went bust.
“Gren Clarence bought a $500,000 home and put 25 percent down. By using an interest only loan, her monthly payment is $1,640 rather than $2,218 for a fixed-rate loan requiring payments toward both principal and interest.
“That’s how you maximize your savings. Yet you’re gambling,” Gren Clarence said.”
$500,000 doesn’t buy much of a house in Petaluma, CA.
This is a perfect example of the mentality we are dealing. The monthly nut under the I/O was lower than the fixed and this bonehead calls it “savings”.
Dude it is not “savings”. Its is a short term cash flow difference between two financial instruments. You have minimized your cash outflow which may or may not be smart depending on what you do with the cash. Savings implies an increase in short term liquid assets that increases your net worth. What your are doing here in regards to the delta between the two loans is credit “not so much cash” and credit “not so much loan”.
-
repost but great comments on how creative financing created artificial, unqualified competition:
5. most of miller’s content was published a month ago in barron’s. the market for the last couple of years has been near-Ponzi-scheme like. Low bar & creative financing product fueled a total bullshit tactic by the real estate industry (conjuring the perception of artificial scarcity) and agents/brokers insisted their clints overbid left & right, etc.
i call it “the fleecing of the buyers”. if you bought in the last couple of years there’s a very good chance you overpaid based on “contrived” and “persuaded” demand, as opposed to the historical market….the market sans the “fuel” to heat up this bullshit. Example? The price you HAD to pay was probably rigged up due to a would-be buyer who also wanted the property, had no business trying to buy it,could not afford it, however thanks to 0 down & i/o and ARMs, could muster financing for up to $800K or $1M or so. Very good chance of them ultimately ending in foreclosure but that does not matter…..that person increased the price you paid, bottom line.
NYC is not immune to what’s hitting the rest of the country. The tactics and tricks our regional market has employed are not working like they used to,hence all inventory, extended days on the market,and price chopping.
Did you see the NYT yesterday? The article about the real estate industry complaining and literally blaming the media for the slowdown? Ha! A voice reports truth and immediately the real estate industry discredits that voice.
Never disclose fact & truth, the real estate motto. I’m trying to sell my multi units in California and am taking a hammering right now. I’ve been interesting in buying in NYC,and will in time…however pulled back from even considering it when I saw the bullshit at work.
The bullshit is I saw I was competing against buyers marginally, thinly qualified…but thanks to the low bar Zero down products, were fueling demand. I pulled back and decided to not be exploited by the manipulation.
Clearing of the market of the marginally qualified will be a good thing, once banks tighten up. I look forward to the days when sellers realize the market is made up of qualified buyers…..and not a large sector of marginally qualified, happy to just be there and have a chance to overpay.
Sellers “Testing The Market” = Is there a bigger fool who managed to get a Zero down i/o ARM whiz bang loan and buy over their head?
Can we cut the bullshit and tell it like it is?
By anon at September 18, 2006 12:30 PM
http://www.curbed.com/archives/2006/09/18/downmarket_here_come_the_brits.php
Real convincing graph. They compare price to change in price. Fat is the new skinny. Stupid is the new smart. Ugly is the new sexy.
Because it seemed so obvious a requirement to me, I never understood how my peers were buying these enormously expensive places… It made more sense when I realized people had no intention of paying off the loan. So they were basically real state speculators with their primary residence. It worked out well for a long time (especially in California), but the game is up now.
” ‘My job is to find a creative way to get them into something and help them find something different down the road,’ the Santa Rosa mortgage broker said.”
This way broker’s business is secured — a constant sale of creative ways to pay for the home one can’t afford.
Jas Jain
Check out this loser w/the San Diego phone numbers. This one is a triple ouch. I am positive this is one of those California equity locusts who showed up in DFW with a wad of cash, bought their mansion and now want to go back to California. Oops, one problem though! There ain’t no way she’s gonna unload this white elephant for anywhere in the ballpark she’s asking (although I’ll bet she paid more than this)
http://rentindallas.com/l.php?/284/
Another one of the joys of selling in this market:
http://dallas.craigslist.org/rfs/211403671.html
I am utterly amazed at that craiglist posting. Unbelievable. LOL I got a solution hire an agent LOL
She sounds like a bitter homedebtor.
“My children couldn’t play freely…. My dogs were chained up ALL DAY, instead of being free to run..I tended to the fireplace ALL DAY..”
Sucks to be a slave. “Money is an excellent servant, but a terrible master”-P.T. Barnum
“Think of how YOU would feel if YOU had to cancel YOUR plans and waist YOUR day.”
I don’t have to think of that, because I already thought of how this flipper game would encroach on my personal time, BEFORE I made the mistake of jumping in and so now I have the simple life of renting. The girls I work with and I are taking the day off from work next week and with our pink surfboards are heading to Coco beach. The sunshine and waves are free.
“Freedoms just another word for nothing left to lose”. Janis
And is it just me, or is the spelling-ignorance of the FB’s simply astonishing. How can anyone confuse “waist” with “waste”???
Bulimic? -
Craig’s List removed that post.
Comparing YTD numbers for Santa Clara County for the last four years, we find:
YTD +/-$ 2003 2004 2005 2006
thru August +$26K +$70K +$104K +$17K
Latest data snapshot can be found here:
http://www.viewfromsiliconvalley.com/id264.html
Once homeless
Mr. Kumapayi is a former car salesman who was living in a Collin County homeless shelter in May 2000, according to court records in a child custody case. Seven months earlier, he told a judge he earned less than $1,600 per month from a mortgage company.
Within four years, however, Mr. Kumapayi and his associates were borrowing millions of dollars for the three-story townhomes.
As they repeatedly purchased and sold their townhomes among themselves, Mr. Kumapayi and his associates increased the paper value of their property by more than $1.5 million.
http://tinyurl.com/m4cls
Well looky here. Notice the name. Not Smith or Jones, that’s for sure. And the 24 year old scam artist with the 5 foreclosures in Sacramento is from the former Soviet Union. This is one of the big differences in this bubble: the huge participation by non-Americans who don’t grab what they can and then leave the rest to flounder. Sickening. As I’ve said a million times, I can’t just stroll into Auckland NZ and buy whatever I want, no matter how much I’d like to. But here any lowlife with an approved loan can wreak whatever havoc they like.
“Well looky here. Notice the name. Not Smith or Jones, that’s for sure.”
gimme a break, chick! who gives a bone what his name is. there’s plenty of crooks named smith and jones.
She’s from Texas.
nobody’s FROM texas — it hasn’t been around long enough. well, maybe kinky friedman ….
Ah, c’mon Txchick57…..I appreciate your bluntness and biting wit, but I never took you for a xenophobe.
He came over here with his family before he was 10, so for all intents and purposes he’s as American as millions of others.
Not to say he isn’t stupid, but I don’t think being Uzbeki stupid is really the problem.
POSTED: gimme a break, chick! who gives a bone what his name is. there’s plenty of crooks named smith and jones.
It’s politically correct to defend people of foreign decent. But don’t you dare defend those darn gringos. Do us a favor and take that nonsense over to moveon.org
When somebody offers you money to buy a house, that’s certainly not the norm,” Mr. Roddy said.
That’s the problem, it is the norm.
Perhaps some new Nigerian scams based on housing will show up.
The old paradigm was that people had their paper wealth and retirement wealth locked up in their homes. The bankers knew this was true and had to figure a way to take it away from them. Creating a bubble to get people to refi and remove the cash to buy consumer goods, and getting all other working stiffs to go so deep into hock on these “creative” instruments was genius. Now you’ve got people who owe everything they make to the banks on an “investment” they’re upside down on, and people that managed to have any equity before, starting over with a new mortgage and 30 years of payments for the same property that was almost already paid for. The elimination of the middle class is the obvious goal of the gov’t and banks. Sadly, this time they have succeeded in creating a whole new class of serfs.
Yes! You got it! I said yesterday that you all should think more like criminals. Where is another huge chunk of locked up “wealth?” What have you seen already proposed and shot down once? No problem. Home equity lending in TX was shot down numerous times but eventually they got what they wanted. The stock market is being readied (IMO) for another run next year and beyond. I don’t like it, you now the economic conditions don’t support it, and the market currently is at very stiff fibonnaci resistance (retracement of the 2000 - 2003 bear market) but they’ll find a way to get it through. That is, if the executives at these companies can just stop stealing for a few months
I suppose your talking about the privatization of social security. That’s the last big game in town. That little treasure chest will probably be opened after the market tanks with the housing burst. The pressure will be on that’s for sure.
401K money is a big chunk currently locked up.
“the market currently is at very stiff fibonnaci resistance”
You’re using pseudoscience to analyze the market.
yes, but the sad fact is that there will always be smart people willing and able to take advantage of the dumb masses. You hit it - they really ARE like a new class of serfs! But they walked into it. They were not held at gunpoint, Only their greed for big screen TVs and the new car smell - and let’s not forget granite - caused them to HELOC the hell out of their loans.
I can’t even discuss option ARMs and int only with any coherence. Only the dimmest of the dim walked straight into those…
Amen to that New AZ.
Many times on this blog there are discussions where the conclusion is that the FED must be stupid. We talk about it and then scratch our heads as to why such smart people in high places could make such blunders.
Well the fact is that they are not stupid, but they think that we are stupid. And we have to take out of our equations that these people are honest and have our best interests in mind. NOT!!!
When given a choice it is far better to hang with good people than get hanged by smart people.
great post! “Well the fact is that they are not stupid, but they think that we are stupid. And we have to take out of our equations that these people are honest and have our best interests in mind. NOT!!!”
which is why, with all the talk of tightening lending guidelines, etc. — the music is still playing and the last gf’s are still being lured in. the ONLY thing that’s actually resulted in tightening lending in any way is the mkt’s falling valuations. which is another big motivator behind the need to ’support’ the falling market with phony comp prices a la humongous (and worse than worthless) incentives that disguise true plummeting mkt value and then just add to fb’s woes by piling on long-term debt for short term purchases (hummers!)
Txchik57 - too funny of a craigslist find. I had to send her a reply for being such a brazen smug. I got ’stood up’ plenty of times when I did outside sales. Just part - people change minds. My email (and an episode of Bubbles the Clown).
OH - BOO-HOO-HOO. GETTING STOOD UP. PART OF SALES (50% STAND UP RATIO). THAT IS WHY PEOPLE HIRE AN AGENT. CUT YOUR PRICE IN HALF AND MAYBE SOMEONE WILL REALLY BE INTERESTED. UNTIL THEN, YOU ARE FAMOUS ON BEN’S BUBBLE BLOG. (I KNOW, YOU ARE ALREADY UPSIDE DOWN AND TAKEN A 25% HAIRCUT). NO PROBLEM. WALMART IS HIRING.
Sadly, was unable to read it, as CL has withdrawn the ad….