Exacerbating The Downward Trend
It’s Friday desk clearing time. The UK, “Alliance & Leicester recently changed its rules so borrowers, except first-time buyers, do not need to provide proof of their income if they can put down a 25 per cent deposit, giving them leeway to inflate their earnings.”
“Simon Tyler of Chase de Vere Mortgage Management, an adviser, said: ‘The continued growth in the property market could not have happened without lenders’ increased generosity. If they had stuck to their old systems, most people would have been priced out of the market years ago and property prices would have crashed, it’s as simple as that.’”
From Spain. “More than 500 people took part in a demonstration in Barcelona’s Plaza de Sant Jaume last night organised by the Assembly for Affordable Housing. ‘Nobody lives here,’ and ‘What’s going on?, were some of the slogans chanted while they passed round two huge white ballons that represented the housing bubble.”
From Australia. “The latest quarterly figures from the Insolvency and Trustee Service Australia have shown record levels of bankruptcies in NSW. Bankruptcies in the otherwise booming local economy of Western Australia are on the rise too. With the holiday season just around the corner, Paul Leroy, partner at Hall Chadwick advised consumers against maxing out their credit cards. ‘Proceed with caution – there may be a few more bumps on the road ahead.’”
In Canada. “Gregory Klump, the Canadian Real Estate Association’s chief economist, says ‘What’s happening in Calgary is sales are gradually cooling and..the market also is seeing a lot more listings.’ Kevin Clark, president of the Calgary Real Estate Board, said the amount of available houses on the market is up at least four times what it was from earlier this year.”
“He also said as of Monday 40% of the detached homes currently listed had reduced their price by an average of $27,000.”
In Kentucky. “The Lexington housing market continued its downward spiral in September, and the president of the Lexington-Bluegrass Association of Realtors sees little improvement before early next year. The slowing of the market and the recent flood of new listings has created a 7.6-month supply, 5,596 properties, at the current rate of sales.”
“‘I don’t think it’s all doom and gloom,’ said Tom Kelley, president of the Home Builders Association of Lexington. About one fourth of the 808 houses sold last month were new houses.”
From Tennessee. “There are signs of the Memphis market slowing as sales and sales volume posted smaller increases, and a larger supply of homes on the market has some analysts worried about a drop in prices. MAAR recorded 10,962 home listings in August, up 18.9 percent from 9,217 in August 2005.”
“With more homes on the market and the possibility of falling prices, now is a good time to consider buying, said Jennifer Burda, general manager of Chandler Reports. ‘It is more of a buyer’s market,’ she said.”
From Arkansas. “Home prices are dropping ‘because there is so much inventory,’ said Jonie Burks, an agent in Little Rock.”
“‘It’s all about consumer confidence,’ said Kathy Deck, at the University of Arkansas. ‘In this case, the media’s attention certainly exacerbates the issue, but the same thing was true [when home sales were soaring ]. When it is good, everybody is on that bandwagon. And when it starts to turn, certainly you can get a downward trend exacerbated by the [publicity ].’”
In Texas. “For the third month in a row, Tarrant County has registered more than 1,000 foreclosures, and the number of homes posted for the November auction appears to be a record high. Some unfortunate buyers combined ARMs with 100 percent financing. Randall Dunn, who buys homes from homeowners facing foreclosure, hears from them all the time.”
“‘Those are the ones who say, ‘Please buy my house,’ Dunn said. ‘But they have no equity, so how can I buy their house?’”
“Home foreclosure postings in the Dallas-Fort Worth area have surged to their highest level since the 1980s. Nearly 4,000 homes in Dallas, Tarrant, Collin and Denton counties have been posted for possible sale in November, up 49 percent from the same period a year ago.”
“About 80 percent of the properties posted for foreclosure are worth $200,000 or less, George Roddy said. Still, a small portion of homes have values over $500,000. ‘It’s safe to say that all walks of life in the D-FW area are affected,’ he said.”
From Arizona. “Asking prices in the Phoenix area have dropped about 25% this year, says agent David Khalaj. Existing single-family home sales tumbled 34% in the first nine months of the year, and condo sales were off 24%. Construction permits for single-family homes were down 23% through August.”
“‘Last year was just one of those atrocities that happens rarely,’ in terms of bidding wars and soaring prices, says agent Camille Sullivan. ‘I’ve never seen it before, and I’ve been doing this for 25 years. It was a very difficult time.’”
In Washington, DC. “Financial planner Jim Ludwick says a client who had to sell a suburban D.C. condo started with an asking price that made it the second most expensive of 15 on the local market. She sold it only after cutting the price to make it the second cheapest. The lower take may have been disappointing, says Ludwick, ‘but there are still 13 other condos that haven’t sold.’”
From Idaho. “Indications are that the price of local housing is persuading more and more people migrating to Ada County to rent homes rather than buy, said Marilyn Grimsley, president of the local property manager’s association. ‘People just can’t buy houses as easily anymore,’ Grimsley said. ‘For the first time in awhile, buyers are not able to get into a single-family home. And lenders aren’t giving out loans as easily as they were.’”
In Oregon. “The latest Lane County housing market data signal a return to a more ‘normal’ market, Realtors say. Pending sales were down 23.4 percent and closed sales fell 20.5 percent. ‘A lot of people are making their moves now that the bubble has stopped expanding,’ said Cory Neu, president of the Eugene Association of Realtors. ‘If we see any depreciation, I think most of it will happen in the upper end,’ he said.”
From Alabama. “David Lereah, chief economist of the National Association of Realtors, delivered good news Wednesday to the Rotary Club of Birmingham: The nation’s housing market isn’t as bad off as the media would have you think.”
“Lereah encouraged the Rotarians to tell the news media that real estate is a local market and shouldn’t be judged against the rest of the country. There are some major metro areas in the country that are experiencing ‘big pain,’ Lereah said, citing Miami and Las Vegas as prime examples.”
“He said two-thirds of the country is currently experiencing a real estate recession and the news media pundits apparently expect that decrease to spread to the rest of the country. Lereah expects real estate prices to continue to fall in most U.S. markets. In areas that experienced the largest price appreciation in recent years, a correction is needed, he said, this time citing San Francisco as the best example.”
“Lereah’s latest book, ‘All Real Estate is Local,’ will be released by Doubleday in February.”
A good week, with an even bigger week coming up. My thanks to those who support this blog. Check back this weekend for news, your market observations and topics.
BTW, for readers at my Money and Metals blog; I have a post ready but blogspot isn’t working for me. Please check back later tonight.
“Lereah’s latest book, ‘All Real Estate is Local,’ will be released by Doubleday in February.”
_________________________________________________
When does - “I am a big liar” come out?
Hahaha, didn’t his last book from a year ago talk about housing prices only going up for the next 10 or 15 years because of an expansion? Now he’s talking recession?
I guess they figured, if we can’t make prices go up, then we better make them go down.
Why? Because Real Estate has to move in price for sales to happen. So if you cant sucker the buyers into paying high prices, then you better scare the sellers into lowering theirs.
Lereah essentially is saying, “GET OUT WHY YOU CAN. PRICES ARE GOING DOWN!” “What? I don’t care what I said last year, it’s your fault for listening to me, but you better listen to me now!”
“Why? Because Real Estate has to move in price for sales to happen. So if you cant sucker the buyers into paying high prices, then you better scare the sellers into lowering theirs.”
Actually, real estate has to move UP in price for sales to happen very fast. Hence the Realtors’ (TM) mantra, “Real estate prices always go up.”
imploder found Lereah book title misprint. Corrected title is:
“All Real Estate is Lo-Cal” “How I Ate My Own Words”.
Revision printing now in progress.
imploder,
Saw you were from the SFV. West Valley?
oh yes, that is what I said to oknish in a previous post concerning Tom Petty. Did you grow up in the west valley as well?
Yes, Woodland Hills. Born and raised in the SFV. How are things going there? I know a couple of true FBs trying to get out. They seem to think things are just slow — not really tanking right now and have their homes priced waaay above recent comps. They are in the mortgage/RE business.
I don’t live there now. From what I hear it’s slow, inventory is up. prices are slightly down, but not tanking yet. Just like the rest of LA.
That was Enron’s business plan. They didn’t care which way electricity and natural gas prices went as long as they moved.
We all know how that ended up. Myself more so than many others.
I reacted to that, too - just when the NATIONAL figures show the beginning of a housing decline, he publishes a book with such a title. Will we have a lot to laugh?
LOL! he will change the title of this one too as he did with his last book.
He should have called his book.
How I lied about prices always going up… locally.
“There are some major metro areas in the country that are experiencing ‘big pain,’ Lereah said, citing Miami and Las Vegas as prime examples.””
Hi-laurious, considering that he specifically cited Las Vegas as having “incredible upside potential” in his last book, published a year ago.
I guess some people are born completely without shame.
EXACTLY! (the LV comment)
Remember how a lot of us made comments about how DL must of had a few LV condos in his back pocket? Obviously he’s dumped them by now…good for you DL!
I am waiting for his best seller “All Real Estate Sucks” to come out.
Look Up Realtor-Whore.. (See David Lereah, chief economist of the National Association of Realtors)
Bahahahahahahahaha
he told the truth,it was not credible.
“Hi-laurious, considering that he specifically cited Las Vegas as having “incredible upside potential” in his last book, published a year ago.”
Well, that comment isn’t exactly without merit. For one can easily see that the further prices collapse, the more upside potential the market has…..ergo, in another couple of years, LV will have tremendous “upside potential”.
LIErah
feb 05 - everyone on this board new the trend
Amazon.com:
Book Description
When real estate booms nationally, there are hundreds of cities and regions that lag behind. Similarly, when the market slows or flattens, countless states and neighborhoods begin to boom. As Lereah makes clear, the most important factor in buying or selling a home is the local market conditions. Lereah shows readers how to:
·Evaluate the values of homes in one’s own town or county
·Determine whether property values in your targeted neighborhood are on the rise
·Assess the market conditions in locations when buying a vacation or second home
·Learn how to identify markets that are overvalued or fully valued, and those that promise to appreciate more quickly in the future
·Understand the local economic developments that can affect one’s investment in the future
There are countless books offering advice on making money in real estate. This is the first one to explain why knowing the ins and outs of your local region is essential to deciding when, and where, to buy.
Too late, the market has already moved up in a big way and is now rapidly contracting. When this is all over with [the bubble fallout], everyone is going to be so disgusted with RE as an investment vehicle that no one will care.
everyone is going to be so disgusted with RE as an investment vehicle that no one will care
___________________________________________
Hopefully everyone who sits on the stools at Ben’s Bar will be out buying then!
That’s the plan Crispy, that’s the plan….
Pennies on the dollar only please! No way until I see 50% cut off from the top.
“Hopefully everyone who sits on the stools at Ben’s Bar will be out buying then!”
…….that is, of course, when the FB’s are sitting in their own stools after soiling themselves.
If you go to the Business section of a Borders or other large bookstore, you’ll see a substantial Real Estate subsection still stocked mostly with books on how to make big money as an RE “investor”. Publishing and book-retailing lag reality.
“Lereah’s latest book, ‘All Real Estate is Local,’ will be released by Doubleday in February.
What is this guy learning as he goes along? What’s the next book?
Liereah’s book will be marketed in the fiction aisle, right alongside James Frey’s book about his imagined journey through rehab.
D. Pinnochio Lereah will have to get a nose job real soon.
“The nation’s housing market isn’t as bad off as the media would have you think.”
“Lereah encouraged the Rotarians to tell the news media that real estate is a local market and shouldn’t be judged against the rest of the country.”
“Lereah’s latest book, ‘All Real Estate is Local,’ will be released by Doubleday in February.”
DANGER! DANGER! DANGER!
THAT DOES NOT COMPUTE!
THAT DOES NOT COMPUTE!
THAT DOES NOT COMPUTE!
(DL seems to be Lost in Space…)
DL really got a point there, where do you see a piece of real estate spanning from coast to coast? Right, no where. It’s on a little lot in some town/city somewhere. Duh, it’s local!!! He’s a genius I must say.
“Lereah’s latest book, ‘All Real Estate is Local,’”
Lierahs book will make some of the best dame out house toilet paper I will ever use. The rest I will give to some homeless guy to burn for warmth.
At least the UK has some lending standards. In the US you can inflate your income without putting down anything. Why anyone would do this just blows my mind. Did they ever think that maybe they’d be stuck with a loan they can’t afford?
I wonder more about the lenders - did they ever think that they won’t get their money back?
Ah! make the distinction between “lenders” and “loan originators”. I am a lender (I keep the notes), most of the so-called lenders are loan originators who re-package the loans and foist them off on whomever, as “securities”. I do not care what my borrowers’ income is (they know what it is, and I make only fixed-rate loans), but I do avoid high LTV ratio, especially recently. Also in my very small niche I often know something about my prospective clients’ personal reputation. Don’t lend to well-known deadbeats. So far, so good.
Plus, if you lie on a loan, and they catch it in BK court, forget having that loan dismissed. It will follow you like a black cloud hanging overyour head.
This is stark contradictions to latest act by Congress to pull in
financial controls in corporations… Sarbanes Oxley act of 2003.
The lenders are way out of control. Saw some analyst on FOX talk about the demand by illegals in the US that will cushion any downturn.
Since when is someone illegal able to purchase anything?
Another way out of control policy!
“Since when is someone illegal able to purchase anything?”
Ever since both the Republican and Democratic politicians have cared only about what their campaign contributors want.
What is really weird is that lenders would lend to someone when they are not even sure what their real name is or that the person could skip out of the country at any moment. But I guess if they get their fees and bonuses they figure they can bundle the loan and sell it somewhere.
ABLE not ALLOWED.
SUre, you can purchase things here if you are illegal. You can purchase a house in London if you want, you know — so long as you have the money. In fact, as a non-resudent, you might want to buy a house in, say, Orlando for your annual trips to Disney World. I actually have (rich, foreign) friends who have done this.
Now why a bank would lend to someone illegal, that’s another matter, and that’s a type of loan that Fannie Mae and friends should NOT Be buying. If you have cash or find money on the open market to borrow, OK. But not a quasi-government-sanctioned lender. Ugh.
“Lereah encouraged the Rotarians to tell the news media that real estate is a local market and shouldn’t be judged against the rest of the country. There are some major metro areas in the country that are experiencing ‘big pain,’ Lereah said, citing Miami and Las Vegas as prime examples.”
“He said two-thirds of the country is currently experiencing a real estate recession and the news media pundits apparently expect that decrease to spread to the rest of the country. Lereah expects real estate prices to continue to fall in most U.S. markets. In areas that experienced the largest price appreciation in recent years, a correction is needed, he said, this time citing San Francisco as the best example.”
Sure, real estate is local. But most people regularly relocate state to state. So he’s saying that 2/3rds of the potential buyers won’t be able to sell their last home and thus won’t be buying a new one; even *after* they’ve relocated for a new job.
My dad and I had a chat about this… he thinks sellers will continue to hold the price for a bit until “geographical lock” reaches a crisis point and causes the housing market to crash. This is due to the current mind set that sellers “don’t want to give away the house.”
Personally, I think it will be a slower correction, but alternate theories should be expressed. Could we be in for an extended “geographical lock” where FB’s are fixed geographically, like surf’s?
Neil
“geographical lock”
Thanks to the internet-telecom revolution there is no such thing anymore. Employers are shifting from high cost metros to low cost metros in order to curtail spending and be competitive in the global market place. The shift now only takesfew months to create local or international entities and cut your costs.
Yes, the companies will move.
But the employees… who bought in 2004 through 2006, can they move? That’s who will be “geographically locked” due to a poor home purchase?
Neil,
In my San Diego (Tierrasanta) neighborhood, the top realtor said we are at 2004 prices and sprinting in 2003 prices fairly soon.
Normally I would not go after anyone’s spelling (pot, kettel, black) - but it might help to point out that you meant “serfs”. (Yes, it did take me awhile to figure it out. Surf? Tidal zones? …D’oh!)
ahem: kettel = kettle.
rotfl!
Yes… serfs.
The immobilization of a once mobile society.
Yes, I love every reference to a German article or blog w/ that wonderful word
“Immobilienblasen” to remind us.
So true. We recently moved from FL to SC and seeing the blood bath there we are very wary about buying. Just because we moved to a lower COL area doesn’t mean that we are jumping on the boat. Things are starting to slide downward. We can wait.
I hope the dude who argued with me about DFW reads the artice from the Startlegram. Roddy called it “unbelieveable.” Not to me. I’m just suprised it took this long.
DFW bigger and uglier than any coastal bubble town.
Last I checked in the standings Dallas was 20th place. Florida (PB) #1. After reading this Dallas Morning Snooze report - They are on top!
txchick57 ………just a question.
Who is going to buy all these REO’s?
The numbers are mind numbing in there magnitude
Cheer up! The market will improve according Craig Jarrell:
Still, there are also positive signs, said Craig Jarrell, president for the Dallas region at Pulaski Mortgage Co…. “Maybe it’s the spike before things start getting better,” he said of the foreclosure postings. “Gasoline prices are down, interest rates have stabilized, the economy’s doing all right, the stock market is getting better….”I think real estate is going to keep on trucking in the Dallas area….”
It’s only the spike b/4 things get better… what an optomiss..
….or optimASS
When I am going to be able to get something in Byron Bay or Tasmania for a sane price?
Tassie……forget it……..too cold.
Byron Bay is nice……..bit pricey though.
Try Buderim or Mooloolabah on the Sunshine Coast QLD.
http://www.buderim.com/
http://www.maroochytourism.com/photos.htm
Tazzi is pretty but you would not want to live there.
Tassie is too cold.
Byron is nice , but pricey.
These are nicer places on the Sunshine Coast in QLD. Better climate.
http://www.buderim.com/
http://www.maroochytourism.com/photos.htm
txchick, you can get lots of other places along that coast that are nearly as scenic as Byron Bay and cheaper. Still, wait a while for it to shake out. I was there in the 90’s and thought it was bloody expensive — ha, was I wrong! Now look at it. I guess I should have bought in while I lived there.
As for Tasmania, went there on holiday, loved the place, but thought the people were the Aussie equivalent of Appalachia. Dunno if I could live there, and dunno if they’d ever accept a “Seppie” in their midst. Still, Hobart would be nice for a few months anyway.
Depends on your definition of a sane price.
http://tinyurl.com/ymzjlf
$A129K is less than $US100K.
(Burnie’s a small town even by Tassie standards, but.)
Hi txchick, “the dude” here :). I didn’t see anything in that article that changes my opinion or the information I posted in the other thread. (BTW, can you come back with something other than a one-word “Wrong” response on that? I enjoy a good debate, but there’s gotta be more than that for me to participate!)
I’m tired of the argument with local yokels, because most of the ones who argue with me are self-interested, either they are in the business or own properties and don’t want to hear it. That’s fine. Disclose to me what your interest is and I’ll be glad to debate with you.
I bet the denial factor ranges pretty high with some folks; can’t say I blame you. I do own a property, the one I live in (bought 2 years ago with a 30-year fixed-rate). But other than that I don’t have any stake in the industry. My interest is simply to learn and make plans for my own financial future.
Thomas,
Since you’re not bringing any facts to the plate, go to another blog. There just isn’t anywhere I know of in the US where the price to median income makes sense. Ok, maybe detroit, but they’re in danger of breaking 25% unemployment!
Super high inventory, bad credit, its all there. Read this blog for a few months and you’ll understand.
Neil
I own a home in far north dallas, which I bought cheap and don’t plan on selling nfor at least 5 to 10 years. I don’t think I have a vested interest. I just think your statement that Dallas is worse than any coastal bubble city is without merit. Dallas may have a glut of homes, but the competitive cost of living has also fueled job and popularion growth. If the median in Dallas falls by 20%, it will hurt, but at less than 150k median, it won’t be a disaster. 20% off in LV, Phoenix or Miami, where the median incomes are the same but the median home price is twice as high and the run up has been furious, will cut much deeper.
Have you checked the housing tracker lately? The numbers tell the story. Miami and Phoenix are in meltdown mode with inventory up 160% and prices down near 10%. Dallas inventory is up just 13%, with prices currently rising. The forecolsure rate may be a leading indicator, but so far we are faring much better than other areas.
http://www.benengebreth.org/housingtracker/
“He said two-thirds of the country is currently experiencing a real estate recession and the news media pundits apparently expect that decrease to spread to the rest of the country. Lereah expects real estate prices to continue to fall in most U.S. markets. In areas that experienced the largest price appreciation in recent years, a correction is needed, he said, this time citing San Francisco as the best example.”
Real estate recession……….David Lereah………..well there ya go
2/3’s of the country and 90% of the population! This is going to work out ok!?!??!
“Dunn said. ‘But they have no equity, so how can I buy their house?’”
OMG! REOs are going to blowup in the banks’ faces!
History Quiz: Do you remember what the initials “RTC” stood for?
Even if we remember, we are doomed to repeat it.
…and FADA b/4 the resolution trust corporation. Any ideas how we might work ourselves out of this pickle?
We’re going to have to fire sale via the RTC (or whatever its called). But, its not that ugly yet. Soon they’ll form it for Florida and then it will spread to other states.
Believe it or not, we want this. A complete stall of the real estate market is devestating to the economy. Man… we’re almost there. I really cannot wait to see the October numbers. They’re going to be… ugly.
Neil
Resolution Trust Corporation. They were my firm’s biggest client for awhile.
RTC…yet another corrupt entity. The reality is that they exacerbated the problems with the S&Ls by taking them over, mismanaging them, and then selling assets for pennies on the dollar, all while their lawyers made out at the expense of the American taxpayer.
They were a typical underfunded government agency but at least in my experience, they did not let the lawyers rip them off. They were a pain in the ass when it came to fees. First you had to comply with all the federal govt. BS about how many four eyed green Martians you had working in your firm. Then you had to agree to their reduced rates. Then you had to deal with their 30K a year beancounters telling you that you should be able to litigate that multi-party adversary proceeding for $500. And so on and so on.
And as far as selling assets for pennies on the dollar, brother, pennies were all you could get for a lot of them. There wasn’t any easy monee around for speculators and investors to buy things. Nope, you need money up front, perfect credit, a good DTI and then you had to give them documentation going back to the time of your bar mitzvah to get a loan. No, they were lucky they could get anything for some of that junk.
The best bet I found during the last REO bubble, was offering the banks listed prices with an inspection contingency. And I had the most awesome inspections every created. The REO manager new I was playing him, but as long as he could create a paper trail with the expenses, I scored some good deals. I spent many weekends at RTC auctions, and the auctioneer and his family cherry picked all the good ones. Anybody thinking he is going to outsmart the auctioneer, when there is money to be made quietly before the auction, had been watching to many infomercials
” Lereah expects real estate prices to continue to fall in most U.S. markets.”
wait. isn’t this the guy who last week said that prices have reached bottom? he’s not only changing his tune every year, but now every week.
I guess they will only fall until the Super Bowl?
“He said two-thirds of the country is currently experiencing a real estate recession and the news media pundits apparently expect that decrease to spread to the rest of the country. Lereah expects real estate prices to continue to fall in most U.S. markets. In areas that experienced the largest price appreciation in recent years, a correction is needed, he said, this time citing San Francisco as the best example.”
Excuse me… did anyone in the audience take him seriously… 2/3 is pretty much a majority… then he listed out major markets to boot.
Someone in that crowd must have said what a dumbass he was.
Exactly. If two thirds are in recession, that’s pretty strong evidence that the current real estate market is anything but local.
I’m not sure if this is big news or exactly what to take of it. Maybe someone could shed some light on it
(KBHome) late Friday said it has received a letter asserting that the company is in default under the indenture related to its 6-1/4% Senior Notes due 2015
http://tinyurl.com/y4tx3r
Also, Caterpillar missed today on account of slowing housing demand: http://tinyurl.com/y7b544
Part of me wants to get excited, however, I think this might be some technicality related to their late SEC filings.
Right. I jumped for a second too. No bankruptcy there.
The issue is the potential for bondholders to present bonds to KB for redemption based on a bust in the bond covenant. BK is not the isssue at this stage although if KB has to meet a substantial bond redemption BK could be the result.
An Escher-like pattern floats before my eyes:
BKKBBKKBBKKBBKKBBKKBBKKBBKKBBKKB
On the other hand, constantly fighting with the note holders can lead to more delayed SEC filings, leading to more notices of technical default.
So long as KBH keeps paying the notes on time nothing much will happen. The worst thing for the note holders would be if KBH defaults. At that point KBH would go BK and there would be a fair amount of litigation since the company still has positive net worth. BK would kill the value of the notes and stop timely payment of interest.
This notice is really part of an extortion game in which hedge funds buy up bonds of trouble companies, send notices of technical default, and then negotiate for a waivier of the technical default. They want KBH to pay for that wavier. Go see the drama at BearingPoint (BE) for an example.
Seeing that it only takes three of your creditors to force into bankruptcy…
is this sort of one down and two to go?
There’s more to it than that.
Section 303 of the Bankruptcy Code And Bankruptcy Rule 1003
Section 303 of the Bankruptcy Code governs the filing of an involuntary bankruptcy petition against a debtor. Under section 303(b)(1), where a debtor has more than twelve total creditors, an involuntary case is commenced by the filing of a petition “by three or more entities, each of which is either a holder of a claim against such person that is not contingent as to liability or the subject of a bona fide dispute . . . if such claims aggregate at least $11,625 more than the value of any lien on property of the debtor securing such claims held by the holders of such claims.” This means there must be actual, unsecured claims against the debtor in an amount at least equal to the $11,625 threshold amount, which is adjusted for inflation at three intervals during the year. Moreover, pursuant to section 303(h)(1) of the Bankruptcy Code, if any objections to the involuntary petition are filed, relief will be granted against the debtor only if the debtor is generally not paying its undisputed debts as they come due. Accordingly, in order to commence an involuntary bankruptcy case, the petitioning creditors must show that (i) there are at least three creditors, (ii) each creditor holds an actual, undisputed unsecured claim against the debtor and the aggregate amount of such claims exceed the threshold amount and (iii) the debtor is not generally paying its debts as they come due.
Pursuant to Bankruptcy Rule 1003(a), an entity that acquires a claim against a debtor for the purpose of commencing an involuntary bankruptcy case is disqualified as a creditor for such purpose.
Another stupid RE quite for the Ben-o-matic:
“‘The continued growth in the property market could not have happened without lenders’ increased generosity. If they had stuck to their old systems, most people would have been priced out of the market years ago and property prices would have crashed, it’s as simple as that.”
There are so many things wrong wiht this sentence it’s hard to know where to begin.
If people were priced out, and the price dropped, wouldn’t people have been priced back in?
Is is generousity to allow people to buy more than they can afford?
Isn’t it a normal thing for prices to drop when people can’t afford the item?
Is it generous to manipulate the lending process so people don;t have to tell whether they are a worthy risk or not?
Stunning!
It just laughable what claims these guys make. Where is the FTC in all of this? Its pretty much left to us to set things right. If I was President I would kick the NAR out of DC…. not to mention outlaw them right off the map as financial terrorists.
“…. will be released by Doubleday in February.”
Hmm..that’s strange…I thought “Doublespeak” was his publisher…
ok, so maybe there are some areas that are “different” and haven’t had price drops (yet)..that doesn’t mean that buyers in that area aren’t aware of waht is happening in other areas, like-wise, that doesn’t mean sellers there will wait for the last buck..queue the “all aboard” whistle and watch as sellers in the still strong areas (if there are truly any) start boarding the gravy train…..
From Arkansas. “Home prices are dropping ‘because there is so much inventory,’ said Jonie Burks, an agent in Little Rock.”
No duh, lady. It’s because the South has a ton of land with nearly ZERO builder restrictions so they build and build and build until the bottom falls out. Happens every cycle…
“‘I don’t think it’s all doom and gloom,’ said Tom Kelley, president of the Home Builders Association of Lexington. About one fourth of the 808 houses sold last month were new houses.”
An interesting data point. If I remember right, ‘normal’ RE markets are about 15% new home sales. The incentives are having an effect: they are stealing used home sales to buffer the fall.
Not only that, new home sellers by offering these incentives are cannibalizing their own market by stealing sales from used home sellers that want to buy new homes but can’t sell b/c the new home sellers are underpricing the used home sellers. As a result, the market is locked, transactions are low, used home sellers can’t buy without the equity they lost, and builder inventory continues to climb. Looks like a struggle to the bottom.
They are also driving the prices down, although that fact is being masked by the use of incentives valued at $50K-$100K. Who wants to buy a pre-lived-in home when you can get a brand new one for the same price with a new Beamer thrown into the deal?
All Real Estate is local. in that case, wouldn’t prices be a lot more random. some go up and some go down? it seeems like if there is a slowdown in one place it’s the same all over.
this is just the housing equivalent of the stock market is overvalued but my stocks aren’t.
I believe that in normal times, all Real Estate is local. This time, I think things are different. I think this is the first time the nation has seen a real estate bull market that has run this fast, this long and this pushed prices this high. We are in unchartered territory here..so..for those that say, “it’s different this time”…I say, “it sure is”….
..and this is coming from someone who would still consider buying in the near future (caveat: given the right property, at the right price)
Actually it’s the second - the first was the great post-WW2 boom. But that one had fundamentals to burn - almost a generation of suppressed demand, greatest rate of family formation ever (baby boom), and big growth in real wages.
“Those are the ones who say, ‘Please buy my house,’ ” Dunn said. “But they have no equity, so how can I buy their house?”
They are not saying, “please buy my house”. They are saying “Please buy my mortgage.” I will buy your house pal, but your mortgage, that puppy’s yours my friend.
“Flipping condos is definitely out, but there are sensible ways to invest in property within a diversified portfolio. Consider real estate investment trusts, or REITs,which are the stocks of companies that own and manage property.”
I am all for diversification, I’m also not for losing money because I bought an overvalued asset.
“I am all for diversification, I’m also not for losing money because I bought an overvalued asset.”
yup..talk about catching a falling knife……the ylds on these is so far from the norm…just wait until these miss their numbers, even the slightest bit
agree with both comments…these overpriced turkeys became the new momentum player’s stock of choice along with banks.
REITS are attractive from several different perspectives. You gain some of the advantages of owning individual properties, without any of the management problems. If you look at the total returns for several REITS (e.g., Franklin Real Estate or Vanguard’s) for the past five years, they remarkably parallel the increase in prices for real estate. In my case, they’ve outpaced the returns of the rest of my portfolio (e.g., domestic and foreign bonds and stocks, even gold mining shares), so I’ve been selling off the outsized gains in REITS when I periodically rebalance my portfolio. This is something that can’t be done so readily, if you own individual properties.
If you periodically sell off your gains in REITS to return the % allocations to their orginal levels in your portfolio, any losses that you sustain when the bubble does burst will be minimal (see Roger C. Gibson’s “Asset Allocation: Balancing Financial Risk - 2nd Edition - available on amazon.com). Indeed, a true collapse of the bubble would present a buying opportunity, again to return the % allocations to your original levels.
The major disadvantage with REITS is that the ‘dividends’ that they pay are not treated the same way as those from corporations, so they have a higher tax rate. Best to keep them inside retirement 401K’s or 403B’s.
From Arkansas. “Home prices are dropping ‘because there is so much inventory,’ said Jonie Burks, an agent in Little Rock.” “‘It’s all about consumer confidence,’ said Kathy Deck, at the University of Arkansas. ‘In this case, the media’s attention certainly exacerbates the issue, but the same thing was true [when home sales were soaring ]. When it is good, everybody is on that bandwagon. And when it starts to turn, certainly you can get a downward trend exacerbated by the [publicity ].’”
I’m always amazed when I come on this blog, to see how the bubble is not just California and the two coasts overall. Not just AZ and NV. Not just Oregon, and those types of areas. It’s nationwide, including locations like Arkansas.
Yet, the same excuses and garbage-speak is used in Arkansas, as it is in California. Ms. Deck insists, as some in California do, that the media caused the decline in sales and prices.
Why can’t they see, that prices inflated above and beyond realistic prices for the given area, are the cause? Of course they can’t see, because if they said such a thing, people like RE agents would have to accept lower commissions.
I am excited about how the news is out, though. Everyone seems to know and accept now, that the bubble is deflating, fast or slow, depending on who you hear talking and where you live.
interest rates were low all over.
Look at some of the states covered in Ben’s post…
Kentucky
Tennessee
Texas
Arkansas
Idaho
Oregon
I don’t thing any of these would have been considered potential bubble areas by all the “real estate experts and economists” as recently as 6 months ago.
Damn, that liberal media. Always reporting the bad news. Gotta get back to Fox before so they can tell me the market is just great, and I am much richer than 6 years ago.
Nothing like bubble news from Kentucky and Arkansas. When the bust hits these areas that experienced no bubble, the pain will be significant. Good luck hillbillies.
(p.s. - I grew up in Kentucky)
The 6 McMansions on my street are still for sale (SW MO). It’s been nearly 6 months for some of them since completion. A McMansion here is anything > $150K :-). I met one of the builders at his open house last weekend. He looked nervous. Or maybe he was just shifty-eyed. I told him if the house didn’t sell I would be interested in renting. He laughed and said the rent on this fabulous piece of gingerbread fake stone facade palace would be $1,200/month!!! Haha. I’ll bet 6 months from now the rent will be $850/month (the typical rent in this town is between $200-$500/month).
I bet that rent just coincidentally equaled his mortgage/debt service payment.
Massachusetts..from http://www.bostonbubble.com
a decent read for us Massholes….
Housing: What a difference a year makes
By Judy Wakefield
It is taking Andover residents nearly twice as long as it did last year to sell their single-family homes - and sellers are getting about 8 percent less.
That’s according to third-quarter statistics compiled by New England Association of Realtors, based in Chelmsford. NEAR’s numbers show that single family home sales in Andover are down about 34 percent, reflecting a national trend. Sales prices are also down, while homes remain on the market an average of 58 days longer.
“It’s stabilization,” local realtor J.B. Doherty said of the current local real estate scene, with which he has been involved for the past 33 years. “Wall Street guys are saying real estate is not a bubble. It’s a soft landing and it’s here.”
These latest NEAR statistics compare single family home sales from July to September 2005 to the same months in 2006.
Last year was a banner year, Doherty said, as local real estate firms reported an increase in home sales well above 2004. Doherty’s research shows 311 single family homes sold between July and Oct. 15, 2005. This year, just 234 homes sold during the same time frame.
“This has been our worst year, but in 2002 we sold 252 homes during those months. It’s not a huge difference from that 234,” he said. “Some property still moves quickly and we still get multiple offers, just not every day. But it still happens”
Doherty said sellers have to be patient in this market, and remember that Andover is still a desirable town. It may not be the hot housing market of last year, but homes priced right will eventually sell. Interest rates are still favorable and that helps sellers, too.
Buyers just won’t overpay, he said, so anyone looking to make a profit from a home sale they made within the last 18 months will be disappointed.
“There’s not much appreciation if you just got into the housing market,” he said. “It’s more like depreciation.”
“With more homes on the market and the possibility of falling prices, now is a good time to consider buying, said Jennifer Burda, general manager of Chandler Reports. ‘It is more of a buyer’s market,’ she said.”
Just what I need - buy an overpriced house in a falling market. UGGGGGGG!!!!!.
I would not exactly say it is more of a buyers market yet, rather less of a sellers market, but make no mistake, sellers are still in control overall, and prices will not fall until the number od distressed properties increases substantially. High inventory only serves to cause financial distress to those who could previously have sold or refinanced, but the process moves along slowly.
You are right. A buyer cannot now offer a rational price and expect to have that offer accepted. By a “rational price” I mean one that would allow you to rent out the property and obtain a positive cash flow after PITI, maintenance, and paying yourself (let’s say 4%) the equiv of a tax-free muni yield on your down payment (whether d.p. is 20% or 100%).
The UK, “Alliance & Leicester recently changed its rules so borrowers, except first-time buyers, do not need to provide proof of their income if they can put down a 25 per cent deposit, giving them leeway to inflate their earnings.”
The idea here seems to be to allow the game of musical chairs to continue since, with rare exception no first time buyer is likely to have 25%… Trade up and see if we care if you lose your 25%… Not a bad strategy really.
Actually 25 to 30% is the amount of down payment a stated income buyer should of been putting down all along . Anytime a lender has that much money down on a purchase usually the buyer doesn’t go into foreclosure because they have a stake in the game . Also a higher down payment covers the risk associated with a stated income buyer if they should they default .
I don’t think it matters because many UK lenders already accept undocumented loans with just 10% or so down (has been going on for several years already). And if that doesn’t work, you can always get a loan based on a fake identy card
It has been a good week for RE-bust news, although I’m still amazed that the DOW keeps going up…just another bubble that is destined to drop (I think it has been over 4 years since the DOW had a 10%+ correction, possibly a record amount of time).
But, a stroke of victory up here in Eureka. While inventory is slightly lower than several months, the Eureka Times-Standard earlier this week talked about “plummeting house prices.” And, even my RE bullish co-worker admitted that things are going downhill.
Now, we just need prices to drop 40-50%…at least the Central Valley is already half way there.
Sorry, Bobbie, but with 7.6-months of supply going into the holiday season and prices at the high end tanking, your market ain’t upturning in early 2007.
‘Housing market slide continues
UPTICK EXPECTED ENTERING 2007
By Jim Jordan
(Lexington) HERALD-LEADER BUSINESS WRITER
The Lexington housing market continued its downward spiral in September, and the president of the Lexington-Bluegrass Association of Realtors sees little improvement before early next year.
Sales usually slow during the holidays, so “I expect an upturn going into 2007,” said Bobbie Johnson, the association’s president.
…
The slowing of the market and the recent flood of new listings has created a 7.6-month supply — 5,596 properties — at the current rate of sales. A year ago, the market had a 4.3-month supply. Five months’ worth is considered “ideal,” Johnson said.’
‘In Washington, DC. “Financial planner Jim Ludwick says a client who had to sell a suburban D.C. condo started with an asking price that made it the second most expensive of 15 on the local market. She sold it only after cutting the price to make it the second cheapest. The lower take may have been disappointing, says Ludwick, ‘but there are still 13 other condos that haven’t sold.’”’
Charles Darwin would have appreciated this market action.
http://www.wwnorton.com/catalog/spring06/005981.htm
“In areas that experienced the largest price appreciation in recent years, a correction is needed, he (DL) said, this time citing San Francisco as the best example.”
He must have gone short CME futures on the SF market…
““Simon Tyler of Chase de Vere Mortgage Management, an adviser, said: ‘The continued growth in the property market could not have happened without lenders’ increased generosity.”
Some of us doom-and-gloom types have known it all along. It was “Bankers’ Mischief,” as in the past booms, and this time the bankers in Anglo-Saxon countries turned into Bankrupters. They got lot of help from their cousins, Fraudsters of Wall Street in the US and “City’ in UK.
Jas Jain
Posted on another thread, but it fits in well for comparison to the UK Fraudsters:
Lenders Loosen Standards
Even as More Loans Go Sour
By Ruth Simon
From The Wall Street Journal Online
Mortgage lenders are making it easier to get loans even as the housing market cools — and as the number of borrowers struggling to make their payments continues to rise, new studies show.
http://www.realestatejournal.com/buysell/mortgages/20061020-simon.html?rejpartner=mktw
right on Jas … let us breed more hate… tis the Anglo-Saxons , the US and the UK? come on man, how is this gonna help? The rest of the bankers, being a different of race, are sacrosant?
I’m sorry i don’t think the US will end in a “greater depression” and “soviet style or kind of collapse” in the next 10+ years.
As to attempting to divide the US on racial lines… I personally don’t think you understand “America” at all.”
“Anglo-Saxon countries”??Do you think this describes the US? Or the UK, which has generously handed out citizenship to armies of immigrants from Pakistan and India, while committing itself to “multiculturalism”?? This is a real estate blog, no need to add your tribal or racial hatreds to the thread.
I could be wrong, but I don’t think Jas meant anything “racial” as much as geographical. While CBs around the world have increased money supply & loosened credit, I do believe the U.K., U.S. and Australia are in the top WRT the debt/housing bubbles (and other countries which have been subjected to specuvestors from the “Anglo” countries).
No hate, Jas just made an observation, IMHO. He’s been following this for quite a while and is quite knowledgable about the subject.
That is true. Look at which countries have the most powerful economies. They’re the only ones financially capable of setting the bubble in motion. To imply racism, in a simple statement of fact, is being disingenuous.
Disingenuous? Go back and read Jas’s statement without the knowledge of his beliefs concerning a Bank of England Banking Conspiracy. Reads like he is blaming the Anglo-Saxon countries of US and UK for purposely bankrupting the world. Sorry I didn’t have the decoder ring.
Jas’ reference is neither to race nor geography. The reference is to the federal reserve bank of NY and the Bank of England, and the system created by the likes of Morgan, Rockefeller, Rothschild and Warburg, which are at the root of today’s central banking system in much of the western world. If you read G. Edward Griffin’s book “The Creature from Jekyll Island”, you will understand the basis for his point of view. It is a very interesting read.
exactly; all the serious housing bubbles can be found in the anglo-saxon empire, while most countries that are clearly NOT anglo-saxon (like Germany) have no bubble at all. The root of all this evil is the anglo-saxon banking system based in the City of London, with their privately owned departments in some other countries like the US FED.
I’d like to hear from all of you what you feel the “Anglo Saxon Banking Conspiracy’s” ulterior motives are and how they started the housing bubble. Did they also engineer 9-11 as an excuse?
Please, I’m all ears.
Imploder,
There is no “ulterior” motive. There is only one - create debt. Without going into too much detail, the banking/financial system’s motive is to create debt and get you to pay them interest; the more the better. The bigger the loan, the more interest you pay. The more people they can get to take out big loans, the more interest they get. So they remove the fractional reserve requirement, loosen the eligibility requirements, and make larger loans. Then they collect more interest. There used to be requirements relative to a bank’s ability to back a loan, but they’re long gone. It gets much more complicated than that, but that’s pretty much it. The whole thing is a huge debt/credit expansion, which manifested itself in asset (i.e. housing) prices. It’s a confidence scheme of the greatest proportion.
nhz
You’ve been writing about your bubble for a least a year. Are you in an Anglo Saxon Country. Netherlands isn’t it?
Imploder, really, just read the book. It’s not about race or heritage.
Anglo-Saxon is English, and the United States’ Federal Reserve System (which is what the rant was about) was modeled on the Bank of England. The term Anglo-Saxon refers only to the people of Germanic descent who settled in Britain
scratch that…I missed the point
ric
I appreciate honesty. And shall investigate the book you mentioned. Thank
you
David L was citing rising prices of 7 percent this year in one of Ben’s articles about 5 months ago. How can someone of his position make statements like this now and not even attempt to qualify his mis-forecasts of the past?
Those of us who were around during the Watergate years will remember this classic (from a White House spokesman):
“That statement is now inoperative”.
All RE is local will replace the mantra that RE always goes up!
New Ghost Towns Sprout up in Las Vegas
http://www.klas-tv.com/global/story.asp?s=5558987&ClientType=Printable
“all of them come standard with granite” said the Realtor
Well that’s allright then…!
Loafer
“The Clark County Commission has given a boost to the Reno businessman building a new housing development about 50 miles north of Las Vegas
In most cases the county pays for water pipelines and treatment facilities to be built. But in this case — to speed things up — commissioners invoked a seldom-used law allowing developer Harvey Whittemore to pay for the work himself and be reimbursed by the county at a later time.
Coyote Springs will create 49,000 news homes in Clark County and another 110,000 in Lincoln County.”
Ghost Towns for everyone!
The FB minons listened to the so called “Experts”, Realty Whores. their media, RE Industry spin doctors and other “6%er’s” with a vested Interest in TAKING their money and now they’re really going to Pay for their overpriced Monuments to Stupidity ! Ooops..”Dream Homes”
I’ve seen more practical RE expertise, honest questioning and most importantly, basic Common Sense, presented on these boards than on some DAYS than the RE Industry lets Slip Out in a year.
Congradulations are definitely in order to Ben, the Gang of regulars and informed visitors on this board !
I am a bit concerned about the UK. I mean, the indication is that I was wrong and they are somehow managing a soft landing or is this just a dead cat bounce?