Cinderella Loans Are Starting To Turn Into Pumpkins
The Auburn Pub reports from New York. “The ‘For Sale’ sign that still hangs in front of a home on North Marvine Avenue in Auburn has sat through this year’s spring rains, summer heat and fall foliage. Finally, five months after the three-story home went up for sale its sale price dropped between 10 and 12 percent.”
“‘It’s been hard to do comparative market analysis based on 2005 sky-high prices,’ agent Sandie Commesso said. ‘But falling prices are better for sellers and buyers because they are more realistic prices.’”
“While NYSAR’s numbers may indicate otherwise, some agents said they’ve noticed a dip in prices. Shawn Murphy, a real estate broker, explains that since 2005, house prices locally are slightly falling because home sale prices are beginning to exceed the average county income. ‘The reason for the house price slip is not economic,’ Murphy said. ‘House prices have outpaced the average person’s income for so long that there is now an affordability problem.’”
“‘If people want to make their houses available quickly, they are now dropping the prices,’ Murphy said. ‘Right now buyers are in stronger positions to negotiate because there are less people buying homes,’ he said.”
The Patriot News from Pennsylvania. “If the housing market nationwide is a bubble bursting, the picture in central Pennsylvania is of an oversized balloon slowly losing air. The region does feel the effects of falling house prices and sales elsewhere.”
“Bernie Campanella, sales manager in Swatara Twp., said the company’s 15 percent drop in sales of new homes compared with 2005 is partly because prospective buyers can’t sell the houses they own elsewhere. ‘I have had three buyers, one from California, one from Florida and one from Virginia, unable to sell their houses. All three had to cancel,’ Campanella said.”
“There’s also a psychological effect, said Doug Rebert, at Coldwell Banker. ‘Potential buyers could be misled by all the national media attention that home prices are dropping,’ Rebert said.”
The Star Ledger from New Jersey. “Leah Belverio purchased a $190,000 home 18 months ago along with her boyfriend. When the couple split up, Belverio, determined to hold on to her home, became a serial refinancer. She dropped a 6.5 percent fixed-rate mortgage in favor of a ridiculously cheap adjustable-rate loan with a low monthly payment.”
“To pay her bills, she cashed out nearly every dollar of equity in her Belleville, N.J., home. She was told, to wipe out nearly $50,000 in credit card debt, she could take out a new, bigger mortgage.”
“Today, her initial $185,000 mortgage has ballooned to $247,000, perhaps more than her home would fetch on the market. And her monthly payment has skyrocketed from $1,375 to almost $2,000, and might go up even further in two years when her 10 percent ‘teaser rate’ adjusts higher.”
“‘I’m trying to keep my head above water with everything, my mortgage and bills,’ Belverio said. ‘I’m the type of person, I don’t look that far into the future.’”
“All those Cinderella loans that enticed home buyers with the promise of low monthly payments during the housing boom are starting to turn into pumpkins. Financial experts now fear the same loans that helped many home buyers realize the American dream are going to land some of them on the street.”
“What worries experts like Christopher Cagan of a California-based mortgage research firm, are all the adjustable-rate loans made in 2004 and 2005, at the tail end of the housing boom. ‘This will fall on a slice of people and a slice of lenders and investors, and that slice of people will get stung badly,’ Cagan said.”
“Oftentimes, borrowers end up digging themselves deeper. Both times Belverio refinanced her home, for example, she sucked more equity out and racked up tens of thousands of dollars in credit card debt, hurting her chances of qualifying for a better loan down the road.”
“As the housing market was beginning to boom a few years back, contractors working for Kara Homes were impressed by the developer’s ‘gold punch list.’ The marching orders came from the top, as the company’s founder, Zuhdi Karagjozi, was often on the scene at Kara building sites across New Jersey, making sure the work was done right.”
“That same year, Kara Homes was recognized by Builder magazine as the fastest-growing homebuilder in the country, and Karagjozi was predicting his company, which had barely $1 million in revenue in 1999, would hit $1 billion by 2006. Then the bottom fell out.”
“Suddenly, contractors working for Kara saw their payments go from weekly to bi-weekly, until they had to go to Kara’s offices in East Brunswick to get paid. Work at 21 developments across the state stalled, then stopped altogether. The company, which once employed hundreds, had shrunk to a skeleton staff.”
“And the ‘golden punch list’ was no longer so golden, contractors said. ‘It was get them up, throw them up,’ one contractor said. ‘I don’t care if the punch list is 100′ things wrong.’”
“By late August, even the Porta Johns started disappearing from construction sites, a sure sign, the contractor said, the company was about to hit the wall. And so it did. Kara filed for Chapter 11 bankruptcy protection this month, becoming the biggest casualty so far of the dramatic change of fortune in the state’s housing market.”
“‘The bankruptcy filing may suggest that the times were so good that Kara got way ahead of the game and took too much risk,’ said James Hughes, at Rutgers University. But, he added, ‘The situation with Kara probably reveals that there are more problems ahead.’”
“Even giant publicly held homebuilders such as Hovnanian Enterprises, based in Red Bank, and Toll Bros., which has put up numerous developments across New Jersey, have been squeezed by the market downturn.”
“‘They were very aggressive in acquiring some of the better land in New Jersey,’ said Carl Goldberg, president of another large privately held homebuilder. ‘But when you acquire those land assets aggressively and pay top dollar … (and) the market begins to diminish, you don’t have as much flexibility to cut price points to move inventory.’”
“Kara’s general counsel, Patrick Turner, said rapidly changing market conditions were the main reason the company fell behind. ‘It’s hard to react instantaneously to market conditions when you get to be a certain size,’ Turner said.”
“For now, however, work at the developments, from Mount Arlington in Morris County to Mays Landing in Atlantic County, has ground to a halt, leaving communities half built and new home buyers wondering what will happen to their deposits.”
“Mike Izzolo and his wife began to notice problems at their Kara Homes development this past summer. They had put $125,000 down on a single-family home in Mount Arlington. Izzolo noticed construction slowing at the development. He called Kara Homes and said they gave him ‘all these excuses — the contractors are some place else or we had to reschedule them.’”
“Izzolo contacted his lawyer to see if he could get out of the contract. But the lawyer told him he would have to wait until the November closing date passed. ‘They have $125,000 of our money, which is a big part of our savings,’ he said. ‘And I have a hole in the ground.’”
‘ As its financial troubles worsened, Kara tried settling debts with some contractors by selling off property. At the Tradewinds development in Sea Bright, where Kara was putting up $3 million homes, the company sold two parcels to one of its builders. But other contractors are still trying to collect. Peter Rallis said he has had to sell three of his trucks and lay off employees, and even was forced out of his own home. He recently moved in with his parents. ‘How would you feel moving back home with your mother?’ he asked.’
‘This will fall on a slice of people and a slice of lenders and investors, and that slice of people will get stung badly,’ Cagan said.’
Cheerleaders like Cagan knew this is how building cycles play out, so let them explain to those who get ’stung’ how minor a development this is.
‘With home prices falling in his town of Westford and across Massachusetts, Thomas Babigian is perplexed that his property tax bill continues to go up, not down. ‘It’s hard to swallow that in this market,’ said Babigian, whose tax bill has nearly doubled, to $8,282 in the eight years he’s owned his home.’
‘Carol Chapuis’s Bridgewater home is on the market for $355,000, but has drawn no offers. Yet last month she got a new bill hiking the value of her home 3 percent, to $392,700. Her tax is now $3,826. ‘I freaked out when I saw the bill,’ Chapuis said. Assessing her house at $37,000 more than what potential buyers are so far refusing to pay doesn’t make sense, Chapuis said. ‘If they say as of January it was worth $392,000 and now I can’t sell it for $355,000, well, something’s wrong here,’ she said.’
“‘It’s hard to swallow that in this market,’ said Babigian, whose tax bill has nearly doubled, to $8,282 in the eight years he’s owned his home”
This is a big reason why local governments did so much to help the housing bubble, so they could get more tax money, often while saying they were doing it to “help the poor”. My local government wanted to help the poor so much that they bought up the land where a trailer park was and sold it to developers for condos. The trailer park residents who were mostly elderly and disabled poor were given a few hundred dollars and told to go.
” ‘It’s hard to swallow that in this market ,’said Babigian,whose tax bill has nearly doubled ,to $8,282 in eight years hes’s owned the home.’ ”
I wonder if Thomas Bebigian is in favor of inflated appraisal and fraud in the mortgage business . This is a good example of how a mania with false inflated prices affects people in the community and might even force some people into needing to sell their home because of the tax increase .
“Cheerleaders like Cagan knew this is how building cycles play out, so let them explain to those who get ’stung’ how minor a development this is.”
Among those who work in the REIC, the downside of the boom will be much better for sideline commentators like Cagan than for those on the front lines.
“‘If they say as of January it was worth $392,000 and now I can’t sell it for $355,000, well, something’s wrong here,’ she said.’”
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Yes.
hehehe…
You couldn’t ask for better to be left holding the bag for the coming housing implosion.
Guaranteed FB’er bail-out.
Get your gold and guns.
http://www.latimes.com/news/nationworld/nation/la-na-pelosi21oct21,0,4332651.story?coll=la-home-headlines
Notice anyone falling over themselves to bail out Kara or these subs and people who have lost deposits?
The situation has to scale up, to use a dotcom era term
Then you’ll see at least some bleeding hearts calling for it (trying to get elected in ‘08)
TxChick,
Are you alluding to the Hillary Housing Bailout proposal?
Ben Jones posts “Notice anyone falling over themselves to bail out Kara or these subs and people who have lost deposits?
Add “Cinderella Loans Are Starting To Turn Into Pumpkins”
Ben what about The Realtors like Susan smelling up the other threads? Will these folks turn into Pumpkins too?
I doubt it they will not “turn” because they aready are….
The Punpkin pie loans were her tool in trade, they were the means to an end. She can “happy talk” toxic loans till the cows come home…. she enabled her part of the decline…. and now, she will be paid in her own coin.
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God help us if these Liberal socialist slime take over congress.
You prefer the current slime?
God help us if these Liberal socialist slime take over congress.
And what has GOD done for us in the last 6 years??? Mark Foley,
Tom DeLay, Jack Abrahmoff, Duke Cunningham….
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Republicans don’t pander to “victims” in order to get more votes. Republicans believe in personal responsibility.
You know the Liberal SLIME will be looking to bail out all of these “victims”.
Republicans don’t pander to “victims” in order to get more votes
HAHAHAHAHAHAHAHAHAHAHAHAHAHHAAAHAHAHAH! Whew, you just kill me. I guess you didn’t see GWB after Katrina, or after the ‘Caines hit Florida, or the Medicare bill, or countless other “victims” that BOTH parties helped.
Wow. He was falling all over himself to pledge more money to victims. (of course, he didn’t have the decency to pay for his handouts with taxes… let’s just put it on the credit card of national debt)
Never forget: it was the CURRENT administration and the CURRENT balance of power, all of whom are in the same party, who have spent like drunken fools on anything and everything that they possilby could have. I doubt the democrats could spend any more… but I wouldn’t bet on it either.
The Simpsons sums it up best. Kodos and Kang have taken over the bodies of Clinton and Dole. When their secret is discovered they say:
“What are you going to do about it? Vote third party? Ha! Throw your vote away, hahahahahaaha”
What is the real difference between the parties? not much. In the end, they both spend spend spend. They both use mindless propoganda. they both harbor mainly to special interests. The rebups are slightly more “conservative” in words - but not in actions though, note the numbers of them that are divorced (most of them), gay, have illegitimate children (Strom Thurmond and his black daughter) etc. The Dems are more liberal, but they aren’t all morale either (clinton’s blowjob, the recent dude who took kickbacks and put it in his freezer, etc)
Keep blindly following the propoganda of a party. They need more sheeple.
(FWIW: I am intensely fiscally conservative, but socially liberal. There is no party for me.)
Clouseau, you nailed it, both sides of the aisle are looking out for only themselves at the expense of those of us who work hard, save what we can, spend wisely and hope that will improve our lot.
Txchick has it right too. When the squealing gets loud enough we can be sure our esteemed representatives will be reaching into our pockets to bail out the “victims” of this travesty.
Just once I would like to see some wisdom come out of DC rather than this blatent idiocy. We all watched and commented on the danger in lax lending over the past 5+ years. Many other public sources issued calls of warning. Did anyone in power bother to take note? Not that I saw. And now all of those folks are “shocked, just shocked that gambling has been going on in this establishment”. (psst, here are your winnings Senator)
The gov response to Katrina was a digrace. Is it me or was it one of the gravest failures on the part of all gov entities I have ever seen. Complete mismanagement of every aspect, save one. The Coasties and other air rescue folks did the job. Bravo for those folks, a pox on the rest.
I have to step off this soap box before I burst a vessel. Jackasses one and all is what they are. Crooked, selfish Jackasses. Maybe this crash will really be as bad as I think in my tinfoil hat moments and maybe that will spur the masses to look at what the heck is going on. Arrrgggh.
Clouseau-You might want to check out the Libertarian Party.
Gekko posts “Republicans don’t pander to “victims” in order to get more votes. Republicans believe in personal responsibility.”
VP Cheny had 5 college deferments….plus a back problem…. big yellow streek.
Please God help the liberal socialist slime take over Congress in order to prevent neo-con fascist pedophiles from BK’ng America morally and financially.
I know it is election season, but this stuff is really off topic.
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Isn’t this question relevant: Which party is more likely to bail out these “victims”?
Post it in a topic suggestions and let the readers decide. Until it becomes an issue, it isn’t one. Politics is a generally a waste of time on a blog.
Sorry Ben.
Ben Jones for President!
Oops, I slipped.
Thank you, Ben!
The link seemed to change. The one I went to was about Pelosi and Congressional elections.
Unfortunatelly the definitions above are both right.
I’m not prejudice, I hate everyone.
You know what Gekko? I completely defend your right to disagree vehemently with the politics of the left, but “slime”? What’s up with that?
One of the great things about this board is that there’s folks of all political stripes here. We’re all of us smart enough to recognize the housing bubble for what is it. Have some basic respect for your fellows and skip the gratuitous insults.
And here I thought we were all Americans.
Nice patriotism. Usually we have to look to our enemies for those type of comments.
Geckko posts ” God help us if these Liberal socialist slime take over congress.”
OH Dear God! Pray’s be the Neo-con who lead to these “Happy Days” ….. unfunded war…. mission accomplished!….. Tax cuts for rich…. No WMD…. No dead Bin Laden…. Praise be for the Deficet!!!! ….. thank you for the corrupt money grubbing now in jail GOP pol’s and I would add a prayer Con Man Foley that he is redemmed from being a child molester back to being a God fearing fudge packer homo.
All BS aside lets say a real prayer for the 2700 dead and 15,000 wounded….Iraq runs equal with Rep. and Dem. blood.
“Get your gold and guns”
I keep telling you “end of civilization” folks that you need to start stock piling disposable diapers. A Red Cross disaster relief volunteer told me that after hurricanes she runs into people begging and waving wads of money for diapers. I am pretty sure my wife would, point her gun at me and force me to trade a few Krugerrands for an eighty pack of Pampers.
‘They have $125,000 of our money, which is a big part of our savings,’ he said. ‘And I have a hole in the ground.’”
From the looks of their bankruptcy so far, what he’s got now is a potential $125K tax writeoff.
Since I’ve never purchased a home direct from a builder, I would expect that the money should be placed in an escrow acct or similar. Anybody that’s done it, comment please?
If the builders actually have the cash non-segregated, there be some serious pounding on the horizon.
Should be placed in an escrow account, but how would a company grow from $1MM to a billion without using someone else’s money?
Who puts $125,000 down any way? We had Ryland build a house for us in 2003. I think we had to hand over $2,000 - $3,000 on a $265,000 house. I hear about these huge deposits and it seems wrong to me. Or is it that this was a $2 million home?
After reading these articles about Kara Homes lately, I don’t think I’d ever want to contract to build a home. You are really very vulnerable. I remember reading a real estate article a few years ago with the line that most buyers in the over $500,000 range wanted a new home. This kind of news about home builders going bankrupt is going to change that psychology, for sure. If you contract to buy an existing home, its real, its there.
Belverio said. ‘I’m the type of person, I don’t look that far into the future.’”
You couldn’t ask for a better summation of the root cause of all our problems than this - housing, economic, political, environmental, you name it…..
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“The future is NOW!” - George Allen
That from a southern californian who as Gov of VA kept a noose in his office in support of the confederacy. lol
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The quote was from his dad, the football coach.
Gekko ”
“The future is NOW!” - George Allen
Enjoy your future…..LOL….LOL
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“What the wise man does at the beginning the fool does at the end. Once a price history develops enough for other people to see it and get envious, that takes over markets.”
“At the start of the party, the punch is flowing and everything’s going well, but you know at midnight it’s all going to turn into pumpkins and mice. People think they’ll be able to get out just before midnight, but everyone else thinks that too. The problem is that, there are no clocks on the wall.”
“Orgies tend to be wildest toward the end. It’s like being Cinderella at the ball. You know that at midnight everything’s going to turn back to pumpkins & mice. But you look around and say, ‘one more dance,’ and so does everyone else. The party does get to be more fun — and besides, there are no clocks on the wall. And then suddenly the clock strikes 12, and everything turns back to pumpkins and mice.” - Warren Buffett
This is one of my favorite Buffett quotes. Buffetts is the Man!
“Orgies tend to be wildest toward the end”
Hey, Tx Chick, seriously now, what does Warren Buffet know about orgies?
Let him speak on something he has experinced
the term “orgy” is not limited to sexual contexts
Gekko “What the wise man does at the beginning the fool does at the end.”
You and your boss are both morons.
‘The reason for the house price slip is not economic,’ Murphy said. ‘House prices have outpaced the average person’s income for so long that there is now an affordability problem.’”
Affordability is “not economic”?
Mooph:
Exactly.
I read that sentence 5 times thinking I wasn’t reading it carefully enough. Then I shook my head and continued on reading.
And the Next Paragraph:
“Right now buyers are in stronger positions to negotiate because there are less people buying homes.”
Sombody please tell me what “economic” means. It clearly doesn’t mean what I think it means, if what this guy says is true.
- ‘read that sentence 5 times thinking I wasn’t reading it carefully enough. Then I shook my head and continued on reading’
Agreed! My morning coffee had not yet kicked in and I also re-read the quote. What a wild ass statement by an unknown hick.
I think what he was fumbling for was that prices aren’t dropping due to a recession in another sector or in the economy at large. He is akwardly affirmng the existence of a bubble in house prices which he sees as finally getting out of the reach of the average buyer.
It’s a Shakespearean play with a cast of colorful characters.
Predator:
‘Potential buyers could be misled by all the national media attention that home prices are dropping,’ Doug Rebert, at Coldwell Banker said.
Foolish Victim:
‘I’m trying to keep my head above water with everything, my mortgage and bills,’ Belverio said. ‘I’m the type of person, I don’t look that far into the future.’
Prices are finally going down. I zillowed a few houses this week and they have all gone down substantially(1 went down 12K in 1 week).
Try looking up on zillow a few houses that are for sale in your neighborhood. If your results are like my neighborhood, then the majority of homes for sale are listed far below what zillow says they’re worth. Where I live, I see a few that are listed $100k-150k below zillow. I live in OC as well.
Wow, I didnt notice that, so I guess the values are going down even more than zillow says.
First, I really like zillow as a resource.
But it is a lagging indicator. In a “normal market” it would be a great valuation tool with its known faults (it has trouble assigning value for a view if the home hasn’t sold within the last five years to show that view premium, etc.)
If homes are priced below Zillow and are not selling quick… then zillow is optimistic. But that’s ok, at least its a reference openly available.
Neil
I just use Zillow to get comps and property information . Zillow does not list all the sales either .
I love to get certain property information that shows where the flippers have been active .
Also I check the current listings to get the trend from the last sales . I have noticed that some properties that would of sold for 800k 15 months ago are now listed at 650k. That is a big haircut yet you can see the homes still aren’t selling .
do not trust zillow. A neat tool yes (particularly the comps and birds eye views). But, the “home price” trends are suspect when the market is moving quickly (up or down).
Make sure you look at comparable, recent sales in your area. That should be the best indicator of what’s going on. Those are available on Zillow. In my mountain resort community near San Bernardino, Southern Califoria the prices have just started downward, just barely.
It looks like Phoenix will be ground zero for the bust as it seems this is the first area where there are substantial prices decreases already-I have heard up to 25% so far plus I have heard there is like 50,000 homes listed there. Things still have’nt dipped much in CA yet but they are starting to and there are tons of For Sale signs every where you look. Other areas leading they way seem to be Florida and Las Vegas(the article about ghost towns in Vegas was scary-just in time for Halloween).
It looks like the SoCal builders may have just blinked ahead of the existing-home FBs. My brother just put 1% down on a $487K 2500sq.ft SFH in “Corona Valley” aka Norco that has yet to be built (KB Homes). Strictly from a price per sq ft perspective, the price actually seems a bit lower than I would have expected, however, I believe it’s right between the Ontario sewage treatment plant and the Norco dairies - so on a good warm summer day no matter which direction the wind is blowing its going to smell like something’s @ss. Supposedly, the dairies are going to be moved to some other unfortunate community’s backyard in the next two years though.
Luckily there is some sort of pricing contingency (?) built in, so that when the house is completed in September ‘07 he only has to pay market value. Has anyone heard of this? Does it actually work in reality, or is it just a gimmicky tool used by the builders?
As for the for sale sign, in my neighborhood of Terra Vista in Rancho Cucamonga there are a lot of for-sale signs staying up a looong time, often six months plus - very rare to see a sold sign dangling anywhere. And this is a very nice neighborhood for the Inland Empire. Case in point, my former landlord is selling his Terra Vista 1800 sqft SFH, but not budging on his $500K asking - its been on the market since early April ‘06. Why the hell would I pay $500,000 for a 13-year-old rental POS, when I can go buy a new, bigger home in “Corona Valley” for $487K?
LOL. Speaking of smelling like sh!t, still no movement on prices in LA.
I would never sign a contract saying I had to pay market value in a year from now . First , how is the builder going to determine market value a year from now ? Second, if prices go up does purchaser have to pay the higher market value ?
A seller/builder and their “special lenders ” are subjective and if they are the ones that are determining value it’s a joke . I would love to see the contracts the builders are currently drawing up these days .
They are moving, all right. When inventories are piling up and “percent reduced” is growing, the prices are moving down. Just because a home has not sold does not mean that its market value is not dropping. Some folks who post here mistake unrealized losses for the absence of losses.
Agree. Have a friend in Pasadena whose daughter reduced asking price by $100,000 and after many weeks the only offer she gets is from someone who wants her to provide the ass’s end of the financing. Pure kaka.
posted “LOL. Speaking of smelling like sh!t, still no movement on prices in LA. ”
Don’t worry alot of farts…. that’s the smell, when we drop the load…. the smell will be the least of your worries.
Supposedly, Lennar has this deal in Florida. People who bought early in a development were really ticked when the builder lowered the price by 100k in the same development. But you are only protected until you close. It seems safe as far as it goes, in that the builder gives you the price of recent contracts in your community. You can refuse delivery and sue them if they don’t follow their own rules. The problem is that prices will still come down after you close.
From my perspective, the Phoenix market started to decline in Sept 2005. I currently have a house listed in Anthem (north of Phx) and Zillow is about $80,000-100,000 too high right now.
I think AZ and Vegas are suffering the most because of the CA flippers, the overbuilding by the new home builders, and the mortgage industry easy money schemes. To think that this just the beginning of the problem is hard for most to believe, especially my wife.
At least I have the opportunity to move back. Many people are going to have to walk away and the only question is “When?”
‘But falling prices are better for sellers and buyers because they are more realistic prices.’
Sellers are particularly thrilled about this improvement.
“Leah Belverio purchased a $190,000 home 18 months ago along with her boyfriend. When the couple split up, Belverio, determined to hold on to her home, became a serial refinancer…”
Why wasn’t Leah’s ex-boyfriend paying on the deal- or did he quit claim? It’s bad enough when married couples split and have to deal with real estate. It beats me why anyone would want to go into joint debt on a house when there is no legal commitment to their partnership. Wouldn’t this be recognized by mortgage lenders?
I’ve wondered that myself, but have seen so many of these “cohabitation” purchases that lenders must not care anymore. It’s like people think marriage is something they cannot commit to, but buying a $600K house with someone you basically have no ties to is “not a big dea”. I certainly don’t get it.
“‘It’s been hard to do comparative market analysis based on 2005 sky-high prices,’ agent Sandie Commesso said. ‘But falling prices are better for sellers and buyers because they are more realistic prices.’”
Falling prices are hell for Realtors (TM) because no owner wants to sell their home when prices are dropping, and most buyers would rather not catch a falling knife. Thus the flip-side of the huge increase in demand for Realtors (TM) services during the big housing price inflation from 1998-2005 will be a big drop in demand for Realtors (TM) services.
Knowing that will help me sleep better tonight. Realtors are a particularly parasitic breed of rodents, from what I have seen. Now, if we could find a way to decrease the bloodsucking lawyer population, we would be much better off.
“There’s also a psychological effect, said Doug Rebert, at Coldwell Banker. ‘Potential buyers could be misled by all the national media attention that home prices are dropping,’ Rebert said.”
Doug, you know of the “Enron defense”, right?
It didn’t work.
“That same year, Kara Homes was recognized by Builder magazine as the fastest-growing homebuilder in the country, and Karagjozi was predicting his company, which had barely $1 million in revenue in 1999, would hit $1 billion by 2006. Then the bottom fell out.”
BwaHaHaHaHAAA! $1m to $1b in only seven years??? It sounds like many believe that trees do grow to the sky…
$1M to $0 in seven years doen’t quite sound so impressive. Kara is just the begining. I believe a few large public builders, specifically those with high debt levels, will go the same way. But for them it will be $10B to $0!
“To pay her bills, she cashed out nearly every dollar of equity in her Belleville, N.J., home. She was told, to wipe out nearly $50,000 in credit card debt, she could take out a new, bigger mortgage.”
“Today, her initial $185,000 mortgage has ballooned to $247,000, perhaps more than her home would fetch on the market. And her monthly payment has skyrocketed from $1,375 to almost $2,000, and might go up even further in two years when her 10 percent ‘teaser rate’ adjusts higher.”
“…perhaps”?
What makes anyone think that their house is automatically worth what is owed on it?
Especially when they have used their house like the bank.
yes, perhaps my ass! this financial guru homeowner will be foreclosed on within 6 months at max. she’s tooooo busy spending money on her credit card to look into the future. i guess that will show her ex-boyfriend!
Lottery tickets, anyone?
““By late August, even the Porta Johns started disappearing from construction sites, a sure sign, the contractor said, the company was about to hit the wall. And so it did. ”
My take on it…By late August, even the Porta Johns started disappearing from construction sites, a sure sign, the contractor said, that the company was trying to delay the shlt from hitting the fan…
“All those Cinderella loans that enticed home buyers with the promise of low monthly payments during the housing boom are starting to turn into pumpkins. Financial experts now fear the same loans that helped many home buyers realize the American dream are going to land some of them on the street.”
‘Cinderella loan’ is a great metaphor for high-risk lending to low-income buyers. The I/O ARMs are supposedly appropriate for high earners with unpredictible earnings streams (e.g., entrepreneurs starting a business), not low income buyers willing to stretch the household budget to purchase unaffordable homes. Unfortunately, this rags-to-riches story will have a very unhappy ending for many low income households who mistook the initial monthly payment for the cost of ownership and consequently bought houses they could not afford.