“A Continuation Of The Nasty Cycle” For Las Vegas
The Review Journal from Las Vegas. “Home sales in Las Vegas, which have tumbled by double-digit percentages in recent months, fell again in October. Sales for new homes and existing homes both dropped sharply. There were 2,934 resales in October, down 35.7 percent from the same month a year ago, Home Builders Research reported. It was the seventh straight month the number of sales has fallen.”
“Sales of new homes also continued to slide, down for the fourth consecutive month at 2,606 in October, a 21.3 percent decrease from last year. The number of homes for sale on the MLS grew to 23,474 in October, a 53.8 percent increase from a year ago, according to the Greater Las Vegas Association of Realtors.”
“Dennis Smith, president of Home Builders Research, said homeowners who read that median prices are ‘x’ amount must understand that average incentive packages of $10,000 to $25,000 must be deducted from the sales prices to reflect the home’s true market value.”
“‘Appraisers know this, and that’s why many homeowners think their recent appraisal is low, when actually it reflects the true level of pricing activity in the submarket area for the subject product type,’ Smith said.”
“Smith said the October housing numbers for Las Vegas ‘indicate a continuation of the nasty cycle that has had a grip on our housing industry for almost a year.’”
In Business Las Vegas. “Any employees of homebuilders or their suppliers couldn’t have left a national housing conference earlier this month in Las Vegas with a good feeling of where the national market was headed.”
“Even the jokes about the homebuilding industry dealt with the slowdown that is gripping the nation. Bruce Karatz, the CEO of KB Home, who chaired the builder conference, described how the mood among homebuilder executives was cautious and everyone was cutting back their operations, joking that he and others were staying at the Motel 6.”
“Some reports suggested the national building business was making a comeback when September numbers showed housing starts up 6 percent and sales up 5 percent, but executives said those numbers don’t take into account cancellations. ‘In the last 30, 60 to 90 days, the cancellations among the homebuilders is by far the highest percentage in the last 20 years at least,’ said Bob Schottenstein, the CEO of Ohio-based MI Homes.”
“‘It took a long time to get in this situation, and it will take a long time to get out,’ said Schottenstein, who urged builders to lower their expectations. ‘Historically, this industry has not had double-digit operating margins, but it has in the last five to seven years. It will not return to those double-digit levels for a long time.’”
“Ken Newman, the president of Illinois-based Newman Homes, said talk in recent years about a housing bubble bursting took on a life of its own this year. Press coverage of it took consumers out of the marketplace the last two quarters, he said.”
” Newman said builders are making the market worse with price discounts and overbuilding. The demand curve is down 20 to 30 percent and it could stay down for the next four to five years, he said. He pointed at incentives and some builders continuing to add spec homes even though they see what’s happening.”
“‘When you see a house one day, and it is $20,000 off in two weeks and later it is $30,000 to $40,000, we are forcing the consumers to cancel contacts by our decision making,’ Newman said. Karatz joked that he believes the builder giveaways will settle down because ‘we are not going to give away homes.’”
“One person representing land developers and owners questioned why builders were bowing to Wall Street by dropping options and not pursuing land as aggressively as they were. ‘Just because we walk away doesn’t mean we have a short-term outlook,’ Karatz said. ‘We base it on where we see things going. We would rather have that money for future acquisitions.’”
“Schottenstein said it makes good business sense to no longer pursue such purchases because builders are eyeing a supply of three to five years. When the market slows as it is, that timetables stretches to seven to 10 years. If builders purchase land with the intent of not building on it for a decade, they will be out of business by then, he said. ‘We want to be standing,’ Schottenstein said.”
“CNN reporter Gene Randall asked those in the building industry if they thought it has hit bottom yet. No one raised their hands. Schottenstein said he didn’t agree with former Federal Reserve Chairman Alan Greenspan who said that the housing market has stabilized. Schottenstein said Greenspan isn’t far removed from his position and probably doesn’t want people to panic.”
“Karatz said there is no ’silver bullet’ to resolve the problem but he said people can only dream. That dream scenario would have builders drastically cut their production and hold prices, Karatz said.”
“‘If that were to happen, and maybe if that were to last two to three months, it would stabilize things,’ Karatz said. ‘The market sentiments would begin to rise with the moderation of market conditions. All of that is a pipe dream.’”
‘Dennis Smith, president of Home Builders Research, said homeowners who read that median prices are ‘x’ amount must understand that average incentive packages of $10,000 to $25,000 must be deducted from the sales prices to reflect the home’s true market value.’
I have posted many times on incentives of $100,000 and up in Las Vegas, Arizona and California.
BTW, I believe Mr. Karatz is no longer with KB Homes, as of recently.
Corporate theft through postdating of options brought Mr. Karatz’s career with KB to an untimely demise. Of course KB’s stock price rallied on the news, as bad news always makes builder stocks go up.
Will he be proscecuted,or are the homebuilders and mortgage brokers immune?
–
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Why no prosecution/penalty under Sarbanes-Oxley?
http://www.nysscpa.org/cpajournal/2005/405/perspectives/p6.htm
KB Homes year is is Nov 30, 2006. Something tells me Krantz left just before KB Homes files for BK, say around Dec 15. With the Feds breathing down their neck, and their unsold inventory high, it would be a perfect time to stop all the creditors in their tracks, and let the auditors figure a way out while screwing their lenders and subcontractors. Probably learned this from the airlines BK. American seems to have figured this out. Just my opinion, but the timing sure seems right.
After the SEC gets through with Mr. Karatz, he will be staying at Levenworth. ‘Say hello to Bernie Ebbers for me, Bruce’. Motel 6 is owned by the French, we never stay there!
“Bruce Karatz, the CEO of KB Home, who chaired the builder conference, ……, joking that he and others were staying at the Motel 6″
This Moth. Fu
you imagin the rest.
Does anyone know what bridge or tunnel LV Landlord is calling ‘home’ these days?
I think she my be on the Strip passing out those “flyers”!
I think I saw her spinning signs.
She might be on the flyers!!
I don’t know but I think someone needs to start a video blog called “I humped your over-priced house” in the same manner as this one:
http://www.ihumpedyourhummer.com/blog/category/video/
This stuff is happening all over. I have not seen any bubble stories about Salt Lake City. Please do post if you find anything. I imagine they are 9-12 months out.
Just spoke with my Aunt, she tells me my cousin is a FB. She actually did not word it that way. Anyway, in Jan 06 the closed on a pre-con in AZ (Queen Creek) for $254k with $12k down. They have decided to move back to CO and just listed there house for $287k (I looked it up on the MLS, my aunt said they were asking $310k). They are leaving the state Dec., 20th. My aunt says they had it listed for two weeks already and no shows. Home is about 2,600 SQ ft. with no landscaping and no upgrades, at all. I figured they need to sell for $275k to break even, and I don’t see that happening.
The thing is, they could probably unload the thing in the mid 2s if they price at the bottom of the comps (just guessing, but I did look up Queen Creek to get a feel of the place - doesn’t look too unliveable). It would be a bit of a lump but at least they could recover from it.
But what are they going to do? Leave it to rot! If it’s vacant and not priced below the market it stands NO chance of selling except to a vulture - if they don’t get proactive with this listing they could easily lose $100K instead of $20 or $30K. It is SO similar to what people let happen to themselves with stocks in 2000.
If all they could afford for the down payment was $12K, there’s next to zero chance they have the ability to come up more than that at the close.
They’re screwed.
i have seen brand new homes in queen creek for 150k range most likely flippers trying to get out.
Paul in Jax,
Question: Do vacant homes sell worse than homes for sale that are still furnished and lived in. Here’s my example.
My FB ex-brother in law, here in Sarasota, owns a house that he bought in 2002 for 350,000. He and his wife just bought and took possession of a new home sold to them from a builder at a whopping $810,000. Yes, thats right and they didn’t sell the first house and rent before buying the second one. They have tried and tried unsuccessfully to unload house #1 and are too vain and full of pride to sell the 810,000 dollar McMansion and move back to the first house. By the way, they may be the greatest fools, as their closing and move in date was Octobr 6, 2006. Can you possibly be a greater fool and buy at a worse time? Their 810,000 house is surely plummeting in value as we speak.
Oh yeah and he HELOCED the first house to start up a window screen and pool cage company to make money on the housing boom. He won’t listen to anyone tell him to cool it though.
He used Heloc money to donate $10,000 dollars to fellowship of christian athletes to be the highest donor on their list. The second highest donor is at $5000 and that is a local millionaire.
This guy also sent his parents on a 3 month tour of Europe using HELOC money. He also has 4 cars. All high end cars too. The house of cards started to unravel last month as he had to vouluntaily reposess one of the cars and turn it in at the dealership due to inability to pay. Also all 4 of these cars were bought by my ex-brother in law new, so he voluntarily signed up for foolish new car depreciation.
Anyway, The realtor of his $350,000 house had to field many calls from the ex-brother in law asking why the house wasn’t selling. These calls were before he moved into the new house.
The Realtor told him things will be better when the house is empty because houses sell better when they are vacant.
I think that the realtor just said this to placate him for a while and to keep him from calling the realtor. Looks like a realtor lie to me. What do you think?
“The Realtor told him things will be better when the house is empty because houses sell better when they are vacant.”
Then why is “staging” such a big business and now an expected part of the cost of selling ?
Houses do sell better when they are vacant but they also get less money.
The agent should now better and probably does, an empty house will get lower offers. Buyer know the seller is making payments on an empty house.
Why else would builders spend the money to build model homes and furnish them.
Verify every thing agents tell you, they will tell you anything to keep the deal together.
“they will tell you anything to keep the deal together”
=====
Which is why fsbo’s rarely work in a declining market.
If you fall for realtor lies, like I did, you end up with the odious bridge loan, and then you pay big money for both the seller (you) and the buyer to get f’d by two realtors. Gotta keep that commission (and your only exit out of hell) on track!
Judging from this guy’s spending habits, I have to wonder if he’s been diagnosed with stage 4 cancer. (Speaking as a “survivor” - gawd I hate euphemisms but don’t have the energy to swim upstream - I can testify that you start feeling awfully generous when you think you’re about to die.)
The agent should now better and probably does, an empty house will get lower offers
Why would any rational person offer more for an occupied house than for an identical unoccupied house? Should be the other way around, since the unoccupied house is available immediately. The market price has nothing to do with how badly someone needs to sell a particular house.
But who said buyers were rational.
I agree with your assessment - the realtor will tell him anything at this point because he (the realtor) knows the whole situation is untenable and there is nothing to be done - except of course wait for the inevitable Spring bounce!
Seriously, I can’t imagine anything worse than an un-ever-lived-in PHX or LAS tract house. It would be like selling a mausoleum. At least in Fla you have a tree or two growing within site, maybe a hint of water nearby, possibly even a few palms waving in the distant breeze.
Errrr, how much is he asking for that “$350K house”?
Sounds like he needs a fair bit more than $350K to pay off the original mortgage PLUS all that HELOC money.
ajh,
He started at 550,000. Got no lookers none at all. He has lowered to 450,000 about a month and a half ago and still has not yet sold. I drove around the neighborhood and picked up some of the other sellers fliers from the cannisters on their for sale signs and they are selling for 435,000. He is still higher than they are. I suspect that due to his Helocs he has reached the point where he would go underwater. So we have here and example of a guy who is holding out hope that the market will reverse itself to accomodate him. Also there are several nearby developments where the builders are still churning out mcmansions. I have to imagine that the builders can build one for less than 810,000 so he may have builder homes undercutting him as well. He hit the F bomb for sure by buying in October 2006.
I can but agree.
I would guess it depends on the housekeeping of the seller.
I suggest granite counter tops!
Sorry, skip. You’re waay off base.
This is definitely a maple cabinets situation.
and should that fail…
it’s St. Joseph time, baby!
““Ken Newman, the president of Illinois-based Newman Homes, said talk in recent years about a housing bubble bursting took on a life of its own this year. Press coverage of it took consumers out of the marketplace the last two quarters, he said.”
” Newman said builders are making the market worse with price discounts and overbuilding. The demand curve is down 20 to 30 percent and it could stay down for the next four to five years, he said. He pointed at incentives and some builders continuing to add spec homes even though they see what’s happening.”
Yeah Ken, it was all that nasty bubble talk that caused people to pull out of the market…it had absolutely nothing to do with oh say…prices being too high. It it hadn’t been for that nasty bubble talk why who knows how much you could be selling your freshly built homes for? 500K? $1M? Sure, why not eventually $1M median for a McMansion in the middle of freaking cornfield 100 miles west of Chicago. After all, they’re not making anymore land.
We had this fantastic post yesterday about a survey that showed how most Americans are clueless about the housing market situation:
“If you are squarely in the ‘blame the media for the housing slowdown’ camp, you are going to love this. The vast majority of Americans are optimistic about what will happen with home prices, according to a nationwide survey.
The poll clearly debunks the more sensational media reports speculating on the demise of the housing market,’ says David Pressly, president of the National Association of Home Builders, which commissioned the survey.”
Unfortunately for would-be sellers, most would-be buyers are nonetheless priced out, especially in markets formerly referred to as “frothy,” which tends to result in a big drop off in new home orders and used home sales.
““Ken Newman, the president of Illinois-based Newman Homes, said talk in recent years about a housing bubble bursting took on a life of its own this year. Press coverage of it took consumers out of the marketplace the last two quarters, he said.”
Hellllllloooooooo Newman. Statements like this makes me think he is a relative of the Newman on Steinfeld.
That is what is so crazy about this market. Buyers have to know that home prices, esp. in the bubbly markets is too high. BUT, they will still sell their soul to buy someone’s overpriced PoS for 750K on, at most, 150K salary (But more like 100K), at least here in the OC. In some areas and a lot of these liar loans, the numbers are even worse. Okay, I get that, if it is evil. But just how desperate are you to rent a home from the mortgage broker? Fast forward 20-30 years, if you make it, are you really going to get, inflation-adjusted, a real wind fall? You buy for 750K, the home goes back down to 500K (we’ll take a 33% haircut), it will take at least another boom, 10-15 years from now, to get back to 750K or 1M. Who in the world would buy at that price then? Yeah, in 2020 I want to buy a 3-bedroom in Rancho santa Margarita for 1M or some dump in Fontucky for 900K. What a crock! I would rather rent a 1-bedroom for a lot less than buy at those kind of prices, if we ever get there. This is what I can’t fathom. Housing is a tough nut to crack. I understand commerical or rentals, but if you think buying 1 home to live in now with the wife and kids is going to make you millions in 10-20 years so you can retire at 55 and move to some bungalow in Idaho, I have another coming to you. Maybe a handful will make it happen, but the overwhelming majority will not!
Well said OCDan.
“Even the jokes about the homebuilding industry dealt with the slowdown that is gripping the nation. Bruce Karatz, the CEO of KB Home, who chaired the builder conference, described how the mood among homebuilder executives was cautious and everyone was cutting back their operations, joking that he and others were staying at the Motel 6.”
Nice cut and paste work there, editor. Karatz will be staying some place more cozy. I was going to blame the reporter, but I looked him up on his home paper (LV Sun) and found that his articles generally seem realistic. Obviously taken out of the past and made into a headline for the propaganda rag.
Isn’t the LV Motel 6 one of the first hotels you see leaving the airport? That’s one helluva sign they have, with the big pulsating neon 6.
Funny thing is, budget hotels usually do pretty well during downturns becuase people trade down (this was widely noted during the 2001-02 recession). Motel 6 will do OK. All the fake luxury hotels in LV are as screwed as the RE “investors”.
I should have been more clear. Ex-CEO Karatz was removed due to options backdating. I suspect he will be spending time in the pokey for some of the next decade. Just a suspicion.
Incessant I really hope so. A good friend of mine drives a limo and he has driven this guy numerous times. Karatz is so cheap, depsite his millions that he won’t even tip a limo driver. Also said he is very standoffish. In sum, not a real friendly guy, although I am sure it is worse with the ways things have been lately in the builing business.
Dear Oc Dan,
Im just a common blue collar guy, so I have never had a ride in a limo like Karatz.
I know that I would tip the driver if I did ride in one. What would a standard tip be for a limo driver? I know at restaurants to tip the 20 % but what is the accptable tip for a limo driver. Thanks.
I’ve got a tip for Mr. Karatz. “Drop the soap”. I want him getting the full punishment under the law. That scumbag made $155 million last year. I don’t recall anybody on this thread posting that number.
The Democrats want to go after big oil, pharmaceuticals and military related companies. Why don’t Reed, Pelosi and the other Democrat boobs go after the shyster lawyers or the slimy homebuilders? Oh, that’s right. They are in their pocket. Sorry!
As a scheister lawyer, I resemble that remark. . .
What I am trying to say is this last bubble made a little sense in that if you bought for 100-150K, yuo could get out 400-500K and make some bank. However, if you start at 750K, where do you go? Even in 20 years I don’t think these houses can go for 1M and even if they do when you consider all the upkeep and taxes and HOAs, are you really that much ahead?
I talked to one speculator who said that the market would cool down and real estate would “only” go up 12% a year from now on instead of 40%. I almost crapped in my pants trying not to laugh in his face
And I bet a lot of other speculators are still out there hoping for 12% real price appreciation forever, which is yet another reason the market is not within years of bottoming out. Unless relation works…
“reflation”
GS,
You don’t really think they can re-flate out of this do you.
I am not sure that will stop them from trying, particularly when the alternative is the inevitable pain and suffering which always occurs at the end of speculative manias as euphoric denial gives way to somber acceptance. It must be awfully tempting for policymakers these days to follow the same script everyone else is following, and try to leverage their problems on to the backs of a later generation of bagholders.
I am sure that they will try, and I am also sure that they will fail. How’s that for certainty?
Reflation->world loses faith in US$->US$ loses status as reserve currency->US can’t borrow in US$ anymore->US must (gasp) pay its own way.
Not gonna happen. Uncle Sam can’t live without his credit card.
Not only that but the Federal Reserve systems only product is little green pieces of paper, if they lose value the Fed Reserve loses their only product.
yogurt / ssbg,
Those things are going to happen regardless. Game it out… all paths lead to the same destination.
Yes but it’s one thing to have the “stealth” devaluation of the US$ that has been going on since the 1970’s, and another for the Fed to trash the currency within a year or two in a vain attempt to save housing. The effects of the latter would be incalculable.
The very best the Fed can achieve is a “soft landing” for the US$, i.e. a continued slow devaluation that will not cause the world to abandon the currency overnight.
The interesting part is is that the end game is deflation. They’ll have to raise rates when stress gets put on the dollar. Already happening…
Heck, 12% a year, then we all better buy because if 12% is guaranteed from now on, that may be the best investment ever.
Sarcasm off!
This 12% is a joke. Here in South OC does anyone think that an 800K house will be worth 960K next year? Didn’t think I had any takers. If I knew for sure that I was going to get 12%, then why not buy 10-12 800K properties and sell them for a 12% gain? You could make a cool 1M before taxes. Tell that clown to put his money or HELOC where his mouth is before spouting that gibberish! It is this kind of insane thinking that will make the market take longer than usual to unwind.
Something nobody can ever answer for me is this: If you’re so damn sure prices will go up 12% every year, why would you ever sell?
The question isn’t: “Why would you ever sell?”
Its: “Why don’t you have more houses then?”
If you’re so sure house prices appreciate at a whopping 12%, why not go out on a limb, leverage yourself to the hilt and buy more and more? Oh… right… that’s what people did.
The ones saying that are Realtors who are not selling but making the fee on chrunings. They are the ones driving all the sheeple to move inventory. They dont care if you buy sell or what ever so long you transact with them.
Great logic.
Well, you can’t eat a house. One could equally well pose the question: if you’re never going to sell a house (or other investment), who cares whether it’s appreciating or not?
What’s the point of holding anything as an investment if you don’t eventually plan to sell?
“Smith said the October housing numbers for Las Vegas ‘indicate a continuation of the nasty cycle that has had a grip on our housing industry for almost a year.’”
And for years to come!!!!!!
“‘If that were to happen, and maybe if that were to last two to three months, it would stabilize things,’ Karatz said. ‘The market sentiments would begin to rise with the moderation of market conditions. All of that is a pipe dream.’”
I wonder just how many months will go by before reality hits and they realize people are priced out of the market. My guess is 6 months or more. But what they haven’t figured is that there will be a lot like me, a prior owner (sold in 2004) who may just remain a renter the rest of my life. I like the freedom of pulling up stakes and moving if the spirit moves me. I like the freedom of no home maintenance, taxes, etc. And when I do purchase it will be based on location, price and community and it will not be in an area with HOA fees, affordable housing mixed in with higher priced homes, or anything built within the last 8 yrs.
“But what they haven’t figured is that there will be a lot like me, a prior owner (sold in 2004) who may just remain a renter the rest of my life.”
Ditto… and this is yet another reason for economic policymakers to want to get reflation underway. Our economy cannot deal with a glut of priced-out renters — who will be there to keep the construction industry going? We only have so much roadwork that can be used to fill the gaping hole in construction demand due to the homebuilding recession.
Salinas you make 2 excellent points:
1. At what point does the REIC eventaully admit that most everyone who buys now is priced out? Doubt they ever will since that would akin to shooting themselves in the foot.
and
2. We soled in January of this year and I have to admit renting, even an apartment, is not as bad as one thinks. I, too like the flexibility we have. The kids will survive if we have to move again. And, despite the rent increase probablity, I like not having to pay all those extras, as well as, maintenance on a home.
However, you have to remember for many people their are an infinite number of reaseons to own (er, I mean rent a home for 30 years from the bank)!
salinasron said, “I wonder just how many months will go by before reality hits and they realize people are priced out of the market.”
Just like people eventually got priced out of tulips and then the market crashed due to no more market support.
“That dream scenario would have builders drastically cut their production and hold prices.” Karatz of KB Homes said.
“Our dream scenario would have oil producers drastically cut their production and hold prices, oh wait, we’re already doing that.” Karatzimi of OPEC said.
“My dream scenario would have scabs prevented from working and wages fixed. Either that, or there are gonna be some accidents.” Dekaratzi of the AFL-CIO said.
Of these three scenarios, unfortunately only the first is an illegal cartel.
The big builders can stop building and keep borrowing for cashflow. The medium and small builders do not have that luxury, so they will have to keep going at 100% and maybe even more if the big boys stop construction.
That’s the rub. Even if the big builders had the balls to try to form an illegal cartel, there are way too many small builders who would be more than happy to rush in. Plus it would be a great opportunity for specuvestors to unload their properties. Just too many players in the market.
Bruce Karatz, the CEO of KB Home, who chaired the builder conference, described how the mood among homebuilder executives was cautious and everyone was cutting back their operations, joking that he and others were staying at the Motel 6.”
Karatz - what a f*cking piece of work this guy is. What did this guy make over the last 10 yrs - 3-400 million dollars. The criminal was paid $156 mil in 2005. If this guy does not serve jail time over the stock back dating scandal it’s a slap in the face to all tax paying Americans.
Ok just found it on Mishs site:
“Since 1992, he has reaped nearly $180 million from exercising options. Last year, he made more than $150 million from salary, bonus, restricted stock grants and options exercises.”
Wow…I guess Karatz watched Wall Street one too many times. LOL what a joke. The guy backdated options 3-4 times and all were at the low point in the year or quarter (I believe). And this guy is a lead speaker for the Home Builders?
Saw KB Home spinners on Beach Blvd. in Jax today - spinners are pretty rare here. Spinning seems to me to be the equivalent of a retailer doing a mass sale with heavy advertising.
That remark above about Karantz and the limo driver seems pretty telling to me, esp. given his disgusting behavior with the options. By the way, of the eight largest homebuilders, KBH has (by far) the biggest inventory to net worth ratio (Beazer is 2nd worst, Pulte and Lennar are the “best”).
I don’t have a crystal ball, and I don’t have an in-depth analysis here, and at the risk of overly-stirring the pot: If I had to guess one HB that will fail and one that will survive I’d put KBH on the former list and LEN on the latter. Just a guess.
It is amazing how someone making so much money has to cheat the stockholders for a few more million dollars. He should be required to pay all of the stolen money plus interest.
Total corruption gone wild.
pay back all the stolen money
Went back over the posts and see David Cee is also touting KBH for First Bankrupter. Interesting. FWIW, I hadn’t seen his posts when I posted mine.
As has also been alluded to, if an HB does go into BK this really could open the floodgates for pricing discounts. It could be the real beginning, too, of banks, hedgies and VC-types, and analysts trying to really begin to separate out the viable players from the unrecoverable losers - who they’re willing to back and who they might be willing to toss overboard. Also worth noting that someone “backed” may become a vulture for the decaying inventory - a lot easier on the market to dump inventory business-to-business than business-to-retail.
Just a thought.
Do we face the possibility that the homebuilding industry could end up dominated by overcompetitive Chapter 11 Zombies, like the airline industry?
We are REALLY going to see some hurting resellers if they have to cope with below-true-cost inventory from builders operating under bankruptcy protection.
Some of these CEO’s are real big time crooks and probably should be shot for white collar crime. Use a gun and maybe you can rob 5 people before getting caught. White collar criminals can rip off 1000’s of people, pay a fine and go ahead enjoy the fruits of their crime (yacht, vacation homes, girlfriends). Congress won’t pass laws as their friends are tied into all these financial crimes.
Here is a true story: a friend of mine called me a couple of months ago and asked me if I could lent her ex-husband (they shared a son) $4000 to help her ex’s cash flow, because he was flipping two houses in Vegas. I was told that one of the house already up $60k, and now was for sale, and he bought another house lately. Guess when he bought the first house, and what job he has? The answer is that he bought his first flipperlast year, and he works in supermarket in Monterey Park (near LA).
I would never lend money to someone who wouldn’t be able to get a bank loan. And if they could get a bank loan, why do they need me? In short, I don’t lend money to anyone. Least of all family, friends, or acquaintances who will be the first to plead for leniency when they can’t repay.
“The Realtor told him things will be better when the house is empty because houses sell better when they are vacant.”
It’s been my experience in the northeast that a vacant house equals a desperate seller. It results in low ball offers right from the start. In the West, however, the opposite seems to be true. Maybe because the rooms in CA are so tiny, having anything in them makes them look absolutely unlivable. Staged vignettes make it look like someone with taste owns the little pos. What a joke! I’m waiting for the day people equate staging to investor/flipper properties and avoid them like the plague. Or when the time-on-market increases so much no seller can afford to vacate and make the realtor’s job easier by hiding their lack of style.
They can keep this party going with 50 and 100 year mortgages. Isn’t that what the Japanese did to keep their RE boom going thru the 1980’s? They can go to 200 years if they want. Anything to keep this ponzi scheme going
Jerry, the US is already using something more powerful than last. An interest-only mortage has an infinite amortization. A neg-am mortgage has, you guessed it, a negative amortization.
They’ve already run out of ammo.
And you know how well that worked.
The monthly nut savings on 40, 50 and 100 year loans is neglible.
See So Cal Mtg Guy’s blog AnotherFuckedBorrower.com
In his archives he does the math.
I’m waiting for the mortgage lender who offers to pay your mortgage till you can sell at a profit loan.
Even if you go to infinite mortgages (pay interest only forever), we’re close to the limit of affordability for most people.
Your typical shitbox in SoCal at $600k costs $3250/month assuming 6.5% interest and no principal repayment. How many people in SoCal can actually afford that, let alone would want to when it amounts to renting, and genuine renting is much cheaper without any of the risk.
bold off