Bits Bucket And Craigslist Finds For November 28, 2006
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Any idea how long a foreclosure stayes on a credit report?
Just wondering how long it could be before we see repeat offenders of who buy without being able to pay…
You can walk out of bankruptcy court into a subprime lenders office and get a loan immediately if you have a job.
Bankruptcy yes, foreclosure no. It’s true you can get financing the day after the BK discharge, but after foreclosure, even the most loose fisted lenders are going to make you wait 12-18 months before they finance your next fiasco, and you’ll be a subprime borrower for the next 3 years (no shot at decent rates).
I thought we’ve already had stories on this blog about owners with multiple foreclosures. Wasn’t there one lady with three?
What I mean is, I think there have been some stories where a person in foreclosure, or foreclosed, was given a mortgages to buy yet another house.
You can receive a discharge of your debts through Chapter 7 only once every six years, so I guess you are marginally a better risk than someone who has just been foreclosed on.
During the boom, yes. After the bust, NFW.
7 years at least but the damaging effect becomes less as time passes.
October existing home sales numbers for Massachusetts are due today. This usually makes headlines on boston.com so for those of you interested, keep checking there. They are also posted on the MA Realty Clown site.
http://www.marealtor.com/content/monthly_reports.htm
The numbers are now out, and are bad. They are on the boston.com site but not yet posted to the MA Realty Clown page.
http://www.boston.com/business/ticker/2006/11/mass_home_condo.html
http://www.boston.com/business/ticker/2006/11/mass_home_condo.html
http://www.suntimes.com/news/metro/151496,CST-NWS-tax28.article
This should help flagging sales.
I’ll bet that 50% of the tax revenue in Cooke County is stolen outright by the mob. That Stroger guy was the most corrupt politician in modern American history.
But Stroger and his son always get re-elected. The entire machine never loses a race: Daley, Mell, Burke, Danny Davis, Guttierez, Barack ‘Barry’ Obama…. (yeah, he’s part of the machine too despite his high popularity).
Who are the morons who vote for these crooks? I don’t know but I’ll tell you that Crook County is full of morons…and most of the morons live within the City limits….particularly the west and southsides of Chicago.
They all vote for the machine because it’s like winning the lottery - ‘Maybe someday I also can get a good county job too - just like all my neighbors. They pays $17.00 per hour plus great benefits. And I don’t really have to work nor do I need to be edu-ma-cated. Cause the same corrupt system that grad-u-mated me from high school, even though I can barely read, is now gonna give me a job.’
Remember folks, only *6 out of every 100* Chicago Public School students gets a bachelor by age 24. That’s a lot of stupid stupid stupid people. They all live in Chicago. And they vote for the machine because that’s the only ‘good’ job they’ll ever get - besides real estate investing…which usually means real estate fraud in someway or another.
Trust me, being a lawyer, I see a ton of real estate fraud…and most of it comes from……take a wild guess…..the south and west sides of Chicago!
Chicago guy:
What kind of real estate fraud do you see in Chicago? I suspect some of the run up in real estate prices has been due to appraisal fraud, but there are other types of real estate fraud as well.
Real estate fraud? You name it. All the following are from files I personally dealt with in the last 24 months:
1) Real estate investors stealing the equity from homeowners in foreclosure - including the filing of fake liens and deeds (I’ll help you out of foreclosure…just sign here…and here..);
2) a real estate ‘investor’ is paid $5K consideration for taking out $500K mortgage on a $400K property. The true buyer and seller split the $100K; The straw investor goes into foreclosure - ‘But I don’t own the property - I bought it for someone else!” Most of the time the straw investor only gets some of the $5K he was promised..
3. Real estate investors selling wannabe real estate investors over-appraised pieces of junk on the southside….the pitch is ‘you too can be a land barron! Rent out the property Section 8 and have the government pay your tenant’s rent!’ With the file I’m thinking of, two guys who make $14.00 per hour each buy 3 properties for $500K. That’s $1,000,000 in mortgages. Of course, the buildings needed hundreds of thousands in repairs, it is really tough to get section 8 tenants and their mortgage payments were all ARMS. One dude lost *all three* to foreclosures, and the other dude flipped all three within a year and *only* lost his shirt.
4. The file I”m working on now is like this: Father dies and has no will. Five children are supposed to split the land. Evil sister decides to steal it from siblings; files forged deeds and liens and such, sells the propery out from underneath them…buys an H3. Now the siblings are saying, “where’s my money???” I say, “Honey, it’s all gone. See that H3? There’s your money.”
5. The other file on my desk is similar. Two bros and a sister decide to buy a property together. Oh, a brother and a sister have terrible credit so only brother #2 can qualitfy for the mortgage note. They all think they own the property even though bro #2 is the named title holder. Bro #2 sells it to a 3rd party and doesn’t his siblings…
6. Another file: ‘Do you have bad credit? Let us teach you how to rent-to-own and pay off your mortgage in 15 years instead of 30!!! We only charge $5,000 or one month’s pay, whichever is greater!” Of course, this company doesn’t do anything for the $5,000. They give you a packet that suggests you use your tax refund to pay down the principal on your mortgage to shorten your amortization period. Great advice. LIterally, that’s all they do and these unfortunate desperate homeowners get jacked for $5,000…bottom feeders.
7. I was at a closing the other day…just before thanksgiving….a guy and his wife are buying a home (on the southside!) and they’re using 50% of their gross for mortgage…factor in car payments and credit cards and it’s more like 75%. ( I’m not joking. At least they got a 30 year fixed…so that makes it OK, right?) The note and all the paperwork says the husband’s name is …for example, ‘john smith’. He signs all the paperwork ‘john smith’. He pulls out an ID for notary and the ID says, ‘Isiah Smith.’ Hey wait a minute, who’s John Smith! Guess what, you won’t believe this…the lender didn’t care! They said to resign all the paperwork John Smith a/k/a Isiah Smith - just so the loan would close!
8.. This one isn’t fraud but it’s loose lending. 23 year old immigrant buys a $200K house (guess where??). His income was approx $2,000 a month documented PLUS $1,000 a month in undocumented tips. His mortage payment (PITI) was a little over $1,500 per month. Plus the note for his sweet sweet car and his credit cards. So this guy was over 50% on front end and was like 75% or 80% on the backend. Is this guy an idiot? Or is the bank greedy? They’ll give anyone a loan!
Damn, Chicago guy - you’re on a tear! Thanks for citing these examples. It’s truly mind-boggling the crap people will pull on other people…or the crap people will do to “own” a home.
Chicago Guy;…..That was eye opening….I will tell you folks, if this kind of crap is rampet accross the country, we are in a world of hurt….
“…a guy and his wife are buying a home (on the southside!) and they’re using 50% of their gross for mortgage…”
The realtor sold them on the continued gentrification on the south side I’m sure. The south side has markedly improved but as the developemnts slows, which it has, so will the gentrification and they’ll own a new home in a new developement surround by the crack houses that never got razed like they were promised.
Wow, amazing. Chicago Guy, can you estimate the % of your cases that are more, or less, just outright real estate fraud?
That one about someone signing, using a fake name, and the bank let it’s go, incredible. The attorney general should go after the bank for criminal fraud.
Hell is coming to breakfast for the Chicago condo market. These tax increases will hit and the continued oversupply will balloon. They’re already auctioning of a lot of condos. 2800 units hit the market this year, 2900 scheduled for ‘07, 6200 on the board for ‘08!! Many of the 6200 on the drawing board for ‘08 will never materialize but even if that number is cut in half that’s still a 10% increase over this year and they’re bailing out now.
Is that 2,800 new units or new units plus apartment conversions? In Rogers Park it seems that every block has an apartment building for sale as condos.
All of those #’s are new construction. I’d love to know how many conversions there are too. People in the area keep telling me that rising rent costs in the city indicate that real estate prices are in line. I always ask if they’re seeing a lot of conversions. “YES”, they answer. I ask “How many new rental buildings are you seeing going up?”…”Uh, none.” they answer. “Wouldn’t that indicate a shrinking supply of rental units that would cause prices to go up?” The real cheerleaders try to throw lots of #’ at me to justify RE prices the ones who know they’re beat, which they are, just shut up.
Just got back from Sedona for Thanksgiving.
A few thoughts:
1) what are people thinking with Phoenix???? when we drove around, all we saw was vacant land. Whoever lives there and believes the “there is no land” argument is insane. Don’t give me the “it’s all federally owned” argument either. There are huge patches of land between each ugly subdivision just waiting for development. On our trip up I 17 we saw new development after new development being build. There were huge tracts of land available INSIDE the city of Phoenix (at least where the “Phoenix city limits” sign was posted).
From the air it is even worse. There is land that is open as far as the eye can see, especially in between developments.
I hadn’t been to Phoenix in a while. I have to say, it may just be the ugliest city I’ve ever been to. Even Scottsdale which is supposedly so beautiful. At least it was warm though, if you can get past the smog, the dirt in the air (!), and the filth in the streets.
2) Sedona is also crazy (but at least it’s beautiful) We rented a house for $1200/week. Last sale price: $975,000 in August 2005. How is that cash flow positive? I talked to the next door neighbors. He was a builder. He said his house went up 8x in the last 10 years. The house I stayed in was owned by a couple who lives on the other side of Sedona, they bought it in 8/2005. (it was originally built in 2001, I don’t have original sales data). The house was cute, but nothing special (good views though). Even in Sedona with the land “shortage”, we saw open tracts of land everywhere. It was all priced sky high, but there certainly was a lot of it, given its small size. (only 11,000 residents, we saw hundreds of lots). I realize it’s a tourist destination.
I have to say again, wow.
That said:
I highly recommend visiting Sedona at some point in your lives, do it early though. Last time I visited Sedona there was a cute quaint “old west” street and that was it. everything else was hiking and biking and horseback riding and beautiful hills.
Now there is a huge long street that is a stripmall and lots of suburban developments. We even saw huge mcmansions on top of some of the cool red rock mesas themselves…
get there fast, it will soon be totally ruined. Only days left I’m sure before there is a Walmart on top of Cathedral Rock.
I came THIS close to buying a house on a couple of acres in Sedona in 1994. Still mad at myself for not doing it. Really bothers me to hear that prices have gone up that much and people have torn the place up. I’m going there myself in a few weeks to look around.
txchick
If you are planning to stay in Sedona there is a really great resort called Enchantment. It is really beautiful. Pretty expensive in the Winter but worth it. Great restaurant with a glass wall that looks out to the red rocks. Good hiking trails from the resort.
Tx:
don’t stay at Enchantment unless you’re a “spa” type. It is super expensive (it runs from $300 to $900 a night). I’m not a “spa” person, so that has little allure for me. But it’s one of the best spas in the world evidently.
There are TONS of houses for sale for really “cheap”. (in the $100 to $300/night range, but for a whole house)
we ate at Enchantment. Food was mediocre ($18 for a cheeseburger, $48 for a steak, $40 for lobster. all were good, but not stellar). The view is great, but why not just eat anywhere and then take a hike?
I’d be interested in your take of Sedona.
I was there in 1990. Was long-distance dating a guy who lived in Tempe back then. We went to Sedona and Jerome (that was a cool little town - is it still?). I was *this close* to moving to AZ back then. Backed out of a job offer at the last minute. Sometimes I get sentimental and wonder “what if?…”
I was in Sedona 3 yrs ago. Everybody in town I met was either a real estate agent or was scamming with offers to take people on tours of ‘psychic energy vortex sites.’ My gf and I saw a guy scribbling on a paper next to his tofu-blueberry pancakes one morning and we bet whether it was a real estate paper or a ‘psychic energy vortex map.’ As we walked by him on the way out, turned out to be the latter….. Seems it wouldn’t be a very quiet/calm place to live since all your neighbors would be huckstering either land or some tourist option, the only businesses in town.
This is really for Clouseau but also for all of you in Arizona Tchick, AZ, Ben etc…
Doc, regarding land in Arizona;…A young gentleman came a visited me about 6 or 7 years ago…He said he had just graduated from Santa Clara University, he was from Arizona and he wanted to stay in the area and was interested in developing….Nice young man and I shared with him all I new over a half dozen breakfasts…
At our last meeting he said that he had purchased a site…I was very familiar with the site, it was a very expensive and a high density site (80 units ?)….Anyway, I asked him, don’t you think this is kind of aggressive on your first deal ??? He then went on to share with me that he is from a family that does a lot of development in Arizona “Robsen Communities”….He has since kicked a$$ developing in the valley…Over a thousand units I suspect…..
To your point about land in Arizona Doc;….This young man told me that his father had a development that has been on going for over 50 years…There is no end to the land I guess….
Robson, a big name in the southeast part of Maricopa County.
HIC,
There is literally at least one house for sale on every residential street around here. It’s madness.
Anyway, I like Phoenix (well the outlying areas, at least). It has its problems, but every place does.
Here in Tucson, I can name three on my street that have been for sale for the better part of a year. One’s a spec house behind an existing house. Both are coming up on their one-year anniversary on the market. The other’s a flip that is flopping.
Umm…Saying Scottsdale is ugly is kind of going too far. The Scottsdale greenbelt is beautiful. But yes, most of Scottsdale Blvd is ugly. Judging that the rush hour on I-10 between the 143 and Chandler Blvd lasts until 7:15 pm, I would say you are fighting upstream. Lots of people love Phoenix. 600,000 people moved here between the year 2000 and 2005, making the population grow from 3.1 million to 3.7 million. Guess you think they are all stupid. You can have your ice and treacherous driving. I’ll take sunshine. And I am one who buys hot coffee at lunctime when it’s 115 degrees - did that a lot this last summer.
Take a trip out to Frank Lloyd’s Wright’s Taliesin West studio in Scottsdale. Worth the trip.
Bill:
sorry, didn’t mean to be as coarse as I came off.
I’m sure there are parts of Scottsdale that are beautiful, we most likely missed them (we were only in Phoenix for a day). I was expecting something awesome and so it is likely that my impressions of what Scottsdale was going to be were too high making me come down on Scottsdale/Phx too much. Also we had just come back from Sedona, which IS beautiful in that desert sort of way… so it may have made Scottsdale/Phx look poor by example.
I was expecting something like La Jolla as example… rich and beautiful. But instead it was more of a plain suburb… I’m sure it is much nicer inside the developments, although I’m not one for suburban developments.
“Guess you think they are all stupid.”
Not at all. People move to ugly places all the time. biggest example of this is LA. Terribly ugly. Yet people flock there.
“You can have your ice and treacherous driving.”
As for Mpls:
I moved here for one reason: job. Make tons of money, COL much cheaper.
I stay because of two reasons:
1-job. Make tons of money, COL much cheaper. the winter is one of the prices I must pay. (and it is a high price indeed).
2- friends. now my life is here. It would be hard to relocate at this point in my life, losing out on the relationships I have.
That said, I love mpls from March 15 thru Dec 1. It’s quite nice here then. The winter though? forgettaboutit.
also: you don’t here people say “everybody wants to live here” and “this is paradise” when talking about Mpls. You do here this from Phoenicians.
I’m retiring in 12 years. That’s the plan. At that time I will move most likely. Where? i don’t know yet. still looking for my “paradise”.
Well I’ve been in Phoenix from Cali now for over 6 months. I was from Moorpark Ca very pretty. Phoenix is OK but I like Tucson better. Try Tucson next time and south of Tucson as well in the moutains. Maybe thats your paradise?
And yes Scottsdale is nice but expensive. I live very close to work now and don’t need to drive the freeways which at summer temps are much worse than traffic jams I had to deal with on the 23 freeway in Cali. I could roll down the window on the 23 and get a nice breeze.
I have switched to ice coffee here as well, Bill your blood must be water thin by now!!
Heh Heh! See, not too long ago I lived in northern New Jersey, through most of one winter and could handle cold. I lived in Los Angeles for three years after that (a mile and a half from the beach). I mostly lived in hot climates. I am very adaptable. I follow where the $ is and I’m not a wuss because of climate. I am in climate-controlled areas most of the day anyway. The 2 minutes it took to get to my truck in New Jersey when it was below 0 wind chill and snowing? piece of cake. Scrape the ice from windshield after starting up the truck, put the defrost on, and I’m off. In Phoenix- same thing in reverse in summer. It takes 2 minutes (at most) to walk in 115 degrees to my car (now a small Toyota). Start it up and air conditioning comes on in a few. I can never get over people who complain about hot or cold when they are in such elements perhaps a total of ten minutes a day. They are emotional, not logical. The money makers don’t care about temperature. The spenders and foolish do.
My wife and I went through Sedona last month and i’d never been and i’ve never had such mixed feelings about a place. Such beauty, everywhere, surrounded by see me dig me overdevelopment that made me wonder what it looked like, once upon a time.
Another thing…
Looking through one of the many glossy magazine look real estate sales guides in Sedona, there seemed to be a lot of expensive ($600k-1.5m) undeveloped land sites for sale, more than i’ve ever seen, any place i’ve been, in my travels.
Why’s that?
Is Sedona still a ‘vortex’ for new-age disciples? I think Asheville is considered as such. Yes, Sedona is nice to drive through as is Oak Creek Canyon. There are so many beautiful areas like Sedona in the southwest, just look at Utah too, that it boggles the mind why one would want to spend millions of dollars for that bling land.
Torrey, Utah is a good example of another place that’s mighty colorful, but not too many people, easy on the soul…
Real estate agents aside, most large scale developers really do feel that there’s a land shortage in Phoenix.
What they mean by that is there aren’t enough huge virgin tracts that aren’t already locked up by other developers. They want huge virgin tracts so they can design a big planned community, do entitlements (zoning etc.) and then sell pieces of it to smaller developers at a huge profit, and have a brand new Applebees and Wal-Mart instead of the shabby 2 year old Applebees and Wal-Mart a few miles down the road.
Anyone have $50,000 laying around? Casey needs a quick loan.
Yep but I’d throw it out the window for the bums before I’d lend him a dime.
In Dallas, you won’t have to throw very hard, or risk hurting your arm doing so. You do so love Casey something fierce!
Josh
that guy sure has a hard head
What he has is a gambling problem, complete with altered state of consciousness which allows him to belive that with his track record, anyone would lend him a stick of gum.
I think that cargo cult mentality still lingers for much of the market. Either that or denial phase, believing that things will improve. This has to be a national rorschach-block test for how things are versus what you think you see.
Every time I read a new post of Casey’s, I start saying “I can’t believe it!” and “How stupid are you?” out loud to the monitor. Hubby now asks me if I’m visiting “that guy’s’” site again when I do it.
I think that some therapy and a good 12 Step program might help him, but not much else will. He’s delusional.
tx chic needs to biotch slap him with a 20lb salmon.
I saw that… and your “with all due respect”. Uh, I would not give Casey any respect. In fact, I would be hard press to wee on him if he were on fire.
It does say “with all due respect” and the amount of respect due to him would be zero. So it works out to the same thing.
The EUR is still above 1.31 USD, so the rise was not just because of low liquidity on black Friday. The business press now “discovers” the housing bubble and sometimes connects it to the weakness of the dollar.
Meanwhile, the OECD outlook is positive for the US, Europe and Asia. No housing bubble factored in yet?
I think the direction of the revisions is more telling than the absolute GSP growth prediction number. OECD revised growth predictions downwards for all 30 member nations.
http://biz.yahoo.com/ap/061128/oecd_world_economy.html?.v=6
Meanwhile bonds are going nuts, yield on the 10-yr is below 4.5%
43 basis point inversion on the 6mo to 10yr. Looks like a strong recession indicator to me.
“OECD revised growth predictions downwards for all 30 member nations.”
But:
“The 12-nation euro zone will post 2.6 percent growth this year and 2.2 percent in 2007, it predicted, upgrading the previous forecasts of 2.2 percent and 2.1 percent.”
The (strong) inverse yield curve is indeed a good indicator for a recession. The European bond yield curve is quite flat, too, an might inverse if the ECB raises rates as predicted, so I am not as optimistic as the OECD.
How long has the yield curve been inverted? Over a year now? Is the recession here yet?
If you allow enough time, any prediction will come true.
But it is a bummer to be on the wrong side when it does
I believe the yield curve indicator is supposed to have a time lag of 6 months to a year, so I’d say we are right on schedule.
Historically, yield inversions typically occur 11 to 12 months prior to the start of a recession. Our first inversion was last January, so anytime would be about right, and it will take 2 or 3 months before that data gets reported, so expect to start hearing recession talk in March/April.
We may well be in recession already, based on the residential construction slump, plus the tendency of the rest of the economy to follow the residential construction sector. The last four times residential construction went on a bender, so did the rest of the macroeconomy.
The R word is politically charged. It is a third rail of newspeak. I think we are in one. Is anyone paying attention though? Only so many hours in the day to monitor how much things have slowed down with all your peers.
IIRC the definition of a recession is two quarters of declining GDP. Since GDP is calculated after the fact, a recession is not apparent until at least 6 months after it has started.
We’re already in a recession if you use the real numbers…..
Check out
http://www.shadowstats.com/cgi-bin/sgs/
True CPI is running at about 7% (with a temporary drop to 5% due to the falling oil prices).
looks like the strong $ policy is working……
make sure you see the $ chart from 1800
http://www.immobilienblasen.blogspot.com/
anyone have a handle on the durable goos orders
the aircraft componenet makes it useless
Durable goose orders, you meant?
Hohnk, hohnk!
I think actually, you meant you want to just take out the aircraft/transport component:
“Excluding transportation, orders were down 1.7 percent, the biggest decline in 15 months and the third drop in this category in the past four months.”
Not a disaster, but certainly not a good sign either.
Oh, darn. I was just going to run out and buy a Gulfstream.
Prices falling from october 05 by 7%. Man I am so sick of this BS. price peak wasn’t in October 05, it may have been few months prior or few months later depending on the area. While sales volume is dependent on time of year, price isn’t. Then 7% is a joke, when the biulder are adding in 100,000 in incentives on 400K houses. So unless you’re counting that in, its smoke and mirrors.
Cool.
Cow_tipping.
of course you want to campare data from the same period, otherwise, it has to be seaonally adjusted. what we want a comparison from peak.
Anyone know where the new Gary Watts’ outlook is posted? it seems the realtors(tm) will email the PDF but I can’t find it on the web.
thx
nevermind, i found his web:
http://www.impactre.com/Forecast.html
NAR’s Existing Home Sales for October show a 3.5% YOY price decline.
Sales are slightly (seasonally adjusted) higher than September, and the $221K national median is also up on the September figure reported last month (providing there were no significant revisions).
I suppose these numbers will be used to bolster the claim that the market has already bottomed out.
Record drop in home prices
http://money.cnn.com/2006/11/28/news/economy/homesales/index.htm?postversion=2006112810
Prices are dropping! Buy now before inventory shrinks to nothing! You’ll be priced out soon!
They’re already buying! Sales are up.
“The number of homes sold last month ticked up slightly from September, rising to an annual rate of 6.24 million from 6.21 million. The trade group characterized that as a sign that the overall real estate market was stabilizing.”
Dow will hit new record!!!!
S&P uptrend line is at 1378. LOD so far 1377.83 so it’s being defended the first time.
LOD?
Existing Home Sales Rise, Prices Fall
Nov 28 10:09 AM US/Eastern
By MARTIN CRUTSINGER
AP Economics Writer
Sales of existing homes posted a tiny increase in October, the first gain in eight months, but the median price of homes sold last month fell by a record amount.
The National Association of Realtors said Tuesday that existing home sales edged up 0.5 percent to a seasonally adjusted annual rate of 6.24 million. It marked the first sales increase since February.
However, the median, or midpoint, price for a home sold dropped to $221,000 in October, a decline of 3.5 percent from a year ago. That was the biggest year-over-year price decline on record. It marked the third straight month that home prices have fallen compared to the same period a year ago, the longest stretch of such declines on record.
Keeps on slippin’ slippin’ -
Home sales: small increase but prices post record decline
POS MarketWatch…. Big a$$ed headline “Housing market gains steam”……How much of the $40million NAR campaign budget went to pay off all these bastards? Friggin liars.
“The worst of the United States’ housing market slowdown is over, economists forecast by nearly 2-to-1 in a Wall Street Journal online economic survey, the paper reported on its Web site on Tuesday”
http://www.msnbc.msn.com/id/15829153/
I hate this crap. WTF
“The worst of the United States’ housing market slowdown is over…”
Yup, it’s all smooth sailing downhill from here!
Hows the Santa Cruz market doing ??
Home sales in Santa Cruz rose 8.2% in October (with a total of 9, yes 9, more units sold than last month), down 16.7% year-over-year. YTD home sales are down 18.8%.
Prices rose with the median price gaining 0.5% from the month before, but was down 2% year-over-year. The average price fell 3.3%, but was up 0.4% compared to last October. Median stands at $754,000. What a bargain eh?
Inventory fell 8.6%. Days on the market is up to about 90 days from 60 last year.
A couple of places priced under median at the $530,000 level still haven’t sold. We got about 1200 units on the market with about 140-160 sales per month on average. Supposedly the inventory data says we got about a 9 month supply.
This Santa Cruz place is silly.
http://www.ror.com has excellent stats.
“I hate this crap. WTF”
Ummm, it could be the truth.
Only if you believe in fairy tales.
I’m starting to wonder myself. Don’t know if it makes sense, but I have this feeling that mortgage rates will get real low next year just as the ARMs start resetting. Obviously, mortgage rates are the key at this point in the process.
I propose a new type of bond. It will underwrite 30 year,5% mortgages for the ARM reset crowd. The buyers of the bond will get a 4% tax-free yield, but must hold them for a minimum of 5 years. Any other possible soft landings available? I’d take 4% tax-free yield for some of my fixed income holdings. Is there enough money in the savers’ pockets to cover the house poor folks?
“mortgage rates are the key at this point in the process.”
Not. Falling prices against a backdrop of still-rising inventory and foreclosures are the key.
http://www.miami.com/mld/miamiherald/16111369.htm
“Julio Escobar, who lives in North Miami Beach, said he didn’t know what he was getting into when he took out an option ARM. Escobar refinanced a $204,000 loan a year and a half ago to reduce his monthly payment and cash out about $15,000 in equity. His payment: $1,000 a month.
When he refinanced again into a fixed-rate loan in September, his payment had risen to $1,300 and, to his astonishment, his balance was $211,000.”
“Cariseo said her broker cited an interest rate of 3.4 percent — but didn’t tell her it applied only if she made a minimum monthly payment. The actual rate: 8.4 percent. And if she wants to refinance, she gets hit with an early payoff penalty of nearly $8,000.
Cariseo put her vacation home in Mexico on sale last week, hoping to raise enough to pay off the mortgage. ”I am stuck,” Cariseo said. “My payments have gone up three or four times . . . I know I’m not the only one, but that doesn’t make me feel any better.””
This confirms it, we live in a country full of idiots!
“‘I was throwing money away,’ Julio said. ‘The broker we did the deal with didn’t really explain all that, or maybe it was a mistake on both sides.’”
Looks like a mistake on Julio’s part. I’m sure it was all there in the loan docs he signed. Too bad he didn’t take the time to actually read them or have them gone over by an attorney.
Country full of idiots? I hear there’s one born every minute.
The local Springfield MO (SW MO) newspaper had a full page ad over the Thanksgiving weekend by the Coldwell Banker Vanguard Realtors. This is the buckle of the bible belt, the heart of meth labs, the center of puppy mills, etc. (ACtually it’s OK living here but I am trying to set a context.)
I am also including the first half of the page since it really enhances the important message below it — It’s different here!”
THERE IS NO “CRASH” IN THE REAL ESTATE BUSINESS IN SPRINGFIELD!
———————————————————–
Happy Thanksgiving! The week before Thanksgiving, we have our own dinner at Coldwell Banker Vanguard, REALTORS®.
For many years, I’ve read this wonderful statement that was first read to me by an employee at the Springfield Family Y, when I was serving on their board. This is the third year we will share it with our friends in the Greater Springfield area:
For the moment, be still. Count the ways you are blessed. Be thankful. Be slow to quarrel. Search out a forgotten friend. Suspend suspicion, be trusting. Write a love letter. Share a treasure. Give a soft answer. Encourage youth. Show your loyalty in word and deed. Nourish a grateful attitude. Keep a promise. Find the time. Don’t harbor a grudge. Listen. Apologize if you are wrong. Be understanding. Be slow to envy. Forgive. Think first of someone else. Show appreciation. Be kind. Count on miracles. Laugh more. Deserve confidence. Be gentle. Wage war against prejudice. Worship your God. Gladden the heart of a child. Decry complacency. Take pleasure in the beauty and wonder of the earth. Make every day a thanksgiving. Speak your gratitude. Speak it again. Speak it still again. Speak it still once more.
We as an office, and a leader in the real estate community are so very thankful for another remarkable year. We were able to be the real estate sponsor for the second St Jude hospital home give away, we completed a blitz build at Highland Springs during the Price Cutter tournament for HABITAT… and we continue to support many other charities in our area because we KNOW the needs and we ARE GRATEFUL for the success this community has afforded us.
————————————————————-
THERE IS NO “CRASH” IN THE REAL ESTATE BUSINESS IN SPRINGFIELD!
It’s important to note that for our entire industry, we have had another record breaking year. To quote a recent article from Kenneth R. Harvey with the Washington Post: “With all the dismal reports about the home real estate market, don’t lose track of something critically important: Mortgage interest rates have been falling quietly, but steadily for weeks and are now at their lowest level in half a year, barely a percentage point above the 40-year lows.
New mortgage applications are up sharply, the number of pending home sales is up, the national economy continues to expand moderately and the rate of unemployment just declined again, to 4.6 percent.
All of which raises the question: Just what kind of housing bust is this anyway? With gloom-and-doom purveyors forecasting imminent crashes in dozens of metropolitan areas, how could such key fundamentals as jobs, interest rates and even pending home sales simultaneously be trending in the opposite direction?
Donald L. Kohn, the Federal Reserve’s vice chairman, took a stab at that seeming conundrum in a speech Oct. 4th at New York University. His views are worth keeping in mind if you want to put the negative news on home prices and sales in perspective.
To begin with the fundamental point: Kohn sees NO IMMINENT bust or crash in housing AT ALL. It is a “correction” that’s underway — a cyclical rebalancing of a marketplace that got too hot for too long in some parts of the country, and is now heading back toward more “normal” conditions, where prices are more in line with what consumers can afford.
Not all home sellers have fully grasped the altered realities in their own markets — that they have to reduce their asking prices if they truly want to sell — so the process is still unfolding. Re-priced houses, in turn, should stimulate more potential buyers to get off the sidelines and make offers. The unexpected 4.3 percent increase in the latest monthly number of pending home sales contracts heading for a closing nationwide reported on October 2, 2006 by the National Association of REALTORS should be a sign that Kohn’s prediction is already taking shape ..”
In our area, where we are not only sheltered by a very diversified economy and nearly recession proof community, we at Coldwell Banker Vanguard, REALTORS® want our customers and clients to feel some comfort in the fact that OUR market is not what the media folks would have you think.
It is stable, we have lots of great inventory and the interest rates are remarkable. Believe in this area and move forward with your decision to continue to reinvest in this spectacular part of the country called “THE OZARKS”.
We wish you and yours a bountiful Thanksgiving and a peaceful and prosperous Holiday Season.
An Independently Owned & Operated Member of Coldwell Banker Real Estate Corporation
“Texas oilman T. Boone Pickens told central Arkansas business leaders Monday that the world has reached peak oil production and the United States, in particular, needs to find alternative sources of fuel.”
http://biz.yahoo.com/ap/061128/apfn_oil_peak.html?.v=1
Snippets of Life in a Bubble Economy:
http://wallstreetexaminer.com/blogs/winter/?p=120#more-120
The Law of Unintended Consequences:
http://tinyurl.com/yjvp8k
“Homeless, felons help fill poultry jobs” after immigration raid in Georgia.
“Martha, does this chicken taste a little different to you? A little saltier?”
“A little saltier?”
ROTFLMAO Now that’s really low down, Chip!
Surprise! Surprise! Round up and deport the illegals and wages begin to go up…
“The company raised starting wages by about 40 cents and now offers attendance bonuses to new hires. Before, it took a year to be eligible for the extra pay. (Starting base pay is $6 an hour; most workers earn more through bonuses and overtime.)”
10am PPT intervention today had no effect. Are they pushing on a string now?
http://tinyurl.com/fzeuw
Would be interesting to see the total dollar volume that drove all the homebuilders, mortgage companies, etc up at the same time. I’d guess a couple of billion?
10:00 AM Pacific Coast Time.
KNX1070.com Business radio is LA is talking about real estate. Good vs. Evil. debate. Evil (real estate decilne is represented)
This is money 101.
http://biz.yahoo.com/ap/061124/all_business.html?.v=1
not sure if anybody has posted this yet. interesting read.
Who bought in CA during the bubble runup?
1) Move-up buyers rolling their equity gains from somewhere else into a new place;
2) Flippers;
3) Those who could only afford to buy thanks to high risk loans against a backdrop of prices that always went up;
4) Wealthy folks who can afford to buy no matter what.
Who is buying now?
Categories 1) and 2) are basically gone against a backdrop of falling prices, and high risk loans (Category 3) would seem increasingly difficult to obtain as the bubble unravels. That primarily leaves the truly wealthy; are there enough rich folks willing to risk catching a falling knife to prop up the California market?
Talked to a friend that has a ho hum house in Torrance (90501) and she’s atypical of many i’d say. She bought in 2002 and I tried to persuade her to sell and escape out of the area last year and she procrastinated and told me she’s going to finally list the house in April, 2007.
The house went from 310k to 675k (value @ the top) and she’s commited to selling and leaving the area, for another state.
Combine tens of thousands of people like her, add in house builders that will sell, no matter what the market bears and all of the arm resets next spring, causing those who bought too late, to get foreclosed on, and it’s gonna be ugly.
Popcorn, get your popcorn~
aladinsane, intuitively, I agree with you. Intellectually, this is how the numbers pencil out. Empirically, sigh, not quite yet, and the tension here is palpable. I wonder if it’s the same countywide, statewide, countrywide? The sales that are taking place in the south bay are consistantly 7-10% under listing price, and that’s almost always after one or more price reductions. A number of homes taken off the market and re-listed at a reduced price, fresh listing. Some just taken off the market altogether, saying “I’m going to just stay put, I’m not accepting a dime less than $500K profit”. So far, the Category 4 buyers GetStucco refers to are still on the prowl in the South Bay… is this area invulnerable? I’m thinking no. When the ‘For Sale’ signs start sprouting up this spring on front yards like weeds, and recalcitrant sellers sense their nest egg shrinking, the psychological slippery slope will manifest itself.
We sold our house in RPV in August of 2005 to a Korean flipper, (the only person that made an offer on our house, in 5 weeks) and if wasn’t for well heeled Asians that barely spoke English, we’d have had just 10 people look at our house, in that time span.
One part of this bubble which makes it so interesting to me is, this isn’t a regional bubble, like el lay in 1988-1991, it’s worldwide (well, at least the 1st world) and the ramifications are not pretty.
I feel like i’ve got a ringside seat, here in cyberland~
I highly doubt those are Cat 4’s. Most likely the last of the GFs from Cat’s 1 & 3.
My Korean flipper paid $1.24 million-cash.
America has created lots of rich Asians…
That was in 2005. Now that prices are dropping, are rich Asian flippers still stepping up to the plate? Maybe there is going to be a bloodbath like the one which befell Japanese commercial RE investors in the early 1990s?
We’re keeping a very close eye on Manhattan, Hermosa, and especially Redondo. Some firsthand anecdotal evidence at open houses suggests that Cat 4 locals are footing some or all of the downpayment for their progeny. Are these wealthy GF’s that were lucky enough to find $ in the first place? Are they friends of the listing agents acting as ‘plants’ to fool other potential buyers?
…just analyzing who else is sitting at the poker table… if you don’t know who the mark is…
My strategy is as is often discussed here. Keep your powder dry, cash is king, yadayadayada. I’m ready to buyand I’ll wait; I just don’t want to miss the starting gun. How low before the bottom? No one wants to buy on the dips, though some will, causing the dead cat bounce. Looking ahead, it’s going to take some discipline and resolve to ride this down to 40-50% reductions. Or maybe I’m watching TOO closely…
Yo, chill dude. The main feature hasn’t even started… there just previewing future attractions.
THE FED
More rate hikes may be needed, Plosser says
By Rex Nutting, MarketWatch
Last Update: 1:04 PM ET Nov 28, 2006
WASHINGTON (MarketWatch) — The Federal Reserve may need to raise its overnight interest-rate target above 5.25% to keep inflation under control, the president of the Philadelphia Federal Reserve Bank said Tuesday.
The Fed must be prepared to back up its words or risks losing credibility, Charles Plosser said during a speech in Rochester, N.Y., where he once taught.
“It is possible that inflation could return to acceptable levels without further policy actions,” Plosser said. “On the other hand, the fed funds rate adjusted for inflation remains relatively low.
“Thus, to my mind, there remains some risk that policy is not yet firm enough to ensure a return to price stability over a reasonable time horizon.”
http://tinyurl.com/y5pcdg
Biggest drop ever in home prices
http://articles.moneycentral.msn.com/Investing/Dispatch/061128.aspx
… so we must be nearing the bottom. ha ha
I’ve had a thought that’s been bugging me. Somewhat OT. I sat through the presentation on naked stock shorts back when it was originally posted, and saw it mentioned again here the other day.
My question is simple: Dividends. A company is not going to pay dividends on stock that doesn’t exist. Do people not naked short dividend paying stocks, or do more shenanigans go on when it comes to dividends that are supposed to be paid?
Anyone know?
It is a good question. I hope someone knows the answer.
I also watched the presentation on naked short selling and failure to deliver securities. And then started asking questions at my brokerage firm. Here are part of the e-mails we exchanged.
I followed this e-mail exchange up, with some more questions, and if anyone is interested, I’ll post their response. I directly asked why they would allow naked short selling at all - be interesting to see if they respond.
My questions to my brokerage firm:
I am well aware of what is supposed to happen when I purchase stock. I am vaguely aware of the situations that brokers must report to the SEC. However, you did not answer my questions. Here they are repeated:
Is there any way I can find out if any of the shares I have purchased (and the funds withdrawn from my account) are in “failure to deliver” mode?
Do I actually need to get the paper stock certificates to prove that the
transaction has actually happened, and is not a “failure to deliver”?
I find this practice of “naked short selling” to be very disturbing, and
wonder how many of my transactions have “failed to deliver”, either selling or buying stock. Can you provide this information?
I appreciate you answering the above questions, directly.
——————————-
Their response:
Dear Mr. —
Thank you for your recent e-mail to
If the shares are not delivered, will notify you and we will also remove the shares from your account. While delivery is requested to be completed on the designated settlement day, delivery can be delayed two days after the settlement day. After this point, an extension would need to be requested. If the delivery is not made by this point, you should soon be contacted regarding the failure to deliver.
You do not need to obtain paper certificates to verify the trade. We do provide you with a confirmation statement that provides adequate proof of the trade.
To provide you with some feedback on short selling, requires that a client pass stringent requirements to be able to short sell stock without owning the stock. However, not all brokerage firms are as strict. Also, naked short selling is not allowed in retirement accounts due to federal regulations. This is to avoid the risk of over-contributing to a retirement account.
If you have any additional questions concerning your account, please
contact us via e-mail, blah, blah blah.
Sincerely,
Registered Representative
KNX1070.com Business radio is LA is talking about real estate. Good vs. Evil. debate. Evil (real estate decilne is represented)
This is money 101.
—————————————————————————
Let me guess, that idiot Bob McCormick is representing the “good” (RE is a great investment) side…Right?
Whats the prognosis given all the recent inflationary news? This has got to end in either fire (inflation) or ice (deflation). Sounds like fire on the horizon… leading to what… a stochastic drop to a new floor for housing prices, with a few years of losses due to inflations?
Some of us need help translating the economic news into a sensible strategy for purchasing housing.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/11/29/cndollar29.xml
Dollar plunges to 15-year low - raising interest rates, like they’re doing in the Euro zone, is probably the only tool the Fed has left to defend the dollar.
Ben, this will make you ill
NAR Thinking Big for 2007
The National Association of Realtors is psyched.
Arguably the country’s most powerful housing lobby, the 1.2 million-member trade group sees the new Democrat-controlled Congress as a golden opportunity to pass legislation it and other industry organizations have long-favored, even with a Republican president in the White House for at least two more years.
Housing has been presented with “an opportunity to move major legislation that we haven’t had for years,” Jerry Giovaniello, senior vice president of NAR’s government affairs group, said at the association’s annual convention in New Orleans earlier this month.
“We haven’t had a major housing bill since 1992. A lot of people have been left out of the 70 percent ownership rate.”
Another “top priority” Realtor issue is flood insurance, which Mark Washko, another staff lobbyist — NAR has dozens — expects to be brought up early in the new year. NAR supports map modernization and higher premiums for repetitive-loss properties when their owners refuse government offers of mitigation. But it wants Uncle Sam to continue subsidizing second homes, vacation homes and rental properties that are in harm’s way.
Hand-in-hand with that issue is the creation of a national disaster policy. The intensity of natural disasters in recent years has made it difficult for home owners to obtain coverage and, if they can find it, to pay the premiums. Since obtaining a mortgage is contingent on securing coverage in disaster-prone areas, NAR supports a federally-backed catastrophic insurance program.
Specifically, the NAR as well as other housing finance interests want to eliminate the FHA’s 3 percent downpayment requirement, increase its loan limits, raise the cap on loan terms to 40 years, allow the agency to switch to risk-based pricing, move the condominium loan program to the single-family loan fund, and strike the limit on reverse mortgages.
So to sum it up, the NAR wants the Democrats to give, subsidized insurance, eliminate a 3% downpayment for FHA (federally funded FHA option ARMs here we come!), increased loan limits to even more ridiculous multiples, reduce limits for 40 year mortgages, allow reverse mortgages to become even more predatory, and try to ensure the remaining 30% of Americans who dont have homes, get subsidized so they can have their piece of the American dream.
Shoot me now.
where the hell has Barbara Corcoran been with this advice for the last 5 years?
http://abcnews.go.com/GMA/print?id=2685399
Protect Your Home in a Dicey Market
Real Estate Guru Offers Tips on How to Bubble-Proof Your Home
Nov. 29, 2006 — - In today’s uncertain real estate market, many people are looking to protect the value of their home.
“Good Morning America” real estate contributor Barbara Corcoran recently shared important information on how homeowners can shop smart — and renovate smart — so that their nest egg keeps its value no matter what the market does.
For those who own homes, Corcoran suggested tips for bubble-proofing your investment.
Keep your home updated. Every few years, visit new construction homes in the area. Pay attention to kitchen models, watch the sizes of bathrooms, master bedrooms and closets. Keep your construction current relative to the price of your home, even if it means tearing out walls.
Keep the exterior of your home painted. Make sure the windows are in shape and the landscaping is neat. Great curb appeal never goes out of style.
Keep the colors of your home neutral and the floor plan functional so it never looks dated.
Buyers need to think like sellers in order to get a bubble-proof home. For those looking to buy, Corcoran suggested the following tips about choosing a neighborhood.
Settle down in the right town. Find a place with a charming downtown area. A high concentration of older homes will give the town more character: no one is going to tear down those structures to build McMansions.
Look for good public schools. The town’s average SAT scores should be above 1800.
Make sure the home prices in the town are affordable. The average home price shouldn’t be three times the average income. (You can find this information through the chamber of commerce.)
Fewer than 5 percent of all homes in the town should be for sale. That means no more than two “for sale” signs per street — not per block. The average street has 30 to 80 houses.
Make sure that empty nesters don’t move out. You’ll know that there are empty nesters around if you don’t see kids or their toys and bicycles in the yards. If older residents are sticking around, that means people love the neighborhood and the inventory of homes is locked up.
Strict zoning regulations are a plus. Though rules about how long your grass can grow and when the garbage can go out can be a pain, they’re great for value.
Once buyers have the neighborhood down, Corcoran had some tips about what to look for in the property itself.
A brick house is best. 68 percent of buyers prefer brick to other types of homes.
White is the best color. White is always among buyers’ top three color choices.
Buy in the comfortable “middle” of the price range — not too high or too low.
Find a house that gets a good amount of natural sunlight. It’s better to buy a smaller home filled with sun than a bigger one that’s dark.
Corcoran also offered tips on how to choose a smart loan that won’t hurt you if interest rates go up.
Choose pressure-free financing. The right financing can help to make your home bubble-proof if you finance conservatively. You’ll sleep much better at night and you won’t have any sudden surprises.
Try to put 20 percent down.
Buy mortgage insurance and insure your house for its current value — they’ll pay out the difference if it fails.
Lock in your mortgage rate if at all possible: a fixed rate gives you peace of mind.
If you do get an adjustable rate mortgage (ARM), estimate whether you can afford any adjustments today. Know what the ARM rate adjustments are and when they change.
Avoid extreme mortgages. Don’t take an interest only, 100 percent mortgage.
Keep your home updated. Every few years, visit new construction homes in the area. Pay attention to kitchen models, watch the sizes of bathrooms, master bedrooms and closets. Keep your construction current relative to the price of your home, even if it means tearing out walls.
So I’m supposed to update my house every few years so it looks like a model home? One of the advantages of owning a house for me is that I can have things that look how I want them to look.
This whole list is pretty similar to all the lists I have seen over the years of how to sell your home - make it look bland and strip your personality from it. That’s fine if you are putting your house on the market but I can’t imagine wanting to live that way. And this does not bubble proof your house by any means, it just makes it a little easier to sell.