“The Go-Go Attitude Has Come To A Screeching Halt”
The Star Tribune reports from Minnesota. “In a stagnant housing market, optimists already are calling 2007 the year of recovery. ‘To me, the stars are all starting to align,’ said Todd Shipman, outgoing president of the Minneapolis Area Association of Realtors. Is that shameless optimism or an educated guess?”
“The market will face plenty of challenges during the coming months, including increasing mortgage foreclosures, stagnant home prices and a glut of homes for sale. ‘It’s going to be a slow recovery,’ Shipman said.”
“The theme of the coming year will be absorption, as sellers step back to avoid stiff competition and buyers step forward to take advantage of low interest rates and seller flexibility. George Karvel, professor of real estate at the University of St. Thomas in St. Paul, said that during the recent five-year run-up in prices, future demand was satisfied, leaving a dearth of buyers and too many listings.”
“At the end of the December, a seven-month supply of existing homes was on the market in the Twin Cities metro area, according to the Minneapolis association’s weekly housing-supply outlook.”
“‘I think we’re all feeling quite cautiously optimistic that the worst is behind us,’ said Wendy Danks, marketing director for the Builders Association of the Twin Cities.”
The Journal Sentinel from Wisconsin. “Mortgage foreclosure lawsuits in the five-county Milwaukee area are up 33% over last year, putting more than 5,000 households in jeopardy of losing their homes, court records show.”
“The largest number of foreclosure actions has occurred in Milwaukee County, where nearly 3,600 such lawsuits have been filed this year, compared with 2,702 in 2005, also a 33% increase.”
“In Washington and Waukesha counties, the number of foreclosure suits increased 49% and 30%, respectively. In Ozaukee County, 14 sheriff’s foreclosure auctions are scheduled for next month alone. For all of this year, Ozaukee County had 30 such auctions.”
“‘Families’ incomes did not keep pace with everything else that was happening, and the final victim was the houses,’ said Kathryn Crumpton, manager of the non-profit Consumer Credit Counseling Services of Greater Milwaukee. ‘I tell them that they are being held hostage by their mortgage payment. It’s just way more than they can afford.’”
“Doug Gordon, president of Wauwatosa Savings Bank, said homeowners without significant equity in their homes are less likely to try to stave off foreclosure. ‘They don’t tend to fight to keep them as much,’ Gordon said. ‘Mostly, there’s not as much of an incentive to save the house because the person doesn’t have much in it.’”
“Borrowers with minimal equity in their property are becoming more common, he said. ‘I don’t think that we have ever experienced as high loan-to-value mortgages as we have today,’ Gordon said.”
“During the heady days of advancing home prices, many people tried to get as much house as they could, and some stretched beyond their financial means, according to the managing principal and portfolio manager of an investment firm that specializes in bank stocks.”
“‘People said, ‘If I don’t buy today, that house is going to cost about 10% more in six months,’ said Robert C. Ollech of Fortress Partners Capital Management Ltd. in Hartland. ‘That was the go-go attitude two or three years ago, but that has come to a screeching halt,’ he said.”
From CNN Money. “Mike and Mary Ott thought they had a good plan. They would sell the mobile home they owned outside Montello, Wisconsin, and buy a house in town. Well, they bought the house they wanted, but they didn’t sell the mobile home. Now, thanks to the housing slump, they have two homes, only one of which they can really afford.”
“‘We have just enough extra every month to cover the new mortgage,’ says Mike Ott.”
“In early 2006, the two started looking seriously for a new house. After a couple of months the Otts agreed to buy a four-bedroom, two-bath built in 1905 with a modern addition. The Otts put their mobile home up for sale in February. They didn’t want to rent a place during any gap between selling their old place and moving into the new one, since that would mean having to move twice. So they didn’t push the sale of their house very hard. Perhaps they should have.”
“Their real estate agent suggested a $42,000 price, which the Otts thought was too high. They priced it at $39,500 and then $37,500. They got some lookers and even a couple of offers, but those deals fell through. Now the home is priced at $32,000, just $1,000 more than Mary paid for it nearly six years ago.”
“During the past six months or so, the market has cratered. ‘The market is pretty slow,’ says Mike, ‘and getting slower every day.’”
“When they put their home on the market there were a couple of neighbors selling their mobile homes also. Since then, more and more for sale signs have appeared on lots all over the park. As August approached, the couple started to fear that they would have two houses and few options.”
“‘The park doesn’t allow us to rent,’ says Mike. ‘Our stress levels rose as the closing date came nearer.’”
“The Otts are fortunate that they can just afford to carry both places. ‘We’re just able to make the payments on both places,’ says Mike. But if there’s an emergency or an unexpected expense they don’t have the cushion the money from the sale would provide.”
“‘To me, the stars are all starting to align,’ said Todd Shipman, outgoing president of the Minneapolis Area Association of Realtors. Is that shameless optimism or an educated guess?”
Neither. It is yet another version of the “soft landing” rumor propagated by the REICs’ Ministry of Truthiness.
Question for the cautiously optimistic: When’s the last time a housing slump lasted only 1 year?
It doesn’t matter, because the Ministers of Truthiness have assured us that this time is different.
It is different this time. The credit conditions in the expansion were totally insane and the correction will be more painful than experienced in the past.
Nothing more than Easy Al Greenspan’s irrational exhuberance for easy money.
Heil the Minister Trurthiness!
Zig heil the Minister of Truthiness and Saint-Bernanké!
Zig Heil to Alan Greenspan and infinite quantum finance!
Almost a banana republic ? Almost ?
From GoGo to NoGo or Togo ?
Joseph Stalin would be proud of all your professional statisticians liars with all the consumate abundance of phony statistics.
“This time it’s different.” Really is. The lies are even bigger!
One year? They didn’t admit their was a slump until November. It’s a 3-month lull, a soft-landing, and now a rebound!!
David Lereah will tell us for sure whether a soft landing is on the way after he sees the third month’s data…
“‘To me, the stars are all starting to align,’ said Todd Shipman, outgoing president of the Minneapolis Area Association of
RealtorsAstrologers.As Herber Hoover once said, “Prosperity is just around the corner.”
Or was it Herbert?
Ouch - snorted coffee out my nose!
The REIC speaks only DoublePlusNonTruths.
“‘I think we’re all feeling quite cautiously optimistic that the worst is behind us,’ said Wendy Danks, marketing director for the Builders Association of the Twin Cities.”
“Financial storm definitely passed” - Bernard Baruch to Winston Churchill Nov. 14, 1929
“While the crash only took place six months ago, I am convinced we have now passed through the worst” - Herbert Hoover, POTUS, May 1, 1930
OT… article about renters…
Renters Gloat Over the Housing Slump
The Wall Street Journal Online
By James R. Hagerty and George Anders
http://biz.yahoo.com/weekend/rentgloat_1.html
I’m still curious as to whether that Mary Tyler Moore house sold. That seemed like a really greedy flipper trying to sell it.
“Doug Gordon, president of Wauwatosa Savings Bank, said homeowners without significant equity in their homes are less likely to try to stave off foreclosure. ‘They don’t tend to fight to keep them as much,’ Gordon said. ‘Mostly, there’s not as much of an incentive to save the house because the person doesn’t have much in it.’”
What a concept. Rule number 1 of lending. To steal a line from Oceans 12, there are consequences for breaking rule number 1. Maybe that will occur to a potential lender next time they grant 100% financing to somebody on a stated income loan or a loan with a 60% debt to income ratio.
Exactly. Why fight to keep something that doesn’t hold the family “nest egg.”
I’m amused at how fast the clock is rolling back.
Since many places are already at 2003 pricing… where will we end up at the end of the year? Since 2002 had such a run up in prices… its likely we will barely get to that.
Cest la vie. We’ll be patient.
Neil
2003 ? I see some 2004
central valley- bostin
2003 = ver scary
Does this chart have any possible implications for the soft landing forecast?
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=TYX&sid=11421&freq=1&time=1mo
It’s not about interest rates, however if they do go up it only makes it harder to buy a house. What it’s all about is affordability - and house prices are only down on a national level less than 4% and that is not enough!
If we are going to have a booming real estate market in 2007 prices have to drop to 2001 or 2002 prices. But even if that happens we have a record number of homeowners and if they cannot sell their houses because they are now underwater who is going to buy all of these houses?
WAman,
Actually that HAS been the problem (up until now!)
Sellers have been somewhat able to “stand their ground” b/c the comps they were drawing from were other overpriced (and unsold) homes. We’ve revealed that this pricing was pure fantasy, or as my buddy Frankie is fond of saying F A N T A S Y! Ever heard of a “short sale”? My question (as is yours) is how will lenders deal with this negative equity? Treat it like a car loan and just roll the negative equity (up to acceptable limits) into a different home (notice I didn’t say nicer, bigger, newer) that they CAN afford?
Dead on WAman. It all comes down to the affordability factor. In California, the affordability factor is a joke in many areas and not just the ridiculous price of property. I was in line at a Trader Joe’s yesterday and a woman in her 70’s, a typical grandmother type, well groomed who probably had a good income from pensions, etc, remarked to the cashier after she saw her grocery bill and he said, “Just keeps going up, huh,” that she was okay financially but she felt sorry for young families with children and wondered how they could afford to live the way prices are going up and the cost of owning a house, etc. I didn’t butt in but I could have told her in one word. Credit. When that gets maxed out - watch out and we are getting closer to that moment in time.
You’re right. It’s not about interest rates. No one finances anymore.
I just thought of a great new business idea. Real estate cards. You know like baseball cards. There could be cards for flipper with their stats on the back, cards for talking heads like DL with his predictions and Guru cards like Sheets ,Kyosaki and Whitney.
What do you guys think?
bob komikazi has moved on to world peace through socialism
David Lereah urinal paddies and Leslie Appleton-Lay toilet paper would be just the ticket.
Great idea. We should start a real estate card business. Like baseball cards. We could have flipper cards with their stats on the back, Talking head cards with RE analyst and their predictions on the back, and Guru cards like Sheets, Kyosaki and Whitney with all their companies lawsuits on the back.
What do you guys think?
This didnt enter so I posted it again and bang it was their twice.
I think that’s a wonderful idea!
Good idea. Then, after the crash, they could also be used to ID the fugitives like the US did in Iraq.
Maybe Rummy could help develop the cards?
the Joker = Gary Watts!
Curt,
O.K now THAT was funny! LOL!
Nah. The Joker has to be Greenspan.
He was called by Aynn Rand, “the undertaker”.
A clown and a jerk like most central bankers. Personnally I think he is a repressed crypto-fascist, obsessed with his ego. Mister God was and still is an arrogant pseudo-scientific, that takes seriously his own bull.
So you’re saying to get the person’s info, I take the card and “flip it”?
ps. will we accept credit card purchases?
hi
“The largest number of foreclosure actions has occurred in Milwaukee County, where nearly 3,600 such lawsuits have been filed this year, compared with 2,702 in 2005, also a 33% increase.”
So much for the theory that lenders will stop foreclosing when they have too many to deal with, where are the work-arounds I was promised would happen ? . Too soon ?
ROTFL.
Stop foreclosing? How exactly does that make a loan perform? Pretty soon mortgage companies are going to be required to clean the books.
I’m suprised we haven’t heard anything about the NRT in a while. As far as I can tell, its not on anyone’s minds…
As much as I dislike government intervention, Florida needs the NRT today. Any bets on when they reform? When the NRT comes to California?
Neil
slower every day” only 3 days to go then 07 when market heats up
Check out PIMCO’s new article on housing - vey interesting
Do you have a link or reference?
Meanwhile, here is a link to an “old” PIMCO article (May 2006) to show just how far the paradigm has shifted. The right end of the two charts hint at a turning point in the near future. And the “Existing Single Family Home Sales” chart graphically documents my assertion that the current boom has very deep roots in the 1991 recession — fifteen long years ago — as seen by a steady uptrend from around 2.7 million SFR homes per annum in 1991 to the recent peak around 6.2 million. I wonder if homes will keep selling at around 6 million a year given the dimming prospects for blowout home equity appreciation?
http://www.pimco.com/LeftNav/Bond+Basics/2006/Role+of+Housing.htm
Doug Gordon, president of Wauwatosa Savings Bank is paying 5.17% apy in his iMoney Market Plus Personal Accounts. It’s a good little bank.
The rumor is that MLN is collapsing.
Huh??? Merril Lynch is bullish on America. End of story.
MerrilMerrillMLN = Mortgage Lenders Network (not to be confused with Merrill = MLN on the NYSE).
Check out the new home sales prices skewing the numbers…
Mid-month O.C. housing prices up 2.1 percent vs. ‘05
http://tinyurl.com/lzgbg
Maven: Too Much Housing Hope
By Marek Fuchs
Special to TheStreet.com
12/29/2006 12:12 PM EST
URL: http://www.thestreet.com/p/newsanalysis/maven/10330081.html
(Editor’s note: To access some of these stories, registration or a subscription may be required. Please check the individual links for the site’s policy.)
My goodness, was that easy. Did you hear? The housing correction is over. Our long national nightmare is finished, almost before it even began. It must be high time to jump whole-hog back to all those former lovers: Toll Brothers (TOL) , KB Home (KBH) , D.R. Horton (DHI) , Pulte Homes (PHM) and Hovnanian (HOV) .
The Business Press Maven is, as you probably guessed, being his normal haughty, sarcastic and by-and-large intolerable self. But who on God’s green earth can blame me?
As you know, The Business Press Maven is always highly critical of the business media for allowing a pattern of three to qualify as a trend. But apparently now two can do the deed. The National Association of Realtors reported that sales of existing homes blipped up 0.6% in November, following a 0.5% increase in October.
How did those modest little facts play?
In its lead, the Associated Press declared that “the worst of the downturn for the battered housing market may be over.” Lower down, it hedges, mentioning those ever-present and always plural “analysts” who say that “this year’s slide in housing is starting to bottom out.” The Business Press Maven seconds that with his first-ever ironclad guarantee. After all, with today being the last business day of the year, the housing market doesn’t have too much longer to slide in 2006.
Reuters also ushers in a new era of stability, at least on paper (or, more accurately, in pixels), with what passes as reason: Wall Street was wrong, so it is right. “The National Association of Realtors said the pace of existing home sales rose 0.6 percent in November to a 6.28 million-unit annual rate, defying Wall Street forecasts for sales to ease slightly and providing the latest suggestion that housing activity was stabilizing after a steep drop.” The AP even adds vestiges of housing-market insanity, disguised as a qualifier: “However, [analysts] cautioned not to expect a sharp rebound.”
Even the 800-pound gorilla of conventional thought, The Wall Street Journal, got in on the revival act right there in a headline: “Home Sales Bode Well for Big Picture: Second Consecutive Rise Points to Limited Fallout From Market Slump in 2007.” By only the fifth paragraph, we are in the thick of an imaginary scenario: ” If the housing slump is indeed bottoming out and starts to reverse itself in the months ahead, it would…”
With that bit of pretend and excitement from the most influential and stately business paper in the nation, I guess it’s time for full disclosure. Few have benefited as much from the housing market as I, so every fiber of my being wants it back.
In the mid-1990s, I bought a modest two-bedroom apartment in Greenwich Village with a fireplace and river view you had to squint to enjoy. By the end of that decade, I had put my large two-bedroom apartment with expansive river views on the market and more than tripled my investment. I used the profits to buy a three-bedroom house in an expensive though self-consciously understated New York City suburb — and my investment in that has more than doubled in value. If this insanity would only continue, I’ll be typing out this column from a mansion in the Hollywood Hills before too long. But — damn reality — it won’t.
How do I know? Because I’ve compared the breathless declarations of an instant return to fine real estate fettle with the daring display of common insight by the Financial Times.
The article’s headline is an appropriately tempered “Existing-home sales edge higher in US.” But it’s the lead that gets to the heart of the matter: “Sales of existing US homes rose slightly in November, though activity in the crucial southern market remained depressed in a sign that the nationwide market has yet to reach its nadir.”
Many members of the business media are, like The Business Press Maven, based in the Northeast, which did OK in the latest survey. But the future of new-home sales appears to be centered where we ain’t — the South and Southwest, which still appear weak.
Adding to this small countermovement of basic common sense is TheStreet.com’s own Nicholas Yulico. I usually hesitate to highlight an article from TheStreet.com, if only to avoid charges of favoritism. But in some cases, such as this one, I can’t help it.
Every down market has those brief blips up, the fools’ rallies that trap the ever-hopeful. And homebuilder stocks have, Yulico points out, rallied some from their lows of late. But in the South and Southwest, he rightly says, watch those land charges. A lot have been taken of late, but even those companies that have been taking them (hello, Hovnanian) are assuming there will be none going forward.
A year ago almost to the day, The Business Press Maven warned readers about all the overblown excitement regarding Howard Stern’s arrival at Sirius (SIRI) and, by extension, XM (XMSR) . The business media framed the situation like this: Either satellite radio or terrestrial radio would prevail, probably the first because of Fartman. Investors listened, and satellite radio stocks were briefly the belles of the market ball.
The Business Press Maven said it was not an either/or situation and that both would fail. Though it is haughty and intolerable to say so, once again I appear to have been right. As the year ends, the satellite radio stocks, like the housing stocks, have traded up off their lows. And we see the business media spinning their wheels as the Motley Fool does, attempting to justify the rise as being the result of substance more than a dead-cat bounce.
But I cast my lot for satellite radio as with homebuilding: with the dead cat. Happy New Year.
‘To me, the stars are all starting to align,’ said Todd Shipman, outgoing president of the Minneapolis Area Association of Realtors.
Hey Shipman, it looks to me like a great cosmic shaft is aligning with Uranus (Beavis & Butthead chortling)….
‘To me, the stars are all starting to align,’ said Todd Shithead, outgoing president of the Minneapolis Area Association of Realtors. Is that shameless optimism or an educated guess?”
Here’s what I’d like to see in 2007:
As soon as someone signs that last escrow document, the agent reaches inside their desk draw and pulls out a “Tickle-me-Elmo” which they place in front of the borrower and with a huge smile on their face and “Elmo” laughing…say’s:
Congratulation’s you’re a homeowner!
Lou…video it and put it on youtube!
“just $1,000 more than Mary paid for it nearly six years ago.”
They expected a mobile home to APPRECIATE?
I’m just a hick and I know better than that.
They expected a mobile home to APPRECIATE?
Thank you - my thoughts exactly.
When I bought my mobile home not only did I expect depreciation, I figured it might not be worth anything when its was time to move. Still the best decision I’ve made. Instead of paying 2000 a month or so for the worst house in my area, or even 1000 for a 2 bedroom apt, I’m only paying 500 a month in lot rent. And compared to a condo or apartment, I don’t have to share walls with anyone.
http://www.mytrailerpark.com/
I can’t for the life of me imagine why discerning people wouldn’t want to pay top dollar to live in a trailer park.
Hey, over on calculatedrisk, the Economic Cycle Research Institute has called off the recession!!
We can all sleep soundly now.
Are all recessions called off ex ante and dated ex post?
Mobile homes reduce land value….those people trying to make money are nuts.
Too much Prozac. They should change their medication.