Bits Bucket And Craigslist Finds For January 25, 2007
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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The real estate market around here is far from dead. The San Francisco home highlighted in this morning’s WSJ National Housing Survey went pending after one week on the market:
http://sfarmls.rapmls.com/scripts/mgrqispi.dll?APPNAME=Sanfrancisco&PRGNAME=MLSPropertyDetail&ARGUMENTS=-N842645301,-N200708,-N,-A,-N6692557
What’s a liquifaction zone?
It is a sandy land fill in an earthquake zone. During the big one, the land liquifies and swallows the house. (Actually, it just knocks it off the foundation and leaves it tilted, but it is more fun to visualized it being swallowed),
Personally, I would rather have my house be liquifactioned than split in two when the San Andreas next ruptures. During the 1906 quake, there were portions of the fault where the shift in the ground between the North American Plate and Pacific Plate sides was over 20 feet. I am guessing there are houses built right on top of the San Andreas, given the density of housing that has sprung up in the SF Bay Area in the subsequent 101 years.
If your house is in a liquifaction zone, your house might as well have been split in two. It will be demo’ed either way as a total loss.
I guess it is a matter of personal preference whether you would rather have your home split in two pieces or shaken off its foundation.
I lived in Foster City during the 89 Loma Prieta, maybe 4 or 5 miles from San Andreas fault, and closer to the epicenter than SF. When we moved to Foster City we were warned about the ground turning to jelly during a quake, since the entire city was essentially a planned fill project ‘recovered’ from the Bay in the early 60s.
However, no one I know suffered any severe structural damage, just things shaking off the shelves and loss of power.
I suspect at the planning of Foster City there was a better understanding of means to resist liqueficti- lequifac- whatever.
My cousins got a real nice cheap house in the Santa Cruz hills out of that earthquake - he’s a contractor, so he knew he could salvage the house. It certainly shook out the value from a lot of homes besides the ones that were condemned.People in Foster City were just lucky they were so far from the epicenter.
http://en.wikipedia.org/wiki/Loma_Prieta_earthquake
The Loma Prieta was a major earthquake, and caused severe damage as far as 50 miles away from its epicenter, most notably in San Francisco, Oakland, the San Francisco Peninsula, and in areas closer to the epicenter in the communities of Santa Cruz, the Monterey Bay, Watsonville, and Los Gatos. Most of the major property damage in the more distant areas resulted from liquefaction of soil used over the years to fill in the waterfront and then built upon.
You know how when you put your foot into the sand near the waterline, the sand looks dry until you wiggle your foot a little, and then suddenly the sand turns real watery? That’s liquifaction. The house wiggles a little and suddenly it’s sitting in a pool of mud instead of dry land, and keels over. I was there for the Loma Prieta quake and watched this happen.
“What’s a liquefaction zone?”
Where the ground turns to jelly during an earthquake. Most of the Marina was built on ground fill. Ironically, much of that fill came from the debris left after the 1907 quake. The dramatic photos from the ‘89 quake showing collapsed homes and a natural gas fire were from the Marina. Yet folks will still pay $2, $3, even $4 million for a house there.
“Yet folks will still pay $2, $3, even $4 million for a house there.”
That is because they are not making unstable landfill anymore.
Good one!
I moved from northern CA recently and sold my house when I did so. The whole time the house was on the market, and when under contract, I was cringing just knowing that The Big One was going to hit before we closed. The day we closed I breathed a big sigh of relief. And this was a house not in a liquifaction zone, and also a house that was built in 1890 and thus survived the 1906 quake - pretty close to ground zero actually.
I can’t imagine the constant background stress (pardon the pun) in the minds of the people who own the homes in the marina area - knowing that when The Big One comes they’ll most likely be toast.
Liquifaction is not limited to the BA. Here in LA, Venice and the Marina are built on silt. While it would be bad to live atop the San Andreas, generally you don’t want to live in a liquifaction zone. Even during the last quake here (Northridge), I remember some homes near me in Santa Monica canyon that took a big hit, while ones above in the Palisades (mostly built on bedrock) moved but weren’t damaged.
The federal gov’t has taxpayers in the midwest pay for the reconstruction of millionaires’ houses damaged by earthquakes and hurricanes.
True, Lionel, parts of Santa Monica looked like a war zone after Northridge.
actually the 1906 quake
There are a number of housing developments in el lay, built on the sites of old dumps…
I love the smell of methane, in the morning~
Methinks that was a rhetorical question.
Chuckle — so that is what an “Edwardian” house looks like. Guess the additional adjectives should be “understated” or “abstract” or “sorta.”
darn it!! I sold too early!!!
I think this housing crash is going to affect the price of boundary areas like Palmdale CA or Queen Creek AZ much more than the city areas like SF. At least in the West. Ironic as many of the working folks bought out away from the cities rather than rent in hopes of joining upper middle class. The population growth just isn’t there anymore I think?
One home sale does not a market make.
Exactly. Houses will keep selling all the way to the bottom. And, the market will never be completely purged of GF’s.
Yes, I’ve been bookmarking houses from Sunnyvale to San Mateo and watched the more attractive ones go inactive rather quickly, while the more run-of-the-mill ones sit for weeks. Earlier this month I put in an offer on a house in a gorgeous setting in Sky Londa but backed out — the foundation has major issues; the house looks poised to slide down the hill.
Last Wednesday a small house in Portola Valley went on the market. There were several offers by Tuesday. Despite my sense that the lower 80% of the market can only go down from here, I don’t see the high end doing that. I took a deep breath and put in what turned out to be the high bid! Financially crazy? Maybe, but I can afford it, and how does one assign “utility value” to a beautiful house in a beautiful place?
dougw, in one of the threads a few days ago there was a discussion on what it would take for us bubble-minded folks to jump in. I think you are the first one, and it looks as if the emotional element of finding a house you like had a lot to do with it. It’s like marriage, you know it comes with a lot of problems, but you have fallen in love…good luck (although I do think the high end will take a hit too, only it will recover before all the other markets). Just hang on tight and ride the storm.
“I’ve been bookmarking houses from Sunnyvale to San Mateo and watched the more attractive ones go inactive rather quickly, while the more run-of-the-mill ones sit for weeks.”
I’m seeing the same thing. A tiny house in downtown Palo Alto—the lot was less than 2000 sq ft and it had no parking, not even a driveway—was listed for $799k and went pending the same week for $950k. There were 12 (TWELVE) offers according to the listing agent.
bubblenews from the Netherlands:
according to todays news, Dutch consumer confidence is at an all time high, and consumers are on a spending spree like never before. The Dutch stockmarket is at a 4-year high as well, up 133% from the 2003 bottom and investor confidence is just as exuberant as consumer confidence. The Dutch housing bubble keeps growing against all odds (the only thing that mattered in the last 5 years or so was easy money). Homeprices are up more than 1000% in some areas compared to 15 years ago, and even unattractive properties in bad areas have posted more than 500% gains. In most other parts of Europe it isn’t any different.
what a difference with these negative US Housing Bubble stories … something has to give, I cannot imagine that the two sides of the ocean will keep going in different directions. After all, it’s all about easy money, and the easy money market is global.
I’m trying to buy a couple of things from an art gallery in the Netherlands. The prices are scandalous.
yes, art is definitely in another bubble caused by all the easy money
There is an upside, which is that somewhere, madly working away behind closed doors out of sight of Sotheby’s buyers or clientelle, the next Van Gogh is creating the next generation’s masterpieces in order to try to capture the last of the art price bubble.
real artists usually die poor, just like Van Gogh … the only artists who thrive in this market are scam artists. As for next generation’s masterpieces, I’m afraid they will be locked up somewhere in a bankers vault. These banksters buy like mad anything that is thought to be ‘art’, real estate is simply too cheap for them (difficult to spend a 75 million bonus on RE, easy to spend it on art).
Here in Amerika,
The plebes revere Thomas Kincaide, painter of light.
Every 137th home has a genuine reproduction, they were able to procure, at a shopping mall, near you.
The fact that people even buy his work astounds me - bleh!
I’d be offended … if it sadly weren’t true. And I think its much higher than 1/137.
Anyone else remember this from a few years ago? The Village, a Thomas Kinkade Community in Northern Cali?
http://dir.salon.com/story/mwt/style/2002/03/18/kinkade_village/index.html
I heard that the really valuable reproductions are the ones where someone else paints the picture and then he paints in the last few highlights himself. That’s why he’s the painter of light.
Buying art from the Netherlands? Are you REALLY a Texan?
well, if it’s ancient art the Netherlands is probably a good place to buy. One of the few countries in the world where you can get filthy rich by selling stolen museum properties etc.
I love those Flemish portraits, they’re magnificent. It’s no wonder people pay fortunes for them.
Actually it’s glass pieces.
They aren’t making any more land in The Netherlands, NHZ.
Oh wait, they are.
In most other parts of Europe it isn’t any different.
In Germany it’s different, much different. Germany has the biggest population and economy in Europe, but the population is declining. Prices are stable for more than 15 years or go down in most areas. In some areas whole villages are abandoned. Churches are sold for luxury home conversions, because there are no people anymore. For example in the City of Berlin, btw the capital with all the government workers, you pay for a nicely renovated apartment $200/sqft.
–
FWC — Power Pay: When the game is rigged in favour of the boss
Boy, am I surprised!
“There has been plenty of misgovernance.”
Misgovernance that has benefited the corporate chieftains at the expense of shareholders is FRAUD. It was deliberate and pre-meditated. Why? Because they could!
With Crooks fully in-charge, America is working itself towards a financial disaster. The ball could get rolling in 2007 with the beginning of the recession. The time bomb has been ticking and it will go off lot more suddenly than most people can imagine. The single most important statistic to watch is the mortgage foreclosures rate in the expensive housing areas like California.
Jas
-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-
http://www.cfo.com/printable/article.cfm/8576191/c_8582887?f=options
Power Pay: When the game is rigged in favour of the boss.
Edward Carr, The Economist
January 24, 2007
Warren Buffett has repeatedly used his “letter” to Berkshire Hathaway’s shareholders to complain about pay. The “boardroom atmosphere almost invariably sedates [directors'] fiduciary genes,” he observed on one occasion. “Collegiality trumps independence.” In 2003, with the scandals of WorldCom and Enron still smouldering, the great investor issued a challenge to directors across the country. “In judging whether corporate America is serious about reforming itself, CEO pay remains the acid test,” he wrote. “To date, the results aren’t encouraging.”
One sign that something is amiss comes from studies that seem to point to a failure of governance. Take research by Marianne Bertrand of the University of Chicago and Sendhil Mullainathan, a Harvard economist. Reasoning that executives should be paid for their own accomplishments but not for sheer good fortune, they investigated whether chief executives were in fact paid for luck.
In the oil industry they found that chief executives’ pay always benefits when the oil price is high, but does not necessarily suffer correspondingly when the price is low. Across a large collection of companies, they looked at the effect of changes over which managers have no control, such as shifts in exchange rates. They found that the typical firm rewards its chief executive as much for luck as it does for good performance. The effect cannot be explained simply by the increase in the value of managers’ share options: it also shows up in their base salaries and bonuses, which are directly controlled by boards. Revealingly, the rewards for luck were smaller in companies that were judged to be well governed.
The most compelling evidence that governance matters comes from putting aside the abstractions of economists and examining what really happens inside companies. The way that new chief executives are hired, studied in forensic detail by Rakesh Khurana, a professor at Harvard Business School, is especially flawed.
Can You Keep a Secret?
For a start, information flows poorly, because both buyer and seller are at high risk from leaks. The executive does not want to let his employer know that he has been talking to another company — probably a competitor — until the deal is done. The hiring company is scarcely less comfortable. It does not want the identities of its favoured candidates to be known because it might end up hiring someone who is obviously the second or third choice.
…
http://www.brokeruniverse.com/grapevine/thread/?thread=351756
“MANDALAY MORTGAGE….. DONE!!!!! ANOTHER ONE BITES THE DUST… WHO’S NEXT?”
don’t forget:
http://ml-implode.com/
The Mortgage Lender Implode-O-Meter is the best. 14 lenders have bit the dust. All the big firms are shutting down the sub prime business. Maybe all these idiots are finally realizing it does not make sense to lend $750,000 on a $500,000 house that will be worth $350,000 in 2009. At the rate they are failing, http://www.paladinreports.com will be a short lived venture.
I cannot wait for your site to be up and operational paladin.
One thing, can you increase the size of the font. That font is very small. I can read it, but I don’t know if others will be able to read it.
Colo, yes we have had several comments suggesting that and we will be doing that. Just keep collecting data to submit. Hopefully we will be up shortly with the database. It is a bit complicated, because we want to show the total “suspected” fraud the contributors have uncovered with each entry.
Fun, but a great deal of work. My family thinks I am “unbalanced” about this, so I am going to take a few days off again and play with the kids and the sweetheart.
Paladin
Use FireFox as your browser and you can have any font size you like (ctrl + = larger, ctrl - = smaller). Oh, and it’s safer than Microsoft Exploiter.
Paladin.
Besides your correct reasoning it didn’t make sense lending someone $500,000 to buy a house when they make $12 an hour either. I’m still trying to work out (outside of it being out of control greed) how this could have happened without somebody with authority shouting, “Whoa! Let stop for a moment and figure this out!” It’s so far out of the realm of common sense or good business practise I just don’t get it.
Someone, maybe Mark Twain, said, “There are none so blind as those whose paycheck depends on not seeing reality”….or something like that. Stucco…what is the actual quote and author?
Paladin I had to squint to read the text on your temporary page. Hope the final draft uses a friendlier font size and colors. Your site purpose is to important not to make it “eye” friendly.
Yes, see reply to colomountains, above.
And thank you, ISoldEarly. Part of what keeps me going is the participation by people like you and the submissions of suspected fraud we are getting on e-mail.
Paladin
Paladin:
Do you accept cash? I would like to send $20 in the mail. If it gets lost not big deal.
Do you open the mail?
The mail is opened by someone I trust.
And thank you SimiWatch. It is a generous act and very supportive.
Paladin
“The Mortgage Lender Implode-O-Meter is the best. 14 lenders have bit the dust.”
Make that 15 as of this morning. They’re dropping very fast.
The meter showed 16 5 minutes ago.
Beazer reports this morning:
“Beazer Homes Slides to 1Q Loss on Lower Revenue, Hefty Writedowns and Other Charges ”
“yet to see any meaningful evidence of a sustainable recovery in the housing market” - BZH
http://biz.yahoo.com/ap/070125/earns_beazer_homes.html?.v=3
We see no improvement in the housing climate, but we foresee a profit next year. WTF?!
Well it’s ripe to be recommended by Goldman Sachs and Cramer.
Updated story on TWIN 31 story towers:
http://www.bakersfield.com/619/story/96206.html
And the local discussion (actually bearish):
http://people.bakersfield.com/home/Blog/tomz911/3736
This is the best comment:
As far as ever wanting to live in the ‘towers’, I’ll pass, I was never fond of dwelling with 100s of other people. But I do hope it goes up and goes up quick so as to further flood the housing market.
Since the AgentsIDon’tWant are here…I remember David telling me a year ago that if I didn’t buy a house right away I’d never be able to afford one today…glad I didn’t buy into the hype, I think I’ll wait a bit longer…You guys should be jailed for driving this market to unsustainable levels they were at and (per the new foreclosure #s)for ruining peoples lives.
By the way, how many homes do you folks own these days? Are those liar loans catching up with you? When will you realize that you’ll never get your insane asking prices?
Thieves!
31-story condos in Bakersfield is only slightly less sensical than condomania in Galveston.
http://www.sellinggalveston.com/index.php?n=4&sn=14&article_id=81
Developers usually do not buy at sites they have helped create, but Richard Anderson says, “I’ve never done it before because I don’t think it’s a good practice to own in your own community, but in this particular case, I broke the rule,”
Sounds like some kool-aid drinking to me!
Who will be left? My mortgage friend thought all those exotic loans she did were”GOOD BUSINESS”. By selling these products she felt she was setting up future business when the customers had to refinance. Problem is, she didn’t see that these exotic loans helped people who otherwise couldn’t buy the home and therefore probably wouldn’t have the money(or the home) to refinance when the time came.
Oops, meant to reply to Frank.
–
“she did were”GOOD BUSINESS”. ”
Yes, goos business for her. Now, she must get into foreclosures business and then into bankruptcy business…
There is no end to making money by first screwing people and then from the clean up operations.
Let us hope that she can protect herself from some wacko that she screwed.
Jas
Jas, you are exactly right. Here is Countrywide, taking another pound of flesh from the home market: Their foreclosure listings. http://www.countrywide.com/purchase/f_reo.asp
Assuming these lists are for the purpose of unloading properties, I hope the lenders spend some time and money improving their foreclosure Web sites, to include individual links with photos and information about the properties and eventually disclosure of the balance owed and what they are asking. Hard to imagine any really good deals in the first year or two of this.
They sure are going to need a proper database to handle the 1000s of listings a couple years from now.
Hey Lizzie,
Nice to see you here on a board that doesn’t have a big nasty troll to give a negative comment to every thought one has.
I have worked in the sub-prime credit card industry for the last number of years. I can tell you that people that fall into this category IMO do not budget, plan or save anything. They simply live for today and next payday.
Your friend was correct in her thinking that she felt she was setting up future business. The problem with her thinking though was the business was not for her and her industry, it was destined for the collection industry.
SKB
Good one. The negative troll was bouncing around on an earlier thread. You must not have seen it. He even went under the name dizzy lizzy for a few posts. He must be bored over there. Ben must make him keep it to a minimum. I feel bad for Jerry that he has ruined his blog!
We are starting up the search to see if there are any bargains out there yet. The realtors are so aggravating! When I tell them I’m representing myself, they tell me by using them I will save my husband and I time and headaches. I’m sorry, but for the thousands of dollars I’ll save, I’ll give up a little time. As far as the headaches, the only thing causing them is listening to the realtors open their mouths!
Good God, that man is such a pain in the a@@. I really think he must be three sheets to the wind all day long.
He must be bored, as I am sure that he is the only one left posting there anymore since he chased everyone away now. He must feel really good about himself for accomplishing this.
The realtors do to seem to understand that the headache portion of what we have lived for the last 5 years is over.
The rest is simply fun for us and we can shop at our leisure when the timing is right.
I wonder how many others on this site will be buying in Florida when we really hit the bottom?
SKB
For those who have access to KABC-TV ch 7 ( Local ABC network
O&O ) in Los Angeles, a special program is scheduled for
6:30pm this Saturday (Jan 27).
Program is titled “Housing Q&A”.
No mention of program contents, but I saw the promo last night
during a report on the 140% increase in LA County foreclosures
during the 4th quarter.
Might be an interesting view to see how the MSM
is handling the bust.
Now if it was on Fox channel it would be huge.
I heard tidbits of this program from Rick Romero this morning. “a more balanced market” stuck in my head…Plan on the usual interviews from the *experts* (Realtor(TM) )to counter any negativity.
Also on the 5 AM news, I heard there was a shooting at a mortgage office. I had to leave and wasn’t able to stay for the full story.
Police Thursday searched for a gunman who shot a man in the stomach at a Woodland Hills mortgage company.
http://cbs2.com/topstories/local_story_025102007.html
FB shoots LO?
The fat lady may be backstage taking a puff from her throat atomizer but she hasn’t sung yet:
“Blackstone raises offer for Equity Office Properties to $54 a share. Full story to follow shortly.”
Remember JDSU buying SDLI for what, $300 a share?
Or buying the business.com domain name for over $7 million? Admittedly much of that was in stock that got diluted so the seller didn’t pocket that much.
“If Equity Office ultimately backs out of its revised deal with Blackstone, the termination fee is now $500 million, up from the original agreement’s $200 million.”
The folks at Blackstone likely are kicking themselves for not negotiating a stiffer break-up fee the first time around. If they had it might well have saved them the more than $2 billion they had to sweeten their offer with. I don’t believe Blackstone ever imagined another bid that would trump theirs.
Sounds alot like the multiple-offer-mania seen in residential real estate circa 2005.
jb
There are still GFs out there
2 of my sorta-coworkers recently bought pre-foreclosures. They were a “deal”.
One coworker did it stupid. He bought a preforeclosure before selling his house (because it was such a deal). I told him to sell his house first, close FIRST then move because the market was slow. I even showed him a local newspaper story about the slow market.
He would have none of that. Well, he bought the preforeclosure (he had to move “fast on the deal because there were a lot of other offers”) and now of course it has all these issues with it. And he can’t sell his old house. Oh well. Of course he played the victim and “how could anyone have known?” so I told him “well, I told you this would happen.”. (we’re not very close. he irritates me). bad karma I know, but it felt good actually.
second person, much nicer person. They have “outgrown” their house (it’s only 4BR 3Ba for two parents and 2 kids… the horror). Thus, the “need” to move. They started looking, I showed her the local paper too. So they went slow. They started noticing that things were getting cheaper. They put an offer on a home with a contingency to sell their own home (after I prodded, yay)… but they couldn’t sell their house, so fell out of escrow.
Then they sold their house and started looking. Found a pre-foreclosure. I told her “be careful”. They closed, and now found out there are $350,000 worth of liens on the home. evidently, the previous owner had 6 mortgages on the house. (my coworker bought the house for $225,000). So now they have lien issues. They do have title insurance, I hope this helps. (I have no idea).
But 6 mortgages on 1 house? totalling $350,000? when the original purchase price of the house was $19,000 in 1969 and last appraised at $275k?
That’s a situation I always wondered about. Anyone here have RE experience to fill us in? What happens when the house you bought — with title insurance — ends up having a bunch of liens with it that pop up on you after the sale?
I would guess that whoever did the title search didn’t do his job right. Or are there ways to hide these liens or make them show up too late for the search to get them? And does title insurance cover it?
Actually it happend to me 3 years ago. I bought and the property had $800 in back taxes that the lawyer missed. I went a couple of months later and picked up the check at the lawyers office . That’s what title insurance is for.
If the foreclosure is for the 1st mortgage, all the other liens are wiped out at the sale. If the foreclosure is on the 5th mortgage (what, did I just write? “5th” mortgage), then all the others (1-4 are still valid). You have to pay them or they can foreclose on you. If there was a title policy (not usually done on the courthouse steps), then the policy should have disclosed the liens. If they did not, then the title company should be liable.
Just one of the issues with moving fast in the foreclosure market.
I predict a rise in the cost of title insurance in the coming years.
“I predict a rise in the cost of title insurance in the coming years.”
Possible, but I can’t think of another industry that has made such outrageous profit relative to the tiny amount of claim money they’ve paid out over the years. We got into this topic in the early days of Ben’s blog.
Here’s a story from Tucson, late 1998: My former landlady bought a foreclosed property at auction on the Pima County Courthouse steps. She had to have the full purchase amount to the title company within 24 hours. And, to add to the fun, she also had to pay off all the liens that had been placed on the property.
I think this will become a huge issue if there is a wave of foreclosures. This week I checked the tax records for two houses I saw for sale over the weekend, and one of them had not paid any taxes in 2006. That made me curious, so I went to Foreclosures.com and checked my zip code. Lo and behold, there were hundreds of liens placed for unpaid taxes. In a quick foreclosure sale, many buyers may overlook this small piece of info and end up being stuck with back taxes on overinflated valuations. What a nightmare.
“I would guess that whoever did the title search didn’t do his job right.”
More like, really REALLY didn’t do his job right. This is almost absurd. The head honchos at the title company are no doubt losing their minds at this point.
Nova, the only way to “hide” a lien is to file it after the initial search. Prudent title companies do a “bring down”, which is a second search a few days before closing.
Thanks all for the clarification. You’d think I’d know this, having actually worked in an attorney’s office back in my teens — doing very basic title searchs of all things!
However, I never saw the later handling of any of the papers. And at the time, as a naive teenager, I had no idea about the process after I handed in my xeroxed data sheets; I mainly cared only about getting enough hourly pay to get that new Foghat LP or fake silk disco shirt.
It’s possible that the previous owner was a serial refinancer and these prior mortgages were paid off but the releases weren’t recorded. That may be why they didn’t show up on the title policy.
Lotsa new foreclosures in Prince William County, VA. They would have been unheard of a year ago. It’s also fun to compare the price to the “Zestimate”.
http://www.foreclosure.com/search/VA_153.html
Type in 91773, under preforeclosures, and the name Jeffrey Quon comes up 7 times. Holy smokes.
I’ll bet that he is a ‘Taco Bell’ manager.
He is Casey Serins half brother by the same mother.
if the feds aever get real DC would implode-easy finding help in fx co now
Is your keyboard broken?
all work and no play makes Johnny a dull boy.
More like: Bad spelling and sloppy grammar make Johnny a confusing boy! (One of the nice things about this blog is the bulk of cogent and readable postings compared to some others out there. Thanks to all who make that happen!)
I’m still trying to get the point about the feds causing an implosion versus Fairfax County (un)employment. Oh never mind! It is not worth pursuing.
Well, I will say in defense of flatffplan,
Government workers in D.C., in general, make way easy money and have excellent retirement and medical benefits. I have a relative who makes 130K a year here in D.C. with a 2-year community college degree. She just moved up the secretarial food chain. Once you’re in, you’re in for good.
But Northern VA has its share of potential weaknesses in the underbelly of its job market. And the housing bubble in the outerlying counties was speculator-driven just like everywhere else.
Does anyone know how the FSBOs (under the FSBO tab), at that site, get there? Seems like an odd place for a seller to run an ad, if it is a pay-to-advertise situation.
Behind the Scenes: Machiavellian Manuveuring
http://wallstreetexaminer.com/blogs/winter/?p=352
“Machiavellian Manuveuring”
That’s the understatement of the thread! Some folks are looking for a Gulf of Tonkin-type provocation to draw an attack by the Iranians, possibly baiting them to attack one of our vessels in the Gulf. Lots of stuff to read in Russ’s post.
The “some folks” sentence was just my thinking, but is tangent to what Russ writes.
I will say first up, the US does not want a military show down with Iran at the moment (at least that is the IC / MIL view). There is no public support for it and the military will need several years to a decade to re-charge after Iraq once we can wind down there (hopefully soon).
Iran may have other plans though, but please remember that through the course of history Persia / Iran have been masters of brinksmanship. They excel at taking it right to the edge and pulling back when the deal is maximaly to their negotiating position.
What has the real Iranian leadership worried this time is that
1) Israel is rehersing nuclear strike
2) The Saudis are busy convincing all the other Sunnis that the Persians MUST be stopped before they can get the bomb, or the infidels (the Shia) will have the upper hand for generations to come.
When you see the Saudis and the Israelis on the same side (though not publicly so), its time to get worried in Tehran.
If you are into bets, look for the US state dept, CIA and DoD to do everything they can to stand in between Israel and Iran. (I know some of you folks will find that hard to swallow).
Was the housing bubble in our country largely as a result of our unability to be competitive, business-wise, in our brave new global world?
Aside from food, precious little is produced in our country anymore and real estate fit us perfectly, especially the building of new homes, as the lion’s share of building a house from the ground up, is that rare bird, something we can do almost in entirety ourselves, w/o those pesky Chinese undercuting us, for once.
I think it is an indirect result of this unability; to keep the party going while actual production is declining, the central banks have to inject ever more money into the market. It’s not just the US, other countries like the UK and Netherlands are also strongly dependent on financial speculation nowadays instead of actual manufacturing. The bigger the financial sector as % of the economy, the bigger the housing bubble.
meanwhile in SWZ house prices are up 20%? in 5 years
a country w a real economy
Switzerland is simply a money center. They maintain a very generous tax structure for the ultra rich be they criminals or those with inherited wealth but in recent years they have tightened up laws to control the “criminal element”. Also it’s very hard to get the Swiss authorities to reveal ANY personal information about anyone banking there. The FBI were once quoted as saying that it’s impossible to get any financial records from Switzerland.
However, one of the big advantages is they do not have a government that is imperialistic and seeks to control other countries under the guise of “Freedom and Democracy” when they are simply out to exploit their resources like oil or cheap labor. Especially if the invading country is running out of oil or their corporations find it’s more profitable to pay a foreign worker $2 a day with no benefits as opposed to paying a local worker $15 an hour plus benefits.
Of course, the CEO’s who practise outsourcing put their multi-million golden parachute pay offs in………guess where?
Sometimes I think Switzerland is the ultimate source of evil. After all, without Switzerland, where would Hitler have put his money? Where would any of the criminals? Would they have the same incentive to cheat and steal if they couldn’t be sure of putting the money somewhere safe?
Just off-the-topics thoughts.
Is there anything I can do to stop this madness? Please help:
BIL #1 (an architect, great guy): Talking about a 300 unit condo development he is designing in Edgewater, NJ. “Everything will sell there, great views of Manhattan, I want to buy one myself. It’s different there”
BIL #2 (business owner, doing well): “I just bought a nice piece of land in Pines Lake (that’s in Wayne, NJ) for $1.2 Mil. Gonna tear the house down and build new, got the builder coming over tomorrow - hoping to keep him below $725K. (That’s about $2MM - in WAYNE, NJ - JESUS CHRIST!!). Me: “Don’t you think that’s a bit excessive for Wayne (superior self-control at this point). BIL #2: “Not at all, those houses on the lake always keep their value….”
My own brother: (love him, a great guy) - “our mother is selling her house, I know you advised her to rent for a while, but she has seen a house in Paignton (in Devon in the remote SW of England) she really loves so she has made an offer on it!! Me: “But that’s preposterous, how much does it cost? Brother: About $500K (converted to US$). Me: “No Fuc*ing way, we are talking about Paignton, for Christskes!!!!” Brother: “Don’t worry, it has great ocean views, those houses always keep their value”. Me: “So, you are telling me it’s different there?” . Brother: “Yep”.
Christ on a bike!! I’m going to live in a cave in Khandahar with OBL for a few years, surely I can’t run into people who are any more stupid!!
My sister and her husband in Tucson, told me a few months ago, that they bought a house in San Diego, becuase it seemed like prices had come down. This is on the heels of them building a house @ Mount Lemon, as well…
What has gotten into the water?
People are buying houses like they were pairs of shoes…
They don’t cost any more than a pair of shoes. You get cash back at closing and payments less than rent.
what do you think you should do ?
better yet, if you just pay the rent of a couple of years, you can pocket $100k in “appreciation”…….That’s what’s happening
My sis just paid $480k for a house that will rent (they hope) for $1800.00 a month. Part of me wants to ask her, why didn’t they just stay at a hotel in San Diego, for a week or 2, when they visit, in lieu of buying a house, but there’s a bigger part of me that says keep yer yap shut. The cow is out of that barn, in a big way.
Hey, I’m looking for a nice house to rent in SD starting next month. I’d pay $1800 so long as they don’t mind a couple old dogs, too.
MRQ-you can’t get a nice house in SD for that price unless you want to live all the way out in El Cajon,Escondido or Vista. Sorry.
well, I heard that even Baghdad has a severe property bubble … nowhere to hide. As for Kkandahar, I guess the few houses still standing are probably also overpriced now compared to local wages.
nhz, lol.
Englishman,
I wish you luck. I told my youngest brother back in April there was an unsustainable bubble-and to read this blog. Did he listen? Nope, bought a house instead. Told me, with the contempt reserved for relatives–”there is no bubble!”. Told older brother buying a multifamily to rent out is not a good plan, unless it’s cash-flow postive immediately–did he listen? Nope. Watched a friend sell her tiny studio in Manhattan for 300k, which she bought for 90K and was nearly paid off, and stretch into a 2 bed, using an IO loan–and now she has been hit with 7k “special assessment” to redo the lobby–and her maintenance has gone up twice!! Even worse, a couple with whom I’m merely friendly are giving up a rent-stabilized apt. in NYC to move to Cold Harbor, buying a SFH for 750K, and a nearly 2 hr. commute. I have nothing to say to anyone anymore on the subject, I keep quiet, nobody wants to be told they’re making a mistake, and not one of them could be bothered to try to read this blog before buying.
I think that a large number of people who believed in or were receptive to the idea of a housing bubble lack the patience to see it through to anywhere near the bottom. These will be the DCB buyers all the way down.
Love the “…with the contempt reserved for relatives…” line. Experienced that when “enlightened” relatives were “making a fortune,” then pulling their stops in the dot-com bust and again when I sold my home and told them the housing sky was about to fall. Strange, that relatives often are more contemptuous of well-intended financial insights than are folks you rarely see.
In the NY metro area, the bubble appears to be still expanding. People who bought against my advice in 2005 tell me their “Zestimates” show them as already way ahead. I look around at the Bakersfields and Sarasotas and they seem to be in a completely different world. I really hope the downturn reaches NY, because it’s the only place I want to live and I’m totally priced out. Doesn’t help that rent is skyrocketing also.
I guess NY is similar to London, UK: so much money is pooring into these cities from bankster/broker salaries and bonuses that at least the average price will keep going up for a long time, thanks to rapidly increasing prices for trophy properties.
But I guess the less attractive properties will be going down with the rest of the country (maybe with some lag) when the bubble bursts.
prices were dipping slightly in queens at the end of 2006; now with the new year everybody’s re-listing at their stubbornly augmenting (5% or more per month) prices. and seems like they are getting them, too. my mailings from propertyshark are still chock-full of sales ranging mid-600s to mid-800s for one-families.
this of course doesn’t change the fact that salaries in nyc are barely increasing 3% yearly and that the average household income is about 60k.
i asked an expert, “how long can this go on?” and was told, “still a while longer.” the consensus is, however, that the longer it goes on, the bigger the bust.
when the cable guy is telling me that he has bought 2 or 3 houses in brooklyn on his salary, i know that doom is just around the corner.
i’m renting a nice place at a reasonable rent. rents in our neighborhood haven’t increased that much since 2000. why should you buy a two-family for 850k when you can still only get $1500 a month for a two-bedroom apartment?
NYC wont pop until one of two things happens.
1.Wall Street pops. Just like after the 1987 crash. Long term, you will see more Wall Street jobs moving out of NYC overseas to London. Eventually we will have a downturn and the layoffs will cause the buble to pop.
2. A major terrorist attack in the US, especially NYC. I’m astonished there have been no Johnny jihadis setting off backpack bombs in Subway tunnels under the East River at rushhour. Or worse, a dirty bomb or low yield nuclear bomb is set off in Midtown. That would not just let the air out of the balloon, but absolutely crush it. Same thing may happen if the Iranians get too frisky with the Israelis, taking out Tel Aviv and Haifa. Israel would lay waste to the rest fo the Mid east, causing mega oil spikes, widepsread destruction, global shock.
Good thing you’re fond of these people at least — good chance they’ll all be living with you in a few years.
Good luck!
Gold up over $650, oil back above $55, 10 year bond up to 4.82……
The stars are aligning. All we need is one or two significant regional/local bank failures, and thecrowd will start to run for th exits.
Buying gold regularly, eventually I could catch a few dips. Bought at the $566 spot price plus commission in the Fall. Bought at the spot price of $609 a couple of weeks ago. People don’t realize that if you buy a little of some investment regularly and it beats inflation in the long run, it’s worthwhile to keep doing it regularly. Easy Street!
Property tax issue
Will county property appraisers keep pace with the fall in property values in a declining market? And how do these value reductions work in states such as Florida were the increases were capped on the way up–are declines capped on the way down?
I know of properties with market values exceeding the appraised value between 2-4 times depending on when the last time the property changed hands i.e. $1M market value with a property tax value of say $350,000. Will we see the same discrepency on the way down i.e. a house with a market value of $350,000 but an appraised value of $1M?
Evidence to date (Florida) seems to imply that the appraisers will chase the value down with a one year lag. This “reset time lag” seems like another great reason why its NOT A GOOD TIME TO BUY especially in high property tax states such as Florida.
Who wants to pay 2% on air to the government each year?
Scratch the above. Ben has a thread up today addressing the above.
I see discussions on how the bank manages the delinquincy, foreclosure, REO’s. But what about all the mortgages, repackaged as MBS’s? I gather the originating lender has some obligations for some period of time, but ultimately how is the shareholder somewhere in Asia going to manage this process.
Perhaps all those ethical mortgage brokers who helped out the not-rich-enough with the creative loans, and recently were laid off, will find new opportunuities in profiting from the mess they helped create?
There’s been lots of chatter in general about housing impacting banking. Here’s a good example.
http://business.mainetoday.com/news/070125tdbank.html
Is it me, or doesn’t “non-performing assets” sound like an oxymoron? In my language, “non-performing assets” are bad loans and, as such, are liabilities.
According to this article, such bad loans amount to a whopping 39% of TD Banknorth’s 2006 net income. ($132.4 million in troubled loans per $339.1 million in net income) Ouch!
I suspect now I know why I was turned down twice for a home equity loan from my “local” TD bank.
I’ve been moving my maturing CD money to higher-rated institutions with less relative mortgage risk, albeit with a .5 - .75% lower yield. Just feels like a time to start hunkering down a bit, though I’m probably early out of that chute.
How are you identifying which places are heavily tied to mortgages?
Existing Home Sales Plummet in 2006.
http://biz.yahoo.com/ap/070125/economy.html?.v=9
Quoted from above link. I still think all the fast money is out of housing and in the stock market.
—————————————————————————-
David Lereah, chief economist for the Realtors, said that even with the December setback, he still believes that sales of existing homes have hit bottom and will start to gradually improve.
He said that in 2005, 40 percent of the market represented purchases of second homes and investors buying homes looking to resell them for quick profits.
He said that speculators had now left the market and that should leave sales at a more sustainable level.
“With fingers and toes crossed, it appears that we have hit bottom in the existing home market,” he said.
The December existing home sales figures are out. Here’s how I’d characterize what they show:
The housing market was like a trauma patient in the summer – suffering from multiple wounds and at death’s doorstep. Since then, a mild decline in interest rates and aggressive price-cutting/incentives from both new and existing home sellers have helped stabilize the patient. But he’s not getting off the gurney and walking out the door, either – not for some time.
I’ve got some more comments on sales, inventories, pricing, the outlook for spring and more at my blog:
http://interestrateroundup.blogspot.com
He said that in 2005, 40 percent of the market represented purchases of second homes and investors buying homes looking to resell them for quick profits.
He said that speculators had now left the market and that should leave sales at a more sustainable level.
“With fingers and toes crossed, it appears that we have hit bottom in the existing home market,” he said
I am glad these “economists” use such technical terms and techniques
Almost fell off my chair this morning when CNBC’s Financial Comedy Show reported the housing numbers. The reporter was quoting the (bad) numbers and then said that, “David Liar of the NAR said about the numbers that home prices of exsisting homes have bottomed out…yada-yada, etc.” Then she said, “Of course you have to take into consideration the realtors spin…” I couldn’t believe my ears! CNBC actually dismissed comments by the NAR as “spin”.
I’ll be really convinced that the CNBC clowns have started to tell the truth when one says, “There’s no doubt that with prices this high, it’s far better to rent than buy…..” However, I’m not going to hold my breath.
That would be the bottom;-)
As if being on the edge of a cliff, playing the real estate market in Los Angeles wasn’t enough…
There is almost no snowpack in The Sierra Nevada, nor in the mountains that feed the Feather River, 2 out of 3 of the water sources for the City of Angels. The 3rd source, The Colorado River, has just been invaded by a new mullosk in Lake Mead and also 14 miles away. The new invader will take a long time to clean up, and apparently leaves the water “tasting funny”.
Mother Nature always bats last~
Even Utah doesn’t have much snow.
And I booked a trip months ago to Alta to ski.
Now I get to go and ski hardpack.
http://www.cbrfc.noaa.gov/snow/station/sweplot/sweplot.cgi?yrList=2006&yrList=2007&yrList=avg&yrList=1992&yrList=2003&stationList=SBDU1&monly=0&tavg=s&hsim=&index=&dbsvr=&indextitle=Untitled
The drought that killed off the Anasazi culture in the Southwest US was 40 years long.
The paralells between what happened to the Anasazi and what will happen to us, are eerily similar…
I recommend “Anasazi America” by David Stuart, a professor @ UNM.
Mother Nature always bats last
So true, Aladinsane, and yet I woke up this morning to see the criminal amounts of water people waste sprinkling their precious lawns in LA (and half of it drains down the sidewalk because they don’t even bother to point the sprinklers in the right direction). Some days I think I have it in me to become a water vigilante.
Mother Nature always bats last
So true, Aladinsane, and yet I woke up this morning to see the criminal amounts of water people waste sprinkling their precious lawns in LA (and half of it drains down the sidewalk because they don’t even bother to point the sprinklers in the right direction). Some days I think I have it in me to become a water vigilante.
I am just finishing up Collapse by Jared Diamond and he has a chapter or two on them.
I had a couple of college profs that were big into dendochronology.
TIMBERRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR;
http://www.marketwatch.com/tools/quotes/quotes.asp?symb=CFHI
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CFHI6.39, -1.65, -20.5%) shares tumbled 20% to $6.42 in Thursday morning trade after the Bradenton, Fla.-based company late Wednesday said it has engaged Sandler O’Neill & Partners L.P. to advise it as the company reviews strategic alternatives. James Toomey, the company’s chairman, said all options would be on the table during the review
Coast has been dropping about 20% per day over the past five days. Interesting that it didn’t do an immediate implosion but went down in steps. Something to think about when planning the “down draft” tactics. It may not be necessary to catch the market top to make some pretty good money on the downside.
The tricky thing is that with such great accounting these days, corporate share prices have a habit of persistently climbing a wall of worry until the day they start dropping 20% a day to the basement. You have to be at the right place at the right time for your puts to pay off.
TXCHICK- got any action on this one?
Davos notes:
Ms. Merkel said proposals to shed more light on hedge funds’ operations would be a priority for her leadership of the Group of Eight industrial nations this year. “We want to minimize the systemic risks in international capital markets and to raise their transparency — above all, I see the need to catch up with hedge funds”
So who has the greatest power to rock the status quo?
“I bet this audience that one of the U.S. presidential candidates will fall because of the work of a single blogger’’ who uncovers damning information and spreads it through the Net. “That is the bloggers’ power.” Timothy Garton Ash, professor of European studies at Oxford University
Robert Shiller, a Yale economics professor, said: “We need mechanisms to adjust tax systems so that they become more progressive if inequality gets worse.
“There are people left behind [by globalisation]. We need to take steps now to design a plan so that if inequality gets worse, governments raise taxes on the wealthy. It’s got to be that way.”
Stephen Roach, chief economist at Morgan Stanley, said there were signs that inequality was leading to political shifts. “Look at the shares of national income in the major economies of the developed world. The share going to labour is at historic lows; the share going to capital is at historic highs.
“The [political] pendulum is moving left towards politicians more in favour of pro-labour economic policies. There is potential for a shift in the relationship between labour and capital.”
So who has the greatest power to rock the status quo?
“I bet this audience that one of the U.S. presidential candidates will fall because of the work of a single blogger’’ who uncovers damning information and spreads it through the Net. “That is the bloggers’ power.” Timothy Garton Ash, professor of European studies at Oxford University”
Any idea who the blogger is and who the candidate is?
Ben is the blogger, and the candidate is whichever one proclaims most loudly that a soft landing is on the way for the housing market.
“and the candidate is whichever one proclaims most loudly that a soft landing is on the way for the housing market.”
I doubt if any candidate will say anything about the upcoming real estate collapse. There are more important issues. So far it’s been a soft landing in most places, but could spike down this year by 12%, next year by 10% and in 2009 by 13%. Try political issues. I could go into details and I have a terrible political grudge tonight, but due to respect for Ben’s blog, I will stifle myself.
Last April, two houses in our development went on the market for $750 and $725. The $750 house was priced right and sold in one week. The $725 house sat until Christmas when it was taken off the market. By that time it had been dropped to $699 and then to $675.
Well, after about three weeks off the market, it’s back on and guess what the listing price is: $725.
It’s with a new brokerage and it sure smells like they “bought the listing”.
Obviously the sellers must believe the Spring will come to their rescue and also that people who saw the price drop to $675 have amnesia. Even if there are new buyers in the market, rest assured the agents will be recounting the price history to anyone who will listen.
Here’s one I’ve not seen until now…a shirt proclaiming “$10,000 in debt…but damn, I look good”. Should we make our own that say “Hell no I won’t buy your overpriced house”?
Oops, forgot the link.
http://www.uneetee.com
It should say $100,000 in debt. $10,000 in debt is nothing these days.
And from Stephen Roach:
“…A backlash is at hand. The pendulum of economic power, which has swung to excess in favor of capital, is about to swing back in a pro-labour direction. Workers lack the bargaining power to execute this change themselves. Instead, they are exercising their power at the polling booth and demanding action from their elected representatives. The result has been a comparable swing in the political pendulum from the Right to the Left — in the US, France, Germany, Italy, Spain, Japan and even Australia.
Led by Democrats for the first time since 1993, the new US Congress has already put down a pro-labour marker — a 41 per cent increase in the minimum wage. Look for further actions emanating from Washington along this same general theme — namely, increased taxes on the energy industry, scrutiny of executive compensation and intensified China-bashing. Similar pro-labour initiatives are likely to take root elsewhere in the developed world.
Financial markets are unprepared for this sea change. As real wages rise in response, corporate profits and equity markets could come under pressure. With cost pressures mounting and protectionism on the rise, inflation could also begin to rise, posing a serious problem for bond and ever-frothy credit markets. And, as globalisation gives way to localisation, the dollar could finally come under assault as America’s lenders seek a safer haven for their huge stash of foreign-exchange reserves. It is as if the film of the past 15 years is about to run in reverse. ” as reported in Timesonline
http://tinyurl.com/399zho
and from China:
“China plans to increase imports rather than allow a freely floating yuan to narrow its trade surplus and curb growth in its ballooning foreign exchange reserves, a top lawmaker said.
“We are going to import more from overseas,” mainly consumer goods and commodities, to address currency concerns, Cheng Siwei, vice chairman of the National People’s Congress, said today at the annual meeting of the World Economic Forum in Davos, Switzerland. China isn’t ready to free its currency “at once,” Cheng said. …
“In pure economic theory, the yuan should be stronger, but we don’t live in a purely theoretical world,” William McDonough, vice chairman of Merrill Lynch & Co. and former president of the Federal Reserve Bank of New York. A freely traded yuan “would be a brutal hit to a financial system that isn’t ready for it.” Bloomberg
http://tinyurl.com/2jpt7u
I just finished reading the blog comments from yesterdays section entitled “Everybody understands that the market has softened”. I would like to nominate the following for blog comment of the year”
Comment by CA Guy
2007-01-24 14:11:52
Two things I am sick and tired of hearing in the media:
‘They have good jobs but they bought over their heads, buying into the American dream.’”
“…..first-time buyers who were forced to settle for mortgages with riskier terms.”
Goddamnit! Enough with these “American Dream” propaganda sob stories. The American dream is about life, liberty, and the pursuit of happiness. It is not about anyone’s right or desire for a huge stucco box. No one is forcing anyone to take out these risky loans! If you can’t afford an ammortizing loan, then don’t buy! There is nothing wrong with renting until you can afford it. In buying into “the dream” these people only contribute to the problem of high housing costs. Anyone who thinks they were “forced” into the “American Dream” (whatever that means), is an absolute idiot. From Pennsylvania Avenue right down to small town Main Street, this country has lost its collective good sense and all personal accountability. One of my h.s. teachers used to say “The only thing you have to do in life is die. Everything else is a choice, so choose wisely.” If you chose to buy a $600K house with a $75K familiy income, then you chose poorly and will now suffer the consequences. Why am I so ticked off? Because when so many clowns start making the same foolish choices then it usually winds up screwing everyone. So if my day ever comes where I am in a position to buy out some overleveraged flopper for pennies on the dollar, I will do it gladly with no remorse or sympathy. There, I feel a little better now!
http://ml-implode.com/
sub-prime lender implosions up to 15 today not including Coast Financial.
I realized that there are now 4 vacancies at the Fed with Moskow retiring and that the one vacant for a year has not yet been filled or an appointment suggested. Retiring or retired are Michael H. Moskow; Cathy Minehan; Jack Guynn (Oct, 2006). Is this akin to the rats abandoning the ship?
This is a quote from the Cali foreclosure article
“On primary mortgages, homeowners were a median five months behind on their payments when the lender started the default process. The borrowers owed a median $10,555 on a median $324,000 mortgage.”
What happens financially to these people. They default on their loan and the house is foreclosed. Are they responsible for the debt? Or, are they responsible for the debt remaining after the bank sells it?
How about it the person files for bankruptcy? Are the new laws written so that they are still responsible for outstanding debt?
Could someone take me through a case of foreclosure and bankruptcy?
You have covered quite a few issues. First off, there are two types of loans in CA: non-recourse and recourse. Generally the purchase money is non-recourse, meaning the borrowers can walk away. However, if they have refi’d or HELOC’d, then they are on the hook for the money.
New BK laws do make it a bit harder to wipe away debts, generally most people will have to file reorg BK and make a payment plan. Another consideration is whether or not flippers and/or lanlords lied on the loan apps and checked the owner-occupied box. If they did then all bets are off and they will still be on the hook for the loan, BK won’t help due to the loan fraud.
Finally, there is the issue of the 1099-C they may receive if the lender forgives the debt. The IRS will want some tax on that money at normal income tax rates. Some have argued that the borrowers can simply plead insolvency, but if the IRS can prove fraudulent conveyance (meaning the borrowers refi’d or HELOC’s then took the money and spent knowing they couldn’t pay back) then the IRS can enforce the tax and start selling off the borrowers stuff to pay the tax. This would be especially true in cases of loan fraud. So i am not sure that insolvent borrowers can get out of the debt forgiveness tax that easily.
I think the next few years will yield quite a bit of case law regarding the above issues.
Thanks very much for the explanation.
State mortgage default rates at eight-year high, firm says
By Emmet Pierce
UNION-TRIBUNE STAFF WRITER
January 25, 2007
Home mortgage loans throughout California went into default last quarter at the highest rate in more than eight years, the DataQuick Information Systems research firm reported yesterday.
* Graphic: Notices of residential default statewide
* Sales of existing homes plunge by largest amount in 17 years
Lenders sent notices of default, the first step in the foreclosure process, to 37,273 homeowners during the fourth quarter. It was a rise of nearly 37 percent from the previous quarter and an increase of 145 percent from the fourth quarter of 2005, said DataQuick analyst John Karevoll.
Foreclosure sales on California homes totaled 6,078 during the final quarter of 2006, up nearly 77 percent from the previous quarter and up 595 percent from the last quarter of 2005, he said. About 32 percent of homeowners who found themselves in default earlier last year actually lost their homes in the October-to-December period. A year ago, the figure was 8 percent.
The sharp rise in distressed properties “definitely reflects a softening trend in the housing market,” said Union Bank senior economist Keitaro Matsuda. “The percentage growth looks dramatic because housing demand a year ago was relatively strong. It does not necessarily reflect a housing market crisis.”
http://www.signonsandiego.com/news/business/20070125-9999-1b25default.html
Housing Glut Gives Buyers Upper Hand
By James R. Hagerty and Ruth Simon
Word Count: 1,986 | Companies Featured in This Article: D.R. Horton, Bank of America, Credit Suisse Group
Amid a continuing glut of homes for sale in most of the country, buyers should have plenty of choices and lots of bargaining power in the spring selling season — typically the busiest time of the year.
Many builders and real-estate brokers, for their part, hope the housing market will start recovering this year as buyers respond to price cuts and other sweeteners offered by increasingly nervous sellers. In some markets, agents say, buyer traffic has picked up in the last month or two.
But any recovery is likely to be gradual. Donald Tomnitz, chief executive officer of D.R. Horton …
http://users1.wsj.com/lmda/do/checkLogin?mg=wsj-users1&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB116969145644087124.html%3Fmod%3Dtodays_us_nonsub_pj
Bond market is crashing, with higher mortgage rates to follow soon…
http://www.bloomberg.com/markets/rates/index.html
Aren’t red and green Christmas colors? Let’s get on with the New Year, already…
http://www.marketwatch.com/tools/marketsummary/
The data just rejected my null hypothesis that the PPT intervenes to prevent losses over 100 pts in one day. Of course, there is still 54 minutes for them to restore my former position…
“100 pts on the DJIA”
Please. Try 500 points.
“Please. Try 500 points.”
Why would they tie their hands, when full discretion is so tantalizing?
Evidence of New Year’s helicopter drops?
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=GC07J&sid=2011166&freq=1&time=1mo
Sickening. Note the location.
http://www.saveakat.com/
Be interesting to know just how much $ ’saveakat’ has collected, if her situation is as described, and just how dire her situation actually is. A modern day version of “got any spare change?”
Florida Realtors’ December & year-end results were just released. December sales down 28%, prices down 2%. Don’t forget that Naples is no longer releasing their results, or it might be even worse (although only slightly).
http://media.living.net/statistics/statisticsfull.htm
Sacramento Area Foreclosures Explode: Up 1,273% YOY
Yes, that’s a year over year increase of One thousand two hundred seventy three percent!!!
http://sacramentolanding.blogspot.com/2007/01/foreclosures-explode-sacramento-region.html
Local observation from the Antelope Valley - KB just dropped its starting prices from $319K to $279K for a subdivision in Palmdale; other new starter homes (1500 SF) are expected to be priced the same. This is a rather big deal since it’s the first moderate price cut I’ve seen since the slowdown started a year ago. Most resales are in the low 300K range still, and this is sure to put pressure on the resale market. I expect resales to head toward the low 200K range soon - I don’t think people can hold out that long or find enough renters.
Here’s an email I received from a ZipRealty realtor (in Mass) yesterday:
“The best time to buy is now, for several reasons:
A. Interest rates are low
B. A good inventory of homes is available
C. Prices have stabilized and are starting to rise
D. The future of the housing market and the economy is positive
E. Housing is a great investment, with average home valuations increasing 88 percent in the last 10 years
I look forward to helping you when you are ready!”
I must have missed the news about rising prices. And somebody should tell the homebuilders that the future of the housing market is positive. They are apparently looking at different data than the realtors. She’s right about the good inventory though.
Proposed house in Montana to be priced at $155 million:
http://today.reuters.com/news/articlenews.aspx?type=domesticNews&storyid=2007-01-25T211639Z_01_N25460726_RTRUKOC_0_US-LIFE-HOME.xml&src=rss&rpc=22
How about some “analysis” from the Times in London…
“But as 2007 gets under way, that soft landing for the US economy everyone said couldn’t happen is clearly in sight.
There were two main sets of worriers a year ago. One said recession was imminent. The other said it was merely deferred. The first group cited the bursting of the housing bubble and a dollar collapse as the reasons US growth would turn negative. The second said inflation was spiralling out of control and the Fed would be forced to raise interest rates much more sharply than it had already, and then the economy would drop into recession.
So far, the housing collapse has not materialised. Residential construction spending has fallen sharply in the past year, and Fed officials acknowledge that activity in the housing sector will be a drag on GDP growth for the whole of 2007.
…Since house price increases are assumed to have been a key factor behind strong consumer spending growth over the past five years, a decline in prices was expected to lead to a retrenchment. But — again, so far — house prices have declined only a little nationwide. More importantly, new research suggests that, when prices were rising, consumers did not spend anything like as much of their housing wealth as was previously believed. As a result, they are unlikely to cut back sharply.”
http://business.timesonline.co.uk/article/0,,8210-2548673,00.html