“Price Declines Show No Sign Of Slowing Down”
Some housing bubble reports from Wall Street. “Countrywide Financial Corp. said the U.S. housing slowdown caused fourth-quarter profit to decline 3 percent, and projected 2007 earnings that fall short of most analysts’ forecasts. The largest U.S. mortgage lender said it expects a ‘challenging’ 2007 as loan demand and margins fall and homeowners miss more payments.”
“CEO Angelo Mozilo said 2007 ‘will likely be the trough year of the current housing cycle,’ but that Countrywide may benefit as weaker lenders exit the market. He also said Countrywide has ‘made progress’ in plans announced in October to lay off more than 2,500 employees to help slash annual costs by more than $500 million.”
From MarketWatch. “Looking to 2007, Countrywide said it expects continued pressure on margins as mortgage origination volumes decline. The Calabasas, Calif.-based company’s also preparing for increased borrower delinquencies and continued credit deterioration. ‘The company believes the industry will experience continued pressure on volumes, margins and housing prices, as well as increased defaults and foreclosures,’ Countrywide said.”
“The company missed its loan servicing target by about $200 million because of a residual write down of $74 million, higher than forecasted hedge losses of $44 million and steeper than forecast amortization expense (realization of cash flows) of $94 million.”
The New Zealand Herald. “A town of less than 800 people is set to lose 99 jobs, after a sawmilling company announced yesterday it would close. The United States-owned mill focuses on producing housing materials for the American market.”
“Mill site manager John Crane said the company’s hand had been forced. ‘It is just a fact that the market has caved in, in the States, and the higher dollar has translated to lower US dollar receipts,’ he said.”
The Associated Press. “Building supplies company USG Corp. said Monday an expected drop in new housing construction will dampen 2007 earnings. USG, which supplies homebuilders with gypsum wallboard, rode the housing boom that peaked in 2005 to big profits last year, but demand has eroded as the housing market remains flush with a glut of unsold inventory.”
“‘The drop in housing starts will further reduce wallboard demand from the near-record levels achieved in 2006,’ the company said. ‘It is too early to determine where demand levels will find a firm foundation or how our competitors will respond to the current imbalance between supply and demand.’”
“Subprime mortgage lender Fremont Investment and Loan on Monday said it severed ties last quarter with some 8,000 brokers whose loans were responsible for some of the highest delinquency rates in the industry.”
“Such moves to improve loan quality have helped trim the number of early defaults on Fremont mortgages to a 3 percent rate from almost 6 percent in mid-2006, (said) Mike Koch, a Fremont VP. The so-called early payment defaults were close to 1 percent in 2005.”
“The brokers ‘released’ were ‘highly correlated’ to the sudden rise in defaults on Fremont loans, he said in response to questions from investors.”
“A surge in defaults across the industry from low levels in 2003-2005 came as subprime underwriters loosened standards to help maintain volume in a shrinking market. The loans, most destined for the $575 billion home-equity, asset-backed bond market, are being returned by investors at an alarming pace.”
“Koch was reluctant to call the brokers ‘bad’ because some may have simply specialized in loans that Fremont has cut back on, such as eighty-twenty loans. However, some of the brokers were ‘pushing appraisals’ to make a home appear more valuable, he said.”
From Broker Universe. “If there is one lesson that mortgage brokers can take away from the SourceMedia Mortgage Fraud Conference is that they will be under greater scrutiny from their wholesale investors in this area. Part of this is just a natural consequence of the numbers.”
“Fraud losses topped $1 billion in 2005, noted Jeffrey Taylor, the managing director of Digital Risk LLC. He quoted data from the Federal Bureau of Investigation, which showed 80% involves collusion by industry insiders.”
“A pair of panels encouraged mortgage lenders to go after parties through the legal system to recover monetary damages for mortgage fraud.”
“There are a number of potential legal causes for lenders to go after any third party in the transaction, including unjust enrichment, said Bob Simpson, the president of IMARC. ‘If you are not doing anything to recover that loss, you are letting them get away with it,’ he said.”
“The number of vacant homes waiting to be sold surged 34% to 2.1 million at the end of 2006 compared with the end of 2005, by far the fastest increase ever recorded, the Census Bureau reported Monday.”
“A year ago, 1.57 million homes were vacant and awaiting a sale. The vacancy rate for owned units jumped to a record 2.7% from 2.0% a year earlier. From 1965 to 2005, the homeowner vacancy rate had never been above 2%. The long-term average is 1.4%.”
“‘We have more than a million housing units of excess supply,’ said James O’Sullivan, an economist for UBS. ‘If you are looking for evidence that the worst is over for housing, you’re not going to find it in this report. This argues that housing starts need to go down more.’”
“Home-price appreciation weakened to its slowest pace in more than 10 years in the 12 months ending in November, MacroMarkets and Standard & Poor’s reported Tuesday. Home prices fell in 17 of 20 cities in November compared with October.”
“The last time prices were rising so slowly was in late 1996, at the end of a six-year period of flat or falling prices. A year ago, home prices were rising about 16% year-over year.”
“‘Countrywide, home-price declines appear to show no signs of slowing down,’ said Robert Shiller, chief economist for MacroMarkets, in a press release.”
We are moving this site to a better platform. There will be some glitches over the next couple of days and it will be running slower until the change is complete, due to some database reworking. Sorry for the delays.
Upgrades must be working - it’s smoking fast right now!
The delays will only be temporary, and then we should be set, with the new server and security measures.
Any word if the Denial of Service attacks were REIC related or just cyber punks?
Probably spammers.
The Russians are mastering the SPAM trade with their botnets.
Had me worried there, Ben. I was thinking that maybe-just-maybe, the REIC grew some brains and figured out how to disable your server.
Trust me, they have the brains, which is why they realize making a martyr out of Mr Jones would only compound their problems.
I agree, that’s one reason I’ve never worried about it.
Didn’t we just see a $1 billion fraud in North County San Diego alone in 2006?
“Fraud losses topped $1 billion in 2005, noted Jeffrey Taylor
A where was the MSM in 2005 and 2006? I’m sure they were all flipping some property somewhere and didn’t want to rock the apple cart.
1$ billion is a too conservative number. Probably 3$ billion.
In Temecula/Murrieta they are reporting a $1.3B fraud alone.
For those of you not familiar Temecula/Murrieta is a third, maybe fourth tier suburb of LA & San Diego.
Yes, both metros, it is about equi-distant to both.
For reasons I previously posted, I continue to believe they are two to three orders of magnitude off.
A client and I were at dinner recently and we were randomly paired with a Sr. V.P. for an NY company which securitizes sub prime loans. We had a lively discussion. His company acquires sub prime loans wholesale, scrubs out the “bad” ones (and they get most of them), based on credit, fraud appraisers, etc. They have a good reputation in the industry for their analysis and culling the most marginal stuff. He was, of course, aware of the sub prime “melt down” in some of the RMBS pools, which is where the conversation started. I told him all about http://www.paladinreports.com and he was quite interested. He seemed surprised a “man on the street” could be so aware and active in the same issues he is facing in the industry. He knew of Ben’s blog and was sure analysts logged in from time to time to get “street level” views of the industry. We talked intensely for about an hour after dinner, too.
I must admit, the biggest problem he has is getting new product to securitize!!! Strange, yes? There are so many investors chasing yield, they are basically ignoring (or in denial about) risk. He could easily sell 10 times the pool volume they do now.
One of this person’s problems is the NY Wall Street Houses are buying the sub prime originators, which cuts into his business as a third party securitization firm. Of course, that is risky for Wall Street too, as proven by Merrill losing $100 million on their purchase of Ownit (exclusive of Merrill’s loan loses.) The Wall Street firms have little idea of the skill needed to grade the product and just waive it in. This is the value he brings to the business.
It seems to me the best we can hope for is the sub prime lenders will get real underwriting and income/credit verification and require down payments. This will stop the fraudulent cash out acquisitions which has been running up prices and comps. New sub prime borrowers will be paying 10% interest or more and have to actually qualify for the loan payment at these rates. This will drastically shrink the pool of greater fools and end the “empowered” drunken bidding these sub prime borrowers have been exhibiting in the market place.
Paladin
Have Gun Will Travel
Great Report!
“I must admit, the biggest problem he has is getting new product to securitize!!! Strange, yes? There are so many investors chasing yield, they are basically ignoring (or in denial about) risk. He could easily sell 10 times the pool volume they do now.”
The problem from my layman’s view is that there is too much separation between what is being bought and who is buying it. All the buyers know is what is on paper and as long as the numbers look good then they buy. Also I bet that a lot of the buyers are betting that if things go bad they can dump the paper on someone else but if everyone starts dumping then things will go real bad. I also bet that there is too much money(credit) out there and it has to go somewhere so they buy something that looks like it has some real tangible value, real estate
Graspeer,
You are correct and he almost admitted as much. This tranching of risk levels, grading of credit, LTV, & markets is all so much hocus-pocus. They and the investors are all playing mind games with themselves. It is somewhat a follow the herd mentallity and they are playing with other peoples money (”OPM”). When it starts to unravel, as it may, it will be real interesting to see who gets stuck!
I oughta be able to make some kind of advertisement out of the fact that I lend only MOM.
Paladin:
I believe in an earlier post you mentioned a way to donate via snail mail. I don’t remember how to do that. Can you post again?
Dummy finance person Novasold doesn’t understand what you mean by this:
must admit, the biggest problem he has is getting new product to securitize!!! Strange, yes? There are so many investors chasing yield, they are basically ignoring (or in denial about) risk. He could easily sell 10 times the pool volume they do now.
What does that mean to the dummy layperson?
Good luck with your site.
Nova, In today’s environment, there are not a lot of places to invest where you can make double digit yields (10% +). Sub prime investing offers those yields on the surface. No investor cared that loans exceeded value, borrowers FICO credit score was 500 to 600 (good is 700+), or that a borrower’s qualifying income was made up….because lending a GF $500,000 did not matter if the $500,000 loan was secured by a house worth $600,000 the next year. Foreclose, sell and maintain the yield.
The new investment reality, in a market filled with loan fraud finds the lenders issuing $750,000 loans against houses with a $500,000 value (and dropping). The investors buying the loans get stuck with a first payment mortgage default and stand to lose $250,000 or more. The originating mortgage broker is suppose to buy the loan back if it defaults in the first 12 months, but they have no assets and “buy backs” easily exceed their total net worth, so they fold and go BK. Thus, the “ignored risk” of a sub prime investor results no 10%+ return, and a 33% loss in principal. That is what is finally ending the loose sub prime lending.
Sometimes it really IS like watching a slow motion train wreck. But of course it’s a great time to buy OR sell….
It is amazing how since the New Year most companies involved the the RE industry are reporting some very bad results and outlooks. It does make you stop and wonder just how bad this is going to really get. For me, I figure that whatever they forcast it will end up being worse. That is not good!!!
Lereah is getting bad press!!!
: “Here’s what Lereah was saying throughout 2006 and into 2007, and what the market was doing:”
January 2006
Lereah’s forecast: “The market is in the process of normalization.”
Actual sales: Fourth-quarter sales fell at an annual rate of 12.6% to 6.94 million annualized.
Lereah’s post-mortem: “The level of home sales activity is now at a sustainable level, and is likely to pick up a bit in the months ahead.”
April 2006
Lereah’s forecast: “Home sales will move up and down somewhat over the remainder of the year but stay at a high plateau.”
Actual sales: First-quarter sales fell at an annual rate of 8.6% to 6.79 million.
Lereah’s post-mortem: “This is additional evidence that we’re experiencing a soft landing.”
July 2006
Lereah’s forecast: “The market should even out just below present levels.”
Actual sales: Second-quarter sales fell at an annual rate of 6% to 6.69 million.
Lereah’s post-mortem: “The market is stabilizing.”
October 2006
Lereah’s forecast: “We expect sales activity to pick up early next year.”
Actual sales: Third-quarter sales fell at an annual rate of 22.2% to 6.28 million.
Lereah’s post-mortem: “This is likely the trough in sales.”
January 2007
Lereah’s forecast: “The good news is that the steady improvement in sales will support price appreciation moving forward.”
Actual sales: Fourth-quarter sales fell at an annual rate of 2.3% to 6.24 million.
Lereah’s post-mortem: “It appears we have established a bottom.”
Credit where Credit is due.
The Big Picture by Barry Ritholtz
http://bigpicture.typepad.com/comments/2007/01/pundit_pileon_n.html#comments
Didn’t NINA make a killing (Not) in Temecula or close to it?
Seattle Renter- my favorite is still “It’s like watching a snail crawl towards a buzzsaw”. Don’t remember who said that.
However, the past few weeks, it feels like that snail is finally getting very close to that first painful nick in the shell.
I deposited the proceeds from the sale of my house into Fremont Investment and Loan because they were paying above-average interest on deposit accounts. No idea they were using the money for funny money loans. It’s time to close the account.
There will be a lot of people who realize that in the future.
Was that account federally insured? In other words, is Fremont Investment and Loan a bank or S&L?
FDIC Insured:
Fremont Investment & Loan
2727 East Imperial Highway
Brea,CA 92821
FDIC Certificate #: 25653
So no worries. If they fold, you’ll get your money back.
In six to eight months. After much paperwork. :-O
Unless you deposited more than $100K.
It’s $200k on a joint account.
500k in one account would only be good if you do a Family Trust with 5 in your family.
No more worries here. Closed the account during lunch break (it was over $500K). Those bastards.
If you gotta get off the boat, it’s best to be first.
Now multiply what you just did by, oh, say, everyone who has a lick of sense. Will Fremont survive?
Those bastards have protection.
Don’t panic. But if you do panic first.
I would suggest moving your funds to Farmers & Merchants of Long Beach. They are very conservative to the point that the feds have come down on them for discrimination, when it was really just show they have high standards.
If we see alot banks start going under, bank like F&M will weather the storm while everyone else is waiting for their govt check. An older friend told me that during a period of the S&L bust some of the good lenders/banks quit taking new customers. Wouldnt that be funny a bank trying to avoid taking in new customers because of their liabilities.
Whoa, dude! You had $500k in ONE BANK? A bank that did lots of mortgage lending? Are you crazy? Their rates are not even that high, at least not now.
Nobody in my family even keeps over $100k in even the best banks; we always spread it around. Drives the bankers mad, but that’s the game with FDIC insurance. Never more than $100k in any one person’s names at each bank. (That also helps in case one does go under; then you’ll have access to the funds in the others so you can afford to live while the Feds sort out your old, bankrupt bank and eventually cut you a check.)
There are four people in my family (parents and two kids) so we were able to avail of FDIC insurance up to $600K. It was just for short-term money market accounts until I can find better investments and I don’t want the hassle of opening several accounts in different banks. I’d rather keep it in a safe deposit box earning zero interest rather than these bastards using it for exotic loans. Vanguard Prime Money Market is a good option but who knows where they invest…I’ll check out F&M of Long Beach.
Actually Fremont has tightened up their guidlines after suffering alot of subprime buybacks in the 3rd qurtr of 06.I read they had to buy back 6%of defailted loans and have narrowed that to 3% in 4th qtr.They no longer offer 80/20 stated loans and have gooten alot tougher on qualifying.I think they will survive but Countrywide is toast.
And it probably will be for the next several years.
Countrywide rising to near all time highs on bad news .
Wow.
I don’t get that! Hey you market ministers, what gives???
Bad news all on the table probably. I am long that stock for the last 12 years. It rarely goes down much.
Potential merger(takeover) by B of A.
So Bank of America is interested in buying a company who is predicting really bad times. Brilliant. We have nothing to fear from the Middle East, our own stupid economics will do us in
I think the belief is along these lines: Well, the subprime market will contract. There will be winners and losers, and the ones who survive will be really solid and make a lot of money when all is said and done. CFC is in a comparatively good position right now. Mind you, that’s compared to other subprimes. It’s not invulnerable and it’s nowhere near a guarantee that it will remain solvent, but it’s in the lead for the moment.
“The company believes the industry will experience continued pressure on volumes, margins and housing prices, as well as increased defaults and foreclosures,’ Countrywide said.”
Pretty grim news… And the stock goes up? They announce layoffs(firings) and thet they assume their competition will decrease… maybe… but the rumor about BofA acquiring might be behind the pop.
Layoffs are nearly always interpreted by Wall Street as bullish.
Lowering their cost structure.
Never mind, those laid off will likely contribute to the exponentially accelerating foreclosures.
“Layoffs are nearly always interpreted by Wall Street as bullish”
That’s something I’ve never understood, especially in the case where the people were revenue producers or or something real close to it.
But my bet is the pop is related to BofA. This grim news could hardly be fueling a run.
Wall Street is crowded with sickos.
Wall Street is crowed with sickos.
Plunge Protection Team Intervention.
Cramer is about to recommend it ?
I increased my short position this morning. I don’t get it…
It’ll turn…
They’re messing with your mind.
http://biz.yahoo.com/cbsm/070129/5d3626dc318249a6abeabbd5171c3142.html
That seems like a bad short term bet at this point.
Yup, I bought Jan08′ $45 puts on CFC yesterday. They are way into subprime and, soft landing or not, we are not going to be seeing a repeat of the past few years in RE for a very long time. I didn’t feel comfortable just flat shorting them, as I did with LEN last week because of the BofA rumour, which I honestly believe is BS.
Granted, the CEO Mozilo has an “automatic sale” attached to the exercise of his options, but he’s sold nearly US$32 million in shares since the beginnning of December. Definitely not a bullish sign.
You really have to be careful and selective shorting these days. As the Main Street economy tanks, the Fed will start increasing money supply and possibly bailing out troubled companies causing much, much higher inflation and eventually much higher stock prices. Economies experiencing chronic inflation ( 10% + ) like the US currently, frequently experience sharp stock market rallies despite bad fundamentals, huge unemployment and economic distress, for example Brazil in the 90’s or Zimbabwe more recently. Zimbabwe, with an economy in a state of total collapse, hyperinflation, 80% unemployment and massive starvation, experienced 3000% increase in its stock market in 2 years. That is not a typo , 30 fold.
The largest U.S. mortgage lender said it expects a ‘challenging’ 2007 as loan demand and margins fall and homeowners miss more payments.”
i expect a catastrophic year for the lenders
everything i have been reading on this blog since may 06
has come true. i am truly so happy i never bought into this
mania of never ending appreciation
http://www.marketoracle.co.uk/Article275.html
lots of people being let go. will this make less subprime mortgages available or will someone step in for a little bit longer?
07 a trough”?
on the way to 400x rent +++ ? = prices
come on dude !
110 x rent = reality
BEN- have LIErah investigated for crashing your site
Reading the whole article is peppered with optimistic senarios, I posted the -ve senarios.
http://www.thestreet.com/_yahoo/markets/marketfeatures/10335578_3.html
That said, “the housing market remains the biggest risk to our outlook,” write John Shin and Michelle Meyer, economists at Lehman Brothers, who predict housing prices will level off and consumer spending slowly moderate. “We cannot entirely rule out a worse outcome if homeowners panic.”
Baby Steps, Springtime Dreams
Rising rates have driven down mortgage application and mortgage refinancing activity in the past couple of weeks, according to the MBA. In the week ended Jan. 24, refinancing activity dropped 9.6%, while purchasing fell 8.4% — their lowest levels since late September and early November, respectively.
Although the fall in mortgage activity doesn’t derail the notion that new- and existing-home sales have bottomed, the process of recovery is in its infancy, says Miller Tabak chief fixed-income strategist and RealMoney.com contributor Tony Crescenzi.
“For the uptick [in home sales] to matter even more, it must last through the spring when not-seasonally adjusted sales are at their peak,” he writes. “Inventory levels will remain burdensomely high unless sales are stable or slightly rising into the summer.”
Eating through inventory “will take time,” he writes
BEN- have LIErah investigated for crashing your site
All PHP/MySQL sites are getting hit by extreme spammer attacks. They hammer the site so hard attempting to put spam links on in various ways that the site ends up shut down. Realtors and their organizations are now and have always been more or less useless. The current wave of electronic spam attacks has everything to do with the government lack of action in prosecuting spammers for damaging crimes and nothing at all with the house in the air guy.
“‘We have more than a million housing units of excess supply,’ said James O’Sullivan, an economist for UBS.
A million housing units doesn’t tell the whole story. It’s a matter of where these units are located, the job market and salaries, as to how long it will be before the units can be reabsorbed.
Ron: I think you make a very important point, one that is too often overlooked. It only makes sense though. How many of these vacant units are in places like the central valley of CA? A region that is historically low-paying, low education levels, agriculture oriented, etc. If the people in the town don’t have much income, those units aren’t going to be occupied very fast. I have become convinced that we are looking at the largest housing debacle this country has ever seen, but many of those I know are still believers in the soft-landing, America is invincible theories.
“Subprime mortgage lender Fremont Investment and Loan on Monday said it severed ties last quarter with some 8,000 brokers whose loans were responsible for some of the highest delinquency rates in the industry.”
Since Fremount is one of the larger subprime’s… any idea on what fraction of their brokers just lost access to their loans? What fraction of Fremont’s business was going through these 8,000 bad apples.
And if a broker is sticking out statistically as more likely to have underwritten a fraudulent loan, how many bad loans made each broker stand out? This implies ugly… really ugly.
Got popcorn?
Neil
Pop goes the weasel !
At least Fremont is being pro active,those brokers will just sell to Countrywide instead.I hope it’s not too little too late i have a big chunk at Fremont.They do have a 4 star rating on Bankrate though.
“The brokers ‘released’ were ‘highly correlated’ to the sudden rise in defaults on Fremont loans, he said in response to questions from investors”
Be nice to know who those brokers were and where they sold these failing loans.
Word is that countrywide has been sold to Bank of America.
Do you have a link?
Thanks
Wouldn’t be too hard to swallow just a couple years after devouring MBNA. The beasts must eat to grow.
You know what’s funny? When I bought my house in 2004 I got a loan from BofA, who then sold my loan to Countrywide. Looks like it’s going back to BofA, which is fine with me. I was always a bit skeptical about Countrywide and their lowest-common-denominator lending practices. This brings up a question - what happens to your mortgage when the company that owns it goes bankrupt??
Nothing much happens. The servicing has value and it becomes an asset to offset liabilities. The servicing will probably be sold to the highest bidder, so you send your payment to a new address.
Or, you can do what that guy suggested last week (a banker wasn’t it?): Don’t pay at all and a few months later when they call you, tell them you were confused about the address change.
that one guy seemed very understanding of situations like that. lol
Word is now that it is iffy as to purchase. Who the hell knows? It is like Apocolypse Now out there….never could figure who was hunting who and for what purpose. It ended badly though.
“The number of vacant homes waiting to be sold surged 34% to 2.1 million at the end of 2006 compared with the end of 2005, by far the fastest increase ever recorded, the Census Bureau reported Monday.”
“A year ago, 1.57 million homes were vacant and awaiting a sale. The vacancy rate for owned units jumped to a record 2.7% from 2.0% a year earlier. From 1965 to 2005, the homeowner vacancy rate had never been above 2%. The long-term average is 1.4%.”
“‘We have more than a million housing units of excess supply,’ said James O’Sullivan, an economist for UBS. ‘If you are looking for evidence that the worst is over for housing, you’re not going to find it in this report. This argues that housing starts need to go down more.’”
Very high vacancy rates, low sales volume, high NOD and foreclosure rates, low affordability, continued building all around us, and a lot of those new jobs created by the REIC now going away.
Tell me again how my rent is going up?
We have a lease until the end of June ‘07. The landlord was already asking us back in December if we were planning to stay and hinting that he might raise the rent. I’ve been keeping track of several rentals in our area. There seems to be a lot more supply than last year. Also, none are moving and I’ve seen many asking price decreases. At this point, the other houses on the market are asking the same or less than last year. I anticipate further rental decreases as more and more homes hit the rental market when sellers find out the “spring bounce” is a actually a bust. Seems like just more good news for us bears sitting it out. We’ll be able to save even more while we wait to buy.
I’ve been rental-seeking, found a SFR for which the owner wants $2200/mo. The lady is dreaming. I did a walk-thru this past weekend. In present condition, it doesn’t even meet twp. bldg. code. The make-ready alone will cost her at least $4500.00.
I offered the same rent the most recent tenant was paying - $1100/mo. (I know a couple contractor friends that will come in and make the place whole.)
She said she “has a tenant in the wings…he’s willing to pay me the $2200/mo.”
How interesting, stupid newb landlord lady…the place has been vacant for six months, and now when I appear with an $1100/mo. offer, suddenly, the Dumbest Dumba$$ in Pennsylvania shows up with a burning desire to pay you out the wazoo for a place that is a fire hazard. Fine, no skin off my nose, rent it to Mr. Dumbazz. More power to you.
This BS is just so unnecessary and a total waste of my time. I’m a former landlord. Note to all prospective tenants out there: Everything on a lease is negotiable…(within the context of conforming to local codes). Most folks don’t know this. If you’re a good tenant and hook up with a reasonable landlord, it’s a “win-win” situation.
7 of 9, you’re putting yourself in a good position by tracking the local inventory. By the time your lease is ready for renewal you should be able to get a good deal.
if you can rent near the builder line of new homes you can probably squat for 2-300 a month plus paint…….
I’m in a $1400 for $1000. Total win-win situation that my landlord was smart enough to recognize. She’s a realtor but an old school type.
You guys are a lot tougher than I am. Moving ranks below losing a little money in my book. In fact, moving costs (in my case substantial with all my belongings), kids’ schools, setting up and shutting down utilities, losing deposit, getting set back up… a lot of cost and burdensome overhead.
I would have to save $500/mo+ to make a 1 year move even come close to popping up on my radar. Of course the landlord knows this too and then you potentially get into the anger dance where you make decisions based less on logic than emotion.
I for one am glad I am not renting my primary residence.
Phillygal:
You are very right. My ex-landlord tried to raise my rent 20% in one year. I found out that she bought four homes in 2005.
I countered b/c I didn’t want to do the work of a move and she would have none of it.
Home sat for two months and she paid a broker one month.
Ha, ha, ha. KMB!!
Landlords need to rethink the feudal lord thing b/c it ain’t gonna happen. They will be lucky to get good pay-on-time tenants, period.
Yes, about that issue I am bitter.
Oh, yes, rents are skyrocketing in my ‘hood. A friend of mine just rented a house, ’bout five blocks from me, that was fully renovated last Winter. Apparently, it sat empty for a few months last spring before the landlord started to slash the rent, $200 per month, for five months. My friend got “a $2,200/mo house” for $1,275. She is pleased and so am I. Time to have a talk with my landlord….
You might want to remind your landlord it’s not how much rent you get a month,it’s how much you get in a year. Losing one months rent will be more than that raise brings.
No consideration of mathematical realities or anything resembling good negotiation skills. The 2004-06 vintage landlord is motivated by greed and the lure of “easy money”. They are almost pathological in the way they grab a wishing price out of thin air - and stick to it.
(I’m referring to the accidental landlords, the ones stuck in a flip gone flop.)
In my case, I offered a little less than what I would have been willing to pay. If newb landlady was serious about renting the alligator, she would have countered, factoring in the work that my friends and I were willing to do. She didn’t offer any justification for why the rent on her place should have increased 100%, considering its status as a vacant non-performing asset.
Instead, she came up with the oldest trick in the book…the phantom bidder.
When I first started reading this blog I thought the hostility and animus displayed toward realtors, FBs and the like was a little intense. After dealing with these players I now understand the contempt for these wannabe Donald Trumps.
The landlord didn’t match your offer, because most landlords are flippers who are trying to cover for their overextended mortgages. Just pay attention how rents are higher everywhere there was huge flipping going on. Plus greedy realtors are now trying to make money with rentals, since nothing is selling. There’s another bubble going on, the rent bubble.
amen on the rent bubble. its my life surviving san diego’s ghastly rental bubble, including flipper shark landlords.
digging my way out saving.
I just move to Chicago and there are a huge number of rentals available, plus condo being rented out. This will depress rents.
Countrywide chief executive Angelo Mozilo estimates that 40 to 50 subprime firms are going out of business each day, a trend that likely will continue all year.
This is going to get a lot worse before it gets better. Where are all the glass is half full people today?
The next six months are going to be brutal.
Does the REIC understand yet what the subprime collapse will do to housing values, absent massive government intervention?
I don’t think that these people really understand how these things are connected like dominoes and follow a non linear pattern. It’s a like the snow flake that causes an avalanche. It’s clear that the whole mess is going to be exponential. The virtuous circle becomes a vicious circle. Chaos theory in practice at its best.
I’d suggest that it’s more like the wind undercutting an ice shelf. Nobody understands the wind, where it comes from or why it blows, but if they look, they can see the ice-shelf looming over the valley below. You don’t need to understand why subprime money is evaporating nor why the bottom of the ice-shelf has disappeared. You only need to understand what happens when it finally gives way.
‘Countrywide chief executive Angelo Mozilo estimates that 40 to 50 subprime firms are going out of business each day, a trend that likely will continue all year.’
I don’t see this in the articles. Got a reference?
“The brokers ‘released’ were ‘highly correlated’ to the sudden rise in defaults on Fremont loans, he said in response to questions from investors.”
While congress tries to find ways to steal more money to paper over the problems the market is beginning to deal with it. By the time congress comes up with their diabolical plan it will be the wrong cure for the disease administered after the symptoms are starting to subside.
The irony is that govenment meddling is a big part of the problem. I just talked to a friend whose wife got a “government insured” student loan to get a teaching degree at a private college. In the absence of that “government assistance” his wife would have attended a public school and not be nearly so indebted. What jerks. They helped get her into debt, but they haven’t offered a dollar worth of help since. If she goes broke the lender gets made whole and she gets screwed with a bad credit rating.
“I just talked to a friend whose wife got a “government insured” student loan to get a teaching degree at a private college. In the absence of that “government assistance” his wife would have attended a public school and not be nearly so indebted.”
Most of these “diploma mills” won’t admit their students until the maximum student loan has been secured, first. Yes, you pay everything up front whereas in the traditional college setting you pay (borrow) as you progress.
In the absence of that “government assistance” his wife would have attended a public school and not be nearly so indebted.
That doesn’t make any sense. If she could have been admitted to the public school, why wouldn’t she have gone there and borrowed less money?
The obvious answer is that these expensive private schools are admitting people who couldn’t get into the public schools in the first place. And who is really benefitting? Not the students.
More socialization of risk, privatization of profit.
From the building Supplies Company USG Corp, talking about reductions in gypsum wallboard orders:
“It’s too early to determine where demand levels will find a firm foundation”…
Guess “finding a firm foundation” is the new euphemism for “bottom”.
I wonder if they could find a firm bottom if they used both hands?
How does Mozillo plan to cut 500,000,000 US in costs by laying off 2500 people in a year? Even if that went down Jan 1 with no severance, that is 200k per position by my count. I think he must have left off a zero or something. Maybe 500 million over 10 years or something.
Someone help me.