In California, “You Ain’t Seen Nothing Yet”
The Tribune reports from California. “With home appreciation slowing and payments increasing for some buyers who chose creative financing, foreclosure activity in San Luis Obispo County is starting to creep up. Default notices were sent to 367 owners of homes and condominiums last year. That’s up nearly 61 percent from the previous year’s 228, according to DataQuick.”
“In Santa Barbara County, 298 default notices were sent to homeowners in the fourth quarter of last year, up 360 percent. And in Merced County, 466 default notices were sent, up 400 percent.”
“The increase locally is a sign that homeowners from Nipomo to Paso Robles could be in danger of losing their property. ‘In a market that’s flat or declining, if you have aggressive mortgages, the equation shifts so that people owe more money than their property is worth,’ said Wes Burk, broker in San Luis Obispo. ‘Often, their only option is to let it go to foreclosure.’”
“Burk watches foreclosures in the county closely. In a recent five-day period (Jan. 19-Jan. 24), he said, there were 12 notices of default in the county. The same time last year would have had a ‘fraction of that.’ ‘It’s changing,’ Burk said. ‘January has been much busier than any of the months in the last quarter, and I anticipate that we’ll continue to see an increased level of notices and trustee sales.’”
The Orange County Register. “Orange County property owners are skipping their property tax bills in growing numbers. Fresh stats from the county’s tax collector show that a sharp uptick in tardy payments that we saw for the December 2005 tax installment was no fluke.”
“This past December’s deadline was missed by 53,880 taxpayers owing on $111 million, 25 percent more tardy dollars than the previous year. It means that 5.32 percent of the slightly more than $2 billion tax dollars due went unpaid. Late bills haven’t taken that big of a slice from the tax pie since 1996.”
“For those in financial trouble, and being strategic about their shaky finances, the property tax bill may be one to skip. Even though there’s a one-time, 10 percent penalty for late payments, plus ongoing 18 percent-a-year surcharges, the tax collector isn’t going to take a tax-delinquent property away any time soon.”
“People in such straights are better off making the mortgage payment first. ‘Everybody knows that,’ tax collector Chriss Street says.”
“Standard Pacific Homes CEO Stephen Scarborough said Friday that he doesn’t foresee a huge recovery in the national new-home market at least for a year or more.”
“Scarborough, speaking during the Irvine homebuilder’s fourth-quarter earnings conference call, said earnings won’t improve significantly through 2008. ‘I think clearly that ‘07 will be a challenge for us, and likely, unless there’s a dramatic pickup, ‘08 will be a sub-par year from a return perspective as well,’ he said.”
The North County Times. “In his 37 years in the mortgage business, Bert Morrison has never seen anything like it. The owner of Quality Funding Group in Rancho Bernardo said that scores of customers have come to his office wanting out of their adjustable-rate mortgages.”
“In San Diego County, borrowers took out 173,033 adjustable-rate loans worth more than $75 billion to buy or refinance their homes between 2004 and mid-2006, according to (analyst) Christopher Cagan.”
“Cagan’s research has led him to paint a dire picture. Of the above loans, he said, 66,726 are at a risk of resetting to a monthly mortgage payment that the borrower can’t afford. And almost half, or 30,209 loans, are at risk of default and foreclosure, costing lenders more than $5 billion.”
“Morrison said that the situation will likely get much worse before it gets better. ‘There is going to be a lot of blood in the streets,’ he said. ‘You ain’t seen nothing yet.’”
“As long as interest rates stayed low and prices rose, high-risk loans to higher-risk buyers did not seem to be such a bad bet. While the payments were low, some of these loans increased the loan’s principal, called ‘negative amortization.’”
“Ed Smith, chairman of government affairs for the California Association of Mortgage Brokers, specifically warned against those types of loans. ‘If you are paying the negative amortization amount, you are looking at a small light at the end of a tunnel,’ Smith said. ‘It’s connected to a locomotive that is going to smack you in the face.’”
“That is what happened to a client of Barbara Williams, a certified financial planner in Carlsbad. The client said she wanted to refinance her roughly $400,000 condominium in San Marcos. She said she told her mortgage broker, then a personal friend, that she didn’t want negative amortization, but wanted an interest-only mortgage for one year.”
“Instead, she got an interest-only first mortgage for the first month. Then her rate reset to more than 8 percent and threatens to go even higher. She didn’t notice until interest rates started to rise and her monthly payments rose with them. Also, she discovered that her interest-only loan was actually a negative amortization loan that has added $8,000 to her principal so far.”
“Now she plans on selling the condo. Williams said clients like this don’t see problems until interest rates rise. ‘She knew, but it really hadn’t gotten bad until last year,’ she said.”
“Some financial institutions don’t make it easier when they dangle mortgages with easy-to-make monthly payments in front of buyers, while failing to discuss in detail things such as prepayment penalties or interest rate changes. Instead of sticking with a more moderate and easier-to-afford home, borrowers extend themselves with risky loans such as option adjustable-rate mortgages (or ARMs) and buy homes costing as much as nine times their household’s income, loan experts said.”
“‘These borrowers are allowed to get into homes they can’t afford,’ Morrison said. ‘It’s a crime, in my opinion.’”
The Daily News. “There’s a movement under way in the nation’s capital to impose a suitability standard on mortgage lenders. Not surprisingly, the Mortgage Bankers Association doesn’t think suitability is suitable for this industry. They’ve countered with a policy paper titled ‘Don’t Turn Back the Clock of Fair Lending and Homeownership Gains.’”
“‘Making the lender responsible for determining which loan is suitable for a borrower will limit consumer choice and could deepen the slowdown in the housing market,’ Kurt Pfotenhauer, MBA’s senior vice president of government affairs, said.”
‘For potential buyers, there’s no time like the present. Sunday’s Super Bowl marks the start of the prime home buying season, and home prices have been edging downward locally. January sales statistics aren’t available yet, but the median in December was $710,000, down from $785,000 in June 2005 and close to a two-year low.’
‘Looking for help? Be sure to consult a reputable mortgage broker. Not all brokers are members of the California Mortgage Brokers Association, which takes a strong stand against predatory lending. If you see the CAMB seal, that’s a good sign.’
‘The shrinking mortgage origination market has caused lenders to embark on the ’spray and prey’ technique to bring in business. I recently had the opportunity to review the financing provided by a mortgage originator whose obvious goal was to make all he could from the unsuspecting and trusting consumer. This homeowner was simply trying to lower his monthly payment but by providing an appraisal with an over inflated value, the loan officer arranged a loan that was $80,000 more than the borrower currently owed.’
‘The loan officer then proceeded to bilk the homeowner out of a substantial portion of this $80,000.’
‘For seven straight months, the number of building permits issued for new homes in Visalia has dropped from the previous year. ‘I think valuation has been a major concern,’ Ronk said. ‘I’m not a financial wizard, but I think we’re seeing a drop from the peak when there was a buying frenzy for homes, and prices just got driven past what the sustainable level was.’
‘Q: Your answer to a question about current home values a while back, in which you talk of long-term trend lines, overlooks the effect of interest rates. If prices rise 20 percent in a year, which many would say is unsustainable, but interest rates drop to a level where the monthly payments are the same as previously, then that is sustainable. And don’t advise readers to reflexively offer 10 or 15 percent below the asking price of a home. In some cases that still would be too much to pay, while in other cases the asking price may be a bargain.’
‘A: There is truth in what you say, but I didn’t advise anyone to automatically offer 10 to 15 percent below the asking price. I pointed out that many sellers seem to believe we are still at the top of the market and are pricing their homes accordingly. Buyers shouldn’t feel intimidated by sellers anymore, and should unabashedly offer substantially less than the asking price when they consider that justified.’
If prices rise 20 percent in a year, which many would say is unsustainable, but interest rates drop to a level where the monthly payments are the same as previously, then that is sustainable.
—————————-
This has been a major pet peeve of mine during the bubble. Everyone’s been talking about low interest rates as though they’ve been making things more affordable. Truth is, monthly payments came to all-time highs during this bubble as well.
IMHO, the high price/high monthly payments combination reflects the fraudulent & easy lending environment even more than the low rates. Of course, the two go hand-in-hand, as low rates are a symptom of too much money to lend, and lenders will come up with all kinds of ways to get borrowers to borrow **their** money — hence the “affordability programs”.
Of course, low rates got the price momentum going, and the rest was history — speculators rushed in as they saw the combination of rising prices and easy money. There’s been no barrier to entry the past five+ years, and THAT is what has caused all the problems.
And interest rates bottomed out in the summer of 03. And yet house prices have continued to rise. The rates from my mortage company for a 15 year fixed have gone up 25 percent from 4.75% to 6.00% percent since the Summer of 03. And yet the taxman sayeth that my house has gone up from 182k in dec 03 to 318k in dec 06. Even though there is a lag to the effect of interest rates on price, the idea tha current prices can be explained by “current low rates” is an ABSURD proposition.
“This has been a major pet peeve of mine during the bubble. Everyone’s been talking about low interest rates as though they’ve been making things more affordable. Truth is, monthly payments came to all-time highs during this bubble as well.”
Exactly. The idea that housing is or was reasonable merely because of interest rates is a ploy for suckers. All it takes is a little math to figure that out.
Same here … The purchase of an asset and financing are two seperate items. But then again Realtors have been harping that your not buying $500K mortgage but the low payment. LOL! Suckers
If you were buying for cash then your way overpaying.
Neg Am + Neg Equity + Decreasing Value = Overpriced Rental
“Overpriced Rental”
Try “Temporary Rental with forced eviction at foreclosure”
Given the huge influence Cali’s economy has on the rest of the country…has their been any word from the governor’s office on thsi impending disaster in housing? I know CA just voted a bunch of debt-funding issues–any indication they might want to pull back on these?
The silence from those positioning to run for prez on both sides of the aisle seems total too…I know they’re trying to find a safe stance on Iraq, but this domestic issue may fly to the top of the list soon.
From NY, nada from new governor Spitzer.
Are they all following the “don’t mention it and it will go away” strategy?
Therer’s been Sen. Dodd and Rep Waters making some noise–but the lack of discussion is disturbing. No need for head’s up for the potential knife-catchers?
The Dodd and Waters hearing could be a watersheed moment for FB legislation and a potential FB taxpyer funded bailout!
Feb 7 is the hearing.
It won’t bail out the FB’s. It will enslave them for life. It will be the lenders who are bailed out. It will also help keep the bubble inflated and force many potential buyers to become enslaved for life if they wish to participate in the American Nightmare.
“It won’t bail out the FB’s.”
Count on a Democratic congress to float some proposals to rob wealthy people in order to bail out FBs.
Count on a Democratic congress to float some proposals to rob wealthy people in order to bail out FBs.
Remember, when Dems talk about “The Wealthy”, they’re talking about people who make > $50,000/year.
Since the areas hit hardest so far have been heavily Republican, there is very little incentive for Dems to act.
‘Remember, when Dems talk about “The Wealthy”, they’re talking about people who make > $50,000/year.
‘
And less than $150,000/year
(It wouldn’t be sensible to penalize your best sources of campaign contributions, would it?)
Uptown,
Surely your not talking about Clownifornia?
Yeah… I figured the Dems would consider me wealthy in all of this.
Between the SS bailout and the FB bailout… I’ll probably need a bail out. I heard early info on SS bailout. They would give less to higher contributors and possibly count your other sources of income against your SS payment. For all you out there not understanding… other sources of income will be your pension/401K/Roth IRA.
So, goodbye tax advantages.
If pressure from the congress gets the IRS to forgive the 1099’s these FBs will get when they walk, then this would be a type of bailout.
Hey Max, GetStucco, Dan and James,
Don’t worry about what the Dems might do. Bush has already included shifting the burden on the wealthy, those making 80K to 160K. It’s in his budget for tomorrow. Aren’t you glad the republicans are handling this:
“Bush’s budget would achieve nearly $100 billion in savings over five years by trimming increases in Medicare, the health insurance program for 43 million retirees and disabled, and Medicaid which provides health care to the poor.
The restraints in Medicare spending would total $66 billion over five years while the savings in Medicaid would total $12.7 billion. Most of the Medicare savings would come in slowing the growth of payments to hospitals and other health care providers.
But $11.5 billion in savings would come from boosting insurance premiums paid by the wealthiest Medicare recipients, those making more than $80,000 annually for individuals and $160,000 for married couples.
http://www.cnn.com/2007/POLITICS/02/04/bush.budget.ap/index.html
Higher contributors already get less.
http://www.ssa.gov/OACT/COLA/piaformula.html
Called “bend points”. My guess is most people don’t realize this.
If the past is any guide, the legislative response for FB will be to enact legislation to “protect” all these poor people who got into houses they can’t afford. And that means more people won’t be able to get a loan. Anyone want to guess what that will do to prices?
This is the only kind of bailout that sounds good to me. Other possibilities are scary.
are you kidding? how can this possibly sound good to you?
“has their been any word from the governor’s office on thsi impending disaster in housing?”
I think the strategy is “Don’t ask, don’t tell.”
Arnold is a big time RE bull. His strongest support is from RE community. Don’t think for a minute he’s gonna turn his back on his supporters. Arnold loves prop13 since it lined his pockets at the expense of the little guy that bought a home in the past 5 years, probably paying more in prop tax than he is.
Arnold loves prop13 since it lined his pockets at the expense of the little guy that bought a home in the past 5 years, probably paying more in prop tax than he is.
————————-
OK, I’ll bite.
How did Prop 13 line Arnold’s pockets at the expense if the **idiots** who **chose to buy** houses at inflated prices?
If buyers had two brain cells to rub together, they’d wait for prices to fall to such a level that the disparity in prop tax payments would become a non-issue. Buyers should ALWAYS consider PITI payments (and HOA and Mello-Roos, these days) when determining what they can afford. If they can’t afford it, they shouldn’t buy it. No whining!
Don’t blame the long-time & native Californians for the specuvestors’ idiocy. The long-time residents should NOT have their prop taxes determined by morons with a bucket of (Monopoly) money and a box of stupid. (thanks, Cote!)
If the newcomers don’t like the prices, they should go home.
Be careful what you wish for. It is the higher taxes paid by the new buyers that have allowed taxes to be capped for the old-timers.
When the bubble bursts in Ca and property prices return to sane levels, new buyers will no longer be saddled with a disproportionate share of property taxes. That means to maintain the same level of services, the old-timers will face big tax increases. Or services will face big cuts. Take your pick.
The Ponzi scheme is collapsing.
I pick…”services being cut”!
Most Californians would love to see services for illegal immigration cut out completely (we’ve voted on a number of propositions, all won by large margins, but the courts overturn them).
If we stopped having to pay for the education, healthcare, infrastructure, law enforcement, prisons, court costs, free food (two meals per day, for free, for illegal immigrants’ school kids — not to mention ALL their school supplies, and the teachers and administrative staff, to boot), etc., etc., etc…
Can you even imagine how much money would be saved.
Most native Californians I know would love nothing more…
As far as FB bailout goes…..I do believe we’ll see rhetoric from the Dems, whether or not it comes to about is another matter. The surge in minority homebuyers, many of which are subprime borrowers, will get politician’s attention pretty fast. The Latino activist will need a political issue……inner cities will call it “revitalization”……
It’s packaged as “The American Dream” so when it’s “denied”, regardless of why, there will be victims everywhere….I was taken advantage of because _____ (fill in the blank)
They will turn it into a social issue instead of a financial one.
Right now nobody can garner attention because of Iraq, but by the time the poop hits the fan, the war could be “old news” and this can take it’s place.
Votes = power and there’s not a politician anywhere that doesn’t slobber at the thought of more power.
It never ceases to amaze me how people jump at every chance to blame the Dems for everything. The national fiscal nightmare, foreign policy nightmare, and end of American values like peace and prosperity and opportunity for all are clearly laid at the feet of the current regime occupying the White House and its ideological bretheren. The absurd liquidity fest was a result of Greenspan, the dotcom meltdown, and 9/11 (which was a direct result of Papadoc Bu$h’s Iraq war radicalizing a generation of young Saudi men during the 1990s… young Saudi men crashed those planes, not Iraqis). Housing prices reflected incomes during most of the 1990s, a period which saw the greatest economic expansion in US history along with real world limits to entitlement programs, balanced budgets, and fiscal responsiblity. The rethugs attacked all of this and trashed our constitution because of a blowjob. The absence of mortgage lending standards reared its ugly head during Rethuglican control of all three branches of the federal government. Yeah, the dems pander to the working class and K Street. What of it? Look at the mass murdering criminals the Rethugs pander to? Think of the cost associated with Bu$hco! Your grandchildren will be getting blown up in their homes because of Bu$hco. A major American city WILL be attacked with WMDs as a direct result of the generations of young men being radicalized by Bu$hco’s foreign policy at this moment. There was sanity in our system, and then Bu$hco seized the white house and it ended. This just happened to coincide with the end of housing prices reflecting income. Go figure. And then find some way to blame the political party that can’t manage to a gang of extremist morons despised in every corner of the earth. Rant off.
Chill my liberqal friend…..
You need to read what I wrote before blowing a gasket. I didn’t blame the Dems for anything; merely stating they will be opportunists. Both parties do it, it’s just their turn at the wheel.
However, I did get a chuckle out of your comments and if I had known it could have caused such a reaction….I would have spiced it up to where you would TRIPLE post. LOL
Wrong place for this kind of post. We’re here to discuss the housing bubble. If you want to debate politics, take those arguments to a different blog.
As soon as I see you “not the place for a political discussion” shut down the right wing FU%^tards I will believe you.
Until then not so much.
Bubble rubble…you cant have a discussion with people who get their “information” from Rush Limbaugh and Fox.
They have a “faith based reality” you know the one where the people in charge aren’t responsible and the ones who aren’t are.
It never ceases to amaze me how people jump at every chance to blame the Dems for everything. The national fiscal nightmare, foreign policy nightmare, and end of American values like peace and prosperity and opportunity for all are clearly laid at the feet of the current regime occupying the White House and its ideological bretheren. The absurd liquidity fest was a result of Greenspan, the dotcom meltdown, and 9/11 (which was a direct result of Papadoc Bu$h’s Iraq war radicalizing a generation of young Saudi men during the 1990s… young Saudi men crashed those planes, not Iraqis). Housing prices reflected incomes during most of the 1990s, a period which saw the greatest economic expansion in US history along with real world limits to entitlement programs, balanced budgets, and fiscal responsiblity. The rethugs attacked all of this and trashed our constitution because of a blowjob. The absence of mortgage lending standards reared its ugly head during Rethuglican control of all three branches of the federal government. Yeah, the dems pander to the working class and K Street. What of it? Look at the mass murdering criminals the Rethugs pander to? Think of the cost associated with Bu$hco! Your grandchildren will be getting blown up in their homes because of Bu$hco. A major American city WILL be attacked with WMDs as a direct result of the generations of young men being radicalized by Bu$hco’s foreign policy at this moment. There was sanity in our system, and then Bu$hco seized the white house and it ended. This just happened to coincide with the end of housing prices reflecting income. Go figure. And then find some way to blame the political party that can’t manage to defeat a gang of extremist morons who are despised in every corner of the earth and every educated corner of the United States. Rant off.
Yeh “Bubble rubble”
Sorry to burst your Bubble. BUT
The Demicans & Repuklicrats are 1 and the same!!!
Controlled by the same money! Elected by thesame money!
Yes that green colored paper we accept for our LABOR!
THey stole the Govt. a century ago!
“a direct result of Papadoc Bu$h’s Iraq war radicalizing a generation of young Saudi men during the 1990s”
Oh, now I get it. Bin Laden’s choice of turning to terrorism was Bush’s fault. I suppose all would have been fine if we’d just let Saddam keep (and murder everyone in) Kuwait. Saddam wouldn’t have pressed his empire towards a virutally disarmed Saudi Arabia, the richest prize in the Middle East. No, why would a mass murdering dictator ever want to capture the richest prize in the world?
I think you’re right. If we hadn’t interfered with Saddam taking over the middle east Bin Laden and other Saudi’s would never have become “dissaffected” with the US.
They’d have been murdered by Saddam (along with most of the other male Saudi’s). That would have been a good outcome but something I can’t put my finger on tells me having Saddam in uncontested charge of the world oil supply might not have led to prosperity in the US…..blow jobs or no blow jobs.
Want to see what $399,000 gets you in the East Bay of California?
http://www.idxre.com/idx/detail.cfm?cid=2322&bid=2&pid=40239561&sid=102011&fe=104
Click on the View All Picks for the full picture… The price is completely disgusting…
That’s a real *cough* beauty. Thanks for sharing.
Oh, my… Can somebody say “bulldozer”?
What’s really scary, is that some people actually live like that. Humans are creepy animals…
‘There is going to be a lot of blood in the streets,’ he said
LOL
That San Diego number is pretty stunning. 33% unaffordable at reset, 16% into foreclosure. Blood on the street is no exaggeration.
On the tax issue, word has it that CA State receipts are falling behind projections:
Dan Walters: ‘Balanced’ budget is very shaky
Every time the economy hiccups CA State revenue nosedives terribly. The majority of state revenue is income tax on those who make $200k or more and they typically choose not to reap much . Maybe we should think of these people as Golden Canaries or Golden State Canaries. Also remember, as California goes, so goes the nation. Into the Valley of Debt we ride.
It seems like we need a soundtrack here. Guns N Roses “Welcome to the Jungle” maybe?
Hold tight wait till the partys over
Hold tight were in for nasty weather
There has got to be a way
Burning down the house
All wet
Hey you might need a raincoat
Shakedown
Dreams walking in broad daylight
Three hun-dred six-ty five de-grees
Burning down the house
With all due apologies to Tennison
‘Forward, the debt Brigade!’
Was there a man dismay’d?
Not tho’ the borrowers knew
Some one had blunder’d:
Theirs not to make reply,
Theirs not to reason why,
Theirs but to sign & die,
Into the valley of Debt
Rode the six hundred
Jim A
Brovo!!!
Yes, that was a good one, Jim!
“Morrison said that the situation will likely get much worse before it gets better. ‘There is going to be a lot of blood in the streets,’ he said. ‘You ain’t seen nothing yet.’”
Morrison said this? And he’s been in the mortgage business 37 years - about the same amount of time the other Morrison who wrote the lyrics to Peace Frog has been “dead”.
“When the music’s over, turn out the lights”.
‘There is going to be a lot of blood in the streets,’ he said. ‘You ain’t seen nothing yet.’”
Whoop-tee-do…Ben Blogger’s have been sayin’ this for months…
Only the Fed printing press is keepin’ the US financial Titantic afloat.
How are you keeping up with all these stories Ben? T
he level of news on the mortgage resets is now in every newspaper. Where were these reporters in 2003-2005?
“Where were these reporters in 2003-2005?”
They were us…
. Where were these reporters in 2003-2005?
Where were those reporters in Feb, 2006? Just 1 year ago they were Quoting David Leaher, Leslie Appleton-Young, etc. Tell the reporters they were duped by the NAR and they have egg on their face.
They were busy focusing on the huge price gains and the bidding wars and the “feed the squirrels” contracts.
Remember, the purpose of newspapers is not to report news. The purpose of newspapers is to sell as many copies of the paper and as much advertising as possible. You don’t do that by printing boring truth or the opposite of what people want to hear.
test
“In San Diego County, borrowers took out 173,033 adjustable-rate loans worth more than $75 billion to buy or refinance their homes between 2004 and mid-2006, according to (analyst) Christopher Cagan. Cagan’s research has led him to paint a dire picture. Of the above loans, he said, 66,726 are at a risk of resetting to a monthly mortgage payment that the borrower can’t afford. And almost half, or 30,209 loans, are at risk of default and foreclosure, costing lenders more than $5 billion.”
Did Cagan suddenly get religion? Because last year he was saying “hakuna matata,” and now he says the situation is “dire.”
The history revisionists will have a hard time with the bloggers here! All there BS quotes in 2003-2005 have been cached in the archives at Google.
The history revisionists will have a hard time with Google cache.
I wondered the same thing. Cagan wrote “Losses of $110 billion - spread over several years - would only come to about one percent of the total national home owners equity.”
I would be interested in people’s own estimates of losses. I think it is quite possible that there could be a nation-wide decline in nominal resale prices by 1% and defaults totalling another 1%. In the short term (5 years), realized and unrealized losses could be quite painful.
“I think it is quite possible that there could be a nation-wide decline in nominal resale prices by 1% and defaults totalling another 1%.”
From what nation on what planet are you beaming your post?
I heard that NASA sent a satellite out to Pluto to see where home prices went in 2005. Maybe this is leakage from the Pluto feed.
ROFLMAO!
Back on Earth…nominal price drops, nationally, of **at least** 25% over the next 5-10 years. I expect we can get real price drops of 60%+ in some bubble areas, esp. FL, AZ and far-flung parts of CA.
Foreclosures? Let’s just say that I am getting LOTS of folks relating their financial woes, lately. For some reason, when I tell people we rent, almost every single one of them is now telling me how lucky we are, and proceed to give all the details about their exotic mortgages (or non-exotic, but barely scraping by, none-the-less) — and how they can barely make it month to month.
This, of course, is while everyone is fully employed, and no unexpectd expenses have come up. We are also talking about people in $1M+ homes… So much for the “rich” not feeling it.
Steve Fur:
Was the 1% statement a prediction or an optomistic restatement of current facts? Here in Vegas we are down about 20%
from the TOP
The losses referred to nation-wide losses over all home owner equity. Certainly some places will take a beating (CA, AZ, Las Vegas, Boston) but others won’t. I have a son in Ohio (I live in Canada) and prices in Cleveland were already low and haven’t fallen much. A 1% nominal loss over the whole SFH pool in a single year, with roughly 5% of the SFH pool turned over, means an average loss on each house sold of 20%. Very nasty.
Cagan has reliably (every 6 months) doubling his estimates of foreclosures for 18 months.
He is interviewed regularly at OCR’s RE blog and after I called him on his inaccuracy he stopped quoting numbers in that forum.
However, his forecast mentioned in this blog has doubled from the last numbers he provided OCR which was 16,000 or so foreclosures up from 8,000 18 months ago.
Not exactly a golden forecasting track record.
With the BBB- paper rising 150 BP in less than 10 days as risk premiums rise to cover loss expectation the FB’s can no longer go from a breaking arm to a new prosthetic. Good thing you don’t need to use both hands to drink the food at a soup kitchen.
For those who missed it, Aaron Krowne has a great writeup of the ongoing subprime credit crunch:
Mortgage Lenders: The three bears come home
Log in to read the comments. We should know in a month or so how the crunch is effecting the market. Every day that goes by, there are less “potential buyers on the fence”.
For those who missed it, Aaron Krowne has a great writeup of the ongoing subprime credit crunch:
Mortgage Lenders: The three bears come home
Log in to read the comments. We should know in a month or so how the crunch is effecting the market. Every day that goes by, there are less “potential buyers on the fence”.
Reposted to correct link…
Max,
I’ve read it before, and never tire of it. IMHO, this is the most concise and informed article on the subject. I highly recommend everyone read this — and print it out. More information to show the dopes out there what the RE bears are talking about.
Thanks for the link!
“In San Diego County, borrowers took out 173,033 adjustable-rate loans worth more than $75 billion to buy or refinance their homes between 2004 and mid-2006, according to (analyst) Christopher Cagan.”
If the San Diego housing market were a ski resort, it would be currently shut down due to avalanche risk.
It’s connected to a locomotive that is going to smack you in the face.’”
I once saw a video of a woman that was struck by a locomotive, though her face was smacked about 100ft with her dead body. Much like how most FBs will feel in the next 18mos.
rob
‘If you are paying the negative amortization amount, you are looking at a small light at the end of a tunnel,’ Smith said. ‘It’s connected to a locomotive that is going to smack you in the face.’”
That my friends, is the most hilarious quote regarding this whole freaking Bubble…the sad thing is some useless broker / realtor, etc…actually probably recommended this type of loan…btw since when does anybody need a broker, and what business is it of my realtor what type of loan/financing i get?
enjoy the game! i’ll have some popcorn for neil…
crush
Crush,
It is amusing how people are just waking up to the smack down.
But this is like watching a freight train demolition derby on iced tracks. Very slow, but inevitable.
Enjoy the game!
Got popcorn?
Neil
nice one
I’ll pass on the popcorn - I’m in braces.
Stephanie
Was at Anaheim Stadium last night and sat in the balcony area where corporate sponsored boxes are located. Almost all of the boxes have a gold sign on them naming the sponsors. Almost all the boxes are mortgage, building and loan companies. Does anyone know or have a list of all the companies sponsoring these “box” areas? The list would amaze you. Also, saw a lot of “leasing” companies. More sighs of loose money.
Simiwatch,
Interesting tidbit. I’m betting that the sponsors next year will be back to bear, soda, and chip companies.
Got popcorn?
Neil
They’re serving bear now at Anaheim Stadium? That is so cool!
A little typo totally change my meaning!
Beer.
I had such a good laugh, my fiancee switched sides of the couch.
Got popcorn?
Neil
Freudian slip
Could be considered a sister indicator to the stadium naming indicator of companies that are wasting money.
San Diego County lending– After years of being in the business I saw, especially these last few years “pushed” the adjustables, negative, loans as there were “higher” profits” for the loan rep. and the house that divided the commissions. They would use their leader, Greenspan, as a message to go for the adjustable loans. “You can always refinance later if you see the interest rates are starting to go higher” was the standard answer they gave. Many took the bait and now we see the “good advice given” Profits have been made. One can only wonder if these smooth-talking reps saved or spent their fortunes? I can only hope they spent their money and will now stand in line for hand outs.The majority of these lenders were no better than used car salesman. The only differance is one group dresses in pimp clothes with shoes to match while the other dresses in differant attire. I’ll let you choose which is which. Retired mortgage broker
I have the same opinion of this group of slime loan reps .that you speak about . In addition ,according to Bens post ,these reps. were doing the old bait and switch with the loan requests from borrowers .
I know someone who was put on a loan they didn’t want by their own daughter-in-law where the loan ended up being totally different than what was described verbally .
When I was in the business you could get fired for misleading a loan applicant . Talk about the borrowers needing to watch out in the current lending environment .But, as alot of posters have pointed out ,had the borrowers not been blinded by greed or fear they might of had more common sense . I am also sure that some of these borrowers wanted to be fraudulent on their loan applications and bought the loan reps spin about just getting out of the loan down the road . The cheerleaders would tell borrowers that they could not afford not to buy real estate at 20% appreciation per year ,which is a scare tatic .
I have to believe that the good mort guys were quickly starved out of the flipper portion of the business. It’s why I think any sort of regulation will be useless. If you are blinded by greed you’ll always an accomplice to help you bend the rules.
so true waaahoo
Oh yeah, if everybody’s doing it it must be good…jackasses
It’s hard to understand how these people were placed into loans that were opposite of what they expected. I have only bought once house and refinanced it once, but both times among the many sheets to sign, there was one very simple one that listed, in large and bold font, the loan balance, the APR, the monthly payment, whether the loan is adjustable, whether there was any pre-payment penalty.
Don’t ALL borrowers need to sign such a sheet, or am I remembering incorrectly?
The lender give a disclosure shortly after the original application is submitted by the borrower ,but that doesn’t pervent a change made on type of loan by the time the borrower signs final loan docs . The borrowers are pressured ,they have moving vans coming , they are fearful that the seller will sue them if they don’t perform on time .
One bait and switch I have heard about is that a loan rep. leads the borrower to believe right up to the last minute that they got a certain loan and than states they have to go on another loan because the funding ran out ,(or some excuse like that ).
I know about alot of this stuff because when I was in the business I had to rescue alot of borrowers from Loan creeps at the last minute .
Have a large friend who took a loan. On his second loan, he told the loan agent. “I don’t get fooled twice. If the loan is different than what you told me, I going to punch you in the nose in front of everyone and you’re going to go back to your office with new nose.”
His second loan went thorough without any problems no switch and bait. He said the loan guy was real nervous the whole time.
I always laugh about this story, it gives new meaning to having some skin in the game!
Sounds like a very effective approach!
Wiz,
I have a friend who got final loan docs at around 8:30 at night. When the docs had different terms, she called the mortgage broker (both of their brothers died in an accident together, so she trusted the broker), the broker told her not to worry, she’d change it the next day…just sign the docs.
Do I even need to tell you what happened at closing? Some people truly deserve to rot in he&l.
I have always hated the fact that borrowers get loan docs at the last minute in California . I feel like some borrowers need more time to examine the loan docs.
My last loan documents were a fixed rate ,but I still checked every paper to make sure I had the right documents .
Also if you don’t like the standard clauses in a real estate listing contract you can change them (but I wont go into that ).
Lots of lying weasel loan reps out there. They’re already lying in writing about the borrowers income, what makes anyone think that they won’t lie orally to the FB.
“That is what happened to a client of Barbara Williams, a certified financial planner in Carlsbad. The client said she wanted to refinance her roughly $400,000 condominium in San Marcos. She said she told her mortgage broker, then a personal friend, that she didn’t want negative amortization, but wanted an interest-only mortgage for one year.”
“Instead, she got an interest-only first mortgage for the first month. Then her rate reset to more than 8 percent and threatens to go even higher. She didn’t notice until interest rates started to rise and her monthly payments rose with them. Also, she discovered that her interest-only loan was actually a negative amortization loan that has added $8,000 to her principal so far.”
….A certified financial planner who can’t even get her own sh!t straight? Where do I sign up for her services!?
I read the article as saying it was a client of the certified financial planner, not the planner herself.
No, it happened to the friend of the planner.
Oh oops, scratch that then! Let the fun continue!
So if the market is softening, and I hope it is, how come inventory in the bay area is pretty stable? And has been for the last three months, at levels well below those of last summer/fall.
cuz they couldn’t sell after listing their properties at outrageous prices last summer
Actually inventory is up YOY in most parts of the Bay Area.
Most of the places in SoCal and CenCal had a run-up in inventory until late fall, after which it slowly decreased. Possible causes include more buyers and people letting listings expire/taking houses off the market to wait until “spring bounce”.
Right now, inventories seem to be slowly rising…we’ll see what Feb., March, and April bring.
You speak too soon, Bluzer. If you’re question is still pertinent in month and half, ask it then. Otherwise, grab some of Neil’s popcorn ’cause the post-Superbowl inventory avalnche is about to come to a neighborhood near you.
munch munch munch
Sorry, did I hear my name?
Got popcorn?
Neil
Pass me some of that popcorn, Neil. The good part’s just about to start.
The listings start ballooning right after the Super Bowl hangovers
go away, probably Tuesday morning. Then the real Spring non-buying season begins, with listings and foreclosures heading toward the moon. Gentlemen, Start Your Engines!!!
But, remember, the Bay Area is different…
It’s gonna be better in the spring…and they’re NOT budging on the prices…’cause it’s different here don’t ya know?!
posted “It’s gonna be better in the spring…and they’re NOT budging on the prices… ”
When the Spring/Summer selling season fails this 07′ it will be straight down….
“‘Making the lender responsible for determining which loan is suitable for a borrower will limit consumer choice and could deepen the slowdown in the housing market,’ Kurt Pfotenhauer, MBA’s senior vice president of government affairs, said.”
Translation: We need to be able sucker even more fools into the ponzi scheme.
Let’s make the problem even worse, by increasing the number of people who will eventually default on their mortgage and lose everything.
Everytime the FB’s have to refi, the MB’s make even more on commissions. They don’t care. Get used to it. Don’t trust anyone in business.
Vmaxer….I don’t think a lender can determine the loan product that a borrower wants ,the only thing a lender can do is offer all the loan product the borrower could qualify for and be trueful about what the features are regarding each loan .
A lender should just qualify the borrower for any loan program they might choose . it’s real simple ,lenders use to do it for decades.
I agree with you on your translation of what the loan guy wants to be able to do .
Maybe this is why both sides are so desperate for the open borders. There’s a billion people in Asia and another 500 million south of the border who could fill up these empty stucco boxes. If you cram 50 people to a home, I’m sure they could afford the payments over 100 years. We could fit enough people in this country to make it look like Bangladesh.
I hope you guys have already have an escape plan for when the SHTF.
You got it Jerry. I wouldn’t be surprised to see signed legislation this year for amnesty.
~Misstrial
I definitely believe this is one of the many reasons the politicians want open borders. That, and new wage slaves who don’t expect anything for their labor, except a few dollars/day. Oh, and they’ll pay taxes on those dollars, too!
November 19, 2005
Neil Cavuto: If home prices slip will it lead to a housing bust or a major buying opportunity? Barbara Corcoran says a dip in home prices is a big buying opportunity! So, Barbara I don’t mean to be cynical but you’re in the business so you’re going to hype it all you can.
Barbara Corcoran: Well, no I’m not going to hype it all I can. I’m also a buyer in the business and a seller in the business. There’s so much uncertainty in the market right now that it really is a great time to buy. And I don’t think it’s going to last very long. Come January, everyone who doesn’t buy their house right now for the price they can afford is going to wish they had because they’re going to be paying more in January.
Jim Rogers: What’s going to make them go up in January?
Barbara Corcoran: In January you can set your watch to Super Bowl Sunday.
Gregg Hymowitz: We’ve been talking about this for years now, right? And it’s always been about interest rates. Interest rates were low, and home prices went up — money was cheap. Interest rates are up materially from where they were, and homes prices have stopped going up. It’s dead in the water for a long time to come.
Neil Cavuto: But not a crash.
Gregg Hymowitz: No there’s never been a crash.
Neil Cavuto: Well there was in the late eighties and nineties.
Gregg Hymowitz: In isolated places. Homes prices aren’t like stocks. It’s very geographically driven. Overall, throughout the country, there’s never been a home crash. It’s very much interest-rate driven.
Ben Stein: Well we most certainly had a crash in Malibu and in Beverly Hills where I live. Historically, just after the peak of a bubble is not the best time to buy. Historically, once you’re off the peak of a bubble it goes down quite a ways before it recovers. And as to why you can set your watch to Super Bowl Sunday, I’m mystified. Usually people have to have a reason for something. I’m not quite sure what Barbara’s reasoning was.
Barbara Corcoran: First of all interest rates are not high. You’re just comparing them. Even though we’ve had five big rate hikes by the Federal government, what has it done to mortgage rates? Really nothing. What I mean by Super Bowl Sunday is this whole media babble stuff that’s out there is going to get old and boring. The media is going to move on to something else.
Neil Cavuto: John Rutledge, I know you pay cash for all the buildings you buy, but what do you think of that?
John Rutledge: Barbara I love you, but we’ve got Barbara’s bubble-busting babble going on over here. Interest rates are all that matters. They’ve been priced into the market. Banks are now not financing spec houses. And Ben, I live in Greenwich, and you live in Malibu. We can buy homes now for less than $4 million. It’s a heck of a market. This is not a crash, but this not the right time, other than a busted spec deal, to buy a house. Stay in the stock market. Stocks are going to give you 10 percent a year.
Jim Rogers: Houses are going to go up in some parts of the country where they haven’t had the bubble, but buying a house in Greenwich or Malibu at these prices is total madness.
Barbara Corcoran: Those houses that you live in now are going to go up. I would put my life on it. More than that I’d put my money on it.
“Barbara Corcoran: Those houses that you live in now are going to go up. I would put my life on it. More than that I’d put my money on it.”
Notice that she didn’t give a time frame.
Within 40 years, in actual $ amount (as opposed to inflation adjusted), she is right. When you don’t really say anything, it’s easy to be “kind of right”.
Man, that is priceless.
“Even though we’ve had five big rate hikes by the Federal government,”
5 rate hikes? If you want to be credible, better get your info right Barb!
“Barbara Corcoran: Those houses that you live in now are going to go up. I would put my life on it. More than that I’d put my money on it.”
THERE IT IS!! The sure fire way to make money in ‘07 is taking Barbara up on her bet. And to think that I was going to leave my money in CD’s. Someone get us Barbara’s e-mail ’cause I want a little taste of that action. Let’s see if you mean buisness Barb.
Send email to Barbara.
http://barbaracorcoran.com/
Barbara Corcoran’s credentials include straight D’s in high school and college and twenty jobs by the time she turned twenty-three. It was her next job, however, that would make her one of the most successful entrepreneurs in the country, when she borrowed $1,000 from her boyfriend and quit her job as a waitress to start a tiny real estate company in New York City. Over the next twenty-five years, she’d parlay that $1,000 loan into a five-billion-dollar real estate business.
Barbara is the author of If You Don’t Have Big Breasts, Put Ribbons on Your Pigtails, an unlikely business book that has become a national best-seller. In it, Barbara credits her struggles in school and her mother’s kitchen-table wisdom for her imagination and her quick wittedness in the business world. The book is a fresh, frank look at how to succeed in life and business and is as heartwarming as it is smart and motivating.
In 2005 Barbara’s entrepreneurial spirit prompted her to start a new venture, the television production and business consulting company Barbara Corcoran Inc. She is a regular contributor to the Fox News Network and ABC’s Good Morning America and The View.
As a speaker, Barbara brings her front-lines experience and infectious energy to every person she meets. Motivational, inspirational, and sometimes outrageous, Barbara Corcoran’s tell-it-like-it-is attitude is a refreshing approach to success. .
About 5 years ago when I worked at Morgan Stanley I met this woman for a 1/2 second at a REIT conference. She’s short, relentlessly perky, a serious lightweight. Clearly thought she was in the same league as the big money in the room–zell, zukerman, the Kimco guys, et.al. The UR Realtor–an aging suburban cheerleader on steroids.
Oh crap - I thought you were just being sarcastic, that bio is on her site…
Holy crap … ummm…. wow… I thought you were sarcastic too until I looked…
How can people take these real estate shills seriously? They hardly ever cite facts. Their utterances are based almost entirely upon wishes and dreams. A seedier industry would be hard to find these days. I wonder what that hag is saying today.
exactly.
Give me facts, trends…
And an explanation on why when we have more bedrooms per person and a lack of buyers the market should go up!
D(price)/Dt is negative
D2(price)/Dt2 is also negative (the rate of price decline is accelerating).
ok
D3(price)/Dt3 is positive. Woo hoo! Why, that means that prices should bottom in… about 2009.
Note: I still am looking to see if 3Q 2008 is a good time to buy.
But any earlier? Ghad… the NRT hasn’t even been reformed. Look at inventory in Florida, Pheonix, Vegas, DC, and So-cal. This… hasn’t even begun.
Not to mention, the big company relocations are just about to start.
Got popcorn?
Neil
she called the last Super Bowl market-jan 06 = boom time
it did explode afterall
Can I pull the trigger when she is wrong?
Nope, she’ll go out Sadam’s style.
I think I’d prefer the style of Saddam’s brother-in-law. Seeing that perky little head pop right off, ribboned pigtails flying, would be delightful.
That was an exchange on Fox News in December of 05 about the last SuperBowl. I know because it was the only time I have ever been compelled to write an email to a television show. I begged Cavuto to never allow her on his show after hearing that exchange.
Yeah…And who is the other “Long Haired Dude” (Remax ?) that is on the show also….??? I have never heard the guy say one negative thing about buying rel estate….He’s a pimp just like Barbara…
And Ben, I live in Greenwich, and you live in Malibu. We can buy homes now for less than $4 million.
But the people have no bread!!!
No bread? Well, let them eat cake!!!
A funny story about that “let them eat cake” quote — it’s not what people think. (And not because it wasn’t Marie Antoinette who said it.)
In fact, it referred to a crisis in the pre-revolutionary French paternalist regulatory state. The price of ordinary bread was capped (by rulers who thought they were doing the common people a favor, by keeping prices down.) But the price of upscale breads, like brioche (the “cake” in the mistranslated quote) was not regulated.
The natural result was that the bakers tended to bake lots of brioche (for which they could charge the market price) and not much bread, which accordingly tended to run out a lot. The saying “Let them eat brioche” was connected to a proposal that a baker who ran out of ordinary bread would be required to sell his supply of brioche for the ordinary-bread price.
Current foreclosure data for LA county and Scal as of Feb 4th, 2007. Data from Foreclosure.com:
Foreclosures in LA county at 1392. DOD’s at 11710 and climbing fast.
Riverside county is at 1292 foreclosures and 6356 NOD’s and also climbing fast.
For all of the six-county Scal region there are 5503 foreclosures and 31859 DOD’s and climbing. Ratio of NOD’s/NOT’s 6.78/1, or 14.72% of NOD’s ending up as foreclosed properties for entire 6-cty region
Notes: Some cities/zips in LA county seeing 15-20+ foreclosed properties. The Banks are not reducing prices all that much, and the listed Reo properties are shown next to Zillow Zestimated prices, which IMHO are completely bogus overappraised valuations.
The real Foreclosure hits so far have occurred, as expected, in the Palmcaster and IE outer fringe areas. Seeing nice REOs for under $200,000 for SFH’s all over these areas, and the foreclosure meltdown in the LA/IE has just barely started.
I can’t wait for the $1 trillion in ARMs to reset. I want to see the gamblers cry and beg for mercy
Some how those F$%kers with ARM’s ready to reset will get bailed out. I can feel it in my bones and it’s already making me crazy. DaBoyz can’t loose that kind of money; so watch for a “fix” to hit at a mortgage company near you,
But it’s California……everybody wants to live here! There’s a shortage of housing so market fundamentals don’t apply here! Prices will not collapse. People will find a way to pay their mortgage even if they have to go delinquent on their car or credit card payments. Remember in California everything is different. We have a movie star for governor and the mayor of one our largest cities just got outed for diddling the wife of one of his best and closest friends.
Everything here is different! People are better looking, sports are just more cool here! We don’t mind paying twice as much as everyone else does for a house. We don’t mind paying an average of 20 cents a gallon more for gasoline. We don’t mind spending more time stuck in traffic because NIMBY cities like to build business parks but no housing to support them. Why don’t we mind these things? Because we get to do them in California! That’s why!
God Bless California! The Goldplated State.
there not enough supply of new SFH coming up in parts of calif esp in Bay area to support the huge influx of immigrants who came in 90s. mostly due to regulation and not because of lack of space - there are tons of empty office buildings. the immigrants don’t seem to mind spending large fraction of their incomes to buy a house causing the price of starter homes to rise and supporting the exorbitant prices in california.
Last I checked, SF population was DOWN not up.
That said, there is a huge space shortage, but it doesn’t mean that prices will keep up.
houses in my old neighborhood (southern part of Sunset Neighborhood near West Portal) dropped up to 15-20% in the late 80’s early 90’s.
The issue isn’t if there’s a shortage of land or not. It’s whether or not there are people who can afford the places. Even if they cram 20 to a building (already being done)
Even if they cram 20 to a building (already being done)
Good point DOC;…Many wonder how people afford these purchases (particularly immigrants)….Take a close look at how they live…They have 4 income households, buy their furniture and cloths at garage sales, shop at Costco and NEVER go out…..Take the Hispanic family purchasing a duplex (780K)….2 bedroom 1 bathroom each side….6 members working full time and one set of grandparents taking care of the children….Sound bizarre ?? True story…..
Actually, the population has been falling in the Bay Area for some years now, according to the Census Bureau http://www.bayareacensus.ca.gov/bayarea.htm
This is also verified by DMV vehicle registration numbers, and by IRS tax return numbers. In addition, there are far fewer jobs in the area than 5 years (or even 10 years) ago, according to the Labor Dept., and those jobs pay less. Take a look at the percentage of vacant dwellings in the Census Bureau site; they have basically doubled in just 5 years. If there were really population pressure driving home prices, there would be fewer vacant homes, not more.
“God Bless California! The Goldplated State.”
God Bless CA, The Gold-Digger State.
Reverting to the mean… and I it’s gonna get MEAN!!
You bet I like the big Earthquakes myself, better in california. Sales taxs go up to repair the damage and stay, never going away even after all damage is fixed.
‘Everything here is different!’
Prop 13 is different. It encouraged metropolitan areas to approve commercial construction without adequate housing because of the impact on the local tax base. Thus, there is an absurd shortage of “affordible” housing in CA. There is no shortage of half million McMansions, but a surplus of those in most metro areas. Another thing that IS different about Calif is that 42% of ALL imports to the US come through the ports of Los Angeles and Long Beach. Since we don’t manufacture much domestically anymore, there is an enormous logistics industry based here. There are a few things that are different about California, but New York City housing prices are not sustainable by any stretch.
The stock guy just wants people to invest in stocks , the realtor was doing the same old urgency ” buy now” cheerleader dance ,Jim Rogers and Bein Stein were trying to be honest about the bubble/crash .
Did you notice how the realtor got the last word with betting her life/money that real estate would go up ,but she didn’t provide any grounds for why real estate will go up soon .Hymowitz was just mouthing realtor spin .
Overall, I don’t think Barbara Corcoran was very convincing . I would love to know if she has any property or would really buy property in a market like this (don’t think so ).
Appraisers pressured to inflate home values
Here’s an article from today’s SF Chronicle RE section about the pressure on appraisers. No suprise here…
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/02/04/REGS1NTAH51.DTL
You’ve got a situation where sales are down, so everybody in the deal needs it to go through” at the contract price — the mortgage broker, the real estate agent, the lender and seller.
Loan brokers are now routinely “dialing for values,” Hummel said. “They call up appraisers and say, we’ve got this sale at $335,000 at such and such an address. Can you get to that number?” If an appraiser answers yes, he or she gets the assignment. If not, the appraiser is bypassed.
Worse yet, said Hummel, when an appraiser comes back with a market value estimate that is lower than the sales contract price, the appraiser may not get paid, and frequently is blackballed by the mortgage broker or realty agent.
No surprises here relative to the current appraisal environment here on this blog.
The constant cheerleading hype from realtors is why I NEVER fully trust any salesperson whose livelihood depends on commissions.
Cars, houses, anything depending on a one-time big payoff is suspect. You really have to do your homework to sort out the truth from the spin.
And whats amusing is when you take the initiative to do just that, the sales people can’t be graceful about your knowledge, they get all pissy & defensive, like you’ve just lifted the judges robes to see for yerself . . . !!
And whats amusing is when you take the initiative to do just that, the sales people can’t be graceful about your knowledge, they get all pissy & defensive, like you’ve just lifted the judges robes to see for yerself . . . !!
—————————–
I can definitely attest to that. If you read the RealtyTimes articles, you’ll see what they think about informed buyers. They think we’re too picky, afraid of committment, high-maintenance, etc. and blast us for actually wanting to get more for our money (gasp! a commission check they’ll actually have to work for!!).
I highly recommend reading those articles. It lets to you see how they feel about their clients, and how then monopolize listing & sales information — and how much money they’re willing to spend in order to keep buyers and seller in the dark.
too many typos, sorry! must remember to re-read before posting…
Home builders fly South
At a challenging time, industry trade show may offer solutions
By Amy Hoak, MarketWatch
CHICAGO (MarketWatch) — Home builders are in the midst of the most challenging times they’ve faced in recent years. Yet thousands of professionals in the industry will leave the field and spend some time in sunny Orlando, Fla., next week.
Their destination: The 2007 International Builders’ Show, hosted by the National Association of Home Builders, where a record number 1,900 exhibitors will be on hand to showcase their products Wednesday through Saturday. This year’s show also has broken the record for the number of advance registrations, said Jerry Howard, CEO of the association.
“Typically, we don’t see attendance go up in tough times,” Howard said.
continued at MarketWatch…
http://tinyurl.com/29nfs3
I have been to the show 5 times over the years….Outstanding display of “State of the art product” from throughout the world….Well worth the trip if you have a interest in home building products…
Whenever you bust someone for not acting in your best interest ,they get pissed because they see their easy money going out the window . Your suppose to be a sucker that never catches on . All you got to see is how pissed criminals get when they get arrested .
A good observation. These types of personalities immediately turn their anger and blame towards the person/establishment they were trying to rip off. These people have flawed characters. Most will not and cannot ever change. They are the bad seeds of society. These people will always be onto the next scam or con. Unfortunately, it doesn’t stop at ruining peoples financial well-being as these criminals take lives. There is a reason we build prisons. Some people are simply out of control and pose a terrible danger to society in general.
I feel that there is alot of psychopathic behavior going on in the real estate market today . There seems to be the attitude of I got mine ,so scr-w you . The T’V. programs push the idea that you can put 2 thousand into a house and get 60 thousand more for the property and the whole idea in life is to con the buyer into a sale. Illusion is the name of the game ,not true value No concept of a fair transaction anymore or getting some value for your buck .It’s either a buyers market or a sellers market ,but never just a fair market . Aren’t the realtors trying to make the buyers feel like they can scr-w the sellers now that it’s a “buyers market” ? Of course these sales ploys are a lie and a illusion to make people think somehow they won’t have to worry about loss .
How the whole real estate industry could justify putting thousands ,maybe millions ,of people into homes they could not afford by telling them “,15 to 20% appreciation was in the bag “,and “you can’t afford not to buy” ,is shocking to me .
Didn’t people think about how they were pricing people out of the market and they would run out of greater fools ?
i contend that the” bad seeds of society ” that you speak of, are gaining in numbers . This real estate run-up was not good for this society . You can always judge something by the fruit it bears . A market crash and maybe millions going into foreclosure is not good fruit .
Wizard, I agree. But it’s the same attitude we see in companies where the end justifies the means, and CEOs have no shame or sense of ethics; we see it in politicians that blatantly say whatever they think will get them elected and change their tune once in office (and while banging everyone in sight); we see total lack of decency and morality in TV shows and movies. There are not many industries we can look to to set a good example any more. And we have so much advertising encouraging us to spend so much money on so much stuff, trying to convince us that the way to happiness is to outspend those around us. With all the problems with social security and the talk about when it will run out, I understand if people think they can secure their future by buying into the real estate hype that RE always goes up. Deferred gratification, slow but steady savings, and living within (or even below) your means are not attractive or sexy in today’s world. I wonder how many even know what the word frugal means…. It troubles me that others are gloating at the impending misfortune of others, tho I have to admit I get a sense of satisfaction when I see really greedy, dishonest people get what they deserve. What goes around, comes around. But many people just wanted a house, and they were told by people they thought they could trust that they could have that dream house.
bedub….I think your right that many people have been brain-washed into the lifestyles they lead ,without alot of good lifestyle examples .The RE market hype/spin was so widespread that it reached just about everywhere in America .
As you said , many people just wanted a house and were afraid of never being able to get one ,(they were scared into buying ). I really don’t think that the fear based borrower is the same as the speculator/flipper or uqualified buyer who is just trying to make a quick buck .
The more I read this blog the more I understand how young people feel today and why they feel they are in a insecure world .
Baby boomers and young people alike are running around like scared rabbits going for the get rich quick schemes .I hope what comes out of any correction in the markets will be a positive change in the way people live their lives .
You guys are on to something here.
The folks who blame everyone but themself, and feel great about screwing over first time home buyers are on the rise. I think the back-to back-bubbles (tech, housing), with some folks flashing easy money everywhere,sent folksmany folks down this path. A serious meltdown would reinstill sense in folks again. Or one hopes so.
Amen wiz…thing is though…you gave these people credit by surmising that they were capable of self thought.
Didn’t people think about how they were pricing people out of the market and they would run out of greater fools ?
the above is what i was referring to
Foreclosures are going to be big news in a year or two. It is possible given the vast number of these on the market at any given point prices will be driven down to mid 90’s levels, although there are always many factors to consider.
I believe that with good certainty, we already have the numbers to determine which debtors will default and thus extrapolate the outcome, and I firmly believe it is the foreclosure factor which will be the greatest factor impacting prices of homes over the next 5 years.
If I am right, there will be a series of reactionary triggers (tightening lending standards etc…), which will set in motion the next set of events and so on, in which case the rate at which this bubble will unwind will accelerate very quickly once things get going.
“…we already have the numbers to determine which debtors will default and thus extrapolate the outcome,…”
Yes, if the invisible hand were the only factor. But count on a newly elected Democratic congress to pass new legislation to severe the invisible hand at the wrist. (And I am willing to guess that the Dems previously played a key role in cutting off the invisible hand’s circulation in order to bring the mortgage market to its current state of near-paralysis.)
‘Don’t Turn Back the Clock Cleaning of
FairPredatory Lending and HomeownershipGainsForeclosures.’I work for a gov agency in SoCal that is putting on a county fair. Most of last year\’s sponsors were home builders/mortgage companies. The staff that are responsible for securing sponsors can\’t figure out why they don\’t want to sponsor this year. I wonder….
Good anecdote!
Personal anecdotes are one of the greatest treasures of this blog.
Thanks, Ben!!
Can we safely assume that everyone here is rooting for the Bears?
No wonder the top politicos are not worried about 1 trillion in ARM resets. Bush wants 2.9 Trillion from Congress.
I’m clearly such a piker I think this is real money. Clearly, we have no economic issues, everything is looking “goldilocks.”
Bush set to request $2.9 trillion from Congress Monday
• Money will pay for Iraq and make up for cuts to 141 government programs
• Democrats highly critical of his budget proposals
• The federal deficit hit an all-time high under Bush of $413 billion in 2004
http://www.cnn.com/2007/POLITICS/02/04/bush.budget.ap/index.html
Wow. A little joke about Housing Bears rooting for the Chicago Bears, and this is how you repay me? Sheesh, it wasn’t the best comment I’ve ever made, but that was some reply…
Sorry JP,
I hope I din’t ruin anyone’s victory celebration. If I can’t get with the good news, I’m going to get shipped out for a little reprogramming.
My apologies.
Tim to pull our boys back and let the Muslims settle their old scores.
I’m with you. If they want to fight over this for another thousand years or so, we could probably find something better to do with our time.
I’m with McCain on this one. If what happens in the vaccuum we leave in Iraq after a US withdrawal only results with us needing to return in a few years to face an even bigger danger (that is aimed directly at us) than what have we gained?
Let’s be what are forefathers were and finish the job. Heck we’re the ones that stirred up this bees nest.
Wasn’t it Cheney who said “Deficits don’t matter”? For some reason I thought he was quoted recently saying that… does he know something the rest of us don’t?
Nearly Half of Consumers Say Housing Price Collapse Likely.
http://originatortimes.com/content/templates/standard.aspx?articleid=2284&zoneid=5
‘Nearly Half of Consumers Say Housing Price Collapse Likely.
http://originatortimes.com/content/templates/standard.aspx?articleid=2284&zoneid=5‘
So can someone explain why consumer sentiment (and homebuilder stocks) is flying high? Whom do they interview for that survey, renters?
“So can someone explain why consumer sentiment (and homebuilder stocks) is flying high?”
Stupidity, possibly accompanied by alcohol consumption.
The Superbowl is over. Let the Spring Selling Season begin.
Let the Tsunami of listings and foreclosures begin…
I was shocked to hear today that a buyer can now purchase a property and write off PMI on their taxes. This was passed last month. How come its not headline news?
Government is trying to keep the RE buying spree going, but I dont know if this is going to do any good.
Ben- Can we have a thread for this topic?
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/02/04/BUGJ8NTRT71.DTL&hw=pmi&sn=001&sc=1000
Shares of mortgage-insurance companies have soared since Dec. 6, the day before word leaked out that Congress was finally ready to let homeowners deduct mortgage-insurance premiums.
On Dec. 9, Congress did approve the deduction. Yet it has so many strings attached, it’s not likely to be a boon for home buyers or mortgage insurers.
The federal tax deduction only applies to mortgages taken out since Jan. 1. It expires at the end of this year. Homeowners can’t claim the full deduction if they have more than $100,000 in household income and can’t claim it at all if their income exceeds $109,000. They must itemize deductions to claim it.
Even if Congress extends the deduction beyond this year, it’s not likely to solve the mortgage insurance industry’s loss of market penetration.
Mortgage insurance pays the lender if a borrower defaults on a loan. Most lenders require borrowers to buy mortgage insurance if they put down less than 20 percent of the purchase price of a home. Borrowers can cancel the insurance when their equity in the home reaches 20 percent.
The cost varies depending on the particulars of the loan, but it averages 0.6 to 0.8 percent of the original loan amount per year, says Greg McBride, senior analyst with Bankrate.com.
On a $200,000 loan, that works out to about $1,400 annually. On that amount, the federal tax deduction would save someone in 25 percent federal tax bracket about $350 a year.
The deduction will make mortgage insurance more competitive with piggyback loans, which have always been tax deductible.
Required reading:
Rich Toscano educates us on who is taking the risks in mortgage-backed investments, and what could happen if things don’t work out as planned:
http://voiceofsandiego.org/articles/2007/01/22/toscano/970cds.txt
A good education on how mortgages are “insured” through Credit Default Swaps (CDS’s) from the investors’ side of things.
“That last point is really the big issue: CDS issuers are not typically insurance companies in the traditional sense, but rather financial institutions or our old friends the hedge funds. And it’s simply not clear that the insurers have enough capital to actually pay off the policies they’ve written…”
“…From the MBS buyers’ perspective, problems in the CDS market could lead not only to increased insurance premiums but also to doubts about whether the lenders were actually insured by a solvent party. The net effect being that they might not be so quick to snap up those “non-traditional” mortgages that everyone loves so much.
For high-flying housing markets like San Diego, that would be bad news.”
Oh , who would even want that sub-prime junk paper . Talk about high risk . That 2006 loan paper was real bad ,(alot of fraud ,cash backs ,inflated appraisals ), I rate it “F” paper .
Mr Toscano’s article is the best article, by far, that I have read about the complex web of MBS, CDS and derivatives. I have always wondered exactly WHO is going to be stuck with these underperforming loans when foreclosures really take off and millions of people walk away from their homes / investments. The fact that hedge funds are involved in CDS raises red flags for me. The book “When Genius Failed - The Rise and Fall of Long Term Capital Management” is a good read to get a feel for how this will ultimately unravel. This is all a “house of cards” destined for collapse.
Here in the Bay Area people are still buying like there’s no tomorrow. My wife’s friend (relocating to another state because of job transfer) sold their house in less one week for $1.3M. Unbelievable!
News from Albuquerque. There was a report of about a dozen boomers with fists full of cash and some Hispanic folks same running around making double offers on available housing. They didn’t miss out on these bargains here in New Mexico right after the final clock ticked off for the Super Bowl.
I had a friend from San Francisco say he saw the same in the Inner Sunset. Only there it was a horde of rich Asians with fistfulls of dollars and they were all outbidding each other.
A report from Miami - there was a hoarde of rich boomers and foreigners rushing out right after the game and trying to outbid each other on all of those highrise condos in downtown. They were trying to beat the rush.
“That is what happened to a client of Barbara Williams, a certified financial planner in Carlsbad. The client said she wanted to refinance her roughly $400,000 condominium in San Marcos. She said she told her mortgage broker, then a personal friend, that she didn’t want negative amortization, but wanted an interest-only mortgage for one year.”
Excuse me but $400,000 condo in san marcos?!? San Marcos is nowhere, why would anyone spend this much for a condo or even a house there. Its 30 miles from downtown san diego, 20 miles from the ocean and oceanside, and 12 miles from Escondido, which is an inland nothing city. Its hot and dry, working class, not a place for a condo or for 400,000$ houses.
Decided to look for some info on the gang activity in SM (lots of gang activity, all around the city) and found this nugget on a message board:
Anyone else out there thinking of getting out of San Marcos? We have just about had it with the out of control population growth and increasing gang and drug activity. There is an ongoing exodus in my neighborhood that started a year ago and we are thinking of moving out of here soon, too.
A RESPONSE:
I was thinking of leaving San Diego altogether. I looked around and had my sites on Washington like so many others. I don’t think I would mind the cloudiness to much since I have lived on the east coast too. Then I started thinking “I’m living on a gold mine here.” Home prices are a little rough right now but they’ll come back like they always do. My parents moved to Escondido back in the early 70’s and bought there home for under $100,000. I’m sure you can imagine what they ended up selling it for when they retired. I’m staying as hard as it seems. Doesn’t matter where you live they all have there problems, crime, prices, traffic….
Good luck with whatever you decide..but you too could be living in a gold mine….haha
http://www.city-data.com/forum/san-diego/4439-fleeing-san-marcos.html
———————-
And so…the moron with the “gold mine” refuses to actually cash in his chips. Another “winner” in the RE lottery…
We have a poster on our local town blog who is moving here from the West Coast. On her thread, other posters kind of got into the strange goings on in the town but her response was that her West Coast neighbors had taken to carrying stun guns to the local markets and she was sure nothing could be worse than that.
Hi CarrieAnn!
Been wondering how all the medical stuff in you family has been working out.
Hope you guys are feeling better! Take care!
California will be a dead zone with in 10 years as the “middle class will be gone or those few who remain will be buried in debt. No one will buy their houses for what is owning on the mortgages. Their sunk. The wealthy have many choices and places they can live.California taxes will “eat” those who remain in the garden state. People still get it. They soon will.