Bits Bucket And Craigslist Finds For February 7, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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The slump is all in your mind…. Well mostly.
http://www.ocregister.com/ocregister/money/article_1566240.php
I can’t help but wonder how long it will take for this kind of mentality will fade and sellers begin slashing prices. On Long Island, we have a pretty decent inventory (slowly rising) and a couple of sellers dipping into the high 300s but I feel like until I see prices dipping into the high to mid 200s THEN people are getting a clue. I’ve been told i’m delusional….
LI is driven by property taxes. if taxes were low then the average couple could probably afford a $400,000. but the way taxes are going up i don’t feel safe buying anythng except maybe in the mid 300’s and the wife and i make over $100,000 a year.
taxes, utilities, LIRR, parking, subway, etc all take a big bite out of the budget
Your neighbors are over-extended. They can’t afford Long Island. Prices will come down because they can’t hold on forever. Whenever I see all of those commuters getting on to the 2 & 3 at Penn Station, from Jersey Transit and LIRR, I can see it in their eyes. They have that look of desperation. They know they are in over their heads and wish they could quit whatever job it is that is sucking their life out of them. I just whistle and smile. I rent!
that is why i would never move out to the island.
take away those taxes the monthly lirr pass the parking the car and you can live in the city (we do not plan on children so i have no desire to live in one of those types of communities)
Long Island has the highest r.e. taxes of ANYWHERE in the United States! I would love to buy a house here but the average taxes on the homes i like are at minimum 10k per year and often much higher. Add that to a home priced 500 or 600+k and i cant do it and my boyfriend and I have a combined income of over 130k!
The other problem we have here is that rents are ridiculously high. I see people posting what they pay for entire homes in expensive areas like california. Here you pay 1600+ for a crappy one bedroom apt. Recent college grads make about half of what they did in the 90’s. Average starting salary now is in the low 20’s. Kids today can’t even afford to rent even if they CAN find jobs. Long Island created just 1500 “new” jobs in 2006. My company alone let go 300 people in that time.
How are people supposed to afford all this?
People in CA are getting deal IF they live outside of LA and SF. I’m pretty sure salaries are still continuing down in SF and rental rates are going up which is so stupid because more and more people are leaving SF (outmigration) just just these reasons. SF landlords have noone to blame but themselves when the market craps on them again like it did in 01-03.
In the meantime, places like Sacramento have some fabulous deals on rentals but you have to be really careful with all the foreclosures. You could be forking over deposits and rent money to an individual that already lost the house and next thing you know the bank is evicting you - not fun.
Don’t be silly. Obviously LI is expensive, but you’re quoting some fairly high numbers. The median home price in Suffolk is about 400K, so that means that there are plenty of homes under that number. There are even a fair number of homes under 300K, as long as you’re willing to live in a smaller home in a less desirable area. If you give up the quest for a McMansion, things look more afforable. And for home like that, you’ll be paying much less than 10K a year in taxes.
And I’m paying 1700/month for a beautiful 2BDRM apt in Babylon Village. I could easily be paying less if I was willing to live in a less desirable area, but this apartment is in walking distance of the train station, so my fiancee and I only need the one car because she works in NYC.
LI is expensive, but I love it here and I wouldn’t want to live anywhere else. I’ve had job offers to move to Tennessee. It’s much cheaper to live there and I could have bought a house almost right away but, Tennessee?
No thanks. Next year, when housing prices drop back to normal I’ll buy a modest, little place for me and my sweetie and me to live in. Until then, I’m a happy renter.
I don’t see why it would fade … I think the article is actually correct in stating that the onset of the housing decline was driven to a large part by psychological factors. I think that bubbles are fundamentally an effect of mass psychology, like lemmings jumping off a cliff, or people stampeding each other to get out of a burning theater when actually everyone could’ve made it out by walking. Of course, when you examine the causes of bubbles under a microscope, you can always say that they’re due to low interest rates, hype, etc, but to me, that is a bit like saying that it is wet outside because it is raining. It explains the mechanics of what is happening in a descriptive way, but does not address the fundamental root cause.
Just because an effect is psychological does not mean it is not real. Remember, the illusion in the Placebo effect is in the subject’s mind, but the Placebo effect itself is a *real* effect.
I agree with you Annata. I think that what is missing in the MSM is an acknowledgement that the psychological factors were a primary contributor in the ascending side of the housing price bubble. For some reason the housing bulls have a burning need to justify the high prices, to avoid any mention of any factor that would undermine those paper prices/values. Of course anyone would rather have their home or investment be worth more rather than less, but unlike securities, housing ask prices are perceived wishing numbers that the REIC tries to prop up, while the real prices are set at sale. So, where’s Neil and that popcorn cause this is one we just have to sit back and watch for a while.
Every time I see a quote from one of these RE folks I just want to puke. Anyhow, I have finally given up on Orange County and I’m moving my family out to Ridgecrest next week. Home prices there are just about 50% of what they are here in OC. The problem is that they are still inflated and I think I’ll think twice before getting into that market as well.
My visit to the town, I was looking for an apartment and was told that the local Coldwell Banker could help me out. Unfortunately for me they were not open yet, buy I noticed a woman standing out front looking at all of the pictures of the houses for sale in town. Let me tell you, there were a lot of houses. I asked her if she lived in Ridgecrest and she told me that she was from Corona. I told her my situation and she invited me to follow her to a place that her sister (also from Corona) had for rent (a 4br,2br, house for $1100/mo); a little more than I needed, but I thought “what the heck”. When I got there, the sister practically begged me to rent the place and dropped $100 off the top. Next, she asked me if I wanted to buy the place outright! It turns out that between the two of them, they “own” 6 houses in Ridgecrest. All purchased within the last couple of years. So, I’ve been looking for the last couple of month at the local listings link from the Coldwell Banker site and there have consistently been about 400 of the same houses for the same prices for sale. Needless to say, I would hate to be in there shoes right about now.
offer to squat ,pay utilities and cut the lawn
And if they counter — offer to pay the property taxes.
I had the same idea here in Northern VA. Rents have come down since last year and there’s so much more to choose from. We could easily save $500 a month and perhaps even $1000. Our landlord couldn’t get her “wishing” price last year and wanted to wait until the “market improved”.
I thought about telling them we’d pay $700 less a month and keep the utilities on until they found another renter or a buyer. Last year, we saw a better deal and figured we’d just move. The arrogant (not exaggerating - he was a specuvestor and whinged constantly that our rent was short of his mortgage) landlord didn’t bargain hard enough to keep us. The place stayed vacant for 8 months. They need us more than we need them at this point.
Bingo, Arwen. I posted the other day I am seeing all sorts of craziness in the District’s rental market - people are asking (wishing) $1,700 for basement apartments in marginal neighborhoods. I pay $1,700 for a whole house.
A friend of mine just rented a small, but newly renovated two bedroom rowhouse up on Capitol Hill for $1,200/month. The speculating owner had it on the market for seven months and had slashed his asking price by $200 per month for five months before my friend stepped in. Unbelievable.
Wow - why commute when you can live right on the Hill for $1,200. You can walk home and catch a nap during lunch. I used to live five blocks from the Capitol. It was kind of dangerous there 15 years ago — you couldn’t safely keep a car outside, for example.
Was in Ridgecrest and Inyokern this past weekend visiting old friends. My one buddy lives in Inyokern on an acre of land with a double wide trailer, garage, extended porch which he purchased a few years back for $31,000. Only bills are utilities, taxes and insurance. He is a couple of hours away from Bishop for great fishing and skiing and a couple of hours away from LA for shopping. Not a bad life for an early retiree.
I get to tend the rabbits, right George?
I sold and rent in ridgecrest, prices are definitely inflated here. There is plenty of land, you could double the population of the town, and nobody would drive more than 15 minutes to work. Prices are still about 2.5 times what they were in 2001. Good luck trying to find a landlord who is not a future FB, I couldn’t. Every single 4 bedroom for rent last summer was: speculator from LA area, bought new and ‘could not’ sell old place so were renting, moved and bought another house and rented old one as investement. But, there are a lot more 3 bedrooms for rent, perhaps some of these are non FB landlords
The soft landing is all in your mind… entirely.
I am SHOCKED! “Coldwell Banker agent Mac Mackenzie blamed a huge portion of the wedge on “unethical behavior of agents” ”
I thought ethics was one of the traits we could count on with our highly professional Realtors! LOL
Hmm…
Last week wasn’t so hot.
“The MBA’s seasonally adjusted purchase index, widely considered a timely gauge of U.S. home sales, fell 0.8 percent to 404.7. The index was also below its year-ago level of 425.1.”
http://tinyurl.com/2qq549
“California’s housing slump resulted in part from conflicting expectations of buyers holding out for better deals and sellers still seeking a premium for their homes, a state Realtors group concluded.
Higher interest rates and low affordability are also among the main reasons for the slowdown last year, the California Association of Realtors said in its 2006 “State of the California Housing Market” report, released Tuesday.”
Translated as …
Stupid, dumb, idiot homebuyers slowing down sellers progress by actually thinking that they may get a better deal, but a temporary damper on our Southern California gold mine real estate market.
Oh yeah, fundamental deteriorated as well…
“California’s housing slump resulted in part from conflicting expectations of buyers holding out for better deals and sellers still seeking a premium for their homes, a state Realtors group concluded.
Higher interest rates and low affordability are also among the main reasons for the slowdown last year, the California Association of Realtors said in its 2006 “State of the California Housing Market” report, released Tuesday.”
Translated as …
repost :
Stupid, dumb, idiot homebuyers slowing down sellers progress by actually thinking that they may get a better deal, put a temporary damper on our Southern California gold mine real estate market.
Oh yeah, fundamentals deteriorated as well…
renting madness in costly london plus a comparison to ny
plus some gold, details on the endgame for nova star / nfi,
and 84% of funds managers think that stocks are fairly valued or undervalued.
http://immobilienblasen.blogspot.com/
The Godfather Protection Racket:
http://wallstreetexaminer.com/blogs/winter/?p=402
I tried to explain this to an academic economist a couple of days ago, but gave up in disgust…
You should ask him the following question, “Who in their right mind would buy two to five year mortgage backed securities (for less than six month T-bills) on the right side of a (serious, severe, minor, fill in his blank) housing fade?”
Slump reported by MSM: http://tinyurl.com/3dt68d
real estate who’s buying now”?
answer=idiots
I gotta correct that.
Idiots and
People who absolutely must “own” a house this quarter and they don’t mind losing up to 50% of the stated value of the home.
Ummm, what’s the difference?
then you get those people like
oh we have kids we cannot rent!
oh please
“oh we have kids we cannot rent! oh please”
Just remind them that it is now actually possible to rent an entire, real, HOUSE. Imagine that.
One reason I do wish to own a house is to be able to pursue growing things and sticking around long enough to see the results. I do miss that. Land prices keep coming down every day, so I’m planning to buy the property and build. That’ll give me somewhere to put my Iris, Peony, and Day-Lily bulbs. As the wise King Solomon said, “First prepare your fields, then build your house”.
” is to be able to pursue growing things and sticking around long enough to see the results.”
The answer to that is to plant everything in big pots and take them with you when you leave. That reason alone is not enough to justify buying a house.
In Lancaster, most of the Section 8 recipients live in houses - and nice houses, at that. Their vouchers are based on LA County median housing cost - but rent is drastically lower in Antelope Valley. So it is not uncommon to see Sec 8 recipients rent a 3/2 house with a market rent of $1200-1400/mo that is fully covered by their voucher.
As a mother who sold in 05 and now renting a “whole house” just as nice as the one i sold, does see the value in owning a home in a decent area to raise my children. I think it is important and a lot less stressful to be able to raise your kids in one house while they go to school. I was raised as an only child with a single mother and we moved ALL the time. i hated it! I would get started in an activity and then i would have to give it up to move. I would make a nice new friend and have to say good bye 6 months later. It was hard and I lived it. I don’t want that for my kids. Just my two cents on renting and children.
If you really want to own soon, buying land and then building is a good bet. Land prices drop first in a bust because developers know what is coming and want cash fast. Building in a bust is much cheaper; subs are willing to work for less and materials are already dropping in price.
One of my co-workers, the other day, told me that he is looking to buy real soon. I asked him why he would even consider buying at the top of the market when it is already apparent what’s happening. He looked at me like he didn’t know what I was talking about. I guess he’s been talking to the RE folks. He was just recently married, and he is being pressured by his new wife to get in while the gettin’s good. Apparently all of her friends “own” their own homes. I tried telling him to just wait a few more months and then it will become clearer the direction that the market is heading, but he just gave me this look like he doesn’t have a choice. Yikes! Can you imagine a man being pressured by his wife to buy because that’s what everyone else is doing? What a strange thing to do huh?
People either learn the easy way (from others, from reading, etc.) or they learn the hard from - fromthe school of hard knocks.
Experience keeps a dear school, but fools will learn in no other.
Benjamin Franklin
“Can you imagine a man being pressured by his wife to buy because that’s what everyone else is doing? What a strange thing to do huh?”
You mean like this:
http://www.youtube.com/watch?v=Ubsd-tWYmZw
(link to Century 21 video called “The Debate”, aka “Suzanne researched this”)
You have no idea how common that is…
I live in the Canyon Villa Condominium conversions s in Aliso Viejo CA (Orange County). They have lowered the prices and offered lots of incentives and the sheeple are lined up to buy them. I just shake my head every time I see them with the agent in the little golf cart headed to there prospective condo (apartment).
“There were some investors thinking that the market was going to continue going up,” said Ramirez,(an RE agent) who has noticed a spike in the number of bank repossessions. “When things go up, they creep. When they go down, they go down fast.”
And where would investors get such ideas?? Except for the whole REIC shill and mislead squad. This creep knew he was selling to specuvestors. But you can tell he’s an agent…he’s wrong about everything.
Prices “creep up–no they were flying upward. And now they go down “fast”–no, they’re showing a lot of stickiness.
Just the sort of bumpkin typical of the industry–that’s why he should be quoted in a national newspaper–an astute reader should be warned off using an agent.
“When things go up, they creep. When they go down, they go down fast.”
HEY ! What happened to the whole sticky on the downside argument ? 6 months ago that was all the rage. Did it disappear ?
Yesterday I probated an estate. The executor is a co-developer of two condo projects here in the PGH area, in two different relatively upscale neighborhoods, 600 total units between them.
Both projects are approximately 75% complete. Between the two, less than 1/3 have sold, and the current annual sell rate is about 80 total units. The co-developer is now switching gears and, upon completion, plans to convert all unsold units into rental units.
BTW, he’s fairly cost-conscience regarding my fee. Gee, I wonder why.
PGH area….Where is this ???
I’m guessing Pittsburgh.
Are these down by the Waterworks perhaps? I drove by them during my last visit to the ‘Burgh in October and absolutely loved the look of the gigantic power supply tower smack dab in the middle of a lawn covered roundabout. Ugliest damn thing I had ever seen in a development.
Empty houses going to pot in Cali burbs.
http://www.usatoday.com/news/nation/2007-02-06-suburban-pot_x.htm
Nice. Now if that crap were legalized and sales taxes like everything else maybe organized crime just would not be involved and maybe cops could do something more useful, such as spy on terrorist cells?
Don’t worry. If you weren’t “at or over age 55″ when President Bush said those words, you won’t be getting Social Security and Medicare after his generation gets through with the country. If the Republicans are in, we’ll get nothing.
But if the Democrats are in, we’ll get medical marijunna followed by legal assisted suicide. And yes, they’ll tax both to pay the interest.
Utterly OT, this is a third rail that politicians are afraid to touch. I am not sure why. I think (based on nothing more than anecdotal evidence) that most people agree that if someone wants to anesthetize their miserable existence they should be allowed to do so, provided they are an adult and don’t harm anyone else.
Legalization would wipe out a host of chronic societal problems.
pot prices may collapse as mcmansion (greenhose) space explodes !
Because the War on Drugs is the perfect excuse for all sorts of government intrusion and infringement of all your other rights. Not to mention that it’s a cash cow for the state. There’s no telling how much private property the government confiscates as a result of drug busts. Finally, the booming prison industry relies on a fresh set of new “criminals” coming into the system.
Really, it has nothing to do with the government not wanting you to hurt yourself.
We house 6 to 7 times as many convicts, as the rest of the industrialized world, on a per capita basis…
We’re # 1
http://www.kcl.ac.uk//depsta/rel/icps/worldbrief/highest_to_lowest_rates.php
Prohibition didn’t work in the 20s and it’s not working now.
It works for certain types of people. Law enforcement gets to expand budgets and control and law breakers get to pocket higher profits. The general populace loses, but who the hell cares about them..
But what about all the revenue that would be lost by Decriminalizing pot ??? Big alcohol would be first in line to defeat it and then. District attorney union, Probation officers union, JD unions, recovery centers, correctional facilities union and so on…..Criminalization of marijuana is a multi BILLION dollar industry that is not going away any time soon……And, no, I don’t partake….I am a beer guy….
Just have the beer companies add in some buds to the beer along with the hops, that should get their sales back. As to the rest, they can look for the guy who broke my car window a couple of years ago.
Three points in this strike me as interesting and having potentially major influence on the housing market. First, these folks attempted to move away from a perceived drug location and ended up in drugs central. This really says a lot about how shallow both perceptions and control of communities are, and thus how weak our attempts to control our fate with location and special rules are. Communities end up being about people. Second, attempts to manipulate markets generate cascading failures. There might not be a need for commuter dominated exurbs if building regulations were more reasonable and fair instead of being so often all about NIMBY. Pot used to grow everywhere and be cultivated, then came illegal fields, then the trade went indoors. Third, note that the give away breaking point here was the massive energy use and the improvised power tap. Energy costs have a massive influence over usage patterns and markets. Energy markets will change in the future, but will this mean more decentralization, or will it mean more people getting nearly all their power from nuke plants that can help enforce social control?
Ironically, the people who gutted their McMansion and use every available square inch for the cultivation of illegal herb were the only people on the street with ENOUGH CASH FLOW to PAY for their McMansion.
You could kill me with debt and you could lock me up for paying it off, but you can’t force me to play this stupid game.
(PS - I highly doubt the growers were paying the mortgage, but still I think they were singularly able to cover the debt. I wonder if your lender would provide you legal defense fees? If you’re acquitted, you could go back to paying the mortgage and they’d have one less property to firesale.)
That is a far more benevolent outcome than going to meth…
Exactly, I’d much rather be living around a pot heads then meth addicts. And growing pot vs making meth? I’ll take a little agriculture over a lab for a neighbor anyday.
In Elk Grove (where a few of the pot houses were located), Standard Pacific had an auction to sell off the last of it’s stock in one development. The auction ended up being a flop with homes selling below the minimums. The new comps in the area are now $125 to $175. Local news interviewed one owners in the area and he was worried about how he was going to refi out of his 2yr ARM now that the values in the neighborhood are at a new low. - priceless
Maxx over at Sacramento Flippers in Trouble had some nice posts on it. I think there is a link to the TV segment too.
“Growers paid up to $750,000 for houses in new subdivisions, usually obtaining 100% financing and putting no money down. They gutted interiors and used every inch to grow pot, knocking down some walls and cutting holes in others to run water lines and ducts. They installed irrigation systems with timing devices and brought in water tanks, pumps, generators and power packs. They built scaffolding to raise plants 2 feet off the floor.”
Wow, those will be nice REOs for the bank to take back.
…and due to the hothouse conditions of a grow op, the THC migrates into the walls (or what’s left of them), rendering the house permanently uninhabitable…. this happened to a couple nice rentals I’m aware of in Washington a couple years ago
On Brokers Outpost, they’re talking about lenders tightening up on FSBO loans:
http://forum.brokeroutpost.com/loans/forum/2/92148.htm
BTW, it’s mentioned in this thread that First Franklin, a big subprime lender that was sold by National City Bank to Merrill Lynch, has eliminated all 100% financing programs.
Further in the thread, it turns out the lender is First Street, not First Franklin. But the tennor is the same: sub prime is tightening. And the true massacre has not even started yet. Still 8-12 months away, after the 2007 spring sting selling season.
“spring sting”
Paladin - Good one. Did you catch that “family” potential fraud that OCRenter is onto, posted yesterday?
This practice, by one of the posters there, makes sense to me:
“We will allow for a fsbo. But, the seller cannot hold a 2nd. The seller must be on title for 12 months.”
I don’t know about you guys but I am riveted by this story about the crazy astronaut. I lived down there in the NASA area for awhile and graduated from Clear Lake High School. My sister is still there and her kid goes to school with the kid of this woman. That is a seriously wacky place. I hate to even visit, can’t conceive of ever living there. Oh well, one more house on the Houston for sale market soon.
Heh! TxChick, I’ve detected a pattern that no one that I know of has noticed. Please visit my blog for an entry about this.
You used to live down there? (gulp!)
I couldn’t get out of there fast enough and have not even visited since 1994.
The story is riveting because it remainds us of the really crazy people doing “important” jobs among us. Often we know these people are totally and completely out of their minds and all we can do is duck and hope that what ever decisions they make don’t affect us personally, but in her case it is clear she is and probably always has been crazy. Who knows what the real criteria is for being an astrounant or wait, …an economist,
Back in 1998, I went to a doctor I’d never seen before. During the appointment, something struck me as being quite odd. But she seemed quite competent when it came to the “doctoring” part. So, I decided to make her my doctor. Shortly thereafter, she was included in a local newspaper article about medical malpractice and addicted physicians.
That was then, this is now. I stopped going to her a number of years ago. Reason: She wanted to put me on drugs to clear up something that I was able to take care of myself. And, last I heard, she was no longer practicing medicine. I think her past troubles may have caught up with her.
It is oddly compelling isn’t it?, I mean she has to have something “on the ball” to get into the program, I wonder what caused the “Snap” I do feel terrible for her kids..
It’s really nutty, isn’t it? This woman is by all accounts brilliant and had everything she wanted and she threw it all away in a Fatal Attraction moment. I smell a made-for-TV movie.
oh god, lifetime.. blechhhhhhh..
lifetime is quick
tiffany amber theissen in the lead with mark harmon as the male lead and meredith baxter birney as her mom
give it 6-8 weeks it’s done
There’s nothing worse than being in one of those deals with a guy and two women. Been there once. Luckily, I was only 22 but I cringe at how crazy it can make you.
They just should of had a little cat fight and get over it (just kidding ). This brings up the age old question of why the felmale always goes after the other felmale .Both the women should get together and have a drink and discuss how both of them are going to dump the two-timer .
Wow , I didn’t see the news last night . I guess this was a serious attack on the other women . Looks like she was nuts .
Hey, I’m moving soon so I don’t get the paper and I don’t have TV. I tried searching for “crazy astronaut” but I’m not having any luck… Link, please? Thanks!
http://www.cnn.com/2007/US/02/07/astronaut.arrested/index.html
try googling: “astronaut diaper pepper spray”, tee hee hee
Glad I wasn’t drinking my diet coke when I read your comment! Good one
I’m wondering how this is going to affect the stock price of Kimberly-Clark (Depends undergarments). I mean, how many people will this awaken to the fact that we no longer need to stop for relieve ourselves on long trips? Maybe they’ll introduce a new cross-country travel diaper line.
Supposedly European soccer fans wear diapers to watch games so they won’t miss anything going for a pee!
Some of them anyway, I’m sure not all of them.
Relationship mismanagement by the guy - that is what this boils down to.
I left there in 1992. Lived on E. NASA Rd One, then on Clear Lake Shores, then north of JSC. I loved the work, just living in a swamp was tough.
I feel a little put out that no obsessed female stalkers have ever put on a diaper and driven 900 miles to try to snuff a love rival, all for yours truly. Don’t I DESERVE that kind of devotion?!!
This astronaut story is right up there with the Houston/Channelview ‘cheerleader murder’ mother from about 20 yrs ago, that spawned a book and a movie..
Toll, Centex, Lennar Join `Moron’ Speculators in Land Grab Bust
“I’m just this humble guy and I didn’t see prices going this low,” Tuttle said. “The big guys didn’t see it either.”
But we folks on this blog did. How ironic.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aA90FVv3DDrY&refer=home#
I was chatting with a friend last week who had been recently talking to one of the market and research guys for one of those builders. Market Research Guy speaking about the downturn in housing: “No one saw this coming.” Riiiight. He believed the hype despite the mounting problems to the point that he’s on the hook for a depreciating house he can’t afford.
Dont know if any of you saw this but, there was a piece on the today show with D. Liar. They were touting that buyers were coming back into markets now that prices have been reduced. The piece did acknoledge that there was a 50% vacancy rate on homes driving up the business of staging.
Toll, Centex, Lennar Join `Moron’ Speculators in Land Grab Bust
http://bloomberg.com/apps/news?pid=20601109&sid=aA90FVv3DDrY&refer=home
The WSJ has an article on real estate brokers going back to their former profession. The lead example is someone who is not training dogs. But the one that interested me is a guy who was with a dot.com in the late 1990s, moved on to selling houses, and has now gone back to tech.
“… has now gone back to tech.”
That dude has a good nose for shifts in the liquidity river’s channel…
The government stores cheese in large warehouses around KC, MO because it subsidizes cheese production, which leads to oversupply.
Lately it seems as though there are virtual warehouses in empty homes developing (2.7m vacant homes currently on the market, for example). The government cannot store these in caves, but will it step in and buy them nonetheless, in order to “help restore balance in the housing market?”
And what, exactly, was the nature of the subsidy that suddenly lead to an all-time record number of vacant homes for sale? (Note that the mortgage interest deduction has been around for a long time.)
I keep seeing that trillions of dollars of A.R.M.s are to reset this year and more next year. Ball park figure, how many houses is that? Percentage in upper income bracket vs lower?
My calculations put it between 3 and 4 millions households, nearly half of which are in California.
homes and fender guitars
per bubble and pre CBS
a house built from 2002-2006 will be a pos
Do you think a house built in 07 or 08 would be better quality?
Yes because in 2007 & 2008 the buyer will look at the property first before signing the papers. No one behind him in line ready to sign without looking.
“Do you think a house built in 07 or 08 would be better quality?”
Generally, I do. Though I’m not sure I’d include California in that, from what I saw recently. Materials prices are falling fast and builders should be a little less tempted to skimp. Subs are starting to get hungry and the builders can be pickier about who they hire. And now that houses aren’t selling in an instant, apparent and reputed quality are all that will set most builders apart.
That said, I’m not a fan of national builders, but instead look for the best of the local ones.
Thanks chip and that leads to my next question…I wonder who those builders are so that when I am ready to make my purchase I know who to look for. I know I have time and I am in no hurry..luckily kids are still pre-school age.
Maybe next year I can start searching for those quality builders in the areas I want to live. But, if anyone knows any, let me know!!
Fed Prints New US Dollar
The Fed announced today that it is printing a new dollar in order to buttress the fortunes of reeling sub prime lenders like Novastar (NFI).
Click to view.
The stock rallied on the news.
That’s a classic! Thanks Lee!!
Read his lips … don’t buy a home until Duncan stops renting. (And does anyone else find it ‘curious’ the Onion Tribune editorial board felt compelled to put ‘quotes’ around the ‘good news?’)
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At S.D. conference, economist predicts ‘another good year’
By Emmet Pierce
UNION-TRIBUNE STAFF WRITER
February 7, 2007
Despite recent setbacks in the nation’s housing and automobile industries, the economy remains fundamentally strong, the chief economist of the Mortgage Bankers Association said yesterday at a conference in San Diego.
“It’s going to be another good year,” economist Douglas G. Duncan said. “The American consumer is alive and well. Consumers still have greater net worth than they have ever had.”
While the decline in housing has been “the biggest drag on economic activity,” Duncan said he expects the market to bottom out by mid-to late 2007.
“The full effects of the housing slowdown will have passed” before the year ends, he said at the association’s convention on real estate finance and multifamily housing.
http://www.signonsandiego.com/news/business/20070207-9999-1b7housing.html
GS, you insulted The Onion.
Unhappy in Elk Grove
Reporter: He showed up out of curiosity because he already owns a home in the development and he’s not happy about the auction.
Homeowner: You’re buying it at $600,000 or $580,000, and all of the sudden they sell it for $430,000.
Reporter: Actually, they sold it for an even lower price: $410,000.
…
Homeowner: It hurts because if you bought it for $580,000, what are you going to do in 2 years, if you have a 2-year fixed on your house and you go to refinance and you don’t have value in the house? You’re screwed.
More on the auction at SacRealStats.
Elk Grove -it’s a swamp. I boarded a horse in Elk Grove for a few months when I lived in Davis until her new digs were ready back in 1990-1991. There were nothing but ranches and marginal houses out there then and for good reason. The ground was constantly wet long after it stopped raining.
You couldn’t pay me to live in Elk Grove.
I have a question on REOs…
If the mortgage has been sold to investors (pension funds, China), and the house gets foreclosed, but not sold at auction, who ends up selling the REO’d house? Does it belong to the investors? If so, who determines the price? Does the bank have a ’service contract’ to sell the house for the investors?
Point being, who determines the selling price of a house when the mortgage is owned by investors?
AG, the house is typically an asset of the RMBS pool (a group of home loans pooled together and securitized on Wall Street into bonds, from which the investors buy rights to various portions of the income stream or bond tranches). Technically, no ONE entity really owns the house. The loan servicer action is controlled by the regulatory agreements between the servicer and the bond holders. One of the problems moving forward it “no one is in charge”. When a loan defaults, it goes to a “special servicing” division. That group pushes paper around all day and has no idea of the market values. They will likely list the asset for sale with an approved marketing group, who will recommend a sale price. Long process. Not like your local bank taking a house back, and making a quick decision to sell at a discount. The lagging, “no one in control” process will just contribute to further degridation of the asset and the neighborhoods, further contributing to dropping values.
If a loan defaults early (say first 12 months), it is “pushed back” to the originator for buy back. Then the originating entity must deal with it and you will have quicker, more effective actions.
What if the originator goes bankrup by then (ex Ownit and 16 others)
Compound what Paladin says and what you just asked it’s going to make for a very interesting downturn. Before banks did everything they could to not just kill the market. I don’t see that happening this time.
“The lagging, “no one in control” process”
Wow, thanks paladin, that’s an eye opener.
Isn’t there a “mortgage” company that acts at least as a front for the investors? It would seem stange if you sent your check to some clueless investment fund?
Anyway, if things are as paladin describes it, then it’ll add at least 6 months to the slow and painful process of this RE downturn… yikes!
Does anybody think the media is just not covering the excess inventory problem ,vacant houses , foreclosures coming down the pike, in a manner that the public understands supply and demand ?
The media seem to report the data ,but doesn’t go on to state why this will bring prices down even more ,so it’s not a good TIME2BUY .
Also the media doesn’t seem to report the fact that we are at 70% ownership in this country which would tend to limit how many borrowers would be available to buy up this excess inventory . You would need alot of speculators buying to absorb the excess inventory .
Also the media /experts don’t explain why the demand in RE went down 30 to 50% all of a sudden starting around the 1Q of 2006.
“so it’s not a good TIME2BUY”
But, but, but… David and his palls launched an advertising campaign that said it was a good time to buy or sell a house. I’m confused. Surely they wouldn’t lie to me ?
The media covers what makes money, not what is truth or news. Realtors buy advertising, MSM strokes real-estate business. I bet if you buy a lot of advertising in the papers, you could get the negative real-estate news front page. MSM is a business. Think what makes them the most money and that is what you get for “information.”
During the last downturn, did the banks, etc., ever pay people to live in the REOs to keep them up (house sitters)?
In some instances, entire condo developments were leveled.
In the last downturn there were so many REOs that they couldn’t do anything to keep them up. They either rehabbed just bfore the auction or sold them as is.
In the antelope valley I passed up more than one property selling for less than $50/sq.ft., and not in bad areas.
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/02/07/BUGV8NVQNO1.DTL
“People are buying above their income level, financing with debt and hoping,” [Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto] said. “They lucked out before. This means that any price downturn is going to put a much greater number of people under water.”
“We’re looking for some signs that the problems in the housing market are behind us,” [Ed Leamer, director of the UCLA Anderson Forecast] said. “Nothing in this report supports that.”
Those are some mighty sane quotes. Even got a good one from LAY:
The steady increase in the number of people who have missed mortgage payments and received notices of default is cause for concern, Appleton-Young said.
“You do have people, especially those who purchased in 2006 and 2005, who missed the big cushion of appreciation, who could get into trouble,” she said.
Stephen Levy was on AM 740 KCBS talking about the bubble. One thing the newscaster mentioned the prices haven’t dropped in the Bay Area, to which he replied “We don’t know what incentives were given to the buyers”
Twin Cities news story regarding the bubble
http://www.kare11.com/news/investigative/extras/extras_article.aspx?storyid=241979
“And an unbelievable migration of new people moving to Minnesota, which nobody saw coming.”
Yeah, right. Not speculators, but real-live homesteaders who have been dying for a chance to live in Minnesota and got in before they were priced out.
Saw a story on Today (NBC) this morning about how the RE market has bottomed out and now is the time to buy.
Sheesh.
Had David “Liarah” on and everything. First time I’ve seen him–looks like the slick weasel he is. He did, though, say that there were small pockets where things weren’t getting better yet, but overall we’re past the bottom.
I can’t find a specific link, but you can watch the show online from the MSNBC.com site. I think it was in the first half-hour or the very beginning of the second.
Small pockets like Florida, entire state of CA, Phoenix, Reno/Las Vegas, plus Boston, NJ/suburbs of NYC, DC, Northern Virginia, Salt Lake City, Seattle, PDX, plus the minor foreclosure problem in Colorado and the midwest. Everywhere else the RE market is healthy, and like Gary Watts wold say, an immediate, steady and solid resumption in home price infla^H^H^H^H^H^H appreciation is “in the bag.”
Monopoly Men Pt 1
Monopoly Men Pt 2
Monopoly Men Pt 3
Monopoly Men Pt 4
Monopoly Men Pt 5
I was driving around yesterday in West Broward and came accross this montsrosity of a project called “tao”. It is two huge ugly buildings at least 20 stories tall in the most boring part of Broward. Nowhere near the beach or anything except a big outlet mall and the place where the Panther’s play. Prices start at $500,000. Who would pay 1/2 million to live out near the everglades? It would take 45 min to drive to the beach or any other attraction.
http://www.sunrisefl.gov/tao.html
A coworker’s husband is a realtor and she told me prices are going up in the D.C. area. I just kinda smile, whatever.
It’s surprising that so many smart people don’t see that HOUSES ARE NOT AFFORDABLE. One thing all these RE bulls that I talk to have in common, they all say ‘If I had to buy, I couldn’t afford prices and I get paid well’. Well than why are you a bull?
http://tinyurl.com/29tw8o
“I don’t think we’ve seen the bottom,” said David Berson, chief economist for Fannie Mae. If this was a Monty Python sketch, Fanny would slap him on the head with a dead chicken and say “There’s no way I’m going to show you my bottom, David!”
Anyway, again we have economists calling the bottom:
“The U.S. housing market has not reached bottom and will likely not begin to recover until the middle of this year, three housing economists said Wednesday”. Oh and they predict a formidable 1% drop!
And it appears that 20% of the Bulders are lying: “To cope with the inventory overhang, home builders have been offering incentives to buyers……close to 80% said they had either discounted homes or offered some other type of incentive to buyers, including paying loan closing costs, helping with financing charges or buying down mortgage rates for a set number of years”.
The FB’s are saved:
http://tinyurl.com/25sd2m
“Meanwhile, Rev. Jesse Jackson of the RainbowPUSH Coalition said he’s discouraged by industry statements about educating borrowers and increasing disclosure”.
Hallelujah!
“Harry Dinham, the president of the National Association of Mortgage Brokers, told the committee that mortgage disclosures should be beefed up and that the government should fund an independent study of the rising rate of foreclosures.”
Yeah, that’s what I want my tax dollars used for, you twit…an independent study of the rising rate of foreclosure.
I’ll save you the money:
People that couldn’t really afford a house bought anyways using exotic mortgages. There were a lot of them. They expected to be able to refinance the mortgage or sell the house if things got “bad” (like time going by causing the loan rate to ‘reset’). For a while, as long as housing prices skyrocketed, this strategy worked. Then housing prices stabilized (or even went down). Those same people that couldn’t really afford their homes could no longer re-fi or sell without bringing money to the table, which they didn’t have, otherwise they wouldn’t need those exotic loans in the first place. So they lost their homes. THE END.
There, I just saved you all 2 billion tax dollars in “independent study” expenses.
Not much going on over at the SDCIA board. But they do have a good thread, “Why It’s Different This Time,” in which there is a definite reality check among one or more of the senior posters. Such as, “The most immediate indicator will be spring inventory. If it does not spike greatly then the declines to come may decellerate [sic], but if not then there is more pain to come.”
Is TxChick still capering over on the SDCIA board from time to time? Haven’t lurked there in awhile - last time I checked, they were as nervous as a six-year-old at the Neverland Ranch.
It’s no fun over there, they have (mostly) turned bear.
Whoa - just noticed the Dove commercial on the site, Ben. Nice!–It may be 7:07 pm in Colorado right now, but my sundial reads High Noon….
Leadership changes at NEW and at other lenders and builders over the past year foretold the story unfolding tonight and in the months to come. Executives leaving to “pursue other challenges” or to “spend more time with their family” translates in good times to “they couldn’t cut it,” and in bad times to the smartest insiders with the most to lose (and thus the lowest risk tolerance for creative accounting, etc.) abandoning the stinking ship while it’s still horizontal.
These companies, this economy, and our leaders all stink. And they stink because they are rotten to the core. Maybe not today, maybe not tomorrow, but soon the sickness all around us, and within us, will be exposed to the healing light of day. We must excise the dead and dying, so that the rest may live.
Ubi pus, ibi evacua.