A Needed Correction
It’s Friday desk clearing time. “Now that overheated markets such as Miami are cooling fast, Related’s talking up another kind of product: affordable homes. The firm has presold 497 of 500 loft condos in a planned downtown Miami high-rise. They’re priced from $159,000, about half the median price of existing condos. That’s a fraction of the price of many new condos, which often now go unsold.”
“Developers are watching how Related fares in its Miami affordable housing mission, says Bryan Finnie, managing director of North Miami developer Redevco. ‘Over the last 24 months you were almost a heretic to talk about affordable housing,’ he said. ‘Now the conversation is, ‘Oh, market opportunity.’”
“Recent condo project cancellations by developers, a rise in prices and a call for more apartments has left some wondering if Downtown Memphis, particularly the 38103 ZIP code, isn’t nearing the saturation point. ‘Yes, we’re overbuilt,’ said Jeff Sanford, president of the Center City Commission. ‘The current inventory that’s unsold, plus what will be delivered this year, 2007, should indicate about a two-year supply.’”
“For (appraiser) Walter Allen, patience and risk tolerance are relative terms and could become factors for developers, builders and investors who might consider converting condos into apartments. ‘You get tired of waiting for the units to sell, you get tired of paying interest, the product itself becomes a little bit shelf-worn, and it’s just not a healthy environment,’ he said.’”
“North Texas home sales dropped again in February, the ninth consecutive month of declines. Sales of pre-owned homes fell 8 percent from a year earlier, double the rate of decline in January.”
“At the same time that sales have slowed, the number of homes on the market has swelled 7 percent. More than 44,000 pre-owned single-family homes were listed for sale in Dallas-Fort Worth and surrounding counties at the end of February. There is just over an eight-month supply of pre-owned homes for sale North Texas.”
From South Dakota. “Faith Wendt, a Realtor and president of the Black Hills Board of Realtors, conceded that the market did level off in 2006. But with prices falling and people unable to sell homes in other markets, level prices are a good thing, she said. ‘We’ve been climbing for a number of years now. At some point, you’ve got to hit a nice level or you’re going to end up like the eastern and western sides of the country,’ she said.”
“In what Finance Minister Michael Cullen called ‘a wake-up call for New Zealanders,’ the central bank yesterday raised the official cash rate, the first rate rise since December 2005. The housing market appeared to have got ‘a third wind,’ which the Reserve Bank could not afford to allow to continue, bank governor Alan Bollard said.”
“‘We’ve now reached a view that the housing sector needs more pressure, and we’ll apply it,’ Bollard said.”
From Australia. “Mortgage delinquencies reached a historic high in December, the Moody’s review of residential mortgage-backed securities shows. ‘With the deflation of the housing bubble and higher interest rates, [an] increasing number of borrowers are running into financial difficulties as reflected by the delinquency numbers,’ the report says. ‘Consequently, some weaker borrowers will lose their homes.’”
“Household debt, as a proportion of household income, has risen above 150 per cent, an all time high, Reserve Bank figures show. Household debt has doubled in the past five years to $960 billion.”
“Montana housing prices have moderated, but continue to increase, according to Paul Polzin, of the University of Montana. During the third quarter of 2006, housing prices climbed 12.7 percent in Cascade County and 13.2 percent statewide, compared to the same quarter last year.”
“‘I’m delighted housing prices are holding up so well in Montana, considering the real estate bubble has burst in many parts of the country,’ Polzin said.”
“Millennium Funding Group in Vancouver, affected by mortgage defaults in the subprime lending market, has laid off 76 employees, its parent company said Wednesday.”
“‘Our personnel moves are a reaction to sudden, dramatic and unforeseeable changes in the mortgage industry,’ said Joe Bell, vice president of human resources of Ace Holding Co.”
“A Santa Rosa man was convicted Thursday of defrauding two mortgage companies and a title company in an effort to eliminate a $240,000 home mortgage. Robison said he learned the mortgage elimination process through books and seminars, and doesn’t believe it’s illegal.”
“Judge Elliot Daum denied Robison’s request for a two-week grace period to see to personal matters before going to jail. He was instead handcuffed and led from the courtroom. Bail was set at $200,000. He faces a maximum sentence of 14 years in prison.”
“It’s scary to think that your retirement or the kids’ college fund can be hurt by a mortgage company lending money to somebody who, it turns out, can’t afford the payments.”
“‘Things are connected,’ said Jason Henderson, a Federal Reserve economist in Omaha, meaning that problems with sub-prime lending, loans to people with poor credit scores, can have broader consequences on the financial markets and the economy as a whole.”
“‘We see customers come in all the time who can’t refinance because of their credit problems. They’re stuck with a mortgage loan they can’t afford,’ said Dave Ulferts, VP for mortgages at First National Bank of Omaha, which does not make sub-prime loans.”
“Omaha mortgage broker Bruce McClatchey estimated that as many as 25 percent of Omaha’s home mortgages are sub-prime. ‘In some respects, there’s been loans made that shouldn’t have been made,’ he said.”
“‘There will be people taken out of the market,’ McClatchey said. ‘Probably people that shouldn’t have been in the market in the first place. This is almost, maybe, a needed correction.’”
Great week folks! My thanks to those who support this blog, especially those who have donated. Please check back this weekend for news, your market observations and topics.
All I can say is thank you, Ben. Your blog has helped a lot of people around the country, and given so many more the peace of mind that we weren’t alone and that this bubble wasn’t just our imaginations. You deserve every dollar people donate.
I agree. People, this blog is worth donating to!
This has been a great week. The whole Subprime implosion has been quite enjoyable. Thanks Ben!
You’re probably exhausted Ben. A lot happened over the last 2-3 months. We’re not even through the first quarter of 07 and permabull CEOs are already disgusted. In addition, lenders are falling left and right. It looks like the whole thing is going to hell in a hand basket. There is more, however; there is always more….
Cheers, Ben.
Three cheers for the man!
Cheers, Ben.
Three cheers for the man!
Outstanding, great job you are doing for all who are “seeing” for many the first time, what is really going on in this market place.
Housing bubble disbelievers, Casey Serins, and sellers who refuse to lower the price, here is a simple message courtesy of Supertramp from the album Crime of the Century:
Dreamer, you know you are a dreamer
Well can you put your hands in your head, oh no!
I said dreamer, you’re nothing but a dreamer
Well can you put your hands in your head, oh no!
I said “Far out, - What a day, a year, a laugh it is!”
You know, - Well you know you had it comin’ to you,
Now there’s not a lot I can do
Dreamer, you stupid little dreamer;
So now you put your head in your hands, oh no!
I said “Far out, - What a day, a year, a laugh it is!”
You know, - Well you know you had it comin’ to you,
Now there’s not a lot I can do.
Well work it out someday….
Music Video: http://www.youtube.com/watch?v=-1auRCameVY
Schiff puts out another good editorial…
http://financialsense.com/fsu/editorials/schiff/2007/0309.html
Notice this comment about Freddie..
“How can anyone ignore last week’s announcement by Freddie Mac that they would no longer buy loans where there is a “high likelihood” that borrowers cannot meet their monthly payments and which are “highly vulnerable to foreclosure.” Talk about closing the barn door after the horse! This is tantamount to an admission that Freddie Mac formerly bought loans knowing full well that they would likely end in default!”
I never thought about it that way, but it’s spot on.
Another great quote from the editorial:
“I heard one commentator on CNBC claim that the U.S. economy was in great shape except for housing. To me that’s like a doctor telling a patient that he is in great health, except for the javelin sticking out of his chest. If housing is going down, there is no way on earth the entire economy does not get caught in its undertow.”
I saw two economists battle it out on CNBC. One predicted the 1987 and 2001 crashes. He predicts another one. When the other economist said we will not have one because unemployment is good, inflation is low, and the economy keeps growing to which the guy who predicted a recession said that when all crashes happened, even the one in 1929, things seemed good, till they weren’t. He then cited 1921-1929 as good times and the “permanent plateau” that some predicted to only have it crash.
Of course it’s different this time.
Everyone beleives the all powerfull OZ (read the fed) can save the day!
1) Problem is the reported unemployment rate is not computed the same as then, housing & its finance was responsible for 30% of the growth since 2001, but all is well despite this segment being down 50% and the mortgage markets dead in the water.
2)Inflation on items that each of us buy 1 in 5 years is beniegn, while all items that account for 105% of what we spend every week is excluded, and then netted versus this economist magic wand called, ” productivity”…..
3) The economy keeps growing? So it is reported aka Russia style….Doesn’t anyone look at common sense DOW Theory?, the rails shipped less car & trailer loads in 2006 than 2005 “excluding coal”, that catchup was mandated by a judge.
So far this year (9 weeks) cars shipped are more than 5% lower. {reports out each Thursday}
The only thing that was GROWING in the US was the US money supply!
Feels good.
But our FIAT money requires lenders & debts.
If all debts are paid, there is no money!
defaults work the same magic!!
I don’t know why the Fed has such confidence, they have an absolutely horrific record (from the perspective of an American, not private banker).
The Fed has confidence, because their job is to show leadership and confidence. Unfortunately, all Central Bank schemes in history have led to collapse.
Another over leveraged RE Prosper borrower (note over leveraged in RE ownership as well as career).
http://www.prosper.com/public/lend/listing.aspx?listingID=107797
Oh, puh-leeze! And is that a *Hummer* in the background?
He’ll get funded too. He’s almost half there and has days left to go. Shows you that the mindset is still alive and well.
His highest funders so far is one at $1,000; one at $500; and one at $458. There is one born every minute!
couldn’t keep it in his pants….$$$ and little man!
Wow. I’d have hidden the Hummer. Maybe dressed in a suit and tie. $15K at 20%? I’d say Sell the Hummer, but he’s probably upside down on it.
Is that a Harley in the left corner? Anyway, I hope his wife gets the kids if they divorce, she can use this picture. “What are you doing daddy? Why do we have to stand here?”
What an odious ad. I not only wouldn’t lend this jerk any money, I’d have his listing pulled if I could. Notice the Hummer and sense of entitlement in the ad. Yeech.
This guy has got everything all those involved in RE have: no brains and a Hummer.
Ain’t nothing dumber than a Hummer.
The life described there is about to change. Any reasonable credit crunch will obliterate that guy. Maroon.
Yeah I don’t think it matters what his FICO is now. Would be interesting to ask who his current loans are through. Or to find out the specs on his properties and what he thinks they are going to refinance for.
I particularly liked the explicitly arrogant sense of entitlement:
“…If I could payoff this debt my scores would jump back into the 700’s where they belong. I am a very active real estate investor and have 21 residential properties and 1 commercial building. Three years ago I bought 4 houses on 3 year A.R.M.’s that are about to adjust.
“I need to get my scores up so that I can get the interest rates that I deserve.”
Umm… no, dude, your credit scores are EXACTLY where they “belong”. And the only thing you “deserve” is a lubrication-free ass-pounding c/o your defrauded creditors.
In my neighborhood all of the homes are owned by realtwhores and they will get a double “ass-pounding” as you say.
First they are not making nearly as much money as they did in the heyday, one of them told me six months ago that some of his colleagues were having trouble driving clients around because of high gas prices.
Second being the greedy realtwhores they are they bought second, third homes, etc to flip and now they can’t get out of them for what they paid and the HELOC money is running out. Ouch
“And the only thing you “deserve” is a lubrication-free ass-pounding c/o your defrauded creditors.”
LOL
there’s still a couple of days left to fund this jerk..
http://www.prosper.com/public/lend/listing.aspx?listingID=109062
Nice to see that the moratorium has been lifted on “A$$ Poundings” postings. Is it safe now to again post about “guys in prison with faces pushed down in toilet and Cindy Crawford poster taped on his back with 10 convicts waiting in line or “realtors servicing homeless gay men in the seedy part of town in a desperate attempt to regain their dignity”…
I smell a rat. Wouldn’t you think someone who’s been in the business for this long would have avoided this situation or worked it out a different way?
Look at this comment from a reference:
“Jeramiah is a safe bet he is well established in the community and a very hard worker I am actualy surprised he is borrowing money”
And I’m sorry, his spelling skills leave a lot to be desired for such a supposed professional.
You’ve got to be kidding me. This guy owns his own business, yet needs to borrow $15k at 19%? Something smells real fishy here. I am thinking empty suit. I call BS on the credit score explanation as I think this FB has more serious problems. BK comes to mind…
I agree, this is the fishiest loan request. If you have been in the finance community for 7 years and do not know someone that would lend you 20K on a handshake at 0% interest - it is because you burned them.
When I first started trading, I got a margin call for $140K. A guy I had been trading with for only a few months lent me the money interest free for a week so I could cover it and then get the positions fixed. I agree with you, he should have plenty of contacts. This is total bS.
Good tx. I joined so I could ask him a few questions, but they wanted bank info. Not sure I want to do that. I was wondering if he had all of the properties appraised in order to back up his assertion of more than 20% equity. Also, why can’t he just get an increase in the limit on his credit cards if his income and DTI are so impressive? This would solve the problem, and they only do soft credit checks since they are established accounts so no hard inquiry dinging the rating. This guy is full of sh!t.
Above is in response to txchick57 posting:
“I’m a Prosper lender. I’ll call him on this foreclosure.”
some lenders there have already called BS on this guy.
http://forums.prosper.com/index.php?showtopic=20842
I smell a rat. Wouldn’t you think that someone in the lending business that long would have avoided this situation or found a different way out? Surely he has access to “product” that, given his credit score, requires a smaller premium than 19%.
No soup for you!!
Based on his grammatical and spelling skills, I would be willing to bet that he was running a scam out of Nigeria. I swear, that whole country should be cut off…
Even his “endorsers” sense something is wrong:
“Jeramiah is a safe bet he is well established in the community and a very hard worker I am actualy surprised he is borrowing money.”
His endorsers have only been on the prosper system since March 07, looks like he got two buddies to join just to give an endorsement - their profiles are empty too.
http://www.afsmortgage.com/
Here is where he’s supposed to work.
http://www.co.larimer.co.us/clerk/search/showdetails.aspx?id=830537&rn=10&pi=0&ref=search
The county records seem to indicate he’s lost one property already. Looks like he does seller financing and then sells the loans to his investment group as well.
People are nuts to be lending to this clown.
I’m a Prosper lender. I’ll call him on this foreclosure.
Even one of his “endorsers” senses something wrong:
“Jeramiah is a safe bet he is well established in the community and a very hard worker I am actualy surprised he is borrowing money.“
How does this work? I see all these $50, $100, etc., bids. What are people bidding on?
If he’s 21 “Investment” properties it sounds like he’s on the Serin real estate investment program.
To top it’s off he’s a loan officer - perhaps at NEW ?
Really - who the heck needs to borrrow $15k @ 20% to pay off credit cards if you’ve 21 investment properties ?
And is paying off the credit cards help his credit rating if he as 21 investment properties - that’s gotta be such a small part of his debt load as to be insignificant.
Dude…
He’s a founding member of Club Casey
Got popcorn?
Neil
Bulls Eye - uncle G
1) his mortage company is probably going BUST before this summer.
2) having 21 properties, 1 foreclosed and 4 more,soon to be, anyone looking to borrow “on prosper” @ 19% should mention how many of the 21 are listed for sale.
3) the hummer did not have a for sale sign! {but should}
4) Finally and NOT a small item {LOCATION} ST george Utah!
To small to get the press but talk about over built, over priced.
I believe home prices have exceeded the 90% +? of the City’s residents ability to qualify for loans under current conditons.
I’m guessing they are simply loaning this guy money at 19% interest. How the heck do they get payed back (assuming that this is what is happening)?
How the heck do they get payed back…?
A: They don’t
How does this work? I see all these $50, $100, etc., bids. What are people bidding on?
People like Jeramiah go onto prosper.com and ask for money. They say they will pay it back at a certain rate, in his case 19%, People the bid what their willing to loan him until his goal of $15,000 is reached. Usually the person asking for funds has his credit rating posted and other personal information that bidders can check him out. That’s how it works from my perspective.
Thanks. I read the tutorial which I blew by earlier.
So I take it that “D” credit grade stands for dogsh*t? Can’t see that unless you’re registered.
Sweet cheesu$!
What a self-indulgent a$$wipe! I cannot believe the nerve of people these days. Un freakin believable!!
The un-freakin’-believable part, is anyone willing to pony up even $1 to loan over the internet. There has got to be a lot to this process that I don’t understand, and frankly I don’t care to waste the time to learn…… but I would like to hear the Reader’s Digest version from a knowledge poster here….?
Mrs. L & I just loaned 150k to a medical professional friend for a commercial real estate project (long story). We actually offered rather than he asked. He is happy to avoid the bank fees and we’re happy to get a better rate on some of our idle cash. I would be more worried about loaning this Jeramiah clown 15 cents.
Maybe someday when I grow up, I’ll be another az-lender….
sorry for my re-posts. For some reason originals didn’t seem to take. Ugh.
How odd all thoses people loaning what 50.00 ? and this guy will pay them all back at 19% ? I don’t think so………..
Maybe it’s the gambling mentality - if you can happily lose $50 at a casino, why not? And what is 19% of $50? $9.50! What the hell, it’s all a game anyway…
I’m surprised that he didn’t mention his connections with the gov’t of Nigeria and the cash he has to sneak out of the country, assuming you send him your account numbers. I’ll bet he even added the supportive comments at the bottom of the page. Can someone with such poor writing skills even run a mortgage company? Except into the ground?
“‘I’m delighted housing prices are holding up so well in Montana, considering the real estate bubble has burst in many parts of the country,’ Polzin said.”
Let me guess - you think Professor Polzin owns a big house in Montana?
Last I heard, Montana inventory was exploding (Missoula area). Exploding inventory and rising prices? HUH?
Lemme guess, they’re running out of land in Montana.
I am one of those smart ones who cashed out at the top of the bubble and am now happily renting a nice little place in Montana. In the last two years I’ve seen4 houses on my street go into foreclosure, 2 went to auction, one of which didn’t even sell. The other was bought and rehabbed (only on the inside mind you - the outside still looks like $hit, they did NOTHING to fix it up so to anyone driving by it still looks like the same piece of crap that didn’t sell last year) and is now back on the market at $30 k more than it was before. It will be fun to watch that one.
The guy across from me just put his 30+ year old place on the market after living in it a year and remodelling like mad, again only on the inside. He has it listed for exactly the same amount as the brand new ones across town that have been sitting empty now for going on a year. They started out 20-30k higher than where they are at.
My neighbors behind me are HELOC’d to the hilt, and keep bragging about how much their house is “worth” while three houses on their block have sat on the market for over 5 months now without any offers and keep coming down in price.
I’ve seen dozens of homes sitting on the market for over a year now, still unsold.
But nope, there’s no bubble in Montana….
“My neighbors behind me are HELOC’d to the hilt, and keep bragging about how much their house is “worth” while three houses on their block have sat on the market for over 5 months now without any offers and keep coming down in price.”
Any time I hear someone talking about how much their house is “worth” (not often anymore), I respond with something like “Oh, you have a buyer?” They tend to get the point. I have a good friend trying to sell who cannot even get $499k when his place was “worth” $800k+ a few short years ago. Most people grossly overestimated the value of their shelter.
Watching&waiting, are you in Bozo (Bozeman)? That was a hot market for awhile with the Cali influx. That and the corridor down to Yellowstone. I was there visiting in about 1990, before the boom hit- houses were dirt cheap at that time but the city was a lot of fun.
All along in the last two years I have predicted that this would happen here in Florida; as have many other astute observers on this blog.
Here in Central Florida:
1)Land prices have drastically fallen.
2)Construction materials are the cheapest in a long time.
3)Lots of contractors are feeling the pinch and are once again looking for work.
4) Existing housing, to a great extent, has been overbought and oversold during the hyped-up spectulative frenzy by greedy out-of-staters and multiple home owners that had no business buying houses in Florida. There are plenty of delusional bagholders down here that don’t know that they are about to receive a colossal ass-pounding.
Now, the music has stopped….the plain old people like myself, that actually live here, still need to buy a place to live. And we won’t pay ridiculous prices, either.
So there is a need for affordable housing. Plain and simple.
Market, meet Demand…..As in true demand….As in a house as an affordable place to live….As in a house that is occupied by a vested end-user who can make reasonable payments on a traditional loan arrangement with an attainable down-payment.
And guess what? The builders are gonna keep on doing what they have been doing all along : Building houses. * Its what they do *
As long as there is an acceptable profit margin and the stars line up right these builders will build “under-market” and still make profits…..and in turn, further erode the currently greed-driven, speculative pricing.
This thing is gonna unwind fast, especially here in mostly rural and suburban Central Florida. I don’t think the coastal areas will cool quicker than Central Florida; and you won’t be getting the killer deals on oceanfront property just yet.
But once the builders down here sharpen up their pencils and get a cold splash of reality they will roll up their sleeves and get back to business as usual to some extent.
Alot of peoples expectations are gonna come crashing down in a few short months. There is gonna be some pain felt here in Polk County.
Your description works in about, let’s see, 50 states. Some sooner, some later. FL is closer to the tip of the spear. But I’ll bet the unwind speeds up as we go, as MSM starts leadin’ with the bleedin’.
Most of the houses in my neighborhood are owned by greedy realtwhores who are experiencing a double “asspounding” as you say…
One they don’t make as much money as they did during the heyday, in fact one realtor told me six months ago that some of his colleagues were having trouble driving clients around because of high gas prices.
Second, being the realtwhores they are they greedily bought second, third homes, etc. and they can’t get out of them and the HELOC money is running out
When times were good, lots of fairly-priced stuff didn’t get to the market at all because the agents bought them first.
Wasn’t a bad strategy… as long as everything kept going up. Just like every other idea that had legs in the blububbulbublubble.
The housing market appeared to have got ‘a third wind,’ which the Reserve Bank could not afford to allow to continue, bank governor Alan Bollard said.”
Can you imagine the shitstorm of the Fed were this candid?
Check out Seattle Condo Review; it’ll make you get mad, laugh, or choke depending on your point of view. Here’s a couple of quotes from the site:
“Designed for the hip and trendy, Carbon 56 (formerly known as Aristo Apartments) is located in the Denny Triangle neighborhood on 2015 Terry Ave. Capitalizing on the success and cache of 2200 and the new Whole Foods located a block away, Carbon 56 is aimed at the young professional urban dweller who can’t afford or doesn’t want to pay over $500,000 for a condo.” Who wants to pay over $500k(if they could pay less)?
“Every now and then, clients will ask if I can find a condo in the heart of Belltown that is also quiet and safe. One would think that might be hard since you are after all picking an urban neighborhood; however, there are exceptions. ” What we have here is a failure to communicate…
Pricing starts in the low $300,000s and go to the high $500,000s. Most units are priced in the low to mid $300,000s. The condos range in size from 660 to almost 1,300 sq ft. and boast 13 feet high floor to ceiling windows and maple hardwood floors.
Uh, yeah, low 300s for 660 sq. ft. is way better for the “young professional urban dweller who can’t afford or doesn’t want to pay over $500,000 for a condo.” Please.
13 FOOT CEILING CAN YOU SAY A LOFT BEDROOM FOR SHORT ROOMATES?
Sound like what they had in mind but couldnt say it.
What is there for the young professional urban dweller who doesn’t want a firepole shoved up his ass for the next 30 years?
Back in the old days when I was a race car driver, my mechanics shop was in Belltown. Lots and lots of winos, decaying buildings, semi industrial, etc. You get the picture. Who the hell wants to live in downtown Seattle? I lived north of Seattle for years and visited downtown so infrequently it was bizarre. sed to drive through everyday to work, but never wanted to stop, especially after dark.
More on Seattle from Seattle Condo Review:
“Seattle Heights on 2nd Ave between Wall St and Cedar St has always been a client favorite. This 26 story high rise condo was built in 1994. A few years ago, it had water intrusion problems and the building was wrapped up for more than a year. New siding and windows were replaced. ” Seems like those construction defects cropped up mighty quickly…
There was a lot of stucco failure - it’s very common in Seattle and Vancouver, BC from that era, less so in Portland (less of the stuff). I believe the product was called EIFS. I never understood why anyone would use STUCCO in the RAINY Pacific Northwest.
> I never understood why anyone would use STUCCO in the RAINY Pacific Northwest.
It attracts the people from California who think it is normal and attractive in a house. For instance, a person from Chicago would probably think of it as a maintenance nightmare.
Can you say REVULSION. Casey Serin and his starring role in the housing bubble, mortgage fraud, and subprime meltdown:
http://cbs5.com/video/?id=21405@kpix.dayport.com
I know it’s not nice to judge people based on their appearance, but Casey’s sloppy dress doesn’t do anything to make me more sympathetic to his “plight.”
How dumb do you have to be to stand there on national TV and ADMIT FRAUD ?
That’s what I thought too I hope he got some solid legal advice before he made those statements. Hey Casey, I’m sure you read this blog, happy landing.
I really hate that guy. Grrrrr….
He got some exposure, but no money was made during the filming of that news spot. I think he’s all about the exposure now, and being labeled the “Poster Child” of the housing bust would be a real feather in his cap.…..
What could be next other than Oprah, and that’s a payin’ invitation.
“The firm has presold 497 of 500 loft condos in a planned downtown Miami high-rise. They’re priced from $159,000, about half the median price of existing condos. That’s a fraction of the price of many new condos, which often now go unsold.”
BWAHAHAHAHA! Condos FROM $159,000 are affordable in Florida! In a pig’s eye! A condo (non-luxury) in Florida is really worth about $80,000 MAX, when you factor in taxes, insurance and the dreaded condo association fees. As one poster on this blog has observed, at least in a non-HOA detached single family home, you can defer maintenance if times get tight. But not in a condo.
BTW, I’m seeing condos over here in the Sun City Center retirement development going for $50,000 to $70,000 now. 1-2 BR furnished. I have a feeling the low price reflects some large condo fees, but I don’t know. I will research and maybe post in the weekend “What do you see in your market?” thread.
Please do. If it’s a retirement center I presume someone has to pay for all those dinners they have at 4.30 pm.
Curious that they would “sell” 497 out of 500. Why not all 500? Could it be that, maybe, you could be one of the “lucky” ones to get one of the “3″ remaining units? Or perhaps that they’ve really only sold 120 but they have to have at least a couple of units “available” as a pretext so they can actually sell some more.
I spent nearly a week looking at properties in Washington and Oregon. Things are unfolding rapidly. While prime areas are still doing fairly well, the outskirts are starting to feel the pain. Inventories are growing, and deals are falling through. My mortgage broker told me that, while it appears on the surface that properties are selling, many are not being funded, and are showing back up on the mls. I think it is only a matter of months until sellers start capitulating on price. They cannot sell otherwise. Once the no down stuff is gone, so are a huge chunk of buyers in rural Washington and Oregon. These places were dependant upon the easy money. I happened upon an old fixer farmhouse on 5 acres in rural Washington, and called the listing agent. I asked what she could tell me about it. She told me it was on 5 acres of property and needed a lot of tlc, as the second story was gutted. “How much?” I asked. “Don’t let the price scare you” she said. “Well, how much?” I exclaimed. Stammering, she said “Three hundred thousand”. I laughed heartily in her ear and told her they must be out of their mind. She said she was working with them on a price reduction and pleaded with me to not to let the price be a deterrant. I told her that we were more than a hundred thousand apart, a gap too big to bridge, and that I am looking for a motivated seller. We said our goodbyes. Now I know this may not seem like a lot to many people here, but this was in a rural area of western Washington where there are no jobs. Yes, that’s right, NO JOBS. People are on the dole. Unemployment is a way of life. Homes could be had for much less than $100k a few short years ago. Until this bubble. I imagine they will go back to those prices as there is literally no industry there, other than logging.
“Don’t let price be a deterrant.”
I’ve never understood this comment. Price IS the deterrent.
And if there were jobs there they’d be in lumber which, even in this boom, are down considerably from 10-15 years ago.
$200K is very generous of you.
Sellers like that are probably going to suspend disbelief all the way down too.
And so many trees have been cut. Out around the mouth of the Columbia, a topo map shows the area in green. When one drives out there, it’s a moonscape of stumps. Not that it won’t grow back - it is - just not in any current logger’s lifetime. Yes, a lot of western Washington is poverty-stricken. It is a sad sight.
“Yes, a lot of western Washington is poverty-stricken. It is a sad sight.”
I had negotiated an amazing deal on a turn of the century fixer on 5 acres but pulled out. While the house was everything I was looking for, and the property gorgeous and perfect for what I want to do, I couldn’t stomach living next door to the Beverly Hillbillies on meth. A lot of those small rural towns have been absolutely devastated by the drug, or rather, the peoples choice to use it.
Good move. Your neighbors are pretty important. That is the main thing keeping me in my tiny house now. The neighbors are just great.
And I agree. $300k is a shitload of money to pay back, especially where wages are low or absent. I pay on on $200k mortgage each month and it is plenty, thank you.
The Beverllly Hillbiliies on meth is what is going on in these small rural towns of south central Kentucky, and many other rural poor parts of the country. If you buy a property in these regions you will never be able to sell and get out, as the meth and crime problem is only getting worse, not better.
I hope for all our sakes that this is gross ‘meth’ exaggeration. In Northern Wisconsin the problem has always been alcohol, nothing else to do on many days in the winter.
“I hope for all our sakes that this is gross ‘meth’ exaggeration.”
I know it might be hard to imagine for those who have never seen it, but meth has literally destroyed entire communities in WA and OR. The percentage of people who use it, kids included, is disturbing to say the least.
And because of those wankers that abuse meth, we all have to stand in line at the pharmacy and have our identities recorded in order to purchase Sudafed. Yet the supply of meth does not seem to have stopped.
I don’t blame the drug, I blame the users. But that is probably a topic for another blog.
It sort of stuns me to hear that middle America is in the midst of death by meth. I expect to see tweakers in the big cities, along with everything else under the sun. It’s really disappointing to hear BanteringBear’s statements, but then I think back to what rural Northern California was like 30 years ago, and I guess it all makes sense. And then I remember why I still live near a big city. Food for thought.
My argument in favor of decriminalization is, why throw people in jail when drug use is already its own punishment. Meth is Exhibit A.
Anyway, meth users will find a way to get it regardless, while the 98% of us who just want to do something about our sinuses get to be tracked by the government. I love this country.
I have lived in semi-rural western Washington for nearly 10 years & the meth problem is for real. What that stuff does to teeth is double ugly!
The reason to criminalize meth is that producing the drug is dangerous and users on the drug are dangerous.
(What stinks about all this is that it seems to me like the old “speed” user who used the diverted prescription kind didn’t cause nearly the social problems of todays home-brew meth user. Meth today is strongly associated with violent crime. Supposedly Matthew Shepherd’s murderers were on a meth binge when they killed him, for example.)
Now, as for pot, criminalizing it seems to cause crime (pot gangs defending their crops in rural CA, anyone?), while the biggest crime associated with the pot user is probably petty theft–if that.
If we legalized MJ but banned all advertising and banned all smoking in public (including tobacco), I’d be happy. (MJ smoke smells like s#it and I’m allergic to tobacco smoke.)
It’s also been suggested that we make growing legal, and selling not. With everyone growing their own pot plants, the selling mechanism would die on the vine. (Well, there goes 3% of the US economy.) The reason tobacco co’s are so powerful is because selling is legal and growing is not. Cartel!
“In what Finance Minister Michael Cullen called ‘a wake-up call for New Zealanders,’ the central bank yesterday raised the official cash rate, the first rate rise since December 2005. The housing market appeared to have got ‘a third wind,’ which the Reserve Bank could not afford to allow to continue, bank governor Alan Bollard said.”
Do you think they would be willing to trade that guy Alan Bollard for our Helicopter Ben? We could throw in Paulson for good measure. And 50 Florida condo’s if they act fast.
Bwhahahaha
“‘We’ve now reached a view that the housing sector needs more pressure, and we’ll apply it,’ Bollard said.”
Many, put that on the list of things you don’t want to hear when your nads are in a vise.
Nads………?
Please explain
testes
Man, this just makes me want to move to NZ. As if the gorgeous scenery in LOTR wasn’t enough. Whatta place.
Yeah, well I live in Napier NZ where I am an ex pat winemaker. I’m planning to sell my house (bought with Seattle profits) this year (to move back to the States for career reasons), so let’s delay things a little bit please. But a seriously nice place to live. People are a LOT more rational (prostitution is legal) and so helpful sometimes it’s disconcerting. When trades people come over to do a job, we end up having intelligent discussions about things! Of course, I’m pretty lucky having a NZ mother and a US (WWII Marine) dad and so both passports.
Your observations are spot on, SteveH. I lived in NZ for a year (Wellington) and have always been impressed by the Kiwis I spent time with. People were intellectually curious, highly athletic, and good-natured!
http://money.cnn.com/2007/03/09/news/economy/home_price_slump/index.htm
From the article……….
“But Dean Baker, the co-director of the Center for Economic and Policy Research and a leading proponent of the theory that there has been a bubble in housing prices, says that he believes it could take five to seven years before prices get back to their highs on a nominal basis.
If prices are adjusted for inflation, he thinks that prices will never recover their recent highs.
“If you look at historical data, home prices have stayed pretty much flat in real terms, maybe being a few percentage points above inflation or income,” he said. “That’s why the run-up in prices the past eight years was so peculiar. And the run-up is what created the bubble.”
All I can say is………”I agree”
I’ve said this before: it’ll be 2030 or longer until some stuff in California, Vegas and Florida gets back to 2005 NOMINAL prices.
wow… While the story ended “bullish,” it was bearish enough that if that story becomes common, this correction might happen on the fast track.
Got popcorn?
Neil
That long? Renting here in LV for only for a few months is already getting on my nerves. Here, with the crime, the water shortage, that fact that we’d be dead meat here in a disaster, is making me worry.
I do like it here, nevertheless. I like the heat. It’s 18 degrees in NY now, 75 here. It’s a small place in comparison to NYC. Some people here may tend to hyperbole over honesty, but that’s no different than Westchester (the last place I lived in NY).
99% of workers in the stores are friendly and polite, much different than home. Well, I guess I might have to start looking for a new warm place to live and invest my bubble gain (made real by selling at the right time.)
Suggestions?
Ugh, the Reno Gazette Journal is once again spouting off trying to support the home builders in the area. According to the report, of course created entirely by the NAHB, “Home construction in Washoe County adds more to the economy than it takes out in infrastructure and services costs…” and “Without new construction, the county’s fiscal situation would be $80 million worse off for the wear…” I think all this proves is that we are in big big big trouble as the housing market here takes a digger. When will the madness end?!?
http://news.rgj.com/apps/pbcs.dll/article?AID=/20070309/BIZ05/703090444/1071
test
This is a test.
sleepless_near_seattle …….this is Houston
Do we have a problem?
A rather bold statement.
Apparently my tag skills aren’t what they used to be. Was having trouble with another post for some reason.
Oh, and yes, I see problems everywhere….or should I say, future opportunities?
Nobody said there was gonna be a TEST! It’s not right!
This is ONLY a test.
a test of the emergency bubbleblog network
Was this posted anywhere? My apologies if so…
“Countrywide stops no-money-down lending”
http://money.cnn.com/2007/03/09/real_estate/countrywide.reut/index.htm?postversion=2007030917
All the funny-money types of mortgages are vanishing one by one. I think the estimate of 25% of “buyers” being shut out of the market, claimed by the pros, is an underestimate. I wouldn’t be surprised if the combination of tougher credit and change in market psychology kills off half the volume.
Take out negam and stated-income and you lose at least 75% of buyers on the West Coast, Florida and the entire Northeast.
This is the start of a spiral.
A coworker asked if I was worried about how difficult a mortgage would be in a year or two…
I pointed out the tougher it is to qualify the easier my purchase will be! (Down payment, credit risk vs. competition, etc.) Any comment he had about it getting harder to buy just had the response “if that happens, I’ll bid less for the home and have no competitors.”
Bwwwaaaa haa haa!
Got popcorn?
Neil
I’m shut out of the market because of my general aversion, rather than any , to buying overpriced things.
This has got to be huge news. Does anyone have information on what percentage of loans currently held by Countrywide (our biggest lender) are 100% financed?
99.99% !!!
At least we know that 99.99 percent of all flippers do 100% financing. So flippers are out of the game.
Big big news. Getting rid of subprime and now all 100 percent financing (both Subprime and Prime) is so great.
Looks like lending standards are going back to where they were in the 90’s. Revert to the mean.
Is it any wonder they announced this at the end of business on a Friday?
Sh!t, meet Fan. Fan, this is Sh!t.
This is finally going to start going off a cliff. And I mean NOW.
checkmark
Got popcorn?
Neil
Further. Back in the 90’s you could still qualify on teaser rates, and if everyone follows Freddie Mac’s lead that’ll be gone, too.
Tj: or the bears:
I believe our central bank is leading on this one. (as one poster said earlier, “after the cows are out of the barn” The Freddie’s comments just made it official!
With the Wall Street sub-market in panic, sending their credit default swaps on on credits involved up to their eye teeth ; for example - “Lehman, Morgan Stanley,Goldman & GMAC. Freddie needed to let the banking industry know, that they will deny all ‘arm pit loans’ and YOU the bankster/ S&L’s will be stuck with them not Freddie!
Earlier in the week Big Ben made statements that Fannie & Freddie needed to {disgorge itself} of assets that are not within the confines of their mandates….AS in your investments will be qualifying loans and Treasuries
PS…..that was code for if you are smart you will do the same!
They (lenders) had better keep an eagle eye on buyers and sellers. Back in the early to mid 90s when 80/20 was the norm, often 100% financing could be finagled by overstating the house price and shuffling money back to the seller. At least that was the case in the metro areas that I was studying at the time (making computer models for automatic appraisal to validate traditional appraisals).
Well it’s about time! Soon, future homedebtors will have to pony up the money up front, just like the renters.
Too bad it isn’t true.
Only their B&C subprime unit has stopped 100LTV products. Their A paper still goes through no problem.
That sucks. The top of the article says Countrywide Financial corp is telling its brokers to quit offering them.
Then down below it says “Countrywide BC” will be the ones to stop offering them.
Spin!
Makes sense — Unless they keep it in-house, there is no market for that kind of paper anymore.
“‘There will be people taken out of the market,’ McClatchey said. ‘Probably people that shouldn’t have been in the market in the first place. This is almost, maybe, a needed correction.’”
Translation: “I made a bundle pushing these subprime folks over the cliff, but now that gravy train has stopped. I guess the market is going to go back to reasonable standards with or without me but it is really so UNFAIR to take the punchbowl away I am really going to miss those 3-4% YSP and two points upfront. WAAAAAA….”
The SHTF!!!
Countrywide has stopped offering zero down loans. They will only fund if there is a 5% down payment or more. If others follow their lead, housing will implode and stay down for years and maybe even decades
http://news.yahoo.com/s/nm/20070309/bs_nm/usa_subprime_countrywide_dc_1
Music to our ears.
That sound must be the fat lady singing.
Oh, and I bet Wells and Wamu follow Countrywide’s lead soon.
Ican’t help but wonder every time i look up
http://www.mortgageimplosion.com
and see Wells as the #1 sub-prime lender, why we haven’t heard about their problems…….”can you say,” to big to fail baby”?
Oh Yeah!!!
Now we’re talking!
That’s the best news I’ve heard in a long time.
NOT TRUE!!!
I just got off the phone with Countrywide. Only their B&C subprime unit has stopped offering 100% LTV. Their A paper still goes through.
A guy I work with showed me this article. They are starting to see what I have been warning about. Its scary I guess.
NBC nightly news just did a story on a sub-prime home owner. She complained that she wasn’t told about the reset and the increase in payments. Forclosure for sure. She looked like a typical product of our education system. Its either she can’t read, or shes just plain stupid to sign her name to any document, without fully knowing what she was signing.
Stupid People!
Tyrone, I saw the piece too!
my take was the working woman with children, counted on the lender to due their due dilegence. she trusted the mortgage bankers to tell her “thumbs up (she qualified) or thumbs down.
Many people are not finance savy, and yes she should of read the contract…but her trust was misplaced!
Countrywide stopped offering 0 down? Wow. The dominos are falling. Fun from a distance. As long as you are not in the path and therefore gonna get squashed….
TTTIIIIMMMMBBBBEEEERRR!
I should say that I appreciate DL and home sellers for trying so hard to delay the burst because I am not ready to buy just yet. I hope the bottom does not come until 2010.
I’m with ya brother.
“Subprime Virus On Wall Street”
http://www.forbes.com/2007/03/04/new-century-subprime-biz-cx_lm_0304subprime.html?partner=financial_newsletter
How was the HSBC news recieved in your neck of the woods? Did it set off any alarms?
OT I know.
I just watched a Foo Fighters video - Learn to Fly - Haven’t seen it for a while. 1999. Right away thought of 9/11 and how much things have changed. It made really feel bad.
Thinking about the shitstorm we’re going through. We all want to be on the right side of the trade. But, how the hell did we end up here?
“…a planned downtown Miami high-rise. They’re priced from $159,000, about half the median price of existing condos. ”
Sweet. Instant equity. I’ll bet those buyers were flippers.
Did you see the video of the guy driving his SUV through the mall.. Just drove right through the front door.. Then swinging away when they took him down!
Reminded me of my uncle. He used to be a “loan officer” at HFC. Some guy was pissed about his loan, and came into my uncle’s office with a knife. Ripped my uncle’s suit to shreds.
My uncle got out of the business after that.
I figure this guy with the SUV is probably a FB looking to go out in a blaze of glory.
Forgot to mention. My uncle is now a highly successful bankruptcy accountant. So he was in the right business all along…
There will be a certain amount of people that will go off the deep end when they run into financial trouble . It happened in every down cycle and it happened during the 1929 Depression .
It’s not very smart to screw your fellow man because it can come back and bite you and some of the REIC were really playing with fire . People should not make a promise they can’t keep like ,”Real estate always goes up “,or ,”Go on this loan and refinance out of it later ” The fact that people are stupid and they want to believe because they are greedy or lazy or fearful or childlike , is no excuse to take advantage of them . The horse is already out of the barn so we will see what happens when people get depressed or pissed or what they will do when their dreams are shattered .
“I figure this guy with the SUV is probably a FB looking to go out in a blaze of glory.”
It’d be more fun if the FB’s barricaded themselves inside their soon-to-be foreclosed homes and shot it out with the cops. Someone might see the home during the shootout on prime-time news and decide to buy it.
Coffee out the nose…LOL!
revision:
shootout on sub-prime-time news
Funny thread from the misanthropes at BO:
http://forum.brokeroutpost.com/loans/forum/2/102040.htm
ROTFL
Ok, who on here is mortgage321321?
20% down 760 FICO… ROTFL… oh, that will happen.
Got popcorn?
Neil
Worth reading. I needed the laugh.
hilarious.
“Judge Elliot Daum denied Robison’s request for a two-week grace period to see to personal matters before going to jail.”
Poor guy just wanted to go home and mail out his mortgage payment.
The Implode-O-Meter was on the NBC Nightly News tonight.
LA is due for an earthquake soon. IIRC, many Los Angelenos blamed the 1990s bust on Northridge.
The bust was well under way before the earthquake, which was Jan 17 1994. Actually, right about at the bottom.
Santa Monica was hammered (by the quake). A house two blocks away from me exploded due to gas leakage, a building up the street jumped four feet off its foundation, and some of the older brick structures looked like dollhouses with one wall removed.
Then the RE market started to pick up the next year.
So I figure we’re due for another healthy quake sometime in 2010-2012.
Speaking of houses jumping off their foundations, years ago in Seattle (Greenlake Area) some old lady lost control of her car, ran off the road and hit a house, Knocked it about a foot off its foundation and exposed, for the world to see, some poor guys marijuana growing operation. Talk about bad luck!!!!!!!!!!
BTW, everything’s cool in Florida now. Better buy right away.
Florida’s Single-Family Housing Market Hits Bottom; Market Stabilizes
GAINESVILLE, Fla., March 8 (AScribe Newswire) — Hopeful homebuyers in Florida should act now: The price is right as the state’s single-family residential housing market bottoms out, according to a University of Florida study released today.
“If you’re thinking of buying a house, there’s probably not much to be gained by holding out at this point,” said Wayne Archer, director of UF’s Bergstrom Center for Real Estate Studies. “It doesn’t look like prices are going to fall anymore.”
http://newswire.ascribe.org/cgi-bin/behold.pl?ascribeid=20070308.104847&time=11%2034%20PST&year=2007&public=0
That’s funny, they didn’t put this article in the Gainesville Sun (I don’t think). Good thing, too, because everyone here can see the bullshit for what it is.
Gainesville’s condo inventory is exploding… Alachua county’s SFH inventory too. I see little signs of occupancy in the new developments on Tower Rd. Locals move to Haile Plantation (which is 3 mi’s off of Tower Rd) if they have the money … psssh. Not some stupid development across the street from–Sugarfoot! Daily shootings back in the 1990’s. Nice neighborhood. Not!
Btw, with a name like “Wayne Archer” he’s probably a native who owns a lot of RE. (”Archer” is the name of a town near Gainesville–apparently the epicenter of North Central Florida’s crack epidemic, too.) A lot of the natives (both “crackers” and blacks) have made big money in RE here, especially those in local office. Meanwhile, most people here stay poor.
It saddens me to see how shamefully successful the slaveowner’s bid to keep slaves and sharecroppers ignorant was and still is.
And into this mix, Christianity, in its most backward form, given to the Black man by the white man not to raise him up, but to keep him down.
Foregive me if this has already been posted:
Countrywide ends no down-payment lending
http://biz.yahoo.com/rb/070309/subprime_countrywide.html?.v=2
“Please get in any deals over 95 LTV (loan-to-value) today!” Countrywide said late on Friday in an urgent e-mail to brokers. “Countrywide BC will no longer be offering any 100 LTV products as of Monday, March 12.”
Ooops, sorry, sleepless_near_seattle alrady posted it.
Can a realtor even trust that Countrywide will fund 100% financing even if they get the loan in by today ? The new problem in this tighter money market will be that funding will be pulled in the middle of escrow and the realtor will have to re-structure the deal or it’s back on the market . In fact ,RE deals will have to be written up different now and 75% of these new realtors in the business don’t even know how to write up contracts in a tight money market . Just think about how much time will be wasted on deals that will never close with more pissed off sellers and buyers as a result .
Brokers on Broker’s Outpost have been scrambling to re-place loans that were going through new century’s funding pipeline into other companies…quite a few escrows will see “problems” in the comming weeks.
The problem is, with more and more restrictive guidelines coming down the pike on a daily basis, quite a few of those loans IN PROCESS no longer have a home…oooops!
is there any place in florida where assessments are proposition 13eened so that the local gov’t can’t raise your taxes 20% per annum +?
I haven’t really looked around brooklyn lately but everyday when I go to school my bus passes the 3 developed condos over 4 stories and so far they are all more or less empty 1 unfinished and 1 has a wamu branch on bottom floor with about 6 floors of emptyness above.
Yes once lending standards force people to pony up savings its done for not just in ny, fl, and cali but nationwide. I am so used to the gloomy greyness of the city its coldness soothing in a glow of warm sarcasm. I keep hearing sirens more often firetrucks…
Ben, wake up!!
MUST… HAVE… BUBBLE… NEWS…
Lol… same here.