“We’ve Just Started To See The Head Of The Monster”
A report from the Arizona Republic. “The number of Arizonans behind on their mortgages and in danger of losing their homes is at a two-year high and expected to keep climbing. Many homeowners staved off foreclosure a few years ago by refinancing to more risky adjustable-rate mortgages with lower monthly payments.”
“But now, those homeowners, and the many investors who used the same mortgages to buy multiple houses, are struggling to hold on as their payments begin to increase.”
“‘We’ve just started to see the head of the monster,’ said Margie O’Campo de Castillo of Arizona Dream Realty. ‘There were a lot of three-year, adjustable-rate mortgages done to buy Valley homes or refinance in 2004 and 2005. Payments on those loans are about to start rising. More foreclosures will follow.’”
“Statewide, 3.51 percent of homeowners are at least one month behind on their home-loan payments, according to the Mortgage Bankers Association’s quarterly snapshot of the housing market. The figures are for the last three months of 2006. In Arizona, about 9.2 percent of borrowers with subprime loans are behind on their mortgage payment.”
“‘There will be some pain,’ said Terry Turk, president of Mesa-based Sun American Mortgage. ‘A lot of people are shaking their heads at the subprime loans out there.’”
In Business Las Vegas from Nevada. “The Nevada Association of Realtors has predicted a ‘modest correction’ in the statewide housing market in 2007 by projecting home sales will decrease 12 to 18 percent and prices will fall 7 percent to 10 percent by early 2008. The reason: too much supply and not enough demand, the association said.”
“The report mentioned a high volume of speculative sales and current divestment of those assets in leading to instability. In Clark County, more than 55 percent of the 22,800 homes on the resale market in late 2006 were vacant or tenant-occupied.”
“New home sales in January were down 23 percent from December and 26 percent from January 2006. ‘We have anticipated drops in prices for some time because product is not moving,’ said Monica Caruso, spokeswoman for the Southern Nevada Home Builders Association. ‘This is Economics 101.’”
“The report cites analysts who said Las Vegas is 33 percent to 42 percent overvalued.”
The Las Vegas Business Press. “Southern Nevada saw just 1,407 homes sales in February, a 21.3 drop from the previous year, reports the Greater Las Vegas Association of Realtors. And while there were only 5,210 new listings in February, slightly less than 12 months ago, there were still 19,639 units available for sale or 11.1 percent more than in 2006.”
“Condo/townhomes saw similar results with only 277 sales in February, a 42.8 percent decrease from 2006. New listings swelled to 1,447 units, a 29.8 increase over 2006, while the number of available units ballooned to 5,524 or 34 percent more than 12 months ago.”
“Realtors are responsible for 95,670 direct and indirect jobs statewide. Real estate professionals and their employees additionally generate $138.3 million in yearly state revenues, including $50.4 million in retail-sale and use taxes, $83.4 million in property taxes and $4.5 million in gambling-percentage fees. Real property-transfer taxes add an additional $165 million to state coffers.”
“‘Growth in the number of realtors and real estate transactions has increased tremendously during the past three years,’ said Catherine Sutton Cloy, NVAR’s executive vice president. ‘Our clients and members expect that we keep them informed, separating hyperbole from reality.’”
The Review Journal. “Nearly $30 million in construction projects on the Strip will carry Las Vegas through the next couple years of slowed construction in the residential market, economic analyst John Restrepo said.”
“Las Vegas will probably experience a continuing decline in residential building permits, which dropped to 33,000 in 2006 from a peak of 40,000 in 2005, Restrepo said. The next two years will return to the 30,000 level of 2003, he said. Construction still accounts for 12 percent of total employment, about twice the national average, (he) noted.”
“Irene Porter, a member of the coalition and president of Southern Nevada Home Builders, said recent home builder layoffs reflect a slowdown in the housing sector as both builders and buyers are finding the present market ’somewhat daunting.’”
“Affordability and price stability are both industry concerns, she said.”
“Restrepo said another problem on the horizon is the personal savings rate that turned negative by 1.4 percent in December. Combine that with subprime lending practices, and Restrepo said he can see why Nevada foreclosures rose to 6,900 in the fourth quarter, up from 5,800 in the previous quarter and more than double the year-ago period.”
“(Nevada) State Budget Director Andrew Clinger said Tuesday that the state will have to scale back its spending because of less than expected revenue. The statement in a hearing last week that revenues will be $50 million less than expected is ‘probably a conservative estimate,’ Clinger said.”
The Nevada Appeal. “Lyon County may have to resort to layoffs to solve its budget problems, but Human Resources Director Steve Englert said that would be a worst-case scenario.”
“Englert said the county could save by laying off everyone in positions created in the last three years (except emergency); by laying off everyone in positions created in the last two years, with no exceptions; or by reducing requested overtime.”
“The county’s budget headache can be traced to the building slowdown, the tax cap and a 3 percent tax abatement mandated by the state, said Comptroller Josh Foli. He presented the commissioners with revenue projections and budget requests that leave the county with a $1.75 million shortfall at the end of the next fiscal year.”
“Foli said the building slowdown hurt because it cost the county millions in sales tax revenue. ‘The economy has slowed down in Nevada,’ he said. ‘It’s kind of a domino effect, so our sales taxes have decreased. The real property transfer taxes decreased 27 percent from last year to this year,’ he said.”
‘A $100 million, mixed-use project that includes 342 condominiums plus retail, offices and restaurants is planned next to Chandler Fashion Center. Christine Mackay, economic development specialist at the city, said the project would give her a different class of companies to lure to Chandler. It would be young technology companies with one to five employees who don’t want to commute and who would like to live in the hub of social activity at Loop 101 and Chandler Boulevard.’
‘They want to be able to work 15, 16 hours a day and bring their dog from their house into the office and walk back for lunch,’ Mackay said. ‘There’s a whole thing called urban design for the creative class for live, work and play.’
Something about these numbers doesn’t add up:
‘Southern Nevada saw just 1,407 homes sales in February…there were only 5,210 new listings in February, there were still 19,639 units available for sale…residential building permits, which dropped to 33,000 in 2006 from a peak of 40,000 in 2005..The next two years will return to the 30,000 level of 2003′
A $100 million, mixed-use project that includes 342 condominiums plus retail, offices and restaurants is planned next to Chandler Fashion Center
At least they won’t have to ship in the building materials. They can just use the scrap from the Elevation Chandler skeleton right next door!
I’ve begun reading this forum for giggles. It’s amazing how far the denial goes. She hasn’t been able to sell in 2 yrs and yet won’t rent or lower the price.
For you people out in Chadler, AZ
http://tinyurl.com/2zrl2z
sorry about the double post - some days I hate word press
I was tempted to answer this lady’s question by just writing “85249 is toast” - hmm, where have I read that assertion recently?
(This was supposed to be a reply to gwynster’s comment below. Sometimes I’m clumsy.)
She’s in 85248, so it’s A-OK!
I zillowed his property - he paid 305K in 2000 and now wants 585 K … Boo Hoo Hoo, He will only make ~250K ( working hard, sorry, sitting on his a$$, for these past 7 years….), provided he gets some GF to buy his piece of paradise.
Yep - one person came out and just about said the home was overpriced. The rest of the yahoos said things like get a new realtor or some new pictures of the property.
And how long have they been servicing the debt on this vacant albatross? They could have just cut the price a long time ago and saved a world of grief.
I can’t wait to see this same thing played out repeatedly in Rocklin, Granite bay, etc.
It’s on Craigslist for $579K. Whoopie!!
http://phoenix.craigslist.org/rfs/293472831.html
BayQT~
BarbBG on that forum replied that her realtor wasn’t marketing the property well enough. Yeah, that’s the problem!
She’s charging almost $600,000 for a 3000 sq ft home. There are probably 500 houses just like it for sale within a three mile radius. And she wonders why it won’t sell.
If I was curious, I’d look up her address on the Maricopa Assessor website to find her name, then I’d look up her name on the Maricopa Recorder website to see the terms of her mortgage. But I’m not that curious…
Damn, I’d be that curious **wink, wink, nudge, nudge**
Of course I was kidding!
I won’t say anything more. This woman and her husband are in dire financial straits.
Damn I could find everything but the actual terms. I hate it when I get curious.
One of the replies threw it right in her face about her emotional relationship with the realtor….a friend of her BIL. Funny! The first mistake: they didn’t sell before they moved. Second: following the market down. Third: unless it’s my imagination but the difference between the listing on the ReMax ad and the Craigslist ad is only $6,000. HUH!?
How about a REAL reduction in price if they REALLY want to sell the place, and stop pussyfootin’ around.
BayQT~
Good Lord someone needs the get on there and tell lala27 that she’s going down!! All those poster with there “sorry about your wait lala” and “I’m sorry to tell you this but you need to lower the price some lala” are doing her no favors. Lala27 is going to either wait it out for 10 more years, stroke that 3k per month, then hope that she finally winds up breaking even or cut the 10 years short, file for chp13, get it over in 7 and keep some change in her pocket.
Apparently two people just did.
One of them was me - over there I am ChrisAZ.
Me too. Chuy2000.
She relpied…
“Fact of the matter is my exact floor plan has sold in my neighboorhood. Recent comps indicate I have a competitive price. For example, the house 2 doors down sold for $610,000. I am going to listen to Annett and lower the price not behind the curve. Possibly lowering an additional $30,000. “What makes me think I am entitled?” I did not pull the listed price out of a hat. Do more research. Sometime it is more than a formula. Sometimes it is based on the recent comps and what people have actually paid. People in my neighborhood have been low balling my price with their listings. Now I hope to beat them at their game with a $30,0000 drop.”
You can’t buy denial this good >; )
I feel sorry for her. She has no idea what’s happening out there right now.
And I love the “professional investor” who told her to undercut comps by 2%! Are you kidding?!? From what I see she’s already done that. Her neighbor sold recently for $20,000 more than what her house is priced and she still has absolutely no bites.
Her house is now tucked away in my ZipRealty My Homes list. It will be interesting to see how this progresses…
“file for chp13, get it over in 7 and keep some change in her pocket.”
I believe that she is already familiar with those sections of the US Code.
I always wonder WHAT people need a 3000+ sf house for? Unless they have five children. The biggest place I have ever lived in (with wife, 2 kids, 2 dogs) is 2000 sf and it was HUGE. There were entire rooms I basically never used. Of course, I like to spend a lot of time outdoors, so that could be it.
I just joined the HG website, just so I could respond to her post. I basically recommended that she lower the price to $375,000 to $400,000 so she could quick sell it. I explained that the frst person(s) to break ranks and sell at that price will be settting the new comp(s) for the area and that all other sellers would be screwed after that. its either sell now, and take the hit (and bring $100K to the closing table -if they have it) or get foreclosed upon later and get $125,000 (with legal costs) deficiency judgement with corresponding lien on current home, plus possible bk. I guess most sellers face this dilemna right now.
Its definitely getting ugly out there. Feature presentation about to start and I just bought an Icee. Neil, pass the popcorn.
I lived in Chandler (85248) for five years, and I can tell you what his problem is … that there are tens of thousands of homes that look just like his in that neck of the woods. It looks like he lives on the Ocotillo Golf Course, which is nice (so did I) but that means that his home is probably 15 years old. He’s battling way too much supply pure and simple. He’s probably just ticked off because his neighbor sold for $650K and can’t face the new reality of his situation.
This forum is classic. I’m reading that thread and saw this response:
“The public records indicate that you purchased this home in 2000 for $305,000. Why do think you are entitled to virtually double your money in five years or so?
The harsh reality is that your house is only worth what someone is willing and able to pay for it.”
Then the original poster responds:
“What makes me think I am entitled?” I did not pull the listed price out of a hat. Do more research. Sometime it is more than a formula. Sometimes it is based on the recent comps and what people have actually paid.
Whatever, it’s obvious her answer should have been “because i’m greedy!” This lady deserves to have her house sit for another 2 years.
Totally bland, vanilla, cookie cutter house. And that’s a lake?
“It would be young technology companies with one to five employees who don’t want to commute….”
Too ironic — this years bubble chasers targeting yesteryear’s.
For you people out in Chadler, AZ
It’s amazing how far the denial goes. They’ve already moved, can’t sell for 2 yrs and won’t rent it out or reduce the price. The problem must be how it’s photographed or staged - hilarious.
http://tinyurl.com/2zrl2z
I know the area well, and the reason it’s not selling is the price. Nicer homes with pools have sold recently for around $450k. Another classic case of greed, and price surfing. She’ll ride it all the way to the bottom if she doesn’t discount it significantly.
This development is right across the street from the new Fulton Ranch development which will have bigger houses for the same amount of money or less, waterfront living, and full new home warranties. Why would anyone buy her house for that?
“They want to be able to work 15, 16 hours a day”
I thought only Ben did that. Seriously, in a live-work-play lifestyle you need to play sometimes, but with these mortgages you just work-sleep.
“…a different class of companies to lure to Chandler…young technology companies with one to five employees who don’t want to commute…be able to work 15, 16 hours a day and bring their dog from their house into the office and walk back for lunch…”
Nope, sorry! Bad idea, wrong town, wrong climate, wrong wrong WRONG! Nobody likes to walk in 100+ degree heat over six months out of the year. The dogs pads burn on the cement and asphalt for crying out loud! Put down the glass pipe Christine, it’s really starting to cloud your judgement.
Yeah, that’s why I own my own business, so I can live in a densely packed condo project and walk my dog to the office.
Come on Christine, your just teasing my pud here. There’s no way I’m ever going to afford to live in the cultural center of Chandler, AZ. I mean, the place is soooo special, everyone wants to live there, like Greenwich Village or SOHO.
You think it’s bad now. You have these “peripheral” area defaults happening where the house prices are double what they should be.
This alone has been enough to prick the bubble. This is only the first wave. When Los Angeles and Orange County go under it will be the end of the U.S. The houses there quadrupled in price and more. Prices haven’t started down yet there so that’s going to be the grand finale.
What you’re seeing now is a joke.
Well I just totally pissed off a very defensive writer for the Mercury News
http://www.mercurynews.com/ci_5432047
I don’t know, Mo, I think you were a little hard on the writer when you accused him of smoking crack. His point may not be TRUE, but it is somewhat PLAUSIBLE that SJ could have lower foreclosure rates than some other areas, due to the presence of many non-RE jobs. Oh well, I agree with the substance of the comments you made there, but your attack seemed a bit personal. JMHO.
I admit I’m getting awfully tired of these “it’s different here” articles.
That made my day. Too funny.
NO, it is not different here. Prices are coming down. I live in the East Bay where, within, 500 feet of my rented domicile, a house listed for 735K 4 months ago and sold, only recently, for 585K and another house bought for 1.5 MM in 9/2006 is not on the market for 1.35 MM (~300k loss in 6 months, ouch!). Two other houses listed at 800K and 949K, approx. 2x their purchase price 10 years ago, and were pulled from the market as no GF stepped up.
Prices are just starting to decline right now just as lots and lots of condo inventory is coming on the market. While i’m assuming that most of the people in my area have “prime” mortgages, i do know that lots of my neighbors have been using houses as ATMs for YEARS. Now that valuations/comps are trending downward, i see more houses being thrown on the market….
Good job!
“”Real estate is a local phenomenon”
What is she, a realtor? I had to take her to task on that one.
“But now, those homeowners, and the many investors who used the same mortgages to buy multiple houses, are struggling to hold on as their payments begin to increase.”
Are these many investors who used the same mortgages to buy multiple houses among the victims who Senator Dodd is hoping to shore up through his bailout plan?
Makes the blood boil. The next chapter in the war on savers ?
simple
dodd connecticut
hedge funds connecticut
What an AH (Dodd). We should all send him emails (link given by ddinoc on previous “house of cards” thread).
YES, and while he is at it: maybe add a bailout for all the stupid speculators from overseas that have purchased Florida real estate lately? If he even mentions the possibility, they might be able to sell even more FL RE to foreigners! Just as good as the Dutch free put options for homeowners (NHG), let’s make ‘RE never goes down’ a legal requirement! majority vote at the next elections guaranteed as a bonus.
Few weeks ago a french tv-reporter followed a french person
buying an appartment on some Floridian Riviera. A complex of several hundred appartments but almost no people running around apart from some swimming pool actors(models) and the sales team. He thought he was getting the deal of the century…
…At least he was on television…
I am in Las Vegas this week, there are almost as many cranes as there are in Miami…
Questions for Txchick and other traders, they were discussing the Quad witching this week and how it may effect the market, I have heard of triple witching, what is quad?
That is numerically impossible.
Miami has 51% of ALL high rise craines in the WORLD working on POS 1M dollar condos at one time.
I am kidding, of course, but man, Mimai is amazing! You just can’t believe it until you see it with your own eyes. Up in West Palm, there are not nearly as many, but when you think of even 1 high rise crane working in a city that had NO residential high rise condos 5 years ago? And now you can look around and see 10+ completed high rise condos, along with another 5-10 cranes working? It’s equally amazing, just on a totally different scale.
S. Fl is toast. Just absolutely no way around that fact. Many other areas are toast as well (there is enough toast for all of us), so nobody get their feathers ruffled.
http://www.investopedia.com/terms/q/quadruplewitching.asp
Thanks txchick … i thought this quad witch stuff had to do with burying some statue in my yard and praying to some wiccan goddess hoping my stucco box would sell for 2005 prices
@ 2% foreclosure rate your in the swamp
that’s a Michigan type number
“We’ve Just Started To See The Head Of The Monster”
The problem is this monster may turn out to be a Hydra.
or equally bad, a Conehead. (Tip gives no clue to overall dimensions.)
monster is huge. monster has one eye. monster keeps growing and growing and growing…
what ever you do, DON’T turn your back on monster.
LOL, c’mon monster just wants to play.
Imploder, when I saw the title of the post, I thought this was going to be about your date that ended abruptly the other day.
‘They want to be able to work 15, 16 hours a day and bring their dog from their house into the office and walk back for lunch,’ Mackay said. ‘There’s a whole thing called urban design for the creative class for live, work and play.’
Dogs to work. This is so hilarious on so many levels.
Christine MacKay has read too many Sunset magazines.
“Urban design for creative class”…in Chandler??? Honey, there are classes there, but urban ain’t one of them.
Dogs to work. This is so hilarious on so many levels.
Maybe she was talking about the employees at the new Petsmart to be built there.
close italics
Italics off?
My bad. Sorry about that. Tags are dangerous things.
Funny,
I walked to work with my dog today. And I played fetch with him after a meeting. I’ll take that, they can keep the 15-16 hours a day of work. But if you met me and my dog, you would tell him to please leave me at home in the future.
More bastardized New Urbanism schlock to peddle urban living (condos). The types Mackay imagines sound as though they’ve been conjured from a rejected screenplay about tragically hip twentysomethings.
and she’s paid by the taxpayers- and will get a raise
‘A lot of people are shaking their heads at the subprime loans out there.’
How ironic ! For YEARS all you heard from everyone was “not enough land”, “priced out forever”, “RE only goes up” and “10% in the bag”.
Now people are shaking their heads ? Why didn’t they pull their heads out of the sand 2 years ago ! Why didn’t they come on this website and read the contrarian view, do a bit of simple math and reign in their urge to buy a house they couldn’t afford !
The same people that are shaking their heads now are the ones that were pushing on the accelerator to make the RE boom go as long and high as it could go. Now that we have a hang over everyone is sorry. Yeah, well its too late now !
The best thing that can happen now is that the markets can correct quickly and we can get back to a normal economy. The quicker the better as far as I am concerned.
I’m on your side, but I wonder if the correction/crash CAN lead us back to a “normal” economy (let’s say, economy of 10 years ago). So many productive jobs went elsewhere, and so many of us are approaching Medicare age. Seems very likely we will get something more like the 70’s (or even the 30’s) rather than a “normal” economy.
I question also whether we can ever return to normal on several fronts - morality included.
Too many have tasted exotic mortgage products/plus newer and newer technology and our collective attention span is too short to really learn from the past - we already have 40 and 50 year mortgages, plus all the neg am crap. Unfortunately, our society will forgive anyone . . . for anything!!!
There will be another round of crazier crap in a few years.
‘They want to be able to work 15, 16 hours a day and bring their dog from their house into the office and walk back for lunch,’ Mackay said. ‘There’s a whole thing called urban design for the creative class for live, work and play.’
Hmm, work 15-16 hours. Sleep 8 hours. Doesn’t leave much time to play.
Then again, I guess if you can’t afford your mortgage, you won’t be sleeping much.
In Carson City the number of homes sold is down 42% from last Feb. Median sales price is down 11.5%. Prices still have a long way to go before this is finished.
You ain’t kiddin’ brutha!
That’s funny, I was at a doctor’s office in Carson City yesterday listening to these two older ladies discussing one of their sons who had listed his house for $280,000. for 3 months and got not one offer. She went on and on about this crappy real estate agent who kept asking him to drop the listing to $260,000. and how she told her son to fire the agent at the end of the contract because his house was so worth $280,000. The two ladies continued to trash real estate agents who wanted to drop prices. Housing Bubble denial big time.
Catherine Sutton Cloy, NVAR’s executive vice president. ‘Our clients and members expect that we keep them informed, separating hyperbole from reality.’”
Hey, Catherine, That’s plain BS! What were you saying for the last year about Las Vegas being different. THE SPIN STOPS HERE!
‘Our clients and members expect that we keep them informed, separating hyperbole from reality.’
Really? You’ve got your work cut out for you, sweetie pie. To real estate clerks, hyperbole and reality are one in the same.
Master Financial - DONE!!!
http://bakersfieldbubble.blogspot.com/
What’s your handicap sharky?
lol
“The report cites analysts who said Las Vegas is 33 percent to 42 percent overvalued.”
Silly rabbit. Don’t you know? The problem with LV is that it is UNDERSOLD.
Got 10% down?
“Realtors are responsible for 95,670 direct and indirect jobs statewide. Real estate professionals and their employees additionally generate $138.3 million in yearly state revenues, including $50.4 million in retail-sale and use taxes, $83.4 million in property taxes and $4.5 million in gambling-percentage fees. Real property-transfer taxes add an additional $165 million to state coffers.”
Realtors are responsible for 95,670 direct and indirect jobs …
Correction: they used to be
Realtors (TM) are no more responsible for all of the ancillary economic RE activity than the salesmen who sell new cars and are therefore responsible for all of the new car production jobs and all of the vehicle parts suppliers and all of the raw glass and steel and all of the vehicle repair and all of the car washes and all of the insurance and everything else that is affiliated with all of the economic activity of vehicles. These Realtors (TM) like to take credit for everything, don’t they?
Got 10% down?
Well, ok, I give Realtors (TM) credit for a new type of job creation, the HUMAN DIRECTIONALS.
http://en.wikipedia.org/wiki/Human_directional
Got 10% down?
A colleague and I recently had a funny conversation over a few beers awhile back and the subject turned to sign spinners. We concluded that if you’re a sign spinner you really need to re-evaluate your life-plan because something is just not working out.
You need to do a little more research sparky…
…Lawrence said he is negotiating with “quality white tablecloth restaurants which are exciting names new to the Southeast Valley.”
~~~~~~~~~~~~~
Who’s going to patronize these restaurants once the HELOCs dry up and the economy tanks? And another tech magnet? Gimme a break.
And the retirees? People I know up here consistently complain about the stinginess of the retirees. The order from the early bird menu, are home by seven, and rarely blow money in the bars, restaurants and clubs like the younger generations. Add to this the uncertainty of the markets (and 401ks, IRAs, etc.) and you will further reduce spending on frivolous items such as dining out.
Interesting,
We have the folks who retire here and build 4,000 sf homes for $800k, then make sure to get the senior discounts whenever out and about the town.
These are the jerks who think their $800K house is an “investment”
Yeah, they have the $$$, but to say they’re stingy wouldn’t be an overstatement. But I guess you need to attain wealth somehow.
But like we used to say in the asset management business: “”shirt sleeves to shirt sleeves in three generations.”
Which is PRECISELY what happened in my family, B-hamster. And mine is the shirtsleeves generation.
Bloomberg interviews Shiller. Shiller tells them that in real terms, houses will be worth LESS then than they are today. The host doesn’t like that. Idiot.
http://www.bloomberg.com/
I watched that as well. I think Shiller is pretty much dead on. The host couldn’t end that interview fast enough.
“The host couldn’t end that interview fast enough.”
Thats what I thought. Shiller is 2 for 2 now… first dot com then housing bubble. I wonder if the host knew that. Silly media types.
I doubt he’ll get a Nobel Prize for economics for either of those two calls…
“The host couldn’t end that interview fast enough.”
Not the impression I got while watching it, though the hosts response to Shiller’s answer about housing prices after 30 years was entertaining.
speaking of Bloomberg…listening to Sirius today on a long drive, I hear “senior analyst” after “senior analyst” say the same thing. Everyone of them, somewhere in the interview say, “well, at the end of the day….blah, blah, blah, blah, hedge, hedge, hedge.”
Can’t one of them (besides Schiller) just come out and say,
“Jesus H. Christ, the crapola has hit the fan!”
I saw the interview too. Shiller was polite but kept to his guns and correctly said that even if RE holds its nominal value over the next decade or so that in inflation adjusted terms the price would go down significantly. Shiller has nice, bushy hair too.
There are some bubblelicious quotes in that interview! I paraphrase a few of these below (not verbatim, but pretty close to what is said…).
Shiller: “We are in currently uncharted territory, after the biggest housing boom in US history. Given how much prices have risen and the situation in the mortgage market, we may be facing a period of protracted decline in home prices. The CME housing price futures are still predicting a future price decline in all the major US cities.”
Host: “Should we expect a bursting of the housing bubble, or a slow, steady bleeding?”
Shiller: “Prices decline so gradually in a housing bust that people not currently in the market tend to not even notice. But a 3% decline one year, and a 4% decline the next, and a 7% decline the next and so on tend to add up to a sizable decline over time.”
Host: “But real estate always goes up over the long term, doesn’t it? People who own homes now can at least expect to sell for a gain in thirty years?”
Shiller: “It depends on whether you mean in nominal or real terms. In nominal terms, it is entirely possible that prices will be higher in thirty years, but I am not so sure about in real terms. As an economist, I think people should think in real terms.”
Schiller is the Man. Of the economists that frequently get quoted by the MSM, Schiller is one of the only straight-talkers out there.
they already are !
there are a handful of counties in the USA that are up since fall 06
they are drilling sites
“Many homeowners staved off foreclosure a few years ago by refinancing to more risky adjustable-rate mortgages with lower monthly payments”
Also keep in mind that many people refinanced out of fixed rate loans into ARMs when unlocking their equity. So, its not just the home buyer that got caught up in this.
And, don’t forget the HELOCs from hell. I have a relative who signed up for a HELOC two years ago. He said it was “just for emergencies”. I found out that he already has used 50k of Heloc money….to buy a new car, PS3 and other items that I would not regard as an emergency.
Great, lets use long term debt to buy short term, non-appreciating assets.
Heres the real jist of his story - he was laid off last week.
Now he has his old first mortgage, an adjustable rate Heloc at 50k and NO job!
“Great, lets use long term debt to buy short term, non-appreciating assets.”
This consumer economy ain’t so hot is it?
Especially when reality kicks in and they realize that it ain’t free money. Can’t pay your bills when you have no job.
Ouch!
BayQT~
Just like the friend I wrote about who re-financed out of a 5.5% fixed into an ARM to pull out equity for 12k worth of comestic dentistry. To make matter worse, he works for a large chip manufacturer here in the Sacramento area that’s somewhat famous for laying off managers now. You can’t pay for comedy this good.
In defense of their regulation of the US mortgage finance market, Federal Reserve officials defend their approach, saying that over- zealous regulation might “cut off credit” to people who need it most.
Now we have potential subprime and Alt-A mortgage default losses in the trillions of dollars with taxpayers holding the bag for hundreds of billions in US Treasury guaranteed loans at Fannie Mae. The game is so rigged against honesty, it boggles the mind. We have had a mindless Housing bubble that was precipitated by a complete abdication of responsibility on the part of Fed monetary policy.
Why wasn’t the Fed worried about “giving credit to people who could not pay it back” a few years back?
I think its true, Alan G panicked after the tech crash and 9/11. He feared a depression and flooded the world with money.
The question I have is what are these people going to do that lose their real estate related jobs?
For the last few years, real estate WAS our economy!
Well do not forget Health Care.
From what I’ve read, job creation that wasn’t real estate related was probably in the health care field. That’s about all that has been driving the economy. Oh, and the false wealth derived from RE appreciation.
The only individual stocks I own are health care related.
Boomers plan on living forever afterall!
IHI is nice
uh oh, bring on the cosmetic dentistry and plastic surgery recession
“how about some new boobs half off honey? special today only price”
WTF - my posts keep disappearing
I can see them up above.
Stop typing in disappearing ink! It makes it really tough to read!
We were one of the lucky ones. After catching the runup in prices from 2001 to 2005 we sold a condo in Las Vegas at the top of the market. I was surprised that the market in LV hadn’t yet tanked, but then I remember the character of the town - “when in doubt, doubledown”. 55% of the listings are investers holding their breath and waiting for the next hand (spring selling season) to bail them out. From the looks of the subprime mess, the dealer will deal himself blackjack and the **** will hit the fan in a really big way. No one in the LV real estate market is prepared for a sustained decrease in prices of 10% much less 30%. Their bankroll will run out first.
Congratulations on paying enough attention to get the heck out.
“the dealer will deal himself blackjack and the **** will hit the fan in a really big way”
LMAO! It is alot like Celebrity Poker - you go ‘All In.’
If those “investor” dolts would take 30 minutes to drive around town to look at all the future inventory getting slapped up they would panic. Unbelieveable amounts of construction going on out to the east of the strip along Boulder Hwy not to mention a half dozen cranes I see putting up condo towers on the north end of the strip. They are going to add thousands of units to the inventory in the next several months.
For you AZ folks, here’s a frustrated seller in Chandler:
“My house has been on the market for almost 2 years in Chandler, AZ. We have an agent from a good real estate company, keep lowering the house price, the house is clean, on lake, looks at custom homes (which you do not see to often in AZ), listed with pictures on all the popular websites and I have no idea what else to do. Only negative I can see–we only have a built in hot tub and do not have a pool. My mortgage is over $3,000 and I can not justify renting. Not that I could find someone that would pay that.”
She provided the link to the listing as well.
http://tinyurl.com/2ksucs
Nice house, but it must be WAY overpriced to sit for two years.
Monday, $599,990….Today, $585,000
looked it up on zillow
seller bought it back in 2000 for $300,000. not going to guess why the payment is $3000
There’s only about a gazillion houses just like it on the market.
I hate that area. Nothing but strip malls and stucco (no offense, GS!) as far as you can see. Criminy, these people buy into mediocrity, then when they want to sell, they get all…”custom”.
I don’t remember any lake in Chandler after living in the valley for 3 years - a little over a year in Chandler. I remember some man made puddles that had some houses by it.
I put my house on the market in Oct. of 2005 (Cooper and Riggs) for $899,000. Every couple of months I wacked the price $50k at a time. Finally in May, got on offer on the house for $650,000 for the house which was listed at $749,000. Instead of being insulted, I was thrilled and sold the place at $705,000. (I had bought the house for $440,000 in Nov. 2004.)
Maybe I can setup my own $1,000 a head seminar and call it “How to get your house $old in today’s softening market”
It was most likely a golf course home, probably Ocotillo.
And it astonishes me that anything on Cooper and Riggs (in the middle of an enormous flat plain) would sell for $700K. You hit the jackpot my friend.
just caught this guy’s talk show “Phil’s Gang”. You guys would love it, he tore into liar loans, the ridiculous housing market, New Century, and then went into a tirade about Goldman Sach’s Paulson who has been sell these junk loans to pension funds for state workers. Just ripped the whole MBS fraud that has been going on. He would play Paulson’s sound byte and then in the backround you hear “LIAR LIAR LIAR!”.
I swear the guy reads here, I thought I was on HBB for a second.
Mike,
I live in Pacific Beach. Where did you see the show? Local cable?
-Mark (Loring & Cass)
No its a radio show, its syndicated:
you can listen live:
http://www.philsgang.com/GetPage.asp?ID=375
oh since you are local, it was on CASH 1700 AM about 12:30 when I tuned in.
-Mike (PB Drive and Morrell)
I love how BH ravers were always talking about the strong job market preventing an RE crash. From today’s CNN report:
“Many of the jobs added were in lower-paying health care occupations and the food service industry. The professional and business services industry saw net growth of 29,000 new jobs; however, 39 percent of those were in “services to buildings and dwellings,” which include janitorial, landscaping, exterminating, pest control and upholstering, the Labor Department said.
According to Challenger’s data on job-cut announcements, February also saw the largest jump in job losses in five months, surging 33 percent.”
http://tinyurl.com/yrx5sr
So much for your strong job market.
Well, you know they have to add more landscaping and pest control jobs just to keep up with all the vacant For Sale homes in showing conditions.
sure its a strong job market… as long as you aren’t a legal citizen!
Head of the Monster? Is that David Lereah??
OZYMANDIAS
I met a traveller from an antique land
Who said: `Two vast and trunkless legs of stone
Stand in the desert. Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed.
And on the pedestal these words appear –
“My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!”
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away.’
Only $1.6 Million..Seller is FIRM….they AREN’T building anymore Monsters !