Perfectly Appropriate, Coming At The Worst Possible Time
It’s desk clearing time. “In a wide-ranging interview, Angelo Mozilo, the CEO of America’s No. 1 lender suggested that panic was gripping the market over mounting distress in the subprime business. But he also predicted that the bad news is far from over. Q: ‘So the industry got a little crazy with some of the lending?’ A: ‘Any kind of bubble like that creates irresponsible behavior. And we did have a bubble in real estate.’”
“Q: ‘You’ve said that you’ve never seen a soft landing in housing.’ A: ‘Never seen it. That’s right.’”
“Toll Brothers CEO Robert Toll said the spring selling season has been ‘pretty much a bust’ and he can’t predict when the housing recovery will begin.”
“‘When will the market rebound?’ Toll said. ‘Who knows? The Shadow knows. I have no idea. I would’ve thought that it would’ve rebounded by now and I would’ve been dead wrong, and I was.’”
From West Virginia. “Ralph and Blanche Ettinger placed their single-family house up for sale in June and waited for a buyer to come along and snap it up. More than six months later, when a buyer emerged with what had been only the second offer on the house. It sold for $260,000, about $29,000 less than the couple’s initial listing price.”
“‘When we put it up, they were going in weeks,’ Ralph Ettinger said. ‘We knew it was going to take longer than that, but we didn’t think it was going to take six months.’”
“‘Today the seller is waiting longer on his dollar,’ broker Greg Ahalt said. ‘(The longer listing times are) driving them nuts and holding them back from movement forward. They’re not used to it.’”
“Lousy weather but some terrific football helped home sales in Central Indiana decline 13.6 percent in February compared to the same period in 2006, one Indianapolis realtor said today. ‘February has traditionally been a slow time period for the home sales market, and the Colts’ Super Bowl win kept even more people home,’ H. James Litten said.”
“Call them the three stages of real estate grief. At first, there is denial, like the kind John Davis and his wife were living in when they put their three-bedroom home in Boulder, Colo., up for sale last April for $850,000. ‘We were pretty unrealistic,’ the 47-year-old social worker admits.”
“Finally, there is acceptance, a feeling the Davises are now in since relisting their house last month for $140,000 less than the original asking price. ‘We’re finally coming to that place [of acceptance],’ Jeffy says of the couple’s attitude adjustment. ‘We’re not going below a certain price. And if we need to, we’ll find another renter.’”
“Lenders are rushing to offer products to help ease Australia’s housing affordability crisis. Steve Keen, an associate professor at University of Western Sydney, described it as a ‘very silly’ product.”
“‘If it’s going to drive prices even higher, of course it’s disastrous,’ he said. ‘It is another one of those products which is dependent upon the level of prices not falling over time. That has been a guaranteed line of success for 40 years, but it has reached such a level, now it is a wing and a prayer.’”
“The federal government, hardly known for its prescience or nimbleness, flagged the problem 15 months ago when the Treasury Department, the Federal Reserve and other agencies jointly urged lenders to: Refrain from giving loans to people who can’t repay them. Educate borrowers on the risks involved with these subprime mortgages. Increase their cash reserves to prepare for the possibility of widespread defaults.”
“Today, these guidelines stand less as pillars of wisdom than as testaments to the obvious, like telling kids not to play on the freeway or use electrical appliances in the bathtub.”
“Yet, amid the housing bubble euphoria, the guidelines were resisted or roundly ignored. Now the party’s ending.”
“Fed data as of January show banks tightening mortgage guidelines, a trend likely to intensify.”
“‘More restrictive regulatory guidance, which is perfectly appropriate, is nonetheless coming at the worst possible time,’ says Richard DeKaser, chief economist at National City, who says the moves could restrict credit as lenders are already pulling in.”
“‘The best time for these changes would have been three years ago,’ he says.”
“‘We have had to tell customers that were dreaming and hoping of finding a place to sort of put their search on hold because of the way the market has turned,’ said Daniel Walsh, president of a lender and broker in Kensington, Md. The firm’s motto has been ‘When others say no, we say yes.’ But recently, ‘we’ve been saying some no’s,’ Walsh said.”
“A softer real estate market could be trouble for Valley residents. Some homes are now worth less than the cost of the mortgage.”
“‘They’re going to have a difficult refinancing, unless they’re willing to put money into it,’ says Joe Paonessa, president of America’s Mortgage Banc Corp in Scottsdale.”
“Listen closely and you’ll hear the croaking sound of nearly 40 subprime mortgage lenders nationwide, including Las Vegas-based Silver State Mortgage, that have either shut down operations, filed for bankruptcy or have been acquired through last-ditch mergers since late last year.”
“‘It’s really a liquidity crunch,’ said Scott Bice, commissioner of the Mortgage Lending Division of Nevada. ‘I could give you horror story after horror story over here of a maid owning eight rental properties, a Clark County worker making $30,000 a year who got into an investment club and now she’s got a $2.5 million mortgage in her name,’ he said.”
“There’s no way to spin this into good news, investor Gary Anderson of Reno said. He wants to know how people with low credit ratings, the target for subprime lenders, are going to come up with just 5 percent, or $20,000, to buy a $400,000 starter home. And where are people with good credit going to turn when they want to refinance out of their exotic loans?”
“‘The party is over and the fat lady is singing. (Federal Reserve Chairman Ben) Bernanke may lower rates, but the dollar will tank if he does,’ Anderson said.”
A really big week for housing bubble consensus! My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics.
No doubt about it. The band finally arrived and they are singing the real estate blues.
“In a wide-ranging interview, Angelo Mozilo, the CEO of America’s No. 1 lender suggested that panic was gripping the market over mounting distress in the subprime business.”
this is another mis-information. as we have seen with other postings, those affected don’t belong in the subprime section. people with good credit scores and good steady jobs should not be in the subprime section and yet these people are being foreclosed. unless you re-define the subprime, the whole mess will in the coming months show how wide spread this bubble was.
for now it seems everyone is blaming it on the subprime scapegoat.
The band finally arrived and they are singing the real estate blues.
How about the RE Blues from Robert Plant?
http://www.youtube.com/watch?v=ompUMUwt2Jk
Here are the actual lyrics
Darkness, darkness, be my Zillow,
Show my price, and let me weep.
In the coolness of your data,
In the silence of your deep.
Darkness, darkness, long and lonesome,
Ease the day that brings arrears.
I have faced the loss of value,
I have known the depths of fear.
Darkness, darkness, be my blanket,
Cover me with the endless night,
Take away this pain of knowing,
Fill this emptiness with blight,
Emptiness with fright, now.
-breakdown-
Darkness, darkness, be my blanket,
Cover me with the endless night,
Take away this pain of knowing,
Fill this emptiness with blight,
Ohhh, with fright now.
Darkness, darkness, be my Zillow,
Take my deed, and let me sleep.
In the coolness of your pricing,
In the silence of your deep.
In the silence of your deep.
jesse colin young and the youngbloods
WHAT IS BEST WAY TO SHORT THE EMERGING MARKETS? I THINK THAT JUNK WILL FALL HARDER THAN A DETROIT HOOKER.
Another bear market article:
It ends with
“The tech bubble in the stock market provides an appropriate analogy. While the largest overvaluations were in the tech sector and especially in the dotcoms, virtually all stocks had become overvalued. As a result, there were very few stocks that did not experience a sharp price decline from 2000-2002. The fact that a company had strong growth and solid profits didn’t matter - overvalued stocks still fall when a stock bubble collapses. Similarly, overvalued houses will fall in price when the housing bubble collapses.”
“The vast majority of metropolitan areas are likely to see a fall in housing prices over the next few years, with the biggest declines likely occurring in the areas that had the largest run-ups (largely the two coasts). Few people will be insulated from the impact, just as very few stockholders were unaffected by the 2000-2002 crash. Don’t let the happy-talk real estate peddlers tell you otherwise. ”
This is by Dean Baker, and can be found at
http://www.truthout.org/docs_2006/031407J.shtml
The only trouble with the sudden bandwagon consensus is the rush for Senators Dodd and Clinton to propose bailouts. Now the U.S. taxpayer will get asked to pay for Wall Street’s excesses (and their huge bonuses). It makes my stomach turn.
No kidding. I love this country, but I’d seriously consider moving to Canada if this bailout comes to pass. I’ve worked hard, paid taxes and tried to be responsible, and this is the thanks I get? Getting soaked to cover for speculators and bankers?
You know, until recently, it never would have entered my mind to live abroad. But lately, I don’t know……….
have fun with that. Canada is in the midst of it’s own RE bubble. Not only that, but the fed guarantees mortgages, so banks will not be on the hook when the market pops, taxpayers will.
And for those who don’t like leftward leanings of US politics should do some serious reading on Canadian politics before fleeing north.
“leftward leanings”
I’m sorry, is GWB leftward leaning?
Looking for real lefties?
Head New Zealand way, staunchly Liberal and quite proud of it.
They said adios to the U.S. of A. some 20 years ago when they broke the ANZUS treaty, as they didn’t like the notion of our nuclear powered navy ships in their waters.
About 5 years ago, their air force had a decision to make.
Buy new fighter jets or not?
U.S. defense firms were dangling fighters with good terms on payment and they passed. Scrapped the fighter jet wing.
Spent the money they would have wasted on jets on an amazing computer network, all throughout the country, called i-sites, which offers visitors easy accomodation, sightseeing, car rentals, etc.
New Zealand reminds me of our country in the 1960’s (pre summer of love 60’s)
oh yea! well the jokes on them… GW just added them to the “Axis of Evil” for this despicable behavior
no joking matter but US of A is behind south korea, japan and europe in term of informational technologies on the consumer front. i am sure the defense department got advanced secret stuffs but as consumers, we are way behind.
but i am not surprised for a country that voted in a president who does not read the paper let alone the internet.
Defense dept had advanced secret stuffs … but about ten years ago they migrated to Windows for practically everything.
You guys are way behind in just about all fronts…especially the most important ones…social, human, etc…
The only thing the US is ahead in is war and military..something to be proud of I’m sure.
The final arbiter is force.
For now, the U.S. has the aces. Too bad we keep playing them in bad hands.
I don’t really care about Canadian politics or taxes or any of that. Canada, like most other countries in the world (and unlike the US), has fairly liberal tax laws for expats, or at least they used to. Plenty of other nice places in the world still have such laws.
But I doubt I’ll end up leaving anyway. It just pisses me off.
Yeah, but when the Canadian dollar goes bust you at least have brightly colored pieces of paper. The US dollar will be much less attractive as a wallpaper.
Italics off
please
Start taking NOTES NOW!!! If a representative or senator even thinks of a bail out we have time to vote them out of office in the upcoming elections. The High Profile National Elections ought to get their attention. Don’t let those BASTARDS even think about that. Maybe we ought to start a score board of those polititions at are leaning towards this issue to try and gain a few votes.
A bail out will go down to defeat. Who gets bailed out? Only those foreclosed? Those who borrowed in the past few years? Why not everyone who has an ARM? There are too many competing interests and it would cost too much to make everyone happy. The reality of the political killing fields make it too risky. It’s just window dressing.
The real Wall Street bailout will be much more stealthy when it comes….and it will come.
There will be no bail-out.
1) We have no money
2) 70% of Americans either rent (no mortgage) or own their home outright.
Although - crazier thighs have happened
thighs=things
paging Dr. Freud!
“2) 70% of Americans either rent (no mortgage) or own their home outright.”
I am a renter. I just completed my taxes. Because of being bumped in tax brackets, plus some stock windfalls, I get to cough up a huge tax check to the government (several 10’s of thousands).
Losers can buy properties and skip out on supporting Uncle Sam because of their ridiculous mortgage interest payment, and I get to take it in the arse because rent isn’t tax deductible.
“Oh, so you’re a stupid slob, eh? OK, take a subprime/FHA/HUD loan to buy into the RE bubble, and pay very little in taxes. Then when you default - NO WORRIES - you get to walk (with Clinton and Dodd on your side) and the government can bail out the banks who bought the CDOs (and call them “predatory”). By then you can collect unemployment/medicaid/SSI/welfare. Again, on my nickel.”
And don’t get me started with the beaners and all their anchor babies funded by - wait for it - yes - yes - the taxpayer.
Great country we live in. Mob rules.
Home a loan, I feel your pain. We are also renters and we’re still reeling from the tens of thousands we paid in January, and that was the corporate return. When I thought the budget was OK, we got hit with the business tax. I’m keeping my fingers crossed for the personal. As soon as that is done I can settle the debt I have with Ben.
Rental deduction would raise the rent. Removing the interest deduction … I’ll drink to that!
You guys can whine about paying taxes on rentals…but is it worth dishing out $3500/m+ for a purchase so that you can reduce your taxes by $3-4K per year?
It makes no financial sense to me. One of the worst things you can do (and also one of most overlooked things) is to out yourself into a debt-hostage situation. Using a write-off as an excuse to buy a home is possibly the biggest scam made to entice people to buy.
The country used to be a republic, not a democracy. The defect with democracy is that once the voters figure out they can vote a benefit from someone else’s pocket, they do.
Bailout anyone?
Republic and democracy is simply two names - Roman and Greek - for the same thing - power of the people. Whether you do it directly or through representatives doesn’t matter much.
It occurred to me I should apologize. I shouldn’t have pounced on the “beaners” and a little gratefulness on my part would be a good thing. I was in a pissy mood because I had just learned what I had to cough up for taxes.
Fact is I wouldn’t have to pay so much except that 2006 was very good to me financially. But it does suck that I feel I’m disproportionately funding stupid adventures in Iraq, popular bailouts of dumb people, etc. I was just venting. Meanwhile homedebtors get tax deductions for interest *and* no taxes on capital gains of the property. That’s waaay tilted against people like me, and frankly it’s not fair.
I believe there will be no bailout. This is pre-campaign rhetoric and I would expect it from both parties once this really catches fire.
However, once this credit bubble really implodes and our Dollars death is signed, sealed and delivered, the clueless morons in Washington will have much more important things to worry about.
Not to mention that does anyone honestly think the Chinese are going to buy anymore of our debt? Uncle Sam sure aint got the cash…
Don’t feel so bad….I owe $30K in taxes…I live in a one bedroom apartment, drive a used $6000 car, and don’t live an extravagnat life. WHY THE F***K should I owe $30K in taxes? I’ve got NOTHING back from the state or government, I still pay for my own insurance, Los Angeles is as ugly as ever, the people as crap as ever…
I’m so ready to leave. And won’t regret it for a moment.
It is interesting that you had mentioned that. I was taking to my colleague who believes that it is a FED responsibility to bail out failing real estate, and giving people incentives to keep their house out of foreclosure. It should be like giving people a form of tax break to skip a mortgage payment so they can catch up with their bills and keep their house. When I objected why my taxes should bail out people from their bad investment decisions, he opposed me that people should not loose their home since it is their retirement money… I would not be surprised if politicians would introduce some bill, where taxpayer money would rescue failing real estate market or ban banks to evict people from foreclosed homes.
Giving bailout money to FBs is like introducing the synthesizer to the British in the 1960s. Long reaching and not very pretty outcomes.
Is that Putney reference?
Politicometer?
What ‘they’ will call a bailout will just be a temporary patch to keep the BK in their houses, forking over almost all of their money to the lenders and their equity goes into the abyss. For instance, foreclosure might be blocked, loan (slightly) written down, fixed interest for 40 years. The householder will be locked into the house. If they went BK they could recover in time to buy again at the bottom, instead they will be trapped. Winner: lender. Loser: home”owner”.
I even pushed that Cramer’s button this week, which yelled: “THE HOUSE OF PAIIIIINN!!!”
The Tipping Point has been reached. I truly believe this is the week that will live in infamy for the FB’s
The FB’s are so stupid, they don’t even know what’s throttling them right now. They speak a language of “Me put sign up, me sell house for millions. Me so smart (burp)”.
First 2000, then 2007. When it comes to popping bublubublubbles, March is the new October
This link shows the housing bubble, the extra gas being used for long commutes, and why such a strong economy all in one article.
Notice the long commute to the LBC, much more than stated by the FB. Add at least an hour. Notice the ATM withdrawls for consumer items and the thought that the ATM would continue to be full. Just pathetic, but also self inflicted.
http://www.latimes.com/business/la-fi-perris16mar16,1,447240.story?coll=la-headlines-business&ctrack=1&cset=true
Ben:
Best week yet~
> the Treasury Department, the Federal Reserve and other agencies jointly urged lenders to: Refrain from giving loans to people who can’t repay them.
Probably the result of a multi-billion dollar study.
Yes, and the list of some of the key sponsors can be found at ml-implode.com
“Refrain from giving loans to people who can’t repay them.”
Let’s hope they didn’t c.c. the Chinese on this one.
All of this after Al from the FED has been saying there is not strain by homeowners to congress for since 2003. Now POP we have lenders going under! and BC surging…
LOL, so true
Best week yet~
No, this was an easy week, the best week or weeks, was when we would have to come to Ben’s Blog for sanity and support.We were discussing the bubble and everyone else was acting like DL.
What a difference a year makes…people at work were short of placing tin-foil hats on my head. So, my question is, have we all decided on the choreography for our “I told you so dance”?
I’m shutting up on the bust, just like I did on the bubble. I got nowhere with anybody. Protect my family’s interests. Being right does that. Talking about it does not.
I think it’s a little early for celebrations. After all, have you checked prices? I know we’re on our way, but we’re not there yet. Still a long way to go.
Our rental (the one we live in) went on the market (Northern VA) on Wednesday, and it’s gotten a huge amount of interest. I was surprised. It is the least expensive in the neighborhood, which is helpful. It is selling below its 2004 price.
On the other hand, I see foreclosures and new listings rising in this area at a faster clip. I think this Spring bounce is possibly temporary. I remember from Jim Klinge’s website that each year has had a short selling season in the early Spring, and then tends to flatline. Buyers who are motivated may think now is the time to get the better “deals”.
Right, but isn’t it good to see our thinking validated at last? For nearly a year, I kept thinking that other posters’ predictions of imminent doom were wishful thinking not to be borne out. I kept thinking it would all be very very slow. These past couple of weeks have shown it doesn’t have to be slow at all. We could have a good 25% downdraft in RE prices nationwide in ‘07 … not that it will be reported that way.
It’s playing out close to my prediction,off10% in 06 off 15% in 07 and off 20% in 08.
Well everybody knows that I have been saying for months that the crash will be fast and get brutal . If the gov. steps in and stops a faster crash than that is another matter .
come on you guys… there’s plenty of infamy and loathing for all….
Nope. If 2007 sucks to the tune of -25%, the NAR will “report” it as -2.5%. Some journalists in CA are now reporting prices are down by 10 through 20% in CA, but look at how the CAR is “reporting” these figures.
Got 10% down?
I got cash and am retired at 48,i have made my my money on the the backs of fuc*d borrowers.I am the Quinticential Contrarian.
“Toll Brothers CEO Robert Toll said the spring selling season has been ‘pretty much a bust’ and he can’t predict when the housing recovery will begin.”
“‘When will the market rebound?’ Toll said. ‘Who knows? The Shadow knows. I have no idea. I would’ve thought that it would’ve rebounded by now and I would’ve been dead wrong, and I was.’”
Uhhh, Mr. Toll, your story is touching but it sounds just like a lie to me. I say you knew all along there was no Spring bounce in the making, and you were doing your best to give those last fence sitters a little push with your BS prediction a couple months ago.
Toll Brothers slogan (coined by family friend who worked for them):
Toll Brothers Homes: Guaranteed for five years. Then they fall apart.
He sounds so despondent but no one really noticed. The screaming from the unfolding carnage drowned him out.
I have wondered whether the builders will be the ones to propel housing prices downhill with rockets attached. This is my reasoning- say a builder bought a big chunk of land. Then the price of raw land drops astronomically (as I am guessing it would, about now). Being a business, they will just have to eat the losses as water under the bridge- sunk cost. Suppose they could build a house for X dollars, and thought they could sell it for a bit more than the building cost. Since the money in the land is sunk cost, which they will have to write off anyway, it would be better for them to build and then sell at just above the cost of building rather than to not build at all. Thus we might see builders continuing to build and then selling at what would appear to be a huge loss with land costs factored in. This would destroy the comps and propel prices straight down. Does this seem like a likely builder response to you?
Right, except that many builders are deeply leveraged, and simply may not weather the storm. After that it gets complicated.
Time to straighten out and fly right, Mr. Toll.
Got 10% down?
“Call them the three stages of real estate grief. At first, there is denial, like the kind John Davis and his wife were living in when they put their three-bedroom home in Boulder, Colo., up for sale last April for $850,000. ‘We were pretty unrealistic,’ the 47-year-old social worker admits.”
WTF? Am I the only one who’s never met a “social worker” who made more than $35K a year? WTF? An $850,000 house?
Well, you beat me to it. Unfreakingbelieveable.
Even more unfreakingbelieveable when you see the house:
http://tinyurl.com/2e6xek
700K for that?
You have got to be kidding…this listing is a joke, right?
From the MLS listing:
“This inspiring, Downtown Boulder home is all about lifestyle.”
(translation: you will be living like hippie bum, in this add-on shack)
“Soak in the sun on this south facing 8120 sf lot!”
(translation: the heater don’t work so hot. On the bright side, If your rich enought, there’s plenty of land to build a real house, once you knock the shack down.)
“The 2 car gar.converted into a studio w/alley access.”
(translantion: Suprise! no place to park your cars when the 6 ft snow drifts come!)
“Wake up here, step onto the master porch and enjoy the postcard view.”
(translation: Hope you like looking at old cars… the neighbor’s got a few… the wise city fathers permitted them as “yard art” )
“Walking distance to Pearl street. This home has the historic charm that new builders just can’t seem to replicate.”
(tanslation: the hardware store’s up on Pearl. Bring your hammer, this place is so old it’s fallen apart and the builders around town are afraid to touch it)
“Walking distance to Pearl street. This home has the historic charm that new builders just can’t seem to replicate.”
For instance, you can’t get 1920s clay tube and bare-wire wiring in houses anymore…
(translation: the heater don’t work so hot. On the bright side, If your rich enought, there’s plenty of land to build a real house, once you knock the shack down.)
.1 acre doesn’t seem to be enough to build a real house to me.
See, if they’d staged it, they could have gotten their orignal price!
You’ve gotta be kidding me! What a horrendously greedy beyatch! And she says she’s accepted reality?? That icehead is still in the MAJOR denial stage. Unbelievable.
This is my nominee for the poster child of bubblemania…
I looked at this little place, and thought 80k, and not a penny more.
Man, I’m with you on that. They are asking an unholy amount for that place.
Land Area:
It’s amusing to read everyone’s comments about that house in Boulder. LA has so completely warped my sense of house pricing, that when I saw it I thought, “sure, 700 easy.”
Decent houses in Boulder sell for 400K. I don’t see a point in that listing.
That place is THE poster home for FB’s… You can just hear the wife at the RE- photo shoot… “Make sure you get a close up of the granite counter and lighting.. thats WORTH $45,000 you know!”
She sounds like a social worker who needs a social worker!
Bet they inherited the place or bought it a long time ago and you know the rest of the story, heloced out the wazoo and money spent.
my thinking exactly
That would be double bubble trouble!
I guess I’m caught aghast — $ 850,000 for any home in Boulder, CO ? I knew California & NYC had ridiculously high prices, but BOULDER ? What kind of jobs do they have in Boulder that could support an $850,000 mortgage, assuming any idiot would purchase any home at that price ? I mean, should I be moving to Boulder to become a millionaire flipping hamburgers ? What’s going on here ?
Good engineering jobs, but I understand many of those have been leaving.
Good engineering jobs, but I understand many of those have been leaving.
University is the main show and I think some federal research outfits like NOAA. Certainly nothing that justifies $800k for a home. But Bozeman, MT has lots of historic fixer-uppers listed in the $800k range. And once they are fixed up, the price tag is in the millions.
As long as people believe RE will go up forever, price doesn’t matter. You are buying the trend, not the utility of the property. Of course now, who will loan you the money to buy the trend?
Yea, in Montana where the big deep freeze reduces your thinking to ZERO and your gonads are the size of BB’s. What a crock! Get rid of student loans and the University is TOAST! Get real estate back to where common folks can afford a descent living.
I am just wondering when sellers are going to get the real memo. You know, the one which tells them they are asking 50% too much.
Me too. How long is the “denial” state supposed to last?
Actually, the RE market in Bozeman went off a cliff last May/June. Now there are 950 listings on the MLS for a town of 40k… and most of them are vacant. Almost nothing selling.
“Actually, the RE market in Bozeman went off a cliff last May/June. Now there are 950 listings on the MLS for a town of 40k… and most of them are vacant. Almost nothing selling.”
Holy smokes, sounds like the music stopped! That’s a lot of listings for a town that size. Wonder if any of them have figured out that prices are the problem. Last time I checked, Montana wages were laughable. I also read a piece recently, touting Billings as the meth capitol of the country. All is not well on the homefront.
A lot of people including our obviously heloc’d social worker friend in Boulder are in for a good strong dose of a very hard reality if they think they have passed the denial stage.
Hopefully, they will look back at that $850,000 initial wishing price and have a good laugh at how absolutely stupid they were back in great collapse of 07/08.
Apparently their social workers are very well paid, and if this house is worth $850k, I can only imagine what a nice house goes for…..so Real Estate agents could live off of a sale or two a year.
zillow says they paid $101K
Betcha it’s mortgaged up to at least 550K
There are decent jobs in Boulder; a decently educated couple could pull down $150-200k. That still doesn’t justify $700k for a sh*tbox.
PURE FRAUD!!!! with little gray matter! D’ah!!! Probably educators of our children so we can repeat this gig!!!!!!
please people, condos are going for $1000 per square foot in downtown, so $400/foot is a steal by boulder standards. and our job base, employment or income have nothing to do with this craziness, it’s the morons from new york and california that have driven things to absurdity. late 50’s empty nesters with tons o’ dough wanting the college town lifestyle in the mountains next to a real airport. i betcha the davis’ (i don’t know them personally) bought the place for $150k ten years ago. crazy.
“so $400/foot is a steal by boulder standards”
So … if it’s not selling at $310/ft2 then I guess the Boulder market is in a freefall.
I personally know somebody that lives in Boulder, moved there from Palo Alto, takes vacations in Santa Cruz, and HELOCed his house to pour into an internet business that’s static sales at best.
A walking talking parody. Can’t stand the guy.
please people, condos are going for $1000 per square foot in downtown, so $400/foot is a steal by boulder standards. and our job base, employment or income have nothing to do with this craziness, it’s the morons from new york and california that have driven things to absurdity. late 50’s empty nesters with tons o’ dough wanting the college town lifestyle in the mountains next to a real airport. i betcha the davis’ (i don’t know them personally) bought the place for $150k ten years ago. crazy.
That’s right. And it will probably wind up being a scraper.
The assessor shows it was purchased 23 years ago for $101K. Houses in the city are still selling for their wishing prices. It’s taking longer than it used to, but so far every place I’ve tracked eventually sells. The rest of Boulder county is worse off. I think Boulder has reached the level of Aspen, Carmel, Sun Valley, Osterville. As for jobs, Boulder has massage therapists, yoga instructors, prairie dog rescuers, ski film producers… Most of the tech people commute from the L towns - Longmont, Louisviile, Lafayette, Lyons. We’ll see if the supply of moneyed coastal refugees eventually dries up.
“WTF? Am I the only one who’s never met a “social worker” who made more than $35K a year? ”
unless she’s a “very social worker”, call girl or pole dancer…
I was….going to make a rude comment about the future profession of Leslie Appleton Young and Kendra Todd….but decided that the “natural order of things” will be established soon enough regardless.
Nice view and piece of land though. I’ll give ‘em $500K-$600K in value… maybe. But north of $600K? Dreamers reside therein, methinks.
600K ??? are you kidding
There is talk on an NPR show (from WBUR in Boston) about the FHA somehow “helping” homeowners at risk of foreclosure by making it cheaper for them to refinance. I guess the taxpayer is on the hook for a bailout, even though Wall Street’s loan sharks profited like bandits from subprime fees?
Shiller is a smart man with a good heart. Too bad nobody running the show on Wall Street seems to have paid any heed to his many warnings over the past decade.
I wish Shiller would take a few classes (like a month’s worth) on presentation and delivery in order to improve his live communication skills. The poor guy fumbles the interview 9 times out of 10.
He does better responding directly to interview questions than trying to duke it out with REIC b@st@rds. He is a very mild-mannered guy.
People like him deserve respect. Where is this country heading? Competent and honest people donot get the kind of credit they deserve.
People of substance often don’t get any credit because they are typically unwilling to lie.
And in a society where lieing is the national pastime, where does that leave the mild-mannered types?
Got 10% down?
Would someone who has a whole lot more brain power than I have wax philosophically on how any bailout might work.
A poster on Brad De Long’s web site made the intelligent comment.
“Problem 1: the house is no longer worth the value of the original loan, so cannot stand as collateral for a new one.
Problem 2: the borrower cannot afford to pay market rates of interest on a new loan, can never afford to pay such interest.
I used to think that renegotiation would, in fact, happen, rather than massive foreclosure. But I now think it’s institutionally estopped.”
Other than making low interest, bridge loans available to potential homeowners facing foreclosure, how can any government sponsored bailout unwind this mess?
I have thought about a bailout, and it seems impossible. But one scenario that comes to mind is:
The FB gets to continue paying the same payment he was originally qualified for, and can afford. The loan is changed to a fully amortizing thirty year fixed, ignoring purchase price. FB is not allowed to sell the home for a gain. The bank takes the loss, but get’s a tax break from the fed. Ultimately, you and I pay.
Ouch. I was just getting used to the pain.
The problem any entity faces in “helping” the “victims” of a sub prime experience is determining how much to lend.
Do you lend at the sales price or the current value? Would you take “help” paying a loan, say, $100k more than the property is worth? How many people do you think will want to pay off a loan (at virtually any rate) that far exceeds the market value of their home?
So, do politicians think voters will accept a deal where the most foolish housing buyers, who drove prices up, will be allowed to pay off loans at far less than the original mortgage/property figures?
They created the bubble, created economic havoc and now will pay only that price THEY can afford? I don’t think the public will buy that and I don’t think people facing foreclosure will pay anything BUT a heavily subsidized, heavily discounted, new mortgage figure.
Jag - I absolutely agree. I think that Dodd is politically posturing (woulda thunk it?). It’s different from the S&L bailout, when all that was needed was to make depositors whole again - relatively easy to understand and fix. The problem here is that the easy answer, refinancing, is not possible. What to do? What to do?
I think that when Dodd and his co-horts actually take a look at the mess, there will be less jawboning about bailouts. My guess is that Dodd & Co. are talking bailout in hopes of giving the sub-prime industry some breathing room in a tight credit market. As we have seen, a number of the players have received credit lines from banks looking to invest in the industry. The last week or so have resembled runs on the bank in the industry.
Scott Bice, commissioner of the Mortgage Lending Division of Nevada. ‘I could give you horror story after horror story over here of a maid owning eight rental properties, a Clark County worker making $30,000 a year who got into an investment club and now she’s got a $2.5 million mortgage in her name,’ he said.”
I only hope Hillary and Sen. Dobbs can get a new tax passed on everyone as fast as possible … these people need immediate assistance. They hard working people may lose their houses.
2500/30 > 80x. The sky is the limit!
Got 10% down?
Yea! The hard working conservative get the corn cob again! When will it ever stop!! Bastards!!!!!
Yeah, so does this hard-working liberal. Dude, put your politics back in your pipe and smoke ‘em. I am just as outraged as you are about this as my wife and I have been saving diligently for four years (once we paid off our marriage bills) for the 20% down only to find the number we need get further and further out of reach thanks to this absurd market.
Shaka, when the walls fell.
This is not a partisan issue, nor should it be allowed to become so. Divide and conquer tactics should not work here. I post on all sorts of sites and there is little to no support for Dodd’s idea. I think most (maybe not all) people know that this situation was caused by greed and materialism and are not happy with that.
As a conseravative I think this issue truly is above party lines.
If either party attempts to pass such legislation all hell will break loose.
Let’s face it, the ‘middle class’ whether they be liberal or conservative know that we are shrinking to the point of non-existance at this point with most of us falling on the downside given outsourcing and other bad economic policies.
Is this the golden egg?
The issue that will mobilize ‘the masses’ that crosses party lines?
Could be.
As a social liberal fiscal conservative* I think this issue is above party lines too.
*an old fashioned fiscal conservative, not the “don’t tax but spend, spend, spend” variety that is burying us in debt.
i hear loud and clear central valley guy
you can’t save as fast as these prices were skyrocketing
nyc is f’n ridiculous and i want out but the wife…….
well that is another story
re: CVG
Tembo, his arms wide.
Your Star Trek TNG quote seems fitting. We are Darmok and Jalad at Tanagra.
rob
“Lenders are rushing to offer products to help ease Australia’s housing affordability crisis.”
In case you guys down under didn’t notice, this little experiment has been tried. Take a hard look at the US, and then back away from this silly little notion.
ex-nnvmtgbrkr………unfortunately, we will go the way of the States. This real estate bubble is global.
The bomb is armed……..just sitting waiting for the trigger to be pulled.
IMHO the trigger is unemployment……..
“‘The best time for these changes would have been three years ago,’ he says.”
_____________________________________________
Too late now.
Yes, this week has been truly dizzying…..yet the pure schedenfrued I thought I would be enjoying is tempered with thoughts that this is going down even faster and more heinously than I anticipated…maybe time to grease the rifles and stock up on canned goods…when the times get crazy, the crazy get moving-do any of us want to know where this elevator lands?
Yea!!! The ELEVATOR lands on hard rock! No Springs at the bottom and no cushion for any bounce! DEAD CATS anyone……
He wants to know how people with low credit ratings, the target for subprime lenders, are going to come up with just 5 percent, or $20,000, to buy a $400,000 starter home.
That is only 6 or so payments at subprime rates along with tax etc. The bigger question is how a person who could not even come up with $20000 is going to make payments on a $400K house. The down should be at least 20% for subprime and 10% minimum with top tier credit and long term stable employment…
The problem with that statement is “$400,000 starter home”….in RENO!!! A 400K starter home is ridiculous anywhere, let alone Reno, where the median income is hovering in mid 40K range. I mean c’mon, someone call it like it is - the biggest monster bubble we’ve ever seen in our lifetimes.
Sounds just like Sacramento. Our median household wage is around 56K yet our starter homes are 300K.
“Lousy weather but some terrific football helped home sales in Central Indiana decline 13.6 percent in February compared to the same period in 2006, one Indianapolis realtor said today. ‘February has traditionally been a slow time period for the home sales market, and the Colts’ Super Bowl win kept even more people home,’ H. James Litten said.”
I read the post in the Indystar and LMAO! They even know that there is a bubble in Indiana!
Based on 40K income as an average and a 35% of maximum income a payment of $1166.66 per month would buy maybe a $250,000 home not counting Taxes and Insurance.
Watch out blow!! HOUSING IS ON THE DOWNWARD SLOAP.
DOWN DOWN DOWN like a merry go round!!
Assuming $12,500 down (5%) and probably that many fees stacked back on up front, a $250K home at 6.5% will run approximately $1500 a month in payments alone. On top of this, Property Tax at between 220 and $400 a month depending on where you buy, most likely some kind of association fee and (blasphemy) maintenance at say $200 a month We did the math at one point and concluded the monthly cost of owning a home would run approximately $800 a month per Hundred Thousand borrowed or in this case around $1800 - 2000 per month so a person earning 40K who will see little tax benefit at all would be spending at least half their income on a $250K home. I earn in the low 6 figures and would be OK with this, but would feel very stressed at much over.
Based on traditional (might I say prudent) guidelines …
$42,000 /yr income = $3,500 / month
Max purchase price = $138,500 !!!
20% down … 6.5% for 30 yrs … 28/36 qaul ratio
figure includes $200 /month re tax and insurance , $300 / month car payment and $100 / month c.c. payment
Raise tax, car and/or c.c. payment amount and the max purchase price goes down even more !!!
I talked to someone just today in Reno who told me that they were going to put their home on the market soon to move to a brand new home where they would get a significant discount plus upgrades. I tried to explain, but it was like talking to a wall. 11 months of inventory, new condos coming on the market, Zestimates going down thousands of dollars per month, etc. I tried everything. The odd thing was that they agreed on the facts and fundamentals being off, but insisted that selling wouldn’t be too hard. I kept hearing, “our person told us prices would go up this summer”. So what, its a Summer bounce now??
In the last month i have heard story after story in Reno by just keeping an ear out: single dad has to sell because of the reset, sale due to divorce - neither can afford the payment on the i/o loan, mortgage brokers with no deals in over 4 months, a house on the market for over 18 months and the realtor insists it’s priced competitively, and the single soccer mom that got laid off from the escrow company. It seems like all you have to do is keep your ears open and the stories are everywhere. When not too long ago all I heard were stories about so and so making this deal or that, now all I seem to hear are stories like these. I have to wonder if I’m the only one connecting the dots. It seems like a whole lot of people around here are still in denial. So much of the growth in this area was based on Real Estate. I’m really afraid to see what happens as the easy money and jobs continue to dry up.
“I’m really afraid to see what happens as the easy money and jobs continue to dry up.”
Hey, don’t be scared, you’re gonna like what you see! You’ll have your pick of any place you want. Reno is burnt toast. My friend is having a whale of a time even getting people to look at his house, much less make an offer. And he’s the best deal in town. Sure, a few places sell, but has there ever been a time when NOTHING sells? Reno is at 2004 pricing right now, and should move into 2003 by the end of the year, if not sooner. It’s getting fugly.
At the risk of stating the obvious: Putting all those requirements together pretty much eliminates anyone under 30 (maybe 35) from the pool of buyers. That would be fine, except for the ridiculous tax subsidies that homeowners get and that younger workers are unable to take advantage of. I’m 30 and I’m pretty libertarian, but I’m tired of seeing paper-wealthy homeowners write off HELOC interest and protect massive capital gains, only to buy cars, kitchens and vacations.
Who cares about a tax deduction when you’re so over-leveraged your sunk. I can see it now; “The bad news is your losing your house and bankruptcy is eminent. The good news is your getting a hell of a tax deduction.” So many people were blinded from the reality of things by that often misused and misunderstood “you must own a home for tax purposes” notion. Don’t drink the Kool-Aid.
“The bad news is your losing your house and bankruptcy is eminent. The good news is your getting a hell of a tax deduction.”
Priceless! LMAO!
And if the lenders forgive some of the debt and you have to pay taxes on that… “Ooops, cancel that good news…”
But, you don’t report it and pay (or you do but don’t pay) and the next thing you know the IRS agents are talking to your employer.
When did it become a “right” to buy a home before you are 30. I rented until I was 39 and had the 20% down saved up, + enough to get me through any emergencies. The easy lending money during the bubble encouraged people to buy prematurely, before they were financially ready. I have no sympathy for any of them and only hope they learned a lesson (but not really…because this (the bubble) will happen all over again in about 10 years, and when it does I plan to profit off it — hee, hee, hee…patience and ready cash.).
I didn’t say, or even imply, that it was a right to buy a home. My complaint is about tax policy that, in general, rewards homeowners much more than renters. This is unfair to younger workers like me, who are much more likely to be renters. It especially irks me that younger workers, who would like to buy a home, have to pay capital gains (or income) taxes on our savings, while fairly wealthy homeowners are able to protect $250k in capital gains when they sell.
Home equity used to be considered “savings” in a sense. Why is one form of savings taxed and the other isn’t? If it’s to encourage home ownership, why are people permitted to take out HELOCs and write off the interest on that as well?
Simi, I hadn’t thought of that. That would also explain the psychological factor of getting into a house at not matter what price, the whole “throwing your money away in rent thing”. Talk about a perverse incentive.
Great point!
Generally limit to “basis” (what you paid plus improvements) plus $100K, although your point is well taken. Why they should be able to deduct up to $100K to buy a BMW or take a vacation only speaks to the power of the real estate lobby.
“When did it become a “right” to buy a home before you are 30.”
100% right on….you need to pay your dues, learn to save and earn the “right” because you are now responsible for your obligations and understand not getting in over your head. 20 somethings bought my house, 80/20 with 11.75% int on the 20 less than a year ago. I know from old neighbors they are already in financial trouble. I even told the buyers realtor that the market was probably at the top right now and anybody buying right then would need to stay put for at least ten years and he agreed. And get this, I found out later as they were moving in that the realtor was a friend of theirs.
Realtors really are realawhores.
As I see it , the only option a lender has on some of these sub-prime loans is to re-write the exact loan to a better interest rate to avoid the foreclosure if the lender feels they will lose less money that way . This option should be at the lenders own expense . Only a certain amount of owner-occupied borrowers could really qualify for this relief IMO.
“‘The best time for these changes would have been three years ago,’ he says.”
Brilliant!!
Senator Dodd, I presume you’re going to help that maid save all eight of her houses. Anything less would be unfair.
Exactly Bill.
And let’s suppose congress comes up with something. Next let’s remember the huge amount of fraud that went on in this bubble. The fraud under whatever program they come up with would be much, much worse in my estimation.
Makes me want to buy a cottage in the woods and go live there. Better yet I better run out and buy an overpriced house and then take advantage of the bailout.
Actually I can see, much to my disgust, a bail out for a primary residence -non stated income and no heloc. Anything else leads directly to fraudland.
The good news is that requirement would eliminate a majority of the population needing a bail out.
Government intervention distorted this in the first place and any government intervention now will only make it worse.
“Better yet I better run out and buy an overpriced house and then take advantage of the bailout.”
Sad that that seems like as good a strategy as any in this environment, isn’t it?
“Better yet I better run out and buy an overpriced house and then take advantage of the bailout.”
Unfortunately, you wouldn’t be grandfathered in, as Blobb, I mean Dodd would have implemented a cutoff date of 3/1/07.
I’ll just get some desperate bank and broker to back date the docs on a short sale, get a false appraisal, HELOC out $$ in case that doesn’t work and then maybe leave the keys on the counter
“February has traditionally been a slow time period for the home sales market, and the Colts’ Super Bowl win kept even more people home,” H. James Litten said.
—- so things should be going great in Detroit and Oakland, right, since surely the Lions and Raiders Sunday performances sent everyone to open houses instead. And now I know why the greater Los Angeles are has done so well in the last decade - no pro football at all!
Yeah, and WTF is this guy going to say when March is worse than February?
he’ll blame it on March Madness… come June… maybe baseball or the kickoff to the MLS season?
me? I blame Nascar for the lousy home sales.
Do you think this really believes this nonsense? (1) as if one Sunday afternoon spent watching football will dramatically change the market; (2) Most folks in Indiana will be watching the Superbowl no matter who is playing.
So what silly rationalizations are realtors going to come up with when sales drop 40% YOY in March and April?
How about:
“NCAA March Madness was particularly exciting this year”
“Nobody was thinking real estate at all during this year’s thrilling Masters golf tourney week”
“Everyone knows the housing market slows down for the first couple weeks of baseball season”
“Naturally, only the child-less population is looking at houses during high-school/college graduation season. And don’t forget the proms!”
dammit, sorry zero, didn’t see your response… didn’t mean to step on your yuk yuks…
no worries. great minds thinking alike. (or average minds doing the same easy joke!)
This country is either loaded with morons or liars. Either way…
As much as I think that you can’t believe anything that a realtor says, those folks in Indianapolis were insane. I was halfway to Tampa during SuperBowl week and they were like locusts; noisy and everywhere
Was talking to a few coin dealer friends about how they plan to go about buying and selling precious metals in the advent of the first whiffs of hyper-inflation and they all told me (we are natural born goldbugs) that they would stop selling, when it becomes obvious that the Dollar is crashing, as they’d all rather have the curiously attractive yellow metal, than fiat money.
You can still buy Gold, Silver or Platinum @ present.
Don’t wait too long.
Hmmm, a crash of the dollar…Where would one possibly redeem the value of their gold in an economy where hyper inflation is occuring? I bet the govt would take first dibs on your gold.
Hyper inflation has happened hundreds of times the past hundred years and the folks that came out of unscathed all had one thing in common…
They had real wealth, not paper money or stocks.
Why would the government seize my gold?
Here’s a bit of history for you. If they had the power to do it once, they can do it again. EO 6102 was not repealed until 1974.
“Acting under the authority he thought had been given him by the Emergency Banking Act, the President, on April 5, 1933, issued Executive Order No. 6l02. Its title clearly discloses how Roosevelt intended to deal with “hoarding”: “Executive Order Forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates.”
“There were exceptions to this general prohibition: every American could retain a maximum of one hundred dollars in gold coin and gold certificates, rare coins were excepted altogether, and reasonable amounts of gold could be retained for use in industry and the arts. Banks, however, were required to turn over gold coin, gold bullion, and gold certificates “owned or received by them,” to the Federal Reserve Bank. This included not only gold owned by the banks, but also gold owned by their depositors.
“In short, on or before May 1, 1933, all privately owned gold in the United States (subject to a few minor exceptions) was to be confiscated by the Government. As compensation, the owners were to receive paper money, whether they liked it or not. Willful failure to submit to the confiscation was punishable by up to ten years in jail and/or up to a $10,000 fine.”
http://users.rcn.com/mgfree/Economics/goldHistory.html
Here we go again…
Since January 1st, 1975, I can own gold in any form my little heart desires, be it a jewel encrusted Gold toothpick, used by Cleopatria in Ancient Egypt or 1/32 Regensburg Gold Ducats dating in the 1700’s (tiny) or a 400 ounce Comex Gold Bar or
in dore bags of scrap 10-14-16-18-21K Gold, or anything.
Hyper inflation in the US… I smell a rise in crime and a govt lock down of society. Dude, you better get out of the country with that gold. Someones gonna come get it.
One point to make is that if the gold was confiscated in 1933 at least the owner of the gold was protected from monetary turbulence from 1929 until the time of confiscation. Being able to maintain a stable asset value for even a limited period of time in an environment of hyperinflation can be the difference between being a shoe cobbler and owning a shoe factory.
As the drama unfolds, I expect that my gold holdings will be worth perhaps as much as 100x their current value, vs depreciating hyperinflationary fiat Dollars.
The United States has not a living citizen that experienced the ravages of hyperinflation, here in our country and it will be a learning game for all, myself included.
People currently are used to knowing what things are “worth”, but throw in hyperinflation and the Kelly Blue Book value, printed in book form, 6 months ago, might have me buying a Porsche 930 for say, $150,000.00, although the real value vis vis my gold holdings, might be closer to a few thousand Dollars, in reality.
And for those that persist in the “confiscation” angle:
A request in 1933 from the government to turn in your gold coins, for fiat paper money @ full exchange rate doesn’t sound like confiscation, to me. At the time a $20.00 Gold Coin had around $19.50 worth of gold, in content.
It was a fair trade~
People will lose confidence in dollar and start accepting alternatives.
Interesting editorial, and worth reading. Over a couple hundred years ago during France’s hyperinflationary fiasco, you could be put to death for even suggesting to be paid in anything but the common currency. It’s worth the read, and as the heading states, history does indeed repeat itself.
http://www.financialsense.com/editorials/casey/2006/1228.html
someone actually falls for all that kitco.com bullcrap
still waiting for gold to return to 1982 highs, but not holding my breath
I’ll laugh hardest @ the Brads of the world whose view of history, seemingly only goes back to 1980…
When the hammer comes down.
My question with buying gold has been this:
OK, so you buy a bunch of gold coins, chains, ounce bars, etc.
What then? How much gold is a tank of gas worth? Do you bust off a portion of your gold brick to buy those shoes your kid needs? The “value” of gold is completely subjective, in my view, and private transactions would be extremely difficult. What about fraud? How would you be able to know you got unadulterated gold for what you were selling?
You can’t eat the stuff, it’s heavy and impractical to transport in large amounts, and it has no functional uses besides being a nice non-corrosive electrical conductor, very pretty for use in jewelry, and a theoretical unit of exchange for some unknown quantity of goods or service.
In the event of a societal collapse, in my view the new currency would be knowledge…how do you provide for your family when there is no gas, no food, no doctors for miles, and the cities have become burnt-out wastelands.
Another good exchange medium would be the vices that would become increasingly scarce…booze and cigarettes :).
Cheery thoughts for the end of the week.
I’m not going to get into a debate about whether it’s wise to own gold, but I will point out that you don’t need to own physical gold. e-gold.com provides a 100% metal-backed currency in an electronic form. The actual gold is stored in vaults in NYC, the UK & Switzerland, and e-gold provides a way for users to transfer to each other, as well as merchant features.
In a societal collapse, you’d probably be SOL regardless of what form your currency was in (except maybe guns & ammo). But if your concern is inflation, or you’re just looking to put some of your dollars into gold and still retain a mostly convertible currency, e-gold is worth a look.
Exactly. Survival skills trump all else.
I myself prefer firearms/knives/bows as a commodity…universal tools that prevent the loss of gold, food, booze, cigarettes, etc. Set up a weapons shop, sell ‘em in exchange for biiiiiiig gold bars.
Goldbugs fall into 3 camps:
1. The tinfoil hat crowd (scared of their own shadows)
2. Pros who market gold on CNN for diversification or to newbies with tinfoil hat sympathies
3. Garden variety market timers (who can certainly profit)
4. Jewelers & pawn shop owners
Why is it either / or? I always thought it was guns AND gold. (and a quiet place to hide out)
Anyone for Little Bohemia?
Yeah, what if your doctor or grocer doesn’t actually LIKE to be paid in gold??
Heck, in the future, I think your best bet is to commandeer an oil refinery out in the desert and hole up with enough ammo to scare off the mohawk-wearing thugs who come to steal it.
There are kits you can buy to test gold.
Gold is worth whatever you can sell it for, just like anything else. The only advantage it has over cigarettes and booze is that you can store more gold in a smaller space and it has a value all over the world, not just in one specific locale.
If gold had no intrinsic value, governments wouldn’t keep gold in their treasuries — but they do.
Don’t you know how much booze and cigs the Europeans (for example) consume?
Booze, ammo and cigs are universal currency.
Here’s my family’s tale…
My grandfather was a rich man in Czechoslovakia, in the late 1930’s, he owned much real estate, houses, hotels, (he was an architect, we ate lunch a few years ago in a restaurant in a hotel he built, about 75 years ago) and first came the nazis and then the soviets and the end result was, he ended up with nothing.
The economy of Prague and most of Czechoslovakia ran on 2 things during the war. Cigarettes and Gold. Luckily grandfather had a nice stash of Austrian 10 and 20 Corona Gold Coins, as they enabled my father and his family to make it through the war, and after the war, my 22 year old father went to the University of Lausanne in Switzerland and got his degree in economics, in 1949.
Just before my father passed away, 5 years ago, I asked him, how it was possible for a Czech displaced person, to be able to go to university in Switzerland, when there were tens of millions of displaced persons all over Europe at the time?
GOLD
Yeah, yeah! At least since dollars are made with paper you can still wipe your ass with them!!!
Give it up, aladinsane — they’re clueless.
I talked to The Shadow this morning.
He said 2007 is going to suck.
Yes, and the invisible hand is booked up through 2008. In related news, the fickle finger of fate is cornering the market in rocket fuel.
All twelve months of the year.
‘I could give you horror story after horror story over here of a maid owning eight rental properties, a Clark County worker making $30,000 a year who got into an investment club and now she’s got a $2.5 million mortgage in her name,’ he said.”
Don’t worry honey, Mr Dodd will save you.
“maid owning eight rental properties”
Remember this folks when you find a great deal in 6 months, there is a LONG WAY TO GO DOWN!!!
Is Bakersfield as ugly as it looks in pictures? LOL
I prefer to call it “beauty challenged”
No, it’s much worse in person.
There’s a reason we all call it “Bakersf***.” It’s so very much worse than anything I can relate here.
And . . . LOL . . . I read when the San Fernando Valley wanted to secede from LA, the best form of punishment anyone could think of was to rename it “South Bakersfield.”
I only use it as a gas and refreshment post, then haul @ss out of town…
LOL. Its not that bad. It has some good qualities. Give me a minute and I will list them here (please don’t hold your breath, for fear of passing out):
chirp, chirp, chirp
I have been to 20 or so other states and it is no different than anywhere else. The best quality was low crime and affordability. Those are both GONE! It is also 1.5 hrs to Ventura coast and 2.0 hrs to Central Coast.
Dining at one of the Basque restaraunts is one of B’field’s hi-lites.
Any other Basque fans?
Simple good food and it keeps on coming, til you are full.
Sounds like almost every other town in the Central Valley. What they had going for them WAS:
Low crime, affordable housing, and a desireable city within a few hours drive.
Now everything has increased beyond reasonablility. Even the drive times have inflated.
Bako Chalet Basque fan here!
I haven’t been to a Basque restaurant in California. But in Buenos Aires, the French-Basque club is a destination for real gourmands.
You mean a “sweet deal” don’t you?
I don’t think Mr Dudd realises the size of the problem. He only sees political advantage here.
Right. Who’s gonna vote for this guy? Now Hillary jumping on the bandwagon… head scratch. just gives me another reason to hate her and I’m a Democrat.
Why are we being so unfair to her? She only makes $30,000 a year. This is an ownership society!! The Gov. demands that we all have McMansions regardless of income. Dodd will probably let her have the $2.5 million home for $10,000. She deserves it. She was taken advantage of. It obviously has nothing to do with greed.
Of course we will be the losers and have to pay for the $30,000 greedy scumbag’s mistake. I was stupid to not jump in to this mania…McMansions for all!!!!!
She should be arrested and charged with fraud and grand theft.
David Lereah, NAR’s chief economist, says there’s some ambiguity about the current housing market.
“Our goal each month is to fine-tune the forecast based on the latest housing data and a variety of economic indicators, but extraordinary weather variations are skewing home sales and clouding the picture,” he says. “Underlying trends point to a housing recovery in 2007, but it will take a couple months for us to get a better handle on it. Existing-home sales are expected to slowly improve from what appears to be the cyclical low last fall, but we think there will be some additional pain in the new home market, which hopefully will start to rise later in the year.”
Whew! I thought that things were screwed up because of subprime.
Now, I feel no ambiguity.
David Lereah, NAR’s chief economist, says:
“Our goal each month is to fine-tune the forecast based on the latest housing data and a variety of economic indicators, but extraordinary weather variations are skewing home sales and clouding the picture,” he says.”"
Following that, he clumsily threw open a window, and extinguished the filthy black bong, of which he had been partaking for the better part of 5 hours. The weather around him improved dramatically, with the hazy clouds dissipating, but his brain was so fried he hit the floor with a resounding thud, passing out in yet another of his legendary stupors.
Lereah’s raving sounds like the descriptions of Hitler in the Bunker moving armies, that no longer existed, around on the war map.
imploder spot on
“‘The party is over and the fat lady is singing. (Federal Reserve Chairman Ben) Bernanke may lower rates, but the dollar will tank if he does,’ Anderson said.”
If the dollar tanks, long term interest rates will shoot up. Remember that huge deficit that has to be financed somehow.
It’s not at all certain that the dollar will tank. The dollar is very near its lows already, probably on the presumption that the Fed will have to ease. The short end of the Treasury market is trading at around 4 1/2%, with Fed Funds at 5.25%. This essentially tells us that approx. 75 basis points of ease are already priced in. Thus, much of the lowering of interest rates could be factored into the value of the $ at this point.
Don’t forget supply and demand. In theory, currency values adjust until currency flows into and out of a country balance. We have been exporting money via huge trade deficits. As long as the free-trade-with-China regime holds, the dollar will have to drop eventually.
No, you’re still in denial. Acceptance would be when you realize that your house is worth whatever a willing buyer can (and will) borrow to buy it. If that’s less than your “certain price”, then so be it.
Unless you can rent it for what you’re paying, plus upkeep, (but good luck with that in most markets,) “we’ll find another renter” isn’t going to help.
“Acceptance” means that you let your decisions be guided by the facts, giving no weight at all to what you want. These people aren’t even close to acceptance yet. Of course, given the facts, (for most recent house buyers,) “acceptance” will equal “panic.”
–Shannon
There are actually four stages of real estate grief:
1. Denial
2. Anger
3. Painful a$$-pounding
4. Acceptance
I think we’re starting to transition from stage 1 to stage 2. The worst is yet to come.
I think that guy Sobel on the last thread who was advised by his broker to “ride it out for a few years” is already in stage three.
Number 3 just kills me!!! I’m lucky I didn’t see this in the am with a mouth full of coffee.
LMAO
You are so right. Money-market cost of $710K is $35K/yr, add in property tax, maintenance, insurance; they need to rent it out for a good $4000/mo. For 3BR in Boulder. Just for fun I googled Boulder rentals and found out their house might rent out for $2000/mo if they’re in an excellent location and also very lucky.
Yep, good luck with that rental! Two of the most annoying FB quotes: “I’m not going to give it away,” and “We’re not going below a certain price.”
Quote one is just retarded and that’s all I have on that. Quote two? Well, he might not go below a certain price, but the bank sure will when it’s a REO. Greedy dip$hit! Fools like that deserve to be living in their car.
No need to live in their car - A friend and I slept in an IHOP in Boulder a few years ago after we overestimated the amount of time it would take to drive from Chicago to Rocky Mountain National Park. Waitress on duty didn’t mind - it was 3AM and there was a grand total of about 3 other people in the place. We left a nice tip after we woke up and ate breakfast.
There is Dodd’s plan! Subsidies to IHOP for temporary housing.
I dont think we the bubble watchers should be too much worried about the bail out. we should be concerned, watching and take steps to save our savings -outside of this country, metal etc. but not worried.
My reason is this
a. US govt is the big debtor, the subprime one at that
b. Unless there are foreign govt willing to lend, no money in the bank
c. Only other way is to print some
d. that would result in inflation, help ful in managing debt, harmful to the society nonetheless
e. other option is to tax more, but people are already suffering from bad loan and indedbted themselves , no option here
f. also the time it takes for congress to act, with two houses in different parties
g. each one would want some for their own constituents- banks, FBs, Thrifts,
h. there will be numerous if and buts in the legistlation. it would get them headlines, but would help none
i. ofcourse it would be difficult for us - renters- to get loans.
j. that only will make the realestate market worse. no sales, no commissions
I’m getting depressed
Bail-out is a legitimate concern providing the amount of debt we have and the way this administration spends money. But what are the signs of a bail-out?
I posted this on Craigslist, kinda for real, and kinda for kicks:
“College-educated, working couple looking to rent a 3/2 house in the 95*** area code. Will lease no longer than 6 months unless security deposit is negotiated downward. Must be ok with small pet. Non-smoking. We are excellent renters with references. We both work and are not on Section 8. If you want your house kept in impeccable condition and the rent paid on a timely basis, then we’re your solution.
We’re aware that many landlords are trying to rent and sell at the same time. That’s ok, because we’ll be looking to get a lovely deal in this buyer’s market while we rent. For a break in rent, I am willing to allow the property to be shown inside.
It’s not my fault that you bought at the top of the market and are getting desperate, if that is the case. We will not pay inflated rents to cover an unwise morgage decision you made. If you are a reasonable landlord, have references from previously satisfied tenants, and have owned the home for some time, you are our ideal solution.
We will not pay a penny more than $1100/month rent and $800 security deposit. These are generous amounts for the true rental values in this market. If you would rather get greedy and take a renter who may try to break the lease, grow pot in your house, or otherwise become a problem, that’s your prerogative.
Thanks for your response in advance,
“happy renters”
note: comparable properties in this area rent for $1300-1500.
Cool. Let us know what kind of responses you get.
That’ll get flagged in less than an hour.
Posts get flagged way too easily there. They need to change that.
lol. Let us know how the response is.
What i great Idea on a Friday Afternoon: LOL
NEED A GREAT RENTER……….
Reply to: hous-295233177@craigslist.org
Date: 2007-03-16, 6:12PM EDT
“College-educated, working couple looking to rent a 2 bedroom nice apartment in the 11104 area code. Maximum is $1150 and $900 security, and a 12 months lease, . Must be ok with 3 cats. Non-smoking. We are excellent renters with references. We both work and are not on Section 8. If you want your house kept in impeccable condition and the rent paid on a timely basis, then we’re your solution.
We’re aware that many landlords are trying to rent and sell at the same time. That’s ok, because we’ll be looking to get a lovely deal in this buyer’s market while we rent. For a break in rent, I am willing to allow the property to be shown inside. And will accept a Complete return of the security deposit and all our moving expenses paid by the new owner in exchange for breaking the lease real fast and moving out before closing.
It’s not my fault that you bought at the top of the market and are getting desperate, if that is the case. We will not pay inflated rents to cover an unwise morgage decision you made. If you are a reasonable landlord, have references from previously satisfied tenants, and have owned the home for some time, you are our ideal solution.
We will not pay a penny more than $1150/month rent and $900 security deposit. These are generous amounts for the true rental values in this market. If you would rather get greedy and take a renter who may try to break the lease, grow pot in your house, or otherwise become a problem, that’s your prerogative.
Thanks for your response in advance,
“happy renters”
Only a very desperate FB will repsond to that post. Wait another 6 months.
I did something like that in Dec., stating we were a childless proffesional couple, long-term local careers, super-high credit scores and no debt. I stated what area, what price, amenities, etc., that I needed. I also stated I was only looking in a very certain area. I was flooded with email and this was back during the holidays when no one was moving.
I ended up staying where we were. The financial situation for every potential landlord I looked at was so bad that I didn’t trust them enough to lend them $20, let alone give these clowns my sec deposit and last months rent.
This might be fun for all of us to do. I might be moving. Excellent idea.
hahaha a professional couple who can’t spell professional in a hurry >; )
Mark,
If it’s just the two of you and a pet, then you can probably won’t mind the intrusion from agents and buyers. I’m doing the “save money and offer to let it go on the market” route and it’s not fun at all. But I have young children, which makes a difference in my tolerance level to intrusions throughout the day and weekends.
Arwen, when I posted my ad, I specifically stated that I would not consider any home that was on the market or going on the market. I also wanted a very long term lease which for the right landlord was a way to hedge on a returning market in a few years. After interviewing these people, I quickly came to the conclusion that they were all scammers.
My favorite was the SF couple who lured us out to view a property at a certain price then quoted us a different rate once we were on site. They pleaded that they had to charge XX dollars because they were a young family starting out. What disgusted me was the brand new mercedez parked in the driveway. They called us 3 weeks later, desparate to accept our first offer. Turning her down and explaining exactly why was the highlight of my entire month.
Bring on the Pain! King of Pain.
http://www.youtube.com/watch?v=XFKnfu9NxhA
Updated Lyrics:
There’s a little black spot on my credit today
It’s the same old thing as yesterday
There’s a listing stuck in a high tree top
There’s a melt-down now and the bubble’s popped
I have been here before around the inverse gain
With the world turning circles, prices down the drain
I guess I’m always hoping that they’ll end this reign
But it’s my destiny to be the king of pain
There’s a little black spot on my credit today
(That’s my soul up there)
It’s the same old thing as yesterday
(That’s my soul up there)
There’s a listing stuck in a high tree top
(That’s my soul up there)
There’s a melt-down now and the bubble’s popped
(That’s my soul up there)
I have stood here before inside the inverse gain
With the world turning circles spinning ’round the drain
I guess I’m always hoping that you’ll end this reign
But it’s my destiny to be the king of pain
There’s a FB trapped in a high cliff wall
(That’s my soul up there)
There’s a dead broker frozen in a waterfall
(That’s my soul up there)
There’s a Realtor beached by a springtide’s ebb
(That’s my soul up there)
There’s a flipper trapped in a spider’s web
(That’s my soul up there)
I have stood here before around the inverse gain
With the world turning circles prices down the drain
I guess I’m always hoping that you’ll end this reign
But it’s my destiny to be the king of pain
There’s some bling on a corpse with his eyes torn out
There’s a FB looking for a shadow of doubt
There’s a poor man dreaming of a golden bed
There’s a broker begging for a crust of bread
King of pain
There’s a crap box built by a wetback’s pack
(That’s my soul up there)
There’s a mortgage lender with a broken back
(That’s my soul up there)
There’s a little black mark on my credit today
It’s the same old thing as yesterday
I have stood here before around the inverse gain
With the world turning circles spinning down the drain
I guess I’m always hoping that you’ll end this reign
But it’s my destiny to be the king of pain
king of pain
king of pain
king of pain
I’ll always be king of pain…
Good one sm_landlord! Where’s the midi?
http://www.mzh.dk/midi.html?ID=58
or you can watch the youtube link above.
Sweet!
That is the title song for “The Housing Bubble” Movie!
Excellent!
Direct quote from my realtor here in Pullman, WA:
“The entire local market seems to be flat lining. Not sure if people are just waiting and watching, or if they are all content in their present places. The ‘better’, of the homes in each price bracket seem to be selling, but the rest are moving slowly. Definitely a different market (so far), than the past 3 to 4 years.”
The only real movement is at the bottom end of the market:
“The only real movement is in the bottom end” of the fools who are still buying.
At the bottom end you can buy a very dumpy 3/2 home in a rental neighborhood for $200,000 that would rent for $900-1000/mo. (And might very well have been a student rental before it was put on the market.)
Keep in mind that most new faculty with a little bit of a downpayment from their folks might be able afford a home in the low $200,000 range. And faculty are paid more than most new hires other than senior admin. So new faculty are buying dumpy student rentals because that is all they can afford.
But we can rent a large, nice 2 bed apartment for $625/mo (ALL utilities included) indefinitely. So what is the hurry?
I’m a WSU alumni (’82 Mech Engr) and I was in Pullman last December visiting some of my significant other’s family. I was amazed at the new construction completed the last few years. We looked at a house for sale in the developement on the hill south of campus and they were asking $425K for a 3 bdrm 3000 sq ft home. Who in the Pullman area can afford that, other than maybe dual income faculty families?
What amazes me is how many 3000, 4000+ sq ft homes here that are just 3 bedroom? What the heck do you do with all that space… set up an indoor football field? The heating bills are horrendous, can’t imagine who could really afford the taxes and utilities on these monsters, even dual faculty homes.
Eastern WA is in a bigtime bubble. The correction will be extremely painful there.
From the business week article (Maria B. interview with Angelo M), Angelo says, “And there’s an old saying that you never know who’s swimming naked until the tide goes out .
We’ll Angelo, I have a feeling (and many others here) that you have been doing some flashing yourself. Let’s see when the tide comes out what happens.
http://countrywide-foreclosures.blogspot.com
I’ve got a feeling that this list could double soon. It’s updated on a weekly basis for those that don’t know. I
I guess we will get a chance to check out Angelo’s tan line pretty soon. What do you think–the full monty, speedo, or farmer?
fully monty and a brazillian.
Here is a bit of fun from Reuters:
(MOSCOW) - Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets.
“You can’t believe how bad it’s going to get before it gets any better,” the prominent U.S. fund manager told Reuters by telephone from New York.
“It’s going to be a disaster for many people who don’t have a clue about what happens when a real estate bubble pops.
“It is going to be a huge mess,” said Rogers, who has put his $15 million belle epoque mansion on Manhattan’s Upper West Side on the market and is planning to move to Asia….
“Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it’ll be worse because we haven’t had this kind of speculative buying in U.S. history,” Rogers said….
http://www.reuters.com/articlePrint?articleId=USL1470530620070314
But will the BLOWHARD put his money where his mouth is
and take the first $9-10 MILLION dollar offer he gets?????
Or will he hold out for the RIGHT PRICE????
Yesterday I suggested that we all get together and pitch in to make him an offer of three million.
Whoah! Why is he a blowhard? Wouldn’t you sell? He has a pretty good track record, and is saying pretty much the same thing Sir John Templeton said a while back, as well as what many of us have been saying (and waiting) for a while.
At least he isn’t talking up the sale of his mansion “’cause real estate never goes down!”
Paul
The fat lady isn’t singing, it’s months before “curtains up” and she’s in bed choking on a drumstick. And she doesn’t know it yet, but this will be her death bed too.
There will be no opera; the fat lad won’t even make it out the front door.
“Cool. Let us know what kind of responses you get.”
sure will–
I was going to buy a house, but since the Colts were winning, I decided to spend the entire weekends watching. You know… pregame, postgame, Sports Center…
Yeah, sounds plausible!
Grossman fumbled the housing market.
and tank johnson shot it to death
Q: How does a social worker afford an $850,000 house?
A: They can’t.
I am mind numbed by these situations popping up. People with 2k in the bank and flipping burgers buying a $300k house. Joe Office Worker making $45k buying 4 houses etc…
I think the big suprise for those not paying attention (this crowd pays attention and is well aware of this pending situation) will hit in ‘08.
The problem is not limited to subprime buyers. Prime and near prime buyers got into the mania and bought McMansions with suicide loans as well. We will see professionals, doctors, lawyers, engineers and those who were thought of as responsible facing ARM reset shock as well.
A good cross section of society will be carved off and wind up in the gutter. Burger flippers, single moms and gucci suit clad power brokers huddled up into cardboard boxes under overpasses.
‘People with 2k in the bank and flipping burgers buying a $300k house’
- Do these people have 2k in the bank?
you would be surprised, on 2nd thought you probably would not, people with alot better jobs than burger flippers who do not have 2k in the bank.
we are those endangered species “homosavians”
I was cleaning the house of some guy who was investing. Saw his budget and all of his 4k/mo income was alloted to debt service and cost of living except $5. 0.00125% available for those litle things that can sometimes happen.
Lol
She doesn’t. She’s the seller. She probably bought it for less than $100K a decade ago when she and her husband could afford that price with their salaries.
Her crime is that she thinks she deserves $700K for the place.
OT - Casey is hosting a live call in a few days:
While we’re OT, KNX-1070 (Los Angeles) will be running a special program on ARM resets - Monday 9AM through 11AM. They were hyping it all morning.
good to listen if time permits. that guy “money matters” show was a big RE shill.
Yes Casey, what tips can you give me that will lead to certain foreclosure ? As you’ve heard our generous legislators now want to bail out people about to lose their homes and as a long time Mortgagee I no longer feel like I need to pay.
Well its a two step process–first you make a lot of sweet deals and…and then you go into bankruptcy. Its easy!
PS. I have found that a blue bouncing ball helps me relieve the stress between step 1 and step 2.
LMAO. It’s scary how he was able buy so many homes.
Don’t forget to juice those veggies, too. THAT is the secret…
“If you are facing foreclosure yourself feel free to call-in and I’ll see if I can help you with any advice or tips.”
Tips: leave country, change name/SSN, suicide.
For real?
How has this guy not ended up with his own reality show on MTV yet?
hmmmmm, tips from casey?
the best koolaid for lipstick in san quentin?
Right after Casey’s podcast Pamela Anderson will be speaking on celibacy followed by a quantum physics lecture by George Bush and concluding with a symposium on modesty that will be run by Donald Trump. Get your tickets while supplies last.
“Finally, there is acceptance, a feeling the Davises are now in since relisting their house last month for $140,000 less than the original asking price. ‘We’re finally coming to that place [of acceptance],’ Jeffy says of the couple’s attitude adjustment. ‘We’re not going below a certain price. And if we need to, we’ll find another renter.’”
Are you freaking kidding??? They are losing money every day it does not sell. $140k less and a second realtor is acceptance? Rent it? You need to sell it, not rent it. Cut your loss and drop the price NOW. Here is some advise, if it takes longer than 6 weeks to get an accepted offer your price needs to be lowered. Of course a REALTOR is going to tell you the price you want to hear to get the listing, so figure you need to price it 5-10% below the comps to get it sold fast. This was the rule I followed however, in today’s market it might be closer to 10-20%.
Last year (05/06) I sold several rental properties in CA and AZ. Guess who priced them 5-10% lower than the comps? Did I care? Well just a little, but I saw what was coming, and frankly now I am so glad I sold them.
The hardest thing in the world is for a human being to accept a loss (of most any kind).
The worst is when you think you have some “control” over the degree of loss. In a market, you simply don’t. In an illiquid market that’s going down…….you are at the mercy of the kindness of strangers.
Unfortunately, few strangers venture into a declining market and those that do usually are smart enough to drive a bargain such that they’ll be insulated from a further decline in value.
These guys won’t sell and, when they finally figure out the game is musical chairs, there won’t be any “chairs” around that will accomadate them. I wonder what they’ll do then?
Heard a story that made me stop and think…
Vietnamese family in CA, bought a home a few years ago with a subprime mortgage…what else eh? Anyhow, now the payment is adjusting (and will continue to adjust upwards each month…) and the husband can’t work…the big C.
I felt very sorry for this family. I don’t believe in bail-outs and I do believe in personal responsibility.
However, I do feel that lenders have completely screwed this family. How many other families are similiarly screwed.
It made the forecloure statistics more human to me….
Shame on the predatory agents, brokers and lenders….may they all rot in hell..
How are they screwed? If they did subprime they probably have no skin in the game, so at worst they are back to where they started. Probably went 0 down and at most had to come up with the cash for closing cost (but probably wrapped that into the financing as well). They are out nothing other than screwing up their credit scores. The free ride is over for lots of folks because it is time to pay the piper. People didn’t understand that there was some risk to their expectations that real estate only went up. No free lotto pay-off this time. Yes, I do feel sorry for the guy with the big C, but that is a completely different story than the foreclosure problem.
Absolutely on the money.
Stock market investors can also develop cancer; however the NYSE does not offer to refund or make good any losing investment simply because the investor has medical problems.
What is “the Big C”?
Lack of Vitamin C or “Big Cahonas”
cancer
In the way, this family is a victim of a messed-up system all the way to the top. Greed — creation of crazy loans — has fueled real estate market the past years and now it reveals its ugly side. Who to blame?
“this family is a victim”
This family is not a victim of anything…prudent families do not use exotic loans to “stretch” into homes they cannot afford. They knew they can’t afford this house because they do not have 20% down and a fixed 15 or 30 year mortgage. And yes, they are adults and responsible for knowing what they can and cannot afford. Lenders may or may not be greedy, primary responsibility is with the buyer. If the buyer is a greedy jackass, then losing a house he cannot afford is not a sad story. It’s an introduction to reality.
I partially agree with you but don’t forget these people are not as educated and not well verse with loan terms. I’m sure there were some who are greedy and wanted to gamble with it but there were plenty of innocent victims. Regardless, a bailout is not a responsible action.
Finance today is a product with new introductions every so often. Todays mortgage isnt like the ones many years ago where we hade fixed 30 years only. Thats how lenders can attract customers and compete.
Take away the marketing hype … and that leaves with with pure finance and term schedules. Anyone can figure that out! Its doesnt take a PHD to figure these are your payments and dates… Period!
Stupid does not = innocent. If you were (are) stupid, it is not everyone else’s responsibility to protect you.
Crooked corporate practices go far beyond lenders, and thanks to our fine government, almost all regulation is gone.
That said, would these same people be giving the money back had prices continued to skyrocket as they are in parts of London? I think not. No one held a gun to their heads and made them buy. Do you feel sorry that they have been able to live in a nice home for the past three years while I rent a 1200 sf apartment? I doubt that either. Did they believe the don’t worry you can just refinance pitch? probably, but how does that make them victims? That was as likely a possibility as any other in this horribly broken housing market. In 2004 I got all kinds of hard pressure sales pitches from relatives and “friends” Get in before it is too late. It does not matter what houses cost, you will make a fortune like everyone else.. UGGG!
The big C?
C’mon, people…Cancer.
novasold gives a big, “DUH?!!”
My Dad is suffering from the big C.
Sorry
Surprise, surprise:
Hedge funds hit hard by subprime woes
It could hardly happen to a more deserving group (although I am not sure whether WS investment banks are more deserving).
I am surprised that we have not had a hedge fund blow up over the last month-not so much due to the meltdown in the subprime equity market but due to the meltdown in the ABX index i.e. the MBS themselves. We also havn’t heard anybody crying “uncle” in the CDS market yet we know there have been around 30 subprime mortgage companies have imploded over the past three months.
One thing I suspect is that though the banks have passed on the MBS to investors I bet they have retained exposure through the provision of CDS agreements. Anybody have any insight on who has the CDS exposure?
That we know of. Hedge funds are non-public and need not disclose anything to anyone. No restrictions.
They all operate in “Stealth Mode”.
I think most of the bigger, more established hedge funds are on the right side of this. Some single-strategy funds which take huge one-directional bets (a la Amaranth) will get killed, but most will do well. Volatility is usually a GOOD thing to them, it creates more discrepancies between markets and thus more opportuinites.
Don’t worry smlandlord, their buddy Dodd’s is working overtime to solve their problems.
“‘The best time for these changes would have been three years ago,’ he says.”
The best time for these changes would have been never, which would have been the case if the lending industry’s underwriting contingent and their regulators had not taken a collective decade-long nap.
“Lousy weather but some terrific football helped home sales in Central Indiana decline 13.6 percent in February compared to the same period in 2006, one Indianapolis realtor said today. ‘February has traditionally been a slow time period for the home sales market, and the Colts’ Super Bowl win kept even more people home,’ H. James Litten said.”
Hurricanes couldn’t stop Florida condo flippers back in 2005, but a little snow and cold has been devastating on the market now that the bloom is off the rose and the thorns have revealed themselves in the subprime lending sector.
You gotta be kidding me, they are still using the Super bowl as an excuse? I’m from MA and remember when they were using the Pats as a reason for when home sales were showing the first signs of a decrease. Unbelievable.
We have heard of credit crunch but do you think we are heading that way? What’s happening right at the moment is encouraging…we are fixing the problem with all the crazy loans out there. My concern is — how long this is going to last providing the fact that the current fed prefers inflation to deflation. Your thoughts?
May I suggest Calculated Risk and Mish Shedlock’s Blog before you beging posting on such subjects.
Yes. Please read that “Doom & Gloomer” Mish’s site ….. (kidding)
He got a small attack here Wednesday(?) for being the “Cup is half empty” prophet. I personally think his postings are firmly grounded in the fundamentals of investing, and frankly I was a bit surprised to read anyone here suggesting otherwise.
Latest off Yahoo….something for the masses to ponder on the weekend. Hey wait a minute… were not all the the shills saying we are undersupplied and there is too much supply. You dont think they were lying to use. Wonder if Senator Dodds will uncover all the lies from the NAR. Yea! I can See DL on the hot seat… Taking oath and really covering his *ss during congressional investigation.
You cant blame it all on the sub-prime lendors… its all going to come back to the realtors.
CNNMoney.comScary Math: More Homes, Fewer Buyers
The problem with subprime lenders means there will be more homes in an over-supplied market and not as many people who can step in to make purchases.
http://promo.realestate.yahoo.com/More_Homes_Fewer_Buyers.html
1716 Chelsea Rd, Palos Verdes Estates, 90274
Status: ACT MLS#: P941287 $1,650,000*
List Dt: 02/08/2007 PType: SFR-D Orig Price: $1,900,000
lot size not much more than 7000 sf. Down about 250K. Good thing I didn’t buy this one last week.
Using zillow this baby of 3300 sq ft had a list price of under 400K 10 years ago. Check out the hoods history for 10 years back on Zillow. Sorry folks under normal markets prices dont zoom from 400k to 1.6M under 10years. Appreciation is at inflation levels… we had no hyperinflation to warrent these increases.
Sorry folks… this needs a hair cut of over 55% to even near to historical mean.
saw one in local Daily Pilot this morning: Newport Beach, paid $950 in 2004, need to get $750 and get out now… hmmm…
and i felt bad about my positon in one stock going red a few hundred bucks
i thought real estate just went up?
go figure?
CRAZY
01/15/2003: $1,295,000 Last purchase
Zestimate: $1,923,807
Residence: Single family
Bedrooms: 3
Bathrooms: 3.0
Sq ft: 3,185
Lot size: 7,320 sq ft / 0.17 acres
Year built: 1989
CNN.FN follows some home sellers:
http://money.cnn.com/galleries/2007/real_estate/0703/gallery.help__updates/index.html
“”My tenant is going to buy the house within a month or two,” reports Corey. “He has been pre-qualified for a mortgage.”The rough experience failed to dampen Corey’s enthusiasm for flipping and the housing slump may be just the recipe for him to even up his activity. He says he just bought a bank foreclosure, a three-bed, two-bath of 1,700 square feet. He says it’s appraised for $209,000 and he bought it for $155,000. He’s putting it up for sale at $184,900.
“Hopefully, the market will come back,” he says.”
I wonder if his tenant has ever read this blog!
“More than three months later, there’s still no sale. The couple were not under huge pressure to sell; Paul can still make the hour drive to work near Louisville. But they would like to get on with their lives.
With the year anniversary of listing the house approaching, the Jantzens are naturally antsy but they are now more confident of getting the deal done soon.
The price of the house is still $215,000 but they’ve transferred the property to a new agent and they are very happy with the traffic he’s generating. Market conditions seem to be on a slight upswing in the area”.
Yup, a new agent to the rescue. Heard that one before.
“When we profiled them last September they had already dropped their price from $425,000 to $358,000 and they were planning to take the house off the market around Oct. 15 if they weren’t attracting any buyers.
The Eatons wound up waiting until Nov. 1 and have kept it off the market all winter. They plan to relist it starting April 1.That, however, may not happen.”Last week,” reports Judy, “our neighbor came over and said friends of his were interested in seeing the house. The couple seemed very interested.”
The Eatons are making the property even more attractive by replacing the ceramic counters with granite and updating the utility room. When the buyers see the updates it may clinch the deal”.
The couple seemed very interested. Doesn’t meab anything until you get the check.
Even the earnest-money check doesn’t mean anything except a drop in the bucket.
Zillow is so off the mark it’s amazing. Maybe someone should point Dodd to the site to show RE is just fine, graphically price is at top right hand corner in California.
So are actual sales prices. Just like the example above. Since when does a home sell from under 400K 10 years ago go up 4x to 1.6M…. Inflation was a meager amount… you take 400K and add YoY appreciation of the inflation rate. Even at a heafty 5% that comes to around 720K in 2007… Even in 2003 it was overvalued by 100%.
No doubt we are going to see steep dicounts… isnt that Jim Rogers has been saying.
Go to 1732 Chelsea … sold in 1979 for $285K… Ok..
so similar home sells for 400K in 1997… bearly doubles over 20 years….it took 3% appreciation YoY in the past. Hey didnt Shiller say its normally that amount 2.5-3%…what do you know.. Very intereting this internet information.
Finally, there is acceptance, a feeling the Davises are now in since relisting their house last month for $140,000 less than the original asking price. “We’re finally coming to that place [of acceptance],” Jeffy says of the couple’s attitude adjustment. “We’re not going below a certain price. And if we need to, we’ll find another renter. But we’ve dropped down to a fair number, and we feel good about that.”
A fair number, huh? Well, guess what, sh*theel… The house doesn’t know or care that you own it. Neither does the market. And a “fair price” is that price which moves your home within 60-90 days. And nothing more. But this pinhead will learn that the hard way. I just can’t believe the things that come out of people’s mouths sometimes.
Q: ‘So the industry got a little crazy with some of the lending?’ A: ‘Any kind of bubble like that creates irresponsible behavior. And we did have a bubble in real estate.’”
NONONO.. Talk to David Lereah. There is no bubble, it’s just a big balloon slowly letting out air.. NONO wait, it’s a big ship changing course..
When were those quotes made? Someone’s gotta know. I really would love to see a bubble timeline and the quotes that some of these “industry experts” had.
The truth of how dire the sub-prime situation is has just started to come out in the MSM.
My question is why should criminals get a tax bail- out ? So many of these sub-prime loans were pure fraud on the part of the borrower and your friendly front line loan agents . My tax dollars might go to fund a action that was a criminal act . I don’t think so .
I can’t believe we are even talking about this. Unbelievable. Tax bailout for flippers.
“You can’t believe how bad it’s going to get”
http://www.reuters.com/articlePrint?articleId=USL1470530620070314
“‘The best time for these changes would have been three years ago,’ he says.””
Beautiful. Home prices have nowhere to go but DOWN from here, confirmed. That’s the good news. The bad news is our whole economy might tank in the process.
They say the Fat Lady is already singing, but I say she’s just warming up her vocal chords. Save the cigar ..it ain’t time yet.
Just scanned TV guide for Flip This House and Property Ladder but could not find them….sigh.
I was hoping we could get a few more GFs to bite thereby leaving less competition for rents (short term) and eventually less folks competing in the market when it bottoms out. May as well do the gene pool a favor and wrap em up and ship em out…..
im sure the 4-8 inches of snow in nyc and tri state area will do wonders for all those open houses this weekend!
liareah will blame it on st.patricks day exhuberance and ncaa tourney which btw i am kicking a** on my picks and hoping to win the office pool
I hear Hillary will be “stumping” here in Seattle this fall….maybe she’ll unveil her bailout program at that time to the latte crowd so they can keep sipping….
Sen Dodd hearings next week, with opening windbag remarks sure to take one-half of the first day - no doubt more socialist prescriptions from the trust fund limosine libs
That social worker who was doing all the complaining after being forced to drop his price by 140k - he should be happy if he gets anywhere near to his “farm” style new listing price of 709k -
Taking a glance at the property at realtor.com - its doesn’t look very good, is just .25 acres, and was built around 1920. Now maybe its spectacular inside - however one has to wonder if anyone will ever pay anything near those crazy prices again
my guess: not ever
I looked at the photos, it’s far from spectacular inside. It’s more arty/funky. I think it’s kind of a cool house, I’d buy it if they move the decimal point one place to the left.
Note to Mozilo:
Step away from the tanning bed.
“A good cross section of society will be carved off and wind up in the gutter. Burger flippers, single moms and gucci suit clad power brokers huddled up into cardboard boxes under overpasses.”
Another possibility would be for creditors in Japan and China to foreclose directly and they would then gain lawful entry to the United States to take possession of the houses as masters, and the former-owners and their families would then be permitted to live in a garage or (with some zoning law changes) a shed - possibly as indentured servants of some type. Note americans after a bit of training could become highly efficient Wok style chefs -its just a matter of practice
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Na! Japanese baught a top line Golf coarse in Monterey then had to sell it at a loss to Client Eastwood and partners.
Cycle repeats itself again…
But Louie, We’re outa bluffs. I think they know what happened with Pebble Beach….
Screw me once, shame on you….. screw me twice, shame on me.
I haven’t read this thread yet so I don’t know if this was discussed, but we seriously need to mobilize: the LA Times today had an article about all this do-gooder legislation Hillary Clinton wants to offer the FBs. After SIX years of waiting this market out, there is no f—ing way I’m going to sit by quietly while my tax dollars are directly or indirectly used to bail out the irresponsible idiots that took part in all this madness. Not only have I not been able to make any cash flowing investments, but I also have to pay for the morons who were speculating on yet another year of double digit price increases? No f—ing way. Can we get a petition going or something? I’m really pi$$ed about this, after all we’ve been through, we can’t let it go down this way.
The USA has been fortunate to be blessed with great leaders in her past, and now more than ever I think you desperately need another.
As I see it the American people will always accept a leader of vision and purpose even though it may cause temporary pain.
Do you have such a leader?
Someone that will speak out for the real American without fear……..will stand tall against the banksters of NewYork and their kind.
I hope so………you see I have a real fondness for you guys, and I wouldn’t like to see your demise in my lifetime.
Don’t look.
Any “bailout” would simply be too large to work.
The reason is it’s not only about subprime since 2004 - which of course includes not just urban poor, but no down, option ARM negative amort etc, stated income and many other categories PLUS you have all these morons who took out huge home equity loans many of whom will be selling for various reason but who will be upside down (negative equity) on their mortgages - in effect trapped or unable to pay given interest rate spikes and unable to borrow more to keep the Ponzi type plan afloat
They were using their houses as ATM machines for trips to europe, new cars. boats etc - and now they would be part of a bailout?
The entire mess is HUGE and is way way beyond fixing at this point
The Financial Times reported that US immigrants (legal or not) wire transfered US$62.3 billion to Latin America and Caribbean in 2006. That was 14% higher than what they sent in 2005. We can assume that most of this money was earned in cash, without paying any taxes, and related to the housing boom, including mortgage fraud and illegal cash backs. That’s money that wasn’t applied back into the extra infrastructure needed to absorb millions of these new immigrants and their gazillion new babies. Now since the boom is over, those millions of illegals are waiting for some amnesty to fall on their laps, so they can free ride on welfare and other social services, while making cash on the side, as usual, without paying any taxes. Why volunteer to pay taxes if they were working before for cash, under the table? And that figure is only to Latin America, so imagine how much it’s to the rest of the world.
oops, read “immigrants in the US”
Based on tradition guidelines …
$75,000 /yr = $6,250 /mo - - - (well above median)
Max purchase price = $299,000 !!!
figure includes:
$350 /mo taxes and insurance
$350/ mo car payment
$100/ mo c.c. payment
based on 28/36 qualificaion ratio
20% down ($50,000 = ouch) … 6.5% for 30 yrs