“They’re Going Under Fast” In California
The Desert Sun reports from California. “Home sales in February dropped 25 percent across the Coachella Valley compared with the same month in 2006, with sales of new homes tumbling nearly 43 percent and fueling the overall decline, a new report shows. The valley’s overall median home price dropped 4 percent to $393,000, brought down by a 7 percent decline in the median price of condos to $350,000 and a 10.6 percent decline in the median price of new homes to $370,000.”
The Press Enterprise. “Inland builders and industry trade groups say they are cautiously watching the new-home market for signs of softness amid concerns about late payments on subprime loans and a national study showing that builders’ confidence is waning.”
“The National Association of Home Builders released its monthly study, showing the West region, which includes California, the index also registered a 36, which was down 30 points from the 66 seen in March 2006.”
“‘We recognized that the market was showing signs of slowing six months ago,’ said Jim Rex, Inland regional president for Hovnanian Homes.”
“Fred Bell, executive director of the Building Industry Association’s Desert chapter, said builders are watching the mortgage market, saying they ‘don’t want to deal with a bunch of cancellations’ on new-home orders. Pricing could see slow to flat appreciation this year, as the Coachella Valley deals with a glut of new and resale homes for sale.”
The Visalia Times Delta. “Acknowledging that potential home buyers remain on the sidelines, a spokesman for Centex Homes, one of Tulare County’s largest homebuilders, confirmed that the company laid off 18 employees late last week.”
“It was the company’s second wave of layoffs in recent months. In late 2006, blaming lagging sales, the Dallas, Texas-based company cut its Central Valley workforce by more than 10 percent.”
“‘Things have slowed down,’ said Mike Wyatt, division president. ‘The investors that had been coming in and creating all of the frenzy have disappeared.’”
“Wyatt said there is a five-month supply of standing inventory in the new-home market. The company also has been affected by recent turmoil in the so-called ’subprime.’ ‘We did have about 25 percent of our buyers last year going with subprime loans,’ Wyatt said. ‘We’re staying away from that area now.’”
“Centex, which now employs 234 people in the Central Valley, has laid off nearly 20 percent of its workforce in Visalia, Bakersfield and Fresno in the past three months.”
The Recordnet. “The number of building permits for single-family homes in San Joaquin County (is) down from a year ago. The real test is forward - whether tightening down on financing standards because of the current rash of foreclosures will knock many people out of the buyer’s market because they can no longer qualify for loans.”
“Some builders are reporting deals falling through with people who initially qualified to buy but then fail to get final loan approval under stiffer qualification requirements, said Greg Paquin, president of a real-estate information and consulting service in Folsom.”
From Reuters. “People’s Choice Home Loan Inc., a California-based mortgage lender to people with poor credit histories, filed for Chapter 11 bankruptcy protection Tuesday, according to court papers.”
“The Irvine, California-based unit of People’s Choice Financial Corp. became at least the fourth large U.S. subprime lender to seek protection from creditors in the last three months. Its parent, a real estate investment trust, also filed for Chapter 11.”
“New Century Financial Corp., a struggling mortgage lender to people with poor credit histories, said Tuesday it can no longer sell mortgage loans to Fannie Mae or act as the mortgage financier’s primary servicer of mortgage loans.”
“In a filing with the Securities and Exchange Commission, New Century said Fannie Mae terminated ‘for cause’ a mortgage selling and servicing contract with its New Century Mortgage Corp., citing alleged breaches of that contract and others.”
The Orange County Register. “The subprime mortgage industry saw two key developments Monday, both of which touch Orange County.”
“Fremont Investment & Loan told many workers currently on leave from its Brea-based lending unit, Fremont General Corp., that their employment will end May 18. And regulators said the chief of New Century Financial in Irvine is one of several industry leaders being asked to testify before Congress.”
“Dan Hilley, a spokesman for Fremont, said the Brea unit employs 2,400 workers nationwide. He said ‘many’ workers were previously sent home on paid leave and they are all being let go.”
The Contra Costa Times. “Wells Fargo & Co. said Tuesday it will eliminate 514 jobs, including 71 in the East Bay, at operations that specialize in high-risk home loans.”
“‘Because of the tightening of credit standards, loan volume has been impacted, and staffing has been impacted,’ said Chris Hammond, a Wells spokesman.”
The Voice of San Diego. “During the month of February, San Diego saw 1,386 new notices of default (NODs), which are filed when homeowners neglect to pay their mortgages. This is more NODs than were delivered in any month during the housing downturn of the early 1990s.”
“Even adjusted for population growth, the number of NODs last month was higher than at any time throughout the prior housing bust except during the brutal spring of 1993, which was the only year not to experience a springtime rally.”
The San Francisco Chronicle. “Recent home buyers, many seduced by too-low-to-last teaser loan rates, are finding that all good things must end. For more than a million, they could end in foreclosure, according to a study by First American CoreLogic.”
“Unlike a lot of other research about mortgage risk that has roiled Wall Street during the past couple of weeks, the First American report didn’t find the problems with risky loans to be limited to subprime borrowers, or people with poor or little credit.”
“The largest group of loans likely to go into default are those that started with extremely low teaser rates regardless of whether borrowers had high or low credit scores, the report finds.”
“‘This isn’t just subprime,’ said economist Christopher Thornberg. ‘This problem is starting to occur in most of the adjustable- rate mortgages. Even for prime borrowers, we’re seeing a big spike in delinquencies among adjustable-rate mortgages.’”
“The Bay Area will be hurt less than other parts of California and the country as a whole, said Christopher Cagan, the study’s author. Borrowers in the Central Valley, where the market is saturated with new homes, are more likely to lose their homes than those in the Bay Area, according to a separate analysis for the California Association of Realtors that Cagan did last year.”
“Thornberg said that the First American analysis fails to take into account the relationship between the housing market and the economy as a whole. Defaults are rising at a time when the job market is stable, a highly unusual occurrence.”
“‘This would be normal in the context of a labor market that was weak, but the labor market is quite strong,’ Thornberg said. ‘These problems indicate that this is just the tip of the iceberg.’”
“Thornberg says he expects that the economy will weaken in 2007, leading to more foreclosures. ‘You can’t look at this in a vacuum,’ he said.”
The Daily Bulletin. “Trash lines both sides of East Jackson Street. Graffiti sullies everything from concrete to fences and even trees. Many of the buildings are in need of repair - and of tenants. A number of the four-plexes have ‘For Rent’ signs in the windows.”
“‘It’s in the hands of the owners if they want to turn that area around,’ said John Dutrey, the city’s housing manager.”
“At a recent monthly meeting of East Jackson Street owners, Richard Fleener, a consultant the city hired to help form the association, described what the street would look like if the improvements are made.”
“But achieving that vision will rely heavily on the cooperation of the owners, many of whom live in other counties or who have little expertise owning and managing property. ‘A lot of these people are running out of money,’ said building owner Judi Potvin.”
“Even during a quick walk up and down the street it’s hard to miss the number of ‘For Rent’ signs.”
“The vacant units are costing the owners money, especially because many bought their buildings when the real-estate market peaked, Potvin said. ‘They’re going under fast,’ Potvin said of the owners.”
I sure hope the FED does not drop rates!
The downward spiral is accelerating and I am afraid they will overreact and move at one of the upcoming meetings.
I’m not interested in what the Fed will do in fear of what might happen to housing - housing is toast regardless of what they do to rates. I’m just curious to see if Bernanke holds to his words that he wouldn’t be affected in drops in asset classes, like housing, when it came to moving rates one way or another. He basically said that he wouldn’t come to housing’s rescue. Now we’ll see. One way or the other, it’s over for this bubble.
Agree!
I fear however, that someone in the Bush Admin will push for this:
- Mr. President its your buddy Mozzilo on the phone
- Hey Leather face, whats going on, You know I am the decider.
- George we need you to lower rates so I can “diversify” my holdings, er…., save the housing economy.
- Let me place a call to Ben
LOL, Leatherface!?
GW: “Ben, it’s GW. the pres in chief. You know, the president of the US of A. hehehe.”
Ben: “yes, mister president.”
GW:”you got lower the rate.”
Ben:” but mister president, that will cause inflation to skyrocket and wreck the economy.”
GW:”rockets, I like rockets. They are having plenty of those in Iraq. hehe. give me some fireworks while you’re at it.”
Ben: “but mister president…”
GW: “no but, Ben. just do it. just pretend it’s ok and it will be ok. just like Iraq.”
Carl Rove: “mister president, hillary clinton is on the phone.”
GW: “president hillary. what does she want? i thought we impeached her.”
I remember reading a couple of years ago that GW held a grudge against Greenspan because he had refused to raise (or lower?) the rates to jumpstart the economy and help George the Father win the election he ended up losing to Clinton. I don’t know if that is true or not, but I’m pretty certain he would have made sure to replace Greenspan with someone who more malleable. It must have been written somewhere in the small letters of the contract. I’m quite a sceptic by nature, but it doesn’t take a lot of skepticism to venture that things will go the way they should go for GW’s friends, at least in the short term.
When Goldman Sacks, Leeman, and the other thieves on WS call to bail them and the subprime’s out then you will see the rates drop.
There’s a reason that the Federal Reserve is not a government agency, and Ben is not a government employee. It’s precisely intended to prevent money supply policies from being influenced by politics.
Of course, nobody said that Executive Orders were the only way for the government to get its way.
Nick….you forgot the most important line in the play…where W threatens Ben with a “hunting trip” with the VP.
Well with the dollar dropping like a stone (82ish) and gold breaking out again, HeliBen won’t have a whole lot of breathing room to lower rates. Especially with Japan poised to raise some more. Greenscam has painted HB into a nice little corner. I think the tough talk on not bailing out housing was simply HB’s way of making it clear that protecting the dollar was more important and that housing would be sacrificed to this end. Makes sense, actually. If RE drops off a cliff, the Fed is still in business. If the dollar drops off a cliff, the Fed is no longer in business.
“Well with the dollar dropping like a stone (82ish) and gold breaking out again, HeliBen won’t have a whole lot of breathing room to lower rates.”
Don’t forget our massive federal deficit, which has to be financed. With the other central banks still raising rates, BB may not be able to lower short term rates here. And remember he doesn’t control long term rates, which would get really ugly really fast if the dollar plummets on inflation fears.
Darth, what does “82ish” mean? I see my favorite AUD is buying nearly 81 American cents, but somehow I don’t think that is your measuring stick. Educate us.
Oh, sorry just the USD index. 83 at the moment but it’s been sliding pretty badly of late:
http://quote.barchart.com/quote.asp?sym=DXY
I’m not sure if everybody gets it yet, but the housing bubble was just a prelude…
You haven’t seen anything yet~
Yep
“I’m not sure if everybody gets it yet, but the housing bubble was just a prelude…
You haven’t seen anything yet”
aladinsane, can you elaborate?
Once hyperinflation roars on through, the very first item, in which we’ll feel the bullwhip hit on our backs, will be the price of oil.
Everything else will initially remain the same prices, just for a short while, until our modern American Heroes (I see a rather ugly “reality” show possibility out of this~ yee gads) realize that anything is of more value than a plummeting Yankee Dollar and they snatch up all the goodies made somewhere else, off the shelves of targets, wal marts, costcos, et als of the korporate world and our mortal weakness becomes apparent.
We forgot how to manufacture our own goods.
China doesn’t really want fiat Dollars, they’ve got enough problem keeping all those wantabe capitalists (r.i.p., you had a good ride for a generation, sorry the ride’s done. Please exit to the right or left, your choice) that caught a glimpse of the good life and you think they’re going back to The Great Leap Forward?…
Luckily, we still produce food, but, after having tricked mother nature (always bats last) for a long time, she’s a little pissed!
According to this article in The Valley Voice, the most fabulous giveaway newspaper I have ever seen, (that was a plug) Bees, (only needed nutritionally, for 1 out of every 3 bites you put into your mouth) have been disappearing, it’s called “Colony Collapse Disorder” and 1/3rd to 1/2 of the bees on the roadtrip that goes on forever and the polination never ends…
kinda disappear. Raptured perhaps?
According to the article, the culprit looks to be a korporate brobdingian, that has a nifty pesticide side job, that came up with the right ugly toxic mix of chemicals, in a pesticide called “Imidacloprid”, that means the bees go out and they don’t come back. No Corpus Apis near the hives…
Way, way under the radar, this story.
http://www.valleyvoicenewspaper.com/vv/stories/beedeaths.htm
Bee deaths aren’t under the radar. It’s even been on CNN and in USA Today.
Secondly, I don’t believe we will have hyperinflation. Both scenario you mention above are highly deflationary.
he; all the bibilical endgame stuffs you mentioned here, as well as global warming, seem to have the same importance to the public as the battle over anna nicole smith’s baby.
will the last human on the planet turn off the light when you leave?
For the record, I detest what the evangs have done to this once great country.
Nothing of which I mentioned was biblical, in any fashion.
I totally agree with aladinsane. The housing bubble, important as it is, is actually only a bubble-within-a-bubble.
The bigger picture reveals the Fiscal Bubble created by the disasterous financial policies of the Bush Administration.
-Thru wreckless (and unnecessary) military adventures, TRILLIONS have been squandered.
-The dollar is teetering against some Asian currencies, particularly China’s. This latter country holds TRILLIONS in US Treasury Bonds and is currently about to start dumping them. Meanwhile, the US Mint keeps printing Dollars 24/7
-US Household Savings are at all-time lows, while levels of indebtedness among the population are at all-time highs!.
-Outsourcing and foreign competition have wiped-out many blue AND white collar jobs. Most of the New Jobs Created nowadays in the US are for low-paying jobs and labor. A great percentage are even minimum wage.
-Oil has surpassed the mythical price boundary of $40 a barrel quite a while ago. This indicates oil is a soon-to-be outmoded viable fuel source for economical reasons. Yet US society is TOTALLY based on it and has done almost nothing to develop alternative fuels. Brazil is already 85% Ethanol while we only have about 2000 ethanol stations NATIONWIDE.
I could go on and on. Believe me, this will be VERY bad. I dare utter the word DEPRESSION. Given the current administration’s unenviable track record of CONSISTANTLY MAKING THE WRONG POSSIBLE CHOICES AT THE WORST POSSIBLE TIMES, I say it’s almost guaranteed.
Don’t forget Peak Oil.
LOL. I did a Google on ‘Peak Oil’ to see what that’s about;
http://www.lifeaftertheoilcrash.net/
No bro, these guys are whackos. What I’m talking about is the Real Deal. Just remember; you heard it here first on Ben’s Blog!.
If you believe that ethanol is the answer to the energy problem and that peak oil is not a potential reality then I have kettle that you need to call black in terms of whacko.
I heard more today about the honey bee collapse and guess what???? The USDA is saying that possibly by the year 2015 our GREAT Chinese friends will be supplying 40% of our food along with our other friends from South America!! Don’t you just LOVE corporate GREED??
Yeah, Peak Oil. Whatever. I have heard about the end of oil since the 70’s. Lots of people lost their shirts in deflation in Houston when oil bottomed. Anyway, there are recorded MSM articles from the 1800’s about the world going dark because of the decline in lamp oil supplies.
How can we use MORE oil, when we all lose our jobs soon and cannot afford to buy anymore??? Hmmmm. Me thinks the price of oil will meet our low wages with lower prices.
If you believe that ethanol is the answer to the energy problem and that peak oil is not a potential reality then I have kettle that you need to call black in terms of whacko.
Ethanol IS the solution. Drink a lot of it, get a DWI, have to take the bus, save lots of gas…
I call total BS on the USDA comment.
Just keep whistling pass the graveyard folks. One look at the discovery and production curves should open up some eyes a little wider.
Hint:An asymptotic discovery curve is not what American gas hog loving folks want to see. You want $1/gal gas? Go find us 10 more Cantarell oil fields. More than likely you’ll go wildcatting and be lucky if you find anything that produces more than a stripper well.
WOW I’m going to bed after taking medication.
Dropping rates won’t matter. The invisible hand of the market has decided that subprime lending should no longer exist.
The only people that will be helped by rates dropping are those few who are right on the fringes of being able to afford their home (eg they could afford their home with a 4% rate, but not with a 7% rate). At the cost of a trashed dollar, bleak future prospects, and long-term economic malaise, the Fed won’t drop rates. Deflation is priced into the economy.
Agree, drop the rates all they want, they’re not going to right the ship, not with credit tightening up.
If they do drop rates…
Inflation. Watch your cars, underwear, and everything else imported shoot up 10% pretty quick…
I’ll join the chorus, rates don’t matter at this point. The fed has a rope. They’re supposed to keep the beast tethered. Once the beast turns around… you cannot push a rope to get it going the way you want too…
Got popcorn?
Neil
“Inflation.”
$3+/gallon gas, anyone?
With summer coming up, major areas like NY and So Cal can expect to see $4/gallon gas. No problem though, all the people in those areas can afford it, right? Oh well, it could be worse, like paying $8/gallon in the UK. Now that’s gotta hurt!
“$3+/gallon gas, anyone?”
Already paying $3.09 here.
“Already paying $3.09 here.”
Likewise. Luckily wages are going up to keep pace with food and energy inflation — NOT!
“Oh well, it could be worse, like paying $8/gallon in the UK. Now that’s gotta hurt!”
Yeah, but they get “free” healthcare!
“Inflation. Watch your cars, underwear, and everything else imported shoot up 10% pretty quick…”
fine with me. I already have a new car and I don’t wear under…….
Gold is currently $658.00 per Troy Ounce. How many gallons of regular octane gas can you buy for that oz, in your locale?
Here, I just paid $3.19.9 so, I can get about 206 gallons for my piece of Richie Rich money.
Which service station accepts gold? Just wondering…
250 gallons
OCDan is right…
Gas is going to shoot up on the west coast. Leading indicators are that we can expect $4/gal peak in the summer.
That will hurt (lots of driving for work this summer). Cest la vie.
Got popcorn?
Neil
Goldbugs still have plenty o’ cash and all.
I was just talking from a value perspective. My buddy told me the other day, in 1967, a common $20.00 Gold Coin (97% of a pure Troy Oz) bought around 110 gallons of gas, at the time.
The relative value of Gold has remained fairly constant or well ahead of your Dollars and Dollar denominated stocks that you hold so near and dear, though most people would have no idea of this going on, because it in no way, shape or from would effect your lives, in times of normalcy.
“Here, I just paid $3.19.9 so, I can get about 206 gallons for my piece of Richie Rich money. ”
265 gallons
Hence the bailout proposals on the Congressional plate (e.g. Hillary: “FHA should loosen its lending standards”).
The problem with Ms. Clinton’s proposal is that the FHA allows only 1 FHA/borrower and it must be owner occupied. The specuvestors are stuck.
That should read one house per borrower(s) -
Also FHA limits would not help California. Can you buy a SFR in Cal for $350K?
Can you buy a SFR in Cal for $350K?
Depends if you want indoor plumbing or not.
In some parts of California you can. Not most of LA, OC, Bay Area, though.
“Can you buy a SFR in Cal for $350K?”
There is not much out there below $350K, aside from “handyman’s specials,” manufactured homes and SFRs situated in high crime areas. So while Hillary’s FHA thang may help a few low income folks stay in homes that most of us would rather to avoid, it will do little to prop up the overall California market (e.g., the median ziprealty SFR list price in SD is currently right around $600K, in a county with a median HH income around $65K).
“Can you buy a SFR in Cal for $350K?”
Yes You will be able to buy a home that was priced at $650K in 2006 that will be priced at $350K or less “in a few years”…
Yes prices will decline in some parts of California by 50% or more down the road…
No! other parts of California economy will do fine.
Yes! RE industry will be changed due to Federal and State legislation. A Sox-404 type legislation will force more transparency in the market place. Realtors will be forced to take much harder exams for certification.
Bids will only allows in person face to face with all parties present (all buyers and seller). No hanky panky nonsense with fake bids driving prices higher.
Sticky Homeowners will be underwater for 15 years or more due to deflation pressures on Salaries. You actually may see spike in arson fires as homeowners try to unload their debt!
Can you buy a SFR in Cal for $350K?
You will be able to in a couple years. For now, check out Yreka. (Yes, we’ve already done the “where are the cheapes houses in California” several times. I think Trona wins, actually.)
Hey, just take a 500k place, put a wall up the middle, and voila it is two 250k housing units in a duplex. Bring on the FHA.
if appraisal value is lower than the mortgage, there is no chance of refi even if the rates are lower.
Well , unless ofcourse the gubment comes up with a handout the difference for all the homeow(n)ers …..
I see very less chances. even if they do, it will get them a headline, but in truth will have so many conditions and restrictions( no refi int he las 4 years unless it was used for medical situation, ONLY for owner occupied home, there could be n number of those things ) that it will fail to stop the avalanche.
If the borrower has not been late on a mortgage payment in the last 12 months, there is a program called “streamlined without appraisal”.
The “without the appraisal streamline” only works with FHA stuff.
“there is a program called “streamlined without appraisal”
I really don’t expect to see that one too much longer.
I wouldn’t say that deflation is priced in…yet. It will be very soon though (muahahaha). Although I agree with your point that asset deflation is definitely in the cards.
Also, i’d like to expand on your statement that the hand of the market decided that subprime shouldn’t exist. This is a very good point. Even though the FCB keep buying MBS like crazy, yeilds continue to break out and the market has decided that it will tighten, regardless of what the Central Banks or MBS “investors” think. This is surreal in a way. The CB’s have been playing with the markets for so long now they must be alarmed that all of this pushing on a string has no effect any more, other than just to prop up the stock market on low volume rallies. It’s also fairly obvious that the credit contagion will spread well beyond subrime, so it’s laughable when the MSM refers to this as a contained subprime event. Really, there is nothing that the Fed can do about housing and this could be why congress is spewing so much hot air about RE recently. It’s out of the Fed’s hands.
Subprime is non-sustainable there are problems in the regular market.
Lower rates will help if they are combined with legislation eliminating “excessive” refinance fee/penalities.
crispy&cole,
I was in your city for the first time ever on Sunday. Drove through back from Vegas and saw a lot of subdivisions and new homes being built. Bakersfield looked a lot like any other Central Valley town, kinda reminded me of Stockton. The area near the CSUB looked ok though, saw a PF Chang’s.
How bad is the market right now?
The area near the University is the nicest part of town. Castle and Cooke (owned by Forbes 400 member David M) has done a great job on this area.
Biggest issues with local market - sales volumes off significantly YOY and NOD’s are up sixfold YOY AND the builders continue to build, especially Lennar and KB.
That part did look good compared to the rest. Thanks for update.
Any guesses what a 30 year fixed will be in 12 months?
At this point, they’d be pushing on a string.
It doesn’t matter if 30 year mortgage rates drop below 5% again. If the Fed wants to get housing moving, then they need to restart the 100% no-doc subprime loans. If you can’t come up with 3% down to qualify for an FHA mortgage then it doesn’t matter if the fixed rate goes to zero. There aren’t enough Americans who could muster even a 5% downpayment to keep the housing market alive in one state, much less all of them. The choice for the government is simple - reinstitute 100% financing or accept the housing collapse. Of course, Congress will probably declare a “foreclosure holiday” but aside from buying people another year to trash the house they can’t afford, that won’t help either.
Yeah. A “moratorium” on foreclosures. That’s really going to excite the investors who front money for mortgages. They’re the kind of people who like to keep their money tied up in a losing asset.
Uh huh.
Lots of states did that kind of thing in the early 1930s. That, of course, had a lot to do with perpetuating bank failures well into the decade, and making the Depression a ten-year event instead of a quick one.
KEEP GOVERNMENT out of free enterprise. Mess with the bull you get the horn!!!
Fed likely to put inflation before growth
By Krishna Guha in Washington
Published: March 20 2007 19:25 | Last updated: March 20 2007 22:29
The Federal Reserve is likely to underscore the difference between its relatively bullish outlook for the US economy and the relatively bearish view of the markets when it releases the statement at the end of its March meeting on Tuesday.
The US central bank is likely to say its primary concern remains inflation rather than growth. Interest rates will almost certainly be held at 5.25 per cent.
Changes to the statement are likely to focus on the Fed’s view of current economic conditions but there will probably be little change to its forward-looking description of US economic prospects, which forms the basis of its interest rate policy.
The statement will probably indicate unease about recent inflation numbers. This could add up to a disappointing message for investors expecting the Fed to switch to rate-cutting mode soon.
http://www.ft.com/cms/s/09dae7da-d70e-11db-b9d7-000b5df10621.html
Dollar May Decline on Bets Fed Will Shift to Reflect Housing
By Bo Nielsen and Min Zeng
March 21 (Bloomberg) — The dollar may extend its drop versus the yen on bets the Federal Reserve will change its statement to reflect a deteriorating housing market.
Some traders said the central bank may remove language from its statement saying housing has stabilized. The dollar fell yesterday against the yen on expectation a weakening housing market may lead the Fed to reduce borrowing costs sooner. All 94 of the economists surveyed by Bloomberg expect policy makers today to maintain the benchmark lending rate at 5.25 percent.
“They may soften their statement a little when it comes to housing, and that could weaken the dollar,” says Camilla Sutton, a currency strategist in Toronto at Scotia Capital Inc.
http://www.bloomberg.com/apps/news?pid=20601080&sid=a5nE8qwsTP6w&refer=asia
Anybody here short New Century Financial?
$66.00 to peanuts in a heartbeat.
Whew…Sure wish I’d been paying more attention.
More of this coming down the pipe.
Helicopter Ben’s sure has got himself a big mess.
Thanks, Al.
Tried to short it over two weeks ago but that was way too late with no shares available to short. Several here had suggested shorting subprime a while back. Yep, I need to pay attention next time.
You could have bought puts!!
I did, but timing is everything with puts. I bought puts on NEW last August. They expired worthless last month. Had I bought the March puts, I would have made a bundle. That, unfortunately, illustrates the problem with options. You can be right on the direction but wrong on the timing and end up with nothing. Be careful.
I wasn’t sure how much of a premium was already priced into them as I never buy options. I was thinking a lot of volatility was already priced in.
Hey HD..
Any comments/input on the North Shore housing market?
Thx.
Pen-
Damn lotta real estate agents gotta be starvin’ to death up here in New England.
Went up to Burlington VT to take in a Canadians/Maple Leafs hockey game and the Sunday Free Press’s biggest section was real estate.
Scores and scores of McMansions for sale.
Doesn’t make much sense when the future market will be down-sizing Boomer retirees.
5 houses listed on my bud’s street. And he’s a heart surgeon.
When I asked his wife what was going on, she said the job market is like a game of musical chairs. Here today-gone tomorrow.
Northshore market?
All my info is ancedotal. I
But the market appears very, very sporadic.
There’s no relation in volume to the number of people living here.
As I noted-how RE agents are turning a buck is beyond me.
However, I still regard the northshore and Metro West areas as the most desireable places to live in MA. If any areas will weather the bust, I think it’s gonna be these-but ya better have the right house in the right neighborhood or else it could
be sitting for a long time.
Seein’ the smaller stuff move-people are scared of McMansions now. Too much potential downside what with escalating property taxes and costs to heat.
Swampscott is in near revolt.
Gotta luv those $40.00 per hour flagman duty cops.
I shorted at 16, covered at .70 I kind of wimped out at only 300 shares, but still not bad $ for clicking my mouse a couple of times. I tried to short LEND at 11 before it went to 3, but there were no shares available.
Guess what? You can short LEND now at $11 (if you can find any shares). I caught FMT at $12, LEND @ $27 but missed the big plunge since it held up so well despite a mess of an earnings release and tried NFI but NO SHARES.
I think there’s still a lot of shareprice to give on several regional banks. If (WHEN) BB says he’s holding his hand tomorrow we might see a lot of air come out from under these stocks. Then, the Q1 numbers will add to the selling fury.
NDE, DSL & FED all have reserves that are gonna need attention - CFC might be worth a look. Let’s say, the next round of delinquency numbers and REOs won’t improve from the last report either.
All you need to do is make some IOU shares, and sell those!
That’s what the hedge funds do!
Amen, brother. I was all over this “naked shorting” thing until I read an article that described what it actually is. So then I put my clothes back on.
RE: Short @ $16/covered @ .70.
Good for you, Talon…But how’d like to have ridden down from $66.00 to .70!!!!!!
Hard to have known when to get off the train but,
Whoooweeeeeeeee!!!!!!!!!!
What a collapse!
Shorted LEND in the low 60s but exited in the 30s… hard part is knowing when to cover I didn’t think the subprime would get taken under entirely and I was the barest bear of the bears I knew.
I may sound gloom and doomish to many, but…
This is the time i’ve waited for, for many years now~
I prepared myself for the inevitable, the collapse of an empire, though I doubted it would come so soon, and that it would involve the entire industrial world all @ the same time, like a bonus!
You see, i’m a later day Goldfinger and I need not set off a nuke @ Fort Knox, as my namesake had to resort to, I merely let the Financial Bomb do it for me…
Every currency will go the way of the dodo, once we fail, they all fail.
A scramble for quality will ensue. What will the world turn to?
Hop on board
“Hop on board”
What , the crazy train ?
A lad insane …yeah that about says it all .
I’ll never give away the correct way to pronounce it…
Give us a hint, does it start with “Allah” ? (Apologies to any sane Muslims who may be reading here.)
David Bowie fan …… solid gold album, “Aladin Sane”
Don’t worry when this whole worldwide economy goes, it will go quickly and very massively. Nice to see another two lenders die today. Let’s get rid of all these playas who only make commission by passing paper around and entering numbers into a computer database.
Patience grasshopper, these things take time. First some asset deflation, then the inflationary death-spiral. Sometimes I think about all of the kooks that are living in the hills and maybe moved out there starting in the 1970’s or even before, thinking that the end was near. Honestly, if I was looking at the economy in the late 1970’s I could easily have come up with a plausible scenario why the economy was going to crash and the dollar would be toast. Thirty years later and the giant credit bubble is still here and has only gotten bigger and more dangerous, even though there have been recessions and credit events mixed in there. So will the monster credit bubble still be here in another thirty years? Honestly, there’s no way to know for sure.
All that is known is that credit bubbles always end with implosion and this is easily the biggest of all time. Some perma-bulls confuse this credit bubble with growth, although it isn’t growth. Real GDP growth would have allowed a single high-school educated person to raise an entire family, send 5 kids to college, have the spouse stay home, have two cars and a house paid off with no debt. Kind of like the 1950’s and 1960’s. Since we know that is no longer possible, we also know that inflation has worked its magic and robbed most of the earning power from the average Joe and we know from the example that this is nothing more than an inflationary credit-induced fake boom. We also know from looking at historical data that the dollar has lost 97% of its purchasing value since the Fed inception in 1913.
Cascading cross-defaults of the type that destroy credit bubbles always start at the margin and work their way in to the core. Subprime is definitely at the margin and it appears from the weakness in the slightly better MBS vintages (non-BBB) that the subprime meltdown is contagious. What can we discern from all of this? The elements for a complete meltdown are now in place but we will never know if this is THE big one until it happens. My personal opinion is that this is the big one.
Here’s the big difference…
I’ve bought and sold coins and precious metals, all of my life and back in 1980, Gold going up was an aberation, it merely followed the coat tails of Silver, which went up, out of sheer unadulturated 100% good old fashioned manipulation… (gone wrong)
One critical factor between then and now is:
In 1980 the Chinese didn’t have a pot to piss in, the Soviets were net sellers of any desireable tangible goods, (gold, platinum and diamonds) to prop up their own rickety ma and pa gulag, on the farm.
In fact, Russian metal traders were the most highly thought of, in the metal trading markets of Zurich. Imagine the pressure, they must have felt to get the best price, always?
The vast transfer of wealth China (all that stuff we buy) and Russia (Mother Oil state, that it is) have received since, goes unnoticed by my fellow citizens, they are living the mental floss version of always being #1, we are the greatest thing that ever lived…
We screwed up, we began to believe our own B.S. Whoops~
I guess you might say that the real wealth decided to go elsewhere.
So even if we become a 2nd tier country why will gold go up? There are many more people living in 2nd tier countries right now. Please explain this to me.
Because we are running a huge deficit, most mfrng was transferred overseas (thanks a lot Wal-Mart, Target, K-Mart, etc), the baby boomers will hit Medicare and Social Security when the deficit is already huge, Americans have negative savings, oil has peaked, corporations want illegal immigration to depress wages (and have more customers to eat junk food), healthcare costs are going to the roof, fractional reserve systems require constant growth to avoid colapse, oil producers and drug cartels are dumping dollars for euros, etc, etc, etc. By looking at all these negative factors, our international creditors (i.e., China, Japan) are losing faith on the US and may stop lending the huge amount of money that we need to keep on going on this insanity we live in. Did I mention Peak Oil? That’s why gold as well as other currencies are attractive for some. Lot’s of people whistling pass the graveyard here. A few years ago many people didn’t believe in housing bubble either.
We manufacture more now than ever before, manufacturing productivity has outstripped all other sectors. Manufacturing employment has nosedived because of said productivity increases. Most of the crap we import from China we used to import from other countries, and much of it is made in factories owned/controlled by Americans.
This idea that we have stopped making things is alarmist. Yes, we have transferred much of the real low wage stuffabroad, and other countries ALSO do high tech manufacturing, and es there are some areas where we need to be careful, but geez, have some perspective. We have also been overrun with cheap labor before–eventually there will be a backlash. How big depends on how well COngress deals with the issue, but it will be fixed eventually. Or do you not believe in actually writing those letters and DOING something about the problem?
Peak Oil? Who cares! By the time the price mechanism has worked its magic, suddenly we’ll all be driving cars powered by baby farts. Unless we suddenly have no more oil, we’ll be fine. We could cut our oil consumption 15-20% and barely notice it–people would just have to think a bit.
Ok, done for the day. Get a grip people. Even in a Depression, life goes on…
Hear, hear. Let’s not take a big enough problem — a massive malinvestment in unproductive real estate — and parlay it into an apocalyptic fantasy.
Hey, Aladinsane, you remember the crazy run-up in silver prices, back when the Hunt Brothers were trying to corner the market? I think it was 1978 or so… wild. I worked in a hard rock silver/gold mine in those days- now those miners made the infestors look like rational actors
AKRon:
Interesting times…
Much of the country sold every last shred of precious metals that had in their possession.
It was like a craps game that went on for about 6 months, before sevening out.
Sometimes I think about all of the kooks that are living in the hills and maybe moved out there starting in the 1970’s or even before, thinking that the end was near.
That would have been me…
“that destroy credit bubbles always start at the margin and work their way in to the core”
Kinda like:
Alka-Seltzer:
Fast Relief of Asset Indigestion
Darth Toll,
Nice comments and I concur completely. Guess we will jsut have to wait and see. What strategies are you using to capitalize if it does play out? I am currently sitting with a few strategic shorts with a lot of dry powder waiting to short heavily all the way down as I see further weakness. Timing is everything.
Got to agree with you here. Strategic shorts (currently in subprime and Alt-A (LEND, FED, etc.), followed by the investment banks (MS, GS, JPM, etc.) a few months from now. Don’t believe the BS about MS earnings, its all smoke and mirrors. Also I’m considering shorting some of the retailers very soon as I believe retail is starting to finally crack (FD, BBY, CC, etc.) Timing is tough because the Fed and all of the primary dealers are working very hard to prevent a dramatic fall off of a cliff, but I think they’re going to lose ultimately. Derivatives are about to be tested if they’re not already being tested, and I doubt that people realize what a potential disaster is in the making. Basically, I am with Fleck on this: I believe the housing market is going to basically freeze-up totally in the next three to six months and when this happens there will be hell to pay. Like you said, strategic shorts along with a lot of dry powder. I’m also building up a good amount of physical gold and silver as well, just in case.
I don’t know, Aladinsane, doomsday scenarios are very dramatic and all, but true financial crashes are very rare occurences. Slow, grinding deflations are much more common, and that’s what I think we’re in store for with housing and the economy in general. I think there will be a lot of false hopes, temporary rallies that will interrupt a steady decline in asset values.
We are fast approaching a financial version of World War 2, nobody fights though, it’s going to be a mad scramble for the exits. The only current model that comes to mind is the great hyperinflation in 1948-49, in China.
Everybody is relying on a financial Maginot Line, in which we’ve invested much effort and spared no expense, to rid us of the notion that the word “responsibility” means much, nowadays.
The Squirrels that have gathered the most yellow acorns, get to sit this one out…
When things come a cropper~
We are fast approaching a financial version of World War 2, nobody fights though, it’s going to be a mad scramble for the exits. The only current model that comes to mind is the great hyperinflation in 1948-49, in China.
Everybody is relying on a financial Maginot Line, in which we’ve invested much effort and spared no expense, to rid us of the notion that the word “responsibility” means much, nowadays.
The Squirrels that have gathered the most yellow acorns, get to sit this one out…
I envision people, out of desperation, will pay whatever they have to, for schlocky lightweight 14k gold jewelry, out of Zales, for a few days, until the notion sets in, of what’s happening and there is no more.
It’s interesing the gold karat preferences for jewelry around the world. We prefer a debased gold: 14K. Europe’s all about 18K, (well, it used to be, I date myself) and the Middle East and Asia are 21 to 24K afficianados.
Yes and it is a very soft metal. That why my wedding band (14k) is still looking good 15 years later.
There used to be a severe penalty in Russia (early 1900s) for adulterating gold with … platinum. I bet they wouldn’t complain now
“and the Middle East and Asia are 21 to 24K afficianados”
Some countries in South America prefer 24k also.
“Thornberg said that the First American analysis fails to take into account the relationship between the housing market and the economy as a whole. Defaults are rising at a time when the job market is stable, a highly unusual occurrence. ‘This would be normal in the context of a labor market that was weak, but the labor market is quite strong,’ Thornberg said. ‘These problems indicate that this is just the tip of the iceberg.’ Thornberg says he expects that the economy will weaken in 2007, leading to more foreclosures. ‘You can’t look at this in a vacuum,’ he said.”
It is easier for Cagan to ignore ripple effects than for Thornberg. Cagan is not an economist, and hence does not really have the right qualifications to assess the ripple effects of the lending meltdown.
I call BS on a strong job market. Unless you call $10/hr and less dep. on the area of the US as excellent job growth. Sure, Wal-Mart greeters aged 98 have a job @ 5.50/hr, but what’s that? IMHO, job growth is not a dozen teenboppers at Sonic Burger in South Carolina, no offense to SC, earning 5.75/hour! Wake me when I start to see real production in this country again with real wage jobs flowing into the US, not flowing overseas!
I agree. The local media boasts about the strong job market in Boise, but a lot of jobs are at lower wages. The job growth has been in retail, call centers, and service jobs. A lot of job growth is also wrapped up in home building: construction, real estate, mortgage, building supply, etc.
OCDan: the supposedly strong job market has been one of my sore points for some time now. It is all about quantity and not quality, just like you state. When homes are costing $700K here in CA, who really gives a crap what the employment numbers are when so many of the jobs pay jack. Strong job market my a$$.
We manufacture more hamburgers than any other country in the world.
Yeah. Tell him!
pss…
(Lucky for us the Chinese don’t like hamburgers)
“When homes are costing $700K here in CA, who really gives a crap what the employment numbers are when so many of the jobs pay jack. Strong job market my a$$.”
Housing prices have reached the tipping point where people are fleeing markets in large numbers. It now makes more financial sense to buy the Ohio house with cash, and work a minimum wage job to cover living expenses, rather than killing yourself trying to hang on in these unaffordable markets. Sure, the scenery is much nicer in coastal CA, WA, OR, etc. but what good does that do when you get to see it once every few months because you are an absolute slave to the bills? That’s no quality of life. I am thinking I might like to start a small organic farm in the midwest on AFFORDABLE acreage, not somewhere in the Northwest (which I love by the way) where the prices are jacked up to $50k+ per acre because of the greedy developers.
Bantering, your best bet for that is Michigan. You won’t have the ocean, but you’ll have the Great Lakes and some of the scenery is breathtaking, some of the towns along the lakes are charming. Also Michigan has a farming tradition in certain areas. We have friends who own cherry orchards. I think Michigan is a state that is ripe for a revival of what made America great. It’s still there. There are still factories and farmlands that can be revived. Check it out. I saw a documentary on PBS about the lake shore areas of Michigan. Very cool.
Brrrrrr.
You’re forgetting the all-important third scenario.
1. Be house-poor and get to see the ocean.
2. Decently-well-off but owning a house in the sticks.
3. Renting and getting the best of both worlds. Ocean, and well-off.
MBRenter, I don’t suppose you’re near me in Morro Bay. Probably Miami Beach? or what?
MBRenter is in Manhattan Beach-90266, just north of Hermosa Beach-90254, just north of Redondo Beach-90277.
“You’re forgetting the all-important third scenario.
1. Be house-poor and get to see the ocean.
2. Decently-well-off but owning a house in the sticks.
3. Renting and getting the best of both worlds. Ocean, and well-off.”
BTW, I was a #1 for 18 years. I’m currently a #3… but my powder is dry and ready.
Job availability and stability reduce “must sell” inventory and thus help stabilize the home market.
The early 90’s recession and high prices drove the market down.
So far job losses haven’t knocked off home owners, excessive debt has.
Tell that to the workers in Michigan and other jobs that left the country because of Wal-Mart and outsourcing. IMO, it’s a combination of low wages, outsourcing, illegal immigration, education crisis, and debt.
Good Point.
Let me put it this way. There isn’t a national recession. If one hits soon, it will devestate the housing market.
The manufacturing losses in the midwest have surpressed the housing market in those states. Detroit in particular is doing very poorly.
Arrgh!
Tarvos!
No offense, but saying that the end of manufacturing in the U.S. is due to Walmart is like saying that wet sidewalks ’cause rain.
Manufacturing left due to the combination of union extravagance and gov’t regulatory burdens. How else does it become (relatively) profitable to ship heavy, low-quality, low price furniture from thousands of miles across the ocean?
Walmart has helped us to maintain a standard of living during this train wreck. Just imagine the price level if there weren’t…
i give up. ;_(
‘but the labor market is quite strong,’ …….you mean “has been” quite strong.
Remember how all the “economists” were saying no housing bust because all former busts (especially in reference to SoCal) were preceeded by mass lay-offs and high unemployment (ie the loss of military jobs in early 90’s) They took no account of the dynamics of the monster bubble in front of them. We on this blog called it like it was some time ago, knowiung very well this pseudo economy was created and dependent on the wealth the bubble created.
That being said, here’s food for thought. How many jobs were lost in the early 90’s from the military fallout? Don’t you think we might be approaching that number very quickly from all the news lately? And here we are in the midst of the housing bust, not waiting for it to happen. Oh, ugly doesn’t begin to describe the months ahead.
“you mean “has been” quite strong”
soon to read “”had been” quite strong”
(maybe?)
I don’t remember where I read this, but I saw a quote from a mortgage broker discussing the layoffs, and saying something like:
“This is just like the aerospace bust in the early ’90s”.
There isn’t anything close (in CA) to the massive loss of high paying jobs and side effect job losses of the 90s.
E.g. in 91 Santa Clara Co., CA had 18,000 aerospace job cuts announced in one fell swoop by one employer. This year salaries are up and so is job creation.
There’s nowhere near the inventory or “must sell” sales becuase only debt excessive debt causing “must sell” inventory.
We’ll have a recession and but it’s not here yet.
Actually we should consider beyond Lockheed…
We can also look at Mainframe companies being hit like Amdahl and Tandem… DEC went under IBM revenue slipped (stock in IBM was cut in half)… Semiconductors were hit hard from from Japanese competition. Much of mfg jobs from all sectors were shipped out. Intel shed 33K jobs.. AMD shed 10K..National had huge losses.. I could go on!!! It was pretty brutal period in the valley.
The ‘91 valley rececession was very different and the elements are still very much present today. Today we have Euro and Asian Semi and software companies competing against us. They get goverment favoritism we dont. We havent had pricing power in a long time. It was last year that Korean Nand mfg was busted for dumping chips below market prices. They paid a couple million in fines but the damage is done.
Tech recessions and downturns come very fast. When they do happen its changes everything. Saw that back in 81, 85, 91, 97, and 2001.
Yeah and those job losses drove down home prices.
Today foreclosures are debt driven and not tied to severe job loss.
Stats for SV show job and wage growth in adjusted dollars. That stabelizes the market.
Experts say a national recession is likely in ‘07 but it’s anticipated because of consumer spending which will slow due to home equity losses on paper. These paper gains created false impressions of wealth and the losses will tighten consumer spending.
“Stats for SV show job and wage growth in adjusted dollars. That stabelizes the market.”
Only 20% of Americans have a bachelors degree, so I’m not sure how there should be job growth that pay decent wages to the other 80%. I assume that the good wages you refer to are anything over $80k, the minimum required for a household of four people. I don’t believe there are many employers willing to pay that much for workers w/o a degree.
I’m not sure how the stat was computed, I expect it was median wage and not average.
High home prices are supported by high wages paid to specalized ‘knowledge workers’.
Yes ex-nnvmtgbrkr that right.
This time around it is indeed different because the industry thats was in a bubble (hyper spending) is not the Aerospace but Real Estate itself. RE will implode on itself this time around.
Chris Thornberg rocks ! He saw the housing bubble burst coming over a year ago. He is the only economist other than Shilling to get this right. His housing bubble presentation is on youtube if people want it.
He is right about this being the tip of the iceberg too.
Thornberg hemmed and hawed and waffled.
Peter Schiff is the leader. He’s the one who has gone on television the most and put his neck out completely. His forecast is really bleak, and accurate in my opinion.
You can start here reading his stuff:
http://www.safehaven.com/article-7146.htm
Noriel Roubini is another one who has appeared on television pulling no punches.
http://pages.stern.nyu.edu/~nroubini/
Also Princeton prof and NYT columnist Paul Krugman called the bubble in 2005. Google “that hissing sound”.
wa! the bad mortage man took my house. I don’t understand, they told me I only had to pay 1000mo for this 4bed house. Now they tell me I have to pay 2500mo. What happened? Reality my friend, the fantasy life is over.
So someone tell me, what OTHER business does Irvine have besides mortgage?
Ok, I know they are pretty well diversified, but I am still a little shocked at how many mortgage companies they have.
We have construction.
Yup, that will help
Expect commercial construction to fall off fast as well. Maybe the construction folks can get public works jobs if the governator’s plans come to fruition. But that will be for the union guys only.
“We have construction.”
That’s funny.
Irvine’s biggest employer is the University of California, Irvine. Which, ironically, pays no where near enough for it’s employees to afford a median priced home in Irvine. Trust me
I work for a software company in Irvine.
Blizzard by any chance? (if so, stop trying to poach our guys!)
A professor at UCI told me they have their own housing, so there goes your biggest employer if most of them buy their price controlled houses!!
It’s the same at all the UCs. UC gives faculty and top admin seed money loans (yes 3% loans using tax $$). The actual employees get crap wages, no raises, and get to be priced out of the market too. You’re singing my song DS.
Irvine has a pretty big tech industry (software, electronics, science).
Yes and tech industry turns on a dime. I wouldnt put too much hope in these industries as long term stabilizer for local economy. Up north in Silicon Valley typical job duration is 2-2.5 years. If you worked for 6 years at one employer your a rare novality. Some 10% in SV companies founded in 1980s survived into the 90’s. It can be brutal.
Dont forget they have realtors, home inspectors, title companies, escrow companies, termite inspectors, chimney inspectors, AC/Furnace inspectors, geologic inspectors, electrical inspectors, and appraisers.
All of which get paid for every home transaction. Although normally there is only 1 home inspection its very common to have 3+ as they all refer their cronies to ‘feed’ on the victim. I seen it many times.
Medical device companies. Lots of ‘em, big and small.
Hello all,
It’s been a while since I’ve written about the market in the Boise area. As the weather warms, there is evidence of the deflating bubble in the form of more homes on the market and price reductions. My neighborhood in Meridian has twelve homes on the market and one “investor” property that has gone into the foreclosure process—this home has never been lived in. Nearly all of the homes have dropped prices 10k-20k and a few homes have been on the market a full year now.
Guess what? Construction carries on in full force across the Treasure Valley. Most new neighborhoods have homes under construction while the year old house next door or across the street is already on the market as a resale. It’s going to get ugly, especially when rates start resetting for people who bought at the top 12-18 months ago.
Brandon
Thanks Brandon. It sounds like the same HB strategy employed in Reno. Nothing selling, keep building!
“Some builders are reporting deals falling through with people who initially qualified to buy but then fail to get final loan approval under stiffer qualification requirements,
Awwww… poor little… wait a second, be thankfull folks. Anyone declined will probably get either a much better loan (FHA) or be able to buy later at a much more reasonable price.
I just talked a coworker out of buying this summer. Whew! I’m on a roll.
Yea, I expect some to jump in the “bull trap” anyway. 
“‘This isn’t just subprime,’ said economist Christopher Thornberg. ‘This problem is starting to occur in most of the adjustable- rate mortgages. Even for prime borrowers, we’re seeing a big spike in delinquencies among adjustable-rate mortgages.’”
Bwaa haa haa.
Oops, did I say that out loud?
Aaaaa Schadenfreude.
Got popcorn?
Neil
Once again for the slow, credit score doesn’t matter. Fundamentals and a real ability to afford the monthly nut are the real ways to test whether a borrower can repay. I don’t care if your credit score is a perfect 850 or 900 or whatever they use now, if your monthly nut resets to double the payment, you are screwed if you cannot afford it. You are also screwed if you can because the house is now upside down.
Plus a lot of “prime” mortgages were followed up with a lot less prime seconds and HELOCs. Even if you can afford your first, if your second goes into default they want the house.
I agree OC, money talks…
“Even for prime borrowers, we’re seeing a big spike in delinquencies among adjustable-rate mortgages.”
Ding, ding, ding…..the party is over. I have been pounding the table over the toxicity of any ARM loan for years now.
For the average homebuyer: NEVER, EVER use an ARM loan for your home purchase. ONLY use a 15 or 30 yr fixed rate loan. If you can’t afford that, then rent.
If rates are at 18%, an ARM is arguably a smart move.
At 5.5%? No friggin’ way.
yep..and it rates are at 18% the principal has got to much smaller..right? If so, then a couple of points up shouldn’t be so much of a burdern…
there is a big difference between a $150,000 jumping a point or two versus a $500,000 jumping that same point or two…
I have a 4.38% arm on my house that I now owe a little over 82k on it will adjust in 9/07. As I am a teacher and get an increase in pay every year and even more as I complete my Masters degree the increase to 6.38% will mean I have to pay $53 more per month. Wells Fargo has been trying to get me to convert to a 6.625% fixed for over a year now. How many fools would do this?
It depends on what it adjusts to. And on a small loan of 82K, the current rate would be 5.625% (w/ 1.5 pts + a Fico 660) & (w/ a fico 720+ current rate 5.25%).
The same number of fools that can’t fill in an online calculator.
The answer to this, as with many other questions, is “it depends”.
Do you believe that rates are going to go through the roof to stifle inflation and to keep the dollar attractive to foreign investors? Maybe you want to lock in a sub-7% rate. Alternatively, at only 82k principal remaining, maybe you just don’t care that much about an extra 50 bucks a month (especially given the paperwork hassle, etc etc).
Now, if you were like a lot of FB’ers in SoCal, underwater, no real equity, and getting that 2% reset (with another future one on the way) of $500k worth of principal, you might seriously consider it.
Yes, every case is different, but the point is that when BUYING a home, it is usually a good idea to try and fix your costs.
WHen you use an ARM loan then you are putting your payment costs at the whim of the markets. No thanks!
If rates drop dramtically and your in the first few years of the fixed rate loan, you can refinance to another no-cost 30 yr fixed and have a lower payment.
I was a real estate investor for almost 25 years and never used an ARM loan. Its a sucker bet!
You know, I keep reading story after story of different means of credit whether it means an ARM, credit card, no payments for 1 year, etc. All of these “products” are designed to help a consumer enter a market for some product.
It occurs to me that if these programs and loan products didn’t exist, the cost of purchasing would be low reflected by people’s ability to only buy what they could afford. Truly a free market.
Instead of making life easier and more affordable for everybody, they’ve done exactly the opposite.
The interest only financing came from commercial developers, which prefer lower payments until the project is ready to be sold or traded for mortgage-backed bonds. Commercial developers use interest only financing all the time.
I agree it is the amount of K’s that are going to be adjusted. At $53 it would take almost 48 months to equal the refi costs. Also I pay extra on every mortgage payment.
BTW (to all) there’s a terrific graph of upcoming ARM resets. Go to implode-o-meter and click on the middle 2007-03-19 entry.
For the average homebuyer: NEVER, EVER use an ARM loan for your home purchase. ONLY use a 15 or 30 yr fixed rate loan. If you can’t afford that, then rent
Never say never, I purchased a house in 90 and sold in 2005 with an ARM based on the 11th District+ 2.25%. I think it started around 9% but spent most of the time lower than 6 and went lower then 4. I was lucky, but never say never.
Desmo, I’ve done quite well with ARMs too, but it was my job to know about yield curves, liquidity preference, index rates and such. How many borrowers know the difference between COFI and 6-mo spot LIBOR? We’re talking about the average homebuyer here.
Wow! The government is going to hold hearings on the sub-prime industry. 6 years too late which makes me suspect somebody in Washington has been paid off or the builders, realtor organizations, sub-prime lenders, etc, must have contributed a boat load of bucks to both parties to keep the from speaking out. Do those ass*oles in Washington do anything else besides hold hearings and figure out how to tack pork onto bills? We are VERY BADLY served by our elected officials. Worse, we have no alternatives. Crappy politicians - crappy politicians out. The party makes no difference.
Chill. Things are slowly getting better.
The Federal Funding Accountability and Transparency Act will shine a light on all of the pet pork projects. That will help stop pork, bigtime.
Here’s how cool Congress can be, sometimes. The act was written and sponsored by Coburn (R-OK) and Obama (D-IL), passed unanimously in the Senate, passed the House, and was signed by Bush. Coincidentally, this bill is one of the reasons why Obama will be the next President. Economic conservatism.
Obama next president? Nope.
Will this bill stop pork? Nope.
So the pork gets pointed out in a clearer light. Big deal, all you get to see is how much uglier the pig is. Pigs aren’t like cockroaches, they don’t scuttle under the fridge when the light turns on.
The reason why hearings are being held now is that the crisis is imminent, and politicians need to have constituents know that they are “doing something”.
The poitical calculus doesn’t award many points for being correct, frugal or responsible, but does award immediate points for “showing concern”.
“‘This would be normal in the context of a labor market that was weak, but the labor market is quite strong,’ Thornberg said. ‘These problems indicate that this is just the tip of the iceberg.’”
I wonder if we are seeing the affect of loans to illegals here. Anyone have data on the number of defaulting loans to illegals? They would be the first to lose their jobs and those losses would not show up in any statistics.
Yet another unintended consequence of the fast and loose times we are coming out of. What a mess.
Re illegals: I think the leadership of San Diego in the foreclosure derby tells you how much of this is about people who can’t speak English and couldn’t afford first-last-security to rent.
None of that going on in the Central Valley, of course
Tragic day on the aladinsane ranch…
Learning the whole green thumb gig and we had some Russell Lupin seeds, we brought back from New Zealand last year and it was the 1st thing i’d ever planted (how many of you can relate?) and they were going great guns until the hot spell that lasted a looong time last summer killed em’ dead…
Well, we planted tulips and they’ve all bloomed and are stunning, hard to believe how easy it was… Beautiful.
Well, i’ve been watering them from a nalgene litre plastic bottle for awhile, during the past hot spell, (85 or so in March, no global warming, ha!) and I watered into the open petals of a few of them, commiting flor-icide, in the 1st degree, I suppose. The blooms melted away and we are sincerely sorry for what i’ve done.
Aladinsane, that’s sad. I have planted a lot of stuff, but the sad stories come with the territory. I once ate a medlar and thought I’d plant the pit in a pot to show my daughter how things grow. It grew into a small tree and was very proud of myself because my parents always used to say fruit trees were the hardest. I went on a trip and asked a neighbor to water. She did, but the thing died. I was devastated. Was it because I abandoned it?
I’m planning a secret garden (not that “kind” of secret garden) of a few fruit trees, in the most beautiful spot I can think of, just inside the perimiter of Sequoia National Park, on a creek that has one swimming hole after another, and it’d be great to have cherries or an apple to nosh on, although i’d have to beat the local animals to it, they’re really quick.
When you live like the animals do, you are not really sure where your next meal is coming from, all of your life, 24/7.
It’s a concept we just can’t relate to. I’ve never had a smidgen of a chance of going hungry, all my life.
although i’d have to beat the local animals to it, they’re really quick
Of course they are. When I was little, the apples of our orchard always had bird, insect bites, and worms. When I saw those perfect apples in the market, I always wondered where they came from. It is not easy to run a fruit garden if you are not close by. It is super labor intensive. A friend of my grandmother’s used to tell me how, after World War 1 in France, they all went out and covered each pear in a pear tree with paper, so that the birds could not get to them. They were actually baby sitting each individual pear. No wonder that woman could make a meal for eight out of two eggs, one onion, a couple of potatoes and yesterday’s bread. I wish I had asked her more questions…
And don’t even TRY growing a peach in coastal OC, unless all you want to feed are peach borers. Nasty little buggers. Worse than mortgage brokers.
Hey, Aladinsane, have you read the book, Omnivore’s Dilemma, by Michael Pollan? It’s a great book about the food industry, including organic.
Haven’t read it…
I’ll check it out. Thanks for the tip~
aladinsane… you’re doing fine in your gardening adventures. Your Russell Lupin(e)s are perennials, they are supposed to die back. If you didn’t dig up the roots they should grow again this spring. They also self-sow. I don’t know where you live, but here on the CA coast they bloom in May or so and come back every spring in the wild. They don’t like really warm or hot weather just like Tulips and fade VERY quickly when temps are in the 80’s and above. Tulip blooms usually last two weeks under the best conditions. Beautiful flowers but fleeting show of color. But I grow them every year ’cause I’m sucker for them.
SK:
117 degrees killed em’ real good, sadly.
Thanks for the tips on tuilips. As I mentioned, i’m a rank amateur~
“The vacant units are costing the owners money, especially because many bought their buildings when the real-estate market peaked, Potvin said. ‘They’re going under fast,’ Potvin said of the owners.”
The vacant homes thing is a puzzle to me. I drove up Camino Del Sur (in San Diego) last night after dark, past entire “neighborhoods” of unoccupied McMansions with not even a light on. It is spooky to drive past ghost McMansion tract home developments.
Now just to throw out some rough figures, suppose there are 1000 vacant McMansions in the Santaluz area valued (according to list price) at over $1m a piece. That would be $1b in vacant new home inventory that will be very difficult to move at anywhere near recent sale prices in the wake of the subprime and high-risk Alt-A contraction underway. Who will buy these? And if nobody buys them, who will get to eat the holding costs? And how long can this monstrous new home inventory elephant stay hidden under Wall Street’s living room rug?
GS, I find the vacant inventory issue puzzling as well. All I can guess is that a whole lot of speculators are burning up their entire retirements on carrying costs. For each month these places sit empty, someone is bleeding cash.
“All I can guess is that a whole lot of speculators are burning up their entire retirements on carrying costs.”
Not sure how many of the places in my hood are investor- versus builder-owned. In many cases, I can say the entire neighborhoods are brand new (never been lived in), and I cannot envision how they will sell at anywhere near what the builder must have anticipated. Somebody is going to take an ice-cold bath on these.
I have been looking at homes in the Tri Cities of Washington since late Feb. I have seen about 30 homes and I would say that 25 or so are vacant.
In which of the three towns?
Richland, Kenewick or Pasco?
Well, it ain’t Camino Del Sur, but the same eerie sight can be seen in many CV towns. Merced has whole blocks of beautiful, finished, empty homes - with one or two residents in a cul-de-sac. Those that are fully occupied (2003,04,05 vintage) are now covered with for-sale signs. Morbid I now. but I can’t help driving those streets. Like Dawn of the Dead.
In the early ’70’s Boise Cascade built a huge development in the Sierra foothills not far from here. Put in roads, lots, fire and sewage - then went belly up. It took until this latest bubble to sell them. Seems the more things change….
I can’t believe you guys are talking about $1 million McMansions here in Coastal OC, $1.4 million is a 800 sq ft shack with a couch on the porch (no lie, I have pictures).
I always shade my estimates to the low end, so that when the truth is eventually revealed, it turns out to be worse than my guesses. (It also helps to make conservative estimates when you have little to go on other than what your eyes and common sense tell you…)
You havent seen anything…
how about 800 sq ft for $3M….
http://www.realtor.com/FindHome/PhotoGallery.asp?snum=167&locallnk=yes&frm=bymap&mnbed=0&mnbath=0&mnprice=0&mxprice=99999999&js=off&fid=so&stype=&mnsqft=&mls=xmls&areaid=93613&poe=realtor&ct=Carmel&st=CA&sbint=&vtsort=&sorttype=&typ=1&typ=2&x=55&y=11&sid=083FEEC1B5C0C&pgnum=17&snumxlid=1067269156&lnksrc=00045&photonum=3
2365 BAY VIEW AV
Carmel, CA 93923
MLS ID# 655399
Property Info
$2,950,000
2 Bed
2 Bath
868 Sq. Ft.
love those assumptions: you’ll need $600K down and it’ll still be $15K / month to carry the loan on your 868 sf pos
I guess the builder eats the cost. If he goes bankrupt the bank takes them and they eat the carrying costs. Until they go bankrupt and then the fed gov’t pays off the account holders via the FDIC.
“I guess the builder eats the cost.”
This part I don’t get. The builder is in business, right? What is in it for them to ride vacant inventory down to the price basement rather than do what a bank would do, which is quickly sell at whatever price the market will bear?
They need time to sell more stock
Now I get it. If the builder plans to go BK, then they optimally would keep the inventory elephant hidden under the rug until the very day they go belly up.
Hey, there are plenty of companies that suffered losses. not only at net income by net gross margins… thats a recession folks…no one is buying
“The Bay Area will be hurt less than other parts of California”
Not sure what some are drinking these days… must be some cheap Scotch. Aside from the waves of M&A recently and continued outsourcing we see weekly. If you look at recent job growth numbers over the past 3 years (after the end of the tech meltdown) does show growth in Retail and Goverment Jobs. High Tech salary increases are on par with inflation (4-5%) or so. Affordibility is remains under 10%.
Fact is higher paid salary positions are prime targets to move to cheaper states. IPO is dead except for a few here and there. Dont expect another Google or late 90’s dot.com IPO equity explosion. No real reasons that still do not explain prices going from $110/sq ft to over 500/sq ft….
Have a good look we are prime target for big correction.
http://flickr.com/photos/7409273@N03/
Great graphs, Louie. It seems that Xmas 07 will be pretty lame.
“New Century Financial Corp … said Tuesday it can no longer sell mortgage loans to Fannie Mae or act as the mortgage financier’s primary servicer of mortgage loans.”
That is scandalous! Unfrigginbelieveable! FNM has been saying all along their role in subprime is limited. Lying effing SOBs.
The amount of subprime loans on FNM’s books is one piece of information we can all look forward to with eager anticipation when they finally come clean with their books.
They also just announced a cease and desist from ?????? YES CALIFORNIA
Are all these firings at subprime lenders taking into account the independent mortgage brokers that work out of their homes?
Probably not, but hey, at least they can get work here:
http://blogs.ocregister.com/mortgage/archives/2007/03/pizza_chain_seeks_exloan_bosse.html
Now you wont be able to order a pizza without them sneaking in charges and hidden costs! NOOOOOOOOOO why did order the extra crusty w/cheese?!?!
Very Funny!!
What’s the commission rate on pizza?
Contractors already got their notice as like any industry.
“Even adjusted for population growth, the number of NODs last month was higher than at any time throughout the prior housing bust except during the brutal spring of 1993, which was the only year not to experience a springtime rally.”
The difference is that California was in the midst of a protracted recession in 1993 (which began already in July 1990). So it is already worse this time while the jobs market is still holding up compared to the middle of a downturn with no end in sight, which shows how damaging it is to the housing market tp make loans with no underwriting standards.
These data portend an extremely hard economic landing.
“Thornberg said that the First American analysis fails to take into account the relationship between the housing market and the economy as a whole. Defaults are rising at a time when the job market is stable, a highly unusual occurrence.”
What is highly unusual is the pay grade of these new jobs - Retail, Sales associate Walmart, Linens & Things, Jack in the Box …
Of course, the First American analysis made one rather large assumption on which they based their foreclosure projections - that home prices will not decline for the next 7 years. When a 10% decline was factored in, foreclosures doubled.
that’s in the bag
moody guy today said a 2.5% decline = recession
So median price of a house in Coachella Valley lost over 40k year over year. The median household income for this area can’t be much higher than that. That seems to be a pretty painful number.
Read it again, chilidoggg. Median price of all homes in CV dropped 4% or about 16K. (Painful enough.) As GH comments below, these prices seem infinite in comparison w/ incomes of locals. Specuvestment must still account for most purchases.
Help is on the way for those in California who are tired of illegals and want them to go elsewhere. I was just watching NBC nightly news and guess what? The mayor of New Haven, Connecticut is making his city into a sanctuary city. Illegals can get a municipal ID card that will entitle them to free city services, no questions asked, not to mention that Yale New Haven Hospital is one of the best in the country. Sure, winters are a little cold, but the Connecticut beaches are lovely in the summer and there will be plenty of Yalies hungry for an international experience. Get the word out, Californians, New Haven wants your illegals NOW! Spring in Connecticut, just heaven. And plenty of housing for everyone. Head East!
New Haven is a slum, and has been for many years. Once they collect their degrees, Yalies blow town.
Bay Area is a special place we had a recession in 2001 and housing didn’t crumble. Now the assumption being made by many people is we are different.
I expect the termites to start at the edges and work to the core.
Richmond
San Pablo (Janitors paradise) How many of the blogs readers have janitors for neighbors.
Oakland
San Leandro
Hayward
Union City
Fremont
Milpitas
San jose
Also in the SF Chronicle:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/03/20/EDG79ONVUI1.DTL&hw=sean+olender&sn=001&sc=1000
“Daily reports for a month now inform us of the “surprise” that subprime borrowers are delinquent on payments. But everyone in the business has expected it since 2004. What happened from 2004 to 2006 in the mortgage markets can be fairly described as a scam. And you are about to pay for it.”
“Here’s how it worked.
In late 2003, Wall Street investment banks realized that with interest rates so low they could make a bundle selling shares in baskets of mortgage loans. Investors craved higher returns in a low-interest-rate environment and welcomed this investment vehicle. Then-Federal Reserve Chief Alan Greenspan encouraged this scenario by keeping the federal funds rate at a 45-year-low of 1 percent. In a Feb. 23, 2004, speech to the Mortgage Bankers Association, he noted that the common man had long suffered under his fixed-rate mortgage and needed help to something a bit more exotic. This unusual advice is a clear example of a tacit promise that if investors are reckless and things go bad, the Federal Reserve will bail them out. ”
“What made home prices rise so fast? If credit liquidity defines the market because few people write a check for a house, then loose lending drives up prices. Lenders and Congress complain, “We need these loans so people can afford the high prices.” But the truth is the reverse — it is loose lending that drives up prices.”
“There are two ways out of this: inflation or deflation. Either home prices drop until they return to their historical relationship to wages, or the price of everything except houses goes up as the Federal Reserve and Congress bail out “homeowners.” The Federal Reserve can do it with its current chief’s money-dropping helicopters, or Congress can do it by using our tax money to pay off the bad debts of investment banks while pretending to “bail out homeowners who will lose their homes!” Either way, we taxpayers lose and banks win.”
Amazing that appeared in the SF Chronicle! The end is very good…
“U.S. Sen. Christopher Dodd, D-Conn., suggested that just less than $200 billion could rescue these poor “homeowners.” But a bail out will amount to at least five times that when the Alt A market fails.
When your congressional representative says, “but we have to help him with your tax money because he’s going to lose his house,” remember: He doesn’t own his house, the bank does. He didn’t put any money down and if he walks away, he doesn’t lose anything because he never had anything. He only had the obligation to make a monthly payment and the hope that in 30 or 40 or 50 years, he would “own” a home. For most of these borrowers, their house is worth less than when they bought it and they’d be better off walking away.
Would you like to teach investment bankers that they shouldn’t package $650,000 zero down loans for people making $42,000 a year? Then let’s tell the Federal Reserve and Congress that they cannot give them our tax money for a bailout.”
It’s either 200B on mortgages or Iraq, I vote for mortgages.
I vote to fully fund education!
its not to save mortgages, its to “save” those that got 20 million dollar bonuses last year.
You can try telling them that, but it turns out ‘our money’ is actually ‘their money.’ It says right on it: Federal Reserve Note.
This just in: Chris Dodd says, “Working class Americans are entitled to own any house they want, even if they can’t afford it. Why should $750K houses with granite countertops and stainless steel appliances be reserved solely for those who can afford them? Here’s my new proposal: You go out and buy a house with an adjustable-rate mortgage. When the mortgage rate resets, take the amount of the mortgage payment and subtract the amount you can afford to pay each month (after you’ve made your boat payment). The remainder is the amount that the U.S. taxpayers owe you each month. You’re not going to have to sell you house simply because you can’t afford to pay for it — that would be absurd and patently un-American. And to expect someone to downsize to a house that is within his means is simply degrading and we can’t tolerate people being degraded, especially poor people.
DON’T BUY STUFF YOU CANNOT AFFORD!
http://www.pistolwimp.com/media/41738/
LOL That was really funny.
Sign up for a bailout and 98% of us will be listening to the prolefeed on the telescreens and eating soylent green. If your in the other 2%, well, I guess you are either a banker or a GOOG founder.
Not sure how a typical 1970s condo selling for $85K back in 1996-97 start selling for 350K-400K today…
Hell if some Google guy is going to buy it…
This is what im talking about… Yes we all saw these before..
http://www.mlslistings.com/common/properties/propertyDetail.asp?open=0&page=12&mls_number=662043&type=property&name=
798 sq ft…..my walk-in closet is almost that big.
You got me beat - my whole home office suite is only about 750 sq ft.
Hi Louie,
Where in the bay area do you live? I live on the Peninsula, San Mateo County.
Down south neat 85 and 280.. cupertino
You’ve got the order wrong:
Modesto (check)
Salinas (check)
Pittsburgh (check)
Hayward (check)
Fremont (stable)
Milpitas (stable)
San Jose (rising slightly)
Working it’s way in…
Just talking to my better half about the layoffs in the mortgage industry. Her comment “I bet a lot of those people are also in those toxic loans”. As Neil says
Got popcorn?
You bet. Poetic
munch munch munch
You don’t want to know how much I want to see a “COPS” like TV show specializing in evicting flippers. (No, I don’t watch much TV, but I’d DVR that!).
Here would be the tag line:
“On tonight’s episode of “TEAM CASEY,” we take you into the house of a one time real estate barron. Note the unmowed lawn. Flat tires on the hummer and pathetic garbage, ummm… collectibles filling the McMansion.
Let’s turn to our panel, which of our ‘Iron repossesors’ do you want to unleash tonight? Terrible Tony known for his chainsaw antics? Drive through dave who’s name and 4X4 says it all? Or tonights guest ‘Iron repossesor,’ none other than the current WWF campion… Give it up for…”
Ok, you get the idea. Maybe I watched to many Schwartzenager movies as a kid.
These people will be evicted left and right. No pity. They screwed too many other people to have earned that.
Got popcorn?
Neil
No, it’s a cartoon:
EVICTOR!
“I know a lot of those people are real estate investors.”
Remember after the dot con blow up. All the “investment” gurus warned you shouldn’t poop where you eat. Meaning don’t invest in the same industry you work. All those dotcommers kept their entire net worth in internet related stocks and options. But did World Con and Enron employees listen a year later? Nope. Have the Kool Aid drinkers in REIC diversified their investments?
“Have the Kool Aid drinkers in REIC diversified their investments?”
More than anyone else, REIC members “know” that real estate always goes up! So I would have to guess (and even know this from first-hand conversations) that the real estate invester crowd is overweighted in REIC employees
I can fully attest to that.
For you folks in L.A., CNBC just did a piece on rising property values in L.A and S.F and it turns out that everything is okay! Market is solid and moving full steam ahead. Of course, there wasn’t one mention of price/sq ft, incentives, foreclosure rates going through the roof, fraud, etc. All substantiated by some guy from Ziprealty that looks like he’s spent a little time bent over a couch in N. Hollywood. What a load. I’ve had it with CNBC and especially cokehead Kudlow.
Kudlow is a joke. He should be canned like Dan Dorfman was.
I still think Steve Lisman and David Fabre (don’t know how to spell names) care about their reputation.
Yeah, Dorfman’s a dandy. Almost stroked out a while back.
Speaking of Dorfman…
And now a man who needs no further introduction….
Fred “The Dorf” Dorfman! Fred was darn near death recently.
He wasn’t ashamed to admit to me that he had syphilis.
Thank God he stopped it in its tracks. It takes a lot for a man…
to admit where he got it from and how he got it.
Look at him today. Fred, you look just wonderful.
The nose looks normal again. The face has come back into shape. He’s not drooling anymore.
And hats off to Marge, his wife, because that whole experience…
the three weeks that she stayed at Trembling Hills has paid off.
No more alcohol or sedatives in her life.
“turns out that everything is okay!”
I’m lucky I wasn’t drinking something right then and there. That’s funny.
Just checking latest Dataquick feb charts for LA County.
Datquick shows a 5% yoy increase for SFH’s ,
which is the average for all 272 LA zip codes.
I counted 116 zips showing neg yoy.
42 % of all LA county zips showed negative yoy..
Some HI-END LA zips showing large neg yoy’s
Agoura Hills 91301 15 $785 -14.0%
LA/Bel-Air 90077 5 $1,000 -50.2
LA/Brentwood 90049 17 $2,000 -11.1%
LA/Rancho Park 90064 18 $799 -33.7%
Long Beach 90803 8 $896 -14.2%
Malibu 90265 21 $2,720 -34.9%
Marina del Rey 90292 4 $1,313 -24.4%
Pacific Palisades 90272 24 $1,560 -20.0%
Venice 90291 10 $838 -23.9%
And here are some bottom of the barrel LA slimeburgs still getting the last waves of immigrant GF’s to overpay for fraudulently overappraissed ghetto crapshacks.
Bell 90201 8 $475 6.1%
Compton 90220 22 $413 13.5%
Compton 90221 29 $415 6.7%
Compton 90222 29 $390 16.4%
Huntington Park 90255 14 $460 14.3%
Inglewood 90301 11 $515 9.6%
Inglewood 90302 7 $605 32.2%
Inglewood 90303 7 $580 28.9%
Inglewood 90304 9 $498 10.6%
LA 90011 31 $440 20.5%
LA 90037 12 $469 10.7%
LA 90047 29 $480 10.3%
LA/August F. Haw 90044 27 $455 18.2%
LA/August F. Haw 90059 26 $380 4.1%
LA/August F. Haw 90061 15 $438 21%
LA/El Sereno 90032 21 $490 10.0%
Maywood 90270 5 $460 17.9%
South Gate 90280 40 $485 10.0%
Lynwood 90262 21 $465 8.1%
San Fernando 91340 9 $555 23.3%
BTW:LA ZIP 90011,a particularly nasty SCentral S*itzone, has some blatant mort fraud, which i have posted previously. Inglewood raises suspicions as well.
That’s interesting info, Peter. I wonder if the same thing happened back in the 90’s or if this is a direct result of fraud and predatory lending.
I zillowed some properties in zip 90011 and already saw one home go up over $300,000 thru 3 sales transactions in 8 monthes: the last sales transaction put homes valuation at over $600,000. The area on 35th st near jefferson ave where this home is located is a nightmarish ghetto craphole.
The entire vast SCentral LA district which comprises zips 90011,90037.90003,90001,90044,90061,90059,plus the adjoining Compton,Gardena,willowbrook, watts,sgate,HPark,E LA districts are a vast rich ore vein of fraud, and not just RE Mort fraud. Even In LA very few know of the shady operations of illegal alien criminal rackets(The LA weekly article ‘the town that Law forgot’ was just the tip of the iceberg). RE fraud may just be the latest profitable criminal venture for the immigrant criminal rackets, and apparantly easier to get away with than Auto accident insurance fraud.
Your right LA and SF bay area is laced with RE fraud..
Fake bidders fake appraisals fake loans…
freaking crazy… and freaking dangerous…
remember when that TV reporter was attached by a mortgage shark
on camera… Holy Cow…. these RE workers are freaking nuts..
“For you folks in L.A., CNBC just did a piece on rising property values in L.A and S.F and it turns out that everything is okay! Market is solid and moving full steam ahead”
Those CNBC knuckleheads don’t know s*it about the LA Market. Large parts of LA are dirty gritty immigrant-impacted hovels with decaying 60-100 yr old clapboards/simple stuccos. I’m talking SCental.Compton,East SFValley,pomona,east LA,southwest LA, Norwalk,belflower,710 alameda corridor cities,parts of SGabriel valley such as Baldwin park, city of industry, ect.
Take out LA westside and that tiny coastal sliver of Sbay communities and the rest of LA county is rather dismal and gritty, and large portions of LA county are third-world, immigrant-impacted,gang-infested barrios.
“Recent home buyers, many seduced by too-low-to-last teaser loan rates”
I’ve heard both of the following from the media and from politicians crowing about a bail-out for strapped homeowners:
1. “Due predatory lending practices, people were buying houses that they really couldn’t afford”
2. “We must help strapped homeowners who are victims of predatory lending practices keep their homes and their oiece of The American Dream”.
When will they ever make the connection and say those two thoughts together:
“We need to help lending victims keep houses that they really can not afford”
“KEEP HOUSES THEY REALLY CAN NOT AFFORD”.
GET IT?
“GET IT?”
Yes. In fact, I can do one better.
“We need to force people who chose not to buy homes they cannot afford to help people who did choose to buy homes they could not afford pay for those homes.”
Do you guys think Dodd or his aides read here?
—————————————————————————-
UPDATE 2-US senator wants subprime answers, warns on alt-A
Tue Mar 20, 2007 9:23 PM BST19
(Recasts first paragraph, adds alt-A warning, detail from letters)
By Kevin Drawbaugh
WASHINGTON, March 20 (Reuters) - The chairman of the U.S. Senate Banking Committee asked banking regulators on Tuesday to explain their handling of the subprime mortgage lending crisis and warned that problems may be spilling into another sector of the mortgage market.
Connecticut Democrat Christopher Dodd said his letters to Federal Reserve Chairman Ben Bernanke, Comptroller of the Currency John Dugan and other regulators seek “to clarify what steps these agencies took in the face of the growing crisis of subprime mortgage lending.”
In the letter to Bernanke, Dodd warned that mortgage default and foreclosure rates were increasing across the credit spectrum.
“There are numerous indications and reports that the alt-A market is starting to experience the same kinds of problems we are currently seeing in the subprime market.”
Alt-A loans are considered a step below “prime” in quality because borrowers typically do not provide documentation, such as proof of income or net assets. Credit scores of alt-A borrowers are higher than for subprime borrowers.
http://investing.reuters.co.uk/news/articleinvesting.aspx?type=breakingFundsNews&storyID=2007-03-20T212342Z_01_N20384354_RTRIDST_0_USA-SUBPRIME-DODD-UPDATE-2.XML
“(Recasts first paragraph, adds alt-A warning, detail from letters)”
Was that an editorial snafu that snuck through?
Well we can let these people fail and walk from their loans which would hurt most of the renter investors as well as home owners since this crap is all over wall street OR we can try to make borrowers pay for a significant fraction of their debt and / or eliminate any refinance penalty. Maybe for them to repay any forgiven debt when they sell the home for anything above a net wash.
Deregulation and excessive greed got us here and while I’m all for the free market, I’m against destructive free falls for the sake of entertainment.
“Well we can let these people fail and walk from their loans which would hurt most of the renter investors as well as home owners”
Don’t forget to mention your “sweet” 401k.
And will you please gift me some money to buy a Ferrari to keep the economy running and your 401k sweet? After all, I can’t *really* afford a Ferrari, but why should *I* be faulted for that?
I wouldn’t have lent the money in the first place but it’s a done deal. Poor regulation and oversight as unfortunately put most of us and probably you at risk for substancial losses.
I frankly think a guy stuck paying a large loan back is worse off then if the guy walked away and sticks investors with the bill.
If you have a great idea about recession proof investments, I’m all ears. Where do you park your retirement money?
“If you have a great idea about recession proof investments, I’m all ears. Where do you park your retirement money?”
Right now, stocks (index funds). Sometime in the next year, money market. And there it will probably sit until the next cycle. I’ll probably buy a little physical gold as well (as a very very VERY small hedge). Recession proof? I don’t know.
However, I don’t think that people should be bailed out using my neighbor’s dime, just so that I can do well on my investments.
The way I look at it, house sellers have been “extracting” money from the system by being able to sell way way way over “financial sound” values. One or more of the following entities will have to pay for this “extraction”:
1. The buyers. This will work in quite a few cases, as a lot of buyers were also sellers, and just used home equity “magic money” to trade up, down, or sideways. However, we are seeing the fallout right now of those who can’t pay for it (unqualified first time buyers, HELOC junkies, etc.) And with house prices flat or falling, well, you know what they say about getting blood from a stone.
2. Uncle Sam. The ultimate deep pockets, but the government faces the moral dilemma of taking money away from people that shied away from risk (or even foolishness), and giving it to those that exhibited the most risky (and foolish) behavior. In this situation, you need enough fools to overpower (outvote) the non-fools. I don’t think it will happen, at least not more than a token gesture. There is too much money needed (”too big to bail”), and too many triage complexities (who gets the bail-out, and who doesn’t)?
3. The Investors/Lenders/Brokers. If anything, these should be the guys doing the bailing. When actual predatory lending happened, these were the guys and gals reaping the rewards (or looking the other way in return for $$$). IMHO, There is a lot less moral dilemma making these guys and gals pay to clean up the mess. (Just look out for loan standards to tighten even more as the financial incentive to make these loans dries up).
The business cycle is part of the natural eb and flow of the economy. It’s goverment regulation that has exaserbated this cycle (e.g. Fed manipulation of short term rates, mortgage tax deduction, goverment insurance of mortages, tax free capital gains, etc.) The is no such thing as too big to fail in my book. Sooner is better than later when the effects will be much worse. Let the investors take the loss for the higher risk they voluntarily took on for higher yield. They will respond with demanding higher returns and better knowledge of their investments. This will drive down prices helping buyers. The refinance fees you’ve refered to were priced into the loan; giving a specuvestor an out, is a subsidy. Had they negotiated for no refinance restrictions, the interest rate would have been higher, and the prices wouldn’t have gotten as crazy.
“KEEP HOUSES THEY REALLY CAN NOT AFFORD”.
thats an oxymoron
The JoJo’s Pizza four-store chain of Italian restaurants from Chino Hills is seeking laid-off mortgage supervisors to fill managerial openings. Joe Bonafede, owner of JoJo’s, “feels that he can offer these employees a great opportunity. Everyone has been involved in the food business whether they have worked or ate at a restaurant.” For more information, contact Bonafede (joe@jojospizza.com or jojospizza@hotmail.com or 714-390-4573) or VP Chris Parker (cpden@sbcglobal.net or 714-709-3743) or marketing director Jaclyn Rovida, (jackie_jojos@hotmail.com) (Photo of Pizza is not a JoJo’s pizza)
http://blogs.ocregister.com/mortgage/archives/2007/03/pizza_chain_seeks_exloan_bosse.html
I’d like to suggest COSTCO as another place these people can work. Openings are many for servers to hand out very small portions of juice, cookies or mini pizza H’Orderves . Must have previous experience using a tooth pick to insert into soft items and an ability to judge how much is too much to spoon into a very small paper cup.
“Oh Big Box Mart, what have you sold to me?
We used to be your customers, now we’re your employees.”
http://www.jibjab.com/originals/originals/jibjab/movieid/122
LOL! Thanks GS! That made my day.
THAT is Hilarious.
The JibJab boys should get a lot of great new material out of the housing fiasco.
OMG I nearly died laughing!
I don’t think most REIC members are qualified for Costco
Hey, what about all those fabulous opportunities in multi-level marketing? They also have openings for laid-off REIC-ers.
Or they could work from home and build a second income of up to $20,000 per month in their spare time…
As a matter of fact, if they call me at 800-555-5555, I can sell them a kit for just $149.99, which is is a small price to pay for the opportunity of a lifetime…
“Everyone has been involved in the food business whether they have worked or ate at a restaurant.”
Maybe he should set his sights on retired English teachers.
Thats too much…
I think many were actually predicting this happening.
I meet lots of former tech works working in retail.
“Pricing could see slow to flat appreciation this year”
Rong [sic]. Pricing will see neither slow appreciation nor flat appreciation.
what the hell is flat appreciation? just call it NO appreciation.
Right, ccbear, but my point was, the reality will be depreciation.
A few percent drop in price to $370K in Coachella Valley is meaningless. Given the incomes out there they may as well be a couple million each … The same places that are currently priced at $370K are not worth a penny over $150K, so really in my mind prices remain at or near record levels. The same can be said of many CA markets.
So basically….we got a long way to go, baby!
I wonder what the next mania will be?
There won’t be any! The American economy is cooked!
Back when Japan Inc. was the bogeyman there was a SF short-story about a wizened Japanese investor actually buying the Brooklyn Bridge. The punchline was he relocated it to his massive garden back home and it really looked good there.
Actually I think the end-game is going to be privatization of (presently) public assets. $40 to the Disney Corp to gain entrance to Yosemite, $25/100mi to drive I-5 in the SJV, etc etc.
Austerity.
“Broke is the new Black”
(C) 2006 TxChick
A Man Killed Holding Sign on Street
Lancaster: Darel Thomas Smith, 22, a black man, was shot and killed at 45th Street West and Avenue K in Lancaster at 12:08 p.m. Sunday, March 18. He was standing on the street holding a sign advertising new homes when a group of men or youths drove up, and someone shot him. One of the attackers then got out of the car and stood over him before the group fled the scene.
Home sales cannot be possibly dropping in California or anywhere else. Haven’t you people read the NAR’s anti-bubble reports? Published in 2005, they dispel all of this nonsense about a “housing bubble”, and predict smooth sailing for the future and ever-climbing home values.
These downloadable 10-page reports show that the facts simply do not support the possibility of a housing bust — not for these 135 markets and not for the nation.
[From the Q&A section]
What are the prospects of a housing bubble?
There is virtually no risk of a national housing price bubble, based on the fundamental demand for housing and predictable economic factors. It is possible for local bubbles to surface under the right circumstances, but that also is unlikely in the current environment. There are tight supplies of homes available for sale in most of the country, and labor markets have been improving. In other words, the two conditions necessary for price softness do not exist in most of the country.
The strong underlying demand for homes results from the simple fact that the population is growing faster than the supply of homes. In addition, it is highly unlikely that the cost of construction will decline. In fact, construction material shortages are expected to continue and the cost of building and development is trending up.
Baby boomers remain in their peak earning years. Echo boomers – the children of the baby boom generation – are just entering the period of life in which people typically buy their first home. The echo boom is the second largest generation in U.S. history. Considering the median age of a first-time buyer is 32, echo-boomers will be a big factor over the next decade. In addition, immigration has been strong for many years. Census data shows that immigrants eventually achieve homeownership rates higher than do native born Americans – this also will be a strong factor in housing demand in the future. Also, minority ownership rates have been trending up.
All this means the demand for housing is historically high and is one of the reasons 2005 will be the fifth consecutive year of record home sales. Even in an economic downturn, the demand remains. If conditions become unfavorable, home buying may be postponed, but a general price decline remains highly unlikely.
What is likely to happen with home prices?
The forecast is for mortgage interest rates to rise slowly over the next year, which will have a minor breaking effect on home sales. The good news is that will help inventory levels to recover and allow the market to come into a closer balance between buyers and sellers.
In other words, a general slowing in the rate of price growth can be expected, but in many areas inventory shortages will persist and home prices are likely to continue to rise above historic norms.
Wow, that’s a timely piece ! I remember when that came out and we debated it here on this board. At the time there were a bunch of bulls hanging around saying “See, see, see ?” The the bears among us put up a brave fight but were generally scratching our head at how housing prices could climb unabated and everywhere.
If I remember correctly there were even a few of us that were pretty sad that that we didn’t have a house at the time. Luckily we waited it out !
I remember those days, tweedle-dee. LV Landlord was one of the perma-bulls. I’ll never forget the looks we got from our friends when we told them we were renting in VA, not buying. They looked at us as if we had just disclosed that we were filming pornography in our townhouse, or collecting shrunken heads. Those who knew we were renting just assumed that it was a temporary arrangement while our custom house was being built.
As for the anti-bubble reports, I got a kick out of this piece: It is possible for local bubbles to surface under the right circumstances, but that also is unlikely in the current environment.
As if it is so improbable as to be almost completely hypothetical. “Sure, I guess spontaneous human combustion IS theoretically possible, given some insanely improbable circumstances, but the odds of it happening once in the next billion years are infinitesimal.”
I also had to laugh at the fact that, of all the factors these “economists” listed as drivers of the housing boom, subprime mortgages and other exotic lending instruments (like neg-am loans) weren’t mentioned. I guess crazy financing had absolutely NOTHING to do with the run-up in prices that started right around the same time. Nope, it was all rich baby boomers and apparently rich immigrants (Mexican investment bankers and the like flooding into U.S. by the millions).
Then they go on to say: Even in an economic downturn, the demand remains.
Wow! How far off the mark can you be? In fact, we’re seeing exactly the opposite: housing demand is tanking while the economy in general is doing pretty well. How much worse do you think the housing situation would be if we were actually in a recession?
Do you smell something?
The smell of ‘housing napaulm’ in the morning, or the 2007 realty office Port-A-Potty…..
John.. forward that study from NAR to Senator Dodds.. .I want to DL grilled by congress… I wanna watch on CSPAN NAR Con DL sweating bullets…
Lets see Mr Liar… you said this and this and this…
How do you repond to the RE bubble now…
I wanna video tape that and save it YouTube…
We are now competing with 3rd world countries at many levels. One of which is Chinese and Indian wages are going up sharply and their real estate reflects that. People in the US of A haven’t realized its at our workers expense. They see China/India RE going through the roof they expect the same here.
Which politican is going to tell them the truth?
So, I’m watching Spongebob and he gets sucked in by some cartoon condo saleshole, and can’t get his deposit back. He calls Sandy Squirrel who promptly comes over, whips the developers ass, and kicks him off the balcony. Problem solved.
So the show teaches our kids something usefull.
Got popcorn?
Neil
I saw that too! The RE agent was showing Spongebob a chart of how much the condo would appreciate. It was hilarious!
NO BAILOUTS !
NO TAX MONEY TO
HELP STUPID INVESTORS !
I swear I’ll start a f*ing one-man revolution if the Greedy & the Stupid wind-up getting subsidized by the government. What’s next; “I lost $50.000 at the crap table and need some help now” ?.
Don’t get me started.
Don’t get me started.
But you could help out poor Casey.
Ok, I couldn’t resist.
Did you explode? Is your computer still intact?
Got popcorn?
Neil
“BIG” Banks will get a get out of jail for free card.
They will lower rates for banks and raise them for the customers. Saudi princes will benefit. I think GW & his family like the Saudi royal family.
Happened after S&L
It won’t be one-man for long I will join you.
NO BAILOUTS
Make sure the lenders do not get bailed out.
Eliminate refinanceing fees and penalities for home loans.
Let those who can, refinance and keep paying back their loans.
If I haven’t already taken my sons to Canada to dodge the draft, I’m in!
Congress is already talking about drafting Sarbans Oxley legislation…
This is actually a right step in the right direction….
Anything to get more transparency in buying would help…
There was too much marketing imposed on financing…
I bought a big screen TV and need a bailout too. And a new Car, And a bunch of other S#!* I don’t need. Can someone pleasy pay more taxes so I can avoid taking responsibility for my mistakes.
LEND getting money had nothing to do with fundamentals.
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070320:MTFH08354_2007-03-20_22-55-20_N20362926&type=comktNews&rpc=44
“”This makes it sound like everyone is doing it and the reality is that most hedge funds are not engaged in this kind of manipulative behavior,” said Laurel Fitzpatrick, a hedge fund lawyer with Ropes & Gray.”
Fitzpatrick continued, saying “well, maybe a few other hedge fund do this. But definitely not Ropes & Gray. And that’s the truth. You can trust me, I’m a lawyer. Say, you’re not working for the FBI, are you? I’m not under oath, am I? This meeting is over!”
A million dollars is not what it used to be…
http://www.cnn.com/2007/US/03/20/businessoflife.million.ap/index.html
“These days, a millionaire is more likely to be the guy or gal next door who saved carefully — and perhaps benefited from the sharp run-up in housing prices”
Uh, yeah, PERHAPS from the sharp run-up in house prices.
Hedge fund bites loan shark…
———————————————————————————
Associated Press
Subprime Lender Takes Out Subprime Loan
By DAN SEYMOUR 03.20.07, 4:23 PM ET
Accredited Home Lenders Holding Co. bases its business on charging risky borrowers high interest rates. Now a risky borrower itself, the mortgage lender disclosed Tuesday that it is paying a hefty 13 percent interest for a loan from a hedge fund.
Accredited Home Lenders (nasdaq: LEND - news - people ), the nation’s 15th largest subprime lender, according to John Bancroft of “Inside Mortgage Finance” magazine, said it arranged a five-year, $200 million loan from Farallon Capital Management LLC, a San Francisco hedge fund.
The company granted Farallon warrants entitling it to buy 3.3 million Accredited Home Lenders shares at $10 per share. The company reported 25.3 million shares outstanding in its last quarterly report.
“It’s expensive, surely,” said Morningstar analyst Ryan Lentell. “But I don’t think it’s completely ridiculous given the situation the company’s in.”
http://www.forbes.com/feeds/ap/2007/03/20/ap3534811.html
I sounds like predatory hedge fund lending, but maybe Accredited is thinking of taking the money and running out to buy a sh*tload of Hummer H2s, Wave Runners, and boob jobs, leaving the “keys to the door” on the counter for Farallon.
Or maybe LEND’s top managers will head south of the border, like many of their borrowers will be apt to do when they can’t quite manage their loan payments any longer…
The money is for buying back the stock….as the insiders sell.
Oh right — the old homebuilder stock buyback ploy in a NEW (or I should say, LEND) setting…
Yeah, well I put my money down by getting some April puts for LEND (I’ve done this multiple times as it went down, back up, down, backup over the last few weeks). It’s been the best short investment I’ve ever made. The misplaced optimism about this housing bubble is mind boggling. By looking at the drop in Market Cap you can see that New Century’s collapse evaporated at least 5 billion dollars of stock equity. 5 billion dollars of loss got distributed amongst NEWs share holders.
What do you think a Hedge Fund who inherits your your late payment mortgage from LEND is going to do about you? Do you think they’re going to wait while you piddle around and the asset continues to lose value? Yeah, right. They are a very understanding crowd.
Subprime chaos claims Tampa jobs
Fremont Investment & Loan alerts Tampa employees their jobs will end May 18.
By Scott Barancik, Times Staff Writer
Published March 20, 2007
So long, paycheck.
Citing growing woes of its subprime mortgage unit, Fremont Investment & Loan told several hundred Tampa employees Monday it will lay them off May 18. The troubled California lender had put its Tampa staff and hundreds of others nationwide on indefinite paid leave two weeks ago after disclosing regulator concerns over its allegedly risky lending practices. A subsequent plan to sell the unit has not yet proved successful.
“Given the uncertainty of this situation and its impact on employment, the company has given notice of termination to these employees on leave,” the company said in a statement.
http://www.sptimes.com/2007/03/20/Business/Subprime_chaos_claims.shtml
The Consequences of Subprime Turmoil
Letter to the Editor
By Desmond Lachman
Posted: Tuesday, March 20, 2007
LETTERS TO THE EDITOR
Financial Times
Publication Date: March 20, 2007
Resident Fellow Desmond Lachman
Your soothing editorial on the U.S. subprime mortgage market, “Subprime does not mean submerged” (March 17), overlooks two important considerations, which would suggest that today’s turmoil in that market will spread to the wider economy.
First, in 2006 subprime lending constituted as much as 20 percent of all U.S. mortgage lending. In addition, other non-documented lending to borrowers with only marginally better credit ratings than subprime borrowers accounted for a further 13 percent of overall mortgage lending. With default rates rapidly rising and with 30 subprime lenders already having exited the market, it would be reasonable to expect that the present subprime turmoil could lead to a reduction in overall U.S. home sales of at least 10 per cent in 2007.
Second, the subprime turmoil is occurring at the same time that a host of other factors is exerting significant downward pressure on U.S. home prices. Mortgage lending standards are being tightened across the board, defaults on existing mortgages will result in the return of around 500,000 homes to an already saturated market over the next six months, around $500 billion in adjustable-rate mortgages are due to reset in 2007, and speculative positions in the housing market are starting to be unwound.
Should home prices at the national level indeed fall at an accelerating pace in 2007, one must expect that the overall U.S. economy will be materially affected. Lower housing activity would substantially crimp residential construction activity and employment. More important still, lower home prices could lead to strains in an over-leveraged financial system and could induce U.S. households to reduce consumption significantly in response to declining wealth levels.
Desmond Lachman is a resident fellow at AEI.
http://www.aei.org/publications/filter.all,pubID.25810/pub_detail.asp
“…as much as 20 percent of all U.S. mortgage lending. In addition, other non-documented lending to borrowers with only marginally better credit ratings than subprime borrowers accounted for a further 13 percent of overall mortgage lending.”
Third, markets where homes are most overpriced relative to incomes
(for example, California and Florida) typically had a disproportionately larger share of subprime lending than the overall national share. In fact, it was the overweighting in subprime lending that drove a sizable wedge between ability to pay (incomes) and willingness to pay (loan amount).
I have noticed the same kind of mentality with store credit card users - They will buy an item at an expensive department store because they can get it on credit, VS going to say .. Costco but having to pay cash. When the amount of credit you can get determines the cost of something, particularly like a house, something is terribly wrong. I’ll keep saying it, but in areas where house prices are extremely detached from incomes, good credit will not make payments so this is not a subprime problem only, but a problem of too much debt to handle.
Love this site, especially Neils, Got Popcorn. Anyway, I think we are going the wrong way with the bailout. I think Congress should give those who have been on the sidelines the 20% downpayment to purchase a new home. It will teach those who have been irresponsible the true meaning of thrift.
Thanks Ben. This is a great site.
Yes Ben,
Thank you. Without this site, we’d be less informed. Since I know many of us repropogate the information, we’re helping minimize damage. It will also help provide a healthy floor (by preserving equity amoung those who deserve to be saved).
I dispair teaching the current generation thrift. My generation is bad enough. Cest la vie.
Got popcorn?
Neil
Looks like the quiggle me guy sites is gone!
Anyone know why?
His site was up early today, but it was redesigned. Not sure if its because of issues with the re-design or something else.
He’s up again. Here’s an excerpt from part 4.
“What I will write about is a subject that nearly everyone discounts or altogether omits when discussing the issues plaguing subprime lending. As a matter of fact, I believe this subject is even more insideous than a lowly loan officer fudging a borrower’s income or an underwriter signing off on it or even the lender who allows it to fund. The subject is real estate agents. The reason they play such a critical role is that they, before anyone else, are the point of entry for new homeowners into the housing market. ”
http://0182eb9.netsolhost.com/blog1/
Got a good one for everyone. Dr. Phil is on (West Coast time zone) with a couple, and the guy has a “sex addiction”. But get this….It’s gotten so bad for him that he’s lost his job, used credit cards for strippers and lap dances, AND he took out a HELOC (I fogot the amount) when he ran out of other options!
I think I’ve heard it all.
BayQT~
Dang it! They’re on to a new couple now.
BayQT~
I just got out of a huge RE gathering (therealdeal.com) a few hours ago at Lincoln Center. Over 5000 paid tix- never have I seen so much Kool-Aid being consumed. 2+ hours or panel discussion on how Manhattan is Different! Steve Cuozzo had a lot of guts inviting:
-Robert Schiller (ravaged by all)
-Amanda Burden (NYC DCP)
-Steve Roth (Related)
-John Miller (Miller-Samuels -appraiser/economist)
-Kent Swig (billionaire RE investor, former client)
Schiller could have been killed by the glare of all the brokerettes. Wish I could say more, but too many people monitor blog traffic these days. Wish some of you THBB regulars could have seen this.
Tell us more. Pile it on.
Need to speak up, folks. Don’t let the lemmings dominate us.
“Schiller could have been killed by the glare of all the brokerettes.”
The psychology of this really confuses/frustrates me. I mean, if there was any chance my industry was about to undergo some radical changes either in its structure or in my ability to make a living, I’d love to hear more. Instead they crucify the messenger. Brilliant. Says a lot about the profession.
-Robert Schiller (ravaged by all)
Right about the equity bubble in 1999…
now his second edition is hitting gold…
I forsee his book one day a must read for Finance professionals in the future
at top schools….. just like In Search of Excellence back in the 80s…
“OCDan is right…
Gas is going to shoot up on the west coast. Leading indicators are that we can expect $4/gal peak in the summer.
That will hurt (lots of driving for work this summer). Cest la vie.”
People will have to move closer to their work. I’ve always lived within 10 miles of my job. Even at today’s gas price, I still only burn a gallon a day to and from work. Time to think ahead…. maybe instead of selling our houses, we could just trade them for a while if you need to be closer to your job-site should gas approach $4.00 per gallon.