Bits Bucket And Craigslist Finds For March 23, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Foreclosures Force Suburbs to Fight Blight
Published: March 23, 2007
SHAKER HEIGHTS, Ohio — In a sign of the spreading economic fallout of mortgage foreclosures, several suburbs of Cleveland, one of the nation’s hardest-hit cities, are spending millions of dollars to maintain vacant houses as they try to contain blight and real-estate panic.
http://www.nytimes.com/2007/03/23/us/23vacant.html?hp
Take a look at the grim slides show. Ghosts of xmas future ?
This trend could hurt our consumerist reputation.
I don’t understand why the city doesn’t just bulldoze most of those houses and offer to sell the lots to the people who still live in their houses around there or to “investors” who are required to have the weeds cut down every once in a while. Crack dealers don’t really like open lots as much as boarded up houses. Now, meth people, I guess they don’t really care much.
Rosa Hutchison Yates of Shaker Heights, Ohio, may be losing her home of 30 years after a refinancing deal created bills she could not pay. “When folks pay for a home, they expect to die in it,” Ms. Yates said.
The trick is to actually finish paying for it.
Ms. Yates must not be a very good baby-boomer. Two things are wrong. One, as a boomer you never *expect* to die. You expect miracles to happen, either the drug companies you railed against will invent an immortality drug, or positive thinking and meditation will keep you alive indefinitely. Second, you never “pay” for anything. You merely postpone it through more credit.
This is Ohio. You do pay for things. You do not postpone it through more credit! Most people I know buy a house and live in it for 40+ years. The concept of selling and trading up is not well rooted in Ohio.
Take a look at this forum discussion on the housing downturn. I have had a very long discussion with a local RE guy who drank all the Kool-aid I think they have. Feel free to jump in.
http://www.urbanohio.com/forum2/index.php?topic=11909.0
even more fun is http://www.city-data.com. Talk about cheerleaders in the relocation forum. I always post this blog’s web address without comment and totally get railed against. it’s hilarious.
“Ms. Yates must not be a very good baby-boomer.”
Actually, she isn’t a baby-boomer at all. She is 62 and therefore born during WWII.
Amen, Proteus. A couple of posters over in the weekend topics thread seem to want to start a little Nazi boomer bashing. Apparently others are looking to glom onto that.
Boomer-bashers, may I suggest Patrick.net for your venting? There you will find all sorts of Nazi solutions to the media generated boomer myths. And just remember that many boomers are also the “sandwich generation” and take care of both their children and aging parents, without complaint, often at their own expense.
Boomers = roughly born between 1940 - 1960. She’s a boomer.
Boomers: 1946 through 1964
FWIW - I have seen the MSM change the Boomer generation birth dates over the years.
It has always started in 1946 (or perhaps ‘45)… but on the backend it has been extended over time.
About 15 to 20 years ago it was usually seen as 1960. In the 1990’s, the end date was often pushed back to 1963, and in the last 10 years or so I’ve seen it mentioned as 1964.
Boomers are so named because after WWII when the vets came home there was an explosion in the birthrate. Hence, the first Baby Boom. In the biblical sense, Boomers are those born 1946-1964. End date of the Boom: 1964 with the introduction of the birth control pill.
History lesson over, class.
It’s a scandal. People are finally waking up to the housing bubble debacle. Step right up. Walk right in. Pandora is home.
Here is an interesting investment site article that starts off on a good housing rant.
http://www.safehaven.com/article-7201.htm
Great article. The economic leftists won’t appreciate the paragraphs later in the piece pointing out the deterioration of western living standards as the Dumbocrap programs such as Great Society ramped up in the 1960s. Thanks Kennedy and LBJ!
Any Clevelanders out there? I thought Shaker Heights was a relatively well-to-do suburb. Median family income was around 80K last census. Am I missing something here? If the comfortable are in trouble, what about everyone else? Yikes.
When things are bad in Shaker Heights, Cleveland is toast. Sad really. Cleveland has so many wonderful things. The best Symphony in world. One of the best art museums in the country, The Rock&Roll hall of fame, the lakefront, the Grand Prix,etc, etc. It has more performing arts than any US city except NYC (even more than Chicago), and some of the friendliest people I’ve ever met.
Very sad to see such a great city and a wonderful set of people fall so much.
Cleveland has so many wonderful things…
Women’s NCAA final four championship this year (Go Lady Vols!)
Still don’t know how you guys got the R and R hall of fame. We have: Bill Haley and the Comets, Chubby Checker, Frankie Avalon, Bobby Rydell and the whole Bandstand crowd; Todd Rundgren, Jim Croce, Hall and Oates, and the entire R & B contingent which would take too much bandwith to list.
We wuz robbed!
Big Croce fan, here.
I’ll have to do a little homage, to him.
“New York’s Not My Home” will work.
Well, prices were falling around me
and all my thoughts were cloudy
and i’d began to doubt the economy
downturn in so many places
you know, whatever the governement tells you, is baseless
and I looked into the empty faces of the people of the night
and something is just not right…
I think it had to do with the local DJ who coined the term “rock & roll”.
The museum should have been in Memphis. At one point almost the entire rock & roll universe was hanging out and recording there.
Or maybe somewhere in Georgia. An incomprehensibly large number of the American music greats come from there, particularly Macon and thereabouts.
OK not to jack this thread to a rock ‘n roll debate, but after all it is Friday!
No question about rock and roll’s southern roots. That’s what makes it a beautiful thing - it came up from the people. Philadelphia claims Bill Haley, but he was not a city boy at all. He was a redneck, a hick, as close as you can get to hillbilly in the flatlands. The area which grew him is now suburbified McMansion world.
The kids from Philly took the rock and roll ball and ran with it. In my travels, I’ve met folks from the midwest who told tales of their older sisters and brothers learning how to line dance from Frankie and Justine on American Bandstand. When I lived in the city, the sounds of a cappella groups still graced the summer evenings.
The R&B crowd: Dee Dee Sharp, The Orlons (”where do all the hippies meet: South Street, South Street”); Kenny Gamble and Leon Huff, producers of The Sound of Philadelphia…(O’Jays, Teddy Pendergrass et al), Patti LaBelle.
Still lots of good music in the clubs and nitespots of Philly.
I don’t know about the rest of you…
But i’d say our fall from grace~
Occurred the precise moment, pop lyrics became unintelligible
Here is what i think is the next hottest thing in Music
Zydeco from Louisiana:
CJ Chenier
http://www.youtube.com/watch?v=DGqnU69p0BM
Rosie Ledet:
http://www.youtube.com/watch?v=Tpc248uMfXM
And my friends The Catholic Girls…women who can rock!
http://www.youtube.com/watch?v=WzyhfA3zScY
Enjoy!!!!
Good ones dj, the first reminded me of a little place I used to frequent near JSC called PT’s for zydeco. Fond memories.
Thanks.
I love Shaker Heights and Cleveland. Could live there (it is one of the few places I am looking at if San Diego prices don’t fall enough) but am worried about the socioeconomic problems. Very low pay and lots of poverty. But it really is a great city. I don’t know why people look at me so strangely when I say I love it. Granted, I have only visited it three times, but I saw a lot of the city and the countryside. And the river hasn’t caught on fire for decades!
(Much as I love Shaker Heights I’m looking at Chagrin Falls as a place to move.)
Bonus points to the NYT for the first recognition of a “real-estate panic” and an attempt to contain it.
Ya gotta lov it! How could anyone not see this end result? All it was gonna take was VOLATILITY to shake out the leverage in the housing market caused by cheap mortgage rates coupled to bad lending practices and the subprime market. Well dah’s, dah’s all folks!
“With so many homeowners running into trouble, the City of Cleveland has been unable to keep track of the number of vacant houses, said Mark N. Wiseman, director of the county prevention program. He estimates that 10,000 of the city’s 84,000 single-family houses are empty.”
Amazing isn’t it. And the mayor says this is just the beginning.
“He estimates that 10,000 of the city’s 84,000 single-family houses are empty.”
That is awesome. I would have guessed a number like 10,000+ vacant SFRs for a bubble town like San Diego, but Cleveland??? Come on — what were these builders thinking? (Oh yeah — they were thinking “take the money and run”, which they all did back at the bubble price peak in 2005…)
I put my place in San Diego (UTC area) up for sale about a month ago. The comment I remember the most from a potential buyer was “Wow, it’s nice to see one with furniture in it.”
Thank You SD!
That quote is a keeper.
One of the reasons Cleveland has had such a problem, is that the mortgage loan disclosure requirements in Ohio were so lax, until recently. The mortgage loan processors did not even have to disclose to the borrowers what the monthly payment was going to be!!
This had Ohio auto dealers in an uproar, as they saw alot of people making big ticket purchases on homes when they would not (could not) purchase an auto. So they petitioned the state to relax auto loan disclosure requirements so they would be similar to mortgage loans. When state regulators finally looked at the problem, to their credit they did just the opposite and tightened the mortgage loan disclosures so they were in line with auto loan disclosures.
Better late, than never, I guess!
“What makes the subprime mortgages so devastating from a community perspective is that they’re so concentrated geographically,”
It will be interesting to see what these areas look like in 20, 30, 40 years. Will RE capital swoop in on this mess and re-engineer these areas into tomorrow’s hot neighborhoods? Or is this the death knell for the Rust Belt?
WOW. That’s all I can say. I lived in Shaker Heights for 4 years as a medical student. It, along with the Gross Pointes, is one of the most beautiful, affordable and idyllic neighborhoods in the country. With irreplaceable architecture, old growth tree lined streets, good schools traditional neighborhoods parks, boulevards, tons of amenities, excellent public transportation and good jobs, etc, all for an affordable price. If this place goes down, good luck to the Wilmington, North Carolinas Las Vegas’s and Boises et al.
I like your spelling GROSS pointes. The wealth there is indeed gross.
I did some work at St. John’s Hospital and Medical Center in the 90’s. It’s really just a stones’ throw from Grosse Pointe.
The class difference was striking between the two areas. The hospital complex is surrounded by run-down housing that was perfectly respectable in maybe the 1940’s. You would not even want to walk around that area today. It’s like the hospital was this island of normalcy surrounded by dumps.
Yet literally two-three blocks away from the hospital you were magically transported to Grosse Pointe. All the houses seem to be mansions set in 1-4 acres, multiple fancy cars in the circular drives, etc. etc. I think it was established by Henry Ford so his auto executives would have a nice area to live in.
The contrast is unbelievable!
Sorry that was unintenional and my face is very red right now. GROSSE not GROSS. I did work at St John Macomb Center and always dreamed of a little practice at Bon Secour or Cottage (reminded me of rural England) if I stayed in Metro Detroit.
Your Freudian slip is showing…
I knew it was a typo. But that place is still gross.
Or maybe I am just envious that I am not a brain surgeon and living there…
Does San Diego have a similar program to spend collective funds maintaining vacant houses? Because the vacant McMansion tracts stare me in the face every time I commute to or from work. I am wondering who is paying for the cost of keeping empty homes standing?
Right now it’s the builders/owners.
You are in the RB area right? We looked at 4S Ranch’s Rosemary Lane back in 2005. The model we were interested in was $720k on the price brochure, but we were told that was “last release, and that it will be $740k on the next release.” We were also told we shouldn’t even bother because the list was so long.
I drove out there about a month ago, and there had to be at least 20 empty houses on the same street with signs stating “Ready to move in!” in the front yard. The price then was $680k, and now the website shows the price at $670k so they still arent moving. With all the hype gone, its clear that those aren’t worth much more than anything in the 400s.
4Closure Ranch
http://bubbletracking.blogspot.com/search/label/4S%20Ranch
Friend of mine was out there last weekend and was struck by the absence of people and all the for sale signs.
Can you give me pointers/streets for a driving tour of the area? I would love to take my inlaws there during their next visit. They are hounding us to buy a house, or at least a new car, with the money we made selling our last house in LA. For some reason the idea of it sitting in the bank earning 5% makes no sense to them because RE Only Goes Up Foreeevvahhhh.
San Diego story for you:
I live in Wisconsin, but I had a co-worker who had transferred from San Diego in mid-2004. He had made a couple hundred thou when he sold his house there. Lived in a really NICE house here in Wisconsin. End of story, happily ever after, right?
Not exactly. The company I was working for, in its infinite wisdom, decided to transfer a large part of its operations from Wisconsin to San Leandro, CA. Most of us were NOT asked to transfer, only about 15 people were extended relocation offers. And Daniel (bless his heart) was one of those who was asked to go. This was in late 2004.
San Leandro is in the Bay area. Mostly middle-class, 15-20 minutes south of Oakland. Daniel was SO excited to be moving there, because he KNEW he was going to make another big killing on real estate, moving back to California. You should have heard him, working the phones with mortgage brokers, RE agents, talking option ARMs, balloon payments, (reassuring his wife over the phone that he knew what he was doing). Most of the houses he was looking at were in the $700’s (I would guess his salary was about $45 to $50k/year, and his wife was a stay-at-home mom).
I, personally, felt sad for him and the others who were moving out there, because I thought they were going to get taken to the cleaners on RE when they got there. The highest ranking guy who moved, was a Sales VP, and he and his wife were moving into a 1400-sq ft ranch in San Leandro (they had at least double that here).
So, I don’t know how everything turned out for those people, but I suspect the worst. Their timing couldn’t have been any worse. Most of them were buying homes in San Leandro in the January to April of 2005 timeframe. So I think they were pretty close to if not right at the top of the market.
Too bad…
Money for empty houses.. don’t worry. The corrupt city council members will find some, they always have as they are “professionals” when it comes to borrowing and keep the costs hidden from the taxpayers by their postponeing the audits of the city budgets. Four to five years and still waiting. That’s ok. It’s beautiful San Diego and the taxpayers are expected to pay. What makes you think the price of sun is cheep? Your pockets better be deep.
Hey folks, our pal Casey Serin is world famous! Here he is in The Economist:
http://tinyurl.com/ypn6ve
Each visit to Casey’s site will cause you to lose a couple of IQ points.
I’ve posted this before but thought it worthwhile to repeat-
Foreclosureville
Nibbling on Spam cake, watching the Fed break,
All of those flippers buried in debt,
Gunning for sixteen, rate hikes and counting,
Smell those deadbeats, they’re starting to sweat.
Wasting away again in Foreclosureville,
Searching for my lost equity,
Some people claim that it’s Bernanke to blame,
But I know it couldn’t be me.
Don’t know the reason that I signed up last season,
For a balloon note I knew would come due,
But it’s a real beauty, a big subprime cutie,
How I missed payment I haven’t a clue.
Wasting away again in Foreclosureville,
Searching for my lost equity,
Some people claim that it’s Bernanke to blame,
But I thought the money was free.
Blew out my credit, jammed with a reset
Trashed my FICO, couldn’t cruise on back home
I am a victim,
‘Cuase I’m being evicted,
That ruthless banker won’t let me hang on.
Wasting away again in Foreclosureville,
Searching for my lost equity,
Some people claim that it’s Bernanke to blame,
But I know it couldn’t be me.
Yes, some people claim that it’s Bernanke to blame,
And I know it’s my own default.
Nice~
Pop music was taylormade for this gig. If you can rhyme, you’re in.
I’d almost bet Dollars to donuts, that Weird Al Greenspankovic, is a somewhat regular voyeur here.
How about vacant homes and disease?
House hunting for West Nile
Vacant for-sale properties can be a mosquito haven
yummy.
Maybe I did not read through all the replies to this article, or I’m the only one bringing this up: Isn’t this a use of taxpayer dollars by the city of Shaker Heights to provide upkeep of the empty houses? And to help people in foreclosures? If so, this is sort of a bailout. Any use of taxpayer dollars to prop up real estate is a bailout, IMO.
Didn’t Ohio give the Moron in Chief enuf votes to win back to back stints in DC? Maybe they can request a little Fed Funds to bail them out for their loyality.
In Surge in Manhattan Toddlers, Rich White Families Lead Way
Since 2000, according to census figures released last year, the number of children under age 5 living in Manhattan mushroomed by more than 32 percent. And though their ranks have been growing for several years, a new analysis for The New York Times makes clear for the first time who has been driving that growth: wealthy white families.
http://www.nytimes.com/2007/03/23/nyregion/23kid.html
Great. Another generations of overprivileged, spoiled hyperconsumers. Just what we need.
Try getting by one of those double-strollers on one of the sidewalks. They always have two little white kids in there and are never being pushed by a white woman. God forbid the woman that bears the child actually raise it.
that is so damn true nycboy always the jamaican/west indian nanny psuhing the little brat along
I see so much of this in SoCal, especially in the last 4 years, and I’m in the San Gabriel Valley! What genius: “I’m going to entrust my darling future doctor/lawyer/mba to someone who last week almost suffocated in a truck crossing the boarder. But she’s happy, after all today she’ll have an extra $20 to put towards her share of the rent in the apartment she’s sharing with 12 others like her…” I swear these people never saw “Beneath the Planet of the Apes” or whichever one it was where the ape servants revolted.
Oh, and BTW, white people, I NEVER see this with Asian children. You can learn something from people from the East…
Regarding Asian kids…
I fly relatively often, and or all the screaming kids I’ve encountered on the plane, NONE of them have been Asian kids. And I’ve been on plenty of planes with Asian kids.
Asian kids respect their parents.
Asian toddlers are often cared for by their grandparents, who move in in order to make a 2-income family work. I have never seen middle-class Anglo grandparents do this. I would be unimaginable for my parents to do this, even though I have 5 kids!
Often, but not always. There seems to be something inherent in the Asian cultures from which a lot of parents can learn.
Alas, I have noticed a few bratty Asian kids around these days. They always have Asian-American parents, usually no older than 30. Looks like the discipline is being assimilated out.
Asians rock.
My little, white toddler doesn’t scream and cry on planes
LOL! Some of the biggest brats on the planet are the rich teenage L.A. asians. Now those are some spoiled freaking teenagers. I
t’s not the race that matters in terms of child spoilage, as any kids “best use before date” is always pushed back by a parent giving in to everything that little Johnny, Loquicia, or Wong wants.
Have you ever seen that train wreck of a show “My Sweet Sixteen”? It goes to show that ostentation and greed knows no racial divide.
I call them Bestafarians - everything they do has to be the best. The best subzero refrigerator, the best Mont Blanc pen, the best ski trip out west…and yes, “our nanny is the best”.
Well, on the positive side, Nannygate SS tax issues will keep all of them from running for office or being appointed to the supreme court.
Re: LA and kids. When my wife and I decided to have a child, we also made the decision that one of us would always be with her, not a nanny. One year my wife got the better job and I stayed home with my then 2-year-old. I’d take her to the local park in the Palisades, an upscale community neighboring Santa Monica. Almost all nannies. Literally there were times that it was 13-14 nannies and I. Not a single parent. I understand why people would want to live here, I just don’t understand why they’d work so much to do it that they’d never get to spend time with their kids. She’s almost five now, and, while a lot of it was hard work, I still think back fondly on that time.
Almost all nannies. Literally there were times that it was 13-14 nannies and I. Not a single parent.
So, did you hook up?
Ah, phillygal, I did not. However, I did acquire a group of hot mommies, mostly from another park, where the residents are wealthy enough that they don’t need a second income. I had a barbecue for my daughter’s third birthday, and a buddy of mine approaches my wife and says, “where did all these hot women come from?” My wife gives me the hairy eyeball, then laughs. I love my wife. She doesn’t mind that I had collected a hot mommy harem.
Wow, we really should have another kid. I need some new mommies.
Mr. Moms have all the fun.
Fun, yes, but holy cr@p it’s hard work. My daughter is awesome, even tempered, great sleeper, but even so, child rearing ain’t easy. Any time I hear dads say how much easier it would be to stay home with the kids, I laugh. Try it first.
It’s not necessariy the Asian parents, it’s probably teh youth too. Most young peole today don’t feel as motivated to move near their parents as young Asians do, and many are hard pressed to want Mom are Dad to move in too.
Have the strollers contaminated the subway yet? In DC, Metro is clogged with strollers on weekends, and that’s before tourist season starts.
There seems to be a small increase in the numbers of strollers, but it hasn’t caused me any bother yet, and they don’t seem to be there at peak times. After all, there’s no point in bringing babies to work.
Strollers - Hah! Wish that’s all we had to contend with. The other day I saw a van outside a trendy food store with eleven bumper stickers demanding breast-feeding rights. One example: Normalize nursing - breast feed in public. The only thing that made me feel better was that the van had Jersey plates.
God that’s all we need. We’re already plagued by their crazy drivers. Now it looks like we’ll be invaded by a legion of nekkid nursing titties.
Please stay on your side of the river, militant tittie-moms!
Having a child is a expensive. In Manhattan a luxury. Two income families are the norm everywhere in the country, by necessity, with wages flat or stagnant. Hiring a nanny is an economic decision, since wages for a nanny are less than foregoing that second salary, health care benefits and retirement benefits. Plus, you need more money for extra apt. space, private school, college fund, etc.
I’ll bet most nannies are foreign, the majority illegal. On the West Side, you’ll see plenty of Asian nannies, by the way. and there are lots of Chinese-American little girls, adopted by single women, being wheeled about by nannies–spared infanticide or the mega-sized state orphanages in China.
Non-white nannies? The majority of folks on the West Side with money are white–the majority of nannies are probably illegal, and even with green cards, without education or job skills. Without kids, or cleaning houses, how else are they going to make a buck. Of course, the INS could round them up and send them home, but enforcing the law is no longer done in the USA.
Ah Yes….”The Double Stroller”
With the TWO white designer kids (1 girl & 1 boy of course)…..Just get the check book out and order um up…We call it just in time production….Takes too long to actually screw & have two….
No offense to women who actually need help but please, its gotten way out of hand….
“God forbid the woman that bears the child actually raise it.”
Why would the surrogate be raising the child?
Its Chattel !!! It just falls into a pecking order of personal priorities, but Gotta Have One…..
Not true, sometimes there is white woman/young lady pushing the stroller, just not the mother. If you’re willing to spend more, you can get a mormon nanny.
I think plenty of Asian mommies are out there working in SD. I am pretty much the only mom under 35 who shows up at the playgrounds and the only other people to talk to seem to be elderly Chinese, Vietnamese and Indian grandmas and grandpas. They’re usually very chatty so it’s not too bad if their English is OK.
On the other hand, we’ve been up the coast to places like Encinitas where the moms are pushing $700 strollers and are totally snobby with their perfect hair, the “right” brand of clothes, Lexus or BMW SUV, and absolutely incapable of conversation that does not revolve around acquiring some sort of material thing. Inevitably the lady or their spouse turns out to be a realtor.
There aren’t a lot of hyperconsumers in Manhattan. Nowhere to put the stuff.
Yep. That is true. We used to collect stuff. No more. Like TXChick, I like collecting glass. That died the moment we moved to Manhattan. I hate when people give me a gift that I can’t consume. It is all just clutter.
I’m with you; unfortunately the worst offender is my mother.
When she asks what I want for Christmas I tell her I don’t want anything. I’m still holding out hope that someday she realizes I’m not joking.
That’s why they invented art. Don’t have room for $1 million dollars worth of stuff from Sears? No problem, this Picasso signed lithograph is $1 millon and takes up little space.
are they gingers ?
Lots of them in Murray Hill. Saw them when we were in NYC last spring.
Typical of the advanced stages of gentrification, the people with power are reclaiming the city.
Same thing here in Chicago, the area in and around Lincoln and Belmont Avenues has I don’t know how many boutique baby stores. Last summer it made national news when an ice cream store owner near my hood, at Clark and Balmoral, put up a sign telling hip urban parents to reign in their yuppie spawn.
Give me a break with the “people with power” spiel. This city is run by and for the very rich and the ultra poor. The upper middle class/young urban professionals deserve to live in Manhattan as well.
Is M3 still increasing?
M-what?
LMAO!
It’s rude to stare at economies that have elephantitis of the monetary supply, chilidogg. Move along, nothing to see here.
M3:
“I….AM….NOT…..AN…..ANIMAL!!!!”
http://www.shadowstats.com/cgi-bin/sgs/data
thank you.
That slide show on the empty cleveland houses,wow,that looks like iraq,after a bombing.Hope that don’t spread.
And what’s worse, those look like older decently built homes (that first brick one looke pretty nice). Wait until the foreclosures start on the cardboard cookie cutter spec developments. Then the houses themselves will fall apart along with the neighborhoods.
In complete fairness to Cleveland, it looked like that before the bust. Before the boom too. In fact, Cleveland has looked like that for about 30 years.
What’s surprising is that Shaker Heights is getting hit.
Thats how I remember it…1971-1973
West Houston update:
http://louminatti.blogspot.com/2007/03/west-houston-real-estate-scene.html
KB Home profits plunge, says no bottom yet
No. 5 homebuilder, hit by steep decline in U.S. housing market, posts 84 % loss while CEO warns of more woes.
NEW YORK (Reuters) — KB Home, the No. 5 U.S. home builder, said Thursday net profit fell 84 percent and warned that higher foreclosures and tighter lending standards in the broader market could prolong weakness in the sector.
http://money.cnn.com/2007/03/22/news/companies/bc.kb.results.reut/index.htm?source=yahoo_quote
Do I finally hear a giant F L U S H I N G sound?
Well those results should push their stock up…..
The funny thing is, it did! And when Freddie Mac posted losses of $480 million this a.m., stock went up too!
A lot of these loans are turning bad even quicker than I thought they would, and many of them have turned bad BEFORE they adjust and BEFORE the borrower gets “payment shock”. Many of them are going bad before the first 1-2 payments.
Hypothesis:
The early default rate on loans made in the last 1 year or so could be due to speculators, who never planned on living in the home. They planned on buying a home, fixing it (or not) and flipping it quick, then selling it before they had to make more than 1-2 payments.
As housing slowed, they are “stuck” and the house won’t sell. But they already have a primary home, so they let the speculated-upon home foreclose immediately. (don’t throw good money after bad… or more appropriately: since they got 105% financing, don’t throw ANY money at a bad project)
Thoughts?
I add to “speculators”
-people who were building a new home who owned a “used” home, who were forced to close on the new home but couldn’t sell their old home, so couldn’t afford the new home
-people who bought pre-construction condos, who then needed to close on the condo but couldn’t afford it so decided to just let it go.
-dead people who got a loan for a home, but were unable to pay for said loan due to the fact that they were dead, an unforseeable consequence of lending to dead people. (i.e. fraud)
Well, the “permanent income hypothesis” that was the justification for the exotic loans in the first place, predicts those who realize their income hasn’t increased, their house hasn’t appreciated enough, and their obligations soon will balloon — will try to get out ahead of time.
“predicts those who realize their income hasn’t increased, their house hasn’t appreciated enough, and their obligations soon will balloon — will try to get out ahead of time. ”
Yes, but in 1-2 months? Something like 10% of these loans are 30+ days past due delinquent within 3 months!
This is why I can’t believe these failures are due to “homeowners” who are living in these places. they can’t even make 3 payments?
It would seem that even the criminally stupid would be able to figure out “hmm… I can’t afford that payment at all”.
I can see if the people held out for a year, then realized that their houses aren’t appreciating… but after just 1-2 months you can’t tell if the house is going up or down. and who thinks their income is going to go up a lot in 1 month?
which is why I think it’s speculators. Or people who bought pre-construction, saw that the house lost value during construction time (which can take over a year), and just let it go.
Interesting thoughts. IIRC, MN is a “recourse” state, so that a lender can come after you for a deficiency in foreclosure (I’m not an attorney so I could be totally wrong about this). Just quitting payments on the speculation house may not work out so well for folks there.
Does anyone have a list of “recourse” states? I’ve tried googling, but couldn’t come up with anything useful.
Fraud.
Agree. Ocrenter is doing a great job of finding and tracking all these “first payment defaults”. They don’t seem to be that hard to find either. When we really start peeling into the deeper layers of this mess I do believe the levels of fraud is going to be mind blowing.
Fraud, pure and simple. Just ask Palladin.
I agree completely. Close on the house, take the kickback from the seller, and walk.
Where’s Paladin? Haven’t heard of him for a while.
I think there is a lot more fraud than we know, straw buyers, loan officers, realtors in cahoots, etc… This kind of non-regulated lending is ripe for it.
i am seeing alot of foreclosure sales in the ny post everyday but they are all in areas that are pretty
pretty scary
was that break intentional? because it was funny.
NEWTON MA auction
thats a nice hood
so was Shaker Hieghts
last time 90-94 auctions in DC area were crap hoods
different this time ?
INSPECTOR ..Glad you brought up the issue of speculators and early default .From mid 2004 onward the speculator/flipper % of purchases was high . To me these short term purchases are the highest risk loans out there and the sub-prime lenders were going 100% LTV on those .There are vacant homes everywhere with entire ghost town tracts.The cash out fraud and incentive game started heating up more in the beginning of 2006 and those bad loans are at a high % also .
How can a flipper even get a tax payer bail out when that flipper had no intentions of living in the property ?
I think the builders were in bed with the sub-prime lenders big time and it will be reflected with time in the amount of foreclosures that come down the pike in new home developments .The condo speculator nightmare were you have a high % of short term flipper bagholders is scary .I contend that many projects were marketed to the speculator so nobody can give me this BS about building for home-ownership for the American people .
Anybody else watch the NCAA’s last night, enjoying the excitement of the games, only to start vomiting at every commercial break when the Realtor commercials came with “It’s never been a better time to buy”?
trying to speak to a wide audience the ratings have been thru the roof! btw i was 4 for 4 lat night and my bracket is looking real good in the office pool
My bracket took a hit with Texas A&M going down. If only they could rebound or make a lay-up. I still have Florida, UCLA, and Georgetown with Florida beating Georgetown in the finals.
I did see the commercials and it made me sick. I damn near smashed my TV. What a bunch of garbage. I wonder if I can by a spot right behind the NAR refuting their BS. Let’s start taking up a collection.
I have florida,kansas,georgetown,ohio st for the final four. Ohio st,florida playing in the championship with florida winning the ncaa championship.
Kansas-UCLA could go either way and i would not mind seeing a Florida -UCLA rematch.
The Trojans are still in it, although they will probably go down tonight when they lose against North Carolina.
The part that made me nauseous was the couple sitting in a living room unboxing their crap, and the guy says something like, “If we hadn’t bought now, we would have missed the opportunity to get this house.” Like “this house” is their soul mate or something.
And another thing, realtors using the word “opportunity” is starting to grate my last nerve. There’s another ad by the Central Florida realtor assoc. that ends with something like, “The fact is: Houses will cost more tomorrow than they do today. And if you don’t buy now, you’ll have missed a real opportunity.” This is right after they quote dated figures on the cost of raw materials. How does this not constitute false advertisement?
It’s not just the real estate industry. “Opportunity” seems to be a favorite phrase of pro athletes too. Must be a talking point from the sports agents.
OTown Cajun …To me it is false advertising and it’s investment advice . The NAR has knowledge of the sub-prime meltdown as well as knowledge of lack of affordability and knowledge of sales being off and prices declining ,yet they put out a add like you described . The REIC has gotten away with their false advertising and widespread myths for a long time now and it’s just so wrong to go fishing for greater fools with those RE industry lies .Didn’t anyone tell the NAR that sub-prime is history and people might have to qualify now and put a downpayment on the house .
http://www.245tenthave.com/
for all you cookie cutter mcmansion haters, here is something unique looking they are building in NYC
Me me me, I’m a constant complainer.
Thank you for this. I’m not big on Modernist and minimalist style, but as modern goes, that does look pretty attractive. Modernists in NYC will love the edgy B&W website too.
Uh oh……
Britain’s Ministry of Defense confirms to CNN that Iranian naval vessels have seized 15 British Navy personnel on patrol in the Persian Gulf.
Anyone else thinking “Falkland Islands”
Britain hasn’t taken crap in the past (the Falklands are British territory) - this is as reasonable an excuse to go to war with Iran as some BS nuclear weapons program.
“BS nuclear weapons program”?
So Iran isn’t developing nukes? That’s why they turned away UN inspectors? That’s why they explicitly say they ARE developing nuclear weapons?
I guess I’m stupid. I suppose I should interpret what “leaders” say as just the opposite of what they are saying.
I guess this means that David Lereah has REALLY been saying housing is going down the tubes, right?
N. Korea shoots off a nuclear bomb and the US cannot and will not do a thing. Iran’s position is similar to Iraq’s refusal to allow UN inspectors inside the country to determine the WMDs that General Powell admirably testified to the UN about. As we have learned there were no WMDs in Iraq. Russia has said that there are no nuclear weapons programs in Iran. I suspect the US can dismiss Russia (since Russia got rid of its dollar reserves), but to be hoodwinked by the same line of crap? Our countries statements smell bad.
Saddam Hussein rattled his saber a lot about having nuclear capabilities. He also turned away UN weapons inspectors. Turned out it was all a bluff.
Sometimes a dog’s bark IS worse than his bite…
Hey Amnesiacs… The weapons inspectors were kicked out by the US…
http://www.usatoday.com/news/world/iraq/2003-03-17-inspectors-iraq_x.htm
I hope you are right; I don’t care if some city gets hit by a “BS” Bomb however a nuke will do real damage.
we are at war with eastasia.
we have always been at war with eastasia.
The ship they were on is HMS Cornwall. I once took a tour of this ship when it was docked in Portsmouth (NH).
Pretty cool. But I think the sailors were just itching to hit the town.
/lurk off
I work for a company that prints boardgames. In the last 2 months I have quoted on 4 or 5 “real estate” games. This is either a weird statistical anomaly or a lagging indicator that the real estate drones are toast. Also of note, none of them seem to be going to print any time soon.
/lurk on
The Spring Season is here in the DC area… just looks like it’s the Spring Selling Season only….
Houses for sale in Zip:
1/17 - 45,595
3/17 - 48,144
3/23 - 49,218
Nice jump in a week.
New cover story of The Economist:
The Trouble with the Housing Market
http://www.economist.com/index.html
Portland Condo market turns back to apartments
http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/1174620336129490.xml&coll=7
Does anybody remember what happened to the stock market what the housing bubble busted in early 90s? Did the stock market plunge too? Did the housing bust spill over to other sectors, such as IT or any others sector? Thanks
Here in New York at least, that housing bust was a result of the stock market crash of 1987.
Housing busts usually follow other economic down turns. This one is different because it is the result of an unprecedented bubble and looks like it will bring down the economy with it.
I believe the market had one good year between 89 and 94. The others were small gains or small losses.
The market (S&P) didn’t improve significantly until after the change in Congress in 1994.
yeah, i recall the S&P really sucked from about October 1990 until November 2004, when the GOP saved the country.
It was not the change in Congress!
The Federal Reserve changed policies in March 1994 opening the floodgate to instant bubble wealth!
http://tinyurl.com/34a2gy
Caution 63 pg pdf
Bubble, bubble, toil, and trouble
“It didn’t look to me like a bubble on the way up, and it doesn’t look to me like a bubble on the way down.
“First, let me define terms. I think of a price bubble as a market outcome in which the price rises for no reason other than the fact that everybody expects prices to keep going up. The first problem with that as an interpretation of the recent behavior of U.S. real estate prices is that surely it is clear to everyone by now that real estate prices have stopped going up. So, if expected price appreciation was the only thing propping up the market, we should now be seeing a calamitous price collapse rather than the slow fizzle that’s unfolding.
“A second problem I have with the bubble story is that, as seen in the graph below (originally presented here in June 2005), there was substantial variation across U.S. communities in the amount by which real estate prices went up. If buyers’ expectations of price appreciation just appeared of the blue, how did they happen to come out so differently across different communities? These differences in realized price appreciation were at least weekly correlated with such fundamentals as population and employment growth.”
Sigh. Can someone explain the housing bubble to his blogger?
Maybe point him to an article like this one in the NYT?
Foreclosures Force Suburbs to Fight Blight
I was reminded of the Teaser Rate Nation we live in yesterday, when a salesperson from my cell phone provider, Sprint, called me on my cell phone yesterday, and promptly launched into a “Sprint would like to send you a new free replacement cellphone, and upgrade your night and weekend minutes ….” spiel. Of course, I instantly knew this was a sales call, and I was sure that I would have to authorize a higher rate and a new commitment period for my “free phone” — but I listened along anyways. The script was obviously well crafted to make it sound all very routine, and like it was something that was just going to happen — as in “and we’re going to send you your free phone, Mr. ______ ” - not so much asking, but telling me this was going to happen. Eventually, I stopped her and asked what my costs were going up to — and, of course, she went right back into the new “free” phone and the extra benefits — I had to ask repeatedly for her to lay out the financial side of this - and, she finally, and somewhat disappointedly, assented to admitting my payments would be going up $20 a month, and of course made one more pitch for the “free phone” and all the extra night/weekend minutes I would be getting (not that I ever cone close to using all I currently have). Obviously, and sadly, this kind of marketing must work on a lot of people.
Of course, since this blog/issue are often on my mind, I thought of the similarities between this call and the regular “teaser rate” and “special program” and “cash out” mail I get to try and coax me out of my reasonable fixed mortgage, my equity (I put 20% down five years ago), and, by extension, my measure of financial security.
I know there is a strong sense of “caveat emptor” for many on this board, and I don’t dispel that personal responsibility is the most important component to financial security — but it saddens me that agressive and borderline depceptive marketing is so prevalent in our society - not just on mortgages.
On a happier note this Friday - I have noticed the mortgage-offer mail has slowed down a bit in the last month or so. Just happy yo have less stuff to shred and toss.
You STILL get mortgage offers in the mail? They stopped coming to me last year. And I feel so deprived. (Not.)
I’ve gotten a steady flow of them for four years - but it seems like it’s been a lot less in the last month (like going from 2-3 a week to two in the last month).
I was concerned that a bunch of them referenced my “adjustable” loan (along with the accurate loan amount) - so much that I went over all my settlement papers to make sure it really was a fixed mortgage for all 30 years (happliy, it is).
I actually kind of enjoy looking at all the deceptive language in them — some make it appear you’ll be paying much less, some make it seem like it’s a “routine review” from your own company, and others have a quasi-governmental feel. But it also pisses me off thinking about the people who are suckered into bad refis, as well as sending more paper to landfill or incinerator.
We got one last week from Countrywide encouraging us to get an adjustable at 5.49%. Yeah, right.
I just got offered a loan by a sub-prime outfit at 50K over the value of my house .I get hit alot by these creeps because somehow they know I have equity (at least for now I do ).
I’m sure the advertising is some sort of bait and switch .Desperate homeowners that are holding on by a thread will go for it and it’s a sure bet these outfits aren’t offering a fixed note for 30 years .
I got HELOC offers and I am a renter
Wow. Freddie has a billion-dollar swing into loss:
http://biz.yahoo.com/bizj/070323/1437004.html?.v=1
It seems that we now have proof that the mortgage problems are not limited to subprime.
Here’s the bonus: their brilliant plan to solve the problem is to dump a billion more dollars into a stock buyback program.
The law of diminishing returns, Darwinized for you.
How come NEW gets delisted within days of a price collapse but Freddie and Fannie get to go years without filing financial statement without delisting? Could a delisted firm sue the NYSE for discrimination or arbitrary enforcement of listing rules?
Delisted firms have other things on their minds - like solvency. Yes, it’s ridiculously bad precedent to allow Fre and FNM to fail to make their quarterly reports, but if there is an ugly truth behind the failures, then the mortgage industry will take a wallop which will take years to recover.
Here’s the bonus: their brilliant plan to solve the problem is to dump a billion more dollars into a stock buyback program.”
Is corporate debt the next bubble? I’ve noticed that more and more companies (in an effort to prop up their stock prices) are buying back shares of stock. Inevitably, this results in them issuing more debt (unless they have a lot of cash laying around, which in most cases they don’t).
So, now that the amount of “easy” money flowing into mortgages has been stopped up, is it a case of “it has to go somewhere” and now it’s being heavily marketed to CFO’s ?? Are CFO’s sitting in their offices, being deluged by direct mail campaigns from Countrywide and Washington Mutual, complete with adjustable (teaser) rates? Interest Only terms? Negative Amortization Option terms????
Just wondering out loud, where the next bubble is going to show up. With the system awash in low-interest money, it has to show up somewhere, doesn’t it?
Did you guys know that if your spouse is a non-resident alien from a low income tax country with a favorable double taxation treaty it can be tax efficient to move your short term stock and option trading accounts to your spouse’s name?
If said spouse happens to be a Russian citizen the witholding taxes in the US are 0/10/0 on interest/dividends/capital gains. Income is taxed at a flat 13% rate in Russia with the US witholding treated as a credit.
But if you put you assests in your Russian spouse’s name, there is a decent chance you’ll be filed with divorce papers and never see the money again. : O
Divorce is a risk with any spouse. Assets are split 50/50 under Russian law in the event of divorce so no big deal.
Also I would rather split assets with my spouse sometime down the road than give the gubernment money today as compounding works in my favor.
Marry a girl from a country with no cap gains tax at all, like Hong Kong.
No tax treaty between Hong Kong and the US therefore the withholding rate would be 30% at the US source.
Would you brave a Russian court??
10 AM, resales unexpectedly up in February.
Existing home sales up 3.9% in February, but home prices decline for 7th straight month, Reuters reports. Details soon.
Does foreclosure count towards sales number?
What I want to know is if the auction numbers make it into the database as well.
I don’t know how this can be possible. Forclosures up, down payment required up, I am baffled. Does anyone have any insight on this number?
Don’t be baffled. Expect continued spinning of the numbers throughout this bust. Also keep in mind that the subprime meltdown started in earnest only 3 weeks ago. We should expect to see the full effect in April. With 3.75 million (gasp) homes for sales and the end of February, we are squarely on track for a record year.
Down 3.6% year-over-year.
http://www.realtor.org/press_room/news_releases/2007/ehs_feb07_existing_home_sales_rise_again.html
Here’s what REALL happened:
“Total existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 3.9 percent to a seasonally adjusted annual rate of 6.69 million units in February from a downwardly revised level of 6.44 million in January, but are 3.6 percent below the 6.94 million-unit pace in February 2006.”
So the NAR revised January’s number downward — resulting in this month’s number being “higher” than last month. Sneaky.
Plus, month-to-month comparisons are statistically meaningless (as we on this forum have established, I believe).
Note that the year-over-year numbers are down.
‘So the NAR revised January’s number downward — resulting in this month’s number being “higher” than last month. Sneaky.’
See my comments on this kind of practice below. It is the initial data release that makes financial news headlines; subsequent downward revisions tend to get ignored.
These are deals closed in February, initiated in January or December. Wait until April/May to see shocks.
exactly
Dead cat bounce (plus “seasonal” adjustments) Y-o-Y was still down in price and volume.
Thanks, how come this isn’t stated in the news reports? Its funny how many hidden statistics there are. The media is celebrating this, “The Housing market has bottomed”, etc.
Don’t put outright manipulation past the REIC from here forward. Their survival depends on it. Honest reporting on falling home sales and prices would scare lenders into further tightening of lending standards (e.g., higher downpayment requirements to cover their increased risk of taking a future hit on a short sale). But that, of course, would lead to further price declines.
So you should just expect inflated data releases, massaged by future downward revisions that fail to make financial news headlines.
Thanks. From the AP article, “The National Association of Realtors reported Friday that sales of existing homes rose by 3.9 percent last month, pushed higher by a sharp increase in sales activity in the Northeast.”
Bonus time on Wall Street?
Link for the AP article?
http://tinyurl.com/23u8xp
Makes sense.
Those scratching their heads - remember these are Feb closings which means the deals were done in Dec/Jan. I know around my hood in Portland Or, there was a bunch of activity then. Though I still wonder why.
Maybe they were in a rush to get the deals done, in anticipation of an incoming subprime tsunami that was already visible from shore as of mid-December? (P.S. H&R Block’s Ownit Mortgage is still reportedly on sale. I offer them the same hint that we always offer to frustrated home sellers: LOWER YOUR ASKING PRICE TO WHAT THE MARKET WILL BEAR!)
———————————————————————–
Mortgage lending
Subprime subsidence
Dec 13th 2006 | NEW YORK
From The Economist print edition
Parts of America’s mortgage market are in turmoil. Some on Wall Street see this as an opportunity. Others are biting their nails
MORTGAGE lending is hardly the raciest business, but it has its moments. “It’s a bit like the definition of combat: 59 minutes of boredom followed by a minute of sheer terror,” says Michael Youngblood, an analyst at Friedman, Billings, Ramsey, an investment bank. “And we seem to be going through another one of those minutes now.”
What has set pulses racing is subprime lending—mortgages extended at higher than normal rates to those with weak credit histories. In America, where it is most advanced, this market is under a lot of strain, and so, by extension, is the giant asset-backed securities market that is linked to it. The market for prime mortgages (those extended to higher-quality borrowers) is faring better, though it, too, is showing signs of weakness, exacerbated by cooling house prices. Might these troubles, some wonder, be the canary in the mine, warning of a looming credit crunch as investors, for years free with their money, recoil from risk?
Once a backwater, subprime is now very much in the mainstream. Annual loan originations grew fivefold between 2001 and 2005, to $625 billion, according to Inside Mortgage Finance, a newsletter.
But with rapid growth has come fragility. According to UBS, the rate of subprime-loan delinquencies of 60 days or more stood at around 8% in October, nearly double the rate of a year before. Foreclosures are also around twice as high as they were. Worse, loans are decaying remarkably quickly: the number of borrowers falling behind on payments in the first few months has leapt, to around 4% of the total. This has taken some analysts by surprise. But Anthony Sanders, finance professor at Ohio State University’s Fisher College of Business, thinks they should have seen it coming: “With the traditional mortgage market flat, the growth has been in the one area nobody wanted to go into.”
This is already producing casualties. A number of mid-sized mortgage firms have failed in recent weeks. The latest, on December 7th, was Ownit Mortgage Solutions, the 17th-largest subprime lender. Others—such as H&R Block’s Option One Mortgage—are for sale, their owners keen to leave the business. Earlier this month, in another bad sign, KeyCorp sold its subprime arm, Champion, for an undisclosed sum thought to be well below the $200m-250m tag analysts had put on it.
Anybody know what’s up with the Realttrac website?
Looks like it’s back up…
Here’s your link to Census Bureau population estimates by state and by county. Shows changes from 2005 to 2006.
http://www.census.gov/popest/counties/CO-EST2006-03.html
Can the PPT turn in a fifth consecutive gain in the headline stock indexes against a spate of never-ending bad news on the subprime front? That would make the PPT “undefeated” according to the Wall Street cheerleaders over at marketwatch.com.
———————————————————————————
March 23, 2007 10:49 A.M.ET
BULLETIN
Undefeated week for Dow?
Blue chips rise as investors look past Persian Gulf news. Gain would be Dow’s fifth in a row.
http://www.marketwatch.com/
Whazzup with NASDAQ? Plunge protection action is getting rather choppy…
http://www.marketwatch.com/quotes/?sid=3291
I’ve been having a “proxy argument” (through my wife) with someone who thinks that the year-over year decrease in median house prices here in Arroyo Grande ($792,750 last year, $490,000 this year, 38.19% DROP!) is due to anomolies in what is selling, and not actual house over house price drops. He mentions that the low sales volume (18 houses a month) contributes to this data skewing. His whole point is that a lot of high-end homes sold last year, and very little are selling this year, because of a lack of availability of new high-end homes.
I’m ready to tell him, in a way, he’s right. That kind of data skewing CAN happen when you use the median sales price, and not median $/sq. ft. However, a search of houses for sale in AG right now shows about half of the houses for sale are priced below $750,000, and half are priced above about $750,000. So what this shows to me is that there is no shortage of houses selling for over $750,000, yet the median sales price last month was $490,000. So it’s not lack of supply of expensive houses. It’s that all those expensive houses are not selling, and/or all houses are selling at a reduced price.
Now the word on the street is price reductions, vacant houses, etc.
I sure wish I had $/sq. ft. data for this area.
I have been tracking price declines here in San Luis via the sales prices listed in Zillow. Condos are easiest to track, since you can compare the sales price of similar units at different time points, but I look for multiple sales on the same unit (SFH or condo) as well. Based on 2007 sales so far, we seem to be back to 2004 prices (about a 10-15% decrease from the peak). Zillow does provide sales information on a per-sq-ft basis, but it is not as useful as it could be because most listings in the area do not include this information.
Fire burns “luxury condo” project in constrution - Torrance, CA.
http://www.msnbc.msn.com/id/17753914/
Arson? Nah…:)
How the real estate industry might extract bailout money from the taxpayers:
“More than a decade ago, developers in Clarksburg agreed to pay more than $60 million for roads, sewers and other public projects to win the right to build the town in northern Montgomery County.
Now the County Council has given preliminary approval to proposals to create a special taxing district to collect as much as $1,500 annually for 30 years from homeowners in three Clarksburg communities to repay the developers.”
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/22/AR2007032202015.html
The symbiotic relationship - the RE industry gives politicians money to get votes, the politicians give the RE industry money to keep getting the money.
This could get interesting.
I have heard nothing but bad things about the clarksburg development. Alot of speculators also bought into that development. I can see homes in that place taking a 50% haircut, easilly. What is the obsession with these mixed community developments? It should be condos and townhomes near metros and single family elsewhere. I don’t know why anyone would by a home in a neighborhood with a condo development in it.
Did anyone see this?
http://news.yahoo.com/s/ap/20070323/ap_on_re_us/homeless_mansions
My question is… if a family can’t afford a $400 a month rent increase, how in the world are they going to afford utilities for these homes? They’re not exactly cheap for large homes.
Oh, I meant to say, too, that it seems like maybe this guy is just looking for someone to upkeep his properties while the housing market flops. Better to have someone living there than to have it be vacant for months on end…. and what better way to do it than “helping the needy”.
Yeah, my utilities are almost $1,000 alone and I’m in a 2,000 sq. ft. house in So. Cal. Rots o’ ruck poor folks! I guess they won’t be getting cable or internet access!
Oh, and here’s the rub:
Some neighbors are unhappy with Kawamoto’s plan, speculating that he is trying to drive down real estate values so he can snap up even more homes.
“Everyone’s paying homage to him, but in reality, he’s the problem,” said Mark Blackburn, who lives down the street from Kahale’s new home. “Houses are homes. They’re made to live in; they aren’t investment vehicles.”
Here is a SD craigslist find.
As this plays out, more and more REOs will hit the market, driving down prices. In 2005, you couldn’t find a condo in San Diego for less than $250K. Here is an REO condo for $160K.
It is not the most beautiful place in the world, but it doesn’t look too bad compared to typical apartment rentals. If you got 100% financing at 6.5%, your payment would be around $1000/month on a thirty year fixed. Throw in $400/month for HOA, taxes and insurance and your total out of pocket would be around $1,400. Probably comparable to 2BR rentals in San Diego. Not super cheap, but seems fairly reasonable. http://sandiego.craigslist.org/rfs/297914230.html
You got to be kidding. First of all this is a crappy apartment. Second, it’s right smack in the middle of City Heights in a particularly nasty area with a high number of sex offenders. It would be bad enough to rent it there’s no way in hell would I want to own it.
I’m just saying it is definitely more reasonable than summer of ‘05. Give it a couple more years and it may be possible to pick up something like this in the 100-120K range.
City Heights= the hood formerly known as East San Diego. There are a few “pocket neighborhoods” in City Heights (like Fairmont Park) that are pretty decent but you couldn’t pay me to live where that crappy apt is located. That is a nasty, nasty hood. The Subway just down the street from there keeps it’s employees safely tucked away behind a thick wall of plexiglass.
Headed off on a hike to seek counsel from some friends that have managed to keep their real estate holdings for as long as a few thousand years…
The Sequoiadendron Syndicate.
Say “hi” to General Grant for me. Those trees are spectacular…
http://www.oceanlight.com/lightbox.php?x=general_grant_sequoia_tree__sequoia_tree__redwood_tree__tree__terrestrial_plant__plant
Blackstone submits landmark IPO filing
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=FT&Date=20070323&ID=6653615
I am wondering what’s to stop equity funds from
1) loading up on debt securities
2) then, going public
3) finally, leaving mutual and index funds left holding the bag
Oh I get it. Give it a few years and by then it will be such a big problem it will be too late to fix, and a few Senators will be shocked at what’s going on and will hold hearings and slap the wrists of their campaign contributors and finally siphon money from responsible taxpayers to ‘fix’ the problem.
found an interesting report searching for emory rushton(work for comptroller of currency office);
Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
Office of Thrift Supervision
Interagency Guidance on Subprime Lending
March 1, 1999
http://www.thecommunitybanker.com/loan_quality_comments_fdic3199.htm
look at the authors at the bottom.
Wow — so there were no secrets about the risks of subprime lending; “guidance” was in place all along…
—————————————————————————–
Examination Objectives
Due to the high-risk nature of subprime lending, examiners will carefully evaluate this activity during regular and special examinations. Examiners will:
Evaluate the extent of subprime lending activities and whether management has adequately planned for this activity. Assess whether the institution has the financial capacity to conduct this high-risk activity safely without an undue concentration of credit and without overextending capital resources. Ascertain if management has committed the necessary resources in terms of technology and skilled personnel to manage the program. Evaluate whether management has established adequate lending standards and is maintaining proper controls over the program. Determine whether the institution’s contingency plans are adequate to address the issues of alternative funding sources, back-up purchasers of the securities or the attendant servicing functions, and methods of raising additional capital during a period of an economic downturn or when financial markets become volatile. Review securitization transactions for compliance with FAS 125 and this guidance, including whether the institution has provided any support to maintain the credit quality of loans pools it has securitized. Analyze the performance of the program, including profitability, delinquency, and loss experience. Consider management’s response to adverse performance trends, such as higher than expected prepayments, delinquencies, charge-offs, customer complaints, and expenses. Determine if the institution’s compliance program effectively manages the fair lending and consumer protection compliance risks associated with subprime lending operations.
Richard C. Spillenkothen
Director, Division of Banking Supervision and Regulation
Board of Governors of the Federal Reserve System
Emory W. Rushton
Senior Deputy Comptroller for Bank Supervision Policy
James L. Sexton
Director, Division of Supervision Federal Deposit Insurance Corporation
Richard M. Riccobono
Deputy Director Office of Thrift Supervision
Got a secret.
I’m a later day version, of sorts.
His first name is within the bounds of my moniker.
the realtors in my area (Ann Arbor MI) must be so desperate…
They recently changed their website, which allows regular people access to the mls listings in an albeit slightly different version from what they get…
and now, I’m noticing, they don’t provide addresses anymore!
why would they do that except to make sure that you go thru them, so that they can start a salespitch or make you hit their own website, etc.
so annoying…
cheers all…
The realtors in SF knew what was coming when they changed public MLS listings about 18 months ago.
They removed DOM stats, which were hugely in their favor during the most bubbly times, and also changed the geographical searches for listings.
And now, it seems, they’re having trouble listing price reductions and all the available condo inventory.
My little trip through the RealtyTrac web site…
There are 37 PAGES of Notices of Default for San Luis Obispo County, with 10 properties per page. I don’t remember how many pages there were before their web site went down, but 37 pages seems like a lot. (Also note that some of the entries are old, I don’t know what RealtyTrac uses for criterion for ‘expiring’ an entry).
However, when I do a search for Altadena, CA, I get NO Pre-Foreclosures, and NO Auctions, so I think that things are still a bit wonky at RealtyTrac.
O.C. house prices down again (OCR)
Single-family home prices fell in Orange County last month, marking the sixth time since August that prices showed year-over-year declines, the California Association of Realtors reported today.
The median price of an existing single-family home in Orange County was down last month, making February the sixth of the past seven months to see year-over-year price declines, the California Association of Realtors reported today.
The median price – or the price at the midpoint of all home sales – was $692,820, the association reported, up slightly from January’s median, but down 3.9 percent from February 2006.
Existing single-family home sales, which usually make up about two-thirds of all homes sold in the county, first fell below year-ago levels in August and have been down every month since then except for November. November’s median price was up just 0.5 of a percent.
But Orange County house sales were up last month, both from a year ago and from January, the Realtors group reported. There were 10 percent more homes sold last month than in January. Sales of single-family homes were also up, 4.6 percent, from February 2006.
Statewide, and throughout most of Southern California, single-family home prices were up from year-ago levels.
California saw the median price go up 5.7 percent in February, to $564,700, the association reported. In Los Angeles County, the median price was $616,230, up 9 percent; and in the Inland Empire, it was $409,020, up 4.4 percent.
But San Diego County’s median price of $593,680 was 2.5 percent below year-ago levels.
Because the Realtor group derives its median prices from a different source than DataQuick Information Systems, its figures differ slightly. DataQuick reported last week that the median price of an existing single-family home was $675,000 in February, which was down 2.2 percent from the median in February 2006.
San Diego just went to over 18,000 inventory. Not at 23,000 like we were last spring (late) but up from winter. Any bets on when we hit 23,000 again or if we will?
You were at 18,000 this same time last year. See BMIT blog…
Thanks Crispy. I didn’t realize they kept the monthly stats! For anyone else interested in SD:
http://bubbletracking.blogspot.com/2007/01/tracking-san-diego.html
HI,
Does anyone know any juicy info about “The Mili Group”?
Some of our old friends joined this group and have been zeleously trying to sell us on them. To me this group sounds like a typical ponzi scheme.
NV HELOC