Yet Another Signal Of The Weakening Housing Market
The Union Tribune reports from California. “Homeowners throughout San Diego County are defaulting on their loans and losing their properties to foreclosure at an increasingly rapid pace. In the first two months of the year, there were four times more default notices issued in the county than in the first two months of last year, while foreclosures tripled over the same period, according to DataQuick.”
“‘It’s disconcerting,’ said Bob Visini, spokesman for LoanPerformance. ‘Everything seemed to be going well and then six months into 2006, we already saw the warning signs.’”
“At the end of last year, Visini said, 9.6 percent of all outstanding mortgage loans in San Diego County were subprime and of those, 11.3 percent of owners were at least 60 days late in making payments.”
“The area with the highest local default rate this year was San Ysidro ZIP code 92173, and February ranked San Ysidro 15th among 1,100 ZIP codes statewide having 1,000 or more homes. Also in South County, three Chula Vista ZIP codes were among the 10 worst-performing San Diego-area communities.”
“Javier Garcia of Virtual Realty & Loan said he has one client whose business reverses are forcing her to sell her Otay Ranch house for about $399,000, which is $60,000 less than the outstanding loan amount. She will have to deal with the tax consequences of the forgiven debt from her lender.”
“Scott Vinson, chief executive of Coldwell Banker Royal Realty, said he is handling 11 foreclosure listings for Countrywide Financial in Otay Ranch.”
“Sergio Rivera in Vista, who moved from selling cars to real estate last year, said the sale of nondistressed property will take longer and often involve a lower price if a neighbor’s home went to foreclosure. But then the buyer may be getting a bargain.”
“‘Every time there’s drama, there’s opportunity,’ Rivera said. ‘This is going to be an excellent time for a lot of people and terrible time for a lot of people. It depends on your point of view.’”
Inside Bay Area. “The number of foreclosures and ’short sales’ of homes equals nearly 10 percent of the total number of homes for sale in San Joaquin County, according to the Central Valley Association of Realtors.”
“Dale Gray, CEO for the association, said out of 4,340 total, there are 317 home sale listings for short sales, where the home is sold for less than is owed to the bank, or foreclosure, a home that has been repossessed by the bank and put up for sale again through a broker. And the number may continue to grow.”
“‘They are up and we are hearing that from a lot of areas in the United States,’ Gray said. ‘A lot of these sub-prime loans… puts (the homeowner) over 100 percent of the value of the house and some of the adjustments are coming home to roost.’”
“The median sales price for a home in Tracy has hovered around $520,000 for the better part of the past year. In Manteca, the median sales price has dropped to $362,250, one of the lowest points in the past three years.”
The Contra Costa Times. “In the first two months of the year, single-family home-building activity in the East Bay and Peninsula picked up a bit but the state saw a big decline from a year ago, an industry report released Wednesday said.”
“Statewide, 13,007 single-family housing permits were pulled, a 31 percent drop from a year ago.”
“‘March and April will really tell the tale for the whole year,’ (said) Alan Nevin, the association’s chief economist.”
“San Joaquin County saw a decline in both single-family and multifamily starts issued for apartments, condos and townhouses. There were 384 single-family starts, a 37 percent drop, and 46 multifamily starts, a 45 percent decline.”
“The East Bay and San Francisco metro area were in line with a 37 percent statewide decline in multifamily permits.”
The Fresno Bee. “Permits increased 18% from January to February in Fresno County. In Madera County, permits edged up 1.9% in February. The area of Hanford/Corcoran saw a 63.4% increase that month.”
“Visalia was among those regions that experienced a decline. Permits fell almost 34% there, to 54 from 110. Los Angeles fell 23.5%, Bakersfield tumbled almost 22%, Riverside/San Bernardino slid 14.1%.”
The North County Times. “In yet another signal of the weakening housing market, home builders sharply scaled back construction in the San Diego region in February.”
“The number of permits pulled by developers ready to start building fell to 539 in February, from 819 in January, a decline of 34.2 percent, and a steep drop of 54.3 percent from February 2006, when 1,180 permits were pulled.”
“Many of the builders with projects in North County are big national developers, such as Lennar Corp. and D.R. Horton, which have reported substantial losses in 2006, said Alan Nevin, chief economist for the builders association. So they are reluctant to start construction on a new phase or a project unless they can get nonrefundable deposits from buyers.”
“‘They still don’t have evidence enough of strength in the market,’ Nevin said. ‘They’re just plain afraid.’”
The Daily Bulletin. “Housing starts fell significantly in February, but at least one builder says the market is actually stronger than it appears. ‘Affordability is the big issue right now,’ said Scott Laurie, president of Pomona-based KB Home Inland Valley. ‘We have a great economy, with job growth and population growth. Unfortunately, over the last few years, incomes did not move up with home prices.’”
“‘When you add in the problem in the subprime mortgage market, it makes the situation more confusing. The buyers’ perception right now is that they may have trouble getting a mortgage,’ he said.”
“There’s also a perception on the part of some people that a big correction is coming in home prices. ‘New home prices have fallen,’ Laurie said. ‘But if there are people waiting for a big correction, they could be waiting for 20 years.’”
“‘The main issue is affordability, said regional economist John Husing of Redlands. ‘It is all about the price point right now.’”
The Bakersfield Californian. “(Economist) John Husing said the housing market has created a bubble, but that the bubble won’t burst. Husing predicted investor home sales and foreclosures brought on by subprime home loans will increase supply and lower prices of residential real estate. He said the Southern California real estate market won’t start to improve until early 2008.”
From KFSN TV. “Local realtors say the housing market is simply coming back down to reality after a period of inflation in Merced. Jim Noumov put his four bedroom home on the market about six months ago. His asking price is $649,000.”
“He says, ‘The realtors say your house is worth your asking price, but you’re overpriced for the market. We’re currently looking at anywhere from $50 to $100,000 overpriced from where the market was to where it is right now.’”
“Jim knows his selling experience would have been much different just one year ago. He says, ‘There would probably have been 2 or 3 people waiting at the door bidding on the house.’”
The San Francisco Chronicle. “Californians see tougher economic times ahead and are losing confidence in the ability of their political leaders to deal with the state and nation’s growing problems, according to a poll released Wednesday by the Public Policy Institute of California.”
“The poll found that half of all adults and nearly as many likely voters now believe bad economic times are ahead for California in the next year, up from 39 percent just two months ago.”
“The loss of confidence ‘is a big change in a couple of months,’ said Mark Baldassare, president and pollster for the policy institute. ‘It reflects anxiety about the stock market, the slowdown in the housing market, rising gas prices and concerns about possibility of home foreclosures due to subprime loans.’”
From Bloomberg. “California Attorney General Jerry Brown is investigating the collapsing subprime mortgage industry in the state, the largest U.S. market for high-risk home loans.”
“Gareth Lacy, Brown’s spokesman, said yesterday that the attorney general has an ‘active and open investigation’ that’s a continuation of probes into predatory lending practices that began a couple of years ago. Lacy wouldn’t say which companies may be targeted or how far the probe has progressed.”
“‘I think it’s appropriate for the attorney general to take a look, especially if there’s been abuses in lending practices,’ state Senator Mike Machado said. ‘There’s a lack of scrutiny over the practices and the brokers engaged in originating some of these loans.’”
‘Unfortunately, over the last few years, incomes did not move up with home prices.’
If wages had double or tripled in the past few years, the Fed would have had a fit and raised rates to 20%.
Nixon instituted wage and price controls in 1971 when inflation was at 4%.
If inflation were running at 50%, defacto interest rates would rise to above the rate of inflation for as long as it took to stop it. Now that would be ugly.
Just wait until China decides to rebalance their currency portfolio. We may yet see that.
Chuck Ponzi
http://www.socalbubble.com
Nixon instituted wage and price controls in 1971 when inflation was at 4%
You must be joking. Inflation was running at double digits. I was around then and I remember it.
The controls didn’t really work. What finally killed inflation was the only thing that does work, choking the money supply, done by Paul Volcker. Appointed by Jimmy Carter.
“Many of the builders with projects in North County are big national developers, such as Lennar Corp. and D.R. Horton, which have reported substantial losses in 2006, said Alan Nevin, chief economist for the builders association. So they are reluctant to start construction on a new phase or a project unless they can get nonrefundable deposits from buyers. ‘They still don’t have evidence enough of strength in the market,’ Nevin said. ‘They’re just plain afraid.’”
What kind of evidence are they looking for? Maybe a bevy of GFs armed with liar loans who are willing and able to buy all the empty newly built homes in North County at prices of $600K and up?
What kind of evidence are they looking for?
Really stupid easy money.
Nuff said.
Got popcorn?
Neil
“‘They still don’t have evidence enough of strength in the market,’ Nevin said. ”
I think what they are saying is they can’t find a data point to spin in their favor…
It’s apparent that these big builders ignored any and all warning signs in their “cover the entire nation with overpriced houses” approach. Every time I ask myself “what in the hell were they thinking?” the obvious answer is: they weren’t. These guys painted themselves into a corner and now there’s nowhere to go.
These guys painted themselves into a corner and now there’s nowhere to go.
Instead of a corner image, My mind is imaging the scene from the trailer of 300 where a bunch of Persian Soldiers are on the edge of cliff facing a solid metal shield wall of charging Spartans.
I’m seeing the same cliff, only visualizing masses of lemming-like FBs pursued by creditors, plunging to their financial destruction on the rocks below.
I’m thinking the invisible hand is the Spartans.
This time through, the Realtors ™ just do not have too many archers and the goat path has been taken care of by a convienient application of flamable oil. Not to mention too many FB’s are out of shape as they charge up hill. So they’re dropping their swords, spears, and sheilds to stay ahead of the mob behind them.
The immortals? In this scenario they’re more of a chear leading squad in gold coats.
The Spartans? They of course are laughing. They know that by sticking together they can defeat this mob. They stand proud as the only scary part was all the arrows from earlier (”buy now or be priced out forever barbs from friends and family”).
And no one has noticed the ships carrying the army over have all begun quiently putting out to sea…
Note: Lereah playing the part of Xerxes had me rolling!
Got popcorn?
Neil
Who can remeber the posts on this blog, that assured everyone, or tried to that the homebuilders would still make a “big profit” even with a 10-20% drop in home prices?
I do!
And it looks as if the builders didn’t have the cushion people thought they would have after a 150% rise in land values!
As it turns out, the homebuilders were the biggest bubble cheer leaders & believers. They paid outragious vaules for their next projects… that now won’t sell.
See it’s cathartic!
It seems that they drank their own KoolAid. They could have been OK with a 20% drop in prices, but then they overbuilt to the extent that some of their inventory will see a 100% drop; i.e., it won’t sell at any price.
After the 100% down the houses are sold for $zero. To cover a 50% loss you need a 100% gain.
I am happy with 50% down…could afford a house then.
IMO, I believe that homebuilders will continue to make very decent profits, provided they build on lots that are bought/priced at today’s “market.” Beyond that, most building materials and labor are much cheaper than a year or two ago and — the BIG “and” — the builders can survive quite well with a noticeably smaller profit margin than they were enjoying during the artificial boom.
To me, this is the biggest elephant under the rug. It will sink many a wishful home re-seller and will ding the income statements of many builders who have 2005-2006 inventory still unsold.
Profitable if they redesign their homes or build the right mix of homes out of their current portfolio.
Builders made large, inefficient homes with multiple bathrooms and bedrooms for non-existant famlies. We’ve all seen childless or 1-2 children couples families invest in these large homes for resale profit, not comfort or utility. They are often built far from well paying jobs so owners have long commutes via car.
Energy efficient, space efficient homes that are low cost to heat and cool and that fit a family are going to be profitable. These homes meet needs of the typically smaller, average american family. If they can be built near infrastucture with access to urban centers, the better.
But think about it from the prospective of an executive of one of the big homebuilders. It’s 2005 and the RE market has gone nuts. You can literally put up any POS house in any location and idiots with liar loans are fighting each other to buy them. Why wouldn’t you ramp up production as high as possible to take advantage of the madness. Your bonus is tied to the short-term financial performance of your company so full steam ahead.
Now fast forward to the present. The housing market is rolling over but are you personally being hurt? They won’t make you pay back your bonus money from 2005, and if you’ve been a smart executive you’ve been selling large chunks of your stock over the past couple of years (as so many of them have). As long as you can’t be indicted for something, you’re sitting relatively pretty. Just issue some cautiously optimistic BS every now and then and finish the projects that are under construction and you’ll be fine.
such as Lennar Corp. and D.R. Horton, which have reported substantial losses in 2006, said Alan Nevin, chief economist for the builders association.
Yeah, uh, ok, so what does that mean, they dropped earnings over the last 5 years from 6 million a year to the lower $1 millions?
Keep in mind much (if not all) of these “losses” is actually writedowns of land they have already bought and paid for. In other worlds the companies can still be bringing in cash but recording a loss for accounting and tax purposes. As long as they can sell houses for more than the cost of building them - and prices are going to have to come way down to change that - they are going to keep building.
“Gareth Lacy, Brown’s spokesman, said yesterday that the attorney general has an ‘active and open investigation’ that’s a continuation of probes into predatory lending practices that began a couple of years ago. Lacy wouldn’t say which companies may be targeted or how far the probe has progressed.”
Slam! Way to close that barn door with authority.
Now farmer Bob, go find the animals. See younder sunset? They’re over that way.
“The poll found that half of all adults and nearly as many likely voters now believe bad economic times are ahead for California in the next year, up from 39 percent just two months ago.”
Ya think? Wait until those April and May layoffs… You haven’t seen anything yet. Maybe this is another job for our attorney general.
Got popcorn?
Neil
Could the AG probe for FB stupidity?
Karnack say yes. But AG would first have to remove probes already inserted by Realtor and Mortgage Broker.
How about identity theft (straw buyers)?
http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1794704
SDCIA board classifieds blatantly offering “cash for your [good] credit.” Couldn’t POSSIBLY be soliciting mortage fraud, could he?
Do you think they realize that we are mocking them overhere on this blog.
Oh yeah….. They mock us too. Think they want to switch places yet?
Neil, call me naive, but I am still amazed it is only now starting to dawn on people that we are looking at an ugly economic future. Just two weeks ago I was arguing with a relative that our current economy is a house of cards. Based on their viewpoint, I’d say they were using the DL method: fingers and toes crossed. Either unwilling or unable to connect the dots and see how it’s all inter-connected and the links are breaking.
I say house of cards is true for the REIC - but believe it or not, a lot of stuff is still manufactured in the US (we mainly buy American, Japanese and German stuff, and ship to Asia), and a lot more could be if:
1. Senior management wouldn’t follow Dogbert’s management rules
2. Politicians would try to create a business friendly environment (which doesn’t mean corporate welfare - I’m thinking along the lines of good infrastructure, good public safety, competition in education (e.g. for CA, neutering the CTA), low taxes, clear rules (e.g. no laws trying to do social engineering), etc).
A couple more notes:
1. Machine Design just had a short article on how a US manfacturer of cleaning supplies (e.g. brooms, mops, buckets) was able to stay in business and not outsource by using modern, Japanese style production. Heck, if we can still make mops in the US, then why can’t we make almost anything here?
2. For hard goods (mechanical stuff, chips, measurement stuff, etc), the innovative and cool stuff still comes mostly from the US, Western Europe (Germany esp for mechanical), Japan, and now a bit from Korea.
“…but I am still amazed it is only now starting to dawn on people…”
Consider the soothing messages from the world’s economic bully pulpits:
========================================================
Paulson sees ‘healthy’ outlook for US
By Eoin Callan in Washington
Published: March 1 2007 19:52 | Last updated: March 1 2007 19:52
The outlook for the US economy is healthy, though concerns remain about domestic protectionism and the slow pace of Chinese currency appreciation, US Treasury secretary Hank Paulson said on Thursday.
The remarks, in a speech to the Economic Club of Washington, followed positive figures on US personal incomes and manufacturing, which helped lift the Dow Jones index from an earlier 209-point drop. “I am watching developments carefully, and I believe that the US economy is healthy,” he said.
http://www.ft.com/cms/s/194850ca-c824-11db-b0dc-000b5df10621.html
IMF: Economy heading for ’soft landing’
By MIKE CORDER
BW Exclusives
THE HAGUE, Netherlands
Fallout from defaults on risky mortgages and a housing slump will slow U.S. growth in 2007, but the economy is headed for a “soft landing” and will likely begin a recovery in early 2008, the International Monetary Fund’s director said Thursday.
Rodrigo de Rato’s comments to reporters in The Hague echoed those of Federal Reserve Chairman Ben Bernanke in his testimony to Congress’ Joint Economic Committee a day earlier.
http://www.businessweek.com/ap/financialnews/D8O5SBDG1.htm
GetStucco,
So true. Feed them BS… reminds me… You are what you eat.
Seriously, most of the world is going to be suprised by this and panic. When that happens I’m shutting up and going to the sidelines. Ok, I’ll still be on this blog. But the rate at which things are happening… I’m very confident when I tell people “you can say I’m insane until June, then you might want to ask me a question or two.”
Got popcorn?
Neil
The layoffs that I’m looking for are in the Assembly and Senate. Anyone?
Good call.
from the sign on san diego piece:
“Florida-based Housing Predictor, an online real estate data company, ranked San Diego this week as the nation’s second-worst housing market, behind Los Angeles. The company said San Diego was likely to see a 13 percent drop in average home prices this year. “
Don’t tease!
If Los Angeles is ranked worst, what’s its downward projection?
13 percent down for San Deigo? Maybe. For the nicer properties on prestigue lots. That I can believe.
Now as to condos…
Got popcorn?
Neil
Incredibly enough, I read LA prices are still positive YOY. I’m starting to wonder if we’re even going to go down in price here. I just drove through the city to get to The Grove, and just anecdotally — I don’t have access to the MLS — I don’t see a lot of for sale signs. I did see a lot of fancy ladies with Coco Channel sun glasses, daughters carrying $75 American Girl dolls with matching American Girl outfits, and BMWs who seem to want to live here. I’m not complaining though, I’m looking for an investment, not a place to live, so if I can find something in an adjacent county, this has been worth the wait.
“…I’m looking for an investment, not a place to live…”
It is amazing to me that people are thinking about going long houses at this stage in the cycle, but I guess that suggests that all the subprime bailout talk is having its intended effect of keeping the speculation binge going.
GS:
A. I didn’t say I’m buying RE tomorrow…I’m watching for a lot bigger declines than the measly 5-10% we’ve gotten so far…that’s going to take at least 2 more years…
B. I have been in this business for over 10 years, and I am hardly motivated to buy by recent bailout talk…and
C. I am not a subprime borrower, and even if I was, I doubt that I would be subject to bailout as it would be a non-homeowner occupied property.
D. I think the subprime bailout talking is scaring people, not feeding the speculation…no one intentionally buys RE knowing prices are falling, on the chance the gov’t will bail them out. They buy it while it’s rising, and don’t think about the chance of prices falling, then scream for help when they do, fall I mean.
IMO.
Thank you.
“It is amazing to me that people are thinking about going long houses at this stage in the cycle”
Get used to it.
I would argue that even this blog is a manifestation of our obsession over real estate. We’re so obsessed with real estate that we log in to the HBB and other veritable echo-chambers over and over to talk about something that will take a very long time to unwind. There are lots of people “waiting on the sidelines” and “ready to jump in” when the foreclosures are getting good.
Yes, even we, the dear readers of HBB, are part of the madness over real estate. A sign that things have stabilized will be that no one surfs to here anymore and Ben gets almost nothing from the Google ads and perhaps closes shop.
Note how many times you hear the debate about whether or not the “correction” (whatever that is) will play itself out by next year, two years from now, 3, 5, 10, 20 years from now. People are anxiously trying to figure out how many years they have to wait before they “swoop in” with their “savings” and “score” a house or two for themselves. By some accounts, they hope to swoop in when the market “overcorrects” to the downside. Sound familiar?
It is an obsession, and we’re part of it.
Oooooohhhhh!
I don’t think lainvestorgirl was referring to a house GS although I could be wrong.
But if you’re handy with a hammer or have a crew there are still opps in the commercial sector.
Home a loan,
You should speak for yourself. I for one am not obsessed with housing. I got into blogging about this mania because it is an interesting economic phenomenon. IMO, owning a home is way overrated.
And drop the ‘get used to it’ stuff.
“You should speak for yourself. I for one am not obsessed with housing. I got into blogging about this mania because it is an interesting economic phenomenon. IMO, owning a home is way overrated.”
Totally agree. It is happening. It is like watching a slow-motion movie but this is for real. Million thanks to Ben for starting this blog.
Ben…
Nothing against your site. I like it and check out the latest articles in it multiple times a day. But my opinion is (could be wrong, but I don’t think so) is that most of your readership (uhm, I would have to include myself here as well) is obsessed with real estate. Of course, mostly in a bearish sense, but more broadly in an emotional sense.
But all day long, to me, so many posters here seem to be aching to get into real estate (the emotional part), though they know it’s not a good time to do so (the rational part). I feel this is evident in the language and topics that are brought up regularly here.
I think these are symptoms of a real estate obsession that has spread beyond the level that some recognize.
I don’t think you, Ben, are part of this crowd, though this crowd is, in large part, the people you serve.
National obsessions, such as this RE and credit bubble we are seeing have funny ways of sinking into our psyches at very deep levels. Remember, even Greenspan, once the doubter, was on board with the new economy by the time the previous stock bubble blew up. And that is one experienced and educated SOB.
Like I said, I have nothing against this blog or its readership. I like it a lot and always read it. I’m just trying to make an “out-of-the-box” observation.
BTW the “get used to it” was meant in a friendly sense, though it may not have come across that way for some reason. Maybe I needed a LOL or a
there…
Ben is not alone. I could care less about houses, they just happen to be the bubble du jour. I wasn’t really paying much attention during the 1990s dot-bomb, but now I’m older and finding myself fascinated by the insanity of the housing “mania.” The parallels with all past bubbles are there, and this blog seems to be especially good at calling future events.
” IMO, owning a home is way overrated”
Awww come’on Ben we all know your pining for one of those newly built stucco ovens on the outskirts of Phoenix. That cost a small mint to keep cool or heat at any given time of the year. LOL
The housing/mortgage bubble as it has unfolded is a rare historical event, which may very well turn out to be of “Great Depression” proportions.
It’s not just Housing. It’s the who enchilada that’s on the grill.
“The housing/mortgage bubble as it has unfolded is a rare historical event, which may very well turn out to be of “Great Depression” proportions.”
It could. Or it could just be followed by a dramatic RE correction lasting years, involving a possibly prolonged recession. That’s how it evolved in Japan.
For the record, in case any you readers think I’m some kind of housing bull/REIC shill, uh, no I’m not. I’m a happy renter who could buy a home with cash, but won’t even consider it for a long long time. OTOH, I have developed at least a small obsession about the housing bubble since last summer, partially because I’m married and have the first kid on the way soon. The nesting instincts make you think about things like owning a home, but the rational part keeps me away from that. Renting is just way too good of a deal. And I can think of much better places for my money than an overpriced box o’ sticks.
I actually am obsessed with housing as I am deeply involved in credit (think Wall Street: CDOs, CLOs, nth-to-default CDS baskets). I read this blog as it contains lots of anecdotal stories that help illustrate the very very bearish models we are creating here: eg, in discussion about the recent blowup in the ABX index stories about Target cashiers buying 600k houses really helped illustrate my points :>
RE Investing in housing before 2010. DON’T. You will be left holding the bag. Smart Money going ELSEWHERE now
Home_a_Loan,
“that we log in to the HBB and other veritable echo-chambers over and over to talk about something”
Bugs Bunny: eh, I don’t think so…
Ever watch a film that’s out of focus? Kinda gives you a headache after your eyeballs have been DECEIVED after some period of time. That’s what the MSM provides to people like me…however, Ben’s Blog is like the first time I put on eyeglasses…I could see the freckles on my Fathers balding head from across the room.
Unlike your reason’s for visiting here, I…
1. Get a great unfiltered economic education on a wide breadth of things that directly effect my wallet. Like salt…I take it for what it’s worth.
2. When things are presented here that wrong or ill advised…there seems to be a self-correcting sort of skepticism by others that quickly steer the boat to safer waters.
3. Seems like a great place to bounce ideas freely off to others, without having to list your credentials as member of a society dedicated to financial brilliance.
4. I’m thinking more than drinking so I’ve got to re-group…Popcorn’s in the microwave and I rather like my NOT burnt, so I pause with this line of thought for now.
Post Script,
Did I mention all the wonderful personalities that Daffy & I have found in this rabbit hole?
Ben is spot on. I used to be obsessed with owning a house. But after watching the mania unfold over the last few years, I’m pretty much over it. Even better, my wife is over it too. We’ve decided that since we missed out on the boom, there’s no sense in getting in late, and we can afford to wait.
But my opinion is … that most of your readership is obsessed with real estate.
I disagree. Most in here, I would submit, have a healthy interest in real estate within the larger context of societal trends in general, and what that portends for the future. This blog has been a catalyst to pull together not RE-obsessed people, but rather, those seeking truth, knowledge and insights to help illuminate “the way ahead” through a very treacherous and uncharted landscape. Yeah, finding affordable shelter is a big part of that, but there are much bigger issues under discussion in here.
This has been a great thread.
I personally am here because I recognize that through housing we will be seeing the upcoming pain of middle America. My father owns a mobile home, my sister, my aunt, my in-laws, and my friends all own houses. What effects the housing market will effect them all in slow motion.
Ironically, it is part due to this blog that I’ve gotten over my own personal obsession with real estate. I’ve managed to convince my husband after 10 years of home ownership that the best thing for our family and our business is to sell and rent. Thinking this much about real estate has caused me to understand the true nature of a house: a depreciating asset that even when paid for must have an income stream to support it. The “wealth building” effect of a house comes from forcing the average joe to save money. If I can save money on my own (which I can), then what’s the difference other than a spiritual consideration and the fact I can actually spend the money if needed without paying interest for the privilege?
In addition, moving as needed is much more of problem when owning. The bubble has come late to VT and with the subprime implosion I’m worried that the VT market might be in a sudden recession. The house goes on the market next week and I’m keeping my fingers crossed that it will sell reasonably quickly. I have a good realtor (and perhaps the only honest one in VT) so I’m hoping for the best.
Finance Guy –
I’ve a question that I’d like to hear your thoughts about, please.
For decades, the rule of thumb in real estate has been to expect an annual return 2-3 percent higher than the going inflation rate. In order words, if inflation back in 1972 was 4 percent, real estate then would have escalated in value roughly 6-7 percent annually.
Do you think this still holds true? Or is the economy such (productivity, information technology, etc.) that in the future, gains of 3-4 percent higher than inflation (annualized) is more realistic during the span of the next 2-3 decades?
FYI - I’m not a real estate investor and never plan to be. Too many things can go wrong. Bad tenants, illiquidity, insurance nightmares, etc. IMO, it’s not worth the hassle.
To me, a house in something to live in and enjoy, not profit from.
Hello, my name is Isoldearly, and I am obcessed with housing. I sold at the top of the boom and want to “swoop” in and catch a good deal when the prices slide down far enough to make a it a really good deal. I’m not all that savvy about economics but folks on this board helped me see the light and sell. Now I check back everyday (just as Home-a-Loan said) to see when to buy. so what is the next step in this Housing Obcessed 12 Step program? (already did the admit thingy).
I’m sitting on the Isle of Capri…
A safe distance away from what’s raining down on Pompeii & Herculaneum~
“so many posters here seem to be aching to get into real estate”
if your so many is less than 20 of the number of posters here, then you are right. i have been reading this blog for a couple of year or so and the number of posters aching to get into real estate is about that number and posts a lot of messages.
“Hello, my name is Isoldearly, and I am obcessed with housing. So what is the next step in this Housing Obcessed 12 Step program? (already did the admit thingy)”.
Stay bearish on LA, and always finish a post with LOL or
(Isoldearly: my vote for post of the day)
Euderman, houses CANNOT appreciate 2-3% higher than inflation (particularly wage inflation) over a very long period of time. Perhaps for a generation or two even (from a low base). But once you get to the point where the financing is too good (!) to last, interest rates are low, everyone is in, speculation is rampant, etc… , the game is set to shift to a long term bear market and appreciate less than wage inflation for quite a long time.
Not in living memory, but the 1869-1896 period was a time of general deflation as the government reigned in the money supply that financed the Civil War. Most real estate (with some exception, like prime industrial, residential or commercial property in high growth areas) deflated slowly.
We may well be set up for another period like that. Or, if the government inflates, well, general decline in standard of living as wages won’t keep up with energy, food and import costs. 20 or so years of that and large swaths of the US will look like Mexico or parts of Asia or South America. Many won’t be able to heat or cool their homes with fossil fuels (too expensive)…use wood (that you chop yourself) or freeze/sweat.
Experiments demonstrate that individuals estimate little losses twice as much as earnings of the same value.
That is one of the lies of home ownership.
For me, the whole RE/credit bubble phenomenon is fascinating sociologically, and is very instructive on our herd/sheep mentality here in the US. I don’t care if I ever own a home. The only “emotional” part for me is that part of my life where I have to explain to my wife day in and day out why it is a stupid idea for all of our friends here in SoCal to keep refinancing and racking up credit card debt to purchase a lifestyle beyond their means. A responsible spender (i.e. one who saves for retirement, ckid’s ollege tuition, etc and lives within their means) simply cannot compete materially with the hordes of irresponsible debt-mongers. All she sees is that Joe and Jane have a McMansion, a Hummer, a new pool, and take trips to Cabo. All I see is another future Bankruptcy filing. And I am anxious for their day of reckoning to come.
fencesitter:
http://www.lyrics007.com/Martina%20McBride%20Lyrics/Independence%20Day%20Lyrics.html
let freedom ring, let the white dove sing let the whole world know that
Today is a day of reckoning let the weak be strong, let the right be wrong roll
The stone away, let the guilty pay, it’s independence day
I agree with Home-a-loan. I have been dreaming of buying a house for a long time. I am a landscape architect and would like to be free to create my own outdoor environment for me and my family’s enjoyment. After years of improving my landlord’s properties (I can’t help myself, its what I like to do) I got fed up and stopped. Right about this time is when the bubble really started expanding so I have been watching frustrated from the sidelines, wondering WTF?
Now, I am questioning why people live where they do. I mean, it seems like people are willing to make all kinds of sacrifices because they think they are ‘making money’. When everybody thinks they are making tons of money from simply owning a house, things in society get really distorted and people loose focus as to why they are doing what they are doing. I have a strong nesting instinct, so it has been really hard for me to watch this transition. Where I live, near a high end resort town, tons of outside speculation money is still pouring into real estate (houses selling for $25+ million, etc.). Maybe partly because people see other markets as weak/declining they are coming here to ‘invest’. The reason people bought here in the first place (either to live full time or as a second home) was because they loved the outdoors. Now it seems like those buying here are doing so more because they look at it as a money tree. It is sad and not healthy for the local community. I hope these people get burned and prices become affordable again for those people that actually want to live here and want to make a positive contribution to society. This whole housing bubble is a mess on several levels and it makes me depressed. But I can’t stop myself from coming here everyday to watch the slow-moving train wreck.
“The house goes on the market next week and I’m keeping my fingers crossed that it will sell reasonably quickly.”
Vermonter, I hope you do! My cousins just sold their place in East Montpelier - in ONE day. VT late to the party indeed. People were clammoring over themselves to buy it. Tards, IMO.
Zip has LA County inventory way past ’06’s late summer high. I think it was somewhere around 46K in August. Right now it’s closing in on 51K, and it’s not even April. Sorry, LA is going down in flames. It’s deserves its kudos for holding out as long as it has, as does the rest of So Cal, but the last finger holding on to the edge of the cliff has just been stomped on by record inventories, massive defaults, and the sudden turning of the liquidity spigot. No other way to go.
Sorry, ex-nnvmtgbrkr, but I have to respectfully disagree. While I do agree that LA will go down in flames, 50k inventory does not seem to me to be the canary in the coal mine, as LA has 10 million people in it…
I started tracking LA just past the peak… (Greater LA). Its now into uncharted territory…
LA will go down in flames. But look how long it took Pheonix to turn… LA will be late to the party but will certainly share the hangover.
Got popcorn?
Neil
To track inventory levels and trends, do you have to log into Zip every few weeks, note the homes for sale for a specific area and document that on your own over and over again or is there ready-made history somewhere?
John Boy,
Give him the benefit of the doubt.
Ex,
How big is the area you are tracking? 50K may not seem like a lot in a pool of 10MM people, but John Boy is taking ALL OF THE METRO AREA into account.
Apples to apples, John Boy.
I’m looking for an investment,
Are you a ‘bot?
lainvestorgirl:
Everyone is entitled to an opinion. I enjoyed your posts and the repsonses they brought.
If this blog continues to run out every potential r.e. bull, then unlike the TOP, we will be selling into the 1st reversals.
As for me, I think the bottom will feel like this.
Banks will be doing all the brokering of homes & realty.
After REO’s sales that have come back 2-3 times,then I plan on dropping in with a fist full of dollars and pay cash, from my Am.Eagle conversions…
Hyper inflation of deflation ?
But on a relative value basis Gold after a 20 year bear market is cheap…here is hoping for $450/oz. and still holding out for the mother load @ $120/ oz..
But Greenspan said, “their is nothing about the subprime market that a 10% increase in housing vaules wouldn’t correct!” Mr. G “Bubble man” never saw a bubble he didn’t like, beleiver to the bitter end.
Okay, that does it. I’m outing you as a real estate shill.
You have done nothing from day one on here except post “I’m starting to wonder if we’re ever going down in price” and you continuously ignore followup posts that provide hard numbers which show that the LA area has already dropped significantly.
http://tinyurl.com/2zbsfq
That’s the graph of Los Angeles asking prices. Keep in mind that even with these asking prices, which are negative YOY, you can chop another 5-10% off these days and the seller will jump at your offer.
“I just drove through the city to get to The Grove, and just anecdotally — I don’t have access to the MLS — I don’t see a lot of for sale signs”
You are either blind (because the complex right across the street from the Grove is packed with listings) or you are deliberately attempting to prop up a flagging market in order to dump your own property at inflated prices. Either way, those of us who have some semblance of what the LA market is really doing are getting really sick of your “I wonder if we’ll just keep this permanent plateau” parroting.
“Okay, that does it. I’m outing you as a real estate shill.”
I second that!
MBRenter, thanks for cracking me up. I hope you haven’t falsely accused, but you’ve certainly righteously accused.
Wow, you got me there, I’m single-handedly propping up LA real estate prices by talking about it here, me and all the others who can’t get into the LA market who’ve complained about it on this board. F you.
“Okay, that does it. I’m outing you as a real estate shill.”
Don’t get her riled. There’s 22 more letters left…
“Okay, that does it. I’m outing you as a real estate shill.”
Sheesh! Chill a bit please. Not saying I know lainvestorgirl’s motives, but for what it’s worth, the last time I went to the Grove, I didn’t notice a whole lot of for-sale signs either. Now before you start calling me out as a troll, keep in mind - I did say “please”.
Look, I don’t know who’s a shill or not, but I “live” near the Grove, and I gotta tell ya, despite the housingtracker info, this neighborhood, and the westside in general, is still in *major* denial.
As someone who would like to buy a place to live in around here, it is frustrating as hell. Prices are down a little from the peak, and sales are slower, but list prices are still beyond ridiculous.
Someone compared LA’s westside to NYC, and I think it kinda fits. There’s a *lot* of money here, some smart, some pretty stupid, but money nonetheless. With 300% appreciation over the last decade,it’s gonna take a while for people to “get it”. I can understand laig’s POV. There isn’t a cash-flow generating “income” property for sale anywhere near here. Not even close.
Oh, also, the “complex right across the street from the Grove… packed with listings” (the Palazzo) is a *rental* complex.
In all honesty, I have to agree with lainvestergirl and SFVhopeful, there has been little evidence in Trendy parts of LA, …. but it will come
i’m not a shill.
I am not seeing a lot of houses for sale in my area either.
There are just two or three in my ‘hood. Compare that with the 6+ I saw in 03,04,05. The prices moderated a small amount but not much. Almost zip in 06. I see only two so far this year.
Last year a place went under 500K (480K) but still have a bunch of 525K+ listings. Its been flat based on $/sq ft.
Not sure what will happen but not much has yet.
Higher up in the thread you boast about being “in this business for over 10 years”, yet you don’t have access to the MLS.
ZipR shows 65 properties for sale in 90036 (where the Grove is located), 21 of which are reduced listings. That’s a pretty small zip code, with a lot of commercial development, so 65 listings is a pretty big deal.
I would certainly hope that someone who has been “in this business for over 10 years” would know that a 5-10% YOY decrease in prices in the LA basin is a huge sea change, and that getting a 30% drop overnight is ridiculous. Or, maybe you don’t know that, in which case I certainly look forward to all of your future “prices are still up YOY!” propaganda.
LA real estate prices by talking about it here, me and all the others who can’t get into the LA market who’ve complained about it on this board. F you.
NO, W-2 you or 1099 you or Schedule K-1 you … How much did you make in 2006? Show me yours and I will show you mine. I can afford LA … and (in Northern California) Piedmont, Orinda, Lafayette, and Moraga. But I rent. Because I’m a loser. Right? Uh, no. I like my leased house in the Oakland Hills + my easy commute. We looked to buy over the years but didn’t want the hassle of things breaking and paint and similar BS (did I mention that we travel a lot to exotic places?) . As for “real estate as an investment …” BORING. My investments (in my company, my trading book, deferred comp, etc) are doing just fine.
So, not F-you, W-2 you.
friends don’t let friends use HTML mark ups
@plysat: You are absolutely correct. There are many, many people who are in absolute denial about dropping prices. Santa Monica is a bastion of “prices will always go up forever!” Not entirely coincidentally, these are the people whose houses have DOM of over a year.
I’m not saying that every single house has a reduced price. What I am challenging is the gross generalizations made about prices being up YOY. That is simply not true. LA is always late to the party when it comes to downturns. Always. Make no mistake, it takes a little bit of legwork on your part if you want to find a great deal, because guess what, you’re competing with all of the rest of us renters who want to get into the market as well. Have a little bit of patience, and the market will come to you.
“Higher up in the thread you boast about being “in this business for over 10 years”, yet you don’t have access to the MLS.”
That’s an unfair assesment if you’ve been reading L.A.I.G.”s post you recognize the primary focus is apartment building’s. Being in the apartment game in Los Angeles doesn’t require MLS access and actually would be a waste of time if your looking for deals. Most commercial brokers here shun the MLS.
As far as the Grove the reason you don’t see a lot of signs is because the “clientele” that sells over ther is mostly word of mouth or interfamily transfers. The only thing you’ll see with a sign up over there is mostly considered overpriced by the locals and the owner is looking for fool money.
italics off
Let’s fix italics.
MBRenter - I’m not in the RE business as a broker, I’m a small investor. I had a RE license for a couple of years to get the 2.5 or 3% back on my own purchases, since I was doing all the footwork to find my properties anyways, but I let it expire (by not taking the renewal exam) out of exasperation because I couldn’t find anything to buy even with that discount. So what. I read somewhere this weekend that LA was up 1 point something% for the year, it might have been the LA Times or another blog.
finance-guy — What is all this you show me yours and I’ll show you mine crap? What does your stupid W-2 have to do with LA real estate prices, huh?
You know, I give up, you guys are right and I’m wrong: LA prices are in the toilet. Now go out and buy some condos
I’ll hang out and wait with mrincomestream until the numbers actually make sense.
MB renter… Here’s a typical listing for that zip… This would be considered a “bargain” (by someone w/ no clue) shopping in this area.
2100 sq ft, 7000 sq ft lot
List 1,089,000.00 red from 1,139,000.00
DOM 29
sold in 2/04 for 590,000.00
Tell me that’s not ridiculous. That reduction is meaningless, and that is one of the cheapest houses in that ZIP. And someone will buy it. The westside is “different”, in the sense that the bubble is popping veeerrry slooowwwly here.
If I wanted to buy in Palmcaster or SD, I’d be hopeful. Here…frustration rules the day. I believe the wave is coming, but as I said there really is a lotta $$ here. Until people *really* start losing it there’s still some air left in the balloon.
“As far as the Grove the reason you don’t see a lot of signs is because the “clientele” that sells over there is mostly word of mouth or interfamily transfers.”
The conservative temple crowd, right?
That makes sense. The older members sell to the younger couples, to keep everyone in walking distance for services. And who says real estate ain’t local.
@plysat: “Tell me that’s not ridiculous.”
That’s ridiculous!
Look. The entire Westside and South Bay is ridiculous. And it’s getting an influx of capital from people moving up from their flips inland and in the Valley. That’s why we won’t see the 30-40% drop overnight.
You just posted a place that has a 5% reduction in price. A year ago, that place would have had a 25% price increase from 2005, and the same in 2004, 2003, etc etc etc. The fact that there are any price decreases at all in Los Angeles is a huge, huge sign. Like I said before, LA is always late to the party, and there’s a lot of bad money chasing worse money, but eventually the market will get to where both you and I want it to be.
Why does the rest of the thread have to be italics? I know nothing about HTML, but if you want to mess around with bold and all of that crap, at least make sure you know what you’re doing.
Dude, if you guys are waiting for the average homeowner in L.A. to wake up and get religion you’re in for a long wait. I would actually put money on hell freezing over before that happens. The only thing thats going to fully correct L.A.’s market back to some sense of reality is foreclosures. Anything else is a pipe dream. When the lenders start really having to move product to stay solvent. Thats when you are going to get your come to jesus market.
MBR- agreed. When I see an actual foreclosure (priced under comps) for sale here, I’ll know it’s started.
But I look at new listings for 1.4 mill, and duplex “investment properties” *selling* for 1.6 million, and I know how laig feels.
It feels like everywhere in the country is crashing except where I’d like to buy. Oh well… more popcorn please…
“The conservative temple crowd, right?”
You sir win the door prize. A free ticket to the Savon magazine section.
The news the other night in L.A. said there was something like 200,000 millionaires in L.A. county… :-/
athena-
Did they answer the question of whether or not paper or principal made these millionaires or should I say equity or principal.
Have no clue… wasn’t paying attention entirely to the news cast… but hearing that number gave me a WTF? moment and I wondered exactly how they calculated that, and who is it that gives them such information?
“The only thing thats going to fully correct L.A.’s market back to some sense of reality is foreclosures.”
The foreclosures are piling up thick and fast in such areas of LA county as the SFV, SCentral. and
Long beach(116 foreclosues and 567 NOD’s in LB). The NOD’s are thru the roof.
The LA Westside land area and population(excluding the SM Mountains)is relatively small compared with the rest of LA county, though it has 30-40% of the housing $wealth, as well as much of the brains and talent. My feeling is that when folks from all over America and the world read about LA,their perceptions are formed by the images and prose generated by Westsiders and Hollywood.
Certainly the LA times RE section always features another sports/entertainment celebrity getting a fancy new dig in the Hollywood Hills, Brentwood, or BEl-aire for 2-10 mil$. Not to mention idealistic Malibu Beach sunsets.
Not to take anything away from the Westside but it is only a small though influencial part of the entire LA County RE market. LA County is BIG, with 80+incorporated cities and numberless communities spread out in one seamless endless array of urban sprawl. Some parts of LA county such as the SFV, South Bay, Long Beach, LA dwtn, SClarita Valley, and Scentral are well known to bens bloggers. Other parts such as the Alameda Corridor, SGvalley, City of industry, Mid-cities/San Gabriel river communities, Walnut/Diamond Bar are less well known.
Many parts of LA will see rapid declines in RE prices, rapidly rising foreclosures,and rapid economic meltdown. Others such as the Westside will be more stubborn. Remember, the vast majority of LA county is predominantly declning aging older middle-class suburbs or working class/immigrant barrios(90%).
Look at foreclosures rates in such areas as Northridge,Long Beach,Van Nuys,San Fernando,Compton,SGate,North Hollywood,ect and see for yourself if LA County is still a healthy RE market.
paper tigers - 200,000 millinaires
When I moved to LA in 1995, real estate prices (both purchase and rent) were extremely reasonable. There were thousands of properties available. A typical modest bungalow, nearly anywhere from downtown to the ocean, cost between $150k and $250k. There were “$99 moves you in!” and “2 months free rent!” banners hanging on apartment buildings all over the city. I rented a great 2-bedroom apartment near Fairfax High for $1050/month.
Where I worked in the South Bay, it was similar - it was easy to find a house costing less than $250k in Redondo or Hermosa Beach, and you could even squeeze into Manhattan Beach for maybe $350k. A lot of people I worked with were very bearish on real estate and on Los Angeles in particular.
There was no sign whatsoever of the housing exuberance that had apparently prevailed just a few years ago. Real estate remained flat for several years after I moved in. My rent was not raised at all for the first three years.
And that was after a bubble that was very MINOR compared with the one we are experiencing today. I expect a very similar environment, but even greater malaise, in the 2010-2012 time frame. This isn’t based on hypothetical wishful thinking, but by actual observations of what happened last time, BARELY A DECADE AGO. How quickly people forget! Patience friends, this is inevitable.
Just for the record, we currently rent just across from The Grove and the area is flooded with “For Sale” signs. The wife and I count off four or five per block between 6th and Melrose and just laugh at the wishing prices. The idea that there’s nothing for sale is moronic. Lots of families perhaps unhappy with the crowd drawn by the new rec center and revamped park?
I did see a lot of fancy ladies with Coco Channel sun glasses, daughters carrying $75 American Girl dolls with matching American Girl outfits, and BMWs who seem to want to live here.
None of that means squat when every bit of it is owned by Capital One
That’s funny, but true.
“The conservative temple crowd, right?”
When all else fails, blame the Jews!
“The conservative temple crowd, right?”
When all else fails, blame the Jews!
I hope you’re joking.
If you’re not, then you are paranoid and need to begin a daily regimen of lithium salts and psychotherapy immediately.
She clearly said that in jest, but I don’t think she intended it to be funny. Jews do seem to be the bugbear of last resort, especially for people - the FBs come to mind - who want to blame a hidden hand for all their misfortunes.
Okay, Mr. Imploder, who were you referring to about the “temple crowd”? Masons? Hare Krishnas?
Now over at the temple
Oh! They really pack ‘em in
The in crowd say it’s cool
To dig this chanting thing
But as the wind changed direction
The temple band took five
The crowd caught a wiff
Of that crazy Casbar jive
“Okay, Mr. Imploder, who were you referring to about the “temple crowd”? Masons? Hare Krishnas?”
So you are nuts. The fact that any one would know that there is a large conservative jewish community near the Grove, that is required by their faith to walk to their services on the Sabbath and might wish to maintain their community … that is racism?
As you so gracefully stated…..
F you
Oh you two need to get a room, for cripes sake.
I think it’s a mistake to pay yoo much attention to YOY median prices in the current climate. If they seem to be going up, perhaps it’s just a reflection of higher-priced houses selling to some degree while lower-priced ones just sit. I think number of sales is a better indicator with which to follow the trend.
Head further west; there are lots of condos for sale west of the 405. Just go down Santa Monica Blvd on Sunday afternoon, you’ll see open house signs on almost every corner. Also, Realtytrac.com is reporting increases in default notices; slowly but surely.
You might be right, I don’t really pay attention to condos, they are like white noise to me, not that anything is wrong with them, they just suck as rental properties.
LAIG, you just triggered a thought.
If you could find a condo developer whose construction loan was expiring and who could not sell the condos due to the lending implosion, you might, just might, be able to take it off his hands at a lowball price and convert it to apartments.
Things may not be bad enough yet for that sort of deal, but you never know what might happen over the next several years.
One problem with buying apartment buildings now in the LA area is that not many have been built recently, so you end up buying older properties that need repiping, roofing, and other expensive maintenance/improvements. Termites are an issue as well.
At the right price, there may some opportunities in repartment deconversions. Just a thought.
Hmmmm that’s an excellent though smlandlord
I think there may be quite a few repartment deconversions in the future… hehe.
And mrincomestream, personally, if I’m waiting for anyone to “get it”, it’s buyers, not homeowners. The reason folks ask these prices is because someone is willing to pay them. *That* I don’t understand.
Homeowners, realtors, MB’s, I got no problem with. It’s the people paying these prices who are the *problem*. You know… the buywhores.
plysat–
Ummmm no I disagree, just came back from meeting a plumber at one of my palaces. Speaking to locals there renters and homeowners the buyers have gotten it. Believe me when I say it’s the sellers. R.E.O.’s will correct this market. I just left a block that within a three block span north to south that had 7 for sale signs at some obscene prices for the neighborhood. All the signs have been there awhile. There are signs all over the place. It made me wonder just where the C.A.R. and DQ are getting there numbers from. The subprime fallout has killed the lower market it’s only a matter of time before the “trendy” markets feel the pain.
Repartment conversion, I like that idea, but to do you’d have to buy the whole building, and considering they’d be priced as condos, and would probably be new construction, I’m guessing most deals would be too rich for me…Now if you wanna go in on one let’s talk…
Hey mrincomestream, have you been keeping up with Nordine.com…his residential inventory has creeped up, a little, compared with the bad old days of 2005.
Nah, I haven’t checked Leo’s site in awhile. His commerial offerings are typically garbage. I haven’t seen any of his signs on the street either. But if he’s getting inventory increases in good numbers you can believe the party is over.
lainvestorgirl’s not a shill. She’s a future flipper. As if that helps.
By the way, she expressed in words what many of us in L.A. are thinking. Will these prices ever come down? After waiting and waiting for a correction, you start to get dispondent after a while. I’m guilty like so many others of wanting results quickly. Doesn’t mean we don’t want it to happen.
How can I be a flipper when I’ve never even sold a property, only bought? Jeez, everyone’s an expert on LAIG today.
Hence the word “future”. I was joking. Perhaps it was the “looking for an investment, not a place to live” comment that vexed me. Greed was the main driver of this ridiculous housing mess. I’m looking for a place to live, not an investment.
Buying RE to live in? What a concept. LOL
I am greedy, which has actually kept me OUT of the housing mess. Being under water and feeding a mortgage payment out of my own $$ is NOT cool.
I for one am very interested in real estate, which is how I found this blog last year. I am obsessive waiting for prices to fall. Ironically I am very happy with my own home, but would love to buy another property at the bottom of the cycle, as an investment or for the kids.
A for honesty. I’d rather be addicted to RE than, say, crack
Hey, Neil, add salt to that popcorn. It just frost my A** when these paid subscription services come to the meltdown so late in life. Where were they 1 year ago , March 2006…and how come they couldn’t predict what happened in their own back yard, Florida?
They shouldnot be quoted and given a free ride unless they can show me what they were projecting ahead of the curve. Tell them to move to the back of the bus that left the terminal months ago
They shouldnot be quoted and given a free ride unless they can show me what they were projecting ahead of the curve. Tell them to move to the back of the bus that left the terminal months ago
Oh… continue with that thought. When people quote me and tell me how we’ve hit bottom, I just shrug and note that I’m only listening to those that predicted where we are. When Cris Thornburg starts talking about buying being a good deal… I’ll *start* to listen.
But as long as the OCregister prints Gary Watts… ugh. I just had him quoted to me as if he wasn’t a shill… By a smart guy too.
This is going to end badly. I still think recession. However, if Senator Dodd gets his way on a few bills… I’ll switch to the depression camp.
Got popcorn?
Neil
So what influence does that have on the median home price?
This will get interesting very soon:
Jesse Jackson: Bail out subprime loan victims
Says ’systemic crisis’ demands protections
http://www.chicagotribune.com/business/chi-0703270615mar28,0,4845939.story?coll=chi-business-hed
Oh no, NOT Jesse Jackson…Can Gloria Allred be far behind?
Al Sharpton is waiting in the wings.
any GOP in on the bail ?
if so they should be shot
ROTFLMAO. From the article:
Think of it as a Million Mortgage March.
Amid a 12 percent jump in U.S. foreclosure filings in February, civil rights leader Rev. Jesse Jackson on Tuesday called on consumers struggling with subprime mortgages to take to the streets and urged the federal government to step in and help them secure their homes.
“What we must do now is begin to ask for some bailout of victims of this crisis,” Jackson, president of Chicago-based Rainbow/PUSH Coalition, said at a news conference at the University of Chicago’s Gleacher Center.
Wait! There is more:
More than 130,000 homes entered foreclosure last month nationwide. That’s a pace of more than 1.5 million a year, which Jackson calls a “systemic crisis” demanding “some government remedy and protections.”
“We must come together and engage in mass protests and make this an issue in the presidential debates,” Jackson said.
If anything can alienate mainstream America AWAY from a Bailout it’s this….
Now where’s Rev. Sharpton?
Al Sharpton is the biggest liar in America.
Come on now, with so many in the running, how can you possibly make such a definitive statement!
This is great. Jesse, and his parasitical kind, will kill the FBs and the housing market. Jesse loves to jump on a cause, suck out his piece of the pie and alienate everybody in the process. He will turn off millions of sympathetic Americans. This is the best thing I’ve seen all day.
Once scumbags like Sharpton and Jackson join the movement the movement is dead. R.I.P. to the FB bailout. Jesse will be richer but you FBs won’t.
“If anything can alienate mainstream America AWAY from a Bailout it’s this….
Now where’s Rev. Sharpton?”
I agree. Anytime the racists show up to support something, it never goes over well.
Jesse Jackalson is a millionaire many times over. I bet he could bail out many Afro-Americans if he really wanted to help his people. Instead, this is just another lame attempt at screwing the middle class and stirring up more racial division.
If you saw the movie Amos and Andrew, you understand why I’m LMAO.
Furthermore, the housing bubble story has clearly gone beyond mainstream now. It’s in the water. It’s in the bloodstream. It’s exponential awareness: From a handful of astute bloggers to financial press to main stream press to the house and senate floors and now there are calls to move it onto the streets. That’s huge and we are at the epicenter.
mrktMaven FL,
“It’s exponential awareness”
As Jay Leno would quip: Exactly! Exactly!
Considering the LA Times is now running a regular section above the fold in the Business section called “The Mortgage Meltdown”–yeah, it’s starting to hit the mainstream.
Knew it was a matter of time before “Jus’ Me” Jackson and his Operation PUSH extortion machine sniffed out the big money to be made for themselves (not the ‘disadvantaged minority’ FBs) by going after lenders. I’ll give it six months till the requisite payolla changes hands, and Operation PUSH lands lucrative contracts to “educate consumers in predominantly minority neighborhoods in partnership with responsible lenders. FBs won’t see a dime, though.
Sammy,
Absolutely on the money. Nothing like grabbing Federal dollars for programs to help the “community”. Jackson has been playing this game a long time and you can see how much the “community” has been helped. Jackson is a master of the extortion racket.
Just wondering if anyone has taken a gander at the ‘Board of Directors’ for The Center for Responsible Lending, and not seen a connection with JJ’s injection of himself into this aspect of the housing crisis…..
The Mafia could take a lesson from Jackson in the art of extortion - but then again, they’re not the right color
“What that would consist of is the federal government stepping in and declaring a moratorium on these foreclosures,” Taylor said. “Second, working with [the Federal Housing Administration] to work with the lending community, Wall Street in particular, to not foreclose but to restructure the loans into the terms and conditions people were getting in the first place.”
moratorium on foreclosures = no need to pay your mortgage
restructure the loans = you get your teaser rate forever
Well, so the banks will stop buying mortgages and the secondary mortgage market will seize up and die. Wonderful plan Rev. Jackson.
Anybody else amazed at how the mainstream media, CNBC, Bernanke, Paulson and business leaders are all assuring the public that the downward economic fallout from housing and subprime lending will be minimum?
Seems it comes down to keeping the sheeple calm…while the big boys unload their stock before the huge downturn. Anyone who thinks this real estate disaster won’t be bad news for everyone and everything is delusional.
Meanwhile Iran is fomenting a crisis, the domestic political situation is getting worse and worse, oil is spiking…nope, not a THING to be worried about. This RE slowdown is nothing to be worried about. Move along now…
Thank God for blogs..including this one.
by the way…Circuit City is firing 3400 of their higher paid workers, making around $11-20/hour, to replace them with cheaper help. The CEO makes about $3 million/year with stock options.
To me that speaks volumes about the state of the average worker in America today. (I wonder how many of those fired workers have a $300k+ option arm subprime mortgage about to reset.)
Great. Already 3/4 of the employees loitering around at Circuit City stores are pimply-faced slack-jaws whose knowledge of the products they sell can be measured in the millimetric. On every recent visit I’ve ended up giving buying advice to would-be customers, while some red-uniformed dolt of a “salesperson” stood by blinking like a toad in a hailstorm.
“Great. Already 3/4 of the employees loitering around at Circuit City stores are pimply-faced slack-jaws whose knowledge of the products they sell can be measured in the millimetric. On every recent visit I’ve ended up giving buying advice to would-be customers, while some red-uniformed dolt of a “salesperson” stood by blinking like a toad in a hailstorm.”
Boy, isn’t that the truth. I am constantly lamenting about the state of “customer service” in this country. It’s almost obsolete. Frankly, I think stores will be completely automated soon. With a high tech security system and self checkout, who needs people?
>who needs people?
Have you tried to get out of the Home Depot through the automated check-out? Only 10% of their products have the requisite scanner tag.
I’m old school. I’ll take that blinking toad in the hailstorm, because I really like human contact…… except the Dial-a-Ride driver…..
I like human contact too, only I prefer it to be competent, friendly, and helpful. I hate do-it-yourself payment stations.
I am constantly lamenting about the state of “customer service” in this country.
And yet we supposedly have a “service economy”. What’s wrong with this picture?
The amazing/disturbing thing about this story is that $11 an hour (~$22K per year) is considered too expensive in terms of labor. Makes you wonder what deep doo-doo Circuit City is in if $11 an hour is spoiling their bottom line.
I got to believe credit card debt plays a huge part in this downturn. Plenty of people who never heard of sub-prime are losing their homes too. Why? Because they gambled (home equity line of credit), spent, and lost. They spent like crazy, and saved nothing. I see people all around me at work who have several maxed out credit cards AND they think it’s funny.
My idiot brother lost the house he bought 10 years ago for 150K!!!! Why? Because he used his house as a piggy bank for vacations, cars, and college tuition for his spoiled brat kids (one who dropped out and is working at Starbucks). He gets a lot of sympathy from me.
Sounds familiar. My stupid brother in law is up to 700K in debt on his house that my mother in law bought for him for like 225K –after he had to short sale his old house and declare BK from pulling the same borrow-and-spend crap.
from you postings.. It sounds like your Mother in Law has reservations concerning you……
“They spent like crazy, and saved nothing. I see people all around me at work who have several maxed out credit cards AND they think it’s funny.”
The Fed must be winning the War on Savers.
“see people all around me at work who have several maxed out credit cards AND they think it’s funny.”
This is a good place for the line I’ve seen posted:
“I see debt people”
This is a good place to give HARM the credit for coining that one…
“They spent like crazy, and saved nothing. I see people all around me at work who have several maxed out credit cards AND they think it’s funny.”
I’ve experienced this same phenomenon. I just don’t get the humor. If I were deep in debt, the last thing I would want to do would be to talk about it in public. I suppose these are the same types of people who enjoy J@ck@ss type humor. Stuff like jumping bikes into cactus, self mutilation, degrading humiliation, disrespect, endangering others lives, you know, funny stuff like that.
“I suppose these are the same types of people who enjoy J@ck@ss type humor. Stuff like jumping bikes into cactus, self mutilation, degrading humiliation, disrespect, endangering others lives, you know, funny stuff like that.”
Maybe a six-month stay in the local clink would sober ‘em up a bit. Along with breaking rocks in the hot sun.
At some point, societal losers like these should actually be punished for their willingness to rob those of us who don’t get our jollies by making appeals to the government to grab other people’s money.
Sorry. I’m tired of bailing others out. Let them suffer.
Will people ever turn around? The last time the savings rate was negative was at the beginning of the Depression, when people spent savings to eat. It feels like the fall of Rome.
The fall of Rome took 250 years more or less. Do you think we’ll get that much time???
Every dollar you save, Stucco, is a dollar that they are eyeballing.
I have a friend who lost a house in foreclosure four years ago. Two years ago, he bought a modest used home in a nice area. Six months later, he has refi’d twice so his original $225K is now $400K. Since then, he has bought new furniture, new appliances, new flooring, three expensive cars, two iPods, a laptop, an iMac, a big plasma TV, and a bunch of other assorted junk. His big ole ARM is set to reset next year.
Oh yeah. He was 60 days late on his last house payment.
85249,
With that list, I think he bought everything known to man except for the seadoos, boat, and Harley. Like he has time to use all that crap.
He doesn’t have time. He works like 12-hour days, and has a second part-time job to help pay for all that junk. His wife is a mess. His kids never see him. But he’s got toys!!!
I suspect that this is what a large proportion of America is like. The alternative is the dirt poor. A stable, strong, solid, middle class is shrinking daily. I really fear for my kids and their generation. Within 50 years much of this country, if anything is left, will be vastly different. And no I am not afraid of change. I like what some of the latest technology can do. However, I don’t think we should mortgage (pun intended) the future just so we can have it at home. Wait the sellers out. In another year or two, people will be begging others to buy all their toys at pennies on the dollar. The mess has been caused by numerous groups, people, etc. all because of greed, no forethought as to tomorrow, and people needing to keep up with the Joneses, whoever they are (I have yet meet them, let alone know their social status).
Despite his choices I really feel for his family. Don’t have kids or a wife if you refuse to be there for them, esp. if it is for toys you think you need to have. If the rest of the family wants them, then you need to lay the law down. We talk about the RE/credit bubble all the time, but what is going to be very interesting is the outcome of all these kids who while they had parents never really saw them. Don’t even get me started on all the South OC families that have a stay at home mom, but need a nanny or maid. What are these parents thinking. You want kids spend the time with them.
Many of you guys know I traded that lifestyle in on January 2006. I don’t miss it, yet I have to admit the bombardment to buy things or an overpriced PoS is daily. However, we like our CD in the bank, dad working M-Th, every other Saturday, mom home w/kids, dad going home for lunch every day because commute is only 4.5 miles, and did I mention we have a pool. Yes, we rent, but it is okay.
“His kids never see him.”
They really caught a break there. If he’s never around, they might stand a chance.
beautiful.
i really dont know where all this stems from. when did men start thinking they had to buy their family off to be liked?
He is a Madison Avenue dream demographic. Someone who spends all they make and more on consumer goods.
I’m trying to turn italics off - it’s not an ethnic thing!
Oh and I do read James Howard K.
He should start selling his car, ipod, laptop, iMac, plasma TV and other junk on ebay or craigslist….
“dropped out and is working at Starbucks”
There it is folks…the circumstantial evidence…like when you find a trout in your glass of milk.
One of the many motto’s on Ben’s Blog:
“It gets better everyday!”
Dropping out and working at Starbucks isn’t an option at my house. My foot would be so far up that kids butt it would take surgery to get it out.
My oldest daughter joined the army because she didn’t want her parents to pay for her education. My younger two attend a community college and they both work. As long as we are paying for their education and they are living at home they are expected to go to school full time and get decent grades.
“My oldest daughter joined the army because she didn’t want her parents to pay for her education.”
Good for her! I did four years (Infantry); got out; went to a community college for three years; went on to get my bachelor’s in Electrical Engineering. 15 years after I joined, I now have a Master’s and am firmly planted in middle Americana…paying rent…in San Diego…..
Of all the things I’ve done in my life, I can honestly say the Army was the best decision I have ever made. It gave me a firm foundation for my accomplishments today. Too bad more parents don’t encourage there kids to join.
So they can be sent off to an absurd war which is making billions of dollars for you-know-who and his friends? You must be joking.
Even the Realtors are talking about resets in Realtor Magazine.
http://tinyurl.com/33ovpe
While this is, for the most part, a rehash of the recent Cagan report, it does have this interesting tidbit: “Hardest hit, and affected the soonest, will be those holding subprime mortgages and teaser rate loans with low initial interest rates, interest-only, or negative amortization features originated within the last three years. Approximately, 1.1 million active first mortgages originated in 2004 to 2006 had an initial interest rate below 2 percent. Payments on loans such as these could increase by 97 percent after the interest rate resets.”
Payments increasing by up to 97%. Ouch. And the ability of these folks to refi or sell just keeps getting slimmer and slimmer.
“There’s also a perception on the part of some people that a big correction is coming in home prices. ‘New home prices have fallen,’ Laurie said. ‘But if there are people waiting for a big correction, they could be waiting for 20 years.’”
Really? We’ll see who blinks first Mr Laurie. Actually, what Mr Laurie meant to say was “if people are waiting to see if the market returns to it’s highs of ‘05 & ‘06, they could be waiting for 20 years”. I’m sure that’s what you meant to say Mr Laurie. Has to be a misprint. Because only only a F’n moron would have said the way it’s written.
“There’s also a perception on the part of some people that a big correction is coming in home prices. ‘New home prices have fallen,’ Laurie said. ‘But if there are people waiting for a big correction, they could be waiting for 20 years.’”
OR, Laurie, YOU could be waiting tables for the next twenty years…
Who’s prediction has the most probable outcome? I’ll give you a tip…
‘But if there are people waiting for a big correction, they could be waiting for 20 years.’
I guess he is not talking about my neighborhood (SD 92127), because we have already had a big correction — condo prices selling 25% off their summer 2005 peaks, for example. More price declines are in the pipeline, with a newfound desire among lending regulators to ensure that home loans are only made if there is a reasonable chance they will be repaid.
Whoa, there’s a whole lotta houses for sale in your hood! I wonder who’s going to buy all those 3 to 4 mil McMansions?
I just took stock last night of currently listed SFRs (on ziprealty.com) in a six zip code area in North SD County (92127, 92128, 92129, 92130, 92064, 92067). There is currently $1.5b+ in inventory (valued by median wishing price, which is a lower bound for the actual number) for this swath of North County SD real estate, with only around 1000 used homes currently on the market. I am wondering if there are enough millionaires moving into SD to absorb $1.5b in used home inventory by the end of 2007 when the real estate market is supposed to begin recovering, especially when we just had an SD Union Tribune article about massive outmigration since Y2K, and when there are so many brand new $1m+ homes coming on line?
The UT also just ran a story with the tired old BS about how millionares are buying up San Diego RE. As I recall it was pretty long on fiction and short on facts, like no facts at all.
‘But if there are people waiting for a big correction, they could be waiting for 20 years.’
I think he’s talking about the upward correction.
I have cash and I have time. What do FBs have besides a mountain of debt and a stucco box?
“What do FBs have besides a mountain of debt and a stucco box?”
(cue the Elvis record)…
“Memories, pressed between the pages of my mind Memories, sweetened thru the ages just like wine, “
How is short selling going to hurt the banks?
If they get there money from there FB, even after agreeing they will take 50k-100k less on the loan owed, and then resell the house at Market price Like In California 500k plus arn’t the Banks making a killing now?
The FB owes $800K and the house sells for $600K. The bank takes the $200K loss plus realtor fees. They’re not getting any money from the FB
Mike: You’re missing what a short sale means. In a short sale, the FB finds a buyer who buys the house for less than is owed on the mortgage, and the bank agrees to accept that amount as payment in full. So, the bank does not end up with the house, merely with the loss on its loan. Let’s look at an example: FB owes $600K, but house is only worth $550K. FB asks bank to accept the short sale to KC (knife catcher) at $550K less realtor commissions of 6% ($33K), and bank agrees. FB sells house to KC for $550K, realtors get $33K in commissions, and bank takes $517K as payment in full (i.e., an $83K loss). Bank then sends FB a 1099 for $87K. KC now owns the house, and Bank has a write-off of $87K.
Hope that helps.
Oops. Sorry, should be “Bank sends FB a 1099 for $83K” (not $87K) and “Bank has a write-off of $83K” (again, not $87K).
In the past I had a short term gig with a mortgage servicing company, and a significant part of their servicing portfolio was sub prime mortgage loans.
The workout staff was composed of hard-assed guys who had no problem performing commission-ectomies on real estate brokers. They’d pay a maximum r.e. commission of 3%, and if the realtor didn’t like it they told them they could go pound salt.
Go HARM!
———————————————————————————
Mapping the Subprime Mess
Posted on Mar 29th, 2007
Tim Iacono submits: Let’s see. Fed Chairman Ben Bernanke used the word subprime seven times in yesterday’s prepared remarks before the Joint Economic Committee of Congress.
Recent hearings in the United States Senate have led to talk of bailouts for subprime borrowers spurring a “Stop the Subprime Bailout” letter writing campaign from long-time Bay Area housing bubble watcher Patrick Killelea at Patrick.net.
http://usmarket.seekingalpha.com/article/31128
“The often heard “they were able to refinance or sell when they got into trouble” seems to no longer be an option for struggling subprime borrowers in many parts of the California and Massachusetts.”
To say nothing about the struggling Alt-A borrowers and A-paper borrowers, which includes those nasty Option ARMS. It’s interesting that a lot of people I talk to want to throw the OpArms in the subprime catagory. Nothing could be further from the truth. Although their were definately OpArms in subprime, a vast majority of these babies were prime, so-called A borrowers. In fact, I’d say that the neg-am option is allowing those note holders to hold out just a little bit longer the our subprime “victims”. We have not even began to see the beginning of the meltdown that is before us. I’ll go out on a limb and predict that when it’s all over there will be as many defaults in Alt-A/A-paper as there will be in subprime. Any takers?
ex: There is no way I’ll take that bet. I’ve been saying this to alot of people lately, but no one believes it. You were an industry veteran, so you would know more than most. SoCal Mtg Guy also shares your opinion. The simple fact of the matter is that people from all economic/credit levels took on way more leverage than they can handle. People here in the snobby bay area should prepare themselves for a shock.
SoCal Mtg Guy was not an industry veteran…first off he was in the biz for a few years (during the mania like the rest of the kids)….he got out when things got tough and is a renter….people like myself who have been in for 1-+ years are a bit more qualified…not some kid with 2-3 years experience during the boom….
Oooh, he’s a renter, so what does he know?
Thanks for clearing that up. Maybe you should post something substantial instead of bitching like a nasty little schoolgirl, and people might refer to you, too.
Dan Tucson: I did not say SoCal was a veteran, our friend from NV is. Besides, one doesn’t need decades of experience to clue in to the fact that the lenders lost their collective minds during this bubble. I’m assuming you made a typo and meant to say 10+ years. So what! You think this mortgage mess is going to unwind gently in a soft landing? If so, you are high on the RE kool-aid. Are you one of the brokers who doubled down and became an “investor?” Sorry, but I just did not understand what the point of your comment was/is.
I never originated a loan in my life and I can figure out how f-cked this mess is.
Alt-A is going to make subprime look like “the good old days”. When people see people getting foreclosed that they perceived as responsible that’s when the sweat will begin to pour.
Everyone knows subprime is a McGuffin deliberately foisted on the media by insiders. The industry is shaking over Alt-A and anything less than 2 years old.
It’s not just the leverage or even the payment that will cause them to walk (though these will certainly contribute in many cases). It’s being upside down $200K-300K even with a 30 year fixed at 6%. If you have to sell or its 2012 and you can buy your house for 1/2 the price…it gets kind of hard to stay motivated to keep yours.
The only reason I have to want to bet against you is that I can see huge incentives facing our policymakers to redouble their efforts to win the War on Savers at this point, even if by going deeper into debt to bail out the FBs. The alternative to FB bailouts is just too painful in the short run for any politician with a finite term in office to contemplate. Too bad there are not very many savers out there whose pockets they could potentially steal from.
GetStucco, I second that. Once the politicians begin to figure out the exent of the mess, any alternative will be better to letting the market take care of things. The laissez faire thing will not be an option.
Plenty of savers in Japan investing in US Treasuries. Why should they care about home grown savers?
Look…….this bail-out talk is a lot of political clap-trap at the moment. Geees they don’t even know the extent of the problem yet…….everybodys guessing……..wait till they find out the truth…….they’ll all run a mile…….I see a lot of political traps in all this and the smart pollies will be saying nothing at this stage.
How can we afford a bailout as a nation when we are paying 2 billion a day just in interest on the national debt? We could always borrow more $$….. Congress is talking about going backto Paygo where programs have to be funded before enacted… How can we fund a bailout of these idiots?
We can’t. I’d bet the raw numbers of folks who understand this versus those who don’t are about 1:500. Out of those who do, I’d further bet that there are more foreigners in that number than American electorate.
The foreign press seems to understand the problems facing us far better than the American press does. It’s funny how they don’t seem quite as able to foresee their own immense problems that are in their future.
The view from the outside is always clearer.
luvs I agree about the extent. Once people like Ron Paul find out about the kickback fraud, like buying a house for 800K so the buyer can 200K at closing look out. That crapola is gonna make one huge mess. No one and I mean no one will allow bailouts. At this point it is all smoke and mirrors to get the voters’ attention and look good, as well as look like they really care about the country. Pfffftttt!
Luvs, I think you’re right. Nobody is sure of the extent of this mess. Right now some pols are grandstanding and trying to look like they’re doing something. But each day, it seems, we get more information that confirms the predictions of this blog that this lending mess is enormous. As it becomes clearer to the masses and pols that this issue is not “contained” in subprime, but rather affects most of the teaser rate and ARMs (of all levels), the pols will realize that there is simply no way to come up with enough money to try to fix the problem (not that there is really any way to fix it except letting the chips fall where they may). As the pols see the costs escalate, they will move from their bailout rhetoric to their scapegoating/regulating mode to try to convince the masses that they will not let this happen again.
In the meantime, proposed bailouts such as the one discussed in Ohio will likely fizzle (and, if not, Ohio will waste $100M). Fortunately, Congress usually works slowly, and the lending trainwreck is happening pretty quickly, so it seems unlikely that they would pass anything before they realize the scale of this mess. Besides, with Congress and the Prez seeming to want to fight each other, any bailout plan would have to have quite a bit of bipartisan support in Congress to have any hope of getting the Prez to sign it.
So, as much as I hate even the talk of a bailout, I feel fairly confident that nothing much will be done. Still, I’m not taking any chances. I have already sent messages to Dodd and the California congressman from the story yesterday who was against any bailout, and I will be sending more messages to other politicians voicing my strong opposition to any bailout.
“Jesse Jackson”
Blechhhhh—-you know when Mr. Jackson gets going, Al Sharpeton’s not far behind.
Is there anyone in this country except “opportunistic” victims, who like Al Sharpton.
“‘Every time there’s drama, there’s opportunity,’ Rivera said. ‘This is going to be an excellent time for a lot of people and terrible time for a lot of people. It depends on your point of view.’”
Spoken like a true Realtor.
Spoken like a true Realtor.
Or a housing bear.
Got popcorn?
Neil
Maybe but he has a point albeit a little early in my opinion
–“We must come together and engage in mass protests and make this an issue in the presidential debates,” Jackson said.–
If the loan don’t fit, you must acquit.
This bailout talk is making me sicker than the OJ trial.
It seems this correction is going a lot faster than that white bronco did.
lol
“The accelerating San Diego County default and foreclosure numbers also pale by comparison to the number of loans issued and homes sold.
For the first two months of the year, newly filed defaults and completed foreclosures in San Diego County totaled 3,272, while loans originated and sales closed totaled 33,801, the DataQuick figures show.”
How do they get away with printing this? 33,801 loans are no measure at all. This should be compared to homes sold in those two months = 5635 homes/condos sold. That means there is a default notice for every two homes sold over the last month!!
“The area with the highest local default rate this year was San Ysidro ZIP code 92173, and February ranked San Ysidro 15th among 1,100 ZIP codes statewide having 1,000 or more homes. Also in South County, three Chula Vista ZIP codes were among the 10 worst-performing San Diego-area communities.”
This should come as no suprise to this blog. Many of you have spoken about the huge numbers of illegal immigrants who have purchased homes. San Ysidro is probably 50%+ illegal as it is right on the border. Once values drop, illegals will walk away without a second thought. There is absolutely no consequence for them, so why not. I say good for them, since the banks felt no worry, why should they, if we don’t bother to enforce our laws, why should they obey them.
This is going to be very important for California, Arizona, and other places with high numbers of illegal immigrant buyers. I think these areas will depreciate faster than the average.
I’m not sure San Ysidro is 50% illegal. Why would you cross the border and then stop 100 feet afterwards? Talk about living in fear.
On the other hand, the only industry in San Ysidro is the Jack in the Box and McDonalds in that mall right on the border… who knows, maybe they’re going back over the border to work in the pharmacias?
“Why would you cross the border and then stop 100 feet afterwards? ”
To dig the tunnel…
Bawahahahahaha
Aw, come on. San Ysidro is pretty much just Tijuana North. Damn near impossible to tell you’re in the US.
Unfortunately, illegals use stolen social security numbers to buy those houses, and if they walk, the people who really belong to those numbers will have their credit ruined. This is already a major problem. But, our government cares more about appeasing big business, and being politically correct, than protecting its own citizens from identity theft, enforcing the laws, and protecting the borders.
From KFSN TV. “Local realtors say the housing market is simply coming back down to reality after a period of inflation in Merced. Jim Noumov put his four bedroom home on the market about six months ago. His asking price is $649,000.”
“He says, ‘The realtors say your house is worth your asking price, but you’re overpriced for the market. We’re currently looking at anywhere from $50 to $100,000 overpriced from where the market was to where it is right now.’”
Would someone please tell me how this home is worth the asking price according to the so called realtors? As you can see part of the problem is with the realtors. How does the realto know this? Is the realtors statement based on last years values? Is the realtor aware of the construction costs? I highly doubt it!!! The realtor claim was baseless. Joe got ripped off to start. The house was over priced then as well as now and stumbling/bumbling Joe can’t figure this out?
Just posted this above but in case anyone missed it….SoCalMtg Guy is not an expert or even an industry verteran…like the rest of the kids who joined in the business during the boom and are now in another line of work. Please refer to people with at least 10+ years of experience to give opinions…i mean really. The kid was in for like 2-3 years, was a renter and has very limited knowledge. Sorry to burst everyone’s bubble on this point. Just because you have a blog doesn’t mean you are an expert.
Hate to burst your bubble, but just because you’ve been doing the same schtick for years doesn’t make you an expert.
Why post twice? Jealous of the attention he gets? Try writing about the issues instead of talking trash about other people like a petty little biatch, and maybe someone will listen to you too.
We judge people here on the quality of their ideas, not their years. There’s no fool like an old fool.
Dan must be one of two things: a troll; or a mtg broker who thought his little bubble party was economically justifiable and therefore bought a bunch of pre-con homes in FL and AZ. He has nothing of substance to say. Personally, I think he’s a troll and not worthy of any further replies.
So Dan… What’s your opinion?
So your saying
“old age and treachery, wins out over youth and exuberance, every time….”
The kid was in for like 2-3 years, was a renter and has very limited knowledge.
He was a “renter”? Well then. I suppose we ought to string him up by his toes.
BTW, how do you know so much about him? What’s your background?
Maybe but he made the call. Perhaps it’s a two-year learning curve in the inventory, and by the start of year 3 he knew enough to say WTF? I’ve had that experience myself in other fields.
He didn’t need to be in the business 10+ years to be smart enough to see corruption, greed and the death of lending standards. His opinions are insightful and welcome here. In fact I would say that it makes him even more credible to be that smart given such little experience in the profession. Definitely smarter than the average hockeypuck.
So what is your opinion oh great one? or did you just come in here to make yourself feel better because you are back at McDonalds working the counter?
SoCalMtg Guy has been one of the standard-bearers when it came to spotlighting the massive problems building up in the lending industry. He’s done a great job on his site and deserves kudos for being an early “voice in the wilderness,” like Ben, warning of what was coming down the pike.
I just spent the last 30 minutes trying to unclog my toilet and for some odd reason, Dan popped into my mind.
I’ll take the opinion of an HONEST ‘kid’ with only 2-3 years of experience over that of the remaining 99% of your bunch, anytime.
And you pay him a compliment in my opinion when you assure that he’s not; “an expert or even an industry veteran”.
Because it’s true ….THANK GOD !
I’m not clear on why anyone thinks a bailout has the slightest chance of actually happening. There’s not enough money in the world. It’s just a few demagogue pols doing some cheap grandstanding.
“(Economist) John Husing said the housing market has created a bubble, but that the bubble won’t burst. Husing predicted investor home sales and foreclosures brought on by subprime home loans will increase supply and lower prices of residential real estate.
Can someone explain how you can fit “the bubble won’t burst” and “increased supply and lower prices” all in one sentence and expect to be taken seriously? I’m getting tired of the linguistic acrobatics.
I think he meant to say “The bubble has burst.”
More madness:
States look at ways to help subprime mortgage holders
http://www.usatoday.com/money/economy/housing/2007-03-27-states-subprime-help-programs_N.htm
As far as a bailout, what really are the options? Once people get a clue how massive this thing really is, they’ll be sorry they ever brought it up. Just an election ploy.
I think if something were to come of all this, it might take the form of making losses on real estate (primarily and possibly secondary homes) tax-deductible. Or, I suppose, the states could go the way of Ohio and start subsidizing FB debt to bondholders…but who would buy now?
The Fresno housing market is real weak across the board in all price ranges. In my own neighborhood their are 17 homes for sale in a four block radius and some have been on the market well over a year. The inventory has climbed almost 35% from last March until now and sales for the first quarter are down between 40-50% compared to the first quarter of 2006.
So I’m not sure why permits are climbing it makes no sense.
Just a guess but it could be because they are looking a few years out (it’s not like these houses are going to be built in the next three months).
“Javier Garcia of Virtual Realty & Loan said he has one client whose business reverses are forcing her to sell her Otay Ranch house for about $399,000, which is $60,000 less than the outstanding loan amount. She will have to deal with the tax consequences of the forgiven debt from her lender.”
It’s a shame people have been spending this thread making personal attacks, because the fact there’s an entity out there called Virtual Realty is far more fascinating.
I mean, Virtual Realty! What a perfect name! They were making voodoo loans based on pretend documentation with the specter of fictional appreciation! Wasn’t the entire business in the past five years a virtual realty?
He stole that name from the movie “Toy Story” where the sign outside Woody’s house read “Virtual Realty”. It was pretty funny in an entirely CGI movie.
A little bit more on the carry trade……….worth reading
http://www.fxstreet.com/fundamental/analysis-reports/lessons-from-the-pros/2007-03-29.html
I guess Japan can keep the interest rates at almost zero and consequently have a weak currency because the japanese population doesn’t do bubbles anymore? Or because they are all 100 years old.
(As far as a bailout, what really are the options?)
For those who did not falsify their income, are bona fide owner-occupants — a mass cram down. Sold with the idea that it will make the buyers pay something, whereas if all these houses end up vacant the losses will be greater.
A mass alternative to bankruptcy in other words.
The problem — I think the flippers, those who falsified income, and the fraudsters may be the majority, or enough that the collateral value will tank even with a negotiated write down.
I wonder if homes might come back down pricewise to more or less where they started from at the beginning of the Crazy Runup.
I live in Anaheim, Ca and homes in this area were selling for a mere $ 167,000 just 6 years ago. Now there are 5 (count ‘em five!) on my block alone with listing prices of $600-650K. In fact it seems that these lower-end types of homes saw the greatest appreciation vis-a-vis higher -ends. This situation can’t stand. Most of these homes were purchased by minimum wage workers with liar loans and I don’t see how they’ll be able to handle a mortgage payment increase.
Judging by the homes for sale on my street, there are at least 5 other guys nearby who couldn’t figure it out either.
What I still don’t get in all this nonsense is how the obvious implosion of an obvious bubble is rocket science. Housing prices after 2001 were based PURELY on speculation and loose lending, with no connection to actual economics. Why isn’t this just a given now, a starting point for every conversation about how rapidly they will correct? Why is there still some discussion about IF they will correct or whether the correction is over after only a few months? Did everyone in the USA take retardation drugs around the time of the 2000 election? Is there some mental activity inhibitor in the water? What gives? How can thinking people be soooo blind to something that is soooo obvious?
I wonder the same thing.
Is it just me or has the whole world gone delusional ?
First off we have the whole ethanol thing. Today the DOE came out and said straight up that Ethanol is not a good alternative fuel strategy. http://science.slashdot.org/article.pl?sid=07/03/29/2342224&from=rss
I’ve known that from the start, yet George W keeps promoting the hell out of it. And guess what ? Its starting a bubble in various things, like the stock of fertilizer companies, farmland, etc. How stupid.
And what is up with all this private equity buyout stuff ? And hedge funds. To say nothing of the price of steel going up as the automakers are shifting towards lighter cars and reduced output. And for some reason copper is over $3 a pound when the US housing market is crashing ? Doesn’t make one bit of sense.
When will sanity return to our economic system ?
I think we need an interest rate of about 10% to clean up this mess. And that includes Japan so that the yen carry trade gets wiped out.
Does anyone see a pattern here ?
1987: LBOs.
1991: Japan
1996: Asian Currency Crisis
2000: Dot coms
2007: housing bubble
Every 5ish years we have a meltdown ! In spite of the “stability” built into the system. And every time the answer is to pump more low cost money into the system ! Which only creates more debt ! People can only have so much debt. Wages need to grow.
Copper is up because China and India are still on a building rampage. When you have 2.5 billion peasants who suddenly want to live like Americans, it sucks up alot of natural resources very quickly. Part of that inflation is due to Uncle Ben’s printing press. The dollar has dropped 30% vs the Euro since 2003.
It was a connection to actual economics that is the real tragedy. Post dot-com boom and negative real interest rates people could not get ahead by saving in the commodity designed for saving in. (money) So people looked for another commodity to fulfil their propensity to save. One needs to thank the Fed for this. It is why Goldman Sachs employees are currently getting record bonuses and eleven dollar an hour retail clerks are getting laid off.
Asset Deflation : The Death of Real Estate
http://www.marketoracle.co.uk/Article639.html
Great op ed piece. From a realtor no less. This was my fave:
“[I]t pains me to give you the bad news, to wit: Real estate in America is officially dead. But only for a generation or so.
In other words, it is time to sell all of your real estate, save for possibly your home. If you don’t, you will likely regret it. You will gradually watch all of your equity disappear into thin air. And then, unless you have little debt against it, you will likely lose your property to foreclosure. It’s as simple as that.”
And: ”
In case you haven’t noticed, or choose to stick your head in the sand, or don’t know much about investment manias and credit bubbles, or think that real estate values “always go up in the long run,” or believe that just because Ben Bernanke’s Fed has a printing press, they can compel ordinary Americans to borrow increasingly reckless amounts of money, allow me to be the one to pour a big bucket of ice water over your head. The fact is, we have officially entered the frightening, post-NASDAQ-bubble, post-subsequent-real estate-double-bubble, credit-contracting, asset-deflationary portion of the 75 year cycle. So buckle-up for Mr. Toad’s Wild Ride, people, because there is no looking back at this point. Mark my words, it’s going to be nauseating.”
Got gravol?
NO BAILOUT for FB Subprimers or anyone that can’t pay their bills. I’m sick of the bailout talk.
What makes these idiots who don’t even know how to balance their checkbook special enough to get a bailout?
MSM is playing this up as a “soft landing” and period of transition. It is a conspiracy to keep it all afloat as long as possible.
I have worked in the lending business for over 4 years now. I’m still relatively young (27) and I refuse to buy a house when I can rent so much cheaper and invest on my own.
Party is over for RE nationwide, time for everyone to accept it. Can’t wait to see SFRs in So Cal selling for sub 300k again. I’m not talking about condos either. HOA fees of $400 in some areas. What a rip off to live in condo la-la land. So many rules and noisy neighbors. Let’s see the logic in paying $4000 plus a month (in loans and hoa, taxes, insurance) for a 100% loan when you can rent the same place for $1800 and not be stuck with a depreciating asset that you become emotionally attached to.
New and more responsible FBs, you’re time will be here eventually. Just realize that buying your first home is not a race. Be smart and make your money work for you by not overspending.
I can’t believe how much money my friends waste on crap. Honestly in OC, the problem is a lot of the women. They want the fancy lifestyle and want to take all these expesnive trips. It must not be any good if it’s not expensive.
I use all the discounts I can with credit card points/rewards and always pay my bill in full every month. I use coupons and I don’t care if anyone thinks I’m cheap. My friends call me cheap, but at the same time they wish they had 10% of my financial discipline.
Also, unlike a lot of people my age I don’t have kids and I don’t plan on it anytime soon. I think a lot of these FBs are saddled with a wife and kids that spend their money as soon as it comes through the door and then go and charge up the CC at Walmart and Target on the weekends.
Once they wake up to reality, they will realize how financially ruined they are.
I’m a sick person, because this makes me happy. I love seeing these people ruined. How’s a foreclosure or short sale (if you’re lucky) for a life lesson on your first time purchase?
Can’t wait for all this to play out. Out on the street to all you irresponsible show offs.
Neil- Love your commentary. You’re the voice of reason here. I got my popcorn ready. Now turn off the lights….the movie is about to start….
well said Stevo !
Word is that an investor bus is leaving NYC headed for California with eager investors ready to pick up all those bargains the brokers are bragging about in southern California
Who can resist getting 5% of maybe 10% off those peak 2005/07 highs - what a bargain
That’s it.
Start kidnapping realtors and tatooing “It’s worth what someone will pay - no more” on their behinds. Then go pants a realtor.
(Disclaimer: above is for satirical purposes only. Poster in no way advocates or approves of the forceable tatooing and pants-ing of realtors. Much.)
I posted this late yesterday, well worth reading. It’s from a realtor whats more.
http://www.marketoracle.co.uk/Article639.html