“Buyers Have The Luxury Of Asking For More”
It’s Friday desk clearing time for this blogger. “Dawn Erwin has had a tough time since moving to Maryland. Her husband has a new job and the Erwins want to sell their home. They put a Realtor sign up on Jan. 2 and have had 15 people interested in their house, but so far no takers. ‘First I couldn’t get into the house, and now I can’t get rid of it,’ Erwin said.”
“‘A buyer might be able to get a home for $400,000 that was worth [$450,000] a year ago,’ said Bill Hocker, branch manager at Countrywide Home Loans in Waldorf. ‘The buyers have the luxury of asking for more.’”
“(Orange County) home prices are 2.7% below last year’s peak of $642,500. Sales activity is down 21.1% from a year ago, meaning that March will surely be the 18th straight month that less homes were bought than a year ago.”
“Centex Homes has cut half of its work force in Southwest Florida, from Naples to Sarasota. The slowdown in the real estate market is to blame for the cuts, said Tim Ruemler, Southwest Florida division president.”
“Last week, I happened across a pitch letter from Countrywide. ‘Wouldn’t you like to have extra cash at the end of every month?’ cooed the come-on. ‘We know how hard you work for your money, and that’s why we’re inviting you to apply for a 40-year loan that offers one of the lowest monthly payments available.’”
“I thought it was awfully sweet of Countrywide to think of me. I do work hard for my money. And I sure would like to have a little more cash at the end of every month. How did the folks at Countrywide know all that? They must be geniuses or something.”
“Like some fool, I locked in a 4.5 percent, fixed-rate, 15-year mortgage a few years ago when I had the chance. What was I thinking? Instead of being free of mortgage debt at 57, I could keep making payments until I’m 85.”
From Minnesota. “Compared to the first quarter of last year, mortgage foreclosures in Dakota County have grown by 204 percent. According to County Recorder Joel Beckman, 299 mortgage foreclosures have been recorded from Jan. 1 to March 21. ‘We’ve had more filed so far this year than we have in the last two years combined,’ said Beckman.”
From Connecticut. “In recent years, many people have been able to purchase properties with little or no money down. So when property values drop or stagnate, owners with little equity in their properties are more likely to stop paying their mortgages and go into foreclosure.”
“Some lenders also had stopped verifying applicants’ incomes. ‘It was just a time bomb waiting to go off,’ said Greater Bridgeport Board of Realtors president, C. Obiora Nkwo. High-end homes in towns such as Easton and Greenwich appear to be getting hurt more than the affordable housing stock found in Bridgeport, Nkwo said.”
“The wave of mortgage foreclosures feared across the country hasn’t hit West Virginia yet, but it might not be far off. Just over 19 percent of such loans on West Virginia mortgages were late, and nearly 4 percent were in foreclosure in the fourth quarter, the MBA says.”
From Oregon. “The housing boom of recent years, in Portland and nationwide, has been driven in part by a rising trend of home mortgages to buyers with poor credit. Now, as housing prices have stalled or even declined in many cities, the cost is becoming clear.”
“‘The fees are excessive, the interest rates are excessive,’ said Kevin Sheehan, Portland office director for a nonprofit housing counseling service. ‘They get into it because they see home prices are going up and think, ‘If I don’t buy now, I’ll never be able to buy.’ A couple months down the road, they just can’t afford it anymore.’”
“Michigan is being hit hard overall. At last count, at least six Hillsdale County homes a week go to the sheriff’s sale at the courthouse at 10 a.m. each Friday morning. State Rep. Steve Tobocman said state House leadership will be working with mortgage lenders to…have state support for a second mortgage for up to six months.”
“‘Holy Cow! Holy Cow!’ exclaimed Scott Gray, a credit counselor in Tecumseh. ‘(Politicians ) want people in trouble to borrow more money? And have a second loan to pay off when they get a new job?’ Gray said.”
“A few years ago, I was visiting with the top dog at one of the country’s largest mortgage companies. I remember that I questioned him about the surge in home lending to people with bad or no credit and marginal income levels, folks who traditionally wouldn’t qualify for a mortgage.”
“I said that based on what I saw in the late 1980s crash in Texas, many of those buyers with little or no equity would walk away from their houses the first time a cloud passed over their financial horizon.”
“Sure enough, the mortgage company CEO agreed. But he insisted it would be worth the industry suffering those foreclosures if it meant millions of people could own a home who otherwise wouldn’t be able.”
“As it turns out, what we both predicted has come true.”
Another great week! My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics.
“(Orange County) home prices are 2.7% below last year’s peak of $642,500. Sales activity is down 21.1% from a year ago, meaning that March will surely be the 18th straight month that less homes were bought than a year ago.”
oh gary warts. gary warts. where are you? you can run but you can’t hide.
But you just have to love “median” prices. Existing houses, condos, and new (houses, condos, THs, etc. combined) are all down YOY (-2.2%, -2.1%, and -3.1%, respectively) for OC, yet the overall combined median is flat YOY. Intellectually, I understand how this can happen, but it still seems strange on the gut level.
Yeahhh, what has become of our good friend Mr. Gary Watts??? It’s in the bag, baby! Come out, come out, wherever you are. You f’ing hack!
Johnny Cash said it best:
You can run on for a long time,
Run on for a long time,
Run on for a long time,
Sooner, or later, God’ll cut you down.
Sooner, or later, God’ll cut you down.
Go and tell that long tongue liar,
Go and tell that midnight rider,
Tell the rambler, the gambler, the back biter,
Tell ‘em that God’s gonna cut ‘em down.
Wait until April sales numbers come out.
If Orange County is like south Santa Barbara County, April in the OC is going to be a mammaries-up bust.
According to statistics I have available to me, only 15 properties opened escrow in the first 2 weeks of March in south SB county. Last year there were over 60.
April sales throughout California are going to be shocking, even to the people on this blogsite.
Well I can tell you inventories are climbing again, at an alarming rate, in the Costa Mesa/Huntington Beach area. In CM, after declining from the previous inventory highs last October (I think it was October - I could be off a month) they’re back up above 500 again and growing.
Isn’t this what is referred to as “crowning” during childbirth? :O
Sounds like the April Ass-Pounding is upon us!!!!
Nurse! Nurse! Episiotomy knife, pronto! Stat! This baby’s a Big One!
Sacramento Dateline:
New Century just listed a house with a Realtor (Unreal-tor) for $350,000 in Folsom. Top 3 bids over the listing price will be presented next week. The existing loan was placed in July 2006? $735,000 77/20! What do you want to bet HSBC holds the 2nd? The seller? Olga Zagorenko. Such a beautiful Russion name. The buyer? David Johnson. Such a wonderful common name. Could this have been a straw buyer delivering a little cash back mortgage fraud?
Could New Century be dumping loans to pay line off their line of credit calls? Here is the punch line: With bonds, taxes, insurance, maintenance, & management, this house will cost $900/mon to own, before the rent check of (maybe) $2,000/mon is delivered. Hmmm. 4% ROI? T-bills never looked better, since this house will sell for $300,000 in another 12 months.
Neil has not even put his popcorn bag in the microwave yet! This meltdown is just getting started.
if the baby is upside down is going to be a double ass pounding
Has anyone ever thought about the phrase of “Owning a home is the American dream”? Does anyone know where the phrase came from or when it got started.
This really reminds me a lot of ” A diamond is forever” Debeers campaign.
I think the these industries create these slogans and they just get ingrained in our sub-conscious as fact.
Just something to think about…
Here’s the promo info I got from Wikipedia on Debeers-
Promotional campaigns
De Beers (through its sales and marketing arm, the DTC) has been very successful in increasing desire for diamonds. The famous advertising line “A Diamond is Forever” was coined in 1947 and the company has created many successful campaigns since then. One of the most effective of these has been recognising the diamond as a symbol of love and commitment and therefore the ideal jewel for an engagement or wedding ring.
Some of the campaigns started by De Beers include the “eternity ring” (as a symbol of continuing affection and appreciation), the “trilogy” ring (representing the past, present and future of a relationship) and the “right hand ring” (bought and worn by women as a symbol of independence).
De Beers is also known for its television advertisements featuring silhouettes of people wearing diamonds, to the music of Palladio by Karl Jenkins.
-Stevo
I thought that music was from Vivaldi’s Four Seasons.
I think it was “heavily inspired” by the winter suite from Four Seasons. I’ve heard it was a new composition, but they sound nearly identical to me.
“and the “right hand ring” (bought and worn by women as a symbol of independence).”
Of course, this is also a way to double their sales since now women have to fill two hands with diamonds.
There are SO MANY diamonds in the world it would take 200+ years to exaust the supply if Debeers didnt con women onto wanting it for their wedding day.
Remember the “Marry Her all over again” the anniversary diamond???
It was designed to keep Russia from crashing the diamond market after the Fall of communism……Russia need CASH,Lot sof it… and they had millions and millions of carats of small decent not gem diamonds….perfect for a 2nd wedding ring…..and there was DeBeers to buy all the Russian Diamonds
And dont forget it was White people who Boycotted South Africa…you never heard any Black Woman In America support a boycott of the racist SA policies in the 80’s…nope black women wanted their gold platinum and diamonds even worse the white brides….
And don’t forget that DeBeers intentionally restricts the outflow of diamonds, something that would be against the law in the US.
Are you crazy? Have you ever spoken with any of those black women you claim did not boycott South Africa? Geez. Stick to what you know, and stop blathering about what may sound good but has no basis in fact.
IAT
Read the folllowing. It’s long, but well-worth the effort.
http://www.theatlantic.com/doc/198202/diamond
DeBeers is suffering from diamond glut. They have millions of carats stashed away and thus are marketing the idea that one should not buy a mere one diamond piece of jewelry but jewelry that has an array of lots of diamonds in it.
Diamonds have to be one of the biggest con jobs out there. DeBeers has a virtual monopoly, and their marketing must be great because everyone seems to buy into it, like you all said. In college my marketing professor, an old guy, said that two of the best marketing campaigns carried out in the last 50 years were diamonds and Rolex. Diamonds really aren’t rare or special, and Rolex is far from being the highest quality watch, but 99% of the population thinks both are the bee’s knees. Buying an engagement ring was so hard for me. I just did not understand the fascination, not to mention the price! And what is with the old guideline of spending a couple month’s salary for an engagement ring? I didn’t spend nearly that much and I walked out feeling like auger-inn had delivered me one of his special poundings.
Diamonds have to be one of the biggest con jobs out there…WELL WOMEN Are a close #2
Without a woman being so manipulatiive to get her guy to “THROW MONEY AWAY ON A DIAMOND” at a real jewelry store.
Why are Woooman so proud to tell her girl friends my guy looked around and saved $50 on big secreen TV but not a $1000 on the diamond ring by buying it at the pawn shop?
dj, don’t generalize. I for one, don’t particularly like diamonds and I would kill my husband if he spent two months of his income in any piece of jewelry for me. I do have some nice heirlooms, but I couldn’t care less about their monetary value. I think marketing has totally messed up the real deal with jewelry. It is something of value that lasts and can be passed from generation to generation. When women did not have access to property, giving them jewels was a way to pass on some of the wealth to them, and I think that atavic thing is what makes women lose their heads over a diamond ring these days. Marketing people are just very clever. Also, jewels can travel with you if things get really bad. I wonder what Aladinsane would think, but I tend to believe that it is not a bad idea to store a little gold, be it in the form of coins or jewelry. You never know what might come to pass.
aNYCdj,
Any guy who falls for such manipulation and makes such a poor financial decision is a schmuck and lacks cojones. Certainly not my type - and I know I am not alone. If he feels like a gun is pointed at his head to buy a rock for his Woooman, I recommend that he get out of the line of fire ASAP. And the black/white woman thing about SA diamonds, where did this little jewel of sexist racist data come from? But hey, sounds like you haven’t had such good experiences with chicks and I truly hope things turn around for you. Bitterness is exhausting.
cassiopeia…
Jewelry is ok and for the ladies in particular, it’s dual purpose wealth & adornment.
The only problem is, everything weighs a little different, and you ever wonder how all those jewelers in the downtown el lay jewelry mart can exist?
14K Gold can often be 12K to 13K, as deceit is just as rampant there, as anywhere else in our fair land.
aladinsane, I kind of suspected that. I also don’t like to pay for the craftsmanship of something if when I have to sell it they will only give me the value of the gold. So, to me, it’s either get something that is really worth something as metal AND as a wonderful piece of craftsmanship or just get the coins.
I’d just buy coins.
They’re issued by governments and I can think of not one instance, where the Karat was cheated on, by the issuing authority.
100% track record, not shabby.
The “two months’ salary” thing was 100% fabricated by debeers. And we’ve bought it hook, line and sinker.
Debeers is Exhibit A that advertising *does* work.
My wife came from a “well to do” family and wanted a diamond ring but settled for a simple wedding band and modest reception. We saved our cash for a down payment on our home which we bought one year later.
If you have a beef with diamonds then how about coke or pepsi? or Nike branded shoes ? You can piss away money in one shot or in small, daily doses.
I do boycott coke and nike. Always have.
For whatever reason…
A crappy quartz watch that comes from a happy meal tells exactly the same time as the Rolex.
Not everyone buys into it. My wife’s engagement ring was very plain (NO diamonds) and her wedding ring sports a small ruby (she chose). My ring is machined titanium. In fact, I don’t believe we own a single diamond. We do laugh at the commercials, though.
When we got married we couldn’t afford a diamond, and now I feel like we dodged a financial bullet hit. But I must say that I like rubies, sapphires, and emeralds!
It’s all ways been easy to brainwash the split tails in our society. And, they perpetuate the tale by telling the story to their daughters. Get some guy, then put his shoulder to the wheel, he’ll be in hock for ten years, even after the divorce. Suzanne is involved in the ‘diamond scam’ as well as the housing scam. No chance guys, you’re toast.
“A diamond is forever.”
So is Moissanite. Debeers can bite me.
Wait, what am I saying? Why spend $$$ on a Moissanite Diamond when you can get one that spent 2 days in some guy’s colon as he stowed his a** over here from Uganda to sell it. Knowing nobody died for [or crapped out] a Moissanite Diamond sortof strips all the romance from it. I take it back. Give me a blood diamond. Or should I say, crap diamond.
The other problem with “a diamond is forever” is that I am NOT forever. I don’t want something that lasts forever, I want something that reminds me of my mortality so that I can make the most out of today possible.
excellent thought process…
The DeBeers people tell us that an engagement ring should cost a man two month’s salary. That’s ridiculous.
I can see a counter-ad:
“Become unemployed two months before engagement - save a lot of money!”
Is that take home pay or pre-tax?
Do some research on the “Kimberly Protocol.” One of the biggest price-fixing scams of all time, yet almost all mention of it is deleted from the Net. If you ever fly first-class across the pond from Europe, watch the diamond dealer with his rectangular black bag, putting it in the forward coat closet after everyone else is settled in; also watch for the accompanying, oh-so-discreet, backup guard/eyes (often female) traveling along.
Think about all the taxes that are not collected on that stuff.
“This really reminds me a lot of ” A diamond is forever” Debeers campaign.”
Yeah, it’s actually kind of funny how the perceived worth of diamonds (previously not considered as precious) was propoganda backed by a monopoly.
DeBeers does a great job of controling the flow of diamonds to the marketplace. Maybe someday we’ll have to get permission from David Lereah to put our homes on the market. Those who disobey will have a limb chopped off!
Seems to me the realtors/lenders/builders are all a part of this market monopoly now by throwing out data that has obvious flaws that no one seems to question. Why don’t they publish the $/sq feet as an indicator by zip code. Not this BS median price which makes no distinction.
I found out my sister’s fiancee’ payed over $3,000 for engagement ring. Jeez…. He works at a coffee shop making $10 an hour and works part time. It amazes me that my sister talks about buying a house with him. I overheard this and had to laugh out loud.
I said, “Why don’t you realize that you should just rent?”
Her response- “Oh because renting is like throwing your money away. I want to own something. But, we don’t have any money to put down. We’d still like to own something though.”
What do you own at 100% financing in this market? Negative equity that’s what.
This is the mentality of the average FB young couple.
Good thing his parents are fairly wealthy. Sounds like they might just get a lots of $$$$ for getting married.
the phrase “renting is like throwing your money away” is another one probably started by the realty cult
I have a niece and nephew who bought “near the top” in St Paul, MN in Sept of 2005. No money down (i’m sure, I haven’t asked) as they had both just graduated from college/trade school and were starting their careers. They bought a house that is probably 3x their combined income. They can probably handle it — I just wonder when housing prices start coming down, whether they’ll realize what they’ve gotten themselves into.
We talk about all these “FB’s” like it’s something new — people making lifelong financial decisions without really thinking them through. But you have to wonder if, during the Depression, there weren’t whole cities full of FB’s who had made drastically stupid financial decisions, whether it was housing, the stock market, or what have you.
I think some of these things just keep cycling around, and it’s just human nature that we’re doomed to repeat the failures of our fathers and grandfathers….
Hey Not Dead Yet…
I wonder when I read the comment “people making lifelong financial decisions without really thinking them through” what a real “lifelong decision” is? Maybe not starting to smoke or drink. Maybe the education that you get that will determine your earnings for your working years. How about committing a crime that gets you twenty-five to life in some state or federal run condo?
Certainly not buying a house! And, it seems not even your niece and nephew’s marriage can be considered a “lifelong decision” based on recent divorce rates.
My point being that all of us have made some good and some bad decisions over the years. We survive! I think that in the past, the average time that people hold a mortgage/house has been something like seven years. Ya, you may lose some money if you move, but not a ” lifelong financial decision” in my humble opinion.
Just my thoughts as I consider all of the stupid things that I have done in the past and still managed to be financially “comfortable”.
Interesting posts, especially in light of the conversation my spouse and I have been having this evening as we consider our housing options. I realize that I am at risk of beginning a flame war by bringing this up, but I don’t believe that it is always a bad idea to buy a house, even in the current market. Each situation is unique, and every buyer must consider the long-term implications of such a huge financial commitment. If the buyer can make a 20% down-payment, take a 15-year mortgage and commit to owning the house for more than a few years, then it is reasonably certain that purchasing a house will be of financial benefit to any buyer.
So, will my spouse and I buy a house this spring? Yes, after thinking it though very carefully (including many nights with a spreadsheet), we will. Our reasons are as follows: we will live in this house for at least fifteen years, we are in the position to purchase the house for cash, we will reap a small tax deduction, and we will pay our “mortgage payment” to our investment account, making it likely that we will enjoy a very comfortable retirement.
It’s easy to throw out criticisms, but not all buyers are naive or fooling themselves into thinking that houses are a quick way to make a buck. Not everyone is fooled by the marketing drivel.
Redhead, that’s the way you’re SUPPOSED to buy a house. No complaints here.
I’m glad you understood my point. Sometimes this blog gets over-run with people who are rabidly anti-housing, ruthlessly criticizing anyone who would dare to suggest that purchasing can be a positive move.
redhead68,
Nobody here is rabidly anti-housing. Most here want a house, they just don’t want to pay an insane price for it. May I ask in what area you plan on purchasing?
I’m not anti-housing. In fact, I own a house with a 15-year 5% fixed loan. It will be paid off in about 12 years. I’m in no rush to pay it off, as I can make more than 5% elsewhere. Also, having a fixed-rate mortgage is a good hedge against the dollar getting toasted, which I think is very likely.
Redhead, Why not simply wait two years and pay half of what you will pay now(you say you are paying cash entirely). The goal is to eliminate any long-term debt, forget the tax breaks on a mortgage, they’re overrated. In terms of your retirement the idea of paying your “mortgage” into an investment fund sounds like a good idea. But I get the impression you’re getting impatient in your wait to buy your “first?” home. It would be a shame to throw that money out the window(unless you’re very wealthy). What if in a few years ill health or divorce pops up and you have to sell, you’d take a heavy loss.
If Redhead and her husband make enough money to pay cash for a house, then they need a tax deduction, assuming that they max out their retirement deductions. Especially if they’re salaried - nowadays the AMT reduces your options for deductions.
Interesting responses. You’ve asked a bunch of questions, and I’ll do my best to try to answer them…
Is this our first house? No, this will be our fifth house (two in Ohio, one in California, and one in Maryland over the last seventeen years).
Where are we purchasing? We are in Colorado and will purchase when our rental agreement expires this summer. We moved here last year to be closer to our extended family and wanted to take our time learning the area before buying.
Are we wealthy? That depends on your perspective. Some people would say yes, others would say no. I consider us very comfortable.
Are we really paying cash for our house? Yes, and we’re not raiding our retirement accounts to do so.
Are we maxing out our retirement accounts? Yes, and then some.
Why not wait? Because our rental’s owner plans to sell the house, and we don’t want to move more than once. We have two young children who have had enough upheaval in their short lives. Additionally, we plan to own the house long enough to ride out any market changes, at least fifteen years and likely longer.
What about the possibility of divorce? I’ve been married for seventeen years, and he and I are doing just fine. Thank you for your concern. And, as far as illness? That’s why we have insurance. I’m a realist, and I know that bad things happen, but I’m not going to put off the future while waiting for disaster to strike. In my opinion, they best hedge against potential financial disaster is not having a mortgage payment, either my own or someone else’s (i.e., the one my rental’s owner is carrying).
Look, my point was not to discuss the details of my life, it was simply to encourage everyone to analyze their unique situation and not to buy into extreme opinions about the housing market, regardless of their slant.
OK Redhead, Go for it! You’re not a young kid as I suspected….
“OK Redhead, Go for it! You’re not a young kid as I suspected….”
No, unfortunately, time ticks onward faster than I’d like!
This is the mentality of the average FB young couple.
This is “THE MORON GENERATION” maybe i can get it to stick, if i say it long enough.
I’ve met plenty of dumb Boomers too. In fact, they seem to be the ones always complaining when things don’t go their way…it is never their fault they haven’t saved for retirement all these years and were compelled by some shady loan broker to buy a house that is 10X their (grossly inflated on the loan docs) income. Unfortunately, this FB mentality gets passed on through the ages.
Ever heard of SSI? Perfect example of lazy a$$es who claim off-the-wall disabilities so they can get checks for doing nothing…their children and grandchildren become SSI recipients as well. Greed, stupidity, and laziness know no age boundaries.
True. We have the occasional giveaway of stuff at work - $10 items at most - that we don’t use any more. I had a 60-year-old ask me why I was conducting the giveaway AFTER work instead of DURING work. I said, heck, we’re giving stuff away, isn’t it worth sticking around for? The person said, “But what if they have an appointment?” I just silently stared.
selfish moron…..unfvcking believable
MBA would have said “I am trying, unsucessfully, to suck some productivity from you and it would be rubbing salt in my wounds to sanction your slacking even further….”
The people I know who have made the worst financial decisions are my eightyish in-laws. Luckily their boomer children are taking care of them.
Well I can’t really talk. I spent nearly 10k on my wife’s ring though I do make more than $10/hr. It makes my wife happy so I don’t mind. Consider me sucked in.
YUP most wives get paid one way or another…
my GF is a rare breed of woman who is proud to be cheap.
She’s not cheap, she’s frugal. HUGE difference. I too am frugal and would kill my husband if she showed up with a $10k diamond for me. My hushand is one lucky man and so are you.
PS……..10+ years ago her mom gave her a 1 1/2 carat diamond that was chipped so what did she want to do with it?
Well we SOLD IT for $2200, and bought our first COMPUTER together. We made far far more MONEY with that computer then with some big rock on her finger.
I spent $300 on my diamond wedding band and had my wedding at the JP in Texas. I refused to spend a sh*tload of money on a wedding or rings!! What a waste! My husband and I used the money for a down payment on our first house!! I routinely save at least $50 - $80 a week on groceries by cutting coupons and watching for sales!! I pack my lunch and we only eat out once a week on the weekends! My husband is the spend-thrift, but I keep an eye on him!! I hate to spend $$ which is why we are doing just fine eventhough he has been out of work since January. I am still maxing out my 457 at work and saving money.
I bought my wife a $3000 diamond necklace.
She brought it back and we bought two new notebook computers.
Now there’s a good nerd wife.
On holidays I ask, “Do you want a girly thing, or a new peripheral?”
If it F###cks, flies, or floats, it’s cheaper to “rent” it…..
“But he insisted it would be worth the industry suffering those foreclosures if it meant millions of people could own a home who otherwise wouldn’t be able.”
During the late 1990s, I heard the same thing said about all the investment in the information superhighway. The analyst talked about the railroads — sure there were massive crashes, bankrupcies, investment losses, depressions — but at the end of it we had the world’s best rail network.
Perhaps this will mean lots of “affordable housing” subsequent to its opposite.
Not everyone fully agrees with that CEO. For instance:
“Research on the CRA (Community Reinvestment Act) has tended to find positive net effects, but the results are not uniform,” Bernanke said at a Fed-sponsored conference on community development.
Research also shows the law’s effect is diminishing as mortgage lending by nonbank institutions expands, Bernanke said.
http://www.reuters.com/article/ousiv/idUSWBT00674920070330?src=033007_1458_FEATURES_subprime_fallout
i think cra is a corrupt scheme where banks get affordible housing credits with which they insure riskier investments. also charity is charity and business is business.
The bubble built homes are over-sized homes and in the extraburbs. Energy inefficient and too large for most practical needs and too far from established urban areas with infrastructure and jobs.
This bubble built homes around an infrastructure dependent on cheap energy.
Imagine if the market speculated on 1300-1800 sqft townhomes, insulated and engineered with solar water heating and passive cooling. What if these were built near urban areas ? We’d have excess inventory of stuff we’d actually need and use.
“Dawn Erwin has had a tough time since moving to Maryland. Her husband has a new job and the Erwins want to sell their home.”
Is it just me, or does it seem there is an inordinate amount of people that buy new homes, but in short order, need to sell cause they have a “new job”? I’ve never seen so many people want to sell within 1-2 years of buying because they have a “new job”.
Or is “new job” another phrase for “bad flip”?
Either that, or “unaffordable ARM reset.”
According to a study by the University of Michigan:
“About one third of American workers, approximately 53 million individuals, change employers, become unemployed, or leave the workforce in any given year.”
I have observed a lot of churn in the job market for engineers - very few last longer than five years at a given job - and engineering is a realtively stable profession.
There are a lot of people who really should be renters. I don’t get the stigma.
And for all the churn, you don’t get to move up the food chain that much.
This is why I’m not using my engineering degree.
Yes, despite constant complaining from CEO’s that there is an engineer shortage wages have been stagnant since 2000. And yet they want to let in more H1B’s for that perceived shortage.
I’m not going to turn this into a jobs board, but I’ll just observe that a really good engineer can easily pull down $140K plus bennies in Los Angeles.
If he or she is willing to do the consultant mambo, it’s more like $240K gross, but you have to buy your own health insurance.
There is no shortage of engineers. But there is a huge shortage of engineers that are:
1. Good to great.
2. Have expertise in the right field (in demand).
3. Are flexible enough to act like professionals and pay for their own training, or do it themselves through relevant experience.
Does that mean that they can afford to buy a house in Los Angeles? No, not now. But they can live pretty well while they wait out this most recent bubble.
Most of the trouble around the H1B thing is related to the last bubble, in which HTML monkeys were paid six figures to sit around and imagine that they were real engineers. The market was seriousy distorted until the dot.com crash sank in. We’re getting back to reality now.
Example: Windows Sysadmin applies for Unix software development job, expects to be trained on the company’s nickle at full pay. Sorry, no way. Come back when you meet the requirements.
Age discrimination is also rampant - look around where are all the engineers over 40? Its kinda like Circuit City, but just not as obvious.
And I think you underestimate the amount of H1-Bs that were brought into the country during the past decade.
2000 257,640
2001 331,206
2002 195,000
2003 195,000
for a total of 1,003,723 H1-Bs
http://www.uscis.gov/graphics/publicaffairs/factsheets/H1-BFY2003.pdf
And don’t forget what Alan Greenspan said last week in Washington:
“Allowing more skilled workers into the country would bring down the salaries of top earners in the United States, easing tensions over the mounting wage gap, Greenspan said. ‘Our skilled wages are higher than anywhere in the world,’ he said. ‘If we open up a significant window for skilled workers, that would suppress the skilled-wage level and end the concentration of income.’”
Circuit City evidently was listening very closely.
If you know of an engineering job that pays $140K, I’ll take it.
$70K is the national median.
Agreed. Civil’s in No. Cal - $80 to $100k (road and bridges).
Moving to consultant company to consultant company doesn’t necessrily get a promotion (unless you’re looking hard for one), but it will get you money when the demand is good! I know. That’s what I did starting in the late 1990’s. But, I’m back in the public sector living in “GOD’s” country and working on my retirement.
There are many factor’s why one changes companies. After you get older (and out of debt; I sold my house 3 years ago), you realise money isn’t everything.
5 years , yep thats about right. I think I’ve had over 15 jobs so far in Engineering. You find out what you’re good at and not so good at by trying different things.
Having engineering degree is not a benefit. There is very little demand for them. Today economy is service oriented, which does not need engineers. Only manufacturing industry would need engineers working with skills in the field of computer, chemical, machinery, telecommunication… Last year I was looking for a new job, literally there are handful positions for them, and the pay is not very high. Entry-level graduate can face prospect of making between $37-45K, which is not much, considering the cost of earning a graduate degree. With this salary, you can only be a renter or mobile home dweller.
“pay is not very high. Entry-level graduate can face prospect of making between $37-45K, which is not much, considering the cost of earning a graduate degree…”
And don’t forget the high level of debt (payments) that most college grad’s have now a days.
It depends what field you’re in. Electrical Engineers, Computer Engineers, etc. are being killed right now because of the labor differentials in India and China. These high paying jobs have been exported for years now. Lot’s of companies doing it.
Road and Bridge design/construction still going pretty good right now. High demand for qualified/licensed Civil Engineers. Hard to export those jobs. But depends on Gov spending (like most of our economy).
No kidding. Add that to the taken-at-face-value media quotes from FBs telling their sob story. Zero effort made at researching precisely WHY the FB is really in hot water. Maybe those serial cash-out refis & HELOCs to take cruises, buy boat/RV, new Lexus, new “headlights” for the wife, etc…
“Dawn Erwin has had a tough time since moving to Maryland. Her husband has a new job and the Erwins want to sell their home. They put a Realtor sign up on Jan. 2 and have had 15 people interested in their house, but so far no takers. ‘First I couldn’t get into the house, and now I can’t get rid of it,’ Erwin said.”
Dawn Erwin. Do you suppose her nick-name is Darwin?
No…….Derwood (as illustrated by Agnes Moorehead in “Bewitched”)
Funny, Jingle. I would have gotten it without the explanation, too.
a HELOC is forever?!
Nah, the FB will be foreclosed on before too long.
“‘Holy Cow! Holy Cow!’ exclaimed Scott Gray, a credit counselor in Tecumseh. ‘(Politicians ) want people in trouble to borrow more money? And have a second loan to pay off when they get a new job?’ Gray said.”
No, they’ll walk from those too, unless MI forces it to remain with them like student loans. I suppose MI could guarantee it for the lenders. It’ll be “free money” for some.
From a self-interest pov, if there are to be bailouts, I’d rather see states I don’t live in eat it rather than the fed govt get involved.
There has been a huge move to shift folks from income to debt. Don’t be surprised if the next move by our trusty govt is to eliminate the statute of limitations on personal debts. With all of the offshoring and imported cheap labor, obviously no one earns what they would otherwise, so credit cards and HELOC to the economies rescue.
“America’s housing slump is more serious than widely believed and risks setting off a full-scale global crisis, Morgan Stanley has warned in a note to clients.
The US bank said the sudden deterioration in the sub-prime sector knocked away the “cornerstone” of US household consumption and threatened contagion to a broader nexus of complex derivatives.
“US sub-prime has the potential to turn into a real financial crisis. We do not make this assertion lightly,” said Teun Draaisma and Graham Secker, the bank’s two chief equity strategists for Europe.”
Let the ShitStorm begin!!
“risks setting off a full-scale global crisis”
You don’t normally see that kind of language from the Wall St. crowd, especially from chief equity strategists. Of course, others on this blog have been predicting this for quite some time.
“contagion to a broader nexus of complex derivatives” Ha. Too funny.
RISK CAN’T BE SECURITIZED AWAY!
Sure it can, if not please tell me what government produces it’s own income.
Of course none do, but they retain a first tranche of the nations income. Because of this, they are obviously rated more highly than every other promise to pay issued in that nation’s currency.
Another example is a mutual insurance company. The risk didn’t change a bit, but every insurance company has a better credit rating than the individuals it insures. It’s only by rearranging most that risk (with the company selling some as well) that improved the chance of survival.
Sometimes the securitization is too costly to be worth it, and there are a zillion failed insurance companies who poorly evaluated risk, but that is a terrible reason to damn the system of risk transfer and repackaging as impotent.
‘A buyer might be able to get a home for $400,000 that was worth [$450,000] a year ago,’
And will be worth $350,000 next year, and $300,000 the year after that, and …
Agreed, although I think his word choice is a little off. I don’t think it was ever “worth” $450,000.
Yes, it was ‘worth’ $450K because it could have sold for $450K a year ago. It’s worth what someone is (or was) willing to pay at the time in question. The number is lower now, but was higher then.
Yeah the American Dream is really ingrained. I been in my SFR rental for over a decade now, unbelievable. Lately i feel pretty good about it tho. Landlord lets me do whatever i want to it, houses on both sides are “worth” 800 to one mil, excellent part of town… my rent is 1400 bucks. It was 1000 when i moved in. Lately I think it will be ok not to have achieved thee Dream… in any case, prices will have to come down A Lot to convince me. Maybe I am just cheap. I am still using the nice Flexogen hose the guy left when he sold house next door for 240k. That was, let’s see, one, two, ah, four owners ago…
Maybe I am just cheap. I am still using the nice Flexogen hose the guy left when he sold house next door for 240k.
You’re a looter. But it’s okay because no one saw you take the hose, right?
He gave it to me. Some really nice patio furniture too.
“You’re a looter. But it’s okay because no one saw you take the hose, right?”
You’re a detective, right?
No, he must be a lawmaker.
I posted this late yesterday……..It’s from a realtor no less.
http://www.marketoracle.co.uk/Article639.html
Nice article. He sounds like one of us (maybe even more pessimistic about the economy than most on here).
Here’s one from out in the Hamptons that will make you vomit:
“Another factor for variations in prices on similar properties is the “marquee” listing or the “I dare you” listing. Some people are serial listors, always putting their properties on the market 20-25% (or more) above value because it feeds their ego – OR because an agent “bought” the listing with an inflated suggested list price. The “I dare you” listors put houses on the market for their “make me move” price, which in escalating markets is often a moving target. Anyone who’s been
brokering for a while has had instances where a buyer puts in a full-price offer and, suddenly the seller takes the house off the market because they didn’t believe anyone would hit their number. Often, the house then comes back on the market at a new, higher price.”
http://thehamptons.wordpress.com/
How very nouveaux…
All well and good, but the market under $3 million on the East End of LI tanking. Some mega homes are selling for above $20 million and that distorts the numbers. But undere $3 million has already seen price slippage and it has truly only just begun.
Trouble in Paradise!
And across the Sound:
High-end homes in towns such as Easton and Greenwich appear to be getting hurt more than the affordable housing stock found in Bridgeport, Nkwo said.”
But I thought that the high end was supposed to be immune to declines.
“Like some fool, I locked in a 4.5 percent, fixed-rate, 15-year mortgage a few years ago when I had the chance. What was I thinking? Instead of being free of mortgage debt at 57, I could keep making payments until I’m 85.”
Gee, it seems that that would just make you a VERY stupid renter, wouldn’t it?. So what’s next; the 100 year mortgage?.
I think the original statement was intended sarcastic.
I understand. I meant to be sarcastic in turn with the fact that they’ve now come out with a 40 year mortgage. I guess I’ll have to work on my delivery
No, it would be medieval mortgage, good for 3 generations, where the people will inherit mortgage from one generation to the other…It worked in Central Europe around 1200-1350 and was intended to bound people to live in the royal (king’s owned) city, so they would not run out to live at some feudal manor.
Sorry if this has been posted already - from La Times:
Sweeping mortgage bailout unlikely
…..The Bush administration has ruled out a blanket program to help homeowners stave off foreclosure, reasoning that it’s “not an appropriate role for the federal government,” White House spokesman Tony Fratto said….
One problem with even suggesting a broad-based rescue plan for homeowners who are underwater is that any bailout of borrowers also would be viewed as a bailout of their lenders — potentially including some lenders that allegedly preyed on home buyers during the housing boom…..
By contrast, using tax dollars to keep people from losing their homes would be “socializing” lenders’ losses, meaning society as a whole would be footing part of the bill, said Paul Kasriel, an economist at Northern Trust Co. in Chicago.
http://www.latimes.com/business/la-fi-bailout30mar30,0,4891093.story?coll=la-home-headlines
March 30 (Bloomberg) — First NLC Financial Services LLC, a mortgage lender owned by investment bank Friedman, Billings, Ramsey Group Inc., said it will close some operations centers because of slowing sales of so-called subprime loans.
…
Operations will be consolidated into facilities at Deerfield Beach and Anaheim, California, First NLC said. The company sells mortgage loans in 42 U.S. states.
http://www.bloomberg.com/apps/news?pid=20601170&sid=aVaPL5ou8ROw&refer=home
I guess the rumors were true:
http://bakersfieldbubble.blogspot.com/2007/03/first-nlc.html
More pain for Orange County:
“Operations will be consolidated into facilities at Deerfield Beach and Anaheim, California, First NLC said”
Nevermind, I missread this.
As some of you might know (I suspect some of you have found it already), I have been doing some work to develop a new kind of integration software. We have been in business for about 18 months and have built systems for some folks in the finance (government and public), transportation and casino business.
Every app we built so far was all viewing and working with private / sensitive data internal to the organization we were working for. We needed a good, public facing demo of what we could do with our tool kit. We crossed my interest with the housing bubble, the problem of watching a fused picture of the MLSs and this software’s ability to scavenge data and came up with something we call Hardtack.
So now we have it running fairly well (consider this a Beta still), I wanted to invite you to take an early look at the web application using our technology (we are calling Boomerang). The site sifts and aggregates real estate data from across the country to create an evolving, current picture of the health and status of the real estate market at the city, state, region and national level. We do this using Boomerang to find, categorize and aggregate sets of listings from real estate web sites. In other words, it treats parts of the web as if it were a large database.
Hardtack site: http://hardtack.osgcorp.com/osg-hardtack/index.jsp
Hardtack FAQ: http://hardtack.osgcorp.com/osg-hardtack/faq.jsp
Feel free to take a look around. The first page you see will give you a summary view across the nation, and you can drill into any region, state or city. The drop down menus across the top will help you find places quickly, or you can just click on the orange blobs on the map. The categories below the map will show you statistics for each of the product types in each market.
Thanks for taking a look, and thanks to Ben for tolerating my posting the web site’s URL on his Blog.
This is awesome - great work! It would also be cool to see the average household income included in the census data.
We have that data, and a whole pile of other stats we are not showing right now. Now that we have it to this state (where it makes a pretty good demo) upgrades will likely be on a “as we can get to them” basis.
Thanks for the feedback, glad you found it interesting or useful.
Sig, where are you located? You should get a story written up in the local press.
Me and the team are in north county San Diego. At this point I would rather have this tool stay a bit low profile. I am happy to share it with the community here, and you can feel free to pass along the URL to anyone who you think will be interested, but I am not up to have a tidal wave of folks yet. Hopefully no slashdotting anytime soon!
Great work. I would ask if there was a way to have more history than 1 month period.
Yes, sadly we have only been running this for 1 month, so that is the history we have. By the end of 2007 we will have nearly a year of it. Later than what I would want, but we will be able to document probably the most interesting part of the market reaction to the negative forces on it right now. Once our data set is broader we want to add lists of places that are dropping and lists of places that are holding value. Who is down more / less, things like that.
I like the fact that the numbers here will never be “seasonally adjusted” or any such balloon juice. You may see odd dips from time to time. Those are bugs in the scavengers and (as i said) the site is still beta.
Sig — slick and timely — good stuff. Thanks.
Very cool!
Nice work.
Great site! I especially like the layout—very clean, and easy to see the relevant information.
That is a pretty cool site, sigalarm. What you should want to add is some kind of quality adjustment to your price change statistics, so that you can separate the change in prices of comparable homes from the change in quality of the homes that are selling. (This is what the Case-Shiller-Wise and hedonically-adjusted price indexes attempt to do.)
Oops, looks like you have a bit of a problem. Here’s what I got from your site:
HTTP Status 500 -
type Exception report
message
description The server encountered an internal error () that prevented it from fulfilling this request.
exception
org.apache.jasper.JasperException: Java heap space
org.apache.jasper.servlet.JspServletWrapper.handleJspException(JspServletWrapper.java:455)
org.apache.jasper.servlet.JspServletWrapper.service(JspServletWrapper.java:377)
org.apache.jasper.servlet.JspServlet.serviceJspFile(JspServlet.java:314)
org.apache.jasper.servlet.JspServlet.service(JspServlet.java:264)
javax.servlet.http.HttpServlet.service(HttpServlet.java:802)
root cause
javax.servlet.ServletException: Java heap space
org.apache.jasper.runtime.PageContextImpl.doHandlePageException(PageContextImpl.java:843)
org.apache.jasper.runtime.PageContextImpl.handlePageException(PageContextImpl.java:776)
org.apache.jsp.index_jsp._jspService(index_jsp.java:1182)
org.apache.jasper.runtime.HttpJspBase.service(HttpJspBase.java:97)
javax.servlet.http.HttpServlet.service(HttpServlet.java:802)
org.apache.jasper.servlet.JspServletWrapper.service(JspServletWrapper.java:334)
org.apache.jasper.servlet.JspServlet.serviceJspFile(JspServlet.java:314)
org.apache.jasper.servlet.JspServlet.service(JspServlet.java:264)
javax.servlet.http.HttpServlet.service(HttpServlet.java:802)
root cause
java.lang.OutOfMemoryError: Java heap space
note The full stack trace of the root cause is available in the Apache Tomcat/5.5.20 logs.
Yes, sorry - one thing that showed up since a bunch of you folks decided to come have a visit is we found some weaknesses in the web site. Sorry for the problems, but thanks for helping us find it.
Awesome !!!! Please add my hometown, Alexandria, Va. (DC area), to the mix if you can.
That is great stuff.
The URL for the Washington DC Metro area is: http://tinyurl.com/34b7nk
The URL for Alexandria is: http://tinyurl.com/2rpoj3
Just about any spot in the US is in there.
A masterpiece mashup, sigalarm. Expect a tidal wave of traffic. Hope you planned ahead! I’m more than willing to spread the word when you’re ready.
Thanks everyone for the kind comments. Based on some of the ways folks have been interacting with the data since last night (and thank you a thousand times over for coming and having a look) we have a few new things we are probably going to have to do before we open the door much wider.
Thanks again for helping us out.
And then there was subprime slime spreadage:
March 30 (Bloomberg) — M&T Bank Corp., the western New York bank partly owned by Warren Buffett’s Berkshire Hathaway Inc., said low bids for the Alt-A mortgages it planned to sell will cut first-quarter profit by $7 million.
…
“We introduced some products that we thought were still within the sanity range of where we should be and as we did that we almost immediately started to see the market contract,” Ken Carter, the unit’s head, said in an interview.
…
M&T said it plans to keep $883 million of Alt-A home loans instead of selling them because management believes the bids don’t reflect their value.
http://www.bloomberg.com/apps/news?pid=20601170&sid=a21ui1oYB5TA&refer=home
So much for sub prime not affecting Alt-A. Right now perception is the only reality. Wait until the true reality sets in. Warren will wish he sold those bonds at a discount. If any of those Alt-A loans are in California, I can tell him there is mortgage fraud on an unprecidented basis. Puffed income and puffed appraisals come to mind, by large percentages. Only equity (down payments) of 50% or more will provide protection to lenders. And if you have that down stroke, who would need Alt-A?
“M&T said it plans to keep $883 million of Alt-A home loans instead of selling them because management believes the bids don’t reflect their value.”
Great! With all those human interest stories on the poor FBs trying to sell their home at they thought was fair market value, its nice to see that Warren Buffet’s crack management team has come along to keep them company as the follow the market down.
Moral Hazard and Culpability:
March 30 (Bloomberg) — “Interest-Only Mortgage Payments and Payment-Option ARMs — Are They for You?” asks the U.S. Federal Reserve in a November brochure on its Web site.
The answer should have been a resounding “No.” Instead, cash-strapped Americans embraced loans offering low initial payments, praying that rising house prices would build a refinancing buffer before the monthly rates become unaffordable.
…
All four legs of the U.S. housing market are wobbling precariously. The mortgage lenders who funded the boom are going bust or shutting up shop. The homebuilders who slapped together the bricks and mortar are seeing their earnings plummet. The financial alchemy used to repackage home loans into tradable securities is starting to unravel…. And the consumers seduced into what the Fed pamphlet calls the “American dream” of home ownership are becoming more fearful about the future as real-estate values start to stumble.
http://www.bloomberg.com/apps/news?pid=20601039&sid=apKbQNSz4iXs&refer=home
It is mildly amusing that Greenspan while working for the Federal Reserve (a private corporation owned by banks) urges ARMs and the FDIC (a government agency) at the same time was concerned about ARMs.
“Again, I want to talk about why someone would do this to themselves, why someone would take on an adjustable-rate product when you know short-term rates are rising. That doesn’t make any sense. The only conclusion that you can draw from this is that, otherwise, these homes would not be affordable to these consumers….Bank exposure to mortgages and home equity is now at peak levels, having risen dramatically (see Chart 50). If you look at 1998, the total exposure to mortgages and home equity loans was about 25 percent. In the last quarter, the third quarter, it had risen to 37 percent.”
FDIC Scenarios for the next Recession Mar 2006
http://tinyurl.com/mqh8y
“Again, I want to talk about why someone would do this to themselves, why someone would take on an adjustable-rate product when you know short-term rates are rising. That doesn’t make any sense.”
It DOES make sense to someone if this someone is deeply immersed into the GroupThink mania that house prices ALWAYS go up and one can ALWAYS refinance or sell out at a profit when his mortgage interest rate resets.
It makes perfectly good sense; Until it suddenly doesn’t
“When you combine ignorance and borrowed money, the consequences can get interesting.” - Warren Buffett
If you devalue money it makes a hell of a lot of sense. essentially they gave people the wrong signal.
LOL. Serin’s FICO score: http://www.iamfacingforeclosure.com/95/my-true-credit-score-fico-score/
“I’m still trying to make sense of this whole credit score / FICO score mess.”
This is beyond hilarious…
is 459 good….
It says right on the report, 459 is better than 1% of the population. So yeah, 459 is good if you’re in that 1%.
HOW BLIND CAN THEY BE?
As our phony economy begins to unravel before our eyes, it is amazing how few people can actually see it. The collective wisdom of stock market pundits, economists, and Federal Reserve officials gives the impression that everything is just fine…….
and this…….
The real problems will be for existing homeowners, especially those who overpaid, who are unable to sell for their loan amounts, and who lack sufficient home equity or incomes to refinance their adjustable rate mortgages. Also feeling the pinch will be mortgage lenders, who will be unable to recoup their investments when borrowers default. Of course, the ultimate bag holders will be American taxpayers. As the crisis widens, politicians will inevitably seek to bail out everyone in danger of losing money on real estate purchased in the boom years. This will result in huge run-ups of the Federal deficit, which will be financed by inflationary monetary and fiscal policies. As a result, the biggest losses could be reserved for savers, retirees, investors, or anyone left holding dollar-denominated financial assets when the music finally stops playing.
http://www.freemarketnews.com/Analysis/96/7226/peter.asp?wid=96&nid=7226
“…the biggest losses could be reserved for savers, retirees, investors, or anyone left holding dollar-denominated financial assets when the music finally stops playing.”
I’ve thought about that, too, and have bought not-quite-enough metal to cover myself. Politicians, fortunately, understand voters. The most determined rain-or-shine voters are among the bunch that would be screwed in this scenario. So I think the screwing will be less violent and severe than it might otherwise have been. The guilty, then, will (IMO) get off much less lightly than in the past. Even so, there is always the possibility of Robert Cote’s long-ago-forecast exogenous event that could come to the rescue of politicos who pull the cord on whomever gets axed. However vile the situation, it sure is interesting.
where is robert???
He still post occasionally on Carlsbad Jim’s blog:
http://www.bubbleinfo.com/
I also saw him post on a wsj blog
Soon helicopter Ben will get the presses really rolling (RTC II will buy mortgages from failed FDIC insured foolish lenders who followed the rules); the lending will continue (although the rules will change), the inflating will go on, and as long as the US military is in charge of the world, the dollar will continue to be accepted. Until it isn’t. I’m aiming for ~10% of my assets in precious metals; I’m halfway there, and will be completely there in 5-10 years.
Got diversified assets?
as long as the US military is in charge of the world, the dollar will continue to be accepted
Sorry to be rude, but the US military isn’t even “in charge of” Baghdad. And a couple of years ago, it wasn’t “in charge of” a major US city either.
And don’t you think people like Putin, Kim Jong-ll, the Iranians and the Chinese haven’t noticed.
Get real.
You may have 10 months, but certainly not 5 years, much less 10 years. And 10% is much too low.
“…the biggest losses could be reserved for savers, retirees, investors, or anyone left holding dollar-denominated financial assets when the music finally stops playing.”
This group is the enemy in the War on Savers. Anyone who is not a wreckless profligate is a deadbeat in the eyes of the banking establishment, whose campaign contributions are the puppet strings which move elected politicians.
Amen to that, but is there nothing that can be done?
“There is no force more potent in the modern world than stupidity fueled by greed” - E.A.
Housing market was a pyramid scheme, which eventually runs out of suckers. The pyramid started to crumble. I do believe that the government will bailout the real estate, not only at federal level, but local and state level as well. Many counties and townships depend on property taxes, and failing prices will hurt their revenues. They will do anything to stop they crumble. I would not be surprised if there would be significant subsides to the mortgages, or the state will try to repurchase and keep the real estate to eliminate the inventory of homes on the market.
Bailout? Won’t happen. For every story of a “worthy” receipient of help there’ll be a Casey Serin story.
No one wants to bail a “Casey” out. Besides, trying to formulate some kind of assistence package will prove so complex it will make the Medicare process look simple. This will take years to work out, years during which those on the margin (worthy of help or not) will fold up one way or another.
“Programs” will be suggested and maybe even enacted but they’ll be too little to late to help anyone but those who are
connected, politically. What will be devised will be for political consumption; not practical deployment.
Anyone thinking to the contrary should provide an example of how any government addressed something (timely) like this (an asset debacle) in the past. There’s no precedent which means any suggestions will go through an endless debate process (as they should). Even if they came up with a workable, “perfect” solution….it won’t get enacted until its far too late to have any benefit. Such is the nature of politics.
If it does happen, I’m quitting my job and going on “Real Estate Welfare”.
“My house lost value. Give me money. Thank you Mr. Government Man. Now I can pay for a new still and crank lab and be a productive member of society”.
““Compared to the first quarter of last year, mortgage foreclosures in Dakota County have grown by 204 percent. According to County Recorder Joel Beckman, 299 mortgage foreclosures have been recorded from Jan. 1 to March 21.”
Born and raised in Dakota County. I can’t even begin to express how many times this Housing Madness has made me want to cry. This would not have happened in the Dakota County that I grew up in. God help us all!
Thanks Ben. You’ve done a wonderful thing.
“With a 40-year home loan, you could possibly have a lower, more affordable monthly mortgage payment than traditional 15- or 30-year loans, as well as the extra cash you need, even if you have less than perfect credit.”
A major typo there, unforgivable for a big outfit like this. “…as well as the extra cash you need…” should be “…as well as the extra cash you WANT…” [emphasis added]
Let the Borrower Beware
By BOB TEDESCHI
Published: March 30, 2007
WITH the national real estate market slowing, fewer people are seeking loans. And with subprime lending standards tightening significantly, fewer people qualify for them.
The combination has resulted in less business for lenders and brokers, which in turn means that prospective borrowers should tread carefully. People shopping for loans must always exercise vigilance against unscrupulous lenders. But analysts and industry executives say that in the midst of the current shakeout, borrowers should be especially cautious about the loans they are considering.
Paul Miller, a mortgage industry analyst with Friedman, Billings & Ramsey, an investment firm in Arlington, Va., said that these days, some lenders or brokers cannot afford to be choosy. And that’s where the problems can begin.
“All of a sudden, you might have only two people walking through the door, and only one of them looks like they’d be a good loan,” Mr. Miller said. But an unprincipled broker will decide that both loans are good, Mr. Miller said, because the broker needs the income.
In other words, to make a larger fee, the unscrupulous broker will qualify someone for a loan he or she really shouldn’t get. Doing so is unethical at best and fraudulent at worst.
Michael L. Moskowitz, the president of Equity Now, a mortgage lender based in Manhattan, said that in harder times there is also more temptation to match borrowers with loans that may not be right for them, but which carry higher profits for the company.
He said a former client in Connecticut had recently closed an $880,000 refinance loan, although a second mortgage would have worked just as well. But that would have yielded the broker only $4,000 in profit, compared with $35,000 for the refinance.
Mr. Moskowitz said he urged the borrower, who had come to him for advice about another possible refinance loan, to complain to state regulators in Connecticut and New York, where the loan officer had his office, and to appeal to the investor who ultimately bought the loan.
“I believe he could present this as a predatory loan,” Mr. Moskowitz said, but the borrower has been unwilling to do so.
Industry executives said borrowers should demand to see the final loan documents, known as the HUD-1 statement, 24 hours before the closing, to avoid any surprise costs or terms.
Mr. Moskowitz said borrowers should also ask the lender to connect them with three customers in similar situations. “A reputable company will have no problems with that,” he said.
Harry H. Dinham, the president of the National Association of Mortgage Brokers, said most brokers try to establish long-term relationships with their clients and seek to match them with the right loans. But he said borrowers should be vigilant, especially in states where lenders and brokers are subject to little oversight by regulators.
With the downturn, jobs in the mortgage field are declining. According to the Bureau of Labor Statistics, mortgage brokers and bankers lost about 15,500 jobs from October to January, the last month for which statistics are available.
The industry still had 489,000 jobs in January, but the employment picture is clearly worsening. Many subprime lenders have in recent weeks either shut down or significantly curtailed lending operations, as investors have deemed many such loans too risky.
Consumers can take some solace in the fact that the industry downturn will weed some unscrupulous lenders from the mix, Mr. Dinham said, but borrowers should also call for stricter licensing requirements. That, he said, will make it less likely that unscrupulous lenders and brokers will push clients toward bad loans.
http://homefinance.nytimes.com/nyt/article/mortgage-column-by-bob-tedeschi/2007.03.30.01mort/?ref=realestate
I know it’s a start but let’s be real….who the hell can afford a $642K home in OC? Are there really THAT MANY rich people in OC? My wife and I made well over a $150K last year…and I PERSONALLY would not want to get into a mortgage for a home that expensive. So WTF…a 2.7% decrease? Big Whoop….
The only buying and selling going on is the incestuous trading between people who already own bubble homes. That’s the only way 99.9% of people could afford the home prices now.