The Housing Bubble

Ich muess mein Deutsch besser lernen…

Ventura County Star front page Grocery Unions to strike in California on April 13th.

entire list, nice to visit, living there, nightmarish

another tg?

interesting link… will be fun to follow the avg sales prices here… though i find it very funny that they have a column for “savings” that these buyers got on foreclosed properties.

From that link: (Thank you Arlington, great site!)
Ten top foreclosure cities:
1. Detroit, Michigan
2. Greeley, Colorado
3. Atlanta, Georgia
4. Fort Worth, Texas
5. Las Vegas, Nevada
6. Vallejo, California
7. Camden, New Jersey
8. Palm Bay, Florida
9. Olympia, Washington
10. Dallas, Texas

16K sales versus 569K foreclosures — wow! It looks like the lenders (or whoever holds the bag on bankrupt lenders’ collateral) are waiting for their blue state candidates in Congress to push through one of their bailout proposals. I hope the REO holders are not deprived of the same lesson in market discipline that the foreclosed borrowers just endured.

This one is a lot better and more up-to-date than foreclosure.com, but many of the little side maps showing locations are wrong.

Arlington,

Great link. I love the graphs.

I’ve already forwarded the link.

Sadly, one of my relatives has gone on the warpath to pressure to buy! Quoting every Gary Watts quote you could imagine. I finally told her that she asked for my advice, we disagree on the trend, and its her money. Her responsibility.

got popcorn?
Neil

Has anyone used RealtyTrac and/or Foreclosure.com? Is it actually worth the costs or is the same info available elsewhere for free? I see there are listings on yahoo that are not on foreclosure.com. What gives?

“It looks like banks are just holding on to properties”

until they unload all their stocks and buy puts.

That is one awesome link.

I was kind of shocked to see a few homes on there that were listed all last year on the MLS with their wishing prices. Two of them were even the front page features on the glossy little free RE books that are in every grocery store, etc.

A few are on the MLS right now at grossly higher “asking prices” than are indicated on the Yahoo site.

Which kind of PROVES that if you’re out there low-balling, you may strike pay dirt. One is on the MLS for @ 500K, on Yahoo for 180K. Another was on the MLS for 180K, on Yahoo for 55K.

As I’ve suspected, minus 50% is not gonna cut it. These places were way more out of touch with fundamentals than that.

Another shocker is that Olympia , WA. is in the top 10 for foreclosures nationwide. State capitol and not a bad town for those not familiar. We certainly have not heard a peep out of the MSM up here on *that* bit of news!

construction workers are illegals( not recorded) RE ,mort are 1099
so when they get cut they become “employeed” at crappy jobs

I apologize if this has been posted before. This is an important article Alan Blinder, architect of the offshoring movement , NAFTA etc. has changed his spots. It is an excellent read.

Offshoring: The Next Industrial Revolution?
Alan S. Blinder

“…To obtain a ballpark figure of the number of U.S. jobs threatened by offshoring, consider the composition of the U.S. labor market at the end of 2004. There were 14.3 million manufacturing jobs. The vast majority of those workers produced items that could be put in a box, and so virtually all of their jobs were potentially movable offshore. …

The overall picture defies generalization, but a rough estimate, based on the preceding numbers, is that the total number of current U.S. service-sector jobs that will be susceptible to offshoring in the electronic future is two to three times the total number of current manufacturing jobs (which is about 14 million). That said, large swaths of the U.S. labor market look to be immune. But, of course, no one knows exactly what technological changes the future will bring….

Changing trade patterns will keep most personal-service jobs at home while many jobs producing goods and impersonal services migrate to the developing world. When you add to that the likelihood that the demand for many of the increasingly costly personal services is destined to shrink relative to the demand for ever-cheaper impersonal services and manufactured goods, rich countries are likely to have some major readjustments to make. One of the adjustments will involve reallocating labor from one industry to another. But another will show up in real wages. As more and more rich-country workers seek employment in personal services, real wages for those jobs are likely to decline, unless the offset from rising demand is strong enough. …

In the United States, job-market stress up to now has been particularly acute for the uneducated and the unskilled, who are less inclined to exercise their political voice and less adept at doing so. But the new cadres of displaced workers, especially those who are drawn from the upper educational reaches, will be neither as passive nor as quiet. They will also be numerous. …

Contrary to current thinking, Americans, and residents of other English-speaking countries, should be less concerned about the challenge from China, which comes largely in manufacturing, and more concerned about the challenge from India, which comes in services. India is learning to exploit its already strong comparative advantage in English, and that process will continue. …”

Foreign Affairs Mar/Apr 2006
http://tinyurl.com/ytm8ow

http://www.businessweek.com/ap/financialnews/D8OB4CGG1.htm

Strong labor market, surging gas, T-bond yields and gold prices… the signs of increasing inflationary pressures are in place. The Fed is between a rock and a hard place; if they stand pat, it will be interpreted as a de facto policy of letting inflation ramp up, but if the tighten, they can increase the chances of catching blame for the foreclosure crisis.

I do not believe these numbers at all! 54k new jobs in education and healthcare in March? Schools do not hire many people in March. Most if not all of eduction hiring is done in late spring into summer. I think that the government cooked the books. They are trying every trick they can to prop up this economy as they know that housing is dragging us into a recession. Look at the earnings of Home Depot and Lowes as indicators of economic activity.

‘Foreclosure properties are hitting metro Milwaukee steadily enough to keep housing prices from rising, Vozar and Scholtka said.’

More properly stated, the comment would be ‘foreclosure are accelerating the decline in housing prices’

you’ll live like a king.
looks lime a decent house is 200K

You ask a “housing bubble” blog if something is way overpriced?

Nah, It is you. RE is a bargain now. You should know by now that real estate always goes up.

Columbus is an example of how the market can be complicated. There are many different neighborhoods making up the city, and some like Germantown have a very different dynamic than the rest. Westside has historically been more hardscrabble and industrial than most of town. Overall, Columbus has seen better economic performance and growth that most other parts of Ohio which is seeing difficulties statewide. And then, of course, there is the bubble which magnifies everything.

Shit, if non felons can put Bush in office, then these ex crooks should be given a chance a voting. LOL

Honestly, hopefully the felons can do better then the citizens have so far. The fact that these looters in govt here can get voted in year after year is just shocking.

It’s just resistence to change; how can we let these crooks continue to run our counties/cities. And, I don’t meen “crook” in the typical politican since of the word. I mean “crook”! Stealing money from public coffers, bribes, etc.

Since Florida has convicted and sentenced people for “moral crimes” and the “vast majority black” have been disenfranchised, it is about time the state started to do positive changes.

Great. Given the millions of ex-felons, 90% or more of whom will vote democratic, the DNC will have a vast new class of thugs/societal parasites to pander to. They will also ensure their permanant stranglehold on the levers of power.

Since the GOP has been hijacked by the neo-cons and financial oligarchs, there’s no place left to go for the middle and working classes, who will be stuck with the bills for Democratic checkbook politics.

In a Break From the Past, Florida Will Let Felons Vote

Why not? FL apparently has no problems electing felons. Isn’t Alcee Hastings a convicted felon?

The inmates are truly running the asylum.

I guess we’ve reached a critical mass of ex-white-collar-crimes felons who have talked the governor into letting them vote again.

or own guns ?
it’s a right they gave up when they commited the crime
soon lots of RE folks will join them

“This has to do with people speculating in the real estate market. It was a nationwide trend in 2004 and early 2005. Prices had gone up 40 to 50 percent. They got pinched …. The market is bad. Even by their own words, they never intended to close on the units. Obviously, they were speculating and this is what happens when you speculate. Sometimes it pays off and sometimes it doesn’t.”

Screw ‘em

“Right now there’s roughly one foreclosure for every 2.5 sales.”

But at least you don’t have a recession there in the Springs, right?

My question: Will that 1 foreclosure to 2.5 sales ratio increase to 1:1 at some point?

“…let the market take care of itself.”

With 569K U.S. foreclosures but only 19K sales (http://realestate.yahoo.com/Foreclosures), it will be interesting to see if the decision to not “interfere” with the market will stand pat as lenders (or their bagholders) try to unload all this property.

Heck, I STILL get an average of two calls a day asking me to refinance. And some of ‘em aren’t idiots, but most are:
“How much money would you be interested in getting back?”
“I’m not interested in borrowing any more money”
“No, how much money do you want?”
“I do not wish to increase my debt.”
It’s surprising how many times we can stay on the merry go round.

Of course you’d have a trashed credit record for your trouble if that matters to you. Late payments all go on there. If your buy got a SUV, I’d hate to see the interest rate he’s paying.

Just wait everything is working slowly. The stakeholders of the banking Industry will demand action soon. Just sit back and watch the Titanic slowly sink.

The longer you wait to take your medicine, the sicker you become. The banks are putting off the inevitable and by doing so are likely making the end game even worse.

I think some of the bankers probably know how bad it could get and are looking for ways to plug the dike, as it were. But water relentlessly flows downhill.

When it becomes obvious these tactics won’t work, then the foreclosures will roll. We really haven’t started yet. We haven’t seen the 2+ pages of microfont RTC homes listed every Sunday, yet. Probably in 2008-10, every Sunday.

This IS The Art of the Deal, per Trump. Basically, you can re-negotiate terms since that’s ultimately in the Bank’s interest, versus holding bad paper. I pride myself on being unconventional in many respects - willing to think outside the box - but this is a tad insane for my personal tastes…still, I do think that’s the basic strategy you’re describing.

Is it really that surprising when you consider the gloating about REOs evident here on this blog? Yes, I want to see the dumb/greedy lenders hurt and the dumb, greedy buyers - mainly because I feel I’ve played by the conservative traditional rules. But, I can well understand why it’s in the interest of both parties to cut the gordian knot.

This reminds me of OCRenter’s recent coverage of mortgage fraud going on. Everyone should check out his recent posts if you haven’t.

http://bubbletracking.blogspot.com/

He’s filing for BK and walking away from it all.

He obvioulsy thinks he had to get the SUV now as once he files BK he won’t have to pay for it.

After losing the house he’s not going to be geting any credit any time soon.

Just looked at a foreclose property from RealtTrac.com. They still had a Lexus and a BMW Z4 convertible in the driveway. Can’t make their payments on the house but still driving vehicles I am hard pressed to afford making a decent salary. Different folks, different priorities. Do you really need a $800/month car payment if you can’t come up with your mortgage payment? I suppose some folk do….go figure.

Jobs growth is a somewhat meaningless statistic for guaging economic strength, as the composition in employment matters a great deal; a job at BigBoxMart does not equal an automotive engineering position.

jibjab.com (click on the link to BigBoxMart…)

This is nothing but good news! There is no chance for the FED to cut now, and probably they are more inclined to raise. Everyone will pat each other on the back now “Housing problems are contained”. No need for a bailout. Just batton down the hatches on lending and history will write itself.

Even if those stats are not meaningful, they are treated with significance, and the effect is exactly what we want. 10 year treasury yields up! Dollar up! Not only is lending tighter but rates are up… Good, Good news.

You would think media would want to bust this as a story but unfortunately, a “reporter” today is not investigative or independent minded.

Maybe the way to do this is tape it and put it on youtube…

I sent it to an investigative reporter in my area.

Well, your appraiser buddy just found a good argument to discount appraisals in the neighborhood by 10% going forward. At least.

This isn’t an infrequent affair.

I know of a deal on a $4m property that involved a $500,000 decorating allowance (among other allowances, landscaping, etc), all paid back to the buyer after closing.

Not a case of mortgage fraud, since this was an all-cash deal. The builder suggested it for two reasons, to raise comps in the development, and to “set a record” for most expensive home sold in a particular area. Buyer was able to claim “bragging rights” as well.

jb

Hello, dime. Isn’t there a state organization (like the FAR) that oversees the licensing of appraisers? You could report the builders to them, just to keep your colleagues on the straight and narrow. You could also call the Attorney General’s office, although from what I saw locally about McCollum’s involvement with Jim Walter Homes, I’m not sure how effective that would be.

But there are also gadfly organizations like the ACLU (not my fave people, I’m just using it as an example) who might be interested. Also, lawyers are interested in this sort of stuff for class action purposes. Florida Tax Watch is another organization that might be able to help, since taxes are based on appraisals. Also call Florida Speaker of the House Marco Rubio’s office and ask where to report this. He’s right in the thick of Florida’s real estate “problem”. Even if he’s not interested, his office should be able to direct you to someone who is.

You are right, this is screwing with your job, if you can’t trust the data for appraisals. It is detrimental to the public also. AH, wait, here’s another idea. There’s a Florida banking oversight organization of some sort. Check out the MyFlorida website. Given the current foreclosure climate, you bet your patootie that banks will be VERY interested in this data, as they will be looking for all sorts of whipping boys. Banks rely on your data for lending decisions and banks that lend for real estate are not very happy right now. They need a target and you can give it to them.

As a CPA, I think the IRS may be interested in these types of deals. I’m assuming the builder is recording the sale of the house as income including the additional 10% and then recording the 10% as an expense in its cost of sales. The question then becomes, who is recording the 10% as income? I doubt the agent is recording the 10% as income and paying the taxes on it. If he is recording it as income I would bet he is also recording an equal expense when he passes it on to the buyer. The buyer then would be responsible for the taxes on the income. Since they decided to format the deal this way I don’t think the IRS would accept that 10% as just a reduction of the buyer’s basis.

Can you post the builder’s name? I would be interested in researching this further.

This is loan fraud if there is a loan involved and it has not been:

A) adjusted in the appraisal, if the appraisal is used to loan money
b) disclosed to the lender
c) disclosed to the secondary market buyers

WAman-
I’m in the business.

Median prices in a changing market can overshoot a bit due to the distribution of sales used in the statistics (ie, higher end home sales over weighting the prices in the lower end, which are slowing further—much more concerning in my view. This is not uncommon when overall sales units are lower than months earlier.

Just ask one question: Does it make sense, fundamentally, that sales prices continue to move upward, overall sales are down, and there is a continual stream of about 300-400 unit list price reductions PER DAY? Inventory increases continues to outpace that of sold prices.

Agents representing borrowers are negotiating home sale prices. Lots of countering. Unheard of just last year.

PS. Pierce county did show a drop in median prices.

Do not be fooled. The flag is blowing in the other direction.

What could possibly go wrong with this diversification strategy? Take a highpaying job in the subprime lending sector, then immediately take out a really big loan to buy a really big house…

‘The turmoil in the sub-prime mortgage sector hits some workers as hard as borrowers.

Brad Cottrell was a paramedic when a friend introduced him to the high-rolling world of sub-prime mortgage lending.

Within three years of landing a job with Ownit Mortgage Solutions Inc. in Agoura Hills, his salary had tripled. His wife quit working and they bought a 3,000-square-foot house in Camarillo.

But late last year, defaults on risky loans began to rise. By December, Ownit was out of business, and the 35-year-old father of three was out of a job.

“It was a nightmare,” he said. “I felt like I got hit by a Mack truck.”‘

The 29-year-old mother of four lost a job that paid $21 an hour, plus commissions. Williams landed a new job March 2, making $12 an hour handling collections for a bank.

“I’m surprised I haven’t called myself yet,” she said

Or even better calling the spouse at home, “listen here deadbeat, and I know your a deadbeat you were still in bed when I left for work…” LOL

Spare me. Another old fart, dim bulb, imperial, hyper-capitalist apologist. Just what the country needs. NOT.

txchick,
How about Ron Paul? He is the only candidate who seems to know what is really going on. Did you see him on Bill Maher recently? It was amazing. A politician who made sense and spoke truth. Maher didn’t know what to make of him.

I’d far prefer Ron Paul.

There is plenty of celebrity real estate news these days…

“Ellen DeGeneres has become a major real estate tycoon, reports Big Time Listings. She’s flipping her Montecito, California estate, which she bought less than six months ago. DeGeneres bought the estate, which has reportedly been renovated and newly landscaped, for $15.75 million. It’s now on the market for $24 million:”

http://www.towleroad.com/2007/04/ellen_degeneres.html

From the listing:

“Estimated Monthly Payments: $60,093
*based on 30year fixed APR loan with 20% down and no points”

All I see is garage…. F-Ugly

Yesterday, I had a lunch meeting across town. To liven up my ride to the meeting, I decided to count the “for sale” signs. Here’s a summary:

Distance traveled: 5.5 miles

Number of signs seen: 31, including one that said “sale pending.” (We’ll see about that. Sales have been falling through right and left around here.

Condo conversion attempts seen: 2, including one that’s on its third real estate agency.

And that’s the Arizona Slim report from Tucson.

I’ve posted as a weekend topic, but I’ll repost the link:
http://www.latimes.com/news/local/la-me-housepot6apr06,1,6530737.story?coll=la-headlines-california

How many pot homes are in your neighborhood?

good story. greed drowns out all other sounds. so does panic.

auger, read Hoz’s post above about “cognitive economics”. This is the phenomenon many of us run into trying to discuss real estate with our friends and neighbors. You are going up against the brick wall of preconceived notions. Has nothing to do with your communication skills. I was very happy to get Hoz’s input on this, it makes so much sense.

We will all have friends and relatives in foreclosure, if not outright bankruptcy, when this is over. It’s fun to laugh at it when we don’t know the principals, but it’s awkward when it happens to good friends. Did they call your wife? How did she react? I hope they aren’t asking for your help.

In your best Nelson voice say, “ha ha”!

Really, you cannot give people advice unless they ask for it. It just won’t take. Better to hunker down and give them a shoulder to cry on, a good scotch, and be patient with their sob story for an evening. And then tell them they are only allowed to stay on the couch for three days…

auger,
Maybe this kind of thing (your earlier post) damaged your credibility with them:
———————-
“Here is a good overview of a book written by a CIA insider about the impending downfall of the U.S. and how it was created.
http://www.bullnotbull.com/archive/chalmers-1.html“

Looks like thay are about to get an *ss pounding…and without the vaseline.

Augur-inn, I know the feeling. 4 years ago, my father decided to invest heavily in real-estate because he “didn’t trust the stock market anymore” and “RE always goes up”. I tried my best to explain that RE has cycles, and being heavily leveraged in it would put them in dire straits eventually. Fast-forward to today. They’re in pre-foreclosure on many properties (they bought around 12-15 lower-end properties with the thought of guaranteed section 8 rents), and are also in way over their heads on unsecured debt. It’s an ugly situation–I don’t see any way out for them other than BK.

But I don’t blame myself or my communications skills–I presented good, sounds arguments that they listened to and chose to ignore.

Slim’s photo comment: Is this clown selling the house or the car that’s parked in front of it?

same thing rents for $775.00 brand new.

“……especially if the area is really as messy as has been reported to me.”

There’s some excellent pre-purchase due diligence done there, eh?