New Housing Starts, Permits Down
Some housing bubble reports from Wall Street and Washington. “Builders broke ground on new homes at an annual rate of 1.518 million last month, an increase of 0.8 percent from February, the Commerce Department said today in Washington. Building permits, a sign of future construction, also rose 0.8 percent. The increase in housing starts was led by a 45 percent jump in the Midwest. Starts fell 7.7 percent in the West, 6.1 percent in the Northeast and 2.7 percent in the South.”
From MarketWatch. “Housing starts are down 23% from March 2006, while permits are off 26%. On Monday, the National Association of Home Builders reported that builder optimism sank in April, with builders warning that tighter lending standards for subprime loans could prolong the slump through 2008.”
From Reuters. “Completions of new homes fell 0.7% to a seasonally adjusted annual rate of 1.63 million. It’s the lowest number of completions since August 2003. It takes about 6 months for a home to go from groundbreaking to completion.”
“There were 1.2 million homes under construction in March, down 16% from the previous March.”
The Associated Press. “Like other banks, Wells Fargo saw some signs of worsening consumer credit and reported that net charge-offs and nonperforming assets rose in the January-March period from a year earlier.”
“The bank said that net charge-offs as a percentage of loans rose to 0.9 percent in the first quarter from 0.56 percent a year earlier. Nonperforming assets were 0.82 percent in the first quarter, up from 0.6 percent a year earlier and up a bit from the fourth quarter.”
“The bank’s first quarter credit losses were $715 million, up significantly from $533 million a year earlier, the earnings report said. Nonperforming assets were $2.67 billion at the end of the quarter, up from $1.85 billion a year earlier.”
“And Wells Fargo estimated that deterioration in the subprime mortgage market reduced first-quarter revenue by approximately $90 million before taxes.”
“On Monday, Citigroup Inc. and Wachovia Corp. increased their provisions for loan losses in the first quarter. Both also held down the growth of expenses, a typical strategy in a weakening credit environment.”
From Reuters. “Wells Fargo isn’t likely to buy another mortgage lender as the market for subprime loans goes through an ‘adjustment,’ and is probably adding market share as weaker lenders pull back, CFO Howard Atkins said on Tuesday.”
“Washington Mutual Inc. topped the list of mortgage lenders in the percentage of loans it gave to investors or second-home buyers, the Wall Street Journal reported on its Web site on Tuesday.”
“The Journal also said that Citigroup and WaMu had the highest concentrations of loans with high interest rates, which are generally subprime mortgages.”
The Seattle Times. “The high-credit-risk market known as ’subprime’ represented 9 percent of WaMu’s overall loan portfolio at the end of 2006. Analysts who follow the company predict first-quarter profit will suffer as a result.”
“‘Some of what they did is going to come back to haunt them,’ said Stuart Plesser, an equity analyst with Standard & Poor’s.”
“WaMu, which employs more than 5,000 in downtown Seattle, had $21 billion in subprime mortgages at the end of last year. The volume of its subprime loans made in the fourth quarter dropped 41 percent from a year earlier, but the company still ranked among the 10 most active subprime lenders, according to National Mortgage News.”
“WaMu last year determined it would not be able to collect on $140 million worth of subprime loans, up from $50 million in 2005. The company reported its home-loan group lost $122 million in the fourth quarter. ‘The subprime business already is hurting their profits and will continue to do so for the next two or three quarters,’ analyst Fred Cannon said.”
“WaMu and other lenders often packaged subprime loans into mortgage-backed bonds sold to investors. Among 20 issues in the closely watched ABX-HE 06-2 index of subprime loan bonds, a WaMu bond had the worst delinquency rate, said mortgage analyst Matthew Howlett.”
“About 23 percent of subprime loans supporting the bond issue were delinquent for 60 days or more in March. ‘Their reputation is not the best in the business,’ Howlett said of WaMu. ‘They’re a little aggressive.’”
“Plesser said he believes WaMu will have to set aside more money as losses mount. ‘When first-quarter earnings come out, people will focus on delinquencies and might be alarmed at how high they are.’ he said.”
The Columbus Dispatch. “JPMorgan Chase is drawing attention for the number of its mortgage loans that end up in foreclosure. Chase accounted for 4.1 percent of Franklin County mortgages but 8.4 percent of foreclosure filings and 10 percent of sheriff sales on foreclosed properties in 2006.”
“Chase’s foreclosure numbers may be the result of being the new player in Franklin County. Chase entered central Ohio in 2004, when it acquired Bank One.”
“When a bank comes into a region, it often has to buy its way into the market, said Ken Mayland, president of ClearView Economics. ‘That means doing the kind of business that other (banks) may not be doing,’ Mayland said.”
“M&T Bank Corp. on Tuesday said first-quarter profit fell 13 percent, hurt by weak demand for mortgages. The company said it had received low bids on some mortgages it tried to sell and that rising defaults had forced it to buy back some loans it had sold.”
“Fee income fell 7 percent to $236.5 million, including a 60 percent decline from mortgage banking. M&T set aside $27 million for bad loans, up 50 percent, while net charge-offs held steady at $17 million. Nonperforming loans nearly doubled to $273 million from $143 million.”
From Bloomberg. “SunTrust Banks Inc., the seventh- largest U.S. bank by assets, said first-quarter profit fell 1.9 percent as problem loans increased and mortgage lending slowed.”
“SunTrust said its nonperforming loans rose to 0.57 percent of total loans, up from 0.25 percent a year earlier, in part because of deteriorating credit quality in the Alt-A loan portfolio. Net charge-offs rose to $62.9 million from $22.3 million.”
“The mortgage investments that helped fuel a recent U.S. housing boom now have many troubled borrowers trapped in loans that they cannot afford, a top bank regulator will tell Congress in a hearing on Tuesday.”
“While mortgage investments added liquidity to the market in recent years this also has put dangerous distance between the lender and borrower, Sheila Bair, chairman of the Federal Deposit Insurance Corporation, is due to tell a Congressional hearing.”
“‘Significant changes in the subprime mortgage market in recent years have substantially altered the relationship between borrowers and lenders,’ Bair said. ‘In some cases, this makes it more difficult to resolve troubled loans in a way that preserves the availability of credit and benefits deserving borrowers, namely, by keeping them in their homes.’”
“On Monday, Bair hosted a subprime summit with consumer groups, regulators and representatives from the mortgage industry. Several participants in the meeting said that subprime mortgages are bundled in such complex investments that it will be difficult to help borrowers who face foreclosure.”
“Losses are showing up in subprime mortgage bonds earlier than expected as the home foreclosure process becomes speedier, according to one research firm.”
“Investors with exposure to the riskiest asset-backed securities had expected to see some losses as a result of the problems with subprime loans underwritten in 2006, but many reckoned the red ink would start flowing much later as foreclosures can take up to two years to complete.”
“‘When you look at 2006 (subprime) collateral there are losses,’ said Michael Bykhovsky, president of Applied Financial Technology.”
“In at least some subprime bond deals, there are losses when loans backing the deals are just eight months old. The loss rates of around 0.5 percent are about triple what he’d normally expect from a loan that age.”
“One explanation, Bykhovsky said, is that banks in charge of collecting mortgage payments and responsible for handling foreclosure and sale of the properties in question are ‘just clamping down and processing and liquidating’ properties whose loans enter into delinquency and default, he said.”
“While in a rising home price environment waiting an extra month or two can actually work in a bank’s favor, Bykhovsky said, in the current environment, ‘if you have less of a chance of recovery you have to move very quickly.’”
“Net international buying of U.S. long-term securities slowed in February from the previous month. Purchases of agency debt slowed, dropping to a net $2 billion in February from a net $35.8 billion the previous month. The securities are issued by agencies including Fannie Mae and Freddie Mac.”
“‘The subprime story still has some legs,’ said Mike Englund, chief economist at Action Economics LLC. ‘The people who were concerned in February still think the market could get blindsided at any time.’”
Recipe for KoolAid:
take a whole pile of negative
spin,spin,spin,spin,spin.spin
extract the positive
chill and serve
Right, the margin of error was 11% and they go with the .08% increase instead of the YOY 20%+ decrease. And that isn’t counting cancellations.
The month-over-month increase game will come to an end when the usual seasonal ramp-up in building winds down mid-summer. Added into that will be the seasonal leveling off of sales, and at some point they simply will not be able to spin the numbers any more, it will be negative across the board.
were these seasonaloly adjusted- if you don’t start in March
fougedaboudit
Exactly what I was alluding to.
Lies, self-serving lies, damnable lies, and statistics. How the hell can we believe anything uttered by people in positions of importance?
We will just add a little bad news today, a little more tomorrow, and some more the day after. Before you know it, everyone will think the bad news is good news! They will feel that their own personal misfortune is isolated, and that they are to blame.
I’m a pretty cheery, optimistic person, but this bubble really makes me depressed about the direction of the economy and the country.
Bah Humbug…..
To the credit of the NAHB:
“The Midwest number is somewhat outlandish,” said David Seiders, chief economist for the National Association of Home Builders. “Clearly there were some weather gyrations. We know the region is not in some kind of resurgent mode.
“If you hadn’t had the number in the Midwest, we would have been down from a February number that was revised lower,” said Seiders. “And the March number is still below the original February number.”
————
It seems that the NAHB is not quite the band of smoke blowers that is the NAR.
You do seem to be getting more honesty NAHB than the NAR. Seems to me that someone is setting the table to justify some big price cuts this summer.
Had the Midwest numbers not been as positive, and had been even with the rest of the country, starts would have fallen to
kingman miner newspaper headline yesterday, “rhodes pulls back” operations at pravada have ceased. so much for his 32,000 home vision here in goldenvalley. he is still taking deposits on lots. they told me last year at an open house that i better put down my deposit because the prices are going to increase. glad i didnt do that. i bought in another trac and my builder is still selling houses on my street. he cannot keep up with demand. he builds a great home on large lots for under $200,000. he starts a home when he has a large deposit from the home buyer.
Ahh, a sauvy builder indeed. I’ve been saying for some time now that if some of these small-timers can step out of the way of their pride and greed, they might make some money in this falling market. Actually, I’ve been toying with this idea myself where I’m at locally. Take for example this one development. It was put together by a couple of local builders at the end of the boom. They currently have 8 spec houses sitting in this development in the 600K - 850K range that haven’t moved in the last 12 months, not even getting a sniff. But they won’t budge on prices (yet). Recently, they started dumping lots to live on(still not low enough for me). But I’ve been playing the numbers (I know they game ’cause i built 2 owner/builder specs a few years back). With building costs coming down and subs lowering prices, right now I could go in there and build a comparable home, list it for 450K, and still walk away with a handfull of change. But the really important thing is this - i will have done my part to help the process of lowering prices and piss off every greedy builder in the area. Both way more important to me than making money.
ex-nnvmtgbrkr - where are these lots you speak of? We’ve been tracking the insanely overpriced Reno area for some time, and considering moving there if it corrects sufficiently.
Sounds like a smart builder.
My parents just closed on their new house in Indiana. Good sized lot and a simple ranch with a full unfinished basement. I believe the price was around $200k. Construction in this subdivision is not slowing down, in fact they are platting an expansion already.
Up the road about a mile, an “upscale” subdivision hasn’t had any construction activity in a year, and lots of homes for sale in it.
11% margin of error?!
NO BAILOUTS FOR YOU!
http://www.economicpolicymonitor.com/2007/04/fdic-chairman-to-subprime-borrowers.html
Sheila Bair, chairman of the Federal Deposit Insurance Corp., testified today at a hearing of the House Financial Services Committee on subprime foreclosures.
Most of the adjustable-rate mortgages taken out in the past few years can’t be easily rewritten, Bair said. In fact, they have been securitized and sold off to parties other than the originating lenders.
Reworking the terms of the loan after it’s been securitized “can be very difficult and may require extraordinary actions…Once the lender has sold the mortgage to the issuer, the lender no longer has the power to restructure the loan or make other accommodations for its borrower,” Bair said…
“Investors with exposure to the riskiest asset-backed securities had expected to see some losses as a result of the problems with subprime loans underwritten in 2006, but many reckoned the red ink would start flowing much later as foreclosures can take up to two years to complete.”
New accounting practices to match the new math. Damn, these things weren’t supposed to bite them in the ass, they were meant to sting the unsuspecting mortgage holder two years down the line. The bond holder and property owners were the marks.
Last week my client got his ARM reset letter from his mortgage company, a major national lender. His rate is changing from “6.350% to 9.350%” and his payment will increase from “$0 to $2,711.50″.
The funny this is that house was foreclosed and was sold at an auction in August 2006. The servicing department must be so backed busy that they don’t even know who they’ve foreclosed upon and who they haven’t. This bubble cannot and will not end well.
Did it come with the “reset kit”? You know, the one that includes a tube of lube and an illustrated list of positions that won’t put strain on your lower back.
Not sure how effective this will be:
http://news.yahoo.com/s/ap/20070417/ap_on_bi_ge/risky_mortgages
These 40 yr mortgages are now very common amongst first time home buyers in Canada. People happily sign up for a lifetime of debt servitude. One thing it has done is driven up the prices of starter homes and condos, so it actually makes the affordability situation worse, while advertising that it makes the affordability situation better.
I bet that next year 50 and 100 yr mortgages will become more common, as they can “lower” montly payments by an additional 5-10%
Exactly, Why oh why doesn’t anyone talk about this?
Because it’s a solution that won’t work. We already have 50yr notes to sell. Payments are still lower on I/O, which we’ve been using for years now. 100yr notes? If we ever get to that point, the housing market will have already been long laid to ruins.
I read where Japan actually had 90 yr mortgages right before the collapse of their real estate bubble.
I mean why don’t they talk about the affordability crisis and how their proposed actions could make things worse. Prices must come down - the bubble is unsustainable. The low and middle income families trying to buy their first homes are the biggest victims of this whole mess.
mortgages of 50, 75, and 100 years… great for the lenders who will loan out their “printed money that cost 4.5 cents per federal reserve note” and why not? You can be sure it will “reset” in the near future as a adjustable higher interest rate for added profits. What a way to go! Some day the public will “wake up” but not now. No common sense people as of now. With longer terms it will be easier to make those payments. Gosh, those lenders are really nice helping me out like this.
That’s what amazes me. Going another ten or twenty years out really doesn’t impact the payment significantly.
Geeze, imagine financing your HELOC Escalade for 40 years. Meanwhile, you know you’ll get sick of it when the Jones’ upgrade to the 2010 model in two years
The forty-year, fifty-year mortgages are really just an interest-only financing masquerading as a conventional mortgage. At some point, the equity is accruing so slowly (or not accruing, if home prices are dropping) that you’re paying rent with none of the advantages of flexibility and limited liability.
As per my post below, interest only is still a cheaper payment, which is all these folks care about. For the last 5 years I’ve rarely ran into a potential borrower that gives a rats ass about paying down principle. It’s all about “I want it, so how much is going to cost me per month”. Almost all the FB’s coming out of resetting ARM’s that were interest only, and definately NegAm’s, will increase their monthly payment amount substantially by going into a 40yr or 50yr note. You don’t save these people by increasing their monthly payment. It won’t work.
hey ex-nnvmtgbrkr, what do you think of the Montana (don’t know how to put the squiggly line above the “n”) development in Genoa? I almost got caught in that spider’s nest but came to my senses.
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There is NO way to further stretch affordiblity.
Negative AM morgages don’t even cover the interest payment. The interest is the same on a 1 year, 10 year, 100 year, etc note.
The lowest possible payment that could/would be offered long term would be the interest only payment. Negative AM cannot be used when prices are dropping (well, I guess they could, but you would need a really dum lender to give you that money).
Affordiblity cannot be stretched any further without a subsidy (another). We already give the MTG interest deduction; ideas of this bent are the only thing that can possibly stretch affordability any futher.
“I bet that next year 50 and 100 yr mortgages will become more common”
I want to buy a home with a 1000 yr mortgage. LOL
Don’t laugh. They do in England. Our friend, who lives in South Kensington, near the Victoria and Albert Museum, has a 999-year “lease.” I don’t event pretend to understand how crazy that is.
I don’t think a commoner can own land in U.K.
Scary thought.
A significant portion of the land in London is owned by the Royal Family. They acquired much of it during the 15th-18th centuries as royal gifts or grants, when the West End and west to Herts was still rural cowpaths and farms.
The Royals see no reason to sell the land, since they are paid by the owners of the buildings on it (yes, one person owns the land, another owns the building on the land) to lease the land for 999 years. Yes, that is essentially forever, but they still retain title to the land and exercise landlord privileges upon it.
Which means: The Royal Family in the U.K. is supported by the rents ordinary people pay in Greater London (and elsewhere, see Prince Charles’ holdings in Cornwall). That’s how QE2 remains the world’s richest woman. And how the extended Royal Family is allowed to enjoy their Life-of-Riley lifestyles.
I understand Cambridge and Oxford U are also very large landowners
This is only the beginning of the “creative” way to save these poor folks house’s. Of course they will just be even farther in debt for the rest of their lives, oh wait they already are so why not? We will see the 100 year and perhaps the 200 year mortgage at some point in the not to distant future.
The only way they could be saved is if interest rates fell to near 0%. There’s a lot of liquidity floating around the world, but not that much!
Well, 40 and 50 yr mortgages have been around for the last year and half and I don’t see them putting the skids on the downward slide. Have you ever seen the payment difference between a 30yr and a 40 yr? It’s not much, and definately not enough to help hopelessly hosed FB’s. Interest only or worse, neg am for example, is what these borrowers are coming out of, and that’s going to be their lowest payment. Let’s say your sinking borrower is sinking on a interest only loan at 5% on 300K. The payment on that would be $1250. You put this same borrower in a 50yr note at 6% (latest bailout number for interest rates is 6.75%, so I’m being nice) and the borrower has a payment of $1579. Hey great, you’ve just increased his payment $300. I’m sure that’ll help. Even if the first situation is at 6% interest only, then you have $1500 going up to $1579. Again, no help. Remember, these are toxic loans we’re talking about here. The kind of loans that started out at ridiculously low payments. The only people this situation would be helping out payment wise would be folks in conventional 30yr fixed rate notes. Most of the people with these type of notes won’t need bailing out, or would even want to be bailed out with a 40 or 50 yr loan.
The people with 30 year std fixed rates morgages really don’t need bailouts, imho (and I see, also in yours EX).
What EX said is absolutely correct. The reason we call these loans toxic is because of characteristics like this. The only reason to use instruments like this (for the normal person) is to stretch affordability to the max.
No fixed rate loan (unless at an artifically low IR, which, I suppose, is possible) will help them. And, we are all neglecting the fact that banks are NOT going to want to make these loans (as they are going to be lending, in many situations, 120+% of value).
And the ONLY reason to ’stretch to the max’ is appreciation.
Who wants to eat canned soup seven nights a week to pay the mortgage on a house that with each passing day is worth less.
“Who wants to eat canned soup seven nights a week to pay the mortgage on a house that with each passing day is worth less. ”
I don’t care for canned soup, but Top Ramen is a good alternative.
corn & gas
whoops same thing
that’s the only thing that would make this increase in midwest
otherwise they’re fckd
FNM and FRE want to keep fb’s in their homes. I’m thinking 40yr mtg at 125% to 130% ltv.
They want to keep them in debt. If they get foreclosed they’ll find another home - likely within their means for heaven’s sake.
Read my posts above. 40yr or 50yr notes save nobody. We’ve already discovered and used and abused the way to find the lowest payments possible.
Except if their currently in a reset ARM at 10.5% & they get a subsidised 50 year 7% for example.
If they’re at 10.5%, they’re hosed and ain’t making their payments, plain and simple. They could barely afford what they came out of, an I/O at sub-7%. Trust me, a 50yr note between 6% - 7% is not going to help 95% of the FB’s out there. The only thing that’ll come close to saving them is if I hear of some agency stepping in and offering interest only at less than 5%, and even that won’t help some of these folks, especially the NegAmers.
Also,
I will go bananas-off-the-wall-apes**t if a overextended FB can get a lower IR then I can on a comparable loan.
Subsidizing MTGs for these idiots will slow the return to affordability, and doubly punish those of us not stupid enough to buy into this ponzi scheme (I pay a market IR while the FB is subsidized. Oh, and where does that subsidy come from? Oh year, MY PAYCHECK).
So I get to finance someone else’s crap loan in order to keep home prices artifically high so that I have to buy at an inflated price with a market rate loan??
Can you tell I might not be in favor of this plan?
Come on, Fink. Why do you have to be so un-American?
Shame on you! No HELOC after dinner for you, bad, bad.
right it’s not the 1250 intruductory payment your compare dthe 50 year nto to, it the post reset 2500 payment compared to the 1500 50 year….
Some, not all, but some had no problem with the 1250 note, its the jump to 2500 that screws them.
…or at least that’s someones thinking
We’ve had the 40 and 50 year notes for some time now. Bottom line is they’re not helping, at all.
“Builders broke ground on new homes at an annual rate of 1.518 million last month, an increase of 0.8 percent from February, the Commerce Department said today in Washington. Building permits, a sign of future construction, also rose 0.8 percent. The increase in housing starts was led by a 45 percent jump in the Midwest.”
I Love it! Keep the inventory coming.
Nothing like a lackluster Midwestern economy to drive its housing boom.
They are trying to get ‘em built and get ‘em sold before the roof caves in.
Read somewhere an analysis as to why the builders keep building - it had to do with the huge municiple bonds they have to post to get started and not wanting to lose those…
Isn’t the US rate of household formation something between 1.2 and 1.3 million anually?……so we are still building more houses than households………oops, forgot about all those divorces (70% due to financial/money issues)….or maybe I don’t account for all the burning houses………
fire sale prices!
now i know what the smoke on the horizon was from!
I posted a little analysis here where I suggest that the best course of action for Lennar shareholders would be to liquidate the company now.
A Short History of New Century FInancial Corporation:
————————————————–
There once was a man named Morrice
Who made subprime his beast
But the FICOs were funky, the no-docs so ugly
That the buzzards gagged at the feast
Was that supposed to be a limerick?
Maybe it signifies the 20% drop in housing values.
Yes - here is another..
Continuing the story of Morrice
He was looking for sheeple to fleece
He funded the loan, but soon there was a moan
Another FB, no grease
“About 23 percent of subprime loans supporting the bond issue were delinquent for 60 days or more in March. ‘Their reputation is not the best in the business,’ Howlett said of WaMu. ‘They’re a little aggressive.’”
Well, duh, that skinny guy keeps telling those fat bankers that they are tools for being so conservative on their television commercial.
At this rate we will need ” Housing Savings Programs” same as our “Education Savings Plans”. When you start a family you will pass the hat to friends and neighbors for both a house and a college education.
Tax Free Home Savings Accounts for your children.
Actually I think a version of a tax free home savings account would be a good idea…rather than all the toxic loans to get people into homes. First time wanna-be homeowners could set up accounts similar to IRA’s and save for a downpayment (novel idea). If they decide to be lifelong renters it would just become a regular old IRA.
This is exactly what Canada has now, except that the accounts are not separate from retirement accounts, they are the same account (called RRSP’s in Canada). Buyers can take the money out for a house down payment without tax penalty and have to put it back over 10 years or so.
Actually encourages people to save before buying a house rather than just borrowing. What a concept. Singapore has this sort of thing too.
“Builders broke ground on new homes at an annual rate of 1.518 million last month”
Historical perspective — 2 million is a big year, 1 million is a low year, 1.5 million is an average year. After several big years in a row, average years aren’t going to bring down the inventory. Aren’t new home sales at about 1 million?
More impotantly, new household creation is at 1.1M. We’re still adding 1/2 mil vacant homes assuming none of these new households rent.
It’s like a death wish. Maybe the builders have such high sunk costs that they’ll lose more by stopping than by building.
What do you call a builder who stops building?
-Bankrupt.
The builders build because they have no choice. They have a lot of land sitting idle in various stages of development that they need to process (i.e. build a house or condo) so they can sell. If they don’t finish out the build, they can’t sell it and get (some of) their money back.
A lot of the building you’re seeing now is stuff that was put in the works years ago. they might as well finish it now, and hope to recover some of what they put into it.
these builders are very cash flow sensitive. they have to keep building so that they can finish product so that they can sell said product so that they can take that cash to pay off their debts.
the fools took their free cash last year and bought back stock. Clearly it was fraud, the CEO’s and executives sucking the company dry before implosion.
soon the builders will run out of cash and credit, they can then file BK and start over.
of course the executives get to keep their on all the options they’re selling like mad right now. (a la Bob Toll)
A contractor wins the lottery. At the interview afterwards a reporter asks, “What are you going to do now that you have all of this money?”
The contractor replies, “I’ll probably just keep contracting until it’s gone.”
“More importantly, new household creation is at 1.1M. We’re still adding 1/2 mil vacant homes assuming none of these new households rent”
Soon to be followed by the dumping of depreciating vacation homes I’m thinkin.
Don’t know if this was posted.
Fremont General finds buyer for sub-prime loans
http://tinyurl.com/2wc3ed
Guess there will be even more BMW’s on the market soon…
Blue Shield can cancel Realtor’s coverage, judge rules
http://tinyurl.com/35bvvr
a local construction guy has a boat and ‘70 vette up for sale, another rehabber in over his head.
‘70 vette…nice…matching #’s or customized job? Hey, even if it’s not all original it could be a nice weekend driver…
Some may call us vultures, but isn’t it fun to be in the position we are?
Careful here, it’s nice to have cashed out, for sure, but if the economy tanks bad, it’ll affect us all, cash or no, esp. if the dollar keeps falling. No one will be immune, though some will be more immune than others. And the psychological effect it will have on us all won’t be so pretty - the stories will get bad.
Yes, this is the position that you want to be in.
However, that said, I don’t think that many of us just woke up one day with a plethora of “housing bubble” knowledge. The reason that we are all here is because we took the contrarian view and did the research to determine the true state of the market.
Also, it is worth mentioning, some of us were here while prices were going up 30-40% YOY. So, although it’s fun now, it was not fun at ALL then.
Honestly, I just like to be “right” even if I call it early. I called the .COM early as well, but again, I was right. Next bubble I am going to hold my call longer.
My problem is that I am continually shocked by the blindness of the sheeple during the end stages of the bubble. I watch people walking through these open houses (1 year ago in Palm Beach) actually talking to the RE person about starting the paperwork. I just looked at them like they had 3 heads!
I continually discredit “market psychology” and rely too much on fundamental analysis. The fundamentals told me (and many others) that we were in a BIG bubble in 2003. However, the market sentiment said “IT ONLY GOES UPPPPPP!”.
Oh well, maybe next bubble I will catch better. This time, at least, I was smart enough not to buy in (not so lucky on the .COMs, but I was young, and did work in the industry).
From yesterday…JL’s blog
Profits shrink for O.C. homesellers
New stats from First American CoreLogic show that typical O.C. homesellers in the month ended March 28 sold at a price in excess of the purchase price that equates to an annualized gain of 13.1 percent. (That’s before any transaction or other costs are calculated.) While that’s no shabby return, it’s a shrinking bounty. In November, for example, these same gains ran at 16.9 percent yearly rate. Last month, 7.1 percent of March sellers got less than their purchase price. In November, the loss rate was 4.3 percent.
Here’s a look at some details from the March study: the median dollars above purchase price; median months owned; median gain on annualized basis; share of sales below purchase price; and sales at twice the purchase price or better …
Stat Condo Home Combined
Median ‘profit’ $169,000 $303,500 $282,500
Months held 47 65 58
Annualized gain 12.1% 11.2% 13.1%
% lost money 9.4% 6.0% 7.1%
% doubled-plus 34.4% 49.8% 44.9%
It’s Bens Fault
Many blame the media for the slowdown that hit the housing market in 2006. “What happened to us is the media,” says Ellen Renish, regional vice president for the National Association of Realtors, or NAR.
Sounds ridiculous, even insulting. But many real estate professionals insist there is a psychological component to buying a house — and that a lot of negative publicity about the housing market can have an effect on whether consumers will buy, sell or sit.
But that’s not to say the broadcast and printed word don’t have some impact.
Stories about a real estate “bubble” and its potential to burst caused consumers to “not do anything,” she says. “And nothing happened. The bubble stories really stopped things for three months,” Renish says. “It was pretty scary.”
Looking for deals
When it comes to sales, the biggest factor is “the local economy,” says Dick Gaylord, president-elect of the NAR. “But I can tell you that almost every buyer I talk to today thinks they’re going to get a phenomenal deal.”
In the Midwest this year, one big yardstick is job growth torquing the force of supply and demand. “If jobs come, there will be buyers,” says Lawrence Yun, a senior economist with the National Association of Realtors. “And if jobs don’t come, there won’t be buyers.”
“But I think the media does have an influence,” he says. “I get calls from Realtors who have been working with buyers for months — then the buyer reads or hears something that predicts a price crash or large inventory and the buyer decides to wait. The media is trying to portray the reality of the market.”
But many times “there tends to be a slight slant that tends to scare potential buyers,” he says. “People start placing a lot of reliance on what they read, particularly from major papers.”
I guess all the “buy now or get priced out forever” stuff they put out had the opposite effect, eh? The NAR doesn’t have a problem with scaring buyers; it just wants them running in terror in the right direction — toward the commission.
(“But I can tell you that almost every buyer I talk to today thinks they’re going to get a phenomenal deal.”)
we won’t be at the bottom until we hear stories about people getting great deals on homes and still being very scared that they could still lose money on the house.
These idiots WANT there to be a psychological factor in buying a house.
Any intelligent buyer (in any market) immediately has to remove any emotion from the transaction. If you get emotional; the transaction is basically already decided in the favor of the seller.
The only way to look at housing (purchase) is with a calculator, comps in hand, and a good knowledge of the local rental and employment market. There should be NO emotion at all in the transacation.
Let me tell you, when a RE agent see’s you pull out a calculator, they know the game is up. When you’re looking at a car/house/any large purchase, the only tact (imho) is aloof.
Do you like this house?
It’s ok, we will have to see how the numbers pan out.
People, it’s a THING. You don’t love THINGS, you love people! The RE shills job is to get you emotionally involved in the transaction. When they can’t do that, that’s when you can truly drive a hard, hard deal.
Absolutely true. But emotions are hard to get out of a transaction when we’re so conditioned to think that a house means security and living happily ever after. Houses own you, stuff owns you, people and your freedom are what really matter.
“People start placing a lot of reliance on what they read, particularly from major papers.”
You can’t make this &++% up. So, according to the NAR, a buyer who conducts independent research and reads a variety of news sources is misinformed about market reality. Whereas, the NAR is the sole unbiased and unblemished guardian and purveyor of truth. IOW, everyone else including the media is trying to fool and trick buyers into not buying.
When it comes to sales, the biggest factor is “the local economy,” says Dick Gaylord, president-elect of the NAR.
Must … resist … urge … to insert 4th grade joke here!!!
a WaMu bond had the worst delinquency rate
WaMu is going to be in huge trouble. Declining new revenue… buybacks, decreased servicing… In my opinion, they are the largest bank “at risk.”
Got popcorn?
Neil
I agree, I think if a big boy falls, it will be WaMu.
Wells has a lot of exposure, but it’s also relatively diversified in terms of it’s overall situation.
that said, nobody is immune to failure.
some surprises are to come, but may be derailed by “mama bailout”.
20% of Wells loans are residential seconds. A third of those - in CA. I can hardly call it diversified. They just mentioned vaguely that while rate of losses was as expected, severity of impairment was worse. We’ll see how it all works out.
On the other hand, I got an impression that Fed won’t let a big money-center bank fail. It is hard to define which ones are those, some say top 100 by deposits would qualify.
The reasoning behind it is that lots of companies and other smaller banks keep their own money in money-center banks. That money of course is not covered by FDIC. So should a big bank fail, it will propagate through the system immediately with disastrous consequences. I think Wells qualifies as such. Not sure about WaMu. On the other hand, it does not mean they are not in for a lot of pain in the meanwhile…
There used to be a WaMu branch in our town. It quietly closed some months ago. Funny thing is that our credit union was going to move into the space that WaMu eventually took (they are still renting space in Agilent’s nearly deserted campus), but changed their mind. I guess they knew something that WaMu didn’t.
I bank with WaMu and I’m very happy with the products and services they offer for my checking needs. That said, I don’t keep savings there. Even if I did, FDIC is there for a reason.
Hope we don’t lose them. As far as banks go in FL, they’re the best I’ve used.
Wells would be the last to go. If Wells goes, we’ll all be living in caves.
Read somewhere that Wells is one of the biggest in sub-prime.
True. In their favor they never offered a neg-amort product, and they’ve publically talked about how a significant portion of the sub-prime risk is “owned” by other entities — but I don’t know more than that. Wells makes gobs of money in servicing.
Do you remember all the finger pointing between state and federal banking regulators during the subprime hearings?
WASHINGTON (MarketWatch) — The U.S. Supreme Court Tuesday handed national mortgage lenders a victory in a 5-3 ruling that said Wachovia Corp.’s mortgage unit isn’t subject to oversight by state regulators.
Instead, the Office of the Comptroller of the Currency, a federal banking agency, is the regulator that governs the business of national bank mortgage units. The ruling will free the mortgage units of national financial institutions from attempted regulation by several state banking offices.
http://www.marketwatch.com/news/story/high-court-backs-wachovia-mortgage/story.aspx?guid=%7BC54563E0-15E2-402A-8085-B3238F74E5A9%7D
LENDER DONE_ CALL this number for a good laugh!:
In trouble? Call them on 1-800-506-0006 … they are GONZO!
“Today is April 17. Home Capital has ceased its operations. If you are a customer in process, it is our intention that you will be contacted by a Home Capital representative in the next 3 to 5 business days via phone or email regarding the status of your application. We do not have associates covering the telephones. However you may send an email and we will do our best to answer it in the next 3 to 5 business days.”
LOL. Good one.
IOW, if everyone gets fired, you are on your own.
“We do not have associates covering the telephones”
Hello, is anybody home!?!?
A guy knocked on my door late last night. Looked thru the peephole and decided to ignore him (probably selling some piece of crap). When I finally went out this morning the flier he left was for a mortgage company. This guy actually knocked, waited and wanted to talk, he wasn’t just a flier distributor. What is he going to say, “Hi I’m a mortgage broker, would you like to refinance your loan?” How desperate are we getting people??? This is a new low.
new mortgage product: The Feces Loan - you buy your piece of shit house with it, and pay it with varying amounts of feces every month with the shortfall being heaped on the balance of the giant pile of shit that you owe. Get em while they’re hot!
The pain still hasn’t started. I’m reminded of the skit on Monty Python where John Cleese is a dentist and is about to work on Micheal Palen who is playing the patient with no pain tolerance. Every time Cleese leans over to start working, Palen lets out a loud howl. Perplexed, Cleese deadpans that he hasn’t even touched him yet…
Facts are there is rampant inflation and the fed will have to raise rates. Then, the real pain will begin for the FBs.
http://biz.yahoo.com/ap/070417/britain_pound.html?.v=14
what a great reference
especially for us dentist fraidycats
The House Financial Services Cmte held a hearing today on the foreclosure “crisis”. No prizes awarded in guessing to what the third panel recommended: extending a big hand into our wallets.
House Financial Services Committee
Responses to Rising Mortgage Foreclosures
(Full Committee Hearing)
April 17, 10 a.m., 2128 Rayburn Bldg.
Panel One:
The Honorable Marcy Kaptur
The Honorable Michael R. Turner
Panel Two:
Sheila Bair, Chairman, Federal Deposit Insurance Corporation;
Brian Montgomery, Assistant Secretary for Housing, HUD
Daniel Mudd, President and CEO, Fannie Mae
Richard F. Syron, Chairman & CEO, Freddie Mac
Panel Three:
David Berenbaum, Executive Vice President, National Community Reinvestment Coalition
Janis Bowdler, Senior Policy Analyst, National Council of La Raza
John H. Dalton, President, Housing Policy Council, The Financial Services Roundtable
Michael Decker, Senior Managing Director, Research and Public Policy, Securities Industry and Financial Markets Association
Douglas A. Garver, Executive Director, Ohio Housing Finance Agency
Kenneth D. Wade, CEO, NeighborWorks America
http://www.house.gov/apps/list/hearing/financialsvcs_dem/ht041707.shtml
100% lefties
wonder what they want
- u-o-me
Why would someone from the National Council of La Raza be testifying before congress? Isn’t this the same group that want to reconquer the American Southwest for the establishment of “Atlzan”? The irony here is beyond measure. A group that wants to overthrow the govt is testify that said govt should give it’s constiutents free money. Welcome to the new world where up is down, right is left and everything is falling apart.