A New Kind Of “For Sale” Sign In California
The LA Times reports from California. “Nearly 900 Californians a week are losing their homes because they can’t afford to pay the mortgage, up from about 100 a week a year ago, providing fresh evidence that the housing market’s troubles are nowhere near over. The 11,033 foreclosures in the first three months of the year represent an 800% increase over the same period a year earlier.”
“In addition, 46,760 homeowners were sent default notices in the first quarter, DataQuick reported.”
“‘For this rise in foreclosures to be happening in the midst of a strong labor market is truly unique and scary,’ said economist Christopher Thornberg. He predicts foreclosures will top out at four or five times the current level, enough, he says, to either induce a recession or at least bring the economy to the precipice.”
The Contra Costa Times. “Contra Costa and Solano counties saw their mortgage default notices reach an all-time high in the first part of 2007, with foreclosure activity rising more than 200 percent from last year. Foreclosure activity has tripled in the East Bay during the past 12 months.”
“DataQuick analyst Andrew LePage said those being served with default notices now were part of the ‘peak lending period of mid-2005.’ LePage said Solano County has experienced five months of median home price declines.”
“‘It will be harder for people there to pull out of their tailspin, even if they can sell the house,’ he said. ‘It may not be enough to cover its fees.’”
“Stephen Levy, director of the Center for Continuing Study of the California Economy, said he doesn’t believe the housing market has reached bottom. Levy said that with foreclosure activity high and lenders bottlenecking the number of qualified buyers, the housing market will be oversaturated with homes.”
“‘There’s still a pretty strong chance there’s a general decline in prices around the region and the state,’ he said.”
The Marin Independent Journal. “The number of home foreclosures initiated in Marin from January to March increased 55 percent over the first quarter of last year. ‘There are so many loans out there that have set people up to fail,’ said Carol Lee, manager of the Hamilton Federal Credit Union in Novato, said. ‘They don’t qualify, but they’re given a loan anyway.’”
The Sacramento Bee. “There’s a new kind of ‘For Sale’ sign appearing in the region’s neighborhoods, offering property repossessed by the banks, and there will be more.”
“Notices of default reached their highest levels ever during this year’s first quarter in Amador, El Dorado, Sacramento, Sutter, Yolo and Yuba counties, DataQuick reported. First-quarter foreclosure numbers also reached highs across much of the region, in Sacramento, Placer, El Dorado, Yolo and Sutter counties.”
“‘A lot of these lenders are going to end up with an awful lot of properties,’ said (counselor) Pam Canada. ‘It’s been difficult these past weeks particularly. There’s more of a tone of desperation from people we’re finding now. They have very few alternatives.’”
The Recordnet. “Foreclosure activity continues to soar, with the number of default notices sent to homeowners in San Joaquin County last quarter hitting the highest level in the past 15 years.”
“‘We’re seeing the tip of the foreclosures,’ said Jerry Abbott, president and co-owner of Coldwell Banker Grupe.”
“It will take up to two years for foreclosure properties to work through the market, where at the current sales pace, it would take 11 months for all homes currently on the market to sell if no other properties went up for sale, he said.”
The Ventura County Star. “In Ventura County, notices of default on houses and condominiums jumped to 965 in the first quarter, up 123 percent from 433 in the same period last year.”
“There were 203 foreclosures in Ventura County during the first quarter, up from 17 filed over the same period last year, said DataQuick spokesman Andrew LePage. The year-over-year leap was a drastic 1,094 percent.”
“‘A perfect storm is brewing, and most people don’t even know it,’ said Anderson, a partner of Ventura County Home Loans. ‘A lot of people are on the cusp of looking at foreclosure. More than likely, a large portion of these are going to be foreclosed on.’”
“‘That’s when there’s going to be blood on the streets, hypothetically,’ Anderson said. ‘As early as six months ago, you could do 100 percent financing for the stated borrower with a 600 credit (FICO) score.’”
The North County Times. “A record number of Riverside County homes went into foreclosure in the first three months of the year, and people in the real estate industry said they expect the number to go higher.”
“Mortgage defaults numbered 5,750, a record, rising from 4,528 in the last three months of 2006 and nearly tripling from 2,148 in the first three months of 2006, DataQuick said.”
“‘Monthly payments have gone up, in some cases to $3,500 or $4,000. It’s just way out of proportion to what the houses are worth,’ said Carolyn Tidmus, a local agent who has sold bank-owned properties in the area since 1989.”
“Lenders seized or auctioned 1,460 houses and condominiums in the county, 10 times as many as in the first three months of 2006, DataQuick reported. Tidmus and DataQuick analyst John Karevoll said that number is sure to go higher.”
“Many of the foreclosures involve home-equity loans or refinances, Tidmus said. ‘People were taking out money like it was an ATM,’ Tidmus said. ‘It was a refinance every six months, and now this new car, and then this new car.’”
The Voice of San Diego. “Local real estate analyst Gary London said the foreclosure rate could soar higher if the housing market continues its slump.”
“‘If there’s not a housing turnaround later on this year, we could start seeing real numbers that are really meaningful, representing real distress,’ he said. ‘If the housing market doesn’t improve in the foreseeable future, the situation could get substantially more dire.’”
The Union Tribune. “In San Diego County, 1,182 foreclosures took place from January through March, nearly eight times the 153 reported for the same period last year. The previous record was 1,059 in the third quarter of 1996, when the housing market was caught in a deep recession.”
“March’s foreclosure figure also was a record, at 433, compared with 66 in March 2006 and far ahead of the previous record of 389 in October 1996.”
“The first quarter yielded 3,931 notices of default in San Diego, a year-over-year gain of 156 percent. The March total of 1,395 defaults was more than twice March 2006’s 591 defaults and below the record 1,773 in March 1996.”
“‘It’s a spectacular increase, year over year,’ said DataQuick analyst John Karevoll of the foreclosure numbers.”
“Elsewhere in Southern California, Imperial County led the increase in default activity with a 218.5 percent increase.”
The Press Enterprise. “Mortgage defaults increased at a faster pace in the Inland region during the first quarter of this year than anywhere else in Southern California, reaching a record high in Riverside County, according to report.”
“In the first quarter, foreclosures soared to a near-record high of 1,460 in Riverside County, 10 times as many as a year ago when 144 homes were foreclosed on. Also, last quarter San Bernardino County had 909 foreclosures, a sharp increase from 111 foreclosures during the first quarter of 2006.”
“Economist Chris Thornberg said his company’s research has found that in the past three years, 20 percent of the people refinancing are in financial distress and have fallen at least six months behind on their mortgage payments. ‘That alone is a scary number,’ he said.”
“He said he is predicting a substantial slowdown in the national economy over the next three to six months, in which case he said the mortgage market will become a ‘mess.’ ‘We are going to reap what we sowed,’ Thornberg said.”
“DataQuick analyst John Karevoll said if the Inland region continues to generate jobs at the present rate there will be enough potential buyers for foreclosed properties that come on the market to keep prices from falling dramatically.”
“‘But if we get a recession at the end the year, which we are not predicting but some economists say could happen, then we are in trouble,’ he said.”
‘The California Association of Realtors launched a new $2.3 million ad campaign entitled ‘California Realtors — We Get It.’ The campaign is a move to encourage those selling their houses to continue to use realtors as the troubled housing market continues to limp on.’
And we’re supposed to watch their campaign ads with a straight face? I see a major opportunity for YouTube satirists here…
I bet the originals will be sufficiently ridiculous that they will be beyond satire.
California Realtors - We Get It.
Get what?
The pain and suffering they’ve helped create?
The campaign SHOULD be something more along the lines of “California Realtors - We’re Sorry.”
No, it would only make sense if it read -
“California Realtors - please don’t take us out to the woodshed when this whole mess is over”
We get it… or you’ll get it.
We get it… all 6% of it.
We get it… too bad if you don’t like it.
We get it… that’s the union way.
“California Realtors - We Get It. Get what?”
Exactly. What is it they get? I’d love someone to ask them that.
Hey realtors, get this:
http://www.iggyshouse.com/default.aspx
This is how I will sell next time, and save a bundle
Good catch, Sue!!!
I imagine this will be the #1 way people list houses in the future. Prepare for it to be another “Google” or “Realtor.com” type of site. Excellent!!!
why does anyone use a realwhore- unless you live out of town
Yeah, they’re getting it alright, more like taking it, right up the old corn chute.
I’ve been in a running battle with a realtor on a Santa Barbara blogsite for over a month. Every time I present some statistic about dropping prices and slow sales this realtor clown is right there to deny everything I say.
The NAR and its membership are sinking into the sewer pit they’ve been filling with vomit for years.
“We get It”. The only thing realtors have is yesterday, because tomorrow, and for a long time to come commission checks are going to be few and far between.
I’ve got one of those local clones with a blog sites too. The only people that post replies are housing bears with lots of stats and MSM stories refuting whatever he writes… yet he never gives up hope.
That’s actually sad.
The new Realtor slogan for the coming decade:
“EDD…We get it!”
I sold in Santa Barbara (Montecito) in 2005. Can you give me the blog you refer to? I still enjoy watching SB Real Estate. I can recall when in 1995 they were auctioning off unsold lots in Ennisbrook. 12 years is not so long ago. The world has not permanently changed. I believe SB has had two 30%+ drops in RE prices in the past 30 years. Like a quake, it is due. This is why I got out.
The blogsite is http://www.santabarbarasblog.com. This is a general topic site, not real estate specific.
Just be aware that the above mentioned site will not allow me to post the housingbubbleblog web address and has censored my information, so what you see is not going to be the full picture.
I sold in Santa Barbara (Montecito) in 2005. Can you give me the blog you refer to? I still enjoy watching SB Real Estate. I can recall when in 1995 they were auctioning off unsold lots in Ennisbrook. 12 years is not so long ago. The world has not permanently changed. I believe SB has had two 30%+ drops in RE prices in the past 30 years. Like a quake, it is due. This is why I got out.
This has probably been brought up many times before but isn’t it intuitively obvious that the internet has made Realtors obsolete. With the ability to search for homes in just about any area online and new tools that allow owners to list homes (along with photos, videos, etc.) on multiple sites at no charge, why would buyers pay tens to hundreds of thousands of dollars to realtors for doing something the buyer or seller could easily do themselves?
Am I missing something here? What service are Realtors providing that is worth a 6% commission other than telling me that it’s always a great time to buy a house?
Bingo… http://www.buysiderealty.com/
Wrong,
Seller pays.
Easy for buyers to decide if there are only 20 homes to choose from and 10 are sold right in front of them.
When there are 300 homes to choose from and many more come up daily the decision is anything but easy. Most buyers look at less than 20 homes before they buy, many much less. The huge inventories make buyers very fearful (rightly so) of buying the wrong one. A good agent will have seen all 300 homes and help the buyers make a better decision.
Buying a home off the internet! HAHAHAH, how stupid is that. RE is not a commdity, the best way to buy (in a down market) is to preview all homes for sale in the area you desire and get first hand knowledge of the values, then wait for a real deal to come along. If you allready know the area and see a good deal come up before other less educated buyers (which you wont without an agent) you won’t hesitate, there will be no need to you allready know what the real deal is.
If you buy a home you found on the internet without having walked all the others in the area (or getting the advice of a good agent that has) you are a fool!!!
The cut rate brokers allways surface like turds in a hot market and allways fail when things get tough. I have seen many here in Stockton fold allready.
Yes I am an agent, no I don’t advise anyone to buy now! I do have my clients best interest at heart and do not believe it will be safe to buy resale for 3-5 years, new you may be safe in 2-4 years. The new builders will slash priced all the way to break-even just to keep the business afloat to be ready to screw the public in the next bubble.
The internet is a terrible way to preview property! Pick your area of interest, find a good agent and look at 5-8 houses a week till you know as much about your area of interest as any agent out there. Do this only after all these FBs are washed out of the system, my estimate is winter 09′ at the earliest for new and several years later for resale.
Why should I bring someone who’s only interest is to maximize how much I pay into my house picking decision? My wife and I are looking and we will talk to the listing agent or the home owner. Having an agent take you around is silly for us because:
- My wife watches the market on a daily basis, she knows when there is new inventory, she drives through the neighborhoods several times a week.
- An agent will steer us to THEIR preferred homes, not ours.
- An agent will use anything we say in their presence against us when it comes time for an offer. After all, they are represnting the seller’s interest, not ours.
- I like the little leverage we get by dealing only with the lister and home owner, they don’t have to share the commission so they have a bit more room to negotiate.
“A good agent will have seen all 300 homes and help the buyers make a better decision.”
What? By your own admission, houses are coming on the market at a furious pace in some places.
How many are they going to have seen?
The use of newer technologies is going to crush some of you guys.
Upton Sinclair says you’re wasting your breath with this guy, jack.
-Rent
HAHHAH, newer technologies!!!
You mean the camera or advertising =)
A good agent will look at 5-8 houses every day. Now if you want to talk about shitty agents (the majority now) I have stories that will… well you know. How the hell could you possibly judge a home based on some pictures on the internet. Purchasing and selling a hous is SERIOUS business and should be treated as such. It is when it is seen as easy (sitting in undies on the net, easy financing, allways goes up (no risk), etc..) that the trouble starts. Why the hell would you cut corners on the most expensive purchase of your life!!!!
I know most here hate agents and I agree, I hate most agents also. That does nothing to limit my credibility as far as RE goes.
I have bought and sold hundreds of homes and see problems you would never dream and solve them before joe six pack even had a clue.
I havent sold a home to a buyer in a year and a half. The last of my buyers ignored all my advice as if I was the dumbest person he ever met, now he is in a $350-400k home with a horrible loan for $630k!! He lied about his income and at doc signing he told me “This is more than I make” reffering to his starting payment!!! I tried to get him to buy a home he could afford with a sensible loan and he looked at me like I was a lost puppy.
I have so much more experience than most that I can assure you that those who go alone (look on the internet and buy from the listing agent) will get screwed.
Who do you think is putting those homes on the web? Agents smucko!!! How many FSBO sites are there that get any traffic at all?
It is really dumb (in a normal and down market) for a buyer to not use a buyers agent, the seller pays my fee. If you think your agent doesn’t have your interest at heart find one that does. I really don’t care which home my buyers purchase as long as they are happy and don’t get into trouble they haven’t been warned about.
Rent…
True.
The best way to determine a value is to tour homes for the year (or two… or three) prior to buying in the area you wish to buy. Realtors ™ cannot help with the last 2% or 3% of value anyway, that’s up to the buyer. So why not scope out the market yourself. Walk the neighborhood. Check out the local markets, etc.
My fiancee plans to get her realtor broker license next year. Why? Just to save us 3%.
Got popcorn?
Neil
Neil-
FYI most sellers won’t let you get paid 3% once you disclose that you are a broker. Neither will most agents. Not being argumentative just a tip.
sf jack-
He’s right within reason. Most experienced agents ie: one whose been in the game at least 10 years will know more about an area deals coming up so on and so forth then most buyers even if they peruse an area for years as Neil suggests. However an agent previewing 300 homes and knowing them intimately is a pipe dream.
The discount brokers will wash away with the high prices I’ve stated it before.
What most don’t understand is that the internet for real estate just replaces the newspaper.
My opinion not up to debating it. Do a search on my name if you want debate.
Rich –
Thought I’d give the bashing a minute to settle down…. Like you didn’t know that was comin ’….
Every home I’ve purchased, I have located, driven by for the “street appeal” viewing….all without the help of an agent. It was however, with the help of the REIC advertising machine. No doubt it was convenient to pick up a magazine, or look on the internet (recent years) and view the majority of homes available in an area. I’m willing to pay a price for this service.
The 64k question (not unlike many commissions today) is what exactly does a RE agent/brokerage company - do to warrant this fee? The CA Department of Motor Vehicles successfully transfers the title of your car for a very simple fee, and this is a complex mobile item. How about we expand the Department of RE to assume this same role of making the “fee simple”?
mrincomestream
I’ll keep that in mind… but that’s just another way to write the contract. Technically, if they offer 3% (or 4%) and then exclude it… I’ll just demand another 4% off the contract price.
Seriously, I’ll bid about eight different ways. I honestly expect to be told to take a hike six or more times.
Hence why I only plan to buy after Capitulation.
I do believe buysiderealty, ziprealty, and others are going to do a number on the buyers agents. Too much of what they used to do… adds zero value to me.
I might even work with the selling agent offering them the full 6%… on condition that the buyer drops their price. Think about how hungry realtors are going to get. Maybe they’ll do more if offered double? If not… live and learn and move on.
Let’s put it this way, I haven’t bought a car via a dealer in forever. My last car was carsdirect. Next time? Who knows. Whatever is the best deal. I see no reason not to do homes the same.
Not to mention, realtors tend to stear buyers towards overpriced homes first (numb the buyer). I’ll avoid that.
But we’re talking about an event that is years away. Oh, I want to learn… But first prices must recover and that could be a slow process.
Got popcorn?
Neil
I am an Attorney and will NOT be using an agent when I buy. The last time I made an offer on a house I did all the research myself, found the house I wanted, and was told I was “outbid” only to find out later that the seller’s agent pulled in a buyer’s agent from their same RE office so they and their office could share all the $$. BTW- it sold for less than what I bid. When I confronted the seller’s agent, he got all bent out of shape about how unorthodox an approach I was taking to RE, etc. RE agents are just dinosaurs that don’t know the big comet is about to crash and block out the sun, leaving them to starve to death.
Here’s the thing why would you as an attorney even entertain using an agent to buy or sell retail real estate. You have the keys to the kingdom. You guys have unprecedented access and have the knowledge. I’ll never understand that. I have in my database 10 attorneys who are major and repeat clients. They continuelly call me to represent them on deals and secure financing I don’t understand it, buy side and sell side.
I do know why one uses me I closed him a long time ago on the concept of value of his time… would he rather answer the phone talking too looky lou’s or answer the phone speaking to people he was billing by the hour.
Actually, I think he just uses me know to torture me for closing him.
MIS,
We’ve discussed this before, and I agree with you that selling in a down market is more difficult & a realtor can be worth the cost.
That said, a buyer has very little incentive to use a realtor unless he/she is from out of town or has to work so many hours that it’s prohibitive to look at homes.
There are quite a few reasons to use realtors, especially if you value your time.
I think what most posters (including myself) have a problem with is that realtors often think they have magical powers and are somehow more intelligent than the buyers/sellers. Perhaps that’s true in the “real world”, but people like the HBB bloggers are willing to do their own research. They probably know their target neighborhoods better than most realtors, and they know how to structure a deal, IMHO. A buyer needs a good lender, **inspector** and attorney — all kept separate from the realtors. That’s probably the best way to watch out for their own best interests.
I have bought and sold a few homes in my lifetime, and the best determinate of value for me is, can I sleep well at night with this home I have bought. This has always worked well for me.
You’ve got to be kidding!!
The internet has been a Godsend to me, a perspective homebuyer in the next year or so.
I live in Santa Barbara, but I am planning on a move to either Plano-Allen- Frisco, Texas or West-North West Austin. I have be viewing neighborhoods and properties via the internet for over a year. The info I have gathered without even leaving Santa Barbara is excellent. When I go to visit Texas in the next 6 months I know precisely where I want to go. I know the market, I have comps, I have sales volumes, I have maps, I have satellite photos, I feel like Eisenhower on D-Day, and there’s no way in hell any realtor would have given me even 1/10th the info I have.
Real Estate Agents are liars and stupid jackasses. When I buy, I’ll hire a real estate lawyer to advise me, and I’ll make my own informed decision.
Clear,
In your case of moving to a new area it may well help, but how many of the homes your looking at on the net are not listed by agents???? none???
BTW I am not a liar or a stupid jackass, and you can lick my balls.
If you buy a home off the net without knowing the area your moving into your a jackass, not me =)
I could care less what you do, I am just trying to help people and don’t care to lie to or screw anyone.
To Rich,
You just proved my point about real estate agents. Only a stupid jackass would use a vulgarity while explaining his “professional” talents to hundreds of thousands of people around the world.
God, I can just see how you handle the buyers who you show homes to:
“You think the price is too high, well lick my
balls, real estate prices always go up”.
OT, but has anyone actually licked your balls when you demanded it? Is there a particular tone or technique you use when making your demands? Always interested in new fads, thanks for any info!
LOL
Rich, OT are you a Realtor in the Castro District?
That would be a good Carlos Mencia skit…
Careful what you say, Mencia likes to lift material from others.
Clearview,
I made the move from SoCal to Frisco/Plano/Allen area and I hope you listen to this advise…..Please rent a place for at least 6 months before you buy. A 2 week look over will not do it. The area is a great place to live, but just being here 6 months in Plano I have discovered that I would like to live in another part of town.
Also, watch out for foundation problems in anything you buy out here. The ground drys out pretty bad and FB’s don’t water so they have foundation cracks.
“You think the price is too high, well lick my
balls, real estate prices always go up”.
LOL. Thanks for a good morning laugh.
Rich,
Actually, I wasn’t talking about purchasing the home over the internet but rather using the internet as a tool to identify homes in a specific area and visiting them in person. What is different from what a Realtor does (search the MLS for homes that meet whatever criteria I specify) from me doing my own internet search? When I’ve purchased homes in the past, the Realtor has scheduled the appointment with the owner for me to visit the property but why can’t I just contact the owner directly?
I’m not trying to be argumentative just trying to understand what Realtors do that justifies a $60,000 commission on a 1 million dollar property. As background, I’ve sold and bought several homes using Realtors over the years but I’m planning to use alternative tools in the future.
Rich:
While the seller is obligated to pay the commission, it is not exactly a free service for a buyer. The seller is taking the commissions into account when determining the price they will accept. If the buyer does not have an agent, saving the seller from having to pay the 3% buyer’s commission, that can help the buyer get a lower price (which will translate to a lower mortgage and lower taxes).
That being said, there are some good agents out there, and for many people it is wise for them to use a good agent if they won’t or don’t want to do the research themselves.
Wrong,
The seller agrees to the commission and the listing broker shares it with the selling agent. If the seller signs a 6% commission and the listing broker sells it they get the entire 6%, if the buyer has an agent it is split betweent the listing broker and the selling broker.
The main point is that when dealing with the listing broker they are there soley to bargain for the seller. Why would you not elect to have an impartial (to this particulat house) person represent you when it will cost you nothing? The buyers agent doesn’t care which home you buy. The listing agent want you to buy his listing and will do all they can to sell you it regardless of it’s value as compared to the broader market.
A “buyers agent” is seldom benificial to the buyer. What happens is that the two agents (buyer and seller) get together and play good cop/bad cop or tag team the buyer for a higher price since that is how both agents make more money.
Want to make sure you have representation and really have someone looking out for your interests? Retain a RE attorney.
Sellers pay the agent’s fees? WRONG.
Technically they do but they RAISE THE PRICE to account for this. Thus it isn’t really clear whose money the agent’s fee comes out of.
It’s a simple point explained above by someone but the agent here isn’t smart enough to see it.
Put another way, 2 houses both worth 400K, the one with the “agent” will charge 425K as a “listing price”. So if you’re buying and are choosing between the two…who is really paying that agent’s fee? The seller in either case is netting 400K…so what do they care. The buyer is paying the fee for the handholding.
Another way of saying the same thing is that sellers lower the price of their “for sale by owner” b/c they don’t have to pay an agent. So if you are BUYING from a MLS listing, you are PAYING MORE.
Again this is simple, but I go into detail to explain it to our logically challenged broker.
brainb-
That’s not true most fsbo price their houses above or higher then what similliar houses are going for in the area and they tend to be harder to negotiate down because they see what other folks are getting and want the same or more. In my experience.
PLEEEZE stop with the “you need an agent” crapola already…too many CAR/NAR cheerleading meetings I’m afraid. You forgot to mention that there are VERY, VERY FEW COMPETANT agents out there. Both of my parents and my sister are brokers (mainly because they ran into such incompentence out there trying do RE deals). They are loath to deal with ‘regular’ agents. It’s so damn irritating to have some no nothing fool trying to tell ya how ‘it’ is in the market. I’ve been following RE in CA and working with my dad off and on for the last 30 years. I bought in San Jose, Santa Clara, Oceanside and the San Mateo coast and only ONCE used an agent. I’m STILL pissed off about that experience and that was in 2005. Those clowns actually tried to tell me the ‘rules are different” in So Cal. Yeah really?? Gee I didn’t know So Cal was another state. All I did was tell these people what and how do thier job and what rules and laws were. Sheesh, I swear I don’t what the hell I was thinking. I’m sorry but I’ve found the great majority of agents to be living in a world viewed through rose colored glasses. The only reality they know is BS. ’nuff said…
Suzy K-
You say you made deals but would you be so smug if you weren’t being coddled by mommy and daddy. Let’s get real.
Most buyers don’t have the luxury of sitting at the dinner table with mommy and daddy being lap fed. PLEEEZE yourself. LOL the self rightousness of the spoonfed.
Most buyers don’t have the luxury of cruising around a neighborhood looking for a home. In some cases that’s considered being homeless but I digress…
As I have said before if you’re living in some area thats rural or very low density then yea why use an agent.
But if you’re in a major metro and work for a living then a good agent can payoff in spades. Especially if you are relocating from a different area. Internet or not.
The problem most people run into discounting the knuckleheads that wouldn’t be happy if a house was given too them with a toilet stuffed with thousand dollar bills. Is that people don’t take more care with scrutinizing and interviewing who they use… Just becuase you’ve seen him on the a billboard doesn’t mean he’s a good agent.
Ask for him/her to provide references from people you don’t know. Have him print you a sheet of properties he has closed and compare the list price with the closed price (checking negotiation skills). For those of you who say use a RE Lawyer, I routinely eat them for lunch. It’s a sport for me as it is with any experienced and seasoned real estate agent. Most of them if they trolling for Real Estate deals aren’t worth the paper their law degree is printed on. Cause more problems then cures.
I would wager that there is no one who posts on this blog who can get a better deal than me when negotiating with a seller or a seller’s agent even with my commission of 6% attached. It’s just not going to happen. Would put large money on it.
I get paid my fee by the sellers because even though sellers are a$$hat morons, I have to say from experience that buyers are even bigger a$$hat morons when it comes to real estate transactions. From dealing with the a$$hat who wants to tie up a 5 million dollar estate with a 10k promissory note to the a$$hat who wants to get a 50k discount for a $30.00 repair. Hell, I would venture to guess that most sellers would pay double not too have to sift through the nonsense that the Carlton Sheets groupies spill out.
In this bloodbath that’s coming down the pipe a good realtor will be worth his weight in gold.
The knucklehead don’t touch the coffee cause coffee is for closers discount brokers will be long gone when the real work needs to be done. It shows just how gullible people are. If the discount broker is giving up all his commission just how hard is he working for you. He’s looking for volume and sheeple. Sort of like the FB’s in the upswing.
I have plenty of time to cruise the area I’m looking at. I ride my bike and cruise the neighborhoods on the weekends. Exercise and scoping for deals in the future, nice combo.
As for negotiating a deal, I use an RE attorney on retainer. I haven’t met a decent agent in years.
Gywnster-
That’s all fine and good more power to you. But you will not find the best deals that way. How can you even believe you’re getting the best available deal. When your cruising the neighborhood part time competing against Realtors and Investors who do it full time 24/7. Most part-time agents can’t hold a candle to a full-timer. Why do you think you can. Be realistic.
As I tell some of the guys here sometimes don’t let the roar of the crowd fool you. Some of these guys/gals will be more screwed then FB’s are now you can tell just by reading their posts. Some of it is really funny stuff. I used to counter it I don’t even bother anymore unless it’s just way off base.
“I haven’t met a decent agent in years. ”
Are you a decent client??
Coddled by ‘mommy & daddy”?… Hardly in family of ten kids. Each of us earned all that we had and bought. Mom & Dad never loaned any of us a dime to buy, just the knowledge and wherewithall to make it happen. I bought my first home when I was 21 in San Jose with just mine and my husbands savings and income. Oh so when we relocated from Nor Cal to O’side due to our jobs transferring back in 1998 it must have been a semi rural area and not a metro area so that’ s why I didn’t need an agent. Gee I hadn’t realized that. For the record “mrincomestream” I’ve worked a “real” career for over 25 years. I used to help my dad out from time to time when he was short handed in his office or when he needed help with his rentals properties.
Your right, access to information will never help someone make a more educated decision.
Last time I checked, people can go view a home listed on the internet and there are plenty of open houses on Saturday where I live. I sold my house off craigslist last May in Seattle and got more than I expected minus the agent fees.
last we sold our home throgh isoldmyhome.com asked 10k less than the similer houses in the neighbourhood and guess waht, we sold it in 3 weeks. we paid just $300 to the isoldmyhome.com.
We listed our home on the MLS for a $300 flat fee. Sold within an hour. Very easy transaction.
OTOH, both of my parents were brokers & RE investors, so I’ve been around RE my whole life.
I think that’s what MIS was referring to with Suzy K. You (and I) were lucky to have parents who were in the business and who discussed it with us. That helps with the confidence factor when going it alone, IMHO.
CA Renter-
Exactly, Most 21 yr olds (as she said above) are not even thinking about buying a home. It interferes with weekend boozing.
The biggest misconception I see with people on this blog. Is that they are trying to treat it like a stock transaction, they are no different then the current inventory of FB’s. Emotions run rampant in a transaction and I’ve seen the coolest become unraveled. And becoming unraveled costs money attorney or not. Make the mistake of becoming unraveled with an attorney baby sitting your deal. I have yet to see a situation like that cost less than $25k.
Like
Well, I bought a 72 year old home and since they can’t build any new houses anywhere around me, I’m quite a lot “safer” than any new home where they can! My house before that - 230 years old - had less trouble than my friend who bought new! Before that 65 years old. Before that 5 years old - got killed on that one in the Austin bust cause they kept on building….
You, sir, are a moron (apologies to the mentally impaired).
The internet MLS site lets me know immediately how many homes are for sale and the current asking price. Craigslist has the FSBO homes that the realtors don’t have on their listings.
No one is going to buy a home over the internet, but the internet is critical to seeing the true picture of what’s out there. I used a realtor once (from Cashin Co.), and she was just like a used car salesman - always showing me homes that were just at the very top edge of what I could afford and trying to convince me to invest in some scheme to buy a fixer for an investment when I was just looking for a place to live in.I became suspicious when she took me to see two condos in one condo complex but didn’t point out that there were at least 8-10 condos there for sale, which meant that complex might have been a shaky place to buy and why didn’t she show me any of the other condos in my price range? If I had had access to the data then that I have now, I would have been in a much better position to see just what exactly was available instead of the narrow picture she was trying to paint for me.
Rich,
First let me thank you for a post that has brought a lot of commentary on a topic that deserves serious discussion. I think the discussion about the value of Real Estate agents and brokers is very pertinent right now. I also think that the key point I have not seen is that Real Estate service providers are at a historic crossroads in terms of how they have defined themselves in the recent past and the opportunities facing them as a group in the future.
Now before I go on I do have to say that as I read through your post my perception was that you were trying to “sell” me on the idea that Realtors ™ are the public’s only hope of getting a good deal and navigating the dark and foreboding landscape of property purchase and sales. The sales pitch may work on Joe and Jane six pack, but on this blog facts and personal experience are the currency of debate.
My personal experience tells me that the recent performance of Realtors(tm) and the related associations leave a lot to be desired in terms of the quality of the services provided. Specifically the misrepresentation of “facts” used to make sales or lure clients, the deceptive practices regarding multiple bids, the collusion with lenders to steer clients into homes they cannot afford, the manipulation of listing data regarding actual total days on market, the complete disregard for truth in listing language, the monopolistic control of listing and sales data and subsequent mismanagement of said data for the express purpose of manipulating public perception of the market. Shall I go on?
The issue is that Realtors(tm) have a very big perception problem right now and it is two-fold. Joe6pack is not too pleased with them and Realtors(tm) themselves are failing miserably to see that the old way of doing business is about to become useless.
I doubt that Joe and Jane 6Pack are going to be happy to see the Realtor(tm) who sold them a house drive by in a shiny new E Class wearing a $300 shirt once their “affordable” loan resets and they get an NOD. Probably time to put the Benz in storage and drive a Chevy.
And stop with the listing lies. A home is where we live. It is not some magical gift that only a Realtor(tm) can arrange purchase of. And tell me how truly “charming” that crack house in Compton is when the bullets come zinging through the walls. How many “Deals of the Century” can be listed in one weekend classified section? Nothing this side of a private island is “A Steal” for $700k. The mortgage interest deduction is being being eaten away by AMT so that is just not a talking point. It is and has been more fiscally prudent to rent than to buy, so stop with the “throwing your money away on rent” line. A “large yard” is not 8 feet across unless you are an insect.
Stop with the emotional manipulation already. I do not “need” to buy squat. Hell, I do not “need” to get out of bed in the morning so why would I listen to anyone about what I “need” or how it will change my life? How about taking a new tack and providing a service to the client rather than manipulating them emotionally and psychologically? How about actually listening to them, helping them identify what they can really afford (you know, long term, not cut off your left nut after two years and surrender your first male child kind of thing) and helping them find that? Gee, what if prices have risen and people really are priced out? Then market forces take over don’t they? And sales decline and then heaven forbid prices decline and OMG you may just have to work harder or even get thrifty. Oh the horror, oh the inhumanity of it all. But life just ain’t fair is it?
You may have your clients best interests in mind, but it has been my direct experience over the last 5 years that most of the agents or brokers I spoke with do not. They are interested in one thing. Making that sale. Transferring money from my pocket into their pocket. What kind of service is being provided when the client says, “Gee I just cannot afford to pay that much for a house.” and the agent quickly pencils out how monthly payments could be “affordable” by using a non-traditional loan without explicitly explaining the inherent risks involved in terms of resets and negative amortization? Now do not get me wrong here. There are many FBs who have chosen to put themselves in harms way out of greed, but many of your peers have betrayed the trust the public put in their hands for the sole purpose of making a commission. Bad form mate.
And let’s talk about the MLS. That cartel controlled by the REIC that has found it a simple practice to misrepresent and deceive the public by making it easy to recast the history of a property for sale by re listing. Loopholes do not an valid data set make sir. Listing and sales data needs to be taken out of the hands of the REIC. It is a classic case of the fox watching the hen house. The REIC has had a go at managing it and failed. Time to give it to an independent organization and pay for it out of your commissions.
Oh, and what is with this Hollywood-esque need to self congratulate yourselves? How many award dinners can you give in a year for “Top Producer”? And how many text inserts with pictures of smiling thieves do you need to cram in the listing pages before you are satisfied that you have enough exposure.
What actual and tangible value is provided by the service and at what cost? Let’s see, searching for homes, I think agents and brokers do actually bring value to the table on this one. Especially for a client from out of town or who is too busy to do the legwork. I like the advice to rent for a while before buying. One never really knows about a place until one lives there. For those of us who have lived where we want to buy the internet is a viable substitute for an agent. How about negotiation of sale price? I can’t give you that one simply because of the phantom multiple bidders gig. Again, really bad form folks. Classless and criminal.
Helping with arranging financing? No thank you, I will arrange my own with someone I trust. Same goes with the paperwork. I’ll use a real estate attorney who will provide the service I pay with my best interests in mind.
Ok, what about the “finding deals” aspect? I guess if you are one of the few actual honest agents you really could find me a deal. But why couldn’t I find it? Why is that bargain property hidden from me? Is it a pocket listing or just fresh on the market? A distressed seller or an REO? Why has the flow of information been channeled in such a way that you can find me a deal? Now maybe it is in some cases as simple as being “in the business” and being at the right place at the right time and passing that on to a client. In that case, Bravo, Good form! But I suspect that many of the real deals get snapped up by those in the business before any client get a chance. A wee bit cheesy if you ask me, but life just ain’t fair is it. These things do not enhance public perception of the quality of services provided.
So my point is that the Real Estate sector has an opportunity right now to evolve. Stay with what you have been doing as a group at your own peril or step back and take an honest assessment and change how you do business so that the services provided match the monies paid. There are many honest, experienced agents and brokers out there and it is these folks who can lead the changes in the right direction. I for one will not use a Realtor(tm) unless I see tangible, verifiable changes in how they do business. I suspect I am not alone.
You go, oc-ed!
The only service I can think that a realtor would do me any good is that they can open the lock boxes to look at homes. Saves a little time, but certainly isn’t worth the commission the buyers side agent earns. Why not have a “security person” paid on hourly wage by the home buyer accompany and open homes to look at. However, we may be overlooking the usefull things a realtor does when showing the house, like pointing out the obvious…”Over here is the kitchen”, “That window lets in lots of light”, “The back yard is right here behind the house”..etc. I’m not sure if I could figure that out on my own!
“Nearly 900 Californians a week are losing their homes because they can’t afford to pay the mortgage…”
I am in LA as we speak. At least three co-workers have shown me this article today in the LA Times. They think I am some kind of RE guru now for predicting that foreclosures will lead to recession. Little do they know I get all my info from this blog. Thanks Ben.
Let a local Realtor I know here in Ventura said it best,”It’s going to be a bloodbath.” That article was on the front page of the VC Star. Watkins a couple years ago was saying the VC median was going to be over a millon by 2008-9…Doh
I have been trying to talk my girlfriends parents out of an investment property in Simi Valley for more than a year now. Luckily, they have done other things with their money.
They read the Star, this is great news. They won’t believe me, but maybe they’ll believe it when “the experts” say it.
Read a blog!
I don’t really consider this a blog in the truest sense. Personally, I don’t like blogs and I don’t read them: supposed ‘experts’ spewing inaccurate information.
I read this ‘blog’ every day since there is little opining, but just information from varied newspapers (based on subjective bile, but still).
I agree. When I was a kid, my older brother used to love to read/post the old bulletin-board systems (BBSs). That’s what I call this site. I say “The BBS had an article…”, and then all of my friends know that it’s time for another drone on housing.
This isn’t just a blog anymore. It’s a community.
You said it right.
Well, the opinions are interesting herein, but I’m also totally amazed at the level of intelligence and investment savvy displayed. Add generally good manners to the mix - this isn’t a blog, it’s an education.
yeah, I was wondering if we can put in for college credits.
We are honest people that are fed up.
THIS BLOG IS THE BEST - HANDS DOWN!!!
This isn’t just a blog anymore. It’s a community.
Yep… at this point we have a feel for the “regular’s posts.” We come here to suck out the information.
For one day almost all of us will buy. Maybe multiple properties…
But for the next bit… schadenfreude.
Got popcorn?
Neil
Anyone want to do a SoCal hbb get together?
Yes to the So Cal get together. We’re in San Diego, but wouldn’t mind going to LA if we get enough notice.
BTW, many have said it before, but I’ve learned more on this blog in two years than I did in all my many, many years in college (chronic major-changer).
THANK YOU, BEN!!!
I’m in for a get together. I am in Costa Mesa.
Thanks Ben for a great community!
Count me in, too. Also in Costa Mesa.
I’m in West LA but TOTALLY up for a celebratory round of beers or other beverage du jour. I know there are at least a few Westsiders hanging out here.
“The secret to creativity is knowing how to hide your sources”
Albert Einstein
Brilliant! I need that on a T shirt
Well as an artist, I love it. Right up there with “Heisenberg may have been right” on a T shirt.
LOL! How many people actually know about Lorentz or Poincare? Hide your sources indeed!
Mitchelson?
Mitchelson?
Well you just can’t ignore Morley and add a t to Michelson’s name.
My brain is nothing more than a lit fart compared to the supernovae of the aforementioned. But sometimes I wonder if even these progenitors of quantum theory would be able to spot a housing bubble and if so what would they do?
“The secret to creativity is knowing how to hide your sources”
i don’t want to hide my sources, but i kept expecting security to come rush me while i was snooping around the McMansion City i photographed for housingbubbleheads.
http://buildingfrenzy.smugmug.com/gallery/2725285#144596208
buildingfrenzy sd: photo 3, what is up with the fence in the road? speaking of photographing houses from the street check out
http://www.zaio.com/
Despite being based in Calgary, Alberta, they don’t cover Canada. Fortress in the foothills?
That’s probably the fence that they have around the model homes.
Often times gets extended into the streets.
“i don’t want to hide my sources, but i kept expecting security to come rush me while i was snooping around the McMansion City i photographed for housingbubbleheads.”
I recognize those La Costa Ridge pics. I’ve been watching that community for the past two years. Used to be a great place for riding bikes and walking the dog. We live in the condos right below it. Too rich for my blood at this time. Maybe I can pick one up in a year or so for a decent price.
P.S. This blog is great!
Oh, I need to hit you up for a loan, babe
Guess you know it’s true
Hope I can borrow some jack, babe
Just to see me through
Loan me, help me, loan me, help me
Aint so far away from foreclosure
900 a week
They loaned to everybody, it’s a bit of a whirl
Always on my mind
One thing I can say about what’s unfurled
You’ll definitely pay over time
Help me, loan me, help me, loan me
Aint got nothing but grief, babe
900 a week
fency:
If you read this BLOG regularly, you are a RE Buuble GURU or will be
inspired: i started out a “bitter renter” with a savings account. i was very sad and looking for beauty. i found my former creative streak right here at the old blog. TY
I wonder if the new Fannie Mae scam being set up will happen soon enough to stop the avalanche of foreclosures? And whether we want to admit it or not, that’s the bailout program we’ve been arguing aginst all along. They’re just packaging it as help for the masses to keep their homes.
You can’t tell me that there won’t be thousands of flippers lined up for these loans along with the garden variety greedy FB’s.
When was the last time you saw a bureaucratic organization function efficiently?
This is window dressing. Few will qualify….even fewer will WANT TO qualify to pay for an ever depreciating asset (regardless of the rate they’re given).
Absolutely, from the report they have tried this in Ohio and only 8.2% of the people that applied were approved - the rest lost their houses.
If you look back a couple days ago (i think on weekend threads somewhere) people were talking about the NACA program. I posted the conditions to qualify for that program, I would suspect any “help” would be along the same lines.
Look through those qualifications…. “owner-occupied” (sorry Casey, I would think at this point they’ll actually check)… “You cannot have multiple refinances where you are continuing taking money out to pay for your living expenses. ” oops…sorry HELOC’ers… and so on… “Investors” won’t be willing to jump through these hoops… people with no money in their houses will for the most part not particpate either, just walk.
I don’t know. It seems that all of the people I talk to are so stubbornly married to the idea that “housing always goes up” that they believe they “just have to be able to hold on”. Some people are so unwilling to believe their houses are not money trees that they will actually WALK AWAY from me mid-sentence (these are people who are generally friendly towards me) when I start saying things like “California is losing population, so it can’t be increased demand.”, “Rents are dirt cheap, so it can’t be a lack of supply.”, “People have lost their shirts in CA real estate during smaller bubbles than this.”, etc., etc., etc.
I actually do believe that their will be plenty of folks willing to walk for miles in order to queue up for the chance at one of these 40-year loans.
Certainly, there is still some denial out there, as well as some anger. It will take a little while for the denial to work it’s way of the system; for some people, they will need to experience the dropping prices first hand or at least have friends/relatives/etc. experience it before they will believe.
As for the 40 year loans, they simply won’t help many people. The payments on a 40 year loan are not much less than on a 30 year loan. As an example, on a $500K loan at 6.25% (I used the same interest rate for both loans; not sure if lenders would charge a little more for a 40 year loan), the payment on a 30 year loan is $3,078 and on a 40 year loan it is $2,838. I don’t think that $240/month is going to be the difference between walking and staying. Run some hypothetical loans through a mortgage calculator to see how little the monthly payment changes.
Also, look at what the payments are at today’s interest rates, and realize that those in trouble probably had much lower interest rates from 2004 and 2005. So, while people might initially think that the 40 year mortgage will save them, I think they will be shocked at what their monthly payments would be with a 40 year mortgage.
40 year loan is such a scam! The only difference between that and 30frm is that little sliver of mortgage payment that actually goes toward the principal is EVEN SMALLER. It’s basically an IO loan where each month they send you the next knife in the set.
People talk about ‘educating the borrower’ as the next big idea… if you sat down an educated an FB about their 40yr fixed “bailout” they’d laugh their asses off. Then they’d mail in the keys.
“each month they mail you the next knife in the set”
That’s hilarious.
People need to be beaten senseless by unending housing declines. They have to be made to instinctively retch when housing is even mentioned. At that point, the froth will be out of the market. It’s the only way people learn.
“Experience is a dear teacher but the only school in which fools will learn”…Ben Franklin…something like that.
Kind of like the Nasdaq…”You think Nasdaq stocks will go DOWN?” (said with a mixture of pity and surprise). How’d that work?
agreed - too little too late for the majority of FBs
in response to jag, that is….
The bailout is bullsh*t. The banks are running scare due to the foreclosure #’s. They need to keep home owners from walking away from their debt. What better way to keep people in their mammoth loans than to repackage them. Only a few will qualify for the “new” loans. And they don’t have a chance if their loan amount is more that the current appraisal. If your holding a 400K to 750K mortgage your really f*cked. Regular CA homes are worth between 165K and 250K. Large estates are worth 500K to 1M. You guys who fell into this RE scam are so screwed. Better call your parents to see if you can get your old room back.
Few to many beers. Cross out the Let in that sentence.
‘Few to many’…like in a couple to a dozen?
Funny
Hey krills, what’s new on the ground in W. Ventura, any bubble progress?
Succintly; “last gasps.” This spring is actually good at the high end. The low end continues to hold because everyone who was willing to lie a lot is willing to lie a whole lot instead. The middle is missing. Not down, gone.
The Ventura City council adopted a new Richard Florida “creative class” type core rezoning but is fast running out of money so it won’t matter. Oxnard is not aware of the problems because they are interested in tracking sales taxes which lag. Camarillo is not selling their version of rat cages and has moved on to another new boondoggle that will be likely called the Springvale Project.
That must be why 700 SF shacks on the Avenue are still holding at 400k.
l.a. still seems to be catching the knives to a great degree….3-4 mos - or less - for a bigger hit? whay say you all???
Climate change will check in as the real estate market in el lay checks out…
Just for the record, the original name of the joint:
Los Angeles (California): “angels.” In 1781 Spanish settlers founded El Pueblo de Nuestra Señora la Reina de Los Angeles de Porciúncula (The Town of Our Lady the Queen of the Angels of Porciúncula).
So if I started calling you Porciunculians?
Would you be ok with it?
What are you talking about
lainvestor girl - i thought sales and prices would be a lot lower by now….friends’ neighborhoods still seeing sales for fairly close to asking price….
MBA:
LA prices are still very high, and there are still buyers. The cheapest house you can find in a decent neighborhood is around 750K. Everyone b!tches and moans when I say it, but I still don’t see any sign of a bust here.
Agreed. Lots of willing knife catchers in the San Fernando Valley.POS houses for 900K. This is depressing and it’s BS!
Where is all the inventory??? Not in Sherman Oaks! I wish!
I’d have to agree, I drove through Valley Village/Sherman Oaks/Studio City last weekend, I saw very few for sale signs.
LA will be one of the last places to get hit because there is a viable job market there. There really is a fair amount of wealth in LA, but not enough to keep SFV houses at $600K+++.
I watched the 1989 bust in Woodland Hills, where I grew up. Our very nice house lost around 40%, and that was when buyers had to qualify to buy.
Don’t buy that whole “aerospace recession” bull, either. The housing market was going down all by itself. It was exacerbated by the poor job market, but was at the peak at the same time the job market fell. Watch this repeat again & see how they try to pin the RE recession on a poor job market in the coming years.
Not much moving in any areas of Ventura right now..Neighbors house still for sale. Bought 18 months ago for 620,000 and trying to short sell for 520,000. Got 2 offers of 480,000 and 520,000 and hasn’t sold…Of course these “offers” were told to me by a Realtor, so I will take that with a grain of salt…Still have a ways to go here, but we are making some headway.
Also, there is a house 5 doors down for 525,000 and about 14 other homes for sale in a 10 block area here in E. Ventura. A couple house have actually changed Realtors upto 3 times, RE-MAX, Troop and now Coldwell. Other houses they just pulled the sign post or there were a couple houses that had Sold or sale pending or in escrow and 4 weeks later they are still for sale. Pretty bizarre.
I’ve seen some price reductions too in Ventura, but rents are still very low in relation, i.e., wouldn’t come near covering the mortgage, much less tax and insurance. Oh well at least we’re moving in the right direction now.
I’ve seen some price reductions too in Ventura, but rents are still very low in relation, i.e., wouldn’t come near covering the mortgage, much less tax and insurance. Oh well at least we’re moving in the right direction now.
There were 2 houses on my street For Rent recently. One was bought in 05 for 575,000 and rent was 2000/month and the other house was a house that sat on the market for a year and did not sell,but the people bought another house and recently rented it out for 2000/month also. These are both 4/2 houses in an older, former blue collar neighboorhood of Ventura..
“He said he is predicting a substantial slowdown in the national economy over the next three to six months, in which case he said the mortgage market will become a ‘mess.’ ‘We are going to reap what we sowed,’ Thornberg said.”
There goes that damn media again, with their self-fulfilling prophecies. When are they going to stop ruining it for everyone?
I’m so glad Thornberg left the Anderson center. He doesn’t have to worry about angering the powers that be with his analysis anymore.
Im glad he moved out of SoCal and is focusing on SF Bay Area Housing Bubble
Agreed.
Sadly…
I must me too this. Oh, I think at its current course it will be only a recession; but the politicians could muck it up.
Neil
YES.
Another Flashback:
CALIFORNIA HOME FORECLOSURES REACHED 97,303 LAST YEAR
A total of 97,303 California homeowners found themselves being foreclosed on last year, according to a real estate information service.
That means one of every 65 homeowners got into trouble in 1992, a rate of 15.4 per 1,000 residential properties (see chart), La Jolla- based Dataquick Information Systems reported.
The foreclosure problem hit Southern California particularly hard, especially the Inland Empire counties of Riverside and San Bernardino where foreclosure rates were 23.8 and 21.6 per thousand.
At the other end of the scale, rural counties like Tulare, Napa and Madera have relatively modest foreclosure rates with fewer than five per thousand, Dataquick reported.
“Foreclosure is a nasty situation to be in, but if matters are handled correctly, they can often be resolved. It’s very important to sit down and talk with your lender if you lose your job or experience some other severe financial setback,” said Donald L. Cohn, Dataquick chief executive officer.
Roughly half the homeowners that ended up in foreclosure were able to halt the process before the final trustee’s sale. They did this by either bringing their mortgage payments current, or by selling the property and paying the mortgage off.
“We saw a rapid increase in the number of foreclosure proceedings statewide during the first half of 1992, and then things leveled off. We’re not sure if it’s because of better times, or if lending institutions became more willing to negotiate new terms,” said Cohn.
A total of 10,149 notices of default (NODs) were recorded on residential property at county recorders offices in July, 1992’s peak month. Since then, statewide monthly totals have ranged from 8,331 (November) to 9,777 (August). A recorded Notice of Default is the first step in the foreclosure process.
Dataquick monitors all California real estate purchasing and financing and provides real estate information to lending institutions, title companies and industry analysts. The company added detailed foreclosure data to it’s system in January last year.
The average homeowner being foreclosed on was 8.7 months behind on his or her mortgage payments when the Notice of Default was recorded.
The typical home in foreclosure was a 1,386-square-foot home with 3 bedrooms and 2 bathrooms, bought in October 1988.
PR Newswire, January 19, 1993
THANK YOU BRANDON!
Its good to see
That there are people out there diging up real data and facts.
‘The typical home in foreclosure was a 1,386-square-foot home with 3 bedrooms and 2 bathrooms, bought in October 1988.’
Now that’s an interesting stat. During the ‘92 meltdown, the average age of a foreclosed loan was nearly 4 years. Today, it’s what, 15 months? The stuff of easy, toxic credit.
If I remember right, stuff went down in the 90s due to a recession and the decline of aerospace in Southern California. Now, it appears that RE has created a Ponzi scheme that will collapse on itself and will be more serious than what we went through in the 1990s. The housing problems may cause the recession as opposed to the housing problem being caused by a recession.
I read that 8 of the last 10 recessions were foreshadowed by a housing price recession. Akin to the chart that shows NAHB surveys forecasting S&P rise and falls by about a year. With the latest survey dropping to a 33, looks pretty poor dosen’t it.
OH TOO FUNNY! A SHACK IN PALO ALTO IS $1M TODAY.
IT SURE DOESNT EVEN LOOK LIKE MALIBU!
http://www.dqnews.com/AA1995MDH06.shtm
Where is the inflation ?
DQNews Archived Article
Million-Dollar Home Sales in California Down from 1994
by Real Estate Analyst John Karevoll
July, 1995
La Jolla, CA.—Sales of million-dollar homes in California declined somewhat during the second quarter as potential buyers took a wait-and-see attitude to the state’s wobbly economic recovery, a real estate information service reported.
A total of 423 homes were sold for more than a million dollars during the April-to-June period. That was up 33.4 percent compared to 308 for the first quarter, and down 26.9 percent from 579 for last year’s second quarter, DataQuick Information Systems reported.
Replace “housing problems” with “liquidity crisis”, and “may cause” with “will cause”, then I’ll agree 100%.
“If I remember right, stuff went down in the 90s due to a recession and the decline of aerospace in Southern California.”
We had a recession in Northern California but we didnt have Aerospace or Base closesures… we had a tech bubble and global competition from Japan that forced many tech companies under. Actually had several tech bubbles. Will there be another one. You bet.
Housing collapse -> recession -> another housing collapse? -> ?
Depends on how fast we can some (or any) industry to replace housing. My money is on bio-tech, alternate fuels, and geriatric medicine after watching faculty hiring trends.
Good insight, Gwynster.
Don’t forget arson investigators.
Bingo.
‘The typical home in foreclosure was a 1,386-square-foot home with 3 bedrooms and 2 bathrooms, bought in October 1988.’
the other thing that jumps out is its not McMansions and it’s not flippers
Those bought years are because of Helocs and Refi’d. The refi’s will have larger property taxes compared to the acutal 88 purchase price.
Inventory has been going up everyday and the prices are all over the place for comps in the same area. Some wishing prices, some trying to make a break even on the sales cost, the lower ones didn’t have the ATM addiction.
HAA(Housing ATM Anonymous) is the new AA.
“DataQuick analyst John Karevoll said if the Inland region continues to generate jobs at the present rate there will be enough potential buyers for foreclosed properties that come on the market to keep prices from falling dramatically.”
What jobs that are created can afford prices right now?
I did not know there are high paying jobs coming to the Inland Empire.
At some point the Inland Empire will lead Ca in forclosures.
- No more ‘Mexi-math.’
John Karevoll is an REIC shill. He spews nothing but BS. Just another “expert” with the ethics of Laireah and the intelligence of LAY. But oh do they make a great team.
Karvoll says DataQuick is not in the prediction business.
A prediction, or not (?), from today’s SF Chronicle:
“Karevoll said foreclosures start to become a problem when they drag prices down on other homes. But he does not expect that to happen in the Bay Area, where lenders are still able to resell foreclosed homes at their market price.
‘It’s very unlikely that the Bay Area will see discounting,’ he said.”
From:
http://sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2007/04/17/BUGCQP9MBO1.DTL
Or:
http://tinyurl.com/2r2jga
“Foreclosures, default notices hit 10-year high
Sluggish sales, rising adjustable mortgages blamed for 802% increase from previous year in homes lost”
Pia Sarkar, San Francisco Chronicle Staff Writer - Tuesday, April 17, 2007
Off-topic, but I can not resist. Anyone heard of the Mexi-meth working its way across the border? Now we are even exporting our meth labs.
Got 10% down?
Yep althought I don’t have solid data on it.
If you have to restore to drugs for income, why meth? Did the floor fall out of the cocaine industry? Meth is the crap generic cheese-based food product of the drug world.
Whoah, what a concidence! I was just talking to someone who told me that he went downtown looking for a Mexican to sell him some pot (dumb, I know), and the Mexicans all said “No, we don’t sell weed. We only sell meth.”
Trippy.
Prison guards — avg salary =80K? We don’t have enough prisons right now with unemployment
…with unemployment at
We house 737 per 100,000 of our citizens in a prison, near you…
In 2nd place, way back, is French Guiana with 630, per 100k
Mexico, supposedly a really crime ridden place, checks in @ 195, per 100k.
Germany, a former bad boy, can’t muster much and comes in @ 93, per 100k.
Canada, known to most to supply latent talent to their clientelle, south of the border, checks in @ 107, per 100k
http://www.kcl.ac.uk//depsta/rel/icps/worldbrief/highest_to_lowest_rates.php
We have looked at prisons, as more of a profit center, than anything else.
Look at the dynamics of a prison, somewhere in the Central Valley of California?
It will cost you a ton to build it, and you’ll have to have people working 24/7, the steadiest employment I can imagine.
What makes it even worse, is there is currently shortages of talented medical professionals in proper society, as the prisons offer almost twice as much moolah and there is no possibility of lawsuits from your clientelle.
It’s all so very wrong~
I suggest you do a google search for Catherine Austin Fitts excellent paper titled “The Aristocracy of Prison Profits.”
Here’s the bottom line, as stated by Richard Andrew Grove of 8thestate.com
“Because certain plants are made illegal by certain men, Black Markets emerge; the same people who make the drugs illegal, operate and control the Black Markets. What’s more, the people who create the laws and import the drugs, are the same people who build the prisons and fill them with otherwise innocent and law-abiding Citizens; essentially extracting profit in multiple ways in exchange for other people’s lives. The hundreds of billions of dollars in illegal drug money that is annually laundered via this scheme is then “processed” through the U.S. Stock Market, and aggregated by companies like AIG and Marsh & McLennan (the world’s largest Insurance Broker, which until Eliot Spitzer’s pseudo-investigation had Jeff Greenberg, Hank’s son, as it’s CEO) with the help of companies like Kroll Associates (Private Intelligence Firm responsible for World Trade Center Security from 1993 to 2001, coincidentally owned by AIG and sold to Marsh in 2004…
Its all run by the illuminati. Remember, the Queen of England is the world’s biggest drug dealer. But of course, they all do the Black Pope’s bidding.
Aladinesane:
I also recommend the same as Bubbleviewer:
http://www.dunwalke.com/
I thought it was on her company “solari”
I see bubble viewer is running with the drug issue.
But for me her article, describes how this real estate mess began, was financed, and ultimately will end.
These “certain men” and bought government officials that give their lives for these “certain men”…Openly steal from the public who are considered nothing more than “chattel”
HUD and the S&L crisis bailout model of REECO was a test case for the millenium grab, on the Global Scale.
Step by step, it is working to plan!!! :>(
I don’t do much dry cleaning nowadays and last time I took a load into a Central California town, I watched as the whirligig they press, that cycles for your clothes, alphabetically…
Every 15th article by my estimation, were fancy pantsy shirts worn by California prison employees, i.e. guards, staff, etc.
So would keeping the locals employed by the prisons, be 1/15th of the income of most of the valley?
Yup prison industries is one of the biggest for profit US Govt enterprises. What do you think has driven the push for longer prison sentences and the war on drugs? The profit motive to get folks encarcerated is enormous.
All of the stats I’ve seen always says it costs the taxpayers a lot of money to keep people locked up. How is the govt making profits on this? Thanks.
Waiting O C
please don’t confuse our government with the people that run our govenrment. Once our government were”public servents”,but now they are in control and making sure their children & thier children stay their.
I would have to do some research but I remember soemthing about inmates receiving a bill for their incarceration time. We were doing a study on african american men and their families in Miami at the time.
Also, prison industries is big business. I would suspect politicans could be holding shares.
Slave labor is big business here in the land of the ‘free.’
Just sell the 400+ acre San Quentin site, and it’ll pay for all the correctional housing space needed for years to come. Or…… until the “foreclosed homeless” begin rioting.
throw the criminals on an island and let them fend for themselves ala Alcatraz, but more like ‘Escape from New York’….and they can grow weed in peace!
I live in the Inland Empire. At least in my industry, computer programming, there are 100 times more jobs in Los Angeles than here.
The freeways are jammed because people are commuting, some a hundred miles or more from Victorville, Palmdale (technically not inland empire I know) and Lancaster. There is no way anyone can afford even a shack in Los Angeles unless you already owned a bubble house and sold it to another bubble house owner who sold his. Even in Watts the prices are 400k and up, reaching way above a million for lackluster, dumpy neighborhoods in West Los Angeles.
California uses more oil than most countries, yet, we don’t allow drilling off our shore. How hypocritical is that? Our water is all imported. We’re like a Frankenstein experiment kept alive by tubes and transplanted organs. This place is going down hard and soon. It’s a completely unsustainable juggling act that’s about to drop the ball big time.
Show’s almost over folks. Break it up.
Yeah, except we keep the world entertained. That should make us worth it. Bread and circuses for all!!!
“‘For this rise in foreclosures to be happening in the midst of a strong labor market is truly unique and scary,’ said economist Christopher Thornberg.
I get so tired of hearing about how strong the labor market is. There might by more people working, but they are making about half of what they used to make. Wages have gone down, down, down, while the price of houses has gone up, up , up! Why most economists can’t see this is beyond me.
Its all goverment and retail jobs. Even in South Bay SF Tech capital has more jobs exported to other states or overseas.
Why! In ever increasingly competitive global markets where price declines are common and no one has pricing power to raise prices, cost cutting is always in vogue.
Lets not forget the L1 & H1b crowd keeping a lid on negotiating a pay raise. Tech worker is doomed VC’s insist on part of the work has to be done in India. Having said that anyone seen the demise of the all mighty $.
Totally, most never even heard of the L1’s but the effect on our software employment market in the western world has been devastating. I have seen my expenses go up 50% in the past 7 years while my income has not gone up at all. I make a decent income, buit it is being erroded fast.
my recent employers have totally outsourced tech jobs…
1st: ‘just maintenance programming- we promise’…then that turns into 100% new development too.
Absurd.
India does not even have insurance and they have no clue of the nuance of what they are programming.
Indians in India provide some of the most aggresive schedule estimates which USA mgmt uses to justify sending project to India. When the project delivery date arrives they have one excuse after another.
The game is rigged just like housing.
Haha, wow… I thought it was maybe just my company that had a lackluster group in India. They send back code that doesn’t even work, so I send it back (and then get a reputation for “not being willing to work with India” cause I reject all their crap). Anybody who thinks that saves money has no idea what they’re doing.
No kidding. The group that we outsource to breaks much more than they fix. It’s overengineered to the point that it’s nearly unmaintainable. We would be better off just paying them to do nothing.
Also defined benefit pension plans made it much easier to determine how much cash flow one would have in retirement. How will I know how much cash my 401k will throw off to continue to pay my mortgage in retirement?
you don’t - that is what sucks… however, some good news. some ins. companies are coming out with products within 401ks whereby instead of putting, say, 20% in a stock or fund, you can buy an annuity fund, thus insuring a certain cash flow level - for life… stay tuned!
Isn’t that fraud? Why would you pay the steep fees for an annuity in an already tax-favored investment like a 401K?
I cant remember if it was GetStucco or someone else who mentioned the quote about it being hard for someone who’s paycheck relies on some half-truth to state/believe in reality.
It is difficult to get a man to understand something when his job depends on not understanding it.
Upton Sinclair
Lost the race but I still get points for the quotation marks.
Har!
‘It is difficult to get a man to understand something when his job depends on not understanding it’.
- Upton Sinclair
‘but they are making about half of what they used to make.’
Agreed!
His point is that not even high employment can quell the foreclosures. It would be Great if we could blame massive layoffs and a dead economy, because that’s all happened a bunch of times in the past. It’s pretty predictable.
I think Mr Thornberg’s main thrust is that “You think this is bad, wait til people stop spending money and start losing the jobs they do have…”
Another Flashback:
CALIFORNIA HOME FORECLOSURES REACHED 97,303 LAST YEAR
In ‘92 - at least you had a reason! Aerospace, oil, banking - just about every major industry LA once had was leaving town in those years.
Now you have a supposed “strong” economy with no big triggering event (save running out of greater fools) and things look even worse
BTW - Chris Thornberg was the TA for my econometrics course back in grad school in 1994. I always thought he was a smart guy!
I posted this above but what the heck - I’m really glad Thornberg left the Anderson center. He’s doing really well on his own.
Maximum foreclosures did not occur until 1995. It takes a long time for housing to hit bottom. 5or 6years from June 2005 is 2010to 2011. Settle in and save by renting. There is a long way to go.
By this I read that six digit foreclosure rates create havoc in the market…
Hmm…
Thornberg seems to be predicting a maximum rate of 200,000 to 250,000 (rough numbers). I see that easily happening by 2008.
This is going to get interesting soon. Just when is soon? June? October? No later.
Got popcorn?
Neil
Neil,
You say “…maximum rate of 200,000 to 250,000…”. If by “rate” you mean per year, you see 50,000 to 62,500 foreclosures per quarter?! That seems awfully high. What is the rate of new homes sold per year in CA? This could devistate a lot of builders and drive some surety bond issuers into joining the GF crowd. Please elaborate. I can not stop looking at this slow motion train wreck…..
God, I love your handle. Every time I heard this on AD I would giggle for the next half-hour. Classic!
I am looking in the 91105 zipcode of Pasadena and although Data Quick shows a 8 1/2% drop in ‘06 it seems like prices here just continue to go up and houses in good condition are snapped up with multiple offers over asking price. Will it be different for the more affluent areas? Will the mortgage “mess” affect all areas?
The thing about Pasadena is it is a beautiful place, in some areas, like along Orange Grove, by the Rose Bowl and adjacant to San Marino, Altadena, etc. But then you travel two miles away and you are in the ghetto. I think overall, there is more older money in Pasadena than say the OC, but never fear, prices there will tumble as well. Plenty of overpriced stuff in Pasadena, including condo’s close to Colorado Blvd.
In most of Southern Cal, the homes which used to be priced at between $200,000 and $450,000, which are now say $600,000 to $850,000 will be correcting. Those are the price ranges of people who don’t really have any wealth, but put on a show and generally make less than $150,000 household AGI. They are the households stretching to display wealth and using toxic loans.
precisely
Yes, I know what you mean, we sold our house in Pasadena last summer, but we hear from our old neighbors that those little bungalows are still selling, still for high prices. Last week some friends sold, inside of 10 days: $750K for1450 sqft on 50′ X 150′ lot. Madness.
Here’s a clue, maybe: the family who bought OUR house was -downsizing- from a $1mil+ house nearby - because they were having so much trouble paying their mortgage that they had been obliged to rent out a room! My guess is, they really ought to have taken a bigger step down than they did, or just sucked up their pride and rented. Good luck to them.
Sorry, I meant that to nest as a reply to nell.
Just to piggy-back onto what Chris said, this is from one of the attached articles:
“So far, the effect on home values has been muted. But as the number of move-outs, evictions and forced sales continue to increase, some economists say they will soon start to push prices down.
First to fall will be the low-income communities where marginal loans proliferated, they say. The trend will spread like a virus to more affluent neighborhoods.
The most pessimistic think a housing bust will wound the economy.”
BayQT~
the condo next to my mom’s pasadena condo sold for 1 mill last month. new kitchen new everything.
the guy who sold rents a house in Clairmont.
“DataQuick analyst John Karevoll said if the Inland region continues to generate jobs at the present rate there will be enough potential buyers for foreclosed properties that come on the market to keep prices from falling dramatically.”
———————————-
Who will want to buy a foreclosure in Murrietta or Menifee when there will likely be cheaper new homes available in Orange County? The megaprojects are going to have a much lower cost structure.
- Rancho Mission Viejo: 14,000 homes
- Irvine Great Park: 3,400 homes
- Irvine Ranch (various projects): >10,000 homes?
- Tustin Legacy (500?)
- Baker Ranch (?)
I think big price cuts on any of the Orange County megaprojects will send the Inland Empire back to the stone age.
That’s exactly why the far-flung suburbs get really hammered in RE downturns. Prices will fall everywhere, but they will fall further, and harder, in these long-commute, smoggy, crime-infested areas.
“it would take 11 months for all homes currently on the market to sell if no other properties went up for sale, he said.”
We’re not even close to peak inventory season yet. Look out belooooooow!
“‘We’re seeing the tip of the foreclosures,’
We aint seen nothin’ yet!
Got 10% down?
““Nearly 900 Californians a week are losing their homes because they can’t afford to pay the mortgage…”
This is music to my ears, when it comes to greedy flippers and the like. I hope they are not surprised about being forced out of their houses; they had to know they were living in dream world.
The rest of that line is worth adding on, too:
Nearly 900 Californians a week are losing their homes because they can’t afford to pay the mortgage — up from about 100 a week a year ago — up from about 100 a week a year ago — providing fresh evidence that the housing market’s troubles are nowhere near over.
BayQT~
The article should read “Nearly 900 Californians a week are losing a property” instead of “losing their homes” since many of the homes lost to foreclosure could be investment properties or second homes.
Yeah, well, I guess their were tenants living in them. But I guess renters aren’t really human, anyway.
Yeah, well, I guess there were tenants living in them. But I guess renters aren’t really human, anyway.
I’m my own worst spelling Nazi.
lots of these places were not occupied, no?!
In the past, foreclosures were considered to be financial disasters to those who went through them. And that’s still the MSM assumption now. But a flipper or FB who put no money down- what’s his downside? Finding a place to rent for a LOT less than his mortgage? Yeah, I know, the FICO goes down. But a lot of these people had pretty low FICO scores to start with.
Heck, even the moving expenses will be less than normal; the sheriff will obligingly carry all the FB’s stuff out to the curb.
I’d get behind some proposal that prevented certain FB’s from being able to buy for some period of time, say 15 years.
I’m thinking of the speculators who bought multiple non-owner occupied properties.
I’d get behind some proposal that prevented certain FB’s from being able to buy for some period of time, say 15 years.
If it can be proven they lied on their mortgage apps, and you can bet many did, a long term notation on their credit report to the effect should suffice. Those of us who want to be honest and conservative in our financial dealings have been left out in the cold as prices were pushed ever higher by borrowers who lied through their teeth on appliactions regarding their incomes.
that is the biggest shame in this whole debacle - people with integrity and prudence have been (prices) / are going to (bailouts or incr taxes) get some kind of shaft…. they deserve NO shaft!!!
“If it can be proven they lied on their mortgage apps”
That’s a felony. Why should a notation on their credit suffice?
Since when was that the punishment for felonies?
From a link in the article:
Santa Clara & Bay Area is getting impacted by foreclosures.
County 2006 first quarter 2007 first quarter Percent change
Alameda 564 1,578 +179.8%
Contra Costa 605 1,969 +225.5
Solano 294 914 +210.9
San Francisco 129 216 +67.4
San Mateo 186 382 +105.4
Santa Clara 527 1,058 +100.8
Marin 76 118 +55.3
Sonoma 157 407 +159.2
Napa 47 88 +87.2
East Bay 1,169 3,547 +203.4
Bay Area 2,585 6,730 +160.3
California 18,856 46,760 +148.0
HEADLINE: Countrywide CEO exercises options
BODY:
NEW YORK (AP) - The chairman and chief executive of Countrywide Financial Corp., one of the largest mortgage lenders in the country, exercised options for 46,000 shares of common stock under a prearranged trading plan, according to a Securities and Exchange Commission filing.
In a Form 4 filed with the SEC Friday, Angelo R. Mozilo reported he exercised the shares Friday for $9.60 to $10.89 apiece and then sold all of them the same day for $33.60 apiece.
The stock sale was conducted under a prearranged 10b5-1 trading plan which allows a company insider to set up a program in advance for such transactions and proceed with them even if he or she comes into possession of material nonpublic information.
Insiders file Form 4s with the SEC to report transactions in their companies’ shares. Open market purchases and sales must be reported within two business days of the transaction.
Countrywide Financial is based in Calabasas, Calif.
Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
LOAD-DATE: April 16, 2007
Sign of the times? or routine trade?
I’m sorry, but Leatherface Angelo Mozillo looks like a criminal…acts like one too, with those stock options.
You mean, Bronzillo!
I am not sure why anyone on this blog criticizes Mozilo for selling his shares. He is doing nothing different from what we did selling off some of our real estate in 2005. He is a smart man and he has a plan and if someone else wants to by CFC shares at 33, what is the problem. He has the benefit of inside information, but Ben’s bloggers enjoy the same level on knowledge.
The stock market wouldn’t work properly if insiders were allowed to buy/sell with abandon. But the article did say that it was a special legal program, so he probably had this selling plan already in place like a long time ago.
But our knowledge here is “public” information (for all to see on the internet), whereas Mozillo’s info is not.
I agree Jingle. This is social Darwinism. If you are stupid enough to buy Countrywide right now, you get all that auger-inn promises.
That being said, I hope to god my 401K funds aren’t too heavily invested in RE . . .
maybe he was liquidating stock so he would have cash to bail out the Countrywide FBs before the whole company implodes?
Coming up on CNBC in a few minutes they will be discussing the Subprime bailout plan.
With the way this is hitting now, by the time they figure out a “plan”, there will be nothing left to bail out. Kind of reminds of the way they came up with a “plan” for Katrina. I can just see the FB’s now on their rooftops waiting for helecopters (even Bernanke’s helcopter can’t save them now)
The picture of that in my mind is just, priceless…
What is the plan proposed on CNBC to bailout FB
No, CNBC was just covering the senates hearing on a bailout plan.
Regulators call on lenders to aid owners
http://news.yahoo.com/s/ap/20070417/ap_on_bi_ge/risky_mortgages
“The heads of Fannie Mae and Freddie Mac said the mortgage finance giants are developing new types of loans to aid homeowners in avoiding default.”
…
“Restructuring their expensive adjustable-rate mortgages “into more affordable products, especially 30-year fixed-rate mortgages, would bring them back to good standing, allow them to repair their credit histories and dampen the impact that foreclosures may have on the broader housing market.”
Most importantly, Bair added, “people would be able to stay in their homes.”"
=====
Forgive me if I misunderstand the situation, but it is my belief that most of the reason people here in California have been using exotic/risky loans (especially considering the historic lows with fixed rate loans) was that they were they ONLY way people could “afford” to buy a house. Trying to save them with a 30 year fixed rate mortgage would be like offering to help a starving diabetic by handing them a pound of refined sugar.
Fannie Mea: “Here you go, this should keep you from starving.”
Home Debtor: “Umm, I’m sorry, I can’t eat that.”
Fannie Mea: “Well, at least we tried.”
IMHO …Some FB’s can be saved by a lower rate than a adjusted up rate of 11 to 13% . In a 6 1/2 % or lower prime fixed rate market the sub-prime rates are very punitive (not that rates should not of been higher for sub-prime borrowers) . I’m not saying that any of these people deserve to be bailed out ,but if a lender wants to rewrite a loan to save a household from foreclosure than it’s up to that lender, but not the taxpapers.
That said , a good portion of the loans cannot be saved by a rewrite of the loans because the borrowers were speculators.
I don’t mind a lender making a cost effective decision of rewriting a loan but I do mind it if I’m asked to bail out any of these FB’s with tax dollars .Sometimes I wonder if Congress/Senate is aware of just how many FB’s were not planning to keep the house more than 2 years anyway and having a long term home was the last thing on these borrowers mind .
Sometimes I wonder if Congress/Senate is aware of just how many FB’s were not planning to keep the house more than 2 years anyway and having a long term home was the last thing on these borrowers mind .
—————————–
Well said, Wiz!!!
I’m sick and tired of hearing about the “poor” FBs losing their houses. What about renters’ payments going up? Is the govt going to create a program for us to ensure our rents stay “fixed” for 30 years?
Why is it perceived to be more traumatic if an FB gets priced out of his/her house by rising mortgage payments than if a renter is priced out by increasing rents?????
Where’s my bailout?
Has this posted anywhere? Apologies if it was. From Marinite’s blog:
(Reference: San Francisco Chronicle)
Foreclosures, default notices hit 10-year high
Sluggish sales, rising adjustable mortgages blamed for 802% increase from previous year in homes lost
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/04/17/BUGCQP9MBO1.DTL
The number of California homeowners who defaulted on their mortgage payments jumped to its highest level in almost 10 years, exacerbated by slowing home sales and adjustable-mortgage resets.
Homes lost to foreclosures in California shot up to 11,033 in the first quarter, an 81.5 percent climb from 6,078 in the previous quarter, according to DataQuick Information Systems. Foreclosures rocketed 802.1 percent from 1,223 in the first quarter last year but remained below the 1996 peak of 15,418.
Statewide, lenders sent 46,760 notices of default to homeowners in the first quarter. That marked a 23.1 percent jump from the previous quarter and a 148 percent jump from a year ago in the same period. Notices of default mark the first stage in the foreclosure process.
John Karevoll, an analyst for DataQuick, said the numbers have catapulted due to a surge of home loans — many of which were high-risk subprime loans — that were made in the summer of 2005. The adjustable-mortgage rate on many of those loans was reset a year and a half later, leaving homeowners scrambling to make their payments.
During boom times, homeowners could sell their property or refinance, Karevoll said. “We had a good long run of strong appreciation and default numbers went down significantly,” he said.
Today, prices have flattened, making it difficult for homeowners to unload their property.
The Bay Area has been shielded from some of the pain compared with the rest of California because of its higher home prices and wealthier residents. About 60 percent of the homeowners who receive a notice of default are able to make their payments before they lose their homes, Karevoll said.
Nonetheless, default notices in the Bay Area totaled 6,730 in the first quarter, a 160.3 percent increase over last year. Contra Costa experienced the biggest jump in default notices, totaling 1,969 compared with 605 the previous year, marking a 225.5 percent increase.
In San Francisco, default notices rose 67.4 percent to 216 from 129 the previous year. Marin had the second-fewest default notices — 118 compared with 76 the previous year.
Mark Zandi, chief economist at Moody’s Economy.com, said areas like Contra Costa are more susceptible to housing pressures because of the number of lower-income households that take on subprime loans. The Central Valley as well as parts of Southern California face similar challenges.
Zandi said he expects to see more foreclosures later this year, when a peak number of homeowners hit their maximum first payment reset.
Karevoll said foreclosures start to become a problem when they drag prices down on other homes. But he does not expect that to happen in the Bay Area, where lenders are still able to resell foreclosed homes at their market price.
“It’s very unlikely that the Bay Area will see discounting,” he said.
BayQT~
“John Karevoll, an analyst for DataQuick, said the numbers have catapulted due to a surge of home loans — many of which were high-risk subprime loans — that were made in the summer of 2005. The adjustable-mortgage rate on many of those loans was reset a year and a half later, leaving homeowners scrambling to make their payments.”
Karevoll is just trying to spin here. How many mortgages reset after 18 months? They typically reset after 1 (true teaser rate), 12, or 24 months. If the height of these loans was summer of 2005, then we’re less than 24 months out, so only those that reset after 1 or 12 months should have experienced any problems.
And as to his comment that “It’s very unlikely that the Bay Area will see discounting,” this is simply not the case. Maybe it won’t see any serious discounting in the next couple of quarters, but prices there will fall. Reversion to the mean will occur (and possibly overshoot).
DQ continues to try to spin and cheerlead this market to the best of their ability.
Hell, Sunnyvale is already down over 8% from last year at the same time. Can’t tell me the BA isn’t going to crash hard.
rob
Nice…this is just in first quarter… LOL… Q2 Q3 Q4 are in the wings
“In addition, 46,760 homeowners were sent default notices in the first quarter, DataQuick reported.”
The article yesterday stated that 40% of NODs in 2006 ended in foreclosures (i.e., trustee sales). If that rate holds (I think it could go higher), then 46,760 x .4 = 18,704 foreclosures from the NODs recorded in 1Q07, eclipsing California’s previous record of 15,418 foreclosures in 3Q96.
And, it looks like the number of NODs is continuing to rocket up at an unbelievable pace, so the number of foreclosures will dwarf what we saw in the last downturn. All this while inventory is rising, sales are declining, and lending is tightening. Looks like prices are going to be under severe pressure before too long.
We need BMIT (Bubble Markets Inventory Tracking at http://bubbletracking.blogspot.com///) to create a population adjust foreclosure inventory record. What was the population of CA in 1996? What is it in 2007? That ratio should be used to set the foreclosure record.
wow- the last cycle FC’s took a long time- this time ?
hyper-bolic
Waiting,
I agree with your math. At best, NOD’s at at half their peak rate (I think its more like 25%… ) I also think the conversion rate will hit about 60%. In other words, 250,000 foreclosures a year. (Or about what Thornburg is predicting).
The credit tightening will get severe. What will the minimum down payment become? 25%? 30% I’m not talking sub-prime, but prime!
This is happening fast… but it will speed up.
Got popcorn?
Neil
Okay, so the previous CA foreclosure record was around 14,000 (hit in 1996 in a single quarter). We’re already at a little over 11,000 and the estimate is for three or four times where we are now??? Unf******* believable.
So I guess the problem is bigger than the Spring selling season can set straight? When is NAR going to come clean and admit that homeowners have a complete disaster on their hands?
I, for one, am looking forward to a little less smugness about how financially brilliant people were to strap themselves with the maximum amount of debt some crock pot lender was crazy enough to give them.
Wow! I didn’t even know there was that much of a crash in the nineties. If something that large went unnoticed pretty much, this next one is going to be 10x that size or more.
It’s going to be the Grand Finale crash which takes down the dollar and everything else, including maybe the Constitution itself.
Got popcorn?
No bailout, lenders are supposed to hold off on foreclosure out of the kindness of their hearts:
http://news.yahoo.com/s/ap/20070417/ap_on_bi_ge/risky_mortgages
From the article: “Prudent workout arrangements that are consistent with safe and sound lending practices are generally in the long-term best interest of both the financial institution and the borrower,” the statement said. “Institutions will not face regulatory penalties if they pursue reasonable workout arrangements with borrowers.”
The problem is that “safe and sound lending practices” were thrown out the window in order to make the toxic loans in the first place, just so that FBs could have an initial payment low enough that they could kind of, sort of have the capability of making that initial low payment. How can any loans that are “safe and prudent” help the FBs? If they could have afforded the safe and prudent loan (30 year fixed rate), then they wouldn’t have needed all of the toxic loans that are now defaulting. And any safe and prudent loan made now would almost invariably be at a higher interest rate than those made during 2004 and 2005. So how are lenders supposed to offer “reasonable workout arrangements” that are consistent with “safe and prudent lending practices”? Also, how does this work for loans that have been packaged and sold into a security (CDO, MBS, etc.)?
From the article: “Prudent workout arrangements that are consistent with safe and sound lending practices are generally in the long-term best interest of both the financial institution and the borrower,” the statement said.
This reasoning is unsound. It may be true if all the lenders were part of an illegal trust or monopoly, but in the absence of said trust, they are going to race to undercut each other to the bottom. Check out
http://en.wikipedia.org/wiki/Prisoner’s_dilemma
The key is that in order for the lenders to just want to “all work it out nicely” they have to be acting in concert, as a single entity. In reality they are separate entities and in such situations one can always make out a little better by undermining the play-it-nice strategy of the other one. So down the slippery slope they go…
Quite neat, really.
Besides, if the politicians lean on the banks hard enough to work it all out with the homedebtors, you know the cost will somehow be spread to the rest of us through higher fees, rates, etc.
What these squatters need is a swift boot in the ass to get them out of their foreclosures so decent people can move it.
I love it. I saddle myself with 800,000 dollar debt. I default and ruin my credit for life. A few months later someone else comes in and buys my house for 400,000 and it starts appreciating in value for them.
Holy Cow! Oh, the delicious irony of it.
From the LA Times article:
“Los Angeles County, the largest housing market in the state, is surprisingly strong. The default rate is almost 60% below the first-quarter 1996 peak, DataQuick said.”
Sorry, but why would DQ soften the news for LA County by putting this unusual 1996 comparative rather than simply comparing against last year? Even the LA Times provided a prior year comparison for LA County foreclosures indicating a +600% jump. Hmmmm……
I discussed this on another post about that statement. The media and RE professionals all used to claim that San Diego is the bellwether for the state. So goes San Diego so goes the state. LA is about 12 to 18 mos, depending on the location, behind San Diego in the current cycle. They don’t seem to mention that anymore. The truth is LA looks very similar to what San diego looked like last year. In other words its tanking. What we are seeing happening right now is totally unprecedented. How people can thank that this won’t have an severe impact on the economy is beyond ridiculous.
Where is LA tanking
Foreclosures are hitting right where you would expect, Compton, Northridge, N hollywood, Long Beach,Sylmar,Whittier,SCentral,etc. I know there have been many a conversation about W. LA. and other desirable ares of LA which seems to be holding up although volumes are way down in many areas. In all honesty I don’t think LA (all areas) will be immune to what this is turning into. We have never seen anything like this. You can’t have the entry level areas hit this hard and not impact the nice areas. Like the article said this will spread like a virus into nice Los Angeles neighborhoods.
LA is tanking… just be patient. Talked to some heavy hitters over the weekend. Very nervous, saying things that SoCal will only drop by 5% etc etc
I did have dinner with a RE agent about a week ago, who works the Spanish speaking areas of the Valley. She claims nothing is moving. Inventory, that is.
Excuse me. In the early 90’s my parents house, near Pico and Sepulveda went from 750,000 in value to 450,000 (based on offers they would get out of the blue).
This next bubble bust is going to make that one look like farts in a bathtub.
LA homeowners are just polishing brass on the Titanic. It’s all going down soon anyway.
”Where is LA tanking”
In transaction volume?
in price
You ain’t seen nothing yet. We’re just getting started in San Diego. Condo inventory downtown has yet to peak. Lots of construction nearing completion. This will cut the legs out from under the entire house of cards.
images from CARLSBAD http://buildingfrenzy.smugmug.com/gallery/2725285#144596208
New York Times: Housing Slump Takes a Toll on Illegal Immigrants
http://www.nytimes.com/2007/04/17/business/17construct.html?ref=business
From Fresno to Sacramento, big tangles of wire and PVC pipes clutter vacant lots in silent subdivisions, waiting for houses to be built — some day. Dozens of “For Sale” signs already dot the lawns across new residential communities. And right next to the ubiquitous billboards from builders are fresh signs offering homeowners help to avoid foreclosure.
But another set of losers is less visible: the immigrant workers, mostly illegal, who rode the construction boom while it lasted and now find jobs on building sites few and far between.
The growing presence of illegal immigrants in home building, mostly working for small labor contractors, might help explain why government statistics have recorded only a small decline in construction employment, despite the collapse in residential investment.
“Technically they don’t fire them,” said Myrna Martínez, coordinator for the Fresno office of the American Friends Service Committee, a nonprofit organization working on social assistance projects for immigrant workers. “They just tell them that there is no more work.”
Click the link for more!
I am so mad!
Barbara Boxer just sent a reply to my e-mail about not bailing out FBs. Here it is:
Dear Mrs. Guest-Flores:
Thank you for contacting me about subprime mortgages, which are loans that are marketed to borrowers with weak or imperfect credit. I appreciate hearing from you.
In order to purchase a home during the recent housing boom, millions of Americans turned to lenders offering alternative mortgage products such as interest-only and adjustable-rate mortgages. Lured by low interest rates and easy access to credit from predatory subprime lenders, millions of Americans purchased homes they cannot afford.
Though subprime loans have initial monthly payments lower than standard mortgage loans, the payments are structured to increase either suddenly or slowly over time. As a result of recent interest rate hikes coupled with abusive loan terms, payments often grow beyond what borrowers can afford to pay, forcing many families into delinquency or even foreclosure.
The Senate Committee on Banking, Housing and Urban Affairs is currently holding hearings on this matter in an effort to gain more information about unscrupulous lending practices and the current crash of the subprime mortgage market.
Please know that I am monitoring this situation closely and will
keep your views in mind should pertinent legislation come before the Senate.
Again thank you for writing to me.
Barbara Boxer
United States Senator
Please visit my website at http://boxer.senate.gov
She’s totally gonna go for it. 40-year loans, restructuring, whatever it takes to permanently entrench these predatory borrowers in their overpriced homes so they can sell for a profit and I can rent for the rest of my life!
AAAAAAAAAAAAARRRRRRRRRRRRRRRRGGGGGGGGGGGGHHHHHHHHH!
Looks like we got the same email from Sen. Boxer, and posted it about the same time.
She’s just going to vote whatever way will get her money votes, and more power.
I would agree that those who can be “helped” to meet their obligations should be helped - not with handouts or tax payer money. I just doubt most FB’s want help meeting their obligations - As in making huge payments on a depreciating home for ever, and few would qualify under these terms. This would help marginal borrowers, but would serve no purpose to those most at risk. What really needs to happen is loan standards need to be restored to ensure borrowers are properly qualified, and not with low teaser rates etc. If this happens, the FB’s who choose to go it the long term, and many who can will, will not be able to sell for a decade or two, while the rest who can sell and need to will be forced to accept a much lower market valuation, so we will not be renting the rest of our lives, and even if we are, still better than a $4200 a month mortgage on some small stucco box in a smelly part of town.
BULLSH!T!!!!
listen to her bleeding heart words… predatory, unscrupulous, etc. yes there were such lenders, but where is the adjective STUPID buyer in her response?
Not to worry the market will require a higher risk return with
interest rates spiking. You cant burn a candle at both ends.
Yeah. So what?
Somewhat OT: I recently wrote to my Senators and Representative, expressing my view that there should be no government bailout. Below is the text of an email that I received from Sen. Barbara Boxer in response to my letter:
Dear Mr. XXX:
Thank you for contacting me about subprime mortgages, which are loans that are marketed to borrowers with weak or imperfect credit. I appreciate hearing from you.
In order to purchase a home during the recent housing boom, millions of Americans turned to lenders offering alternative mortgage products such as interest-only and adjustable-rate mortgages. Lured by low interest rates and easy access to credit from predatory subprime lenders, millions of Americans purchased homes they cannot afford.
Though subprime loans have initial monthly payments lower than standard mortgage loans, the payments are structured to increase either suddenly or slowly over time. As a result of recent interest rate hikes coupled with abusive loan terms, payments often grow beyond what borrowers can afford to pay, forcing many families into delinquency or even foreclosure.
The Senate Committee on Banking, Housing and Urban Affairs is currently holding hearings on this matter in an effort to gain more information about unscrupulous lending practices and the current crash of the subprime mortgage market.
Please know that I am monitoring this situation closely and will
keep your views in mind should pertinent legislation come before the Senate.
Again thank you for writing to me.
Barbara Boxer
United States Senator
good for you ,but barb will be #1 on the reward a victim parade-it’s what she does
In short f*** off hunh?? That’s shameful
Too much focus on mortgages and not on the source and reason for the real problem … home price inflation.
Nope.
What’s the source and reason for house price inflation?
Idiot, greedy buyers overpaying for a hellhole box with created out of thin air borrowed money (mortgages).
Debt inflation (mortgages) caused house price inflation. Idiot, greedy buyers caused the debt inflation by signing on the dotted line for a mortgage.
There’s the real problem - everyone who took out a mortgage.
Exactly, crisrose. It’s the loose/exotic lending that caused housing prices to rise. And it took morons who thought they “deserved” to make millions by flipping houses who destroyed the housing market (caused it to rise to totally unaffordable levels).
What we need is a return to lending standars where the borrower is expected to pay off the entire loan based on the original terms. No expectation of refis, no “just hold it for two years & sell at a profit” plans. Just sane debt-to-income ratios (less than 28%, as DB pensions and employer-paid healthcare are less likely, as are wage increases — and cost inflation is eating away at what’s left & jobs are less stable). And income needs to be verified if the LTV is over 70%.
That would probably bring prices down by about 40-60%, depending on location.
“Lured by low interest rates and easy access to credit from predatory subprime lenders, millions of Americans purchased homes”
Yeah, and a year ago, Boxer and her ilk were were oh so pleased with the inclusion of millions of new home-buyers, getting their piece of the American dream utilizing creative mortgage products and government programs.
The canned response is predictable…so are the words ‘lured” and “predatory”.Always nice when senators respond with condescending emails. Not. What a dolt!
So what?
There are probably many more hard working people who would resent “house welfare” and vote that battle axe out the next chance they get if she gets our taxes raised over this.
Now here’s a good laugh………
From Reality Times……..
In the Company of Chickens: Subprime Market
One little gem from the article………
“Recently, at a conference of mortgage executives, the executive vice-president of a major seller of subprime loans admitted that his company knew better than to make these loans, but they couldn’t stop themselves.”
http://realtytimes.com/rtapages/20070417_subprimechickens.htm
OMG, that article is way too funny!
Moron thinks suicide loans are wonderful miracles or some such nonsense. Things couldn’t be better ’cause we’ve got more people into homes. Doesn’t matter if they can’t keep them. He blames the foreclosures on divorce, not toxic loans!
Call the senator by phone talk to a person make your point be known.
Question: By doing this we will never have affordable housing.
The devil made me do it .
Of course the people in the loan business knew they were making really bad loans ,but the money was just to good . If the lenders can’t stop themselves, than they need regulations and more disclosure documents . The realtors couldn’t stop themselves either and the borrowers couldn’t stop themselves either . I guess during a mania people can’t stop themselves so regulation is necessary .
No regulation is necessary. People will lose their houses and values will fall until the next bubble, what’s wrong with that.
Because the PTB will spend OUR money trying to fight “the market”. There is no free market; therefore, we need regulation.
If you would like to write to your representative/senator…here is a helpful link
http://patrick.net/housing/contrib/nobailout.html
We should start worrying about a Japan style deflation …..
What’s the best way to prepare for such a deflationary period?? Not that I think it’s likely, mind you–I think the Fed will end up with stagflation instead…
what increases in value the most with deflation?
cold hard cash, safely deposited into a Vanguard Treasury Fund
So if they are going to bail out the FB’s who took out liars loans and negam loans, are they going to ban these loans? Or are these loans going to just be a mass production line for churning out people who need to be bailed out? Enquiring minds want to know!
We could have annual bailouts, each year using tax money to buy off the loans made by the “predatory lenders” of the previous year. Year after year. Sounds nice!
“So if they are going to bail out the FB’s who took out liars loans and negam loans, are they going to ban these loans?”
You’re right, if the bailout serves to wipe out “exotic” financing, the market will tank.
And I don’t think a lot of these people are going to want to be “saved” if there is no GF able to buy their house at a tidy profit.
This was an experiment that went horribly wrong, and there’s no neat way to clean it up. Don’t bailout the FB’s, the market tanks. Bailout the current FB’s but not future FB’s, the market still tanks.
The LA Times reports from California. “Nearly 900 Californians a week are losing their homes because they can’t afford to pay the mortgage, up from about 100 a week a year ago, providing fresh evidence that the housing market’s troubles are nowhere near over. The 11,033 foreclosures in the first three months of the year represent an 800% increase over the same period a year earlier.”
“In addition, 46,760 homeowners were sent default notices in the first quarter, DataQuick reported.”
Ohhh man, I would love for the specuvestors and real-estate-always-goes-up true believers here in California to be burned, and burned BAD.
All I gotta say is, COME ON DEFAULTS!!!!!!!!!
One foreclose in California is like, three foreclosures everywhere else in the country. This is going to get real ugly.
LOL Lets get the evil media to help out…
The massive amount of paperwork needed to buy and sell a house virtually guarantee realtors will always be needed to hand hold through the process.
Very few people could do this for themselves the first time.
A Real Estate attorney can hold your hand, and they won’t pick pocket you after the fact.