“Coming To The Realization That Prices Have Come Down”
The Press Democrat reports from California. “A spring home sales surge wasn’t enough to keep Sonoma County prices from falling for the ninth consecutive month in March. The March median resale price was $565,000, down 1.7 percent from a year ago. The stretch of price declines is the longest in 14 years, according to the latest Press Democrat monthly real estate report.”
“Home sales were down 19.8 percent in March, compared with a year ago. The 368 sales in March were a nine-year low for the month. ‘Prices are still coming down. Sellers are having a difficult time of it,’ said (broker) Ron Wareham in Santa Rosa.”
“The county’s housing market continues to recede from its peak in summer 2005, when the median resale price hit a record $619,000. Sales here have fallen 18 consecutive months in year-over-year comparisons.”
“Lenders have been tightening standards or eliminating high-risk loans as foreclosure activity soared in Sonoma County and across the nation. ‘I’ve lost three or four borrowers just in the last few weeks. I could have gotten them qualified a month ago,’ said Darren Seliga, owner of Seliga Financial in Santa Rosa.”
“Spring and summer usually bring strong sales as the weather improves and families look to make moves. But despite the seasonal increase, home sales are down 13.7 percent in the first three months of 2007, compared with the same period a year ago.”
“Buyers, however, are in no rush to make deals with a large supply of homes to choose from. Homes still take several months to sell, on average, and even those that stand out may not get snapped up. ‘You have to have everything in a row to make it work and it probably will sit awhile,’ Wareham said.”
“‘Now are the buying months and we’re seeing more applications,’ said Joan Picard, president of the Redwood Empire Mortgage Lenders Association. ‘We had some doubts. I think people are now coming to the realization that prices have come down.’”
The Mercury News. “The number of Bay Area homeowners who failed to pay their mortgages on time more than doubled in the first quarter compared with the same time last year, as home values flattened and fewer homeowners could sell or refinance to escape mortgages they can’t afford.”
“In the nine Bay Area counties, 6,730 homeowners received ‘notices of default’ from their lenders in the January-to-March period, according to DataQuick. That’s 160 percent more than during the same time last year.”
“When would the numbers indicate that the Bay Area is in trouble? ‘If the economy weakens or there are labor market problems, then look at this to be a disconcerting number as it’s rising,’ said Mark Schniepp, director of the California Economic Forecast, in Goleta.”
“The other risk factor is whether more and more borrowers who qualified for loans with subprime credit will default. ‘We don’t know to what extent the subprime problem is really going to blow up,’ he said.”
“A total of 11,054 homeowners in the 16-county Central Valley region - spanning from Kern to Yuba counties, received notices of default last quarter, up 166 percent from a year earlier.”
“The statewide rise in default notices is ‘the result of flat appreciation, slow sales, and post-teaser-rate mortgage resets,’ the DataQuick report said. About 40 percent of those who received default notices last year in the Bay Area were foreclosed upon. The previous year, only about 8 percent were foreclosed upon.”
“In Santa Clara County, 1,058 homeowners received default notices in the first quarter, slightly more than double the 527 who got them in first quarter 2006. In Contra Costa County, however, defaults rose to a record 1,969 in the quarter, up 226 percent from a year earlier. Sacramento and San Diego also hit new quarterly records, at 3,234 and 3,931 defaulting homeowners, respectively.”
The Union Tribune. “The San Diego City-County Reinvestment Task Force tomorrow will examine how deeply the recent spike in home loan foreclosures has affected the region’s neighborhoods.”
“‘What does it mean to the local economy?’ task force director Jim Bliesner asked of the increase in foreclosures. ‘If there is a large volume of properties being foreclosed on, what does that say about the safety and soundness of the lenders and the practices of the mortgage lending industry as a whole?’”
“City Councilman Tony Young, co-chairman of the task force, said the San Diegans he represents in District 4 are feeling the pain. ‘Many of the neighborhoods I represent are being affected negatively,’ Young said. ‘Some of our citizens are in deep trouble. I want to find out what effect it will have on San Diegans as a whole, in regard to housing.’”
“Countywide, 1,182 foreclosures took place from January through March, nearly eight times the 153 recorded in the same period in 2006. The previous record was 1,059 in the third quarter of 1996, when the housing market was in recession.”
“Critics link rising foreclosures to the widespread use of adjustable-rate mortgages that offer low monthly ‘teaser’ payments before adjusting upward. They are widely used in the subprime market. In early 2005, when the local housing boom was approaching its peak, adjustable loans accounted for 84 percent of purchases, according to DataQuick.”
“Yesterday lending giants Fannie Mae and Freddie Mac announced the development of new loans to help borrowers at risk of default. Edward Leamer, director of the UCLA Anderson Forecast, said the move comes ‘a little too late.’”
“‘We should have had some kind of system in place a year or two ago to prevent people from getting in over their heads,’ Leamer said. ‘Buyers assume (that) if they can qualify for the loan, they can afford the product.’”
‘Banks began foreclosure proceedings against 47 percent more U.S. homeowners last month compared with a year ago as falling housing prices made it more difficult for borrowers to refinance mortgages.’
‘California had six of the 10 metropolitan areas with the highest foreclosure rates. Stockton, California was the top metropolitan area in March for foreclosure filings, RealtyTrac said.’
‘The other California metro areas in the top 10 were Vallejo-Fairfield; Modesto; Sacramento; Riverside-San Bernardino and Bakersfield. Greeley, Colorado, Detroit and Denver were also among the top 10, according to RealtyTrac.’
Humans are very poor at understanding exponential functions.
The papers talk in percents as compared to previous periods without conveying the real risk. If (and the will for a while) these foreclosure numbers keep doubling it won’t take long for a huge percentage of Californians to be looking for rentals.
Those landlords that didn’t overpay in the past will soon have the ability to raise rents rapidly, even in the face of massive countrywide vacancies.
This will cause the gov to come up with even more fancy hedonic adjustments as it concerns rents.
My estimates have at least half of the FB since 02′-03′ suffering foreclosure, unless substatial numbers magicaly (no other spending that will crush the economy) and wrongly stick it out for 15 years to break even (in their mind).
“raise rents rapidly even in the face of massive countrywide vacancies” - hard for me to make sense out of this part of your comment, Rich.
I know it is counterintuitive, but all those FB getting booted out will have to live somewhere. It may take well over a year from foreclosure through sale till the home is actually inhabited again.
The rents may indeed by hurt long term in real specific building bubble areas (LV, AZ, FL, etc.) due to drastic oversuppy, but in areas that were just driven up in price without insane building levels rents will rise. I have been involved in the rental game for 15 years and I can tell you that rents don’t really drop here. They reach a point go sideways and rise. The RE bubble was a huge distortion taking millions of (rightly so) renters and putting them in McMansions, it was this drop in rental demand that dropped rents. As these fools seek rental housing the opposite will occur.
It is funny that you all accept the tsunami of foreclosures coming that will exceed the lamest predictions in the MSM, but don’t see all these sheeple turning back into renters driving rents up.
Those long term customers that use our property management services are quite pleased with the rents they are getting, but not impressed with the trashy tennants =). It is only the ignorant FBs that paid $450k for “Investment property” that are screaming about a max rent of $1,350/mo. All those that bought for $60k before the bubble and got $500 rents are very happy that the same POS now rents for $900.
Another overlooked aspect is the availability of good rentals. McMansions with $400/mo HOA fees do not qualify as a good rental in my book. Thus I make the case the vast majority of the 2million vacant homes (soon to be much more) in the US would make awful rentals. Cold day in hell I would rent out a 3000sqft home!!! The carrying cost over any meager rents would make a boat a better investment =)
Trust me guys, millions of FBs are about the hit the streets and they are not going to be renting the McMansions that they got kicked out of.
Very good points. Same thing happening right now in Reno.
And what job will the new renters be doing and how much will it pay, Rich? Mortgage broker, realtor, appraiser, loan processor, construction? This RE boom has been virtually our entire economy for the past 7 years. Do you believe that the economy is going to keep on humming right along when it unravels? I don’t think so. We are going into a severe recession that will probably result in a hyperinflationary depression, in which everyone is screwed. The renters will pay whatever they can pay based on the salary of their piece of sh** job, and the landlords will take it. Maybe the investment will pay off. I’m open to that, but I think you’re missing something if you think incomes will continue growing at their present rate (at least in purchasing power). Stagflation is where we are at - in the U.S.
‘This RE boom has been virtually our entire economy for the past 7 years.”
Roger that. The housing boom has totally masked our weak economy … now the mask is peeling away exposing the blemishes. An $8.00 an hour job is fine for your high school kids working part time but here in So Ca that ain’t gonna cut it.
Once again, someone has hit the nail on the head. I don’t understand how people continually say “housing will be all right if employment stays where it’s at”. A *large percentage* of jobs created over the past 4 years have been in the *real estate industry* (I work for a mortgage banker, unfortunately, so I see it firsthand so to speak).
Whatever, Rich.
Rents in San Francisco could go up with double digit increases for YEARS before it would make renting nearly as costly as buying.
I pay 40% of a traditional mortgage payment for the place I’m in - before taxes (and let’s not talk about the six figure downpayment to reach that mortgage payment figure).
Rental increases at this point?
Who cares?
“I know it is counterintuitive, but all those FB getting booted out will have to live somewhere.”
All those people live somewhere right now and there’s a vast surplus of homes.
When they foreclose they have to live somewhere, but they’ve also created a vacancy in their wake.
Rich,
This is nonsense. The FB’s don’t have to live in the same place. The vast majority will be forced to move to locales with cheaper housing where their income can actually cover the costs. They can either buy or rent there - this won’t increase rental demand in the region where they were foreclosed. If you doubt this, I suggest you study the migration patterns of previous recessions.
I agree with you. The builders are continuing to build. The oversupply of condos that aren’t selling will turn into rentals. People will move in with parents, roommates. Foreclosures will stagger as opposed to happening at once. A lot of foreclosures will become ‘work outs.’
Rents might go up in the short term but they are likely to go down in real terms as people have less buying power, relocate to states with better economies and as more inventory is built. At least this is what I see happening in LA. There are thousands of additional condos in process and projects that haven’t even broken ground. Population growth is stagnant and may turn negative once we’re in a recession.
Rents in San Francisco could go up with double digit increases for YEARS before it would make renting nearly as costly as buying.
My San Francisco rent isn’t going to do that - thank god for rent control!
OhMy,
Its not that people vacate neighborhoods — although some may — but the historic pattern is that people subdivide existing homes. Just look at Brooklyn. The boom in the last few years has meant converting multiple dwelling homes to their former single-occupant grandeur. But people should realize *how* they went from single occupant to multiple dwelling in the first place: *exactly like this*
Rents fell 20% in Austin from 1985 to 1990…Cal is looking at a similar collapse. Austin’s collapse was not oil driven. It had 3% unemployment and a tech boom going on. It was speculation like today.
“Those landlords that didn’t overpay in the past will soon have the ability to raise rents rapidly, even in the face of massive countrywide vacancies.”
How does this make sense?
Foreclosures eventually will need to be sold off. (No matter how much Wall Street denies it.) As inventories grow the only way to make your property stand out and even have a shot at selling is to lower the price. If rental properties are purchased at a lower price the owner can charge occupants a lower rent.
The people that will get squeezed won’t be the long time property owners. The dead men walking will have purchased very late in the cycle and for top dollar. The “squeeze” will force more and more property owners into foreclosure. They will be replaced by buyers that purchase the foreclosed properties on the cheap. This will occur until buying makes more sense than renting.
Currently renting makes more sense than buying. (In overheated markets)
unlike funny money with mortgages, landlords who did not overpay can not raise rents when they want, salaries are going nowhere these days in various sectors, some may even go down or alltogether disappear with the upcoming slow economy.
With a $400/mo HOA fee and the upkeep cost on these huge shitty McMansions no real landlord would touch them!! If you can get $1,300/mo and your upkeep 200, taxes 200, vacancy 150 and HOA 400 total almost $1,000 your busting your ass for $300/mo!!! Only a dipshit would take this on! Hell if they go from the $450k now to $100k they would still be a shitty rental. $100k in an ignorant gov bond will yield you more without dealing with trashy exFB renters.
“With a $400/mo HOA fee ”
Rich, I don’t want to bag on you too, but, how do you think that the HOA will stand when the neighborhood is vacant? IF and when the landlords come in to purchase the property, they’ll most certainly do away with the HOA, as with it, it would make, “a shi**y rental”. BTW, in your calculation for $1,000, you seem to have thought that they would get the property for free? Where’s the mortgage? Point that out too, and it would help your argument.
Pleasetake a look at this article”
Most of you I am sure will enjoy
“TROUBLE IN SQUANDERVILLE”
http://onlinejournal.com/artman/publish/article_1981.shtml
Rich,
It actually happens just the opposite of your hypothesis. The “shadow” market of unsaleable homes floods the market and rents start dropping. It happened in 1992-1996 and will happen this time too. We have too much housing (rental or sale) and not enough bodies to fill it all. In the late 1980’s apartment investors paid top dollar for units underwritten to 97% occupancy, ever increasing rents and fixed expenses. The only thing that went up in 1992-96 were utilities and vacancy. The occupancy hovered near 85%, costs went skyrocketing and many, many apartment projects went back to the banks.
Exactly… and the same thing is happening again with people buying at these low cap rates and using interest only loans to finance them. I know quite a few that are teetering on the edge right now.
I also wonder if things really hit the fan if younger renters will go live with the parents, since they can’t find a mortgage broker job to pay the bills.
Speculation for sure, but if things go the way many people predict I could see a scenario where rents drop even more.
The only thing that went up in 1992-96 were utilities and vacancy. The occupancy hovered near 85%, costs went skyrocketing and many, many apartment projects went back to the banks.
As I recall in the early to mid 1990s, poor people on welfare moved to places like Palmdale and bought houses with their welfare checks, thereby freeing a lot of rental properties in the inner city. This also helped to drop rents.
In the mid 1990s there were banners on nearly every apartment complex in Los Angeles: “$99 moves you in” and “3 months free rent” etc. These are not indicators of a tight rental market. What Rich is forgetting is that a lot of people moved out of town after they lost their houses, rather than fouling the rental market.
Uh sorry Rich, I’ve noticed rents coming down in SD as all the condo conversions have come on the market. A fancy 2br that was $1950 (mine) a year ago, now rents for $1750, plus they are offering 6 weeks free. Last summer they had a waiting list. Last summer I could not find a house to rent in Mira Mesa for less than $2000, now I’ve seen them on craigslist as low as $1550. I’ve seen nice places houses in Del Mar/PB for the mid $2000’s — things have changed and will only get better for renters!
One thing you have to watch out for is renting from a homeowner about to go into foreclosure. If you rent from them they will…
1. Just pocket your monthly rent knowing that the property will be foreclosed on soon.
2. Take your deposit knowing again that the property will be foreclosed on soon.
If you rent from one of these people and the house gets foreclosed on you will get evicted. The 6-12 month lease will not hold up.
If you’re going to rent a house or even an a condo. Look up the property on http://www.zillow.com and see what the owner paid for it and when.
In California it takes about 4-6 months of not paying a mortgage for evictions to occur.
Thats because the previous renters became FBs (cond glut I have no clue about, and I agree that may depress condo rents for years) and were removed from the pool of renters.
I am mainly speaking of Stockton here. We have had quite a few McMansions go up, but didn’t get a glut new condos.
I agree with the scenario that Rich laid out…though it will take years to develop and will be most apparent when the current bubble cycle has played out and house prices bottom out. Think about all the folks on this blog that believe renting is smarter than buying right now because no one wants to catch a falling knife (I’m one of them). As more and more people join this way of thinking, demand for decent rentals will increase and landlords will be able to eventually start increasing prices. Just because there are lots of homes in the “for sale” inventory won’t mean they are available as rentals. This happened to me in the San Diego area in mid 1998. It was harder than heck to find a decent rental, but there were ton’s of homes for sale, both resale and new inventory. I was in a rental for only a year and the landlord wanted to move back in. I bought at that time (early 99) as it was actually easier to buy than rent a decent place (of course I had the 20% down). Turned out to be a lucky move as the upward bubble started about a year later.
I lived in SD in 1998 and it wasn’t hard to find a cheap rental. If you’re going to make stuff up make up things that make sense.
Nein you are wrong. Are you sure your in real estate?
Rich: way to hang in here! You have a lot of experience and I am interested in what you think.
I’m interested in what he thinks too….. when might we here that?
Go Stockton!!!!
Ill by buying these at 6 times rents in a few years!!!!!!
All the shit I took from dumbshits when I sold my rentals in 02′. I am going to be the loudest ass around them in the future about what great deals there are at the courthouse and “Sorry you have such a large house payment that you can’t buy some, DAMN SHAME!!!”
Down Dino, we’ve got a ways to go yet. The FB’s are still medium-rare. Trust me, they’re tastier well done, and I mean crispy. So go hunt Neal down and maybe he’ll give you some munchables to pass the time.
Oh, nothing personal, but your theory about rents tells me you might need meds to go with that popcorn.
Wrongo boys, as stated above all these FB now live in homes that make no sense as rentals. From an (logical) owners perspective it would be better to sell the previously $450k McMansions for $100k and move on than to rent them out.
You need to see some of the horrendous HOA they slapped on this shit here =) As stated above just the carry cost on these McMansions preclude them from being rentals. I have seen $600/mo HOA fees in town where the max rents in the same developments are $1,350 for an amazingly terrible renter=)
As a friend of mine said, all those homes are good for is growing pot!
“Go Stockton!!!!”
WTF? Go where? Have you driven around your town lately?
You bring an excellent point about the H.O.A.’s but I suspect it will work like it did the last time here for condo’s. Reduce fee’s, reduce services and maintenance, complex becomes a pit, all units lose value, forclosures rise, HOA goes bankrupt bank comes in cleans up mess. New H.O.A. fees become 50 dollars a month houses sell for condo’s sellf or pennies on the dollar.
Replace condo’s with houses and you have the big picture.
I don’t get this “counterintuitive” logic that says market forces will drive up rents and yet market forces somehow will not do anything to empty homes.
Mr. is right. If you don’t drop the onerous fees, all you do is end up getting less fees. If this goes on long enough, eventually it forces your hand to drop your fees or get out of the game.
If I have 10 people are paying me $10 each, but that proves to be unaffordable and 5 leave because of it, I am now only getting paid $50. It would be better for me to reduce my price to $8 and have 7 people stay. Eventually, the market will find its equilibrium.
But this concept that nobody could possibly buy these homes for rentals is a fantasy. Even if HOAs or other associated costs were to mystically stay high, the price of the home itself would drop until the total cost of ownership meets its market clearing price, whether it be for renters or homeowners.
i agree mrincomestream…
the usual, and unexpected paradine shift…
Many of these McMansions will become duplexes and quadPlexes, etc… Sharecropper quarters in the exurbs over a longer period of time
(with some exceptions - tech enclaves and other desireable enclaves due to recreational and natural pluses).
many communities have strict zoning laws that will make it very difficult for this to happen.
Hahha, I have no intention of jumping anywhere. My estimate is resale may be close to bottom in the winter of 09′. The bottom is a nice place to buy, but impossible to know. All that matter to me is ROI, at 10 times rents with interest bellow 8% I will start looking for rentals again. My estimate (or wishful thinking) is that prices will fall to 6 times rents here. 6 times rents will make landlording a very profitable business again. My best rental purchase was initially around 8 times rents and I got paid, that turned into a cash cow after a few years of raising the rents $30-50. It bought me my first new vehicle with only a few thousand out of my pocket to buy it. When I sold it netted me about $150k.
Crying over spilt milk it went up another $150 after I sold, but the “Investor” that bought it has been cash flow negative since 02′ =) He refied it twice and now owes much more than it is worth =) Now he has to be paying over $1,000/mo for his investment =)
“…at 10 times rents with interest bellow 8% I will start looking for rentals again…”
Below 8%? not going to happen you’ll be jumping for joy if it’s below 10.
You’re totally baked on acid, aren’t you? Step away from the computer and go find a lava lamp.
Best I ever did was 4 times rental…snowballs chance in hell I’ll ever see that again. To many people on these blogs are getting smart.
rex, 4 times must be like losing your virginity again!!!
Just a matter of finding the market. I’ve got a rental I’ll be happy to sell you at ~3X
Less than 3.5X (asking price):
http://tinyurl.com/3exkhm
Not only are those areas all in California, but they are all in the Bay Area.
NICE :+>
What? When did they move San Bernardino to the “Bay Area” ?! Or Bakersfield?
Eventually San Bernardino will be in the Bay Area.
Where’s the zip tracker guy? This is now 1115392 from 900k
from a couple of weeks ago…
http://tinyurl.com/2jcads
“San Diego City-County Reinvestment Task Force”
I can just see the monkeys humping the football.
Thanks for the laugh, ex.
Why didn’t they start investigating the pain that the absurdly insane housing prices were inflicting on neighborhoods 3-5 years ago?
HAAHHA, cause the had title to homes?
LMAO, monkeys with real property deeds!!!
No commissions is really having it’s way with you, isn’t it. Have you tried deep breathing? meditation? yoga? 5 beers and three Vicodin? habitual masturbation? Try one or all, ’cause your losin’ it.
Sorry, it’s “you’re”. I don’t want a thrashing from the the English major again.
LOL
I wonder how long it will be before he’s “ex-rich”
bwahahahahahahaha!!!!!!! you made me look bad as I had to explain the diet coke on my computer screen and outburst of laughter in the middle of a Quarterly review meeting!
What an insane waste of time and money…
….and a good football.
“Yesterday lending giants Fannie Mae and Freddie Mac announced the development of new loans to help borrowers at risk of default. Edward Leamer, director of the UCLA Anderson Forecast, said the move comes ‘a little too late.’”
Rather, a lot too late and absolutely worthless.
Too many leaks in the dam. No patchjobs will help. Its gettin ready to burst.
Ex has convinced the monkeys to plug the leaks in the dam instead of enjoying the football. All praise for the monkeys, who will sacrifice their “capabilities” to save those who build the dam and placed the water behind it. //bless those monkeys//
What I’m trying to figure out, and maybe it’s just me… Let’s say for instance the values in a FB’s area has dropped 10% ie: for sake of simplicity a 500k house drops to 450k that a FB owes 500k to 525k on, are these 40 yr loans going to be given at 450k or the owed amount of 500k to 525k and at what interest rate. Say for instance they go with the 10% less value, what happens to the difference does it just magically evaporate? This should be interesting to keep track of…
Nevermind qualifying for the payment, I don’t think I want the answer for that.
It doesn’t make much sense to me either.
People that purchased with crazy loans used crazy loans because they couldn’t qualify to buy with a regular loan. If they were to try and refi into something fixed it would have to be 3-4% higher than the current fixed good credit rate.
If a borrower can barely afford an artificially lower priced crazy loan how in the world will they be able to afford a fixed rate that’s 3-4% than the current fixed good credit rate?
Are we the only ones that know how to use a calculator anymore?
…Are we the only ones that know how to use a calculator anymore?…
I guess so..
I’ve basicily come to the conclusion that this bailout talk is just political grab-assing by politicians pandering to what they feel are their base. Let’s face it unless the Democrats do something utterly stupid while not impossible the next Presidential election should be a shoo-in for them, after the shenanigans of Bush/Cheney. It has to be that they are further trying to entrench what should be a sure thing. When the elections are over maybe the fairyland talk is going to go away. Especially when it will be too little too late for most folks. It’s the only way I can make sense of it.
Saw a news clip of Dodd tonight on PBS where he said “a bailout is not going to happen. There’s no support for that”. (!!!!) He looked a bit disappointed when he said it.
Saw a news clip of Dodd tonight on PBS where he said “a bailout is not going to happen. There’s no support for that”. (!!!!) He looked a bit disappointed when he said it.
He probably took one look at the polls regarding this issue and did such an abrupt about-face that he twisted his spine.
“I’m not interested in (a bailout) at this point. I think this problem can be addressed without going down that route,” said Sen. Chris Dodd, the Democratic chairman of the committee.
Maybe he got enough letters/e-mail/phone calls from us prudent folk & he decided to change his tactics.
We can hope…
My understanding of the Fannie/Freddie proposal is that the new loan is for the full amount, just on “better terms,” similar to the Ohio plan (which has only helped “rescue” about 8.2% of applicants). The GSEs can’t force the original lenders to write-down their loans; the GSEs are only offering to buy new loans (30 or 40 year fixed rate - maybe below market rate) to replace the current ARMs. Frankly, I don’t see how this will help many of the FBs since they can barely afford the teaser rates.
apply the gain from ‘61 - ‘81 to ‘05 prices.
http://www.mres.com/ave_sales_price_with_2005_numeric.pdf
If that’s the case, then I think the difference is like the “forgiving” of the loan and the FB will have to pay taxes on that. . . . Pretty steep tax considering.
All this talk about helping the FBs is too little too late and is just “window dressing”…
It is not toooo late.
This will help 8.5% of the people {i think i read},it is not intended to stop the flood of foreclosures. It maybe intended to lock in some to on going mortgage payments and slow the flow. While they prepare for the big grab.
Guys, don’t be so bitter. I think the people who can afford a fixed rate and are willing to pay a huge mortgage for the next 30 years to keep their house, should be allowed to refinance. What’s the point to get foreclose because you can’t pay those 10% ARM to the greedy lenders?
Futhermore I don’t even think the government is making them a favor but just make those FBs slaves of their mortgages and they would be better off walking away.
I think the people who can afford a fixed rate and are willing to pay a huge mortgage for the next 30 years to keep their house, should be allowed to refinance.
This represents such a tiny minority of FB’s that there would be no perceptible effect on the market, so I’m neutral on the issue as long as tax dollars are not used.
I agree,
Cause either this thing is a monster or it is not. Apply the tourniquet to those that can truly be saved, as any caring human would.
“A spring home sales surge wasn’t enough to keep Sonoma County prices from falling for the ninth consecutive month in March.”
What do you know. Lower the damn prices and sales pick up.
It’ll take really lower prices. The population is declining still (i posted on this below).
Sonoma has a declining population even if you account for births/deaths and intl immigration. In 2005, it declined by 892 or .19%. It was down again in 2006 although by a smaller amount (72).
Everything else around here seems to be trending down as of the 3-22-07 estimates release except for Colusa at 4.8% growth - go figure.
Could it be that everybody is priced out of the housing market? Once earnings/housing costs get too much out of wack people move on to greener pastures.
Yep. I would love to see the internal immigration patterns in this country over the past 5 years.
You can if you aren’t afraid of a little spreadsheet time >; )
Go to the us census.gov site and under the popular tables section you can get data by county and by year. This is easy stuff if you have the time. Someone with a little stat skills can run the trends and it’s “mostly” correct. These will be estimates and not actuals but even playing with their “plugged” data is better then nothing.
Where I used to work, we begged the census for data sets and always got our hands politley smacked. If in the course of post 2003 (?) NIH sociological research you produce new data sets, you have to share these, with the identifiers striped out naturally. But of course the census doesn’t have to share it’s data sets before they smooth the data to all hell and gone. That’s a soapbox for another time - grrr.
CA’s done, lets go to AZ. No now they’re down, lets go to OR or WA. Oh wait, Boise. No, no - Salt Lake.
Oh I need a job? I guess San Jose’s just fine.
You can move to Denver. It’s the last “west coast” like city as you go east from California. There’s a decent amount of tech and housing is not completely overpriced.
Denver is an ugly ugly place. Salt lake much nicer (only 50% mormon), except for the huge earthquake factor.
Denver’s burbs are OK, and some are quite affordable.
“Salt lake much nicer” Salt Lake maybe. But DON’T go to Provo!
Shadash, lay off the hash.
Lost in Utah, you’re lost in La La.
Denver, affordable? Maybe if you drive all the way out to Lochbuie, but that isn’t Denver anymore. Salt Lake, beautiful? There three times in the last few years, and that statement makes me choke. You’re both nuts.
Several of us have been predicting a reverse dustbowl outmigration for a while and it would explain the housing starts data that was released for the midwest.
I do know that established hispanic families are relocating into the interior of the country in significant numbers. Monday’s NYT article touches on this a little bit but the loss of construction jobs is part of the larger story.
“A spring home sales surge wasn’t enough to keep Sonoma County prices from falling for the ninth consecutive month in March…”
“Home sales were down 19.8 percent in March, compared with a year ago. The 368 sales in March were a nine-year low for the month.”
I’m sorry but a 9 year low and a reading 20% below prior year does not constitute a “surge” in my book. you want a surge? drop asking prices by 30-50%, and do flat rate commissions to realtors.
“Home sales were down 19.8 percent in March, compared with a year ago. The 368 sales in March were a nine-year low for the month.”
Now that’s quite a “surge”……bwhahahaha
Maybe the “surge” was relative to February. BFD !
“‘We should have had some kind of system in place a year or two ago to prevent people from getting in over their heads,’ Leamer said.
There was a system in place. It was a process in which scrupulous lenders documented income, assets, and credit history, among other things, to determine how much money, if any, a potential homebuyer was “qualified” to borrow. Unfortunately, it was largely ignored.
Sorry, Leamer, but you have no credibility left. (It’s tough for me to say that, as I am a UCLA alum). Leamer’s been talking about the soft landing for a couple of years now (he started out with talking of the bubble, back when Thornberg was there, but apparently his masters told him to back off), so he was claiming that nothing bad was going to happen so no “system” was needed.
What year? I’m ‘93, History (and egads, I work at USC).
Eight clap!! ‘93 Comm Studies.
You should have gone to USC.
I guess working there is the next best thing if you couldn’t get in for an education.
“‘We should have had some kind of system in place a year or two ago to prevent people from getting in over their heads,’ Leamer said.
It’s called foreclosure
Mr. Leamer just doesn’t understand how government works. The correct sequence is:
1) leave barn door wide open
2) horses escape
3) barn catches fire & burns down
4) put padlock on scorched remains of barn door
… … well … in your analogy … … with the barn burning down and all … isn’t it a good thing the horses escaped.
Harm
5) Create a bail out entity to sell the assets to your firends, relatives, & contibutors for a song. Provide Guarenteed Govvt. funding for below market interest rates.
” ‘Buyers assume (that) if they can qualify for the loan, they can afford the product.’”
When I bought my first two homes - when you qualified for the loan that meant that you could afford the payments.
i think there was a lot of blind faith put into the banks this time around…people were either used to the good old days when banks wouldnt qualify you for a loan you couldnt pay, or they were told thats how it works by their parents, etc. (I have even read some RE investment books from the early 90s stating you dont need to worry if you can afford the mortgage, because the bank will not approve you if you can’t! and this was true!) These same people are crying foul that they were deceived, but in reality they didnt understand the new “paradigm” where the banks didnt give a rats ass if you could afford “their” loan. ignorance is expensive
“I have even read some RE investment books from the early 90s stating you dont need to worry if you can afford the mortgage, because the bank will not approve you if you can’t! and this was true!”
It was true until at least 2000. I had an excellent credit score, only wanted to borrow about twice what I made per year, was coming in with a sizable down, and I was put through the wringer over my “debt load” which consisted solely of some VERY minimal student loan debt I was paying off at the time.
Sort of. Even in the late 90’s my wife and I were being told we coudl “afford” more than we really could. If you have no car payments or other debt they automatically assume you’re going to pour all that “extra” money into your house. They also assume both of you will be working and that the kiddos won’t cost anything.
The stupid thing is that cars and stuff still cost money, just because you’re not in debt doesn’t mean you shouldn’t budget the money for those things. The banks were drifting off the deep end for quite a while. After all, real estate only goes up.
Banks don’t give a dam…. federal reserve prints new money and loans it to the banks who loan out this paper to almost anyone who will pay them back with their slave labor contracts. Profits and fees for those who create the paper and the uneducated public sees nothing wrong with this picture. Landlords and serfs. Serfs will wake up some day from being the fools as they are and stop this madness but now they are enjoying the shopping of tv’s, suv’s and big houses with little worry of debts that have to be “paid back”.
Excellent post, Jerry. As long as J6P can buy the 72″ and the Escalade, then he and the wifey are happy as clams and could NOT care any less about what we discuss here every day. When this nonsense (music) finally stops, then watch out. When J6P can no longer buy all the toys, trouble will really start and eventually lead to the proverbial blood in the streets.
I believe banks stopped caring when they ceased to be portfolio lenders (loan remained on their books) and essentially became mortgage brokers, living on fees and selling the loans to Wall St.
mithrander:\
“Igonorance is expensive.”
so is GREED
” ‘Buyers assume (that) if they can qualify for the loan, they can afford the product.’”
IDIOTS! Don’t they know how do to a simple math operation. Income has to be greater than expenses now and when the rate resets!
“We don’t know to what extent the subprime problem is really going to blow up”
Subprime is just a credit score. The suicide loans are spread across many income levels.
Subprime is the canary. Alt-A and prime loans are the miners left behind. Everybody will be dead by the time they realized that the methane gas and carbon monoxide levels of toxic loans are inescapable. This real estate Ponzi Scheme is a collapsed coal mine.
The miners forgot what it meant when the cannary falls over.
meanwhile the mining company’s stock keeps on goin’ up…
Hi All:
I posted this in the Bits Bucket, but I know this thread is CA-specific, so it might get a little more traction here. Will everyone here please agree to send Boxer similar letters? Thanks.
Here is the e-mail I just sent to my senator. You may recall that I posted her maddening reply to my original e-mail last night. I hope she reads this and has a change of heart, but she probably won’t. Instead, I fully expect her to begin speaking of “distressed young families” while playing the violin, after stringing it up USING THE NERVES FROM MY OWN ARMS. Here it is:
I recently received an e-mail from you stressing that you were highly worried about “predatory lenders” approving debtor’s requests for pay-option adjustable-rate mortgages. That’s why I’m indignant about the fact that Congress is now allowing Freddie Mac and Fannie Mae(notoriously corrupt and ill-run organizations) and Ginnie Mae to begin hooking borrowers into new 40-year loans.
This type of loan is obviously not beneficial to those who receive it, since the total interest paid on such loans is much more than the total principal paid. It’s not beneficial to the American people, since such loans will only allow habitual debtors to hold on to their ill-gained assets even longer, therefore keeping the cost of homeownership artificially high and economically unfeasible.
Furthermore, I am incensed that proposals are seriously being considered to put taxpayers’ money into “emergency funds” that will be raided in order to pay the mortgages of people who can’t afford their houses. We all know that “government” money is really “paycheck” money. Frankly, I see no reason why I shouldn’t go out and buy myself a mansion in the hills. I know I can’t afford it, but who cares? The government will take care of it for me.
In a recent CNN Money poll, 86% of respondents said that they did not think subprime borrowers deserve a bailout. Please listen to your constituency and do not allow these insane bail-out tactics to proceed.
Now it’s time to return the favor to those campaign donors from the real estate sector. The voter might not like it if their tax dollars get kicked back into the real estate bubble. Lucky for the politicians the American voter is largly ignorant and has a very short memory.
They already bailed out Katrina, and all the other hurricanes. It really does pay to not be responsible. Really, why insure your house if you live in one of these areas? Just become part of the ever growing shadow economy in the US and enjoy the bailouts because as far as the gov’t knows you have no money.
The same wheels are already turning to use Fannie to bail out these poor souls who can’t afford their mortgage. Its a no brainer given that Fannies books are so opaque nobody really knows or cares if they are solvent or not.
The winners in all this are the rich (mainly anyone involved in banking, mortgage brokering, RE, for the last 10 years). It almost feels like after they instituted the PPT there really is a Greenspan put on everything.
I sent those two idiots Boxer and Feinstein emails a few weeks ago when Dodd first started yapping about bail outs. They were very polite, well-reasoned emails, just like yours. Any response from either? Hell no. CA has two of the sorriest sacks of $hit for representation in the senate. Beyond that, those 40 year loans are band aids. Once the idiot masses are told that they will be paying hundreds of thousands more over the course of the loan and only getting relief of a couple hundred per month then they will most likely balk. Better to just leave the keys on the counter and walk away.
“CA has two of the sorriest sacks of $hit for representation in the senate.”
You got THAT right!
We are the most populus and richest state, and THIS is the best we can send to Washington?
You could be in Southern Arizona. Don’t get me started on Reps. Giffords and Grijalva.
As for McCain, he needs to give up this presidential pipe dream and get back to being our Senator. Kyl? I agree with him on some issues, but not others. However, he seems competent. Not brilliant, but competent.
>> Don’t get me started on Reps. Giffords and Grijalva.
Oh come on, let’s hear it!
Grijalva always struck me as a decent guy at the state level but I haven’t been following him at the national level. Do tell…
i did the same thing. i got a response from boxer yesterday. it referred to the borrowers as “victims”…
keep writing.
Apropos of responses: I sent a fairly brusque email to Kimberly Blanton of the Boston Globe a few days ago in response to some remarks of hers that appeared in this blog. I got a polite response addressing the substance of my beef. I may not agree with her but at least she answered on-topic.
“CA has two of the sorriest sacks of $hit for representation in the senate.”
Thanks for reminding me to donate again to the DNC for your over the wall character assassination. This is a real estate blog. If you want to Swift Boat my senators, take it to Fox News.
Wake up David. IMHO, neither political party has done a darned thing for any of us in about 20 years, maybe longer. So cut the partisan b.s. and look at the criticism that was leveled accurately. Both of those two Senators are just pandering for future votes.
Testify, Chris! Both sides are good for nothing, IMHO. Both sides have a LOT to do with this bubble and will have a lot to do with the way the bust plays out. Both sides will use the real estate issues to pander for votes while appeasing their real consituents, the multinational corporations.
Swiftboat? They all need a swiftkick in the Beazer.
I am not a fan of either of those two. I kind of think they are putting a dumb proposal together that is destined to fail on the floor. Would be robbing the rest of the US to benifit Cali.
After it fails then they can shake a stick at whomever voted against it on the other side.
Normally the minority party does that trick. Put out unpassable legislation then complains about it.
For example see what the democrats did about the enviroment when they were in the majority vs the minority. Also look at the Republicans and the tough talk on spending vs what they did in the bush years.
Same crap from both sides
Feinstein and Boxer got Purple Hearts for scratches and were hated by their fellow soldiers? What?
Feinstein’s a crusty bag…..how does that suit ya?
My post above said nothing about party. I am a democrat by registration, although I usually vote for whoever the “moderate” is.
Our Senators have two votes and nothing more. They have no power in Washington, by their own doing. They are weak and probably not very smart.
Didn’t Feinstein get caught steering goverment contracts to her husband’s company ?
They all steal. As my father always says, “there are two groups, caught and uncaught (not caught yet)”…
Yeah, it but was only in the tens of millions. She had to resign from Military Appropriations Subcommitee. She’s a career politician, what do you expect? It’s not like she has to have ethics training like a Realtor.
Politicians need to undertand that any bail out is a direct attack on those of us who saw the RE madness for what it was. If gov was able to (which I doubt) and actually went ahead and bailed out most screwed FBs, this would help keep house prices in the stratosphere. I would be really pissed off since it would mean that would actually be priced out for ever. Let the market work and the pieces fall where they may.
Comment by Inspired
2007-04-17 17:21:13
fency:
“If you read this BLOG regularly, you are a RE Buuble GURU or will be”
Reply to this comment
Comment by buildingfrenzy sd
http://buildingfrenzy.smugmug.com/gallery/2729167/15/144852747#144852747
inspired: there is only one true Guru-ben jones. i would be honored to be among the Muses. i am devoted to natural beauty and enlightenments.
Of course meanwhile, the Dow closes at a record high. On the other hand, didn’t a similar thing happen just before the Depression? Or is it a sign of swinging away from housing back into stocks as investment?
Before the depression we were on a gold standard. The level of the Dow actually meant something. Now, the dollar has devalued since the last Dow peak, this new Dow “peak” is a fake.
“Before the depression we were on a gold standard. The level of the Dow actually meant something. Now, the dollar has devalued since the last Dow peak, this new Dow “peak” is a fake.”
The Dow meant nothing in the 20’s as it means nothing today. It is an insiders game which allows the insiders to fleece the sheep (uh, that would be everyone who isn’t an insider).
Fat a$$ 401k carrying American monkeys check the stats at the end of the day:
Dow Green = economy good
Dow Red = economy bad
And when the 1920’s debt pyramid imploded, it took the debt-inflated Dow with it.
When the debt couldn’t be paid back (it’s impossible to pay back debt when only the principle is created and not the interest), the bankers seized the gold backing the debt (by ordering their lowlife lackey Roosevelt do it for them).
“The Yen crosses opened the US session sharply lower after EU Junker expressed criticism for one-way bets in the currency market. Europeans are beginning to express their dissatisfaction with the recent weakness in the Japanese Yen but until the US becomes concerned, it is unlikely that currency traders will care. Expect the recent weakness in the Japanese Yen to have a profound impact on the earnings of Japanese exporters. The record high that the Dow reached today should help spur sharp gains in the Nikkei overnight. Looking ahead, we continue to only have secondary data from Japan. The country is releasing the tertiary industry index for the month of February. With lackluster economic growth, the tertiary number should do little to stem the currency’s slide. The Bank of Japan however will be releasing their monthly survey tonight which could lead to some Asia session activity.”
The market will reverse on Friday the 20th of April.
“The market will reverse on Friday the 20th of April.”
Hey, Hoz, thanks for the data. How much of a reverse, do you think? Just an educated “guesstimate” is all I’m asking, based upon your excellent theory of cognitive economics.
Try May 4th-5th.
any reversal until then may be short lived.
Hoz you are tempting me to buy a short-term put on the index just as a small bet that you know what you are talking about. Do you?
Hoz is one of the most informed posters on this blog; but I’m sure he would recommend everyone do his/her own homework.
In the meantime…Dow futures are down 76 points overnight (3:30 a.m. Pacific time). Seems we sometimes see a rather dramatic drop after everyone celebrates a “record high”. Let’s see if the PPT shows up…
for the dow to climb from 1000 back in the early 1980’s to 12803 today it had to make a lot of record high’s. don’t know where it’s going to be in a week, but just because stocks make a record high doesn’t mean the only way is down. most good stock pickers buy high and sell higher
dba, the 90’s called. They want their stock picking strategy back.
That is very funny…
All the house loans are down
and most borrowers aren’t ok
I’ve been for a walk
On a spring’s day
I’ll be safe and warm
Cause’ i’m not in el lay
California dreamin’
On such a spring day
Some stepped into the lurch
and will learn responsibility’s ways
I watch em’ get down on their knees
And pretend to pray
You know the lenders were so bold
They knew you couldn’t pay
California dreamin’
On such a spring’s day…
Nice.
Unfortunately, many are still drinking the Kool Aid on the Central Coast.
http://centralcoasthousingbubble.blogspot.com/
“Pulte Homes (NYSE: PHM) today announced preliminary and unaudited financial results for its first quarter 2007. The Company expects a first quarter loss in the range of $0.34 to $0.38 per diluted share from continuing operations, including impairments and land-related charges of approximately $130 million to $140 million. Pulte Homes had previously issued earnings guidance for the first quarter of break-even to a loss of $.10 per diluted share, exclusive of any impairments or land-related charges. …”
Ouch!
Pulte Homes Reports Preliminary Results for First Quarter 2007
Wednesday April 18, 6:42 pm ET
- Net New Orders Were 8,499 for the Quarter, Down 21% from the Prior Year First Quarter
- Backlog at March 31, 2007 of 13,334 Homes, Valued at $4.7 Billion
- Closed 5,420 Homes in First Quarter 2007, a Decrease of 37%; Average Sales Price Per Home Decreased 2% to Approximately $330,000
- Preliminary Q1 2007 EPS from Continuing Operations in the Range of a Loss of $0.34 to $0.38, Inclusive of Impairments and Land-Related Charges in the Range of $130 Million to $140 Million
Silver lining: Stock is up after hours!!!!!!!!!!! WTF
Idle question:
How long until these minor losses become so significant that the major home builders declare BK and restart? Let’s face it, if they shed a bunch of debt and start again buying land fairly cheap, they could keep selling homes…
On a side note, the drop in California demands for labor is going to be brutal (as others noted prior). I wonder how many will out migrate. At first it will be those that the local community doesn’t care about (illegals, migrant labor). But then business will decrease.
Home prices to income are getting ready to adjust and fast. But when will it start? I think somewhere in August to October.
But I still say by June Joe Sixpack will know we are in a declining house market.
Got popcorn?
Neil
Agreed Neil. Also, I was watching The Donald earlier on CNBC do his typical “pump and dump” in regards the luxury condo market and how “the rest of the u.s. will correct, but not the coasts, New York and L.A. and Miami”. Of course all areas where he has his name on licensing agreements to push condo’s…
Things are starting to move a little faster now. I didn’t think we would be there before Christmas, but I am starting to believe this holiday season will be ugly. J6P will know by then and that new Tickle Me Elmo at $79.99 wont be under the tree this year…
> “the rest of the u.s. will correct, but not the coasts,
The Donald is building a rather tall building in Chicago…
The Donald is building a rather tall building in Chicago…
…And he’s been looking for another piece of land here for the last few months…
“Tickle Me Elmo at $79.99 ”
HOLY CRAP, that’s what they cost??????
I just hope that Eduardo’s doesn’t go out of business. They are my only source for a decent bean and cheese burrito.
The dollar is collapsing look at India and UK. That is good for the workers not corporations who like cheap labor abroad.
With dollar in decline Ben B.’s hands are loosely tied.
I can’t for the life of me imagine what Congress can cook up to save this situation.
Not cash because of possibility of inflation but no debt is going to be king.
Goldilocks is going to get Scrooged.
Bank of England looks set to raise rates to 5.5% in May. Will the Fed have to match?
Bank of England looks set to raise rates to 5.5% in May. Will the Fed have to match? If not… our inflation will rise *very* quickly.
The Fed has no choice but to raise rates. They’ll try to do a little incriment… but I have a feeling they’ll be chasing their tail up to 6.0% to 6.25%.
I’m not worried about what that will do to a mortgage payment… Americans are tapped out. This is going to take a while.
Got popcorn?
Neil
Popcorn?
You dull fool. If this plays out the way you think it will, there won’t be a distribution system left for you to buy it from.
He’s already got it stockpiled. RIght Neil? Love you guys.
Yes, Fed will have to match.
RE is a lost battle…the FED won’t let RE AND the dollar both tank.
dont forget thr 40 yr old agreement to support the dollar @ $80.
It is in everyones interest. so it will be….this time.
Yep, the bank used to keep you from hurting yourself. Also, every fogey i have talked to here in CA will tell you, o yeah, we bought our house for 34 thousand dollars in 1972, and thought no way we’d be able to make the payments. But we did, and now it is worth 8.5 mil… Point is RE until recently out here pretty much has always been a good idea (if at times not a great one). The FBs are idiots, but between the Fed policy and banks, etc, lately it has been like abusing animals, you know?
Two tiered world out in CA. Think how awesome it would be (except the age part) to be someone in CA who has owned their house for the last 15 years. Think how rediculously low their contribution is to the local governments and schools. Any FB who bought in CA in the last 5 years is really paying for all those old folks share of schools, police, etc. They should at least get priority handling when *they* need a public service. Even to the point of having the firetruck stop to get their cat down from the tree before they drive over to put out the fire going on down the road where the owner has lived their the past 20 years.
Remember. The only thing the fed can do is to print money. 34K to $8.5Million. Amazing though how well our federal reserve engineers their inflation reports.
They probably owe $9 million ;-).
http://centralcoasthousingbubble.blogspot.com/
The newer buyers aren’t supporting the older ones. Just because they were foolish enough to buy at prices which make the property taxes prohibitive…that’s not the fault of the long-time residents.
If buyers considered the full PITI payments in their budget — and acted accordingly (not buying) — the taxes wouldn’t be worth complaining about.
People need to get real and understand the real problems here (EZ credit, too many new residents, state & city govts that refuse to budget wisely & illegal immigrants who use up the bulk of the prop tax funds). Oh, and those foolish buyers, of course!
Dumb, dumb, dumb buyers…and not the problem of long-timers.
Please show me some numbers that from 1972 to 2001 (the beginning of the bubble) RE out-gained the stock market - just curious.
Also, most of the FB’s on the Central Coast didn’t buy during the run-up. They bought in the mid-90’s and HELOC’d their way to bankrupcy. They have to have the plasma TV, new F350 and all the fancy toys to take to the Oceano dunes. Idiots.
http://centralcoasthousingbubble.blogspot.com/
I don’t think RE has ever outperformed the stock market during any 20-year period, but an LL collecting rising rents while his property appreciated might have made out like a bandit.
Except, rents didn’t rise much during the RE run-up. Everyone who could’ve paid a higher rent was out there buying houses. I guess rents DID rise 2004, 2005 … when the big price run-up was starting to falter.
CNNFN heard your request:
http://money.cnn.com/galleries/2007/real_estate/0704/gallery.stocks_v_realestate.moneymag/index.html
Seems that the ’spring bounce’ is over. A slight bump in MOM numbers, a little less drop in YOY, and an unusual jump in Midwest housing starts to shake out a ’strong’ 0.8% rise. The stories from the front, a.k.a. RE offices are that large numbers of buyers can’t qualify under current loan requirements. All in all, a great chance looms for a truly horrific April, May and June.
I’m kind of enjoying the horror.
Perhaps that ugly sense of snobbery and entitlement will disapate.
LA is going to be front row seats for the show.
From the look of the reset graph it should be a double feature.
can you reserve me a front row seat?
Neil will bring the popcorn
exclusive hill top homes aka Snobby Acres
These foreclosure numbers have been alluded to in prior discussions, but here is the breakdown for Colorado courtesy of the Denver Business Journal:
Colo. foreclosure rate up 16 percent in year’s time
Colorado’s foreclosure rate in March was 2.7 times the national average and second highest in the country.
Irvine, Calif.-based RealtyTrac Inc., which runs an online marketplace for foreclosed properties, released the latest statistics Wednesday.
Nationally, the number of foreclosures is up 7 percent from February and 47 percent higher than a year earlier. The national foreclosure rate is one filing for every 775 households.
The foreclosure rate was highest last month in Nevada, which has held the top spot for three months. The rate was up 29 percent from February and almost 220 percent higher than in March 2006. The filings amounted to one for every 183 households, or more than times the national average.
Colorado’s 6,267 foreclosure filings in March was 18 percent higher than the month before and 16 percent more than a year earlier. The state’s rate amounted to one of every 292 households.
These numbers have bee alluded to in prior discussions, but here is the breakdown for Colorado courtesy of the Denver Business Journal:
Colo. foreclosure rate up 16 percent in year’s time
Colorado’s foreclosure rate in March was 2.7 times the national average and second highest in the country.
Irvine, Calif.-based RealtyTrac Inc., which runs an online marketplace for foreclosed properties, released the latest statistics Wednesday.
Nationally, the number of foreclosures is up 7 percent from February and 47 percent higher than a year earlier. The national foreclosure rate is one filing for every 775 households.
The foreclosure rate was highest last month in Nevada, which has held the top spot for three months. The rate was up 29 percent from February and almost 220 percent higher than in March 2006. The filings amounted to one for every 183 households, or more than times the national average.
Colorado’s 6,267 foreclosure filings in March was 18 percent higher than the month before and 16 percent more than a year earlier. The state’s rate amounted to one of every 292 households.
For those wondering when the Bay Area is going to get hit, this quote has some nice numbers in it: “In the nine Bay Area counties, 6,730 homeowners received “notices of default” from their lenders in the January-to-March period, according to DataQuick Information Systems. That’s 160 percent more than during the same time last year. But it is slightly less than the peak level, which was reached in first quarter 1996, when 6,830 owners received such notices.”
Only 100 NODs behind the peak level of 1Q96, and the number is rising at an incredible rate. While this number is not population adjusted, I think it is safe to predict that the number of NODs in 2Q07 will surpass the prior peak level on a population adjusted basis, and then keep on rising as more loans reset. The article also mentioned that about 40% of NODs from 2006 ended in foreclosure. It will still take some time for these foreclosures to put pressure on prices in the Bay Area, but it will happen.
Regarding SouthBay SFBA one should note the workforce today is exactly the same number is not less than in 1991 around 840K people. So dont expect a big jump in population growth.
http://www.viewfromsiliconvalley.com/id134.html
The inventory in the Bay Area keeps raising at an exponential rate. According to ZipRealty we have now 31,500 properties for sale (+400 today). This is the level the market reached in early july last year before topping at 35,000 in early september. A slight increase in foreclosures will put the market under even bigger pressure.
These foreclosure numbers have been alluded to in prior posts, but here is the breakdown for Colorado courtesy of the Denver Business Journal:
Colo. foreclosure rate up 16 percent in year’s time
Colorado’s foreclosure rate in March was 2.7 times the national average and second highest in the country.
Irvine, Calif.-based RealtyTrac Inc., which runs an online marketplace for foreclosed properties, released the latest statistics Wednesday.
Nationally, the number of foreclosures is up 7 percent from February and 47 percent higher than a year earlier. The national foreclosure rate is one filing for every 775 households.
The foreclosure rate was highest last month in Nevada, which has held the top spot for three months. The rate was up 29 percent from February and almost 220 percent higher than in March 2006. The filings amounted to one for every 183 households, or more than times the national average.
Colorado’s 6,267 foreclosure filings in March was 18 percent higher than the month before and 16 percent more than a year earlier. The state’s rate amounted to one of every 292 households.
Subprime solution: Swap ARMs for fixed-rates
Off topic but can you believe this madness!!
http://money.cnn.com/2007/04/18/real_estate/foreclosure_bailouts_/index.htm?postversion=2007041812
Comedy on bail-outs
http://www.cnn.com/video/player/player.html?url=/video/business/2007/03/23/kathleen.madigan.subprime.cnn&source=money
A great piece from Pimco’s Kiesel, who sold in 2005 to rent.
Also this morning on Squakbox Pimco’s Gross said he thinks homes are over valued by 20%.
http://www.pimco.com/LeftNav/Global+Markets/Global+Credit+Perspectives/2007/U.S.+Credit+Perspectives-+5-2007.htm
– BREAKING BUBBLE NEWS –
Florida House passes Republican property tax reform measure
By BILL KACZOR
Associated Press Writer
TALLAHASSEE, Fla. –The Republican-controlled Florida House voted largely along party lines Wednesday for a measure that would swap homeowner property tax relief for higher sales taxes.
The proposed state constitutional amendment, which would go on the November 2008 ballot if it gets Senate approval, could make Florida the only state in the nation without either a personal income tax or property taxes on primary homes, known as homesteads.
http://www.bradenton.com/331/story/26698.html
Oh, heck, mrktMaven, now you’ve gone and done it. You just KNOW Mike Fink and I are going to get into it big time tomorrow when he rolls out of bed, because I’m all for this measure in a big way. I promise to be polite. As much as I can, anyway. After all, I am a curmudgeon. For those who don’t like SOH, this is good news, because SOH will go away.
As far as higher sales taxes go, sales taxes as the chief source of income for governments are the wave of the future. It’s inevitable, because what with all the globalization and immigration, income and property taxes just aren’t practical. Rampant tax evasion is already going on in other countries like Brazil. The Florida House has studied this and realizes that if states don’t get ahead of the curve and get on board with sales tax, the federal govmint will get there first and states will be sucking hind tit, begging for their share. This way, the states that eliminate property and income tax in favor of the sales tax will be in the driver’s seat, taking back state’s rights and exerting more control over their collective destinies, deciding what share the federal govmint gets when it finally bows to the inevitable and eliminates the income tax. This goes far deeper than just appeasing property owners. It has to do with the future of the state and the country, for that matter. It’s about time the federal govmint was decentralized, anyway. The states that get on board with this will be the firstest with the mostest.
Florida’s proposal exempts food, medicine and housing from this tax. The basic necessities are exempt, so the poor won’t suffer. Yes, fuel will take hit. That’s maybe the only area where the poor will see a burden from this. But we’ll cover that with vouchers or something like that.
Yep, there will be a lot of howling before this is over. But provided the law is written such that property taxes are revoked permanently in favor of the sales tax hike, it’ll pass.
On the surface it sounds like a good idea, but at the end of the day you have to wonder what the hidden “gotcha’s’ are…
Is it easier to track income or sales? IMHO, this will only serve to drive business out of FL. What’s to stop someone from buying (in person or on-line) something out of state? What about a black market for goods/services? I don’t think this will be a long-term solution, but will be interesting to watch.
Sorry, that was in response to a sales tax over income tax. Personally, I fully agree that housing should NOT be taxed. If you own it, you should own it. There’s no reason to have to pay rent to the govt.
“There’s no reason to have to pay rent to the govt. ”
Think of it more as an association due. Don’t want police or fire protection? Then you’ll pay out the ass for insurance instead. It’s all a matter of distribution. Who would you rather pay, the insurance man, or the govmint, and have streets too (oh yeah, property tax pays for a lot).
– Breaking Bubble News –
Florida House passes property tax reform! The bill promises no more taxes on homes. Link coming soon.
“The Republican-controlled Florida House voted largely along party lines Wednesday for a measure that would swap homeowner property tax relief for higher sales taxes.
The proposed state constitutional amendment, which would go on the November 2008 ballot if it gets Senate approval, could make Florida the only state in the nation without either a personal income tax or property taxes on primary homes, known as homesteads.”
Business Week Link:
http://tinyurl.com/28xvzh
There is going to be a lot of opposition from cities and counties all across the state. From the Sun Sentinel:
Anticipating cuts in property taxes by the state legislature, the Palm Beach County administrator called for countywide reductions in next year’s budget, a decision that could mean there won’t be enough money to hire sheriff’s deputies, buy fire vehicles, or to open planned library facilities.
For some reason my links are not posting. So, if you want to read more, google Florida and taxes under News.
More from the Herald:
Tax reform’s effect on schools feared
By TANIA deLUZURIAGA
tdeluzuriaga@miamiherald.com
As lawmakers in Tallahassee voted on plans to restructure property taxes, Miami-Dade School Board members discussed Wednesday how to brace themselves for the ramifications ranging from program cuts to possible school closures.
”A reduction in revenues is on the horizon,” board member Evelyn Greer said. “This could have a very dramatic series of unintended consequences.”
…
Although lawmakers have assured school districts across the state that the changes won’t impact school funding, Greer said there could still be financial ramifications, including a reduction in grants or a change in the district’s bond rating.
”At some point Wall Street is going to wake up to the fact that we don’t have a very stable revenue stream,” Greer said. “The state Legislature has signaled that at any moment, with no study or due diligence, they could essentially evaporate the entire revenue stream of the system in 60 days.”
In addition, since county and city budgets will be reduced, programs that the school district does in partnership with municipalities could be affected.
http://www.miamiherald.com/416/story/78925.html
REDISTRIBUTION!!! If property tax is gone, but sales tax is the alternative, then they’ll get the tax revevue some how! Not everyone is going to go to Georgia or wherever to buy their stuff! Maybe some more on the internet, maybe. But not everyone has access to it! Could I use any more exclamation points?! Wait, I know what this is. THE GOVERMENT IS NOW THE VICTIM!!!!!!!!
From the MiamiHerald:
By BILL KACZOR
Associated Press Writer
TALLAHASSEE, Fla. — The Republican-controlled Florida House voted largely along party lines Wednesday for a measure that would swap homeowner property tax relief for higher sales taxes.
The proposed state constitutional amendment, which would go on the November 2008 ballot if it gets Senate approval, could make Florida the only state in the nation without either a personal income tax or property taxes on primary homes, known as homesteads.
Republicans called it the state’s largest-ever tax cut - a net of $25 billion to $35 billion over the first five years even with the sales tax increase. They said it’s wrong to tax “the American Dream” and that the proposal would make housing more affordable for low-income residents.
bone up on your Spanish, Sunshine Staters. Oh, I know you have a lot of Hispanics today. You wouldn’t BELIEVE how many Hispanics we had in L.A. in 1978…
IMHO the whole Buying and Selling of properties can do without realtors. With the web and the huge array of information there is no reason for buyers to be uninformed. Here’s a funny exchange that I had yesterday. I called regarding one total FIXER (and I mean total) in a nice part of Woodland Hills. Here’s what transpired:
Me: “I’ve driven past the property and scoped it from the outside. Before I spend time looking further at the property I’d like to know beforehand whether the seller is open to negotiation with the price.”
Realtor:
“No, that price is firm and I actually live in the area and that is such a good price.”
Me: “Really, well I would have to disagree. When I checked the property on Zillow the list price was way out of line with the Zillow range. In my experience I have found Zillow to actually be on the higher side of pricing.
Realtor: “Oh dear, I’ve seen Zillow being totally out of date for years.”
Me: “Well how can that be when Zillow is less than a year old and base there pricing on recent sales.”
Realtor: Well dear, this house (WHICH HAS BEEN ON THE MARKET FOR OVER 90 DAYS) received multiple offers and actually sold at a higher price than what it is currently listed at!
Me:”I’m confused! If it has already sold, why is it still listed?”
Realtor: “Well it fell through because the buyers couldn’t get financing.”
Me: “Well, I can get financing, yet I’m not interested in even looking at the property because the listing price is ridiculously out of line. Do your sellers want you to actually sell the house to buyers who actually CAN get financing or do they want you to have their house languish on the market for months?”
REALTOR: “Dear, you are so misinformed! That house had multiple offers immediately after it was listed!”
ME: “Well why don’t you call all of those other buyers and complete the transaction for your clients then.”
REALTOR: ” Well, I have done that and they’re not interested anymore.”
ME: “So…. I’m a little confused. You are arguing with me, a prospective buyer who would buy a house at a reasonable price, yet because I refuse to severely overpay and match prices that several previous buyers gave you who couldn’t get funding, you are getting snippy with me.
Realtor: Exasperated sigh!!!!!
Me: “I hate to be the bearer of bad news here… The reality is, I AM THE FACE OF THE NEW TYPE OF BUYER. You know why? Because in the current climate of new lending, your other buyers can’t get a loan!…..
I reallly hope that Realtors like the one above are forced to go and restock shelves at Ralphs! Thanks to Ben’s blog for providing all of this valuable information
“I AM THE FACE OF THE NEW TYPE OF BUYER.”
Good one, and a lot of Realtors and sellers will be seeing this face going forward
That doesn’t even sound realistic…
Not calling you a liar but I couldn’t even imagine a Realtor who had multiple bids on a property, obtained a winning bid, with probably back-up offers if it was really a multiple bid. Then after the winning bid couldn’t get financed, went back and tried to ressurect the other offers then after getting no response, has a buyer drop in her lap, who wants to buy the property, in what everyone knows is a slow market. (Well at least the fella’s and gals I encounter know). Then argues and basically turns down someone who is merely just asking about a price reduction. On top of that she doesn’t have to split what she makes with another agent. Are you kidding me ?… I don’t believe it.
Again not calling you a liar but I find that hard to believe. If Realtors are out there doing that; then hell… A lot of starving is going to go on. I couldn’t even imagine that. Tell me you were paraphrasing or maybe left something out. Unbelievable. Actually tell me you were offering her 30 cent on the dollar. Anything… I find that really hard to believe.
I am absolutely 100% paraphrasing EXACTLY what the Seller’s agent told me. If it sounds ridiculous to you, you and I are in agreement. I think that I am backed up by enough would be buyers / browsers who have come across this type of mentality on numerous occasions.
If you don’t believe me check out 5952 Lubao in Woodland Hills 91367 and see for yourself. Go to http://www.realtor.com get the number for the listing agent and then see how far off base you think that I was. Tell Merle (listing agent) that you’ve driven past the property and given the dilapidated condition you want to know whether the seller is open to negotiation on the list price. Mention that you were basing a price more in lines with Zillow’s range.
I’ll await your apologetic blog response!!!!
No apologies are needed know the house, know the area. You’re too soon it probably just fell out. Give it three more months and the tune will change.
I placed an offer for a house in Valencia for $550K, listing price is $690K, which was lowered from $735K after ~6 months. House is listed as a new listing but I have been monitoring that address since it got listed. Was purchased last year for $605K and was listed ASAP (flip). I got a message from my realtor that the seller’s agent said that my offer is a complete waste of time. I replied that I will place an offer next year for $500K. They don’t even have to feed the squirrels. I hope the seller and seller’s agent (may be the same person) is reading this blog. THIS IS THE FACE OF THE NEW BUYER.
Do it next week and have your agent send a certified copy to the seller. I hate a$$hat agents like that present the offer and get a counter. End of story. If the seller comes back with a signed counter at full price then so be it. But he’s been reading the paper and watching T.V. he knows whats going on. The agent is being an a$$hat.
Why even think about buying now?
We’ve got those greedy flipper sellers right where we want them! In a year, they are going to wish that they had taken your offer…after the house is pryed from their dead, cold fingers via foreclosure.
Sellers still don’t want to believe the party is over. Let them sweat it out with another year of horrible RE stories!!!
I’m pretty sure that the house was owned by elderly people who own the house free and clear. It’s the kids who stand to get the inheritance who want as much as their greedy Realtor can trick people into paying. Where the kids were when their parent’s roof was leaking is another story.
I remember when $550K was a lot of money, about 6 years ago.
today, $550K is just numbers on a mortgage contract, funny money
$550K right now is not even worth considering, based on the response of the seller’s agent.
time is on your side
REALTOR: “Dear, you are so misinformed! That house had multiple offers immediately after it was listed!”
ME: “Well why don’t you call all of those other buyers and complete the transaction for your clients then.”
REALTOR: ” Well, I have done that and they’re not interested anymore.”
Ah, man, you just can’t argue with that kind of logic.
“Zillow’s been totally out of date for years”, my aunt fanny.
I always love references to unqualified “buyers” by agents in real estate advertising. I see it all of the time on Phoenix area house listings.
So, someone with no money and no ability to borrow money declared that your price was appropriate. Where do I sign?
Typo… meant “their”
oooop’s…………
NIKKEI 225 -386.38
HANG SENG -307.78
ALL ORDINARIES (Aust) -61.20
Shanghai Composite 3,526.00 Apr 18 86.39 -2.39%
Our Dow futures were down, but it looks like the PPT is coming to the rescue (still down, but moving up…as usual). Bet by the open, nobody will be the wiser.
Housing Bubble Bursts into American Elections
Like the Iraq war, the present cooling in the housing market displays every sign of getting worse. The housing bubble has already burst under the weight of rising interest rates and the ever-deepening mortgage market crisis for those borrowers with weak credit histories. The bursting comes after home prices at the national level had increased spectacularly by 80 percent between 2000 and 2006.
The housing market is now characterised by falling home prices nationwide for the first time in 15 years. It is also characterised by very high vacancy rates and record inventories of unsold homes. Further muddying the waters are congressional housing market initiatives such as Mr. Frank’s proposal to create an “affordable housing fund” to be financed by an effective tax on Fannie Mae and Freddie Mac.
In the run-up to the 2008 election, it is more than likely that home prices will be falling at an accelerating pace. The crisis in the subprime mortgage market, which accounted for as much as 20 per cent of all mortgages in 2006, could in itself result in a 10 per cent drop in housing demand in 2007. It could do so as many subprime mortgage lenders shut down and as mortgage lending standards are tightened. Housing demand could also be crimped as more than $500bn in adjustable rate mortgages are reset at higher interest rates in 2007 and as speculative demand for housing dries up. To make matters worse, rapidly rising default rates could result in as many as 500,000 foreclosed properties returning to an already saturated housing market in 2007.
Unlike Iraq, the unravelling of the housing market is a bread-and-butter issue that has a direct impact on most voters’ pocketbooks. After all, 70 per cent of US households own their homes. For the bulk of those households, their home is their main source of wealth. Increasing home prices have also been most households’ source of financial security as home prices kept increasing year after year until the middle of 2006.
At an emotive level, the travails of the US housing market will receive increasing political attention as the 2008 election approaches. Scenes will become commonplace of single mothers or minority homeowners being evicted, unable to cope with rising interest rates on their adjustable rate mortgages. The owners can be expected to charge that those mortgages were foist upon them by deceptive lenders, who knew full well that they would not be able to meet those mortgages’ terms.
Politically more important will be the fallout on the overall economy’s performance. A 30 per cent decline in housing construction could shave up to 1.5 percentage points off gross domestic product growth. In the same way that rising home prices induced home owners to borrow against their homes to increase consumption, declining home prices could put that process in reverse. This prospect has prompted Alan Greenspan, former Federal Reserve chairman, to suggest that there is a one-third chance that the US economy slips into recession by year-end.
The recent congressional hearings on the housing market, chaired by Senator Chris Dodd and Mr. Frank are suggestive as to how blame will be apportioned for the housing market debacle in the forthcoming election. It will be asked whether the regulators and the Federal Reserve were not fast asleep at the wheel when lending standards were irresponsibly relaxed. At the same time, the investment banks and mortgage originators will be put in the dock for predatory lending practices. Judging by recent comments from Mr. Frank, this could lead to proposals to stick investors in mortgage-backed securities with the losses when subprime borrowers default. In an early sign of the impact of that political pressure, at yesterday’s House hearings, officials from Freddie Mac and Fannie Mae unveiled plans to help subprime borrowers refinance their mortgages.
http://www.aei.org/publications/filter.all,pubID.25982/pub_detail.asp
Oh Chit……….”Trouble in Squanderville”
Consequences of Housing Bubble Crash Ignored by the Media for 2 Years
http://www.marketoracle.co.uk/Article795.html
but not ignored by us Berkshire Hathaway investors
HAHAA!!! Thats a great story!
Neil, can we grow enough POP CORN for the big show?
“Lenders have been tightening standards or eliminating high-risk loans as foreclosure activity soared in Sonoma County and across the nation. ‘I’ve lost three or four borrowers just in the last few weeks. I could have gotten them qualified a month ago,’ said Darren Seliga, owner of Seliga Financial in Santa Rosa.”
————————————-
time to get ready for Japan style deflation, higher interest rates, lower commodity prices, could last a few years…..
My financial manager who is a stock analyst and bond trader said May 18, 2007 22% of all types of ARM’s not just sub-prime, written since 2001 are due to adjust upwards. This will be the knockout blow to the foreclosure stats when it starts bearing down on FB with ARM in about 6 months and pushes out another Tsunami wave of foreclosures on top of what is already happening. Another nail in the NAR coffin, may they rest in peace NOT!!!!
Are my comments posting?
Is this the tipping point … is this the moment … it this the exact instant in time where the Realtors throw the sellers under the bus.
Here is one other way to find out. More and more and more agents become buyers agents only. Happened in charlotte NC in 2002 and that was indeed a low point for prices and sales which declined starting in 98.
Cool.
Cow_tipping.