Bits Bucket And Craigslist Finds For April 24, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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The existing home sale numbers come out within an hour. How bogus will they be?
Did anybody else see John Norris, the tool that CNBC had on this morning? It was just awful. It was as if David Lereah was talking through him. He spewed all of the regular B.S. about housing and the quick recovery. He didn’t get questioned on one stupid thing he said. I was throwing effenheimers at the TV like there was no tomorrow. These people are such liars.
It’s nice to see that the Apple guy got to keep ill-gotten gains and can still serve on the board of a publicly traded company. Every day the system gets more corrupt.
“Every day the system gets more corrupt.”
The rule of law doesn’t exist in this country anymore, except to protect business interests from the anger of the people they’ve cheated and ruined. All you had to do was watch the Attorney General’s recent performance in front of Congress to realize what’s going on.
“All you had to do was watch the Attorney General’s recent performance in front of Congress to realize what’s going on.”
Contract with America?
Contract ON America.
Yes, things were so much better back in 99 when great businesses like Enron and Worldcom operated lawfully within the competent oversight of a quality administration.
Late in the Clinton administration I was involved in a review of Enron practices in the energy sector (a study initiated by the department of energy)..
The report was released around the time of the handover to the new administration. Where it went from there is anybody’s guess.
Probably met the same fate as most Enron related documents
I do think that the Clinton administration was “on to” the problem in 99. How it was allowed to continue for as long as it did is puzzling..
1 word - kenny-babes. Google is your friend.
The NAR EHS numbers will be out at 10:00am EST, not 8:30am.
I should never listen to Squawk Box.
I don’t listen. I keep the volume down while working out. Becky Quick is kinda hot.
“How bogus will they be?”
Something weird is going on. Some local blogger commenting on the interest of farmers getting the most money for their land was announcing that we should get ready for an explosion of development in my area.
I wonder what this guy heard that has him so stirred up. The post had kind of “The British are coming” feel to it.
(Development will happen here over many locals’ proverbial “dead bodies”)
“Sales of Existing Homes Fall by Largest Amount in Nearly 2 Decades”
That’s a reasonable headline.
Then: “Sales of existing homes plunged in March by the largest amount in nearly two decades, reflecting bad weather and increasing problems in the subprime mortgage market, a real estate trade group [NAR] reported Tuesday.”
Source:
http://biz.yahoo.com/ap/070424/home_sales.html?.v=9
Fast forward to a month from now: “”Sales of existing homes plunged in April by the largest amount in nearly two decades, reflecting beautiful weather that distracted buyers from home shopping.”
I love how the link compares March sales to Feb sales, but not Y to Y. Year to Year, the drop is 11.5%.
And then, next month, there will be the May Flowers effect on home sales. Meaning that those dastardly would-be buyers will be busier smelling the flowers than anything else. As for June, that’s a prime wedding month, and you know how time-consuming weddings can be…
Ahh, yes. The March sales were down because of the “weather”.
It does make sense, if you really think about it. ‘WEATHER’ that is:
Sales depend on ‘WEATHER’ your move-up buyers could sell their homes or not. You have to get the price your neighbor got last year, you are not going to ‘give it away’, are you?
Sales depend on ‘WEATHER’ the first time buyers could qualify for a loan or not. Low FICO score? No down payment? Credit card debt? No biggie! You heard one of those talk radio ads before, finance with them! ‘Its the biggest no-brainer in the history of man-kind”
Sales depend on ‘WEATHER’ That third HELOC or that cash-out REFI would close or not. How else are people supposed to put a down payment on their next ‘investment’ home?
Sales depend on ‘WEATHER’ your new job promotion pans out or not. Remember, you shouldn’t purchase a home based on your current income, you should always size your mortgage to your anticipated future income growth potential. Especially if you work somewhere like New Century, or General Motors, or your income is commissioned based.
Very creative, STA. Funny too.
Starve — ditto — good one. Sales were affected by the “whether.” That’s one for my list of useful housing bubble phrases, puns and homonyms.
I did see that and thought pretty much the same thing. However, I also noticed that the reporters faces seemed to say they weren’t buying the line he was feeding.
They have had several other guests on that have been much more honest about the length and severity of the downturn and the kids on squawk box nod in total agreement.
It also seemed that, once again, when the guy was speaking he was talking more in terms of sales volume and not price. The panel even asked him ‘what about prices’ and the guest totally hedged.
I see this alot, that the talking heads who are crying ‘bottom’ mean a bottom in sales volume, which has been falling for 2 years now, which may indeed bottom out this year.
But resetting ARM’s, the credit crunch, and a host of other factors are just starting to gain steam and affecting price.
In a minute they are going to discuss “making money on foreclosures” on CNBC. Probably B.S., but you never know. Maybe NAR is trying to invigorate the r.e. market by getting FB’s to start buying the REO’s out there.
Kimberly Blanton has written yet another story for the Boston Globe that is devoid of any semblance of critical thought:
http://tinyurl.com/2m5geh
They are trying to will it to happen. They think that with enough happy thoughts they can deny reality from coming. We have all done that at one time or another. Honestly, it’s never worked out too well for me. How about for you? I have learned that there is no substitute for common sense and good planning.
“They think that with enough happy thoughts they can deny reality from coming. We have all done that at one time or another. Honestly, it’s never worked out too well for me. How about for you?”
LMAO, NYCityBoy! This “power of positive thinking” stuff is a load of crap, IMHO, and you are exactly right, we’ve all been suckered into the “happy thoughts” mindset on occasion. Yes, try telling some soldier who just got half his face shot off to think positively and his face will grow back.
You are exactly right, they are trying to will it to happen. Right, the only cure is common sense and good planning.
“This “power of positive thinking” stuff is a load of crap, IMHO, and you are exactly right, we’ve all been suckered into the “happy thoughts” mindset on occasion.”
It’s the Kool Aid.
I agree - kool aid.
I was actually shaken up for the first time yesterday afternoon after talking to my speculator neighbor (they are both schoolteachers). They cash-out re-financed their McMansion to buy two speculative riverfront lots in SC. She told me that the $75K lots would be worth $130K next year.
Then she told me how she barely made the kid’s tuition this year (A relative pitched in in the nick of time).
Meanwhile, in our own neighborhood (Northern VA), we have three vacant houses and prices are eroding fast.
I felt strange inside about the speculation. Wondering if I’m the chump who doesn’t make money on these things. At the same time actually fearing for my neighbor’s future.
Arwen, I feel for your neighbors, too, but I feel for their kids the most, because the question is… how will they make their tuition NEXT year, when their huge windfall gains on those lots don’t materialize, and they are left with those monthly HELOC payments?
What I have to wonder is this: A $75k –> $130k price change is 73% appreciation in ONE YEAR! Have they lost their minds? Or did the salesman tell tham that, and they believed it? If I owned 100 saleable lots that would be going up that much by next year, damned if I’d sell them off today to schoolteachers or anybody!
Wondering if I’m the chump who doesn’t make money on these things
Don’t worry, you’re not the chump in this game!
It’s this outfit (seems sleazy)
INVESTORS: I have a product that many of you probably have heard about but may know little about. It’s called pre-development and our goal is to earn you 100% return on investment (ROI) in less than a year.
This agent’s myspace: http://tinyurl.com/34j6rh
Good lesson for the children -
greedy dumba$$ parents + sleazy ‘investment’ + heloc/refi = public school
RE: Arwen’s posts
I’m trying really hard not to play the age card here, but look at that guy’s page and the “friends” he has. All mid-20s bee-u-teeful looking, hard-charging people. All thinking they’re going to change the world and become multi-millionaires by their brilliant real estate careers.
It goes back to other posts I’ve made. These idiots have never seen hard times, so all they know is “100% ROI” type numbers. In 3 years he’ll be living in his parents’ basement which will be too bad since he probably sold it to them and helped refi them 5 times.
I do give him credit though, he’s got quite the lady-friends.
I just read through the people posting on that guys wall. Most of the posts are from bots, get rich quick schemes, and people advertising gift cards they give you for free for entering your email address. I doubt that guy has any real friends other than the two guys he played D&D with in jr. high school.
Ever since the “It’s morning in America” claptrap. Don’t get me wrong, you need to have a good attitude. It keeps you healthy and happy. But you can’t ignore the things that need fixing without it biting you in the butt at some point. There is NOTHING negative about improving those things that need improving. In fact, its part of having a positive outlook, IMO.
Palmetto- I had to laugh, “happy thoughts”. Cut to dumb and dumber when he is about to get his butt whipped and is crouching in the corner of the stall sucking his thumb, saying “I am in my happy place.” Looks familiar with regard to these buttfaced drones calling themselves experts.
Kick his ass, Seabass!!
It’s a bubble - the whole phenomenon is fundamentally driven by people willing things to happen: Prices first rise because everyone expects them to rise, and when prices finally crash, it is because everyone expects them to crash.
If the original boom was not driven by fundamentals, why would a brief resurgence need to be driven by fundamentals? Most speculative bubbles had a few dying growth spurts before the whole thing collapsed.
Trying to will it to happen…
I’m seeing the same phenom with which way interest rates will go. It seems that every analyst on Nightly Business Report is predicting a DROP in interest rates. What they’re really doing is establishing a sort of squatters’ rights. If enough people say interest rates are dropping, then it becomes conventional wisdom even if it’s not wisdom at all. BB would just HAVE to drop interest rates, right? RIGHT? We can’t have BB be “out of touch” with conventional widom can we.
Thomas Merton (in his auto-bio, The Seven Storey Mountain) described a similar situation regarding the advent of WW2. People hoped that by being positive that WW2 wouldn’t happen. There was even a pledge (The Oxford Pledge) where young people pledged to not serve if the war broke out, the idea being that if the cannon fodder was unwilling, there could be no war. That sounded good until Poland was invaded.
Sometimes the poop hits the fan and there is nothing we can do to prevent it.
They are trying to will it to happen.
You gotta wonder, when you read a story like this, if the reporter has some skin in the game.
Have they all been reading “the Secret”?
Yup, you beat me to it. Kim calls it — the market has stabilized, the bottom is in, because median prices last month increased 0.1 over the same month last year according to the MARtians (Mass Association of Realtors). Hooray! It’s all over! Home prices will now resume appreciating in Massachusetts! Buy now or be priced out forever!
It’s actually pretty funny to click and read the discussion. Lots of realistic people in there calling BS.
This is discouraging. Blanton has two sources for the article, the Mass Realtors, who say prices inched up 0.1% or the Warren Group who say prices fell by 1.6% Which does she lead with? On the front page of Boston.com the headline for the article is “Mass home prices tick up in March”.
Hello! Ms. Blanton! I’m not sure, but of the two sources isn’t one more biased than the other?
yeah and there are “signs” that the surge in Iraq is also working.
Sure, the surge is working. Profits for Lockheed Martin are way up. That will push the Dow up this morning. God, I’m getting cynical but the jerks in power have made it so easy.
Two of the headlines I saw this morning are “robust earnings from U.S. military supplier Lockheed Martin” and “9 U.S. soldiers dead in Iraq”. Is there any connection?
“Two of the headlines I saw this morning are “robust earnings from U.S. military supplier Lockheed Martin” and “9 U.S. soldiers dead in Iraq”. Is there any connection?”
Don’t even get me started. How about “We’re not going to leave until the job is done.” What’s “the job”? The decimation of our military? A Middle East secure for the oil companies to pump out profits and millions of dollars for executive pay and bonuses? (While the vets can’t get decent health care). Somebody tell me what “the job” is, because I don’t buy the terrorism argument anymore, if I ever did. LOL! They’re walling off sections of Iraq, but they can’t do it at the southern border of the US. LMAO!
“They’re walling off sections of Iraq, but they can’t do it at the southern border of the US. LMAO!”
Palmetto, you racist you! Everyone is welcome here, we have plenty of resources and the government is fully-funded. We can handle another 30 to 40mil illegals. They do the work you lazy Americans won’t do. Come on, where’s your compassion?
sarcasm off
Just a thought - when stock market is in a bear market phase, volume is the first thing to decline then prices. Usually, volume drops for several months and then boom - prices start to drop.
What I hate is that the MSM is not reporting on the reason s behind the sudden turn-a-round in the RE market in 2006 onward . We don’t get alot of reporting on how the speculator/sub-prime/fraud lending inflated home values and supply and killed affordability .
The MSM is trying to report the sub-prime foreclosure problem
as if it’s a human interest story rather than a viable reason for the false markets nationwide .If the public doesn’t know the true reasons behind the run-up they can’t vote on new laws or object to the damage of sub-prime lending or potential bailouts .
This is a information war and the RE cheerleaders are alive and kicking .It makes me sick .
“This is a information war and the RE cheerleaders are alive and kicking .It makes me sick . ”
Yes, I agree 110%
This statement applies to many different aspects of our lives, such as news on the economy, health care, Gov policies, and investing.
It is so important to turn off the main stream media and seek alternative news sources, such as this blog. Else, whether you know it or not, there is risk you may get blind sided. I believe this is what happened to many who brought houses at or near the top of the market.
http://www.baltimoresun.com/news/local/harford/bal-te.bz.foreclosure24apr24,0,4103824.story?coll=bal-home-headlines
A large portion of a new-home project in Harford County is scheduled for foreclosure auction next month, an apparent victim of the sharp slowdown in the housing market that has hurt builders across the country.
Great news release this morning on Bloomberg about who will be holding the bag of sub prime crap.
Good article:
They will lose as much as $75 billion on securities made up of millions of mortgages to people with poor credit, says Pacific Investment Management Co., manager of the world’s biggest bond fund. Some of the $450 billion in subprime mortgage-backed debt sold last year has lost 37 percent, according to Merrill Lynch & Co.
BlackRock Inc., AllianceBernstein Holding LP and Franklin Templeton Investments are vulnerable because investors have replaced banks and thrifts as the primary source of money for U.S. mortgages. More than $6 trillion of mortgage bonds are outstanding, dwarfing the amount of U.S. government debt by about 50 percent.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aq3flDbwBCbk&refer=home
No mention of insurance, however.
a whole 75 billion,maybe
they’ve already lost that
“BlackRock Inc.,”
Let ‘em burn.
Just curious - do you think the bond market will grow weary of MBS all together or just bonds with subprime / ALT-A loans in them?
Just curious - do you think the bond market will grow weary of MBS all together or just bonds with subprime / ALT-A loans in them?
That’s a great story on Bloomberg. Chronicles a SAIL series bonds issued by Lehman. As of today, about $100mil of the $1.5bil is in default. The interest rate resets on the underlying notes don’t happen until December 2007. The i-bankers are saying one thing (these are great bonds!) but the story details the empty foreclosed homes that resulted from the bonds.
6% default 7 or 8 months before reset?!?
Ghad… if more Americans read instead of getting news via the tube. But I’ve given up hope on us becoming a literate culture.
This will prop up home prices a little longer. But once all of the savings are gone…
Look out below.
Oh, we’re no exiting the time of year when 90% of property appreciation normally occurs. We’re now in the time of the year when in most neighborhoods inventory increases faster than sales. With credit tightening… its going to be interesting.
Got popcorn?
Neil
“The National Association of Realtors in Washington this month said the median price for an existing home likely will fall 0.7 percent to $220,300 this year, the first annual drop since the real estate trade group began keeping records in 1968 and probably the first decline since the Great Depression.”
The national median is such a useless figure to describe housing.
Take a look at this thread: Link
Here’s a snippet:
“I understand the fact that house vales can go down and that’s exactley what happened here, our house will not appraise as much as the purchase price and that’s one huge negative for us right now. We are not in a hurry to refinance NOW because we still have about 2 more years for our rates to go up, but at the mean time we would have to build some kind of a reserve for the worst to happen, hopefully house values will jump back again. I wish we would’ve thought about it a little more. I am just curious where you guys gonna shop for mortgage brokers?? Who do you have now as your mortgage company??”
At least three people with Option Arms that won’t go up for another 2 years. Makes you realize how loooong the bust will be…
Yes, we are still in the beginning phases.
In general, people with the best credit scores got 5/1 ARM’s (resets/adjusts in 5 years). The sub-primes all got 1 year ARM’s and are all ready toast. Alt -A’s probaply got 3 year ARM’s. This one is next.
Being that housing prices have been flat or going down since 2005, the 1 year and 3 year ARM’s are breaking down now. With no equity, these people are toast. One of my favorite quotes over the last few years was that people buying more house than they could afford with these toxic mortgages were really already bankrupt but didn’t know it yet. I thnk there getting a clue now.
Home prices firm up as buyers emerge
But agents say too early to call it a turnaround
By Kimberly Blanton, Globe Staff | April 24, 2007
Massachusetts house prices held steady in March, putting an end to the monthly price declines that have plagued sellers since last April.
The median price for a single-family house was $344,000 last month — 0.1 percent more than year-ago prices — the Massachusetts Association of Realtors reported yesterday in its monthly report on the real estate market. Condominium prices increased by 3 percent, to $279,000. The last time house prices increased was last April, while condo prices last posted a small gain in November.
“They’re hovering where they were a year ago, which shows the market has stabilized,” said Doug Azarian, president of the Massachusetts Association of Realtors.
Prices firmed in reaction to strong sales in January and February, when unusually warm weather pushed the number of houses and condos sold above their levels a year earlier. However, March sales fell — by 2.8 percent for houses and by 1.4 percent for condos — though the magnitude of those declines was smaller than in prior months.
Buy backs, currency, flight to quality….
Take a look at Spain. Bunch of homebuilders’ stock blew up today (and have been for last few days). Some down 20% or more each of the last few days.
strange, in Netherlands and Germany, RE investment funds and stocks of RE developers and other companies in the building industry are still surging. Don’t know about homebuilders because most of them are probably relatively small private companies that are not listed on the stock exchange.
This can’t be right. Numerous people have told me that because Spain has such great weather, there will be an unlimited supply of wealthy Brits moving there to retire. There’s no speculation at all, just basic supply and demand.
Ha ha. It seems the last of the lemmings to buy in Spain were the construction workers themselves, who generally are migrants from the poorer eastern/southeastern part of the continent.
latest home price data from Netherlands: prices up 1.65% from last month (in the US that would be +20% annualized I guess …) or down 0.1% from last month, depending on which source you believe. Average home price is now 6% higher than one year ago. Still no sign that the Dutch housing bubble is slowing.
Newspapers report that Dutch people over 65 years old are holding enormous amounts of equity in their - often relavitely big - homes (huge appreciation, many of them have not moved for 20 years). “If they every decide to move and spend their equity, the Dutch economy would overheat seriously”. On the other side, most of the younger Dutchies are holding enormous amounts of debt in their homes …
In the Northern part of Belgium, Flanders, the market is cooling significantly. Although there was still an increase of almost 10% YOY in average sales price, the number of sales declined in the same % range. There is huge overconstructing and the first to be hit are the existing appartments which hardly move.
Mortgage applications are nosediving since Q4 2006, so a lousy 2007 may be expected and a desastrous 2008. Unless our dutch neighbours, who speak the same language, come to rescue.
But before you do, you should know that you pay around registration tax and notary costs for about 14% on the sales price of an existing home and a sales tax(VAT) of 21% on new builds.
Oh yeah, and yearly tax deduction of principal and intrest is only 2600 euros in Belgium…
Dutchies who buy in Belgium and declare the home as their primary residence (tax office doesn’t bother to check that usually) can fully deduct the cost of the mortgage, home/garden improvements and many other things from their income taxes (by far the biggest tax in Netherlands). Many of them will buy an additional home just to make sure they pay the minimum amount of tax. I think they will quickly come to the rescue if prices in Belgium start declining (prices there are still low compared to most of the Netherlands).
I think home sales in Netherlands are relatively good at the moment, inventory for sale seems lower than last year. The mortgage market seems to be less attractive for the banks lately because of competition from foreign lenders (which of course makes it even more attractive for FB’s). In my area there is lots of new construction in the works despite slightly declining population, but it could take a few years before these new homes come on the market. And local government is doing everything they can to demolish every ‘affordable’ home they can find (affordable being about anything below 175K euro); always a sure way to keep home prices rising, especially if people can borrow all the money they need for more expensive homes from that same government
Wasn’t it the Dutch who invented bubbles? Nobody will ever top tulips. =P So, should I buy in the Netherlands if there is still some kick to the speculative craze?
If all the mortgage companies think they can refi or modify these sub prime loans away into never never land it is not going to happen. I was at a conference and one of the biggest servicers in the country said 40% of all workouts will fail anyway.
Is that 40% if the economy doesn’t take at the same time they are trying to rework these albatrosses? I still think the predictions being set forth, even the more realistic, are still of the rosy variety. Throw even a moderate recession into the mix and “kaboom”. That 40% number will be a wish.
Best one i have heard in a long time…..Orlando hotelier threatens lawsuit over hurrican forecasts. This local nut is going to sue the old fella who forecasts hurricanes and has said that we should have two or three big hurricanes this year. Hmmmmm me thinks reservations are down.
They’ll be fine. The NAR never got sued over sunny weather forecasts…
I was driving to work and listening to the news and I realized that the war in Iraq is a “Flipper War.” Same mentality. The experts (Army) said put a big down payment (troops) but no. We went in on the cheap. Went in with 5% down and expected to do a little upgrades and be out. We were going to flip the entire country.
No. Virginia is picking up in foreclosures. Finally seeing the top end show up. Usually it was the 300-400k showing up now its more and more of the higher end SFH.
Still building condos all around me. (Near metro). Houses really aren’t coming down. I have noticed what seems to be a fair amount of houses bought within 2004-2007 showing up. But prices still not really dropping in the close-in burbs.
How to tell if the Latino community is really moving on? Watch for bodegas to start closing.
in 1990-94 the only foreclosures in NVA were in the hood
different this time ?
falling prices is a painfully slow process
I’m watching NoVa very closely because I believe our market (C’ville) will follow it to an extent. We were starting to see people cash out of NoVa and relocated to the rural areas all around us at the same time that outrageous inflation was pushing development south of Warrenton for folks who are still working.
Watching on CL, the MLS and the newspapers, prices are starting to drop here now. 3-5% cuts are starting to show up and inventory is blooming. The telling signal so far has been the growth in open houses - everybody and their brother is trying to get foot traffic in, something that wasn’t even necessary in our area last year.
Thanks for the bodega tip; we have a handful, this will be interesting…
Scott,
A client of my agent’s bought the cheapest townhouse in “Faircrest” in Centerville in 2005 for $485K. The agent at the time said it was a “steal”. They’re now going for $420K. That’s a good 13% haircut. If you haven’t already been to my Northern VA blog, click on my name for more deeply discounted listings (from the peak in ‘05). Foreclosures especially can run as much as 30%.
I’m tracking a couple of places. In one block of townhomes in Loudoun, prices peaked at $430-$450k. Several sold this spring for $365k, and one has just come on the market for $350k. Ouch!
“I was driving to work and listening to the news and I realized that the war in Iraq is a “Flipper War.” Same mentality. The experts (Army) said put a big down payment (troops) but no. We went in on the cheap. Went in with 5% down and expected to do a little upgrades and be out. We were going to flip the entire country.”
Deep stuff. I think you’re right.
NoVA is getting very exciting to watch in my opinion. There are many houses that are languishing on the market for hundreds of days refusing to budge.
I think newer listings (not recycled ones) are starting to undercut neighbors a bit more and the bank-owned propertys are undercutting everyone.
This is my favorite one right now:
FX6384025
List Price: $271,900
Last Sale: 05/06/05
Sales Price: $414,900
That’s a 35% haircut. I hope you don’t mind, but I borrowed the data for my Northern VA blog. I’d like people to see it.
Oh! Now I can connect the dots.
I discovered something about posting my blog under the name “Harriet”. I chose it because my favorite books are by Dorothy Sayers and there’s a writer/sleuth named Harriet Vane.
But a few mornings ago I realized something else. When I bought my first house at 23, my new Mother-in-Law kept calling us “Happy Harry and Harriet Homeowner”. At the time I felt sick to my stomach over having a mortgage at 23. Now I’m posting as the anti-Harriet homeowner, as I’m a dreadful Renter. Are there names for renters? Rude Raymond and Ramona, perhaps?
I’ve been looking at Prince William County tonight. It’s turning into a “bloodbath”. The listings are piling on like crazy. 12.3 months of inventory, and tremendous price drops since the 2005 peak. (in the 35% range).
In my neighborhood of stupidly overpriced old dumps in Arlington, there are a handful of houses that have been for sale for literally months with no apparent action, and little apparent reduction in asking price. Some of these, I suspect, are absentee owners with low or no mortgages (lots of group house rentals in our ‘hood) trying to cash out before things go belly up.
Still a few houses selling for silly prices. The neighborhood (Aurora Hills) is hard to read, though, because it has housing stock dating from the ’20s to today, and there is such variety in terms of size and style that it’s hard to figure out an ‘average’ price.
Yuck. That’s a rip-off even at $271k.
It appears all the mortgage fraud of the last few years may be now starting to catch up with the fraudsters. It is hard to tell with these people, but we all know more of this kind of stuff is going to come bubbling up to the service over the next few years….
“..The Parks were due in court Monday for a meeting about a civil lawsuit. Laguna Beach police are also investigating whether a visit by sheriff’s deputies to the Parks’ home Friday could be related to what happened less than 48 hours later.
Both licensed real estate professionals — he a 6-foot-1 broker, she a 5-foot-5 salesperson — the Parks owned two Mercedes-Benzes. Gardeners maintained their lush lawn and maids cleaned their two-story, 2,600-square-foot house….”
and
“….The meeting with deputies Friday was requested by Joni Park, sheriff’s spokesman Jim Amormino said. She said she “had some information” about an undisclosed case, he said. At about 10:30 a.m. Friday, two deputies rolled up to the Parks’ home for what Amormino called an “informational” police call that was not criminal in nature. An online sheriff’s log listed a call on Dardania Avenue as “Fraud Report.”…..
read it all here:
http://www.ocregister.com/ocregister/homepage/abox/article_1667689.php
Just the beginning. This will be the equivalent of brokers jumping from windows during the depression.
With subprime implosion there is a whole sector of the economy (the fraudsters) that is cut off.
Its as though all illegal drug supplies run out completely overnight and cant be replaced.
Just to put things in perspective I’ve read it costs 10-25k to have someone ‘offed’ by criminals. People make 100k EZ doing cash back at close mortgage fraud the last few years.
We will see a HUGE increase in all types of crime as mortgage fraud is cut back by the fact that no doc 100% loans are gone. The drug dealer loans are gone so they have to go back to dealing drugs or whatever.
CNN article on sub prime bailout. Key point of this article is that at the borrower can only do a refi if the the loan to value is below 85% and we all know most subprime loans are 90% and above LTV.
Price appreciation was supposed to take care of that little detail. Oops!
I think the 85% LTV is from a program in Maryland. I would prefer a limit of 80% better or even less, but 85% at leasts limits the hit to the state treasury.
http://money.cnn.com/2007/04/24/real_estate/bailout_plans_how_they_work/index.htm?postversion=2007042408
CNN article on sub prime bailout. Key point of this article is that at the borrower can only do a refi if the the loan to value is below 85% and we all know most subprime loans are 90% and above LTV.
In most cases the loan to current value is over 100%!
“In addition, their old lenders may have insisted on enforcing the onerous terms of their original agreements, such as prepayment penalties. The state has more leverage with lenders to compel them to co-operate with the program.”
Yeah, just like the Florida gummint has leverage over the insurance companies. Try getting a new Florida homeowners policy through USAA, unless you’re active duty. Try getting a subprime mortgage in Maryland if they pull this. Yeah, that “state leverage” really works well. At least their policy should help prices crater there faster than if they hadn’t interfered.
BTW, in the article’s pane there is a link to a good video by “Comedian Kathleen Madigan,” who describes, seriously, why FBs should remain F’d.
Bodegas can be a trailing indicator. Often a Bodega can act as something of a focal point, a community center of some sorts for the local hispanic (Re: Mexican) labor. If there are multiple bodegas watch for all but one or two to close down…which might indicate their clientele has gone elsewhere.
in certain areas of nyc there are 5 or 6 bodegas on a given street
and most are just fronts with laundry detergent or other items with no expiration dates lining the winodws and shelves.
a big way drugs are sold in the boroughs of nyc
not all bodegas mnid you but a large amount are serving this purpose to their local community
Funny Video..http://www.cnn.com/video/player/player.html?url=/video/business/2007/03/23/kathleen.madigan.subprime.cnn&source=money
Krills — sorry — you had it first. My reference above is to this clip.
Response from my realtor re: my asking if she’d be willing to submit lower offers for me (my comments in bold - I didn’t reply to her, my feeling is that it’s time to severe this working relationship):
“I have thought over and pondered your letter. I think the letter you
wrote is very well done and touching. I absolutely understand the market and what the last 7 years looks like in comparison to the rest of history. While the increases where steep and overly long, they where not a complete anomaly in real estate. We have seen this market before and we will see it again. (Really? The run-up of the past several years has been seen before? Seems to me it’s the largest run-up ever. Unprecendented, if you will. Am I wrong? Is the “expert” right?…) The real estate market is incredibly predictable. It cycles every 15 years or so. The key is getting in at the start of that cycle. When people try to time the market, they usually end up missing the opportune time for them. In your case, when I met you, the market had already risen steadily for 4 years or so and was really tough.
Will the market “adjust”, absolutely, it always does. I think you need
to focus your research more locally however. The huge adjustments that we saw the last time the market went down (35-45%) were in areas of outrageous increase (coastal areas and major cities) California, New York, Florida, Washington DC. In the real estate world Philadelphia is not a big fish. You still get the best buy for your buck here, as far as big cities go. (I call b.s. on that. Anyone in Philly care to comment?) As a matter of fact, we where always priced way under the other metropolitan areas. (Um, if that’s true, perhaps there’s a reason for that? Like it can’t be compared to “better” cities? I’ve always said Philly is like the little brother who wants desperately to play with the older kids, but no matter how hard it tries, just can’t run with the big dogs.) We have caught up a bit but are still far below many cities (most) in the country.
No one is predicting that the market is going to adjust to the degrees it did in the last buyers market. (No one? Really? Here I thought the intelligent, unbiased [i.e. someone who's livelihood doesn't rely on real estate] predictions were that it will be far WORSE then ever before…) Many factors play into that
adjustment. Interest rates being a key factor. When rates are at 17-19% people cannot afford the payment so the prices fall. While rates will increase, maybe 7% by the end of the year according chief econ. at Wells Fargo, they will not be heading to 15%. (What about the foreclosures? Have they ever factored in so greatly in previous “corrections”?)
All this being said. I understand your need to make offers you can
afford. Most sellers in the first time buyers price range are not desperate. There will always be first timers. (Hmmm…I thought the prediction was that first-timer buyers were going to become a vastly shrinking pool if and when lending requirements become strict.) That market is never hit hard by adjustments of any kind. (Never? Is this an accurate statement?) I would definitely love to help you find a home if you are willing to be realistic. Look at the percentages in relation to the price range you are looking in. Sellers are not coming down 25% in that price range. Also keep in mind the average list verses sale price in particular areas that you are looking in. Don’t compare San Diego, Australia, Florida, etc to Hatboro, Horsham, etc.. Huge decreases also tend to go with big industry implodement. This area is dominated by one employer that is folding. (I’m assuming she’s talking about the Willow Grove Naval Air base) Therefore the towns are not going under. Hence sellers are not desperate. As a matter of fact some of the areas (Hatboro in particular) is on the up swing. The rejuvenation and desire of small towns in this part of the world is growing.
So I guess that all this being said the decision is really yours, not
mine. I like you and would love to help you. If we are going to work from the same vantage point. If you want to put in offers
25-30% off the marks, I’m probably not the right agent for you.
I have been selling real estate for 10 years. I have a lot of experience and knowledge to draw on. If we are coming from fundamentally different beliefs it would be better to find someone who agrees with you whole heartedly and can sell you better then I can. (Sure, but who the hell is that person?…)
“If you want to put in offers
25-30% off the marks, I’m probably not the right agent for you.”
The realtor is giving you good advice. You don’t need a realtor. Why not put an ad on Craigslist outlining your criteria? (be polite, but firm). If you find a place that works for you and want to put in an offer, then all you need to do is get a RE attorney, inspector and title company. It’s possible the RE attorney may even have a title company you can use, so you kill two birds with one stone.
then all you need to do is get a RE attorney…..
Yeah, but, unlike the realtor the attorney charges you by the hour….So after a Dozen or so frivolous offers and several thousand dollars out of your pocket you will change that approach quickly….
“Dozen or so frivolous offers and several thousand dollars out of your pocket you will change that approach quickly….”
Make the offers yourself, you don’t need an RE attorney for that part, just for the closing and other finer points. I didn’t. I made copies of the local FAR/BAR contract and used that to put in my offers. Worked just fine for me.
Sorry…I misunderstood your comment…Thought you were going to use a attorney to write the offer each time thats what promted my response…
Palmetto
I did the same. Just use standard offer form, adjusted to your specs. Easy to do. The the RE Attny writes up the deal so you can get your deposit back if you don’t like thetermite inspection!
She said “When rates are at 17-19% people cannot afford the payment so the prices fall.”
Those interest rates have been replaced by the high prices this time around.
She’s right about one thing. The best deals and biggest price cuts are currently at the high end of the market. For instance, in Southern Md, the homes on the market for over $400k are in dire straights, but the homes on the low end are still being flipped, because that’s the price range most buyers can still afford. The lower the price, the more competition there is…
Y’know, going from 2002 to 2005 was like increasing interests rates from 6% to 14%. More specifically, if a place cost $250k in 2002 and $450k in 2005, if you put 50k down, the mortgage payments would be twice as for the 2005 home (i.e. $400k vs. $200k).
So, if $200k at 6% is $1200 a month. That means that the $400k at 6% is $2400, and is the same monthly payment as $200k at 14%!
Here in South Florida we often hear the comment that prices will not fall much because we are already priced lower than many other areas. Sound like this is a realtor spin being told everywhere. Too bad many will fall for it.
I think I’m going to reply with this note:
Unfortunately I guess we cannot work together. I do not think I’m being unrealistic. Perhaps I’m jumping the gun, but I still believe - in the long run - my line of thinking will become the reality.
Let’s look at it this way…when a townhouse that was last purchased for $72,000 in 1999 is now listed at $190,000 that’s an affordability problem. Using the 3x income rule, one only had to earn $24,000 in 1999 to afford it. Now the buyer should earn $63,000 to keep the same income-to-purchase-price ratio. Does anyone really believe a job paying $24,000 in 1999 now pays $63,000? No way! Incomes have been flat for years. Cost-of-living increases have been about it. At a 3% annual increase, that salary would now be $30,500. Even at a more generous 5% annual increase, that salary would translate to $35,500 presently.
I respectfully disagree with you that this market has been seen before. Sure, real estate cycles - I absolutely know and get that. But it has never, ever run-up like it has in the past several years. Ever. Look at this chart (http://www.biggerpockets.com/images/blog/shillerbig.gif) and tell me, honestly, that you believe this is “normal”.
I also don’t believe we’ve ever seen the wave for foreclosures we are starting to see. And predictions are that this is only the tip of the iceberg. Perhaps interest rates won’t force prices down, but I’d be willing to bet that REO sales will.
I just don’t understand why realtors are so unwilling to submit offers for people if those offers aren’t full (or 97% of) asking price. It’s not a reflection on the realtor. I’ve been told the reason often times is a reputation thing. I think that’s ridiculous. I thought this was a business, not a popularity contest. (Not saying that’s necessarily the case for you, just in general I think it stinks.)
I wish you the very best and I am truly sorry that we cannot work together to help me realize my dream.
One person suggested to me that I might want to try another realtor in my area as mine lived in this town and had a personal interest in keeping values up. Perhaps yours has a few investments of her own she’s protecting?
I’m at the point where I’m ready to contact the listing agent if I find a property I’m interested in, have them show me it, and then submit an “informal” offer if I’m interested (why waste the time making a formal purchase offer if it’s such a long-shot anyway?).
Yesterday, this advice was given to me: Question to those in the know - would it be illegal to simply contact the sellers directly - verbally? Just tell them on the phone (or in person via visit) that you’re interested in making an offer - but it’s so low that you don’t want to waste yours (and theirs) agents time unless they would consider it seriously. If they would consider the, or serious negotiations, then have them have their agent contact your agent. Such a verbal offer would be non-binding, and thus not illegal to do without realtor, would it not?
Reply to this comment: Its perfectly fine to do what you suggest but “NOT” through your realtor…Once the seller has a Agency relationship with the a realtor, any other realtor is obligated to go through that realtor in presenting any information to the seller…However, if you “BUYER” were to send a direct inquiry to the seller that should be perfectly.
My question becomes - what about an interested buyer submitting an informal offer like this to the listing agent? Is that something that can be done?
Frankly, I wish realtors could be cut out of this part of the picture. Let buyers and sellers negotiate and only get a “realtor” (or whatever they’d be called in this case) involved when it comes time to draw up contracts.
what about an interested buyer submitting an informal offer like this to the listing agent?
Nothing wrong with this approach either….
Is buysiderealty in your state? http://www.buysiderealty.com you should check it out!
man, i hate real estate agents. i say find the place you like using an online mls service and submit the offer thru the listing agents. maybe have a real estate attorney review the contract before you’re locked in. i bet the listing agent will have no problem submitting a low-ball if it means double commission for him/her. that system is completely broken.
Keep track of the offers and two years later when the owner is listing with another realtor for much less, mail them a copy.
Maybe they will sue their previous realtor for not passing the offer on.
I still say the same thing I said yesterday. Start shopping as an “Investor” instead of a homebuyer. Then you can start talking about rental income in relation to price. The 100X formula etc. Almost all the successful lowball offers I’ve seen pulled off in the lower ranges were done by LLC’s (investors) or real estate agents themselves. Either the house was on the market for a long time or the owner was in financial trouble. Common theme? They have to have equity in the property…
Stop wasting your time with this idiot; don’t even bother with the letter. Go directly to the owner of the house that you are interested in; but find out who the owner is first. People selling houses that they’ve actually lived in take you comments personally, so you have to play it nicey-nice, even if their house is a sh*thole; many times they don’t even notice it is a sh*thole. Many homeowners want their house to go to nice people - we sold my mom’s house to a nice family that had contacted us directly for less money than we could have sold it to a contractor that bid on it. Selling a home while technically a business transaction often has a huge personal element to it. Use that in your negotiation. Buying from a flipper? You can play hardball; talk dollars and cents. In any case, people who are selling want to sell; chances are they won’t shut you down if you contact them directly. No law preventing you or them from talking, but they will have to pay their realtor. If they’re smart, they can try to renegotiate their fee with the realtor based on the fact that they closed the deal without the realtor’s help.
I’m looking at a house in the Philly ‘burbs that needs boatloads of work - I’m going in at around 22% below asking; I’d go more, but beyond that, I think I might hit a psychological price wall with the seller.
The RE Agent is right not to waste time with an offer that is “25-30% off the marks.” Nobody will take that offer unless thier desperate! Most people who are selling their houses are in denial about the price. And of course the Real Estate Cheerleaders are out there trying to verbally prop up the market.
Just wait a couple of years, you’ll be looking at 40 to 50% haircuts (from the highs of ‘05 & ‘06).
There is nothing keeping you from contacting listing agents or owners yourself and making offers. Why don’t you test your thesis and start looking and making offers in this range?
This agent doesn’t want to work with someone who is likely going to want to see a lot of houses, prepare a lot of offers with what he/she believes are not realistic at this time. At least they seem like they are being honest with you.
There is also nothing keeping you from contacting agents until you find one willing to support you in this strategy. Let us know how it goes.
I don’t get it.
You want to make an offer.
Sellers want offers.
Seller can reject ANY offer.
Sellers can counter any offer.
You can reject any counter.
Sometimes something happens, sometimes it doesn’t. What’s the big freakin deal? Is this still the “somebody’s going to be insulted” game?
Are there any grown ups, business people, in real estate? People who can act without such adolescent emotions?
“If you want to put in offers 25-30% off the marks, I’m probably not the right agent for you.”
Wow! I thought they were supposed to submit all offers. Is that a myth?
Does anyone else remember when it was standard to offer ~85% of asking? No one expected to get a full offer. I don’t see how a 75% offer is so offensive in a quickly deteriorating market. (Except that I think we’re at the point where sellers are hanging on tight to the railings of the Titanic to try to avoid going overboard.)
Or, as I’ve said before, maybe I’m just unrealistic and naive. But at least I’m naive with a chunk of savings and zero debt!
supposed to submit all offers
Not if it’s a frivolous offer….
Frivolous is hard to define, though, isn’t it? Again, using this scenario:
Let’s look at it this way…when a townhouse that was last purchased for $72,000 in 1999 is now listed at $190,000 that’s an affordability problem. Using the 3x income rule, one only had to earn $24,000 in 1999 to afford it. Now the buyer should earn $63,000 to keep the same income-to-purchase-price ratio. Does anyone really believe a job paying $24,000 in 1999 now pays $63,000? No way! Incomes have been flat for years. Cost-of-living increases have been about it. At a 3% annual increase, that salary would now be $30,500. Even at a more generous 5% annual increase, that salary would translate to $35,500 presently.
What would you consider a frivolous offer?
Impossible to define it without the relevant facts but, I would know it when I saw it…..Also keep in mind that “Frivolous” today is not necessarily “frivolous” 6 months or a year from now…See CIRCA 1981 for that data….
It simply may be too early for low ball offers in your area. I put the value of the condo at about $95,000. They are simply not ready for that offer. Also, what does it rent for? Even with low ball offers are you paying more to own than rent? If so, wait a year. IT will change eventually.
I was thinking that that 25-30% was just a starting point. If they met in the middle that would be 12-15% and I believe many places are experiencing 12-15% price drops anyway.
When my home was on the market I would have been happy to receive a lowball. (My home was the lowest in its price range and almost completely redone..whole price range just sat) Anything on the market now in same class going for $30-$70k more….go figure.
You can’t negotiate when people don’t engage. To me, lowballing gets the negotiations started….and helps you find where the market is now. If you have too many lowballs in the same range, maybe that’s the price the house must go for.
If eastcoaster is serious in his offers then the real estate agent is supposed to submit them.
Who knows what a seller will or will not accept or reject?
Who knows exactly their need to sell or move?
My sister the Wyoming realtor had a client who drove her crazy with lowball offers. But lo and behold, one day someone took his offer. She had a sale and the buyer had a deal.
Find an agent that’s hungry and willing to work with your plan.
But if you’re going to lowball and somebody bites then I hope you’re prepared to buy. Otherwise you are wasting your realtor’s time and that’s not fair either.
Severe the relationship? This is just about sales. If this droid can’t help you find the listing you want, then maybe another can. More likely at this point the market is just messed up. Always remember, though, that sales people are just tools. All of the priorities and the hardcore math and balancing has to come from you.
Realtors don’t want to help people get a 25 to 30% off deal because they would try to get the deal themselves and flip it (by a double escrow or something like that ).
The sellers are still in the hopefull stage, so you might be just a little pre-mature with the big lowballs .I agree with you that the only way to find out how hard-up a seller is to sell is by lowballs but the realtors don’t want to put a bunch of paperwork in for rejects . Better to research property and determine that the seller is needy and than call that listing broker who will not have to pay a buying agents commission . None of the buying agents are working for buyers anyway and really all the agents are just working for themselves these days . Become your own agent and learn how to write up a contract that protects you in every way or make to offer subject to a third party attorney review .
RE contracts have become so one-sided these days that its a joke . The REIC is corrupt ,so you have to protect yourself . Some RE agents are good but it’s hard to tell the good ones from the self-serving ones because they all have smiling faces .
Housing Wizard makes some good points, also Palmetto & Mikey(2). As I mentioned yesterday, you can make the offers you want, directly to the seller(s). If they accept the listing agent will still get paid, and wont care one way or the other. Make sure the listing agent kicks in two points for your closing costs. This would leave 4 points for him/her, which is one point more than he/she would get if they had to share the commission with your buyer’s agent. Everyone is happy.
However, as was alreeady mentioned by Mikey(2), many sellers wont sell for what the property is actually worth, right now. So you may be premature in your bids, and you may want to wait another 6 to 12 months until things really get dicey for the economy - more job losses, etc. Then sellers everywhere may be a bit more motivated. And as HW mentioned, the agents are never your friend anyhow, because if there was a deal, they would take it and double escrow it (check your state to see if agents are required to disclose ownership when listing - in CA this is so, but not in every state).
For me, it is still too early in the game to lowball offers. I think it is a waste of time in my target areas for both my primary residence and rental targets (CA, AZ, NV). Sellers are either still unrealistic, or they cant firesale due to having no equity. And banks aren’t willing to deal yet. If I need to - I will wait until the banks are ready to wholesale or buy thru the new RTC in bulk. But I am looking at buying at least 20-25 props or so, and then maybe negotiating a good deal on my primary residence as part of the package.
I don’t know about your area, maybe Phillygal can give you some insight. But overall, I think it is still too early - you will catch a falling knife. IMHO
What is “implodement?” Is that like “underwaterment?” Or “FB-ment?”
I’ll give her points for being polite and leaving the door open. Like Carrie Ann, I wonder if she has a portfolio of stuff that she owns and need to believe that prices won’t tank.
implodement=collapsing RE prices that soil your undergarments.
“It cycles every 15 years or so.”
“While the increases where steep and overly long, they where not a complete anomaly in real estate. We have seen this market before and we will see it again.”
“I have been selling real estate for 10 years. I have a lot of experience and knowledge to draw on.”
Ok, new criteria for my next agent 15+ years experience.
“Ok, new criteria for my next agent 15+ years experience.”
That’s pretty funny.
I am a renter in the area. From what I’ve heard, you cannot expect most RE agents to cooperate in putting in bids of 25%+ below list. It doesn’t “show professional courtesy” because RE agents don’t like to bring offers like that to their listings…doesn’t give people a warm n’ fuzzy feeling and implies the agent listed the house too high.
Does she know the difference between where and were?
It’s different this time.
It’s different here.
I have vast experience and you are wrong.
Everyone wants to live here.
Other areas will be affected but not here.
The underlying fundamentals do not matter here. See above as to why.
Nope, nothing we haven’t heard before.
(PS She’s been an agent for 10 years. That means she started in 1997 and has NEVER seen a down cycle. Run, do not walk, away from this “expert.” If you want a realtor send an e-mail to the fifteen big offices in your area saying you want a realtor who will make low-ball offers and who has been through the downturn of the early 90’s, and maybe even the early 80’s. Months ago I saw an ad in a San Diego magazine (unfortunately I didn’t pull it) for a realtor who basically said the market has changed and he’d make the low ball offers and not worry about insulting sellers who just haven’t learned it yet. They are out there - you just need to find one.)
Good advice. Think I’ll contact one of my parents’ friends (who they’ve used both times they bought a house). He’s at least in his late 60s and been a realtor his whole career so he’s seen the cycles.
Thanks for all the good advice today! You all keep me sane.
ec,
If you are patient, the time will come that an offer will not be scorned this way. The realator’s letter sounds somewhat sincere. If it is that means she is not encountering soft sellers yet. She isn’t trying to be rude. Let things unfold for a little while and you may get a lot more for a lot less. You are wasting your breath trying to convince the realator things are overpriced if she hasn’t realized it yet. I have heard realators tell sellers they need to be realistic too. It is just their opinion based on their experience. Things outside everyone’s experience are approaching.
I was going to say what SD REBear just did — this realtor has never seen a down market during her entire career, and her “knowledge and experience” won’t mean anything in the coming years.
Here are some other ideas you might want to consider:
1. Find a GOOD RE attorney and have him/her draw up a contract for you — one that you can copy & use repeatedly. Make sure you go over it one item at a time & that you fully understand all the terms. Use this contract for your offers.
2. Submit the offers directly to the sellers. Inform them that if they decide not to accept the offer at that time, you will be there when their contract with their realtor expires, and they can deal directly with you & save on commissions. They might also have a more realistic idea of what their house is worth if a realtor can’t sell it.
3. IMHO, you are waaay too early. I know you are looking for a comfortable place for you and your son (?).
We have three kids ourselves, so totally empathize, but have decided to continue living in a rental until it’s time to buy. Maybe you can find a more appropriate rental???
4. Maybe you can find a realtor who would be willing to work on a hourly basis? He/she could help write up contracts, but you could submit them, so their “reputation” would not be at stake.
Whatever you decide, I wish you luck! Please let us know how it goes.
FB Blows up his home due to financial and emotional problems.
http://www.ksl.com/?nid=148&sid=1140341
What gets me is according to zillow this home was purchased in 2003 for $38,138. Thats cheap enough even someone earning minimum wage could afford it. Doing a quick search on Realty Trac I found a house on the same street with the same square footage (I don’t subscribe so I cant get the exact address) with a NOD filed. The house has an estimated loan balance of $177,000. Is zillows previous sales info that far off or has this guy been living large the last few years?
Salt Lake City has appreciate fast in the last year. I suspect it’s overwhelmed with speculators. This story is very disturbing, how this man nearly killed his neighbors and their children.
It’s actually funny: The FB ran out of the house, he was trying to destroy, with his head smoking. Apparently, just like with his loan, he forgot to read the fine print on the flammable/exposive device he used.
The thought of him caught in his own explosion/fire and running out of the house with his head smoking cuased me to LOL!
Does this make me a bad person?
“Does this make me a bad person?”
Yes. But that doesn’t mean it isn’t funny.
Who is supposed to be moving into all these townhouses, condos, and SFHs? And if these people exist, don’t they already have townhouses, condos and SFHs they’ll be leaving empty? The population isn’t increasing by a million ultra-rich 20 Somethings every month. I imagine most of this stuff will end up as section 8 housing, sold at outrageously inflated prices to the Government, and will be slums within four or five years. Perhaps the Bubble was the Universe’s way of updating slum-housing.
As for positive thinking (mentioned above), I’ve found that it does work, sometimes, if one is absolutely adamant and ones desire doesn’t conflict with everyone else’s in the picture. But, when carried to extremes, it, like extreme negativity, can be obnoxious. I suspect most people are hard wired to be positive or negative by a very early age, if not before birth, and since everything begets its opposite, being either isn’t right or wrong. The same with being conservative or liberal. A plane needs two wings to fly, and neither is better, or more evolved, than the other. But each thinks it is correct and the other the bane of its existence.
I believe thinking positive thoughts can make happy things happen, if done with good motives, but every positive has a negative, so while some fat cat is celebrating his good fortune with a lobster feast, the poor lobsters are experiencing the worst of the worst. The trick is to stay near the middle about most things, and to generally observe, but not participate, in the clash of polar opposites.
Low paid immigrants! Who else is supposed to “buy the houses Americans won’t buy”? We all know that strawberry pickers can afford 500K houses, right?
Kidding aside, I too wonder “what are they thinking, why haven’t they stopped bulding?”.
Positive thinking is usually wishful thinking . While I believe that a upbeat positive attitude can help a person get by during bad times ,a positive person is a person that is creative and can make a better situations out of bad situations.
Often times this positive thinking BS is a “chant” for getting something for nothing .It’s like if I think hard enough Santa will bring me what I want for Christmas .
If you have a million people praying for rain and you have 1/2 million praying that it doesn’t rain ,who wins out ? Better to learn out to take advantage of whatever kind of weather that comes .
There is a whole industry out there that peddles the “You can have anything you want if you visualize it hard enough” notion, and the people selling it ARE prospering. What nobody mentions is that they WEREN’T prospering before they started selling prosperity books, tapes, courses, and seminars. Some of them advocate “tithing to the source of your spiritual inspiration,” meaning THEM, so of course, they prosper, claiming positive thinking did it. I would call it unconscionable thinking. Historically, the concept is called New Thought, and there are a bunch of churches built upon it (all of so called magic is built upon it too). New Agers spout it incessantly, but I haven’t noticed too many of them who look prosperous and beautiful, and whose lives are without trouble. Those who can, do, those who can’t teach and make money. What a world.
Forgive the grammatical error. “This IS a bunch of churches . . .” not ARE.
There is a whole industry out there that peddles the “You can have anything you want if you visualize it hard enough” notion…
Isn’t that what “The Secret” phenomenon is all about?
Yep. And since when was it a secret? Its been a best-selling gimmick since the early 20th century, was tauted endlessly in the 80’s (it was literally the basis of the Yuppie movement), and now is making a ho hum comeback. Depok Chopra and Wayne Dyer have been preaching it for thirty years (or thereabouts). I bet the creator of “The Secret” was broke before starting to preach it. Scientists in particular take offense at claims that this practice is scientific or that its results are proven.
When it comes to New Age marketing, all one has to do is change the names, and add more drama, and boom, you have a best-selling “program.” We are talking about buyers who are, for the most part, very stupid or very superstitious, or both, all of whom think they are enlightened “old souls,” chosen by the latest God/Goddess/It/Alien Life Form.
“Isn’t that what “The Secret” phenomenon is all about?”
Exactly. I actually believe the messages you give yourself can make or break your success. But The Secret says positive thinking causes the universe to open up like a genie and hand you anything you want. What crap. The most the universe will give you is opportunity. That and a heck of a lot of hard work and sacrifice will give you what you want.
The Secret is being marketed to the same people who plan to win the lottery to fund their retirement. If they make stupid decisions and things happen because of it they blame the universe. And you don’t have to worry about genocide in Rwanda because the victim’s lack of positive thinking caused the universe to punish them. Complete rubbish.
Which is too bad because there are some good messages in The Secret. Just hard work and self determination are sadly overlooked.
If you have a million people praying for rain and you have 1/2 million praying that it doesn’t rain ,who wins out ?
Depends - if some of those people are Hopi, you better get the umbrella out. Telluride ski area in Colorado hires them, and man, does it work. Way higher than statistical probability.
It’s because they Hopi it works.
All goals start out as positive thoughts . It takes alot of will power and positive thinking to overcome forces that will drag you down . Every goal is usually achieved by hard work and right action . I just don’t get this concept of wishing for something and you get it just because you want it .
My father use to say that I could get anything I want if I’m willing to pay the price to get it .
These people that want to take the bus ride without paying the fare piss me off .
Maybe the Hopi have some connection with the rain gods and maybe the power of thought can bring something to humans for all i know ,but what about earning something ?
I don’t like to get things for free . I like to pay the price in effort . Call me strange but until someone proves to me that you can make matter appear by thought, I’m going to get things the good old fashion way .
Renters vs homeowners
As homeowners circle the wagons to prop prices up,
RE taxes up
Homeowner ins up
HOA fees up
Mtg reset interest up
Rental rates down
Renters might win this one
https://image.minyanville.com/assets/FCK/File/Stuff/ATT00004.txt
$570 mil for average pay. I obviously majored in the wrong field of study.
That’s great pay for underperformance.
*******
“The average compensation of the top 25 hedge-fund managers
rose 57 percent to $570 million and more than doubled from 2004. Those managers earned a combined $14 billion, about as much as Iceland’s gross domestic product. Still, average hedge-fund returns of 13 percent trailed the Standard & Poor’s 500 Index and MSCI World Index.”
Agreed.
Is it just me, or did the stock indexes just hit a wall?
Oh, I don’t doubt the market will “recover.”
But it sure is jumpy…
Got popcorn?
Neil
Existing sales down MOM and YOY, a new threshold. From the WSJ:
Home resales fell to a 6.12 million annual rate, a 8.4% decrease from February’s revised 6.68 million annual pace, the National Association of Realtors said Tuesday. February’s rate was originally estimated at 6.69 million.
The median home price was $217,000 in March, compared with $213,600 in February. The March price was 0.3% below $217,600 in March 2006. The 8.4% drop was the sharpest since 12.6% in January 1989. The NAR blamed bad winter weather.
“For the last couple of months we’ve been expecting a weather “hit” on home sales finalized in March,” NAR chief economist David Lereah said. He added that the subprime problems in the housing market might have hurt sales.
…
Inventories of homes fell 1.6% at the end of March to 3.75 million available for sale, which represented a 7.3-month supply at the current sales pace. There was a 6.8-month supply at the end of February, revised from a previously estimated 6.7 months.
Sales fell in all four regions of the U.S. Demand dropped 10.9% in the Midwest, 8.2% in the Northeast, 9.1% in the West, and 6.2% in the South.
APRIL is the cruelest month, swelling
listings into the dead land, mixing
sellers’ hopes with fear, keeping
buyers from falling.
But just think of all that pent-up demand when the “bad winter weather” turns to spring…
The weather was also the welcome culprit for the harvest number in the Soviet Union - either it was too dry and little grew or it was too wet and what had grown moulded away.
Are the new numbers the first to be influenced by the subprime mess?
One or two of the “amateurs” on this blog made predictions to that effect.
Queen: Under Pressure
http://www.youtube.com/watch?v=d-xVb1qsPCw
The median home price doesn’t mean anything, since the sale of a single expensive house in an area can jack it up. No wonder the NAR uses median prices, instead of average prices, or prices per square foot. And, of course, we know this figure will be revised downward within a few weeks when the NAR “discovers” some glitch in its computers. The NAR blames bad weather every month, though this winter has been one of the mildest on record, and snow, when it falls, is not bad winter weather, it’s normal winter weather. There was snow last year too, and during all the bubble years as well.
Does anyone in the Press keep tabs on the NAR’s tactics? The NAR pulls the same stunt month after month, and yet it seems reporters never catch on. The headlines tomorrow will be “Home Prices Up,” and a correction next week or next month will be hidden on page 20.
I think you’re confusing the median with the mean. The median is the point where half the homes in the sample set sold for more and half for less.
Thanks for the correction, but the median prices still doesn’t mean anything. The NAR also doesn’t indicate whether its reported sales are completed sales, or just contracted sales, and whether the people buying them can afford them or are using rigged financing. In my neighborhood, I see “pending” and “sold” signs all the time, that eventually disappear to be replaced with the original “for sale” signs, so the NAR can apparently spin anything any way it wants.
Agreed.
> the median prices still doesn’t mean anything
Its meaning is limited for the selling side of the housing market, because it is influenced by which segment of the market shows stronger sales, the upper or the lower. It does, however, tell us something about the buyers: What kind of money was the “typical” buyer willing to spend or allowed to spend by the lender?
Actually, average home price is more sensitive to the sale of a single expensive house in an area. Say we had 5 houses in an area that sold last month with prices of 100K, 160K, 250k, 300K, and 800K. The median home price is the one in the middle of this list, so 250K. The average is 322K. Now lets take the last price and adjust it down to say 500K. Our list of home prices is now 100K, 160K, 250K, 300K, and 500K. Our median stays the same at 250K, whereas our average has dropped to 262K. So, in our example, the median price was unaffected by the price of the most expensive house. That is why average price is not used.
So what your saying is… no math is used to figure the “median price” It’s just equal numbers of houses grouped above and below a certain number? It doesn’t matter what the most expensive or cheapest house is.
That explains how price can be manipulated, therefore why we haven’t seen big moves to the down side in median price reporting. Besides, who really checks these numbers out anyway? This wouldn’t be the first time the media reports bougus numbers.
March weather occurring in March? What are the odds!
How come when sales go up it is never blamed on all the nice weather we’ve been having?
Weather was unseasonably nice for a lot of the winter months in the DC area (and I guess a lot of the mid-Atlantic states?) ….. most of March and April have been kind of weak, but I recall unseasonably warm January and February weather.
first, i am a real estate agent. we exist because we haven’t been replaced yet; it’s not going to happen anytime soon. but crappy ones will go away, just like they always have when times get tough.
the agent who wrote that letter showed a lot of insight and patience, but they may not be right for you. brokerage is for sale of property at a point in time, nothing more. as an agent, i sometimes counsel my sellers to wait, less so for buyers. enough said.
i would suggest that you go directly to the listing agent, and submit a serious letter of intent at the price you desire to pay, no more, no less, as-is, subject to a 5 business day inspection, take it or leave it (you want to buy that house and live there, don’t you?) with evidence that shows you are financially capable to purchase the house. if you want it, get it, and then live with your decision.
i would also read up on markets, investor psychology and then think about how the concept of “home” throws it all for a loop.
Realtors exist in such large numbers because they were successful in creating a monopoly (the MLS). Americans pay by far the highest real estate commissions in the world.
And hasn’t the Department of Justice filed suit against the NAR? Doesn’t it relate to the MLS monopoly?
“i would suggest that you go directly to the listing agent, and submit a serious letter of intent at the price you desire to pay, no more, no less, as-is, subject to a 5 business day inspection, take it or leave it (you want to buy that house and live there, don’t you?) with evidence that shows you are financially capable to purchase the house. if you want it, get it, and then live with your decision.”
There is a tendency to roast realtors first and ask questions later on HBB but the above seems like fairly simple and practical advice for those of us who would like to play “low ball”. Thanks.
I’d extend the inspection period on that contingency. Make it 14 or more days, IMHO.
From Bloomberg, YOY down 11.3 pct:
April 24 (Bloomberg) — Sales of previously owned homes in the U.S. declined more than forecast in March to the lowest level in almost four years, delaying housing’s recovery from a slump that’s shown some signs of reaching bottom.
Purchases dropped 8.4 percent last month to an annual rate of 6.12 million, from 6.68 million in February, the National Association of Realtors said today in Washington. Sales fell 11.3 percent compared with a year earlier.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aesO8EJYxVUo&refer=home
“largest drop in almost 2 decades”
It looks like those annualized models are not getting the spring bounce they expected.
CNNFN chimes in:
http://money.cnn.com/2007/04/24/news/economy/home_sales/index.htm
“Home sales: Worst drop in 18 years
Sales pace much lower than forecasts, prices show year-over-year drop for eighth straight month.”
I am working/visiting the DC area this week. My mom and I drove through the Villages of Urbana, one of the newer housing developments around here. We drove through the townhouse section. There are some very, very nice-looking townhouses there. Brick walls, or what at least seem to be brick walls, garages, small yards. Maybe like, every 5th townhouse was up for sale. We picked up a sales flyer…asking price $459K for one of these townhouses. Whee.
Oh and we went out for dinner in Rockville, Maryland on Saturday night, only to find that the restaurant I really wanted to go to, an Italian steakhouse place, had been bought out for someone’s bar mitzvah. The whole, damned 300-seat-plus restaurant. The hostess (who also seemed somewhat appalled) explained to us that the place cost about $50,000 - $100,000 to rent out for the night.
I thought we were through with all of these excesses after the dot com era ended? I wonder where all of this extra money is coming from, anyway? HELOC’s?
Maybe the celebrants are truly wealthy. It does happen.
Sorry you missed out on the meal you were looking for. If you are still looking for someplace to eat in Rockville, may I suggest Mykonos Grill? It’s on Congressional Lane right off Rockville Pike just north of the shopping plaza with the Whole Foods. My parents loved it and they lived in Athens for a year before I was born. I like it too. I consider it my “neighborhood” standby for reasonable (not cheap) dining.
I personally hate the townhouse farms…all that space eaten up by cookie cutter crap, and just try to visit someone who lives in one of those places - the parking is insane. I’ve heard its most ly because the families that live in them insist on having more vehicles than they can park in their garages/assigned spaces so they fill up the visitors lots with they extra SUV’s.
First of all I was at that Bar Mitzvah and had a really good time.
Second, I grew up in the DC area and the only thing in Urbana was Peter Pan Restrauant (now the Crack Claw). That is a good 75-90 commute downtown DC.
holy crap on the Peter Pan reference…
My memory of that place, i was about 5-6 at the time the family drove out there for a nice meal… at that time my sister and i liked to sneak sugar packets from the table for a quick buzz…
what do i do? grab a sweet & low, proceed to suck it down and immediately start vomiting at the table.
Priceless memories.
*makes bomb dropping noise*
The sad part is I no longer feel the need to read the site in the past month, the evidence seems so overwhelmingly obviously now and the level of disagreement I received over the past 2 years has now become a sincere level of agreement.
What about agreement on government bailout? What about agreement about modernizing the FHA into a guarantee for subprime lending?
It’s not just about housing prices though. Does the credit shock turn off consumer spending also? Our economy could get tagged with a recession right as the meat of the resets hits… Do interest rates move up or down?
That unemployment rate seems juiced to really go up at this point. But depreciating house prices mean an immobile workforce. That could be a brutal double-whammy on the economy also. When house prices were always going up, it was easy to predict the future (”They’ll go back down.”) Now that it’s here, things get interesting.
I’m still hooked. But over the last two years the seems to be a pick up in whishing others bad luck or routing for bad things to happen.
Ladies and Gentelman this Housing Bust will effect us all! And not in a positive way.
On CNBC: Just saw a commercial for Museum Place, a highly touted high rise development in Chicago in what was supposed to be the next hot area of the city (South Loop). Wonder if its a signal of desperation, it can’t be cheap to buy that ad space.
It’s hard to tell. The company doing the “Museum” condos in the south loop has been quite successful. I had looked into buying a unit at one of their lower-priced buildings and ended up not going for it. Partly because they wanted about 15-20% down to sign the contract. I couldn’t let pretty much all my savings sit in their bank account for two years.
I figure they ended up keeping most flippers away - they still don’t have many listings in the MLS. Keep in mind that south loop inventory is huge and getting worse.
They are starting marketing on two new towers but your description doesn’t definitively say which one. They are doing site prep for Museum Park West - at Roosevelt and Indiana. That’s going to be a very successful building. The other is Museum Park Place 2 - down around 19th and Calumet. Museum Park Place 1 was more successful than they hoped. It always had a twin planned, but they got city approval two months ago to add ~8 floors to it. In my mind, they did two things that really set it apart. First, during construction of the first tower they built a pedestrian underpass under the St Charles Air Line, giving that [fairly isolated] neighborhood outstanding access to the lake. Second, they bought all the neighboring air rights and gave ownership to the condo association - the views will never be blocked.
This particular company got all the prime real estate in the south loop, and so far they’ve been flawless in execution. That doesn’t guarantee anything about these next two towers, but chances are they aren’t in trouble. I know I know, not what this blog wants to hear
From the NAR EHS release:
Inventories of homes fell 1.6% at the end of March to 3.75 million available for sale
I would imagine for-sale inventory falling from February to March is quite unusual.
–
I think that they seasonally adjust these numbers. But the supply went up from 6.8 to 7.3 months.
Jas
Sales are seasonally adjusted, inventories and prices are not.
Maybe ist just realistic, non distressed sellers who have realized that “Its NOT a good time to sell” who have removed their houses from the market. I have noticed in my neighborhood that there are very few houses for sale this year.
Yeah, I caught that too, and it made me very curious…all I can think is that incomplete construction that now won’t be completed was being counted previously.
Under water FBs cannot afford the realtor commission; as a result, they are migrating to alternative channels of property distribution including auction houses and FSBOs.
I’m seeing many more FSBO signs in Tucson.
No joke. Especially considering that every city in the US has reported an uptick in number of houses for sale from Feb to March. In April, the inventory trend is only accelerating - Seattle is now at almost 50% YoY.
This is merely another datapoint that the NAR’s data is worthless.
Interesting article in the AZ Republic this morning re long commutes. One guy drives from Gilbert to I-17 and Union Hills—that’s not a commute, that’s a career.
http://www.azcentral.com/arizonarepublic/arizonaliving/articles/0424commuter0424.html
Too bad he’s not making money during that drive.
florida data
south florida SFH down ~25% in sales but median prices are sticky…
apple to apple, my data, shows prices are down 10-15% and 2004 level or so.
http://media.living.net/releases/Mar%2007%20Sin%20Fam%20Ex.html
For what it’s worth, here’s my take on the 3/2007 sales figures…
* Total sales fell a sharp 8.4% to a seasonally adjusted annual pace of 6.12 million from 6.68 million in February. March’s sales rate was down 11.3% from the same month a year ago and the lowest since June 2003.
* Median home prices fell again – down 0.3% from March 2006. That’s the eighth month in a row that prices declined from a year ago, the longest such stretch on record.
* For-sale inventory remains the real bugaboo. The total number of homes for sale came in at 3.745 million units, down slightly (1.6%) from February but up a sharp 17% from the same month a year ago. On a months supply at current sales pace basis, inventories are running at 7.3 – just shy of the October cycle high (7.4)
No amount of lipstick can make this pig of a home sales report look pretty. Sales dropped sharply. Prices fell again. And inventories are closing in on the 14-year high set in late 2006. No doubt, crummy weather had an impact on the figures. But sales were poor in all regions, down 6.2% in the South, down 9.1% in the West, down 8.2% in the Northeast, and down 10.9% in the Midwest. That tells me a lot more is at work here – namely, that affordability is still poor, that speculators have left the building, and that tighter mortgage standards are starting to knock marginal buyers out of the market.
Supply is still the biggest problem in my book. We’re seeing three forces keep inventory levels high – and I doubt they’ll go away anytime soon:
1) The “March of the Re-Listers” – They’re the people who tried to sell last year and couldn’t. They pulled their homes from the market over the holidays, but now they’re putting them back on the MLS again to capture the seasonal upswing in activity we see every spring.
2) Lots of our nation’s homes are in “weak hands” – 40% of the homes sold at the tail end of the boom were bought as investments or second homes. Those owners are more likely than owner-occupants to try to sell and cut their losses when the market turns south.
3) Forced sales due to foreclosures — A company called RealtyTrac tracks monthly foreclosures – They surged 47% from a year ago to around 149,000 in March. That’s the highest reading yet for this series, which data goes back to January 2005. As mortgage defaults and foreclosures rise, more motivated sellers (banks, mortgage lenders, etc.) will dump the homes they’ve repossessed on the market.
Looking ahead, April could prove to be another weak month. The National Association of Home Builders index recently dropped to 33, leaving it just above the multi-year low of 30 set in September 2006. Also, the Mortgage Bankers Association’s purchase application index just slumped to a two-month low.
How sad for those sellers who, at the advice of their professionals, pulled their properties from the market over the winter so that they could benefit from the promised spring upswing.
Just posted on MSN:
Existing home sales tumble in March
http://www.msnbc.msn.com/id/18289082/
–
The Blame Game
How ’systematic inattention’ led to subprime fiasco
The San Francisco Chronicle reports that appraiser trade groups are saying inflated appraisals are at the heart of the subprime mortgage crisis. Click above to read more real estate news headlines from California and across the country:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/04/22/REGMTPCPHT1.DTL&hw=real+estate&sn=006&sc=200
None that have anything to sell dare to point to the high priests of the economic Temple – The Money Changers and their agents at the Federal Reserve. They started the ball rolling down the mountain.
Jas
End-user caveat emptor: Appraisal fraud can drastically inflate the comps…
—————————————————————————–
A house that had been sitting for months with no takers at $450,000, for example, might be relisted by the agent at $525,000.
Then, working with a cooperative appraiser who has promised to “hit the number,” and an unscrupulous mortgage broker who simply wants the commission, they “change the (loan) documentation to reflect the (artificially inflated) sales price.” The loans typically are for the full price of the house. The seller nets the price he or she had originally listed — $450,000 in this example — and the buyer gets a portion or all of the $75,000 inflated differential as cash at closing.
The wholesale lender purchasing the loan from the broker doesn’t look hard at the appraisal and funds the excessive loan amount none the wiser. Public records do not reflect the $75,000 slush in the transaction. The realty agents and loan brokers pocket their commissions; the buyer pockets the cash from the closing proceeds, makes loan payments for a while and then stops. Within months, the property is headed to foreclosure.
“It’s total fraud, of course,” said Crabtree, who is documenting 32 cases of alleged appraisal hanky-panky for state regulators and the FBI. “You can throw a dart at just about any large subprime lender and something like this (scheme) is going to stick.”
Yet some lenders are in denial that they’ve accepted grossly inflated appraisals. Crabtree said he contacted one major East Coast lender with the documented details of a cash back at closing scam that he submitted to state regulators. So far, the lender has not even returned phone calls, according to Crabtree.
To compound the problem beyond the individual foreclosures, the inflated selling prices of the homes involved remain “in the system” for use as comparables for valuations in the coming months.
That $525,000 recorded closing price on the house that wasn’t selling at $450,000, in other words, might now be available on the public records as a comp for overvaluing upcoming sales.
How to protect your home’s value as prices fall (and low ballers like Eastcoaster) from MarketWatch:
“..When there are a lot of foreclosures in a neighborhood that will put downward pressure on other homes. The banks will try to get foreclosures off their balance sheet as fast as they can, and they will be aggressive at pricing them,” said Celia Chen, director of housing economics at Moody’s Economy.com.
Even when priced below the competition, foreclosed homes can linger on the market. Kent thinks it could take up to four months to sell the foreclosed properties in his listing book, particularly those that appeal to “low-ballers” and “bottom-feeders” willing to wait in order to pressure lenders into taking just 50 cents to 75 cents on the dollar for the homes.
Although Moody’s Economy.com sees home prices overall declining through 2008 due to excessive inventory, individual owners can take steps to make their property more attractive, Chen said. She recommended home improvements such as fresh paint and landscaping to ward off the impacts of falling prices due to a great number of foreclosures in a neighborhood…”
http://tinyurl.com/yp2ptq
“For those homeowners fearing that the “low-ballers” and banks trying to unload foreclosed homes will sap the value of their own properties, Kent suggested that residents could band together to watch out for a property.
“They could try forming a little neighborhood watch where people watch over that house to make sure there’s no vandalism, no squatters trying to move in, and to avoid people from stealing the fixtures of the home,” he said.
Banks will board up houses that are vandalized or that people break into, Kent said. Making sure that doesn’t happen can keep banks from dumping problem homes at fire-sale prices, he said.”
To recap, not only will the homeowners have to pick up the slack from unpaid HOA fees but they now need to take care of the flopped REO’s so that their own homes don’t crater in value? Good luck with that program.
Housing Values Well Contained
http://www.minyanville.com/articles/index/a/12674
Finally, keep in mind that while a home equity loan amount might seem relatively small, it still is secured by your residence. “At the end of the day, the bank wants its money back and your home is the collateral,” says Hiles. “You could be forced to move out if you don’t repay the debt.”
http://biz.yahoo.com/brn/070423/9971.html?.v=1&.pf=personal-finance
ya think? still trying to pump the home ATM. whoops, home prices are dropping!
Q. How do you know the flippers are clogging the exit door in your local real estate market?
A. Look at what share of homes listed on the market were built pre-bubble versus post-bubble.
My Rancho Bernardo zip code (92127) has many homes of pre-1998 vintage, but very few of these are for sale. Out of 235 homes currently listed on the market on ziprealty.com, about 24 or so are of pre-1998 vintage, with the vast majority showing list prices north of $800,000 (median list price is currently at $1,395,000). By contrast, last month’s median used SFR sale price in our zip code was only $850,000 according to DataQuick — a $545,000 gap between median listed and median sold!
Why would so many of the homes on the market be up for sale in practically-new condition if many of them were not bought as flips? And good luck to the flippers trying to cash out in the $850K+ range — it looks like there is a severe shortage of buyers willing to consume at that rarefied price level.
“with the vast majority showing list prices north of $800,000″
Clarification: I mean the vast majority of the 235 homes currently on the market.
All but about two homes priced over $800K are of post-1998 vintage.
Interesting points. I will remember this when I am out looking at homes. Thanks.
Subprime bailouts: How they work
There’s some state-sponsored help on the way for subprime borrowers.
By Les Christie, CNNMoney.com staff writer
April 24 2007: 9:39 AM EDT
NEW YORK (CNNMoney.com) — “They got themselves into this mess and I don’t want my tax dollars used to get them out of it.” That’s the attitude of many when it comes to bailing out subprime borrowers from bad loans.
Still, many programs to help those facing foreclosure are being launched, with the aim of moving borrowers out of high-interest, variable-rate loans and into lower-rate, fixed ones.
http://money.cnn.com/2007/04/24/real_estate/bailout_plans_how_they_work/
Your tax dollars at work under a Demo-rat-controlled Congress…
—————————————————————————
EDITORIALS &
OPINION
Subprime Silliness
INVESTOR’S BUSINESS DAILY
Posted 4/23/2007
Lending: Meet the newest members of the victim class — folks who bought homes they couldn’t afford, mostly with other people’s money. A bailout would encourage more of the same.
What do you say to someone who, essentially, got something for nothing and is now on the verge of losing it? Too bad, but maybe you’ve learned a lesson? That sounds about right to us. Anything but “help is on the way.”
But some in Congress, such as Sen. Charles Schumer, the New York Democrat, can’t resist the urge to throw money at those shaky borrowers. Schumer, along with fellow Sens. Robert Menendez of New Jersey and Sherrod Brown of Ohio, earlier this month proposed directing federal funds to nonprofit groups that would use the money to lighten homeowners’ mortgage burdens.
http://www.investors.com/editorial/editorialcontent.asp?secid=1501&status=article&id=262221397198594
GM’s subprime woes
Automaker’s mortgage operation, ResCap, could weigh down GMAC for the rest of the year.
FORTUNE Magazine
By Katie Benner, Fortune reporter
April 24 2007: 6:57 AM EDT
(Fortune Magazine) — In 2006 General Motors appeared to be back from the dead, thanks in part to selling 51% of its best-performing division–GMAC–to buyout firm Cerberus Capital Management. But instead of printing money, the finance company is now minting worries because of its mortgage operation Residential Capital (ResCap), a lender whose subprime mortgages make up a fifth of its revenues.
At GMAC’s investor conference last month, CEO Eric Feldstein assured attendees that subprime lending is being slashed, but he also acknowledged that ResCap could weigh down all of GMAC for the rest of the year. This admission marked a major shift from 2005, when ResCap accounted for nearly half of GMAC’s net income.
But like other subprime lenders, ResCap saw its 2006 earnings plummet–falling more than $800 million, to $182 million. The company posted a fourth-quarter loss of $651 million, compared with earnings of $118 million the year before.
That is bad news for GM (Charts, Fortune 500) because the automaker was counting on a percentage of GMAC’s earnings to help fuel a turnaround, but it is worse news for Cerberus. As GMAC’s chief financial officer, Sanjiv Khattri, told investors, “Cerberus has bet its franchise on [GMAC's] success”–and that success depends largely on better credit ratings for GMAC (and ResCap) corporate bonds.
http://money.cnn.com/magazines/fortune/fortune_archive/2007/04/30/8405393/?postversion=2007042406
Good thing homebuilder stocks get such great plunge protection…
——————————————————————————-
Existing home-sales decline hits builder stocks
Full week for company earnings, housing data opens with a thud
By John Spence, MarketWatch
Last Update: 1:48 PM ET Apr 24, 2007
BOSTON (MarketWatch) — A busy week for home-builder stocks has gotten off to an uninspiring start with the sector pulling back on a March plunge in existing-home sales and disappointing corporate earnings.
This week’s slide comes after the group had traded higher through much of April, helped partly by easing inflation concerns and a report that housing starts and building permits both rose higher than expected in March.
Still, the Dow Jones U.S. Home Construction Index (DJ US Home Construction Index, Last: 633.02-1.97-0.31% 2:30pm 04/24/2007), a home-builder proxy, was off more than 13% so far this year through Monday’s close. A sluggish opening to the spring home-selling season and the subprime-mortgage shakeout have weighed on the stocks. The housing market won’t be able to rebound significantly until it makes its way through an inventory glut of unsold homes, economists say.
The housing market won’t be able to make its way through an inventory glut of unsold homes until prices fall to affordable levels, I say.
Most of the sector was in retreat Tuesday after a Realtors’ report said that existing-home sales fell 8.4% in March to their lowest seasonally adjusted annual rate in almost four years. See Economic Report.
http://www.marketwatch.com/news/story/home-builders-busy-week-gets/story.aspx?guid=%7BA4CD62C3%2D5CCF%2D46B1%2DB673%2D77F4C33C4182%7D
Housing Bust Meets the Equity Blues
By Gene Sperling
April 19 (Bloomberg) — While the subprime and exotic mortgage fallout has been grabbing recent housing headlines, another potential story for 2007 may be in the wings: as Americans withdraw less equity from their homes will it mean a big or little hit for growth and consumer spending?
The connection between housing and consumption isn’t a new story. Economists have long assumed that there is a so-called wealth effect from rising home prices: for each dollar of housing wealth accumulated, people spend anywhere from 4 cents (as conventional economic models predict) to 9 cents, as Johns Hopkins economist Christopher Carroll found in a December study.
Yet, the dramatic expansion of mortgage-equity withdrawal, or MEW, by homeowners over the last decade has raised new and less-settled issues over whether housing wealth now has a greater impact on consumption that ever before. Many — me included — have likened home-equity withdrawals to automated-teller machines, with owners literally taking money out of their houses to bolster consumption.
Goldman Sachs Group Inc. has found that consumers spend about 50 cents for each dollar of home-equity extraction and cash-out refinancing. The International Monetary Fund, using a different methodology, has found that 18 cents are spent per dollar of home-equity withdrawal.
http://www.bloomberg.com/apps/news?pid=20601039&sid=aOrVXpIJP.Yw&refer=home
REAL ESTATE
Protecting your value as foreclosures rise
Tips to buffer your home’s worth if you’re near an empty property
By Ruth Mantell, MarketWatch
Last Update: 7:43 PM ET Apr 23, 2007
WASHINGTON (MarketWatch) — Gary Kent has more foreclosed properties to sell than ever before during his 23 years in the real estate business.
The San Diego-based realty agent currently represents about 100 homes for sale, 85 of which are foreclosures. A year ago, Kent represented about 20 homes for sale with only a couple of foreclosures among them.
“I feel sorry for the people who lost their homes, but I’m probably going to have to best year I’ve ever had,” Kent said.
While all those foreclosed homes mean opportunity for Kent, they spell trouble for homeowners in the neighborhoods in which they are located. In addition to the potential for dragging down the values of surrounding homes as lenders try to unload, vacant foreclosures also present an inviting target for vandals and squatters.
“When there are a lot of foreclosures in a neighborhood that will put downward pressure on other homes. The banks will try to get foreclosures off their balance sheet as fast as they can, and they will be aggressive at pricing them,” said Celia Chen, director of housing economics at Moody’s Economy.com.
Even when priced below the competition, foreclosed homes can linger on the market. Kent thinks it could take up to four months to sell the foreclosed properties in his listing book, particularly those that appeal to “low-ballers” and “bottom-feeders” willing to wait in order to pressure lenders into taking just 50 cents to 75 cents on the dollar for the homes.
Although Moody’s Economy.com sees home prices overall declining through 2008 due to excessive inventory, individual owners can take steps to make their property more attractive, Chen said. She recommended home improvements such as fresh paint and landscaping to ward off the impacts of falling prices due to a great number of foreclosures in a neighborhood.
http://www.marketwatch.com/news/story/how-protect-your-homes-value/story.aspx?guid=%7B5DEB76D2%2D98D1%2D4643%2DBDB7%2D2F64C09145EF%7D
Even when priced below the competition, foreclosed homes can linger on the market. Kent thinks it could take up to four months to sell the foreclosed properties in his listing book, particularly those that appeal to “low-ballers” and “bottom-feeders” willing to wait in order to pressure lenders into taking just 50 cents to 75 cents on the dollar for the homes.
Should we infer that this San Diego agent with 23 years of experience is anticipating future comps 25 to 50 percent below current levels? I, for one, am willing to wait for that.
If I had a vacant, foreclosed house next to me, I believe I’d talk to the neighbor on the other side, about mowing (with permission) the vacant house’s yard. Some foreclosers (particularly if there is an IRS lien, it seems) let these places go to seed, even though it might seem to be against their interests. I saw a bad example of this in a very upscale neighborhood in the Orlando area. Didn’t seem to occur to the neighbors to offer to keep just a bit of lipstick on it, so it became an increasingly bad eyesore, month after month.
(talking to the neighbor about splitting the work or the cost)
Ok, wtf is going on here:
6231 Newbury Dr, Huntington Beach, CA 92647
Sale History
04/11/2007: $1,002,000
07/17/2001: $520,000
Residence: Single family
Bedrooms: 4
Bathrooms: 2.5
Sq ft: 2,114
Lot size: 7,640 sq ft / 0.18 acres
Year built: 1974
A million freaking dollars on March 11, 2007!!! Who is lending (giving away) that kind of money? Anyone with title search access please let me know what/who is financing that!
There goes the NAR once again, blaming bad housing data on bad weather. If weather is such a big deal for home sales, how come Florida condo investors were out and about chasing the tailwinds of 2005 hurricanes?
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Housing data raise fears for US economy
By Daniel Pimlott in New York
Published: April 24 2007 17:15 | Last updated: April 24 2007 17:15
Sales of previously-owned homes in the US plunged by the most in 18 years last month, and consumer confidence also fell, in the latest warning signs for the state of the economy.
Existing home sales fell 8.4 per cent to an annualised rate of 6.12m units. Economists had been expecting a slip to a 6.45m unit rate from the 6.69m originally reported for February. The drop was the worst since 1989.
The National Association of Realtors, which compiles the data, blamed poor weather that kept buyers at home and said the crisis in subprime lending might also be responsible.
”We … may be seeing some losses as a result of the subprime fallout,” said David Lereah, chief economist for NAR.
http://www.ft.com/cms/s/6bf8d730-f27d-11db-a454-000b5df10621.html
The Weather in this Book
Mark Twain
No weather will be found in this book. This is an attempt to pull a book through without weather. It being the first attempt of the kind in fictitious literature, it may prove a failure, but it seemed worth the while of some dare-devil person to try it, and the author was in just the mood.
http://www.centerforbookculture.org/context/no7/twain.html
this is a ziprealty property description for a 2/2 995sf condo in alameda, CA, near SF:
” Sold property to seller years ago refi ed and have to sell sweat equity call lets make a deal”
this kind of home description is new in this segment. certainly a portent of things to come.
Asian investors are underwhelmed by U.S. plunge protection smoke and mirrors…
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ASIA MARKETS
Asian shares weaker after U.S. data; Sony down
By Chris Oliver, MarketWatch
Last Update: 12:30 AM ET Apr 25, 2007
Updating an earlier version that inaccurately reported that markets in Australia and New Zealand were open Wednesday.
HONG KONG (MarketWatch) — Asian stocks drifted lower Wednesday, led by losses in South Korean and Japanese markets as investors sold Sony Corp. and other export-related shares after declines in U.S. housing sales and consumer-confidence raised fresh concerns over the outlook for the region’s most important export market.
Among exporters, Sony shares were down 1.9%, Matsushita Electric fell 2.1% and South Korea’s Samsung Electronics was down 0.9%.
Honda Motor Co. shares slipped 2% ahead of earnings results due later in the day.
The Nikkei shed as much as 0.9% at 17,298.62 in afternoon trading, while the broader Topix South index fell 0.9% to 1,691.62.
Korea’s Kospi index was off 0.7%, Taiwan’s Weighted Price Index fell 0.4% and China’s Shanghai Composite Index was down 0.7%.
“Japan, South Korea and Taiwan, which are very much export-oriented, are weaker after the (U.S.) consumer-confidence number fell and housing number was down,” said Andrew Sullivan, head of sales trading at Daiwa Securities. “People don’t want to sell the market, they are invested, but they are not overweight.”
http://www.marketwatch.com/news/story/asian-shares-weaker-after-us/story.aspx?guid=%7B91F0AC64%2DCEC8%2D4F63%2D8AE5%2DC7BD9ACCCF6F%7D
In case you ever wondered why Japan’s economy has struggled…..here’s your answer…….
http://tylerliving.blogspot.com/