Bits Bucket And Craigslist Finds For May 1, 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
Location:Northern Arizona, United States
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ValueLine Index, Median of Estimated P/E Ratios
compare this to the daily “cheap market” spin/talk
Deficit Attention Syndrome / Contrary Investor
http://immobilienblasen.blogspot.com/
Understanding the PPT:
“We’re going to leave you with a quote that we first posted last year on our subscriber site and in our January open access monthly discussion. We suggest that in the clarity of hindsight, it now takes on much more meaning and gravity. It’s a quote from a Fortune Magazine interview with Treasury Secy. Hank Paulson from last November. As we suggested when we first posted this, LISTEN CAREFULLY to what Paulson is saying. The editorial inserts (ed.) are ours.
Fortune: Aren’t you concerned that GDP growth dropped to 1.6% in the latest quarter? That’s kind of anemic, and we’ve seen a downturn in the housing market. Convince us we’re not going to have a recession next year.
Paulson: “I can’t convince you. But as I looked at the third quarter, I felt good because I saw a major correction in the housing market, and I knew that was going to take more than one percentage point off GDP. And then I’m looking at the rest of the economy - strong corporate profits (ed. this is now slowing) and investment (ed. slowing also), good growth outside the U.S. (ed. still true), strength in the construction sector away from housing (ed. this is now slowing), and then an equity market that has gone up and added $1 trillion in value.
I know how much people care about housing. But I would be quite hopeful that through 401(k) plans, pension plans, and elsewhere that the average American is feeling an uplift from the appreciation of the equity market that would be very offsetting to any potential decline in housing.”
As we’ve suggested many a time, we’re an asset inflation dependent nation. From stock bubble to housing bubble, and now back to potential stock bubble? What else could Paulson be referring to in his quote? Although you don’t need us to tell you, directly from the horse’s mouth, no? Do yourself a favor and savor the moment. After all, how often do you get a rare glimpse of truth on the Street? Ignore Paulson’s comments at your own investment peril.”
http://www.contraryinvestor.com/mo.htm
“But I would be quite hopeful that through 401(k) plans, pension plans, and elsewhere that the average American is feeling an uplift”
How many people do you know that either cut back drastically, or stopped altogether, putting into their retirement accounts. There are going to be a lot of double-losers in this real estate game. It’s nice that he chose to ignore this inconvenient little truth.
Pension plans? What are those? Is Paulson flashing back to the 1960s?
He’s probably thinking of government employees.
I remember when I was a kid that it was much better to work for a Fortune 500 company than the gov’t. The tables have definitely turned. What’s especially interesting is that the government employees don’t have a clue of how cutthroat things have become in the private sector. When I tell them that I don’t have a pension where I work they always say: “But you work at XYZ Corp, that can’t be true”.
I work for the goverment and I know exactly how bad it is out there. That’s why I changed jobs.
Coming from the private sector and knowing what working hard means, I get treated like a god here. Still, our pensions are still a shadow of what people got who started working for the gov back in the 60s and 70s. It’s the sad sacks that have always worked for the state and are 5 yrs away from retirement that had it sweet.
gwynster, I hear you. I turn the lights on in the morning and off in the evening. My co-workers, mostly career gov employees, think I’m insane. Just doing what I did in the private sector.
“But I would be quite hopeful that through 401(k) plans, pension plans, and elsewhere that the average American is feeling an uplift from the appreciation of the equity market that would be very offsetting to any potential decline in housing.”
Good thing the stock market always goes up. But too bad the stock market wealth is far more concentrated into the hands of the top 1/2 % of the US wealth distribution. Greenwich’s and Manhattan’s high end housing may be saved by ever-rising stock market valuations, but Main Street’s housing market will not.
“of the top 1/2 % of the US wealth distribution” (than housing market wealth is…)
Wall St wealth, bonus for each player of all this created printed money will turn into the biggest scam in history,a thousands Enrons comming undone at the touch of a “sell” switch.
In reality though, it’s only important that Greenwich and Manhattan’s high end housing is saved. I’m sure for the likes of Paulson, the rest of us a pretty much surplus to requirement anyway, and therefore not that important.
Poor Paulson…
Has a tony house in drought central, Palm Beach.
Any departing message for David Lereah?
WASHINGTON, April 30 (Reuters) - The economist who prodded investors into the U.S. housing boom and has been skewered by bloggers during the bust is leaving a top real estate trade association, the group said Monday.
David Lereah, the author of ‘Are You Missing the Real Estate Boom?’, will leave the the National Association of Realtors’ by the middle of next month after serving as the head economist for seven years, a spokesman said.
http://www.reuters.com/article/bondsNews/idUSN3045809720070430
“David has been an expert in the field, is widely respected and has been an excellent spokesman for NAR,” Salvant said.
This guy should get his a$$ kicked just for muttering such words. We might call this thing the REIC but I think they much more closely resemble the old Soviet Union. Stalin would have been proud of these losers and their ability to disregard facts. I hate them all. Good morning, everybody.
NYCB:
Sounds like just another Idiot Salvant, in a world of idiot savants…
Take out the word Salvant and your statement makes sense
how many RE rental sites are there on the net ?
10 , 20 ?
Residents of the city of angles and baghdad by the bay…
A cautionary tale from a frustrated Floridian, in the Sun-Sentinel.
“Why didn’t water restrictions take place 6 or more months ago??? Why did they wait so long to discover we had a problem? Some management here! Someone should be held responsible for their negligence!”
Keep in mind, that what’s happening in F el lay, will happen to you, in about 6 months~
off topic, but did you happen to notice how the bridge was progressing in black canyon?
When I was there last July, they had poured the Nevada side concrete buttress and strung a cable across the river.
thanks
In September, strong winds took down one of 4 massive cranes, followed by the 3 others, thousands of tons of metal fell 800 feet into the Colorado River, causing it to be closed down and drained, for 3 months…
In theory, it was supposed to be done by 2008, and now they are talking 2011.
The Asian company that won the bid for the job, was around 35% below competition Americano, and a friend who is a river guide told me, “they are strictly a non-profit orrganization” on this endeavor…
TAMPA - Condos For Sale. The loud signs flaunted from street corners across the Bay area are meant to grab the attention of potential buyers.
http://www.tbo.com/news/nationworld/MGB44MHS51F.html
“Although the trend squeezed some renters out of apartments a few years ago, it’s helping them now. Converted condos for rent are plentiful, leaving renters in a good position to negotiate a deal.”
This is great. Nothing will scare owners more than stories of renters making out like bandits. This will drive fear into the hearts of the FBs.
If you thought Tampa was bad, meet Brandon. Brandon is a big suburb of Tampa to the east, full of crime, rednecks and condos. If you want to get shot, car jacked or a victim of DUI, drive over to Brandon.
All those condos they built there… yep, great idea that thar.
I’m about to be fired by a second realtor.
The first one, through whom I made three lowball offers, claimed that I was wasting her time. Actually, I believe that I was scaring her (she bought four condos in 2005, or so tax records show).
Realtor number two is frustrated with me for waiting too much. I found a house priced 20% below other similar homes in the area, and, apparently, I’m a fool to not bid at list.
Your best interest is not in their best interest. They are just reminding you of this fact.
Realtors are over paid unprofessionals - stupid or brainwashed.
Right now, if realtors win, you lose.
go direct- wait till 2 days befor a listing expires and then play
LOW BALL
Oh you dirty bastard! I love it! You may have to wait 90 days after the contract expires, though, depending on the circumstances. I’m sure other RE experts will expound.
No i think the strategy is not to screw the listing agent out of a commission (which is a different good strategy) but rather to use the listing agent to put pressure on the FB to accept the low ball offer when he only has 2 days left to sell the home.
Most owners not related to the realtor will dump them after the listing expires (its the realtors fault it wont sell !) and so the listing agent will try to scare them into ‘this might be the best offer youll ever get’ type of talk. Maybe they will email a link to here!
Although upside down FB’s are useless to deal with its the bank making the call on the offer. Make sure you know how much they owe on the house before you make an offer. Any realtor can tell you this.
Is this the only time that the listing agent is “on the buyer’s side” ?
I’ve been going directly to the listing agent and making offers. I also remind them that they are required to present it. What passes for a buyers agent in CA is crap. It’s asking “please game me with the old good cop/ bad cop ploy” which is almost fun as long as you see it coming.
I’ll have to do a little research. Checking the listing dates is genius and not a little bit evil. I like it.
don’t lose heart..come back in the winter w/vengeance…
To heck with losing heart, this is good sport. Nothing is more gratifying than pissing off a realtor. I was in Maui last week and I did not feel like my vacation was complete until I pissed off a local realtor. Actually, pissed off is understated. I flew home with a smile on my mug.
Well? Let’s hear the story
This sounds like a good story… do tell.
I wouldn’t have blamed them for firing you in 2005. But I’ll bet one of them calls you back within the next couple of months.
Who cares?
LOL exactly ex NV
Southfl…
I am here in Port Charlotte…If you are not in a rush just hang out. On my street alone are 4 foreclosures. 1 was foreclosed 15 months ago. It has not been put on the market yet. A appraiser i know mentioned that only a handful of REO have been put on the market as of this month. It will be a bloodbath in Charlotte county once even a handful of REO hit the maket. Oh yeah..there are only NINE houses on my street…
Chris
P.S. My neighbors house has been for sale for 18 months. Started at 279k,He missed the high side and is priced at 169 now with not a single showing at all !!! I have no idea how far prices will fall…
That’s puzzling to me. Why would the bank/mortgage holder want to carry a house indefinitely? They have to pay the taxes, and the risk of the house being stripped is significant. Do they really expect a near-term turnaround?
Anyone have any insight on this?
If the CEO/manager is acting as a long-term owner, they’d take the hit and move on. If, as so many are, they are managing for the next quarter or two’s earnings for their obscene pay packages, perks, and stock options then denial of unpleasant reality is the main goal. So many people are in the latter mindset and thus they kick the can down the road, a la Fannie, Freddie and others. Denial is not just the province of the FB’s.
By the way, that’s another reason to watch free cash flow and growth in receivables instead of just reported earnings. Many times you’ll get hints of trouble there first, kind of like the vendor-financing schemes of many firms during the late, great internet bubble.
john…
i think you hit the nail squarely on the head. i’m seeing the same thing here in the sfv area of l.a. there are plenty of foreclosures (and growing) in my area that remain to be marketed. more ponzi scheme i guess. there will come a point when they have to be moved off the banks books….that’s when it’s going to start getting interesting.
jmf
This from the New York Times.
Accounting Said to Hide Lender Losses
“’The thing about gain on sale accounting is that you can create a machine that just manufactures earnings out of thin air,’ said Richard Benson, an expert on securitization and president of the Specialty Finance Group, a financial broker.”
Duh, here’s the link.
http://www.nytimes.com/2007/05/01/business/01account.html?_r=1&oref=slogin&pagewanted=print
Banks don’t like doing onezzz twozzz when they know more are in the pipeline…They will wait until the bulk of the REO’s are in place, form a liqudation committee that is monitored by the Fed’s and blow them out…The fact that they are not on the market yet is not a good sign of things to come IMO….
could this be one way the feds can keep the market propped up? who forces banks to unload their reo’s? more foreclosures off them market, leads to higher rents…
Any company doing this may not be around much longer. Even though it hides losses (in an enron kind of way) this increases losses down the road due to long holding time on the foreclosure. Especailly considering vandalism/winterization issues.
But it seems like many of these companies are throwaway companies funded by wall street anyway. They generate profit in the short term and when the fold they absorb all the legal liability and screw lots of creditors in the end game of bankruptcy. Brillant!
I’m talking abou the subprimers here mostly and any other sector about to implode. Probably its builders. Who wants to be a builder during the housepocalypse with no profit possible and the only reason to stay afloat is to be a lawsuit target? I would shut her down in a spectacular bankruptcy if I was Hovanian, lennar, etc. Its the best ‘out’ they have. Then re-emerge in a year as a new entity (with same employees!) but no debt or lawsuit worry.
banks don’t want to take a hit. all they have to do is pay the taxes and keep the temp above 55 degrees, which is a hell of a lot less than selling at a $100k loss. they’d rather have a non-performing asset than have their books f’ed.
the only homes worth looking at are those that have minimal mortgages. you can forget dealing with the banks, they will not take less than what is owed on the house.
“…they will not take less than what is owed on the house.”
Yet.
As best I recall, it played out the same way during the S&L crash — the S&Ls held out and held out and then folded big-time.
Thats interesting. I just fired my agent, because she said I was wasting her time and the sellers time! It may be better to go it alone as a buyer. These may have some advantages. First, the seller’s agent might contribute some of the commission to get the house sold. That can happen, especially if the seller’s agent does not have to share the 5 or 6% with another agent.
THe only hassle is that you have to call the seller’s agents yourself, but then that can’t be more of a hassle than dealing with some-one who thinks that your offers are a waste of time.
Just a thought Mick;….By representing you & the seller, the agent becomes a dual agent which, IMO, is Impossible…Can’t be a judiciary to both parties….It exposes the Agent to tremendous liability potential and most “professional” agents won’t do it…I guess the good news for a buyer that’s attempting to do this is that most agents are not professional so there greed gets in the way of prudent ethical conduct so I say, go for it…If you find a agent that won’t do it, its probably one of those professionals…
Sorry;…Fiduciary not Judiciary…First cup of MoJo has not kicked in yet….
Of course they’ll do it. They are required to disclose to the seller that they are representing both though. Easy as pie. The agent is ALWAYS acting in the best interest of the seller…even if they are a so-called buyers agent. Keep that in mind. The higher the sales price, the higher the commission.
The higher the sales price, the higher the commission. ??
Not after deducting litigation expenses…..
DAMMIT, JUST DO AS YOU’RE TOLD! THESE PEOPLE ARE HIGHly TRAINED EXPERTS!
Why are you using a realtor in the first place? If you know what you want, deal directly with the seller’s agents. You might get more leverage, anyways — some realtors getting a 6% cut might be inclined to kick in a couple points to make a deal work.
Even better — track the properties you are interested in, let them expire, and contact the owner directly — and your lowball offer without the 6% commission will be considerably more attractive.
Look — a realtor is not well-equipped, nor motivated, to squire you around looking at a lot of properties if they perceive little of a payoff. So do yourself — and them — a favor by doing it yourself. It doesn’t sound like you need their help, honestly.
Trying to get an unwilling or uninterested realtor to go along with your plan is like trying to teach a kid a sport they are not interested in — a lose-lose situation for both of you.
And, finally, I don’t understand why you would want to work with folks who’s opinion of the market is so different from yours in the first place. Maybe you could find a like-minded realtor by laying out your strategy in the local craigslist, and asking realtors who were happy to work your system contact you.
I know this may all seem like more work, but it will be more productive for you in the long run.
I’ve also discovered realtors and realtresses become impatient when you don’t play the game according to their rules.
Are you in a big hurry to buy a house? It seems like FLA is quickly imploding, so maybe you should wait a little while longer , then your lowball offers won’t seem so unreasonable to the realtorettes.
First off, and most importantly, why on Gods green earth are you shopping for a home right now?! (unless of course you’re objective is to piss off as many realtors as you can. In that case, carry on.)
Secondly, when the time is right, just keep getting fired until you find a realtor one who is as ravenous as you are about kicking these greedy FB’s when they’re down as you are. They exist, it just takes a little looking. It might help by being straightfoward from the get-got. You might start by telling your potential realtor; “I’m looking to give someone the reeming of a lifetime - are you in?” That should help narrow it down.
Boy, you can tell I’ve been on vacation. That post is a grammatical nightmare - my bad.
“First off, and most importantly, why on Gods green earth are you shopping for a home right now?! (unless of course you’re objective is to piss off as many realtors as you can. In that case, carry on.)”
I’ll admit that it has been incredibly fun to frustrate realtors. I have some greast stories. I’ll look through my inbox and post the “dear John” letter from one of them.
My approach, which may not work, is to get 08 prices today, if that is possible. I look for houses listed 20% below the neighbors, discard from that list any houses bought high or with HELOC’s, then bid 30-40% below the laready 20% below list. This amounts to a 50%+ reduction, offered to people who can afford to take it.
This is not possible. If you get 08 prices today then in 08 prices will be at 09 levels. See? Just wait wait wait.
Owning is not pleasant when 6 months after you buy the new neighbors are bragging about paying 50k less than you. Or 150k less if you are in CA/NY/other.
Instead of buying right now just take 50k and set it on fire. Then in 2 years you will be better off than if you had bought - no albatross home with high fixed expenses. And in 2 years you can buy a better home cheaper and still have good credit.
“This is not possible. If you get 08 prices today then in 08 prices will be at 09 levels. See? Just wait wait wait.”
I’ll bite.
My “strategy” is likely doomed to failure (i.e., won’t lead to buying a house at the low) because most sellers aren’t prepared to accept the offers. But given that these offers are 50%+ down from the current market, which is itself down far more than the 5% reported, it doesn’t seem that far off to me.
I do read and comprehend this blog, after all.
If you have to buy then I guess you have to buy, but a prevailing point made on this blog and similar ones is that if you are willing to forgo the privelege of holding a title– then economically you are much better off renting, even at ‘08 prices, and quite possibly at ‘12 prices, depending on how long this thing stretches out. You just simply end up with a whole lot more money at the end of the month even with any equity built and even with any tax deductions.
Like I said, go ahead and buy if that is your true wish despite the exhorbitant markup of holding a title, but just make sure you’ve read patrick.net first.
S FL renter-
Please keep doing what you’re doing. You are priming the pump by getting realtors and sellers ready for what’s coming their way.
I totally applaud your hard work and activities on behalf of us all.
And I hope you’re rewarded with a great house at 50-60 or even 70% off for your trouble!
This is really good karma for you. Thanks.
Goodbye DL. Time to say goodbye - Sarah Brightman and Andrea Bocelli.
http://www.youtube.com/watch?v=BLHq7rgHOLk
He is blind … like DL’s predictions
She is somewhat large … fat lady singing
Both are singing Time to say goodbye … Time2Bye
I was hanging out at a friend’s 1680 sq. ft.,1.5 bath, 3 bedroom house on Saturday and we got to talking about his mortgage and his property taxes. He mentioned that his property taxes will continue to rise, and I asked, “What if the value of your house goes down?” He said that home prices generally only go up.
He and his wife bought the place for $720,000 in February 2005. He said if there were to try to sell it today, they’d only break even. I kept my mouth shut, thinking, “Dude, you have no idea what’s going on right now.”
$720,000 for a 1680 square foot house? Is the land underneath paved with gold? This must be California.
Arlington, MA. Just outside Boston.
I live in Boston. This guy is so hosed it isn’t funny. Right now you can get the same size home in my neighborhood for about HALF that number. A neighbor just sold a similar home for $400k….after a year and a half on the market and cutting the price over $100k.
Arlington is “nicer” than my neighborhood but it ain’t Wellesley either. Dan’s friend is toasty.
Holy cr@p - I lived in Arlington for a while and don’t remember ANY place in that town worth $428/sqft. Which part of Arlington is this? Unbelievable.
About 10 minutes from Arlington Center. It’s a nice area–near Spy Pond. But, of course a home that size is not worth almost three-quarters of a million. Arlington is the quintessential middle class community, but nothing more. It has Nice, but not spectacular, homes. It has good, but not great, schools.
Thx Dan. I am familiar with those neighborhoods near Spy Pond. I used to live right near town Center on Broadway. If your friend’s purchase price is well within the distribution for early 2005, then it’s going to be a huge lesson to buyers of that period, because there’s no way in h3ll those houses are worth $400+/sqft. Arlington is not Lexington or Acton or Concord. Solid middle class town, like you said, and in for a massive loss of paper equity.
“He and his wife bought the place for $720,000 in February 2005.”
A quick napkin calc: Average 30/yr fixed PITI is roughly $800.00/month per $100k, so your friend needs to put out $5k+/month assuming a down payment. No sweat, right?
His mortgage is actually around 2500. He accomplished that in two ways: He had lived in Evanston, IL, and made a nice profit after he sold his house and moved here. He also has an ARM of some kind. I think it’s an Alt-A.
You know that when a buyer with tons of equity still needa an ARM that things are just totally out of whack.
Before he signed the papers, someone needed to tear his arm off and beat him over the head with it.
So his equity likely will evaporate AND he’ll probably end up with a higher interest rate than he had in Evanston. Smooth move.
If by “generally” he means the last 15 years preceeding 2005 then he is right, but of course what really matters is the next 15 years.
We didn’t just build crappyshacks that aren’t worth a tinker’s dam, in country…
An excerpt from The New York Times about our methodolgy in Iraq:
The United States has previously admitted, sometimes under pressure from federal inspectors, that some of its reconstruction projects have been abandoned, delayed or poorly constructed. But this is the first time inspectors have found that projects officially declared a success — in some cases, as little as six months before the latest inspections — were no longer working properly.
It must be hard to keep up construction standards when people might be shooting at you and an IED might go off at any moment as you drive to the construction site.
Here’s another excerpt, from the edge of the abyss, that is Iraq:
“At the airport, crucially important for the functioning of the country, inspectors found that while $11.8 million had been spent on new electrical generators, $8.6 million worth were no longer functioning.”
Are you describing Baghdad or East L.A.?
same-same
I don’t think there is much IED risk in East L.A., but I might be wrong…
Imagine largely minority g.i.’s coming back from an utterly failed mission in mess-o-potamia, armed with the knowledge of just what an ied can do…
Pissed off g.i.’s, many from east el lay.
“Are you describing Baghdad or East L.A.?”
FYI: there are three Large Cemetaries located in East LA within a square mile of each other. LA obviously needed to site burial grounds in less-desirable locales away from DWTN.
Some EAst LA Landmarks:
USC Medical center, CSU East LA, Ceaser Chavez st,Hollenbeck Park,Sybil Brand Institute,
Notable Features of EAST LA: Lots of old rundown decayed Barrios with 80-120 yr old clapboard, mud-brick or stuccos composition inhabited by a mix of native-born Chicanos living in their hoods for generations and a recent mixture of immigrants.
Wonderful examples of turn-of-the-century Tijuana-style Barrios found in Boyle hts, City Terrace, along Eastern ave off the 710, along Ceasar Chavez ave, ect.
A bit of Sarcasm here: seriously E LA does have large depressed slummy pockets much like SCentral along with a few, very few decent neighborhoods.
thank god the slums of so cal are nicely confined to east l.a.
Been near pacoima?
I had a loft at Sante Fe and Olympic (hunter street) way back. Great quiet street surprisingly but you had to own a trashed car - nothing else would survive.
I loved the huge old homes in Boyle Heights. Wasn’t that the jewish bankers neighborhood back in the 20s? I hated seeing those historic building turned into slums.
Hey, back off East LA! It was the only place my husband and I could afford a house a few years ago, and we really liked living there. It was a friendly place, everyone knew each other and chatted over their fences on weekend afternoons. Everyone had cute and quirky landscaping (no cookie-cutter homes there!), and lots of people used their HELOCs to fix up their elderly houses instead of buying Escalades. The biggest crime on our street in the two+ years we lived there was a party that went too late one night. It was great to have a small-town community feeling in the LA megalopolis.
We sold because we’re leaving LA for jobs out of the country, and for now we rent in some yuppie apartment building in a swanky LA area. We’ve had half a dozen break-ins in the year I’ve been here. Our neighbors are too busy yakking in their cell phones to say hello. I miss East LA!
I was born in east el lay…
“loved the huge old homes in Boyle Heights. Wasn’t that the jewish bankers neighborhood back in the 20s? I hated seeing those historic building turned into slums. ”
There are quite a few old turn of the century historical Bldgs scattered throughout East LA, but many of them have indeed fallen into disrepair amid the slummified zones. There are also some quaint homely quiet streets with small cottage-type bungalos where the old-time chicanos have lived for generations, especially in the City Terrace Heights.
At least East LA does have some heights and some tucked away charming little parks(Hollenbeck, lincoln hts park), but overall in the larger scheme of LA it is quite ragged and decrepit in many parts. Too bad because it has the same potential for A Silverlake-type gentrification due to elevated areas with many old but repairable/upgradable older Victorians/Craftsmen homes, just like Silverwood was before Gentrification.
To Gwynster,
You are referring to those homes up along Boyle ave near Hollenbeck park? Indeed there are some nice kept-up Victorians up there and the park itself is a real hidden gem. Can’t say the same immediately east of there in the Hollenbeck/south Boyle hts area.
Holy crap.
I just went through my local community tax records.
From March 20 - April 20 of 2007 there were 387 sales recorded (some businesses are mixed into this number).
From March 20 - April 20 of 2007 there were 1260 sales (again some businesses but I filtered out the 1-10000 dollar sales since they’re mostly tax sales or change of ownership deals, marriage etc).
Link to Montgomery County land records of Pennsylvania
http://propertyrecords.montcopa.org/Search/SalesSearch.aspx?mode=sales
Er
That second one is:
From March 20 - April 20 of 2006
So in other words, what you saw were
3/20/06-4/20/06 1260 sales recorded
3/20/07-4/20/07 387 sales recorded
YOY percentage decline in recorded sales = 69%.
MontCo PA is recording the sale date. If they are as slow as Cook County in Illinois, April 2007 sales will be fully reported and entered in the database by the end of June 2007.
I predict a decline of over 50% in the June 2007 YOY numbers as well…
It’s May Day. It’s also Casey’s big day. Will it be a steady diet of government cheese?
His live in his car post really takes the cake. What a masterpiece of rationalization and deluded fantasy. I suspect his blog will wither and die now that all the houses are gone. At this point, he’s just a pathetic loser.
Whatever happened to good old fashioned shame?
I hear the NAR’s looking for a new spokesman.
Couldn’t Casey spin his ‘intimate knowledge of all aspects of the Investment RE Market’ into DL’s old job?
Txchick,
What’s your take on Jeffy?
Standard issue gambler with limited ability to control greed impulse. The bear market in stocks wiped this type out by the millions, I’m sure. I don’t know anything about him personally but would be willing to bet there’s a divorce and substance abuse in his future.
You know, most people end up homeless because they actually do have some type of mental problem. And I think that is actually the case here.
Sure casey is fun to laugh at, but I really think the kid is - to use technical jargon - completely around the bend. If he was a bona fide conman, things wouldn’t have spiraled out of control for him this way. All that cashback at closing would be shoved into a mattress somewhere while he moved on to his next mark.
I really think he needs professional help.
People like Alan Greenspan however, or Sen. Chris Dodd. Those guys are the real criminals.
I think he’s a gypsy myself. That culture is really hard to see into but we are getting a look at it now.
Maybe the money was shoved into a mattress, and he is just putting on a final show before he vanishes into the woodwork.
Do gypsies tithe the church $300 a month even when unemployed? thats what he claimed on his expenses breakdown.
Casey is like every dead beat ever made. Owes money but wont work, and when he does get $ it doesnt go to debt.
This is the value of credit scores so we know who is a deadbeat.
Will it be a steady diet of government cheese?
…and living in a VAN by the RIVER!
Here is a nice quote from lama at CR:
It’s a great time to leave a job, or start a job.
Others?
It’s a great time to buy - or sell - a house!
I don’t know where that one came from, it just kinda popped into my head.
It’s always a great time to sell your soul for cold hard cash.
Even though homes in San Diego are still near record-low levels of affordability, especially with a sudden dearth of available subprime lending, steadily rising inventories and falling prices, the SD Union Tribune’s headlines today are cautiously trying to raise hopes that SD County’s housing market may soon bottom out. Maybe Ryan Ratcliff at the Anderson School Forecast is hoping for a shot at replacing DL as the NAR’s Bottom Caller in Chief?
I would have been more convinced if a shard of statistical evidence had been offered to support the notion that a bottom is in sight. ZipRealty.com’s current inventory is 17,733 homes — up 18% in three months (from 15,000 at the end of January), and about six times as high as it was in the hot spring of 2004. In the zip code where we live (92127), the median ZipRealty.com list price, which was over $1,400,000 just within the last few weeks, is now down to $1,300,000, while the median sale price in our zip code was only $850,000 in March. Those numbers don’t suggest a bottom is on the way to me, but maybe the UCLA Anderson School forecasters saw some encouraging statistics that were omitted from the SD UT article?
I am reminded of a link one of the HBB posters has put up occasionally to a series of LA Times articles from 1990-1996 which repeatedly called for a bottom. By 1996, they got it right!
———————————————————————————-
Housing may have hit bottom
Prices to start rebound next fall, forecast says
By Dean Calbreath
UNION-TRIBUNE STAFF WRITER
May 1, 2007
Despite a surge in home foreclosures, the worst may be over for San Diego County’s beleaguered housing market, according to a study to be released today by UCLA’s Anderson Forecast, one of the state’s leading economic think tanks.
But that’s not to say that home prices are going to immediately start going back up.
The Anderson forecasters, who took the lead in predicting a housing slowdown nearly four years ago, project that prices will decline by less than 2 percent through next summer, then start to rebound.
But they add that there’s a major wild card: the question of whether a wave of foreclosures might drag down local home prices and exacerbate the current economic slowdown.
“We’ve only seen the very tip of the iceberg” in foreclosures, warned Ryan Ratcliff, a UCLA economist who evaluated the county’s housing market.
http://www.signonsandiego.com/news/metro/20070501-9999-1n1forecast.html
I liked this quote of Ratcliff from the article:
“The recent path of prices in San Diego opens itself up to several types of spin,” Ratcliff said. “If you want to grab headlines and scare homeowners, you can point to the 5 percent decline in the median sales price. . . . If you’d rather soothe those fears, you can simply say that 2007’s median sales prices are essentially the same as 2004’s.”
Here is a headline the SD Union Tribune editors could have chosen, but did not:
ANDERSON SCHOOL FORECAST NOTES 5 PERCENT
DECLINE IN MEDIAN COUNTY HOME SALES PRICE
2007’s median sales prices are essentially the same as 2004’s
“…prices will decline by less than 2 percent through next summer, then start to rebound.”
Regrettably, the article did not report that ‘San Diego County housing prices appear to have reached a permanently high plateau.’
Hey GS, I would LOVE to see SD home prices in ALL areas of SD drop. Take a look at the info that sd realtor posted over at Piggington about North County, it aint happening in his neck of the woods, I just don’t know how these people are buying these pigs…(below)
http://piggington.com/the_short_sale_monitor?page=5
Submitted by sdrealtor on April 30, 2007 - 5:13pm.
Update time!
Short sales 2,021 up from 1,916 last week! Happy 2K day!
Total SD County Listings 16,796 another relatively small climb from 16,534 last week. Inventory really has to start climbing soon or prices will not be pressured anywhere near the amount they were last year.
Quick update on NC Coastal. Active listings climbed about 3% (443 to 460) and pendings (in escrow) are down about 10% (185 to 168). The decline in pendings is likely due to alot of closings on Friday as we are near the EOM.
Here’s the real story along the NCC. This time last year inventory was about 20% higher than it is today and pendings are very consistent with last year. I ran the numbers again to make sure the statistics glitch was skewing these numbers and the impact was nil. This weekend, I saw a bunch of homes go pending with asking prices that seemed quite high. While they probably didnt sell at those prices, they likely sold much higher than I would have guessed 30 to 60 days ago because there is very little on the market. If you are looking for a nice 4BR house in a good area, good luck. I’m not talking about something fancy but rather your basic 4BR house with 2500 sq ft built in the last 20 years. Not much in the way of real discernable weakness here along the coast.
One last thought. If there is a hotter market in SD than Carmel Valley (92130), I’d like to know where. I started tracking SFR inventory there last August.
On August 15, 2006 the inventory was double what it is today and the pendings were about half. Anyone waitng for a collapse in prices there should look into getting a nice comfortable chair cause its gonna take a while if at all.”
Realtors will lie — it is necessary to keep business going during a real estate bust. But how can you spin the gap between median list price in 92127 (currently $1.3m) and the March 2007 median sales price ($0.85m, or $450,000 short of the median list price)?
I guess it is best to lace your sentences with words like “hot” and “hotter” while never addressing any current statistics that suggest otherwise.
Anybody who is not blind can see the inventory glut in North County on a quick drive-through tour, and new construction continues to add to the inventory pyre at a high rate. Almost all of the $1.6b worth of current inventory (by list price) on the North County market was built after 2000 (if I get ambitious enough, I will figure out how to calculate a good estimate, but for now, I will just mention that most North County SFRs are priced above $700K, and almost all of these were built post-2000). How can the market be red hot with so many flippers clogging the exit door, a huge gap between median list price and median sale price, and steadily growing for sale inventory due to a severe buyer shortage?
I remember in the early 90’s when the SD market stagnated for a couple of years they parrotted the same party line, that the rebound was imminent. It took a while (about 2 years), but eventually the bottom did fall out of the SD market.
HAHAHAHAHA
I’m getting a big kick out of this:
eventually the bottom did fall out of the SD market.
And I’m not even attempting to purchase a home in San Diego.
It did take a major financial catastrophe (tens of thousands of permamant defense contractor layoffs) to bring the San Diego market to its knees. Time will tell if the sub prime meltdown will have the same effect.
And the rebound did arrive (with a vengeance) just a few years later. I have said this before, while I do expect SD prices to come down, I do not think that the SD market will ever be affordable. So instead of houses costing 10x the median income, they will “only” cost 6-7X, which is still a King’s ransom in my book.
“And the rebound did arrive (with a vengeance) just a few years later.”
1) Down from 1990-1996.
2) No rebound until after 1997.
3) If this time were no different, then there would be a period of decline from 2005-2012.
4) This time may be different, because the euphoria phase was much longer (1997-2005 versus 1987-1989), and with all the spin in the media, may take much longer to unwind.
But the prices didn’t collapse until around late ‘94, IIRC.
I do agree with #4. 10x price to wages is insane. At the previous peak (1990) you could get a house for about 4-5x median (of course, interest rates were a bit higher then). By 1995 it was about 3X (temporary sanity), then in the later 90’s all heck broke loose.
I do agree that it will take time to unwind. The question in my mind is will the next bubble start before price fully unwind. My guess is yes.
“The question in my mind is will the next bubble start before price fully unwind. My guess is yes.”
Do you work for the REIC? Because you definitely agree with their plan.
I don’t see how it can happen without
(1) massive government intervention which somehow escapes notice on the political radar screen; or
(2) much higher wage inflation than we currently see without any Fed policy response to contain it; or
(3) divine intervention.
What scenario are you envisioning that would lead to a reflation of the bubble “before it fully unwinds” (unlike what happened in every other real estate bust in U.S. history)?
Bubbles not only unwind, they overshoot.
After the bubble in the late 80’s I thought for sure that prices would remain semi-affordable. It happened once, I’m guessing it will happen again. FWIW, at least compared to Bakersfield, San Diego is desirable. And no, I don’t work for the REIC. I am a former San Diegan who bailed out 10 years ago.
The thing about San Diego is that half of LA wants to move to there. Which is why salaries have always been below average and housing prices have been above average. My employer used to provide pay differentials for LA and the Bay Area, but not for San Diego.
“The thing about San Diego is that half of LA wants to move to there.”
But they can’t afford it, as appreciation has slowed from 23% to near 0%…
Funny how they present the Anderson Forecast as the people who predicted the Bubble. Didn’t the guy that did it leave Anderson?
Anyway, strange how you get the real story from this source (and not form the newspaper):
http://realtytimes.com/rtmcrcond/California~San_Diego~sharynvictoriacrown
“Sub-prime Loan Woes Pushing Statistical Prices Higher
The problems in the sub-prime mortgage market have had some unintended consequences. Demand and sales in the entry-level segment of the real estate market have fallen as lending requirements have tightened. Coupled with a strong million dollar plus market, we have the illusion of higher prices because high-end sales are a larger portion of all sales. That is one of the inherent problems with statistical analysis.”
An a comment on another UT story today: “Second home sales surge” or something like that. It was up 4.7%. Some surge.
They were maybe 4 years ahead of the rest of the world predicting the bubble, so I guess it stands to reason that they might be 4 years ahead in predicting a bottom as well
Craigslist Find.
“$1,500,000 Buy this home and get $300,000 cash back at closing!”
http://sarasota.craigslist.org/rfs/321663691.html
The house is in Austin, TX but it’s listed on the Sarasota craigslist site. Probably a lot of others as well.
Illegal?
Organized crime ?
It’s simple: take out a stated interest 100% financing subprime loan for 1.5 mil to buy this little gem, earn yourself a quick 300k, toss the keys to your banker once the check has cleared and yippy kay yay out of dodge with your credit rating in the toilet but 300k richer. Not bad for one day’s work.
Well, hopefully it’s not THAT simple because this would be a jumbo loan and subprime is collapsing, but still, 300k is a lot of money and might be worth working out these and whatever other added complications arise.
Post has already been removed from Craig’s list.
*stated income
Here is Prince william County Sales figures.
http://www.nvar.com/market/marketstats/mar07/PW%20-%20SFA.pdf
That’s for single-family attached.
Here’s Detached: http://www.nvar.com/market/marketstats/mar07/PW%20-%20SFD.pdf
How deceptive!
To plot active listings on the same graph as units sold and pending contracts- makes downward trend seem more flat than it really is…
Buyers have no representation in the home buying transaction. It’s buyer against the whole reic & seller.
cashback does not lower the sales price or property taxes.
I think cashback is mainly an enticement for mortgage fraud, where if you take out a loan under the present ridiciously lax standards, planning to foreclose right away without any intention of paying the bank one red cent, then you basically sacrifice your credit rating for the amount of cashback you are getting.
Here’s one way to keep the prices up, from Crains NY Buisnesss
Brooklyn quarterly home sale prices rise
By: David Jones
Published: April 30, 2007 - 3:13 pm
“The market for residential real estate in Brooklyn remained strong in the first quarter, according to a new study by appraisal firm HMS Associates…HMS said that despite the rising sales prices, the number of home actually being sold has declined. Officials said the disparity points to the unwillingness on the part of sellers to drop prices, and the patience of buyers, willing to wait for better deals…HMS officials said that Bedford-Stuyvesant, Bushwick and Brownsville were not included in the study, as a large number of subprime loans were noted and could therefore skew the overall results.”
Skew the market, eh? I’ll bet if you exclude foreclosure sales, prices in the second half of 2007 will be quite high, as the only other sales will be to billionaires paying cash.
good morning guys,
I visited a matthews development yesterday. A house was on sale for 239k 1550 sq ft from the regular prices of 291k. (house of the week) what a sale. I feel sorry for the joe that buys the same model not on sale.
I sold last year and I give partial credit for this blog for giving me the fortitude for executing that transaction. The only issue I have with this blog is the doomsayers out there. I know some pretty smart people who say otherwise. Sure a %50 correction can happen but not everywhere and it will not effect everybody even in the most heated areas on our country. I’m fully invested in the stock market. I’m in constant contact with a money manager who manages 12B in assets. He says no economic busts, maybe a recession. I echo his sentiment. The truely wealthy have stayed invested in the stock market even through the Great Depression, the threat on nuclear war, Vietnam just to name some truely worrisome events. John Train the great financial author states, “capital is to be sacrificed, so that society can progress.” People will continue to consume, and stocks that represent that consumption will thrive. Be greedy when other are fearful and be fearful and others are greedy. There are cheap companies out there from a valuation stand point that are the bluest of blue chips. Guys don’t miss out because you think the sky is going to fall. I have read all of those re books of the up coming collapse–truth embedded with exaggeration doctored to sell. Oakmark Family of Mutual Funds is the avenue through financial independence. Bill Nygren has been able to compound peoples’ assets at 18% yoy clip. Even through the 2000-2002 crash. During the peak of the bubble, the argument that I would give to people that were in the “re outperforms companies crowd” was how can a house which sole purpose is to give sheltet a family outperform a company whose products apply to the world population. Dangers abound in the stock market or for any market but if you know what you’re buying opportunities are for the taking.
how can a house which sole purpose is to give sheltet a family outperform a company whose products apply to the world population.??
Since when is a personal residence a investment ??? So lets please differentiate between “Investment Real Estate” and a single family home when comparing to investing in a “Company”….
This is the heart of the problem. Investments typically generate a cash flow, and usually a positive NPV as well (otherwise its a bad investment). Last time I checked my house generated a negative cash flow, even with tax breaks, appreciation, and loan balance reduction factored in. The only thing that makes it worthwhile is that its a place to hang our hats. FB’s bought their houses believing that they would generate positive cash flows into perpetuity. Its as if you could borrow money, buy an annuity with it, and come out ahead. Ain’t gonna happen
“Be greedy when other are fearful and be fearful and others are greedy.”
Please explain why margin debt has exceeded March 2000 levels.
retail investors do chase performance and unfortuneatly use margin to accelerate their gains. I was not aware of margin debt exceeding March 2000 levels because I don’t pay attention to that statistic. I focus on companies, their intrinsic worth and what they are selling for in the market. You’re saying the margin debt is an indicator of speculation and I agree. What I do is invest and refrain from speculating. And as Ben Graham says, it makes all the difference.
“Please explain why margin debt has exceeded March 2000 levels.”
Because the value of those margined dollars is smaller?
I believe they compare margin debt levels as a fraction of the outstanding market cap of the issues.
Housing in most parts of the country is over priced. The magnitude depends on the price escalation and median incomes. It is a fact that house prices are inflated as compared to incomes in all bubble markets of the coasts.
agree, median household income in Bakersfield Ca 45K median cost of prices 300k
correction median cost of houses 300k
Not bad, its 6X, only twice what it should be
housing in most parts of the anglosaxon world is severely overpriced; it’s not just the US, in fact many US areas are far less bubblelicious than most of Europe.
Pending home sales down 4.9% vs. February.
Expectation was for a 0.7% increase. Are these unadjusted for seaonality (I think so)? Usually there would be a big increase from March to April.
April will be even worse. The standards didn’t get ‘tighter’ until the end of march.
Soon, there will be hardly any qualified new buyers left (and those are the only folks who can really take inventory off the market). I look at places like Westchester Co. Nassau and Suffolk and I just see retiring boomers (who will move because of the high taxes) + hardly any new buyers = huge price declines.
Add a term for “lots of new and recently-built homes coming onto the market” to the equation for North County San Diego.
Does “Contract subject to lenders approval” mean “price as listed is a short sale and our mortgage holder has to approve it first” ??
Mina
Probably…..
Housing bubble political cartoon:
http://www.cagle.com/politicalcartoons/pccartoons/archives/stantis.asp?Action=GetImage
too funny
Predatory lenders? Lending Fraud? Real estate scams? Dimwitted “investors”? See it here at KCRA Sacramento.
http://www.kcra.com/news/13226878/detail.html
The city of St. Paul is taking a proactive stance towards abandoned foreclosed homes: declare them nuisances and tear them down:
St. Paul razing nuisance homes
Many neighbors cheer revitalization effort, but some decry loss of affordable housing
By Jason Hoppin, Pioneer Press
“In February, Mayor Chris Coleman announced “Invest St. Paul,” a broad, multimillion-dollar neighborhood revitalization program focusing on Frogtown, Dayton’s Bluff, the North End and the East Side.
While the details remain foggy (an expanded home foreclosure prevention program is the only specific proposal so far), the city is attacking its expanding list of 926 vacant buildings with gusto, removing decaying, neglected eyesores as the first step to rebuilding neighborhoods.
So far, most of the buildings torn down were rental properties that have severe code problems. But many more are the product of foreclosures, city officials say. And now that banks are holding them in a sagging market, trying to force improvements can be difficult.
“A lot of mortgage companies are nonresponsive or not proactive in addressing the problems,” said city inspector Steve Magner, who oversees St. Paul’s vacant buildings. One mortgage company did become proactive recently, filing suit against the city to prevent a demolition. The building had already been torn down.”
Full story at
http://www.twincities.com/searchresults/ci_5728858
“A lot of mortgage companies are nonresponsive or not proactive in addressing the problems,” said city inspector Steve Magner, who oversees St. Paul’s vacant buildings. One mortgage company did become proactive recently, filing suit against the city to prevent a demolition. The building had already been torn down.”
—-
Now that’s HBB funny.
“I focus on companies, their intrinsic worth and what they are selling for in the market.”
So where are the values? Just about everything appears to be more than fairly priced or overpriced imho.
there are 3 parts to my portfolio, a retirement account that is largely indexed, the bulk of our net worth that is deferred to Bill Nygren, and a brokerage account through TDAmer. The latter I consider our speculation money even though I do a tremendous amount of research to derive at my picks. I bought Intel at $20. I bought MSFT at $25. Those are just a couple of my picks that I will hold for 10 or more yrs. Capital has been chasing small caps, international, and of course real estate for 5 years. IMHO, values are at large caps including home builders. The smart money is flocking to these valuations.
Sounds like you started buying stocks in 2002, a good time to buy. Just be careful. I’m hearing a lot of “it’s different now!” talk about how the stock market will stay up forever because the S&P is dominated by international companies and the global economy will keep stocks high even in the face of recession. Let’s face it - it’s never “different.” It’s always the same. I sold a couple of weeks ago.
The State of Minnesota is buying foreclosed homes from mortgage lenders. From the St. Paul (Minnesota) Pioneer Press:
“The state is giving Twin Cities housing groups $11.5 million to buy, fix and resell empty homes in core neighborhoods hard hit by the recent wave of residential foreclosures.
Nearly all the money will be spent in North Minneapolis, where foreclosures have been most heavily concentrated. St. Paul is getting a $500,000 grant to buy up houses in the Dayton’s Bluff area that troubled mortgage lender Residential Capital is marking down, a city official said.
Tom Sanchez, East Team Leader for the city’s Department of Planning and Economic Development, said the city considers the new program a pilot project and wanted to test it before buying up a lot of houses.
It’s busy browsing the foreclosure properties that Residential Capital, or ResCap, the troubled Bloomington-based unit of GMAC Financial Services has in inventory, Sanchez said. It’s looking for houses with three bedrooms or more and expects to spend $50,000 to $75,000 per house to fix them and get new owners in. He expects Habitat for Humanity to do some of the rehab work.
ResCap is discussing marking down its properties about 40 percent, Sanchez said.”
Full article at
http://www.twincities.com/searchresults/ci_5788291
From the New York Times:
Accounting Said to Hide Lender Losses:
Money quote. . . “’The thing about gain on sale accounting is that you can create a machine that just manufactures earnings out of thin air,’ said Richard Benson, an expert on securitization and president of the Specialty Finance Group, a financial broker.”
http://www.nytimes.com/2007/05/01/business/01account.html?_r=1&oref=slogin&pagewanted=print
‘….you can create a machine that just manufactures earnings out of thin air,’
Enron got away with that kind of fraud for a while until they got caught.
Moral hazard of mortgage mess:
http://biz.yahoo.com/brn/070430/21762.html?.v=1&.pf=personal-finance
That is a very good article, lainvestorgirl. As Casey would say, short and sweet.
NAR Announces Replacement for Lereah
Washington, May 1, 2007 — The National Association of Realtors® , “The Voice for Real Estate,” is proud to announce the appointment of Academy Award-nominated and Emmy winning British comedian and actor John Cleese as interim Chief Economist of the NAR.
The announcement follows yesterday’s announcement that David Lereah, senior vice president and chief economist of the National Association of Realtors® for the past seven years, is joining Move Inc. as executive vice president, effective in mid-May.
In serving as the new interim Chief Economist, Cleese will resurrect his role as the Black Knight from the film “Monty Python and the Holy Grail.”
Dale Stinton, NAR executive vice president and CEO, said “With market conditions deteriorating and home prices continuing to fall despite our attempts to prop up the market, we needed someone with overconfidence and a staunch refusal to ever give up.”
“We believed that the Black Knight would be the perfect fit for us, as we needed a character who could downplay bad news and scof at the idea the conditions were worsening,” continued Stinton. “After seeing Cleese’s arm-less Black Knight character proclaim ‘It’s just a flesh wound,’ we knew Cleese (as the Black Knight) was our go-to guy.”
Cleese, in-character as the Black Knight, will be responsible for all media relations and press interviews. “We have yet to determine whether we’ll go with the arm-less Black Knight or the arm- and leg-less Black Knight for press interviews,” said Stinton. “Maybe we’ll switch up depending on how bad market conditions get.”
The National Association of Realtors®, The Voice for Real Estate, is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries. The NAR reminds you that there has never been a better time to buy than right now!”
Hey, it’s MAY 1st.
King Arthur: [after Arthur's cut off both of the Black Knight's arms] Look, you stupid Bastard. You’ve got no arms left.
“You’ve got no I/O ARMs left”
His ARMs needed to be fixed.
Maybe he could use the Holy Hand Grenade of Antioch ™ to start reinflating the housing bubble.
Or am I thinking of a different meaning of “blow up”? :unsure:
Arrrrrrrgh!! Why don’t we have a preview?
http://www.bloomberg.com/apps/news?pid=20601087&sid=aXZRdKh_WP1s&refer=home
May 1 (Bloomberg) — An index of pending sales of existing homes in the U.S. unexpectedly fell to the lowest level in four years in March, signaling the real-estate slump may linger as prospective buyers hold out for lower prices.
unexpectedly fell
Is anyone who reads and posts here shocked that pending sales fell in the wake of 50+ subprime lenders going out of business so far this year? Why can’t these MSM commentators learn to anticipate worse-than-expected home sales statistics, given that the REIC spin doctors constantly try to inflate expectations that a bottom is at hand?
http://metromix.chicagotribune.com/news/celebrity/mmx-0704260557apr29,0,5130052.story?coll=mmx-celebrity_heds
New song title = Haircut
From the story:
“Grammy-winning musician Jack White, of rock duo the White Stripes, has sold his 5,800-sf Detroit home for $590,000, well below its initial $930,000 asking price… White bought the property in 2003 for $524,000… Last August, he put the house on the market for $930,000 and later cut the price to $650,000… White now lives in Nashville, where he paid about $3.1 million for a nearly 20,000-sf house in December 2005… Michigan Association of Realtors: In Detroit, the average price of a home fell 23.5% in the first two months of 2007 from year-earlier levels.”
I kind of feel sorry for Detroit…..Between the Car industry, the housing mess and a slow down in the economy their prospects don’t look to hot….
If public services don’t collapse, they’ll be OK. Affordable housing, Great Lake, not much traffic — something will move in to take advantage. Auto industry dominance has limited entreprenuership for two long.
If public services collapse, however, it could be ugly.
Last year, I bought some stuff from a guy here in the Seattle area who was selling his house (in a really nice area of south Bellevue) and moving his wife and kidsto Detroit in order to become a slumlord. He had gone to one of those “make $ buying foreclosed properties” seminars and (gasp) Detroit was one of the places with the highest levels of them (even then). He wanted to buy houses and rent them out for a living.
Having spent two years in Flint, MI 20 years ago and having visited Detroit back then as well as having been there for business more recently, I knew that he had absolutely no idea what he was in for.
But his house here was already sold and he was packing things up. All I could say was “good luck.”
“It was a bright cold day in April, and the clocks were striking thirteen.”
George Orwell
waiting for the crash in Spain …
one of the major Dutch newspapers has a lengthy article about an impending crash of the Spanish housing market. Over the last years more than 50% of new homes were purchased for speculation. The Spanish central bank says RE in Spain is 30% overvalued and teh government says that after last weeks correction there is nothing to worry about, but many people think this is a very optimistic view.
Rents are now equal to 2-3% of the value of a home, while financing and other costs are at least around 6%. Nobody cares, because Spanish RE has always gone up in the last 25 years (except for some small hiccups in the eighties). A crash may ripple through Europe, because in the last years Spanish RE construction was responsible for one third of the total growth in the eurozone. And of course, many of the speculators in Spain are highly leveraged players from other EU countries. A professional RE investor mentions that he is so sure of a crash that he already purchased put options on the Madrid stock exchange; several experts think a crash may happen far faster and be more devastating than anyone imagines. Also, most investors will probably hold on for a long time because they have never seen declining prices (especially the Dutch speculators!)
No mention about the housing bubble in the Netherlands of course, everyone understands that the Netherlands IS different and that homeprices can keep rising there despite even higher mortgage dept than in Spain. These countries have at least one other thing in common besides the bubble, both think they will be the future Florida of Europe where all the wealthy pensioners will retire. Climate change and a bursting housing bubble are the big wildcards in this expectation.
“By lack of understanding they remained insane.”
George Orwell
“It was the incarnation of blind and insensate Greed. It was a monster devouring with a thousand mouths, trampling with a thousand hoofs; it was the Great Butcher–it was the spirit of Capitalism made flesh.”
Upton Sinclair
Most Ameircans think it is the job of a realtor to help you buy or sell a house. People here seem to realize that it is the job of the realtor to maximize their comission.
However, I’m not so sure many of us realize what the job of reporters is. I find myslef thinking that the paper’s business section, channels like CNBC, and even the local news are there to give me information…
Then I see how they report, and I’m reminded what they are REALLY there for. To sell advertisement.
Fashion magazines can’t make you pretty, they can only make you think that you could be pretty if you would just buy the products that are paid to advertise in their magazie. Could you imagin how mant ads they’d sell if the articles just said, “pretty is pretty and ugly is ugly, and there just isn’t much you can do about it.”
The news can’t make money by saying that housing is dead. No advertiser is going to want to sell ads on that story. They sell ads if they make you think everything is okay, and you should keep spending, on these products.
I’ve never been a big proponent of subscription TV thinking, “Why pay when I can get it for free?” I just ignore all the ads. However, I’m more convinced than ever that I’m not really getting the news. I’m getting whatever sells ads.
Unfortunatly, I’m not sure subscription is better. They’d just say whatever helps supscriptions.
Profit sucks. It is the only thing that works, but it sucks.
I tried reporting for a smalltown newspaper, thought it would be fun, I wrote features (pick my topic, the people, etc.). newspapers are a dog eat dog business, I found out I had almost no freedom, I had to satisfy the advertisers and cater to those who could scratch the owners’ backs. News? Ha. what a joke. I quit after 6 months in disgust - you do things for fun or money, this had neither.
Realtors who help clients get good deals get repeat business and referrals while fly by night bubblistas get to move on to learning how to use a fryer.
Today, May 1st, 2007, is the final day to pay second-half of 2006 taxes on Arizona real estate before the taxes become delinquent.
I believe that I read here that many of the exotic house loans also lacked impound accounts for some reason. Let’s see how this works out.
Voice of San Diego explaining what the UT writers can’t grasp:
http://www.voiceofsandiego.org/articles/2007/05/01/opinion/01toscano050107.txt
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Let’s run through a quick example. Suppose that five homes sold for the following prices: $300,000, $400,000, $500,000, $600,000, and $700,000. (Residents of this neighborhood really like round numbers — maybe I should consider moving there). The median sale price of these homes was the middle one: $500,000.
Now let’s suppose that a year goes by. Prices haven’t budged, but this year, only three of the five houses sell: the $500,000, $600,000, and $700,000 ones. This year’s median is $600,000. That 20 percent increase over last year’s median might make it seem like prices have risen, but they actually haven’t budged. The rise in the median price was due not to changes in pricing power but to the fact that fewer low-end homes sold than in the prior year.”
Without subprime, few “low-end” homes priced over $400K are going to sell in a town where the median HH income is between $60K and $70K.
NOD showed up this morning for Mitchell Chase, Willowvale rd. Palmdale, 93551
He’s a local TV/radio guy.
Moral risk with subprime
http://biz.yahoo.com/brn/070430/21762.html?.v=1&.pf=personal-finance
Bankrate.com
Moral hazard is part of mortgage mess
Monday April 30, 6:00 am ET
Holden Lewis
The concept known as “moral hazard” will be important to understand as Congress, regulators and lenders address the aftermath of shaky mortgage lending.
Today’s subprime meltdown, and tomorrow’s bigger Alt-A debacle, will bring out a lot of politicians who will demand that something be done to protect consumers from bad loans. But it’s going to be hard to protect consumers without bailing out the lenders and investors who were behind those bad loan decisions. That’s where moral hazard comes in.
Moral hazard is an economic and insurance term that describes how people behave recklessly when they’re insured or protected in some way. If you sell flood insurance, people will build on flood plains. If you make airbags and anti-lock brakes standard in all cars, people will drive faster and tailgate more closely. If you introduce fat-free cookies (fat-free, but still loaded with calories), people will eat more cookies than before, and get just as fat.
All examples of moral hazard.
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FB’s also fell into the trap, due to housing only going up.
Debt men walking… (These people need the govt to step in and protect them from themselves!)
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Dragged Down by Debt
People with shaky credit are getting suckered by risky loans against their paychecks, homes—and even cars.
By Jane Bryant Quinn
Newsweek
May 7, 2007 issue
High Risk, Low Reward: People with shaky credit can borrow more easily than ever before–against houses, paychecks and even, like Tom Elliott (right) and Josh Reel, their cars.
…
Payday and car-title lenders tend to cluster in low-income neighborhoods—especially around military bases, where families are young and borrowers aren’t very savvy about interest rates. Congress recently slapped a 36 percent interest-rate cap on loans made to members of the armed services. But it left out everyone else, who pay rates that sometimes exceed 700 percent, says CFA’s Fox.
Of all the predatory loans, “exploding mortgages,” with interest rates that wing up after two or three years, are probably the most toxic and have made the most headlines. They’re typically granted to borrowers classed as “subprime”— those with credit scores under 620 (a 900 score is tops). But these are the very people least able to handle monthly payments that suddenly double or triple. The Center for Responsible Lending says that one in five of the subprime loans made in 2005 and 2006 will likely fail.
http://www.msnbc.msn.com/id/18367501/site/newsweek/
All the house poor shaky credit people I know lease their expensive cars. (I think the idea is that you don’t lose equity when they repossess them.
) Not sure what happens when the lease period runs out and you are NOD though. Can you keep renting it? 