It’s Not What It Used To Be In California
The Signal reports from California. “The housing market may be either ‘back to normal’ or ‘depressed,’ but one thing is for certain, it’s not what it used to be. ‘I’ve been in real estate for 20 years, and I’ve seen changes in the market,’ said real estate agent Margo Sherwood, adding that the market has been stagnating locally.”
“Jack Kyser, chief economist for the Los Angeles Economic Development Corp., said that the market is shifting to a very strange dynamic, especially with people who were trying to ‘flip’ properties, and those who were paired with mortgages or homes that were wrong for them.”
“‘A lot of people are quite nervous,’ he said.”
“Realtor Linda Slocum said that the market during the three years previous to the crash was abnormal. ‘It was a frantic three years, and then it went back to normal,’ she said.”
“Kyser disagrees, saying that although there was a dramatic increase in the housing market close to a frenzy, it went too far on the other side of the spectrum. ‘It’s like you were out on a binge, you’re waking up the next morning and you have a very bad hangover,’ he said.”
“The problem with the current market is that the supply is up, without the demand for the homes, and without as many buyers, many of whom are unable to afford housing due to the tightening of conditions by lenders. This is partially due to the foreclosure crisis.”
“Slocum said there have been concerns when people refinance their homes or take out another loan and don’t use it for their homes but rather for ‘play money.’ ‘It’s not all people who got into bad loans,’ she said of foreclosures, although she added that Los Angeles County’s biggest concern regarding foreclosures is in Palmdale.”
“In addition, builder confidence hasn’t been strong. ‘They are selling, but they aren’t selling at the rate they were,’ Slocum said.”
“Although not much activity is expected in 2008 or 2009, 2010 might be the year that things bounce back. Slocum said she receives calls at her office, saying that people don’t want to buy a home because ‘the market’s going to crash.’”
The Contra Costa Times. “The meltdown of the subprime lending arena has imperiled hundreds of East Bay jobs. For the moment, though, subprime lending woes have triggered the loss of at least 250 jobs in the East Bay and dozens in the South Bay, multiple sources said Thursday.”
“Companies in the troubled sector moved to limit further exposure. ‘Once Fremont decided to exit the subprime business, they immediately stopped making new loans,’ said Daniel Hilley, a Fremont General spokesman.”
“‘We have only started to scratch the surface of the subprime problems,’ said Jon Haveman, a principal with a research firm that tracks regional economies in California. ‘That will lead to some job losses. There is a potential that this problem will ripple out into the broader economy.”‘
“Some of those difficulties will jolt the Bay Area economy, he warned. ‘The Bay Area is susceptible to a downturn in employment due to the subprime market going belly up,’ Haveman said. ‘But it will not happen in the Bay Area to the extent we will see in Southern California.’”
“A building industry economist warned that the housing industry’s problems have yet to run their course. ‘I don’t see much of a recovery in store this year,’ said Alan Nevin, chief economist with the California Building Industry Association. ‘Home building will continue to struggle.’”
“Brookfield Homes Corporation today announced net income before taxes for the three months ended March 31, 2007 was $5 million, compared to $31 million in 2005. The decrease is a result of fewer home and lot sales, and a decrease in the gross margin earned on housing to 20% from 31% for the same period in 2006.”
“The decrease in housing revenue is primarily due to fewer home closings during the quarter in the San Diego and Washington D.C. Area markets.”
“‘Market conditions remain challenging, and demand has weakened in recent weeks as a result of mortgage illiquidity in the marketplace. Yet our housing margins remain above industry average,’ concluded CEO Ian Cockwell.”
“Our portfolio includes 27,000 lots owned and controlled in the Northern California; Southland/Los Angeles; San Diego/Riverside; Sacramento; and Washington D.C. Area markets.”
The Sacramento Bee. “Next to the US Bank Tower, Denver developer Craig Nassi hopes to build Aura, a 39-story luxury condominium tower that will cost about $177 million.”
“But Nassi has yet to break ground because he hasn’t purchased the land from local developer David Taylor. Last month, Nassi’s deadline passed to line up financing.”
“Three blocks west, all is quiet where John Saca’s $550 million Towers project is planned between Third and Fourth streets. The foundation work on the ambitious 53-story, twin tower, hotel-retail-condo complex abruptly stopped last fall.”
“To close the deal, he must come up with about $25 million by May 25 to reimburse the state pension fund for what has been spent. The Sacramento-based developer also needs more money from other investors and lenders to restart the project. He has taken deposits on about half of the 800 condos up for sale.”
“Saca did not return a telephone call seeking comment. Mark Cordano of Sacramento-based Cordano Co. said his company has put its Towers retail marketing efforts ‘on hold’ for now.”
The Bakersfield Californian. “In another sign of a stalling real estate market, the number of permits issued to build new homes in Bakersfield dipped to its lowest point in seven years during the first quarter of 2007, according to a report prepared by Howdy Miller of Ticor Title.”
“‘We had such a huge run-up for a number of years,’ Miller said. ‘These numbers just reflect the fact that we’re a tad overbuilt and that it’s going to take some time to catch up with the existing inventory.’”
“Locally, an excess of available homes, high land prices and investor speculation during the real estate boom of recent years combined to sideline small builders and cause large developers to scale back building plans, Miller said.”
“KB Home, a national builder with a large Bakersfield presence, canceled a planned subdivision last year because of high land costs.”
“Corky Martinez, owner of C. Martinez Concrete, didn’t need to see a tally of building permits to know construction had slowed. ‘After the first of the year, it didn’t slow down,’ Martinez said. ‘It just shut down.’”
The real bailout? FHA expansion, approved by committee, going to the floor: http://www.house.gov/apps/list/press/financialsvcs_dem/press050307.shtml
An excerpt:
Specifically, the bill modernizes the FHA and brings it into the realities of the housing market in the 21st century by:
Increasing loan limits in high cost areas of the country like California, New York, and Massachusetts, where FHA has been driven from the market, forcing many borrowers to turn to high-cost financing and other non-traditional loan products.
Authorizing zero down and lower down payment FHA loans for homebuyers who could not otherwise make the down payment required under current FHA rules, to make FHA more consistent with other private sector loan products.
Directing FHA to underwrite to borrowers with higher credit risk than FHA currently serves that are still creditworthy to take out a mortgage loan, but are otherwise now being driven into the subprime loan market, with much higher mortgage rates.
Permanently eliminating the current statutory volume cap on FHA reverse mortgage loans to permit this program to meet the growing needs of home equity rich, cash poor seniors citizens that need help paying bills or needed home costs, while capping the fees that loan originators can charge senior citizens
Reinvesting increased FHA profits created by the bill in housing counseling and affordable housing fund activities
Some other gems:
*An amendment by Rep. Green to require HUD to create a pilot program for an automated process for borrowers without sufficient credit history.
*An amendment by Reps. Frank, Gary Miller, Scott, and Neugebauer to permit mortgage brokers to participate in FHA by posting a $75,000 surety bond, in lieu of the current audit and net worth requirements, with a GAO study of the change and a five year sunset. Before adoption, this amendment was modified by an amendment by Rep. Green to include certain requirements for such mortgage broker participation in FHA.
*An amendment by Rep. Frank to increase funds for nationwide housing counseling grants from $42 million to $100 million a year, and to ensure that no funds that are derived from the 203(b) single family loan program may be used for affordable housing fund purposes.
Just leave the monkys alone, Shaun. It’s dangerous to interrupt horny monkys. It can’t work, won’t work, and will never fly soon enough to save the meltdown. There is nothing, and I repeat nothing, that can stave off the ongoing collapse.
I hope you are correct. It’s “bad” because its already out of committee and going to vote. Usually bills if they are delayed, get hung up in committee.
I wonder how Ron Paul will vote on this one?
I hope the monkeys catch much-deserved blaim up the road for offering further encouragement for low income buyers to purchase homes they cannot afford. Meanwhile, I guess I will remain a priced-out bitter renter, while I watch people with half our household income step up to the plate and purchase homes priced over $500,000. !#*%%%!!!
Let ‘em have ‘em, Stucco! I think it’s hilarious to watch these jokers hang themselves while I rent at 40 cents on the dollar. Bitter renter? C’mon! That term went out with having to have 20% down. The new and politically correct term is “grateful renter”. If it stays this way forever i could give a crap! I’ll be saving my way to retirement while most homeowners plunge themselves into financial ruin.
I am unhappy with the realization that I have to break it to my spouse that we will probably not ever be able to purchase a home, but that we will nonetheless be forced to help unqualified buyers buy their homes for the foreseeable future.
agreed
I’ve been a homeowner a couple times over, and a renter a couple times over. Honestly, BFD!
It is a BFD. Stay on this GS, you are very well informed, I hope you take your rants to the MSM, too!
Stucco, maybe you need to move to a more affordable area. I’m not sure where you are, but I bailed from the Bay Area to Portland 13 years ago when it was just as unaffordable. Today I live on five acres with 12 more years of payments - after a divorce and remarriage. The weather is not as nice here, and the income is lower, but the place WILL be mine (can’t retire until it’s paid off).
“Stucco, maybe you need to move to a more affordable area.”
I have a good job, great neighbors and schools for my kids, landlord pays for ilegal immigrant yard care and our recreational club membership, and I rent for 2/3 the cost of owning (before considering the falling knife of plunging valuations). Thanks for reminding me that I have no right to complain.
That poor football is getting quite the workout lately from all of these horny monkeys.
Pretty much unusable at this point.
Cliff notes version of BILL:
New loan requirements: Either section 1 and/or section 2 below:
1) Mirror test - Miror held to mouth should produce fog.
2) Pulse test - Person must have pulse rate of 1 or higher per minute.
Really, what’s to stop all the subprime from becoming FHA backed? Their standards are incredibly low, the only thing that was limiting was price and some credit (around 620 FICO) restrictions. FHA also does refinancing.
Will this be enough to turn the tide? Combine this with Amnesty and I think it might be enough to at least limit price reductions. Not good for America long term obviously.
none of this addresses affordability. The complete inability of people to afford to the payments on houses at the current level. Even if they can shave a point off market by doing FHA, it isn’t enough.
I think they’re just trying to throw more cash at the system… that may slow the rate of slide, but won’t alter where the ends up… just how long it takes to get there.
Lower prices is the only way out of this. Unless, of course, someone wants to step to the plate and offer 0% financing.
FHA is planning on it, that’s the point. Why wouldn’t you make the loan if it’s backed by the gov’t? Lenders might not make as much as they used to, but compared to the alternative (nothing), it’s much better.
It’s stupid to even debate this. It ain’t gonna work - period! Next issue please.
0% sounds crazy but something tells me some knob bonnet might try to make it fly.
“…none of this addresses affordability.”
Affordability is implicitly addressed. By giving low income buyers money to buy homes they cannot afford, it enables anyone in the middle class who wants to buy a home as a place to live in and as a vehicle for long-term household wealth accumulation to be outbid by unqualified buyers who with govt guaranteed zero-downpayment loans to buy homes they cannot afford. As a side effect, unaffordability can continue unabated for a few more years at the taxpayer’s involuntary expense.
I hope my blood pressure survives this test. I have already decided to vote for any presidential candidate who stands up to this form of robbery.
“it enables anyone in the middle class who wants to buy a home as a place to live in and as a vehicle for long-term household wealth accumulation to be outbid by unqualified buyers”
Then to hell with housing and find another way to accumulate wealth. Let the stupid money keeping flying into housing, while the smart money goes elsewhere. Using the house to accumulate wealth was never a smart thing to bank on anyway.
“As a side effect, unaffordability can continue unabated for a few more years at the taxpayer’s involuntary expense.
I hope my blood pressure survives this test. I have already decided to vote for any presidential candidate who stands up to this form of robbery.”
I am in complete agreement. As silly as it may sound, I have given consideration to the idea of standing on a busy streetcorner with signs expressing the huge fraudulent ripoff of the american people that the housing bubble has been, and what a further scam any “bailout” is.
f-em and rent if Congress subsidises housing enough to make it affordable then buy one, if not then watch it crash. Renting is pretty afordable most places and down right cheap others. If this bailout encourages more over build all the better for us.
There’s nothing wrong with that. This is one of the most important political issues today, one that will determine how we will live the rest of our lives. If people protest a shock jock making *gasp*, a shocking comment, then why shouldn’t people express their viewpoint on a very important political issue that the MSM does not talk about.
It might be enough to turn the tide for the lenders that made a ton of money. I think the foreclosures would hurt them more than it would hurt someone with a 600 FICO.
Nope, not enough.
Given that 63 or so subprime lenders are out of business already this year, I am wondering if the real beneficiaries of this bailout will turn out to be the hedge funds that bought the toxic debt at pennies on the dollar (e.g., the remains of NEW).
They definitely would gain a lot, especially *if* they can refinance those loans through FHA. We will have to see, but it certainly doesn’t look good.
pt: you are hilarious! And correct, unfortunately. Amazingly, the bozos in government are stupider than the real estate/financial types who got us into this mess.
3) If applicant fails first test, poke with a stick and repeat.
“We have confused the free with the free and easy.”
Adlai E. Stevenson, Jr.
So the plan is essentially to replace subprime from the private sector with govt guaranteed FHA subprime? I am feeling nauseous. How can these taxpayer-funded insurance schemes be stopped?
GS, I am not sure that the FHA plan will work. The FHA (to the best of my knowledge) requires full documentation. In some areas, not most of the US unfortunately, there will be a few that FHA will help and that should have been FHA originally. What are they going to do to the individual that has paid his mortgage in a timely manner but the house is worth 100K less than when purchased? Streamline loan with no appraisal? Not a very tenable proposition.
Dude, you can get a Fannie Mae loan with a water bill and gift letter. Where have you been? Increasing the limits is just what the doctor ordered for the housing market. Drop the rates a little bit and the party continues on.
Fannie Mae is not just FHA. ” Fannie Mae was authorized to buy Federal Housing Administration (FHA)-insured mortgages, thereby replenishing the supply of lendable money.
In 1968, Fannie Mae became a private company operating with private capital on a self-sustaining basis. Its role was expanded to buy mortgages beyond traditional government loan limits, reaching out to a broader cross-section of Americans.”
FHA are government guaranteed
and if you read this press release there are new guidance requirements that exclude many potential borrowers.
“An amendment by Rep. Waters to set upfront premiums on FHA single family loans at levels commensurate with risk, so that HUD can afford to insure loans for such borrowers.”
“An amendment by Rep. Gary Miller to prohibit use of any affordable housing funds unless HUD certifies each year that FHA premiums are sufficient to comply with the Mutual Mortgage Insurance Fund capital ratio, to ensure the safety and soundness of other FHA funds, and to ensure efficient delivery and availability of FHA loan programs.”
So MrIncomestream, if you are aware of what HUD does, then you are aware that FHA has a low default rate and that Fannie Mae’s problems are not from administering FHA loans.
Complying with Fannie Mae is not the same as complying with FHA.
Hud.gov
But the bill includes this:
“An amendment by Rep. Capito to require a government ID of some sort to qualify for an FHA loan.”
Let’s see how long this lasts or how “government ID” gets defined.
Dude, I’ve been in the business a long time. Understand this in comparision to private lenders yea their rate of foreclosure is probably low. but I know agents who have made millions selling Fannie Mae foreclosures. Any shady loan broker you have come across probably got his start doing Fannie/FHA. Fraud runs aplenty.
At the end of the day they are both the same. What you are witnessing is a greenlight to continue stealing.
The agents should make millions from dealing with mortgage foreclosures. The risk is huge. But you continue to confuse Fannie Mae and FHA.
Fraud runs aplenty in the subprime/Alt A/Option Arm markets and appears to be greater in those mortgage markets. No mortgage market is immune to fraud.
That is why I said I do not think the FHA bailout will work for more than a few borrowers. Reread my original comment “I am not sure that the FHA plan will work”
I know what you’re saying I’m saying it’s going to prolong it. They just opened the door for every loan officer with a word processor and a copy machine to start churning new money. Every illegal and subprime borrower that just recently was shut out has a new lease on life now. Fraud in subprime/alt-a/option-arm was small potatoes compared to what’s about to come. Kinko’s has just called their paper supplier and upped their quota.
Not going to happen.
Appraisals must come in at current values and be done by an FHA licensed appraiser - not your run in the mill mope currently doing appraisals, houses must meet FHA standards (easiest part of fraud), income must be verified as well as 2 years of tax returns. IMO refi’s are toast - appraisals will be to low, purchases at current price levels are a non issue because the affordability issue is still in existence. And for the few (probably less than1%) of the borrowers that qualify - more power to them. This will not change a thing. The decline is happening and will continue to happen and there is nothing the government can do at this time to stop the housing collapse. The government does not have enough moneys to absorb the 2.2 trillion in Subprime/ Alt A mortgage resets.
You really have no insight to this industry do you…
Also let me say this, before this run-up Fannie and HUD had gobs of foreclosures but because people were willing to pay insane prices for them, they emptied the coffers. That is a whole other cottage industry within itself fraud is rampant. If you think appraiser are going to save the day because they are FHA approved you are fooling yourself. these guys will take a comp from Northridege for Compton.
The gov’t upping the limits is the worst case scenario for price declines.
I have an excellent insight into government! You have a belief that this is being done to protect the lenders or borrowers - Not! This is government CYA at its finest. As Fisher said a few weeks ago “the lives of the cast of citizens of this great country are going to be dramatically altered by a calamitous development.” The government knows what is happening and the members of congress primary duty is to stay members of congress. The easiest way to stay a member is to pretend you are helping some misbegotten souls. The government knows that the ability to use FHA to alleviate the conundra is not possible. FHA criteria are tighter than subprime/alt A - where the problem started, but the problem is spreading. It is just not worth worrying about an FHA “bailout”. A 1% change in home ownership is not going to impact this collapse and it may accelerate it.
(William Fisher - President, CEO Dallas Federal Reserve - April 16)
So let’s all go out and buy the biggest house we can qualify for under FHA!! Free houses for everyone!!
ROTFLMAO
If there is a bailout that saves these schmucks - I want in! I just want $2K/mo to keep me in my Johnny Walker Blue - screw the mortgage. If I’m going down I want a case a month.
Make mine Lagavulin please…
‘Let’s see how long this lasts or how “government ID” gets defined.’
Let me guess: You need to be an illegal immigrant to get a “government ID” card?
What’s the purpose of documentation when there are essentially no credit standards?
If an individual has unpaid medical bills, loss of job, etc. that resulted in a BK yet has a history of paying all their other bills before the harmful incident, they will have a low FICO (less than 550). They are classic SubPrime. Now these formerly decent payers will be able to go into a fair loan at a reasonable price. The purpose of the documentation is to determine the reasonableness of the borrowers ability to pay the loan back based on current economic conditions.
Don’t worry GS, this will never happen. Once China breaks the peg, we will get massive inflation in this country and sky-high interest rates to boot. Piling on more debt in this environment would be literally impossible and would lead straight to hyper-inflation. And at that point, nobody will remember or care about the housing bubble as we’ll all have much bigger problems to deal with.
Here’s a good article describing why China is going into an overheated hyper-bubble blowoff and why they can’t stop the melt-up short of breaking the currency peg. Tick…tick…tick
http://tinyurl.com/248fjc
“Once China breaks the peg, we will get massive inflation in this country and sky-high interest rates to boot.”
Is anyone in Congress bright enough to foresee this problem?
That’s a rhetorical question, right?
Perhaps it is needless to point this out, but this FHA bailout scheme should be properly interpreted as a bailout of the lending industry. It will have the undesirable consequence of continuing to keep the middle class priced out of the housing market in coastal zones, and providing further encouragement for low income buyers to purchase homes they cannot afford. I suppose if prices start going up again as a consequence, then at least risk lovers will be rewarded for throwing caution to the wind and purchasing volatile and illiquid assets worth several times their net worth. All told, turning the FHA into a subprime lender sounds like a terrible idea.
GS, once again, you called the game. This a bail out of the stuck lenders. Refi them out whole, let the gov’t take the problem off their hands. This does NOTHING to help the F’d BORROWER. If the feds really wanted to help clean up this mess, they would lend every FB $1500 for a deposit on their new rental house.
Jingle, I couldn’t agree more. As far as I am concerned, bankruptcy and a little help to start over is the bailout system for FB’s, and it’s already in place. Anything else will only line the pockets of the lenders.
I get sick thinking about it.
Ladies and Gentlemen-
Lend me your ear, Let me introduce you to the gov’t bailout. If you think subprime was bad. LOL, you haven’t seen anything yet, partner. Compound that with an interest rate dive and viola market saved by many more sheeple. Wow what will they think of next. Fannie Mae is famous for letting gardners with no assets and telephone bills secure loans.
Throw in some Amnesty, just in time. Yikes.
Exactly, Americans are getting a$$pounded right before their eyes from all angles, guns and butter, guns and butter. It’s about to get ugly.
i sure hope you butter that gun before the a@@ pounding
“its about to get ugly.”
First thing you have said I agree with you on. LOL
This is just too much. They’re setting us tax payers up to be the bag holders for this collapse. Refi private debt into the public and then let it fall. Those “high priced” loans were priced appropriately at the time they were written. Refinancing (and insuring) to better than market terms is exactly the same as cash payment to lenders and debtors.
You are correct sir ! Amnesty..30 million that are now shadow buyers into the light ,and an open door policy for anyway that want through the open door….Think about it..More potential tax payers,and a savior for the FB’s. I think it a done deal as much as I boil thinking about it…Pray to the new god of profit. Our dollar ,way of life is toast, but US corps are making more overseas than ever before…No loyalty to our? country…pay at the door.
I do not worry about FHA taking on loans, provided that FHA documentation is required. Not many of the FB’s are capable of showing true income to support the 300K - 1M housing purchased through subprime. FHA requires proof of income.
This is a non-issue to make the politicians in Washington look as if they are doing something.
Some of the borrowers will qualify for the FHA loans under the new guidelines - so what? These borrowers cannot have been late on anything over the last 12 months (exception is medical). The provisions require the new loan to have “upfront premiums on FHA single family loans at levels commensurate with risk, so that HUD can afford to insure loans for such borrowers.”
FHA loans are lower rates than subprime, but ~40-80 basis points higher than conventional. And the Mortgage Insurance has to be paid upfront and monthly.
No, they do not they allow mattress money and gift letters for down payment requirements. They allow a certain amount of untraceable income to be listed on the apps. The gov’ts cersion of subprime.
People will have dummy corporations and fake W2’s for job verification. I’m telling you the fraud will kick up to a “whole nother” level. QC only calls 4506’s on about 1 of 1000 apps if that. Unless a company has been flagged and it takes a lot for that.
You are fooling yourself if you think that’s going to initiate declines. During the last downturn the highest sales prices were coming from Fannie and FHA deals.
“They allow a certain amount of untraceable income to be listed on the apps. The gov’ts cersion of subprime”
That is not true!
Go to HUD.gov
I’m no economist but I’ve read up on business news long enough to know that: whenever stupidity is dominating some area of the business world on a massive and continuing scale, you can bet the government is behind it in some way. If the government would just get out of the way and let the chips fall where they may, we would be talking about a 5 year blip in the real estate market, there would be some foreclosures, whoever was left standing with money would come in and buy, and prices would eventually stabilize or recover…But because the numbskull bureaucrats have to come in, engineer a bailout and/or refinance all the FBs onto loans secured by the government, and thereby rescuing all the FL’s (f#ck#d lenders), this could turn into a much bigger financial disaster and, at the very least, will certainly harm the priced-out middle class and, of course, the taxpayers, or should I say tax slaves. I’m a patriot, but it’s time we recognized that our current government is the enemy, and the stupid public are their enablers. Excuse me while I pour a bucket of water over my head to extinguish the steam coming out of my ears.
From Remarks to the 2007 Annual Conference of the Investment Adviser Association
Austin, Texas
“…The Fed will not monetize our government’s debts. So you are left with the people you elect to represent you in Washington. In the end, that means you must turn to the person you look at every day in the mirror—you.”
April 26, 2007
William Fisher
President, CEO Dallas Federal Reserve
Income, I’ve read your posts and though you and I agree on a lot of things, I don’t think you’ve thought this one through. All of you guys are knee-jerk reacting to something that, in the grand scheme of things, will do nothing to rescue price deflation in the US housing bubble. Think about it. How many FHA deals have you actually done? I cut my teeth on FHA many, many years ago. If I have to I will list in detail why this won’t work, but I think if you stop and think for a while I won’t have to. I actually welcome FHA back to the game. Welcome back Old Man.
LAinvestorgirl: I have complained often that government could have responsibly intervened by simply pointing out the obvious fact that the housing bubble was going to burst, and by not regulating the loosening lending standards that occurred in 2001-2002 as an antidote to the tech bubble. You can’t just leave business to its own devices - businesses need to make money, and will do what they need to to keep doing so in the short run. CEOs have to show profit now, and don’t care about the long term. The RE shills were lying and politicians kept their mouths shut until now.
ex-nnvmtgbkr-
Explain fully and in detail I don’t see it.
https://entp.hud.gov/idapp/html/hicost1.cfm
Look at the numbers for FHA in Los Angeles, You can still get houses in the ghetto for that. I remember when FHA/Fannie could buy you a house in Thousand Oaks. Now lets say they raise it too 450-475 you will still be able to buy a 3/2 in the ghetto for that easy. Compound that with the mattress money and the allowance of everybody and there mother on title. L.A. won’t see a decrease in prices but an increase. Happened the last time…. The gov’t has pushed up from the bottom giving foundation to the sand.
You should read this speech by the head of the FHA and tell me that it’s not something to worry about. Big gov’t is here to stay.
“I think we have some better solutions to the problem, both short-term and long-term. We can re-ignite the housing boom if we are prepared to make some important changes.”
“FHA reform would be a meaningful improvement in home financing. For example, the President believes that FHA’s loan limit in high-cost areas should rise from 87 to 100 percent of the Government-Sponsored Enterprise conforming loan limit. This change is important because in many areas of the country the existing FHA limits are lower than the cost of new construction. The current loan limit eliminates FHA financing as an option for many buyers of new homes. We should create a new, risk-based insurance premium structure for FHA that would match the premium amount with the credit profile of the buyer. This would replace the current structure in which there is a standard premium amount for all borrowers, while still protecting the soundness of FHA’s Insurance Fund. So FHA would still have the flexibility to charge a lower premium for low-risk buyers. High-risk borrowers, most of whom are currently unable to participate in FHA due to its outdated pricing structure, would be charged a slightly higher rate. But they would still enjoy the benefits of prime rate financing. This type of structure would help more families participate in the American Dream, while also protecting the taxpayers against risk.”
http://www.hud.gov/news/speeches/2007-04-25.cfm
“…the President believes…”
OK, now I’m scared…
Mr income
I read and learn from your posts. You know plenty.
I just read all your posts about FHA bailout.
IMHO you are pissing in the wind.
If they raise it to 800k I could see it…
This scheme simply will not work as sheeple already turned to be afraid of housing. Once the herd mentality goes against cliff, no amount of enticement will prove to be useful. Whatever way you persue the bull, it will not go to a burnt barn.
It will attract the stupidist and the worst credit risks — the type of folks who bought at the top in 2005 and are currently wondering why their mortgage payment on the I/O option ARM has doubled and their home is worth three-years of pretax income less than it was when they first bought it. And the insurance for these terrible risks will come out of your and your childrens’ pockets.
I would tend to agree. JSP will still be cautious even though “I’m the GOV and here to help” is displayed. Besides, keep in mind this is an election year expanded. Vote for me your savior
Realtor Linda Slocum said “It was a frantic three years, and then it went back to normal.” Say what? This is normal? Either she’s delusional or outright lying.
“Realtor Linda Slocum said that the market during the three years previous to the crash was abnormal.”
Abnormal? Apparently she never listened to Watts. He promised double digit appreciation forever.
California Realtor Linda Slocum says:
“… 2010 might be the year that things bounce back”.
Funny how a member of the NAR, a group which predicted in January that the market would bounce back this spring, can predict what will happen three years from now.
http://foreclosureavoiderssavedme.blogspot.com/2007/04/rise-and-fall-of-jeff-from-sdcia.html
Jeff begins to crack up…
“I have been ill…
I can’t sleep, I can’t eat, when I do eat it comes up. This morning I started the day with a shower and threw up in the shower…
I am barely functioning, I try to read everyone’s posts…
To those of you that insist that these houses were a mistake, you were right.
To those of you offering constructive advice and support, thank you.
I try to read everything but the words are just swimming, I’ll try again later…”
Maybe its all that Taco Bell food thats making him sick and not his idiotic RE investment stragegy?
He’s binged on too many cupcakes.
To paraphrase Oscar Wilde, you’d have to have a heart of stone to read about Jeff’s travails and not laugh at him.
From the link:
Not looking good…
“Sadly…it looks like those who warned me that Florida properties won’t work were right–so far, it might change (acknowledgment to those that warned me this might be the case…).
This is true despite many Realtors and others, (professionals!) swearing to me that Florida DID qualify–including the nationally famous Marshall Reddick.”
Who the heck is Marshall Reddick?
Get Rich Quick Seminar guy - similar to that scum bag Carlton Sheets
Googled….The Marshall Reddick Real Estate Network is an educational and purchasing system based on spiritual values. Our business is a customer-focused network that …
godz right hand man in things real estate related?
http://www.johntreed.com/Reedgururating.html#anchor535653
I love the one where he says something to the effect of, “If I had listened to Jonesians, I would be under my bed screaming ‘a recessions coming, a recessions coming.’”
Instead, he’s in the shower puking.
Am I the only one bothered by his confusion of “should of” and “should’ve/should have”?
Man I hate that phrase, “should of.” I know where it comes from - people hear “should’ve” and think it is spelled should of, not a contraction from “should have.” I still hate reading it and its’ sister misspelling, could of, which should be spelled, could’ve. AAACK!
I need to read about this Jeff clown so I feel better.
LOL. Instead of going the “Jonesian” route, Jeff went the Jonestown route instead. Gee, that Kool-Aid sure does leave a nasty after-taste….
Hmmm. I’ll bet lunch at Taco Bell that what’s terrifying Jeff the most isn’t watching his RE empire collapsing - it’s having his WIFE discover that his RE empire is collapsing!
why is he puking… everyone that knows anything, knows that the FHA will save him….
Or am I missing something?
Anybody ever endure a hangover lasting more than one long day?
“Kyser disagrees, saying that although there was a dramatic increase in the housing market close to a frenzy, it went too far on the other side of the spectrum. ‘It’s like you were out on a binge, you’re waking up the next morning and you have a very bad hangover,’ he said.”
e-CON-omist
“without the demand for the homes”
There is demand, just not at the current prices. The housing hangover hits and hits and hits.
Found this quote and thought you would enjoy Aladdin Sane
“So, if you are in precious metals, you have all the insanity of all the world’s governments working to generate profits for you. In the realm of human affairs, that’s as close to a sure thing as we are ever likely to get.”
Richard Maybury
For we, the later day Goldfingers of the world, every day brings more promise…
Just had a call from one of the salespeople from Centex. He wanted to know if there was anything he could do to help us get into one of his houses.
Sure, lower the flipping price! Look asshat, I’d consider one of your homes as long as it didn’t eat up 2/3 of my monthly take home money.
For the record, I was much nicer then I would have been normally because screaming and cussing are discouraged at work.
Except the hangover hasn’t even started yet for most people. They’re just bitching about the bar closing and trying to figure out how to get home at this point.
“we’re a tad overbuilt”
Tis just a flesh wound.
So an hour ago I’m talking to a fellow former FB at work, and he’s telling me about something strange going on with his friend-of-the-family landlord (he’s been renting for about 18 months now). This McLandlord is a small-fry contractor/homebuilder who screwed up and built a 600k house in a 300k neighborhood and can’t sell it, so he’s renting it to my friend for $1600/mo while it’s on the market.
He’s currently “building” in Arizona and trying unsuccessfully to sell all his RE in Colorado that he previously pulled all equity out of. All of the expected disasters are occurring, and last week he went back to Arizona with 8k in cash (not normally something he does). Just got out of Arizona jail last night, wife has pulled all money from their accounts and wants the rental house back from friend (no lease, $1500 deposit). Nobody has spilled the beans on how he got arrested but apparently there was a gun involved.
Exciting times…friend knows his deposit is gone and is just trying to figure out whether to move this weekend or wait and see what’s going on.
I think that if he’s paying month-to-month rent, she is required to give him 30 days notice, in which case he can just not pay the last month rent. On the other hand, the guy might come back and shoot him, so losing $1500 is better than losing his life.
In AZ, if you’re renting month to month, you do have to get 30 days notice from your landlord if he/she wants you out.
The rental is one of the Colorado houses. In theory as “friends-of-the-family”, violence shouldn’t be an issue if he keeps the last month’s rent in return for the deposit, but they’ve already had a tense conversation where the guy claims to not remember any deposit so who knows? Very ugly. It was a smoking deal on rent while it lasted…it’s tough to move a middle class family with 3 kids and all their crap in a weekend with no prior preparation, though.
With all the giant red flags in the story you know it’s not going to get any better with time.
but they’ve already had a tense conversation where the guy claims to not remember any deposit
Tell your friend to start making moving plans, and tell him to assume;
1. He’s going to have to move, perhaps with no notice at all.
2. He’s not going to see that $1500 again.
I was one of a group owed money by a “friend of the family” about 15 years ago, and the tone went from “blood is thicker than water” to “what f…ing money, you never lent me any money. I’ll sue all of you p…cks.” in about 10 minutes.
And we had signed receipts. One member of the group decided to force the issue, and the “friend” went bankrupt quicker than a rat up a drainpipe.
“Nobody has spilled the beans on how he got arrested but apparently there was a gun involved.”
He was probably pointing the gun at passersby in AZ screaming, “BUY THIS F*CKING HOUSE!!!”
chicago bubble blog: He was pointing the gun at passersby in AZ screaming, “BUY THIS F*CKING HOUSE!!!”
pretty funny!
http://www.superiorcourt.maricopa.gov/docket/criminal/caseSearch.asp
“Anybody ever endure a hangover lasting more than one long day?”
Unfortunately, BanteringBear has. Not fun, don’t recommend it. The price paid for growing up with lots of drinking buddies. Memories galore, but glad I turned the corner on that lifestyle!
and he continued
“The problem with the current market is that the supply is up, without the demand for the homes, and without as many buyers, many of whom are unable to afford housing due to the tightening of conditions by lenders.”
The only thing the lenders did was to make the insanely unaffordable possible. What you should be saying, Mr Economist, is that housing is flat out unaffordable - period! And unless prices drop 30% - 50%+, there will be no housing recovery for the forseeable future.
So they’re trying to reinflate the bubble. My question is, why should poor people be enabled by the government to buy expensive housing? By what entitlement? The government already pays for housing in the form of apartments, etc. But, now it has to buy people houses? These fools in Washington should have to take the money out of their own pockets for their so called generosity. Giving away everyone else’s money is not kind, it’s criminal.
IMO this proposal demonstrates a real contempt for the financially stressed. Are any of the legislators or community activists behind this “aid” measure buying real estate in this current declining market? Probably not. But they’re going to enable citizens dependent on the legislators’ acumen and the taxpayers’ largesse to go ahead and catch a falling knife.
I really wish “the folks” could see what is happening to them.
They may not be buying, but I bet lots of them–and their zillions of “friends” and contributors–are trying to sell.
I just keep getting the feeling the politicos in DC who really understand this thing are absolutely sh!tting bricks and are willing to do just about anything to protect THEMSELVES.
“Linda Slocum, a Realtor with Vintage/Sotheby’s International Real Estate, said that the market during the three years previous to the crash was abnormal.
Slocum said she receives calls at her office, saying that people don’t want to buy a home because “the market’s going to crash.”
“If you look at our economists, they’re not seeing anything drastic,” she said.”
(Psssst…earth to Linda…it’s best to get a clue from the handwriting on the wall than what you think the economists are “not seeing” ):roll:
BayQT~
sfbayqt: How do you insert the eye-rolling face in your post? I like that.
Here ya go:
http://codex.wordpress.org/Using_Smilies
For the specific smiley you’ll have to type specific text. Taking out the hypens, the rolling eye smiley is
: - roll - :
The colons sit right next to the “r” and the “l”
BayQT~
Let me see if I understand Linda’s comment re calls to her. People are calling her realtor office just to say they are not going to buy????? Hmmm, I should call the Benz dealership to say I’m not going to buy that 645 because it’s too expensive.
It’d be a little bit cheaper if you bought it directly from the Bimmer dealer.
Our portfolio includes 27,000 lots……
I was in Manteca day before yesterda looking at a commercial property on Lathrop Rd…Went through the Del Webb/Pulte 55 and over development there…Building is very slow compared to the number of lots….Accross the street from Del Webb is another development…..All the infrastructure is completed…Streets, curb, sidewalks, street lights “Everything”….Not ONE foundation poured…No equipment onsite…Not even a superintendent trailer…My guess would be there were 300 lots…Kinda spooky
Thank heaven. That entire city of Lathrop is literally underwater if flooding occurs. They should never have built there.
Interestingly, there was an article in the Lard paper that Del Webb was selling like hotcakes! Must be traditional “newspaper” fluff to support the real estaters who feed them…
You know…
I’ve never had any difficulty in procuring hotcakes, whilst @ a restaurant.
Never once have I been told, sorry, we ran out…
“Although not much activity is expected in 2008 or 2009, 2010 might be the year that things bounce back.”
Translation. By 2010, prices will have plummited back to a normal inflation level from where they were in 2002. Then prices can resume climbing at the rate of inflation again.
Another fascist housing Nassi…
“Next to the US Bank Tower, Denver developer Craig Nassi hopes to build Aura, a 39-story luxury condominium tower that will cost about $177 million.”
Just a little cocksure, dontcha think?
“‘Market conditions remain challenging, and demand has weakened in recent weeks as a result of mortgage illiquidity in the marketplace. Yet our housing margins remain above industry average,’ concluded CEO Ian Cockwell.”
Yes, ALIS, Cockwell does seem a little cocky. No one is really feeling the pain yet. There was so much fat created, the party was so large, the binge drinking so long, that the hangover diet has not even started.
It will be interesting to hear Cockwell in 2009………if he still has a job and Brookfield is not in bankruptcy court….
“Los Angeles County’s biggest concern regarding foreclosures is in Palmdale”
The mere utterance of the word “Palmdale” runs chills down my spine. Might as well live on Mars.
A buddy lived in Palmdale and he used the describe the area as:
“Where jesus lost his sandals”
Did Jesus lose them, or get them stolen by an inner-city HUD recipient with a meth-lab in their basement??
Sane and JJ, stop it! You’re making me laugh out loud!
Back in the mid to late 90s I experienced Palmdale for the first time for “Battle of the Imports”. I guess it was the biggest moneymaker for the town at the time. I got pulled over 3 times in the course of 3 hours driving around, each time the cops would just give you a warning and off you go. Pulling illegal U-turns, “California stopping” at stop signs, blue lights…. any other town in Kalifornia and the car would be impounded or at least ticketed. Point is, the cops knew the annual drag race brought in lots of money and they didn’t want to lose their only tourists, who just happened to be illegal street racers.
That place really is the pits though, that housing market will crumble.
The median family income in Palmdale is $39,110 and yet there are any number of homes for sale for well over $1 million. That’s crazy! I wonder how many will sell?
(singsong)
go Palmdale
go Palmdale
get busy
get busy
It used to be a great place to raise a family, now it’s compton north.
Just a “tad” overbuilt?
Howdy, LIAR.
“‘We had such a huge run-up for a number of years,’ Miller said. ‘These numbers just reflect the fact that we’re a tad overbuilt and that it’s going to take some time to catch up with the existing inventory.’”
We, too, have finally “run out of stupid people”.
I have been meaning to compliment Mr. Joe Kelly for almost 18 months since I read that, now seems appropriate…best bubble quote ever.
http://tinyurl.com/3yr3py
http://tinyurl.com/3yr3py
Interesting to read the quotes below the article…”wait 6 months and it will go back up”…”our location precludes any downturn”…clearly they were not quite out of stupid people then, but probably are now.
Down? What down market are you talking about? Just listed. Check this out:
http://tinyurl.com/yrrwv6
I prefer the one from Bend, OR.
The sellers are looking for someone with a bagful of money and a box of stupid.
Soon to be renamed Bendover, OR?
“Locally, an excess of available homes, high land prices and investor speculation during the real estate boom of recent years combined to sideline small builders and cause large developers to scale back building plans, Miller said.”
Large builder are scaling back. Uh huh. And just how are the “large builders” going to generate income during these down times? Builder A will slow down a bit, Builder B will put up one more house than Builder A, then Builder A will…you get the picture.
test
test
How is one supposed to end itallics?
test
end
I think the posters on here work for Money magazine
I’m sure this has already been posted since its 2 days old, but its all playing out like we’ve been saying. Next phase, lawsuits, lockups, and Congressional hearings…
http://money.cnn.com/magazines/moneymag/realestatebubble/2007/index.html
CNBC is running their “Mod Squad” story like once an hour.
First with “Are they just delaying the inevitable?”
Then with “Is it just media hype?”
It is on now… waiting to see how they end tag it this time….
And the winner is?
Back to the “just delayng the inevitable since 40% of these rescued loans still fail”.
My opinion, the other 60% will, just haven’t yet.
A successful bailout? I doubt it. The people that bought can’t afford a 30 year mortgage. They got in because of Subprime teaser rates. People that were foolish enough to buy a overpriced house will eat Top Ramen for the next 30 years or eventually foreclose.
Governement lowering interest rates? I highly doubt it. They are stuck between a rock and a hard place. Dollar is down, risk of inflation is high, US printing money like it falls out from the sky.
Debt became fashionable. Fashion become fads. But this fad will last a long time. what a mess….
“US printing money like it falls out from the sky.”
It doesn’t fall out from the sky. It is delivered in helicopters.
Wow, I was expecting to see California bubble issues discussed, but the thread is dominated by bailout fears. A bailout would be a bad thing, but is there any evidence of such? The FHA loans are way harder to qualify for than nodoc subprime crud by a long way both before and after. Is there any specific reason to be upset about these FHA adjustments, or do people just not want the threat of a bailout to be taken seriously? If the VA home loan rules are also adjusted for soldiers returning home, would that indicate a bailout? It is interesting that in the past helping out returning soldiers was considered basic, not a toxic political move. If any adjustment of any housing program constitutes a bailout, then the more interesting question might be what is not a bail out? Perhaps returning soldiers should be considered immigrants so that we can maximize the social overstress?
The FHA is a non-issue. A red herring.
Hoz — Hope you turn out to be right on this one. My larger concern is not the immediate effect of an FHA bailout, but the potential indirect effect. If the Demo-RATically-controlled Congress succeeds in passing one taxpayer-funded bailout with a dearth of news coverage or political opposition, the success may avalanche into a series of additional measures with material impact on bubble punchbowl respiking success. The time to stand in the way of this is right now, not once the avalanche is rolling down the mountain side.
Remember in OC California several days ago where the couple that got shot by police in a standoff at the Montage hotel? No surprise that the FBI is now investigating them for mortage fraud….
http://www.ocregister.com/ocregister/homepage/abox/article_1680350.php
“Our portfolio includes 27,000 lots owned and controlled in the Northern California; Southland/Los Angeles; San Diego/Riverside; Sacramento; and Washington D.C. Area markets.”
All of their lots are in major bubble areas. The only big bubble areas they’re missing are Florida, Las Vegas, and Phoenix. Sucks to be them.
Sounds like a falling knife portfolio to me. BwaHaHaHAHAAA!
Sorry, I have to try it too.
“‘We have only started to scratch the surface of the subprime problems,’ said Jon Haveman, a principal with a research firm that tracks regional economies in California. ‘That will lead to some job losses. There is a potential that this problem will ripple out into the broader economy.”‘
WRONG!
“Some of those difficulties will jolt the Bay Area economy, he warned. ‘The Bay Area is susceptible to a downturn in employment due to the subprime market going belly up,’ Haveman said. ‘But it will not happen in the Bay Area to the extent we will see in Southern California.’”
WRONG!
“A building industry economist warned that the housing industry’s problems have yet to run their course. ‘I don’t see much of a recovery in store this year,’ said Alan Nevin, chief economist with the California Building Industry Association. ‘Home building will continue to struggle.’”
WRONG!!!
THESE SO-CALLED ‘EXPERTS’ ARE ALL 110% WRONG. SUBPRIME HAS BEEN CONTAINED, AND THE HOUSING MARKET WILL START GOING UP, UP, UP AGAIN AT YEAR-END 2007.
Sellers need to wake up, California house prices need to drop and drop big before the market will move. Otherwise the housing market will just stand still until something breaks. Prices are so outrageous in so California and no one can afford to buy a house without at least a 40-50% down. The sooner sellers realize that, the sooner the market will start up again. Buyers are patient and are waiting on the side lines, but Sellers are greedy and just won’t drop their prices. I have been actively keep tabs on the house prices and I don’t see any dropping that much …5-10% is nothing compared to the high prices. Sellers need to get realistic and really drop prices if they are serious about selling, if not, they should keep their overpriced homes that they can’t sell now or later, because they’re not worth what they paid for them. Way too many people bought too much house without the ability to pay.