Bits Bucket And Craigslist Finds For May 5, 2007
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I’m first!!
Unless jmf has an earlier post in moderation.
We have an unwritten rule here discouraging “first” posts. I’m not perfect either; I did it once and was reprimanded. Thanks.
…and being first matters because?
…..sloppy seconds suck!
“I’m first!”
Grow up, moron.
first, with nothing to say.
sad.
You can tell this blog is far more mature than SlashDot.org because any “first post” comment gets lambasted. Pray we never get any “I, for one, welcome our new bubble bursting overlord” posts.
If you’re gonna be first then have something to say.
Here’s my observation for today, kind of OT but still:
Horse market in Chicago has gone into the toilet. everyone agrees. Three years ago you could put anything on the market here for $3K+ and it would sell no matter the breed as long as it would canter around and jump a course of crosspoles. My trainer actually “flipped” a couple of horses he had located for my youngest daughter but didn’t work out (he paid $5K for one and then sold it two days later for $9K - crazy!). He actually called it “flipping” !
Today nothing is selling, prices are being drastically cut. EVERYONE blames it on the housing market. No more HELOCs, price of gas, etc.
I guess there was a “horse bubble” that has just “crashed” …
Personally I don’t sell horses but we just got a “loaner” horse for my young pony club kid and he is to be sold when we’ve gotten his training finished and something of a show record. Hopefully the horse market crash will work in our favor though since the horse is pretty nice, my kid likes him and we’d just as soon keep him for a few seasons anyway
Mina
http://www.speculativebubble.com/videos/real-estate-roller-coaster.php
May have been posted before, but I just saw this for the first time.
Here is a listing that the seller is trying to use reverse psychology. I guess he thinks if he can convince you that this property is worth what it’s listed for he will get a full offer.
Property sold 8/31/2005 for 229800. I guess they have been getting some low ball offers. The house is listed for 199,900.
Here is what they said:
“OWNER IS MOTIVATED AND A MORTGAGE BROKER. PLEASE NO OFFERS UNDER $195,000.”
I think I should offer him 95,000 and say “please no counter offers above 98,000″.
Or you could just reply, “Owner isn’t half as motivated as he will be after another 6 months of carrying that pig!”
You two guys are too F’n funny…..
“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”
Charles Mackay, author of “Extraordinary Popular Delusions and the Madness of Crowds”
“Insanity is the rare exception for individuals; but in groups, parties, nations, and epochs it is the rule.”
Friedrich Nietzsche, Beyond Good and Evil
German philosopher (1844 - 1900)
Ironically, Nietzsche himself died insane.
Ironically, Nietzsche himself died insane.
Yes, but he was surrounded by a group of partiers.
“…they only recover their senses slowly, and one by one.”
And there is another reason the housing bust will likely play out past the year 2010. What is the half-life* for the post-bubble-insanity recovery process? I am thinking at least four years.
*That would mean the time by which half of those rendered senseless by the housing mania have recovered their lost wits.
Hey GS, I know I have written you before about Jim the Realtor’s site, but it amazes me that North County Coastal is still selling and getting multiple offers on some properties. Rest of SD is not doing so good.
http://www.bubbleinfo.com/
“North County Coastal is still selling and getting multiple offers”
Is that where Jim the Realtor sells? If so, how unbiased is the source of information? Does it really make sense that North County Coastal would be selling like hotcakes when the rest of SD is in the toilet? I am highly skeptical (as usual!).
Have you ever gone to his site and looked at what he posts? He is just using the #’s from the MLS…take a look…
Just as on other sites, like SDCIA, where people were over bullish, some run the risk of being over bearish. Now, I am very bearish, but I am also open to reading about what is going on in certain areas. In NCCoastal, places are selling…still OUTRAGEOUSLY priced…it is what is happening…
Still missing the evidence of multiple bids to which you alluded. But I did see these preliminary April sales figures. I add the omitted April 04-April 07 3YOY % change in sales rate in italics:
“April Sales
April’s sales numbers are trickling in:
SD County Closings Y-O-Y diff
2004 2,557
2005 2,394 -6%
2006 1,710 -29%
2007 1,342 -21% (figuring 1,350)
3YOY diff = (1342/2557-1) X 100% = -47.5%
All this means is that sellers need to be aggressive on price - there are buyers waiting, they just want to pay less.
The lower-end appears to be bearing the brunt of it:
Now he only gives two years back, so I add in the 2YOY % changes:
April Closings 2005 2006 2007 diff from 2006
Encinitas 53 28 42 +50%
2YOY diff = (42/53-1) X 100% = -20.8%
Carlsbad 101 91 88 -3%
2YOY diff = (88/101-1) X 100% = -20.8%
Carmel Valley 43 44 38 -14%
2YOY diff = (38/43-1) X 100% = -11.6%
Oceanside 194 119 74 -38%
2YOY diff = (74/194-1) X 100% = -61.9%
Vista 107 75 45 -40%
2YOY diff = (45/107-1) X 100% = -57.9%
Tentative conclusions:
1) The sales have dropped by large amounts in all areas, but have so far only really fallen off the cliff in the lower-income areas where subprime was most prevalent (Vista, Oceanside).
2) It will take a while for the subprime implosion to trickle up to high end areas (Encinitas, Carlsbad, Carmel Valley).
3) Resets in prime and Alt-A toxic mortgages are not supposed to peak for another four years. That development will disproportionately affect the high end.
“Carmel Valley 43 44 38 -14%
2YOY diff = (38/43-1) X 100% = -11.6%”
I forgot to mention the reason for this: Carmel Valley has a huge McMansion glut, including lots of new homes built since 2004. Small wonder their sales pace picked up. If you adjusted these sales rates from total number sold to percent of existing stock that sold, you would get bigger negative numbers for the change in places like Carmel Valley where building went on at a frenzied pace.
I couldn’t find the bit about “multiple offers on the same properties” (maybe I was being inadvertently dense). But I did notice this:
“1.There is a healthy demand for real estate, it’s just a price issue.
2. We are in the midst of a paradigm shift in how the sale of real estate is conducted. The buyers have caught on, the sellers have not. It is better for sellers to price aggressively and sell early on, than to wait for weeks or months - the buyers will offer lower the longer you wait. The shift is due to sellers being spoiled over the last 10 years by getting away with pricing too high - the rising market eventually came up to meet your crazy price. That has changed, and we’re not going back, at least not for a long time.”
Jim the Realtor does not seem to grasp deflationary psychology very well. Let me explain.
After a couple of more years of burning through negative cash flow, a lot more flippers will have to throw in the towel, and their homes will be sold through REO auctions that will drive down the comps. And lots more FBs with broken ARMs will be foreclosed, also driving down the comps.
Any buyer with a brain and bank has to ask himself why he should buy an overpriced home now when he is highly likely to be able to buy a comparable home a few year later at 40% off, which would save several year’s worth of pretax income for the median-income San Diego household (around $65K/year) purchasing the median-priced home (median list price on ziprealty.com for a SFR is currently $599,000).
Of course, if the central planners at the Fed successfully respike the punchbowl, thereby creating enough inflation to materially escalate the War on Savers, all bets are off.
Here is the part with multiple offers, boggles the mind…: “Two specific examples of demand today in Carlsbad; a Wells Fargo-foreclosed 2br/2ba 1,341sf condo listed for $400,000, and got buried with offers. One I heard about was $406,000 and lost out because it was too low. Example #2 was an old 1,100sf fixer house in Carlsbad that listed for $550,000 that got two offers the first day, and is well over list price. I have buyers looking for deals that haven’t found ANY - and new listings that come up that appear high are still selling - on both ends of the price scale (though fewer lately). ”
I don’t know what people in SD are smoking, but it must be something completely mind altering.
I think they been self Temeculating…
“… a Wells Fargo-foreclosed 2br/2ba 1,341sf condo listed for $400,000, and got buried with offers.”
It sounds like it may have been deliberately underpriced, in order to attract multiple offers. My wife and I did this the last time we sold a property — priced it $20K below the most recent comp price and received five offers on the first weekend of the listing, with the best one $10K above the most recent comp price.
“I don’t know what people in SD are smoking, but it must be something completely mind altering.”
Maybe they purchased something cooked up by these area homeowners, who figured out an innovative solution to paying The OC’s unaffordably-high housing costs off a teacher’s salary:
——————————————————————–
Woman, boyfriend charged in drug case
She teaches math at Carlsbad High
By Kristina Davis
STAFF WRITER
May 5, 2007
A teacher at Carlsbad High School and her boyfriend have been charged with manufacturing drugs in a rare case that began when a suspicious explosion rocked their apartment in Orange County nearly two months ago, authorities said.
Kathryn Susan Garcia, 24, who teaches math at the school, and her boyfriend, Timothy Murry, 32, were charged this week with using a chemical method to extract THC from marijuana.
THC, or tetrahydrocannabinol, is the active ingredient in marijuana that causes a high when smoked or eaten.
The extraction’s end product, sometimes referred to as hash oil or honey oil, is sticky and potent. It is placed on a piece of tin foil, heated and the vapors are inhaled through a straw.
“It gives you quite a wallop,” said Lt. Mark Bailey of the Orange County Sheriff’s Department. “This is not your granddaddy’s marijuana.”
http://www.signonsandiego.com/uniontrib/20070505/news_1mc5pot.html
Of course, if the central planners at the Fed successfully respike the punchbowl, thereby creating enough inflation to materially escalate the War on Savers, all bets are off.
The way I see it, inflation would cause reasonably-prices housing (apartments and houses) to rise in price at X%. The specuvestors sitting on crap homes are going to try to raise their prices by X% as well.
The smart ones will not change their asking prices and then just sell once the market rate matches the asking price. But will they survive to that point? Their everyday essentials (like food) will be inflating, but do most of these idiots have “good enough” jobs that will inflate the wages to keep up?
OK, but lets assume they do keep up. The rest of us are going to fall into two groups:
1) Renters. Screwed over, except if you recognize that the inflation is happening and will be a long-term trend. If so, it is probably very wise to buy a home at as close to a reasonable price as possible. Right now, I think I can find a home that is at least $100k or $200k below wishing prices for a specuvestor home. It may not be reasonably priced, but it’s closer and that would be what I buy, which screws over the specuvestor.
2)Owners of reasonably priced homes. The inflation is going to make these guys the real winners, but most of them are going to see that and not be tempted to buy a specuvestor home. When your housing costs keep going down, why buy a new place and reset them to a higher amount?
Brian,
So what happens to home prices if inflation increases substantially? (Mind you, I am not making a prediction on inflation.)
Won’t mortgage rates go up?…
Won’t this tend to push home prices down?
Prices now are so out-of-whack now, could we see home price deflation in an otherwise inflationary period?
jd
Brian — how can renters be screwed over if selling prices continue to be way out of whack with traditional rent vs. buy ratios? Clearly, you’re referring to wannabe homeowners who are priced out, but even at the point where house prices stop falling and rise — a day many/most of us believe is far off — the rent vs. buy ration will continue to be valid. It never goes away. Rent will always be limited by what’s in a person’s wallet, not what’s on his/her credit report (or a buyer’s Alt-A form).
My point about renters being screwed is if the inflation includes wage inflation, which would drive rents up. If the inflation doesn’t include any sort of wage inflation, there’s no reason a renter should look to get into a house ASAP.
“…if the inflation includes wage inflation, which would drive rents up.”
I’d think that wage inflation would result in enough after-tax increase in income to cover increased rent, so it’s a wash but for tax bracket creep and savings erosion. Yet the point remains that landlords cannot charge more than what renters are willing to pay. At a certain point, they will find different shelter or a totally different place.
I’d think that wage inflation would result in enough after-tax increase in income to cover increased rent, so it’s a wash but for tax bracket creep and savings erosion. Yet the point remains that landlords cannot charge more than what renters are willing to pay. At a certain point, they will find different shelter or a totally different place.
Yes, I agree. However, if you were a renter and saw this coming and knew it was going to be quite prolonged, buying a reasonably-priced home with a fixed mortgage seems like the best thing to do. If your monthly rent is $1500 and over the course of 5 or 10 years goes up to $4000 because of inflation, you might be better off if you bought a place with a $2000/month fixed mortgage. The cost wont change for 30 years and then drops to zero. The trick is finding anything that’s reasonably priced. There isn’t a whole lot, but that’s slowly changing.
I wouldn’t sit on a hot stove waiting for wage inflation… The ‘tards navigating this listing ship have labored long and heavily since Ronnie to keep wages in an undertow.
Yes, I think Jeff at SDCIA (for instance) has lost it. He has not said a peep for days. Sad to say, he is going to lose it all, and soon…
I have always liked that quote. I see examples of my fellow Americans wrapped up in a state of “hyperreality” as Russ Winter would say every day, and it disgusts me what many have become.
I grew up working hard, saving, and helping others when I could. Now it is all ME, ME, ME. Our financial system now relies on lies being repeated by investment personalities over and over again, and this drives our markets…it sickens me…
I am a master of the universe. Well, OK, a master of the bubble universe. I manage a hedge fund, or maybe I sit on the board of a major lender. I have information and income at my disposal.
I know that the street has morphed into a machine by which the only way to make money is leverage and liquidity. These are the gaseous bubbles on which my businesses are built and are utterly dependent on to survive. And what concerns me more than the economy, the data, or even my own future is how do I leverage what I have to make more money in the near term?
I ask you bubble posters to ignore the flashing-red evidence and underlying data — just like I have– and put yourselves into my head for a second. You see, I have to keep juicing the markets — even though reality screams at me to stop. So how long do you think I can keep this up, and what is the thing that might finally stop me and my fellow masters?
Discuss…
“and what is the thing that might finally stop me and my fellow masters?”
Reality…………..we all have to face it sometime, and the sooner the better
Exactly. You can jump off a skyscraper and pretend you are Superman, but eventually the inevitable happens.
What will stop this clown is laws and regulations .The sub-prime lenders/borrowers have proven that they can’t control themselves when it comes to commissions /profits .
Real estate has always been a conditional sale for qualifying for the loan and these masters of the universe thought that they could just create a market that would go to the moon (in spite of people not having the money to pay .They lured the marks in by the promise of profits in the future with nothing more than myths of a non-stop run-up in real estate that had to crash .
These masters will stop when there is nobody left to pay for this e-ticket ride to the moon including the tax-payers . I guess these masters weren’t thinking about future generations being able to have affordable housing .
What use to be great about American was that the average Joe could afford cheap real estate in many parts of America .I grew up in a America that didn’t take real estate and make it a e-ticket ride to the moon .
Haha, laws and regulations, right…… Where have you been the last 8 years?
Print the money without limits… loan the money… that is the law in place now. A few our starting to ask questions. Perhaps those who know their history are the few bright minds who have read about the debasement of money. The majority are still in a fog and sorrowful reality is starting to set in.
Gresham doesn’t really come into play here…
How would one debase our current currency, even further?
It costs around 25 Cents to print a $100.00 banknote.
The other $99.75 added value is strictly faith based.
Leverage scares the living s%@t out of me! Oh, turn the way back machine to 1999 when Akamai peaked at $320 / share and crashed to $1.06 on 7/31/02 down 99.67%! Or just ask any FB (who bought a 500K home with no $ down, on a 40K salary)
Pursuant to your insight, the WSJ Money & Investing pages has some poor advise today for short sellers: “To maintain your sanity, you should probably be on the sidelines during a period like this until the passion spends itself.” (Advise from retired short-selling guru David Rocker blogs.wsj.com/marketbeat )
But with the stock market reflating full of the financial equivalent of the hydrogen which filled the Hindenberg dirigible, wouldn’t one want to be in the market at this time above any other? How else can one hope to catch a black swan falling out of the sky if one is not in the game when the fools of stock market randomness collectively recognize their folly?
http://www.amazon.com/exec/obidos/ASIN/1400063515/bookstorenow99-20
(Wow — the price of Taleb’s latest book is falling more quickly than that of a California Central Valley home!)
I think the WSJ advice is pretty sound, although maybe today a bit less than in previous years. Especially in Europe, over the past five years bears were eaten alive while shorting the market; there are not many of them left I guess. They got the fundamentals right, but that didn’t help them; no one can predict when sanity returns in this market and I wouldn’t be surprised if the markets keep going up (especially in nominal terms) for many more months with all the central banks and the Paulson gang pushing in the same direction. Unfortunately, standing on the sidelines is also a sure way to loose money
“no one can predict when sanity returns in this market”
nhz — You will have to read Taleb’s book in order to formulate an intelligent response to my comment. Sorry to say, but this comment is completely orthogonal to my point.
I have read some of his work (not the latest book) and agree with most of it. Catching black swans sounds like catching fallen knives to me, especially in the current market climate. I don’t see what is wrong with my comment, but maybe I am missing something as non-native english writer …
opposite of catching falling knives
“Catching black swans sounds like catching fallen knives to me…”
Anyone playing Taleb’s game purchases put options or exercises other contrarian plays which allow them to catch black swans and eat them when everyone else is catching falling knives.
purchases put options
it’s clear that you are not from Europe
I don’t think there are any buyers for (naked) put options left here; they all went bankrupt over the last five years. Even the ones who were buying put spreads etc. must have lost tons of money betting against the market.
“it’s clear that you are not from Europe ;-)”
I appreciate comparing notes, and admit there are important differences that I may be unaware of. Although I think the shorts got screwed by large entities with massive market power on this side of the pond over the past year.
Regarding another difference between your hood and mine, we sure haven’t run out of prime land for home building over here yet!
HouseGeek, you bring up an unknowable question. I have been watching our over leveraged financial system thinking: “this has GOT to be it!”, many times over and it just keeps going. All I can say is that when it ultimately does pop, the downside will be worse then it had to have been.
It could be any even, big or small, that in hindsight after the crash or tumbling, will have caused it.
Gravity will eventually pull it back down to Earth….the trick will be surviving the crash and the dislocations, worthless assets, paper and promises after.
Not to mention a lot of p*ssed off people.
“And what concerns me more than the economy, the data, or even my own future is how do I leverage what I have to make more money in the near term?”
Funny you come to this site and ask people to consider how to make money in the “near term”. Short term thinking is a favorite rant subject around here….the underlying reason for the upcomig downfall.
About all I can guess is that it will a black swan event. I’m not sure if this was what GS was referring to when he used the term above wrt short selling. What I am referring to is something like the LTCM blowup - for example, what if the pricing model for the “AAA” CDOs used at some hedge fund turns out to be horribly wrong? What if they didn’t bother to calculate what would happen if foreclosure rate moved by 3 or 4 standard deviations? Remember, we are looking at this market with the benefit of hindsight that the rocket scientists did not have when they set these things up. So what seems obvious to us may have been completely ignored because they found some historical statistics that convinced them that it could never happen. So they went ahead and found a way to make it happen.
Sorry if this reads like gibberish, need more coffee…
the trouble is that all these hedge fund managers survive whatever happens (unless someone pushes them out of the window when the black swans arrive). They have a position where they cannot loose, whatever happens they make huge amounts of money every year and someone else takes the losses if things go wrong. Same story for investment managers at pension funds or politicians. Even if they fu** up like that Amaranth kid, they are back on the job in notime. For sanity to return, we need these guys to get grilled so that no one will trust this kind of people with their money in future (I know, unrealistic idea …).
The problem is the pension funds. They are underfunded and are suckers for a swan song that they think will bail them out. It’s all about their jobs and their security (PF managers) not anyone else.
I’ve been “consulting” with a few of them lately on some RFPs and stuff like that. The lack of knowledge and willingness to suspend disbelief is amazing.
GM’s experience speculating with their pension fund is probably not helping.
“The problem is the pension funds.”
The problem is the PBGC — govt bailout insurance for failed pension plans. A smart company will underfund its plan while the stock market is always going up during the boom time, then close shop and dump the plan on the PBGC in the bust.
since the whole financial network is faith based, once trust falters he will be grilled.
“I’m not sure if this was what GS was referring to when he used the term above wrt short selling. What I am referring to is something like the LTCM blowup…”
Exactly. Excessive government interference in markets eventually leads to systemic collapse — it’s in the bag.
what is the thing that might finally stop me and my fellow masters?
China crashing. Within a month, is my guess. They’re pulling a 1929 Dow, 2000 Nasdaq thing, and they’re in the late stages of it. Don’t forget that when Chinese stocks tanked 10% overnight in late Feb, the whole world tanked afterwards. Why? The very leverage-fest you’re talking about. As Grantham says, there’s a bubble in everything, worldwide. Leveraged on the way up, and will be on the way down too. People seem to have forgotten about the China incident already, but they’ll remember real fast when the time comes.
master of the universe.
The beauty of it is that you will not know the name of it or see it approaching.
Play Jenga?
Thank you all — continually amazed by the insights here. And so it seems, the masters of the universe are really slaves to a gambling addiction. Which means they might keep playing even when the casino has caught fire and is burning down around them. God help us all.
The biggest joke for me, has been making poker “heroes” out of zeroes…
That most of them are gawdawful pompous examples of humanity, is like an added bonus.
I watched a disgusting young turk “win” $700k and he proudly stated that he’d never read a book.
A curious badge of honor?
H.R.1852 - Expanding American Homeownership Act of 2007
To modernize and update the National Housing Act and enable the Federal Housing Administration to use risk-based pricing to more effectively reach underserved borrowers, and for other purposes.
http://www.opencongress.org/bill/110-h1852/show
A taxpayer funded government program to offer zero down payments and bigger and fatter mortgages to subprime borrowers. What a nanny state we have become. I don’t know what makes me angrier: watching the government reward people who are reckless and punish people who are prudent, or my transformation into a Republican.
Taxpayers, watch out for your wallets! And be sure to vote D-RATic in the next presidential election if you want to get fleeced to the max! Any R-can candidate who stands in opposition to this measure gets my vote in the next election.
One certain consequence if this legislation gets passed: America will have a higher future poverty rate. Thirty years after LBJ’s Great Society’s spectacular failure, D-RATs still don’t have it through their thick skulls that if you subsidize something (like poverty), you get more of it. D’oh!
Sorry if this sounds harsh, but at the moment I cannot begin to afford to purchase a home, and I am not in the mood to help those who bought $600,000 houses on $30,000 incomes stay in theirs.
===========================================================
Panel: Expand FHA role in subprime lending
By Bloomberg News | May 4, 2007
WASHINGTON — A US House panel voted to expand a federal agency’s powers to help low-income borrowers at risk of losing their homes as Congress pushes legislative fixes for the subprime mortgage crisis.
The House Financial Services Committee approved legislation yesterday to let the Federal Housing Administration refinance more subprime mortgages. The panel’s 45-19 vote in Washington sends the legislation to the full House.
The agency “has a very useful role to play in supplementing the market,” Representative Barney Frank, the Massachusetts Democrat who chairs the committee, said during the panel’s consideration of the measure. “If we can get people into the FHA rather than to some of the other kinds of loans they have, everybody will be better off.”
BVLLSH!T
Congressional lawmakers have expressed concern in a series of hearings this year that rising default and foreclosure rates among borrowers with weak credit will force thousands of people out of their homes. The House legislation is one of the first formal steps in Washington to address the problem.
The proposal would direct the FHA to underwrite mortgages for people with higher credit risk who would otherwise be driven to subprime loans and expand access to FHA protection by increasing qualifying loan limits in high-cost areas. The legislation was introduced in March by Frank and Representative Maxine Waters, a California Democrat.
The Washington-based FHA, an agency within the US Department of Housing and Urban Development, insures loans made by private lenders to low-income, minority, and first-time homebuyers. The mortgages generally have interest rates 3 to 4 percentage points lower than subprime loans, the agency said.
http://www.boston.com/business/globe/articles/2007/05/04/panel_expand_fha_role_in_subprime_lending/
“…interest rates 3 to 4 percentage points lower than subprime loans,…”
For those without finance backgrounds, there are at least two channels through which taxpayers will be involuntarily forced to pour money down this rat hole.
1) Interest rates 3 to 4 percentage points below market (at a time when market rates are running around 6 percent) would inflate the price of a home a buyer could afford to pay off on the order of 100% over what would be affordable without the income subsidy. This basically qualifies an FHA-enabled household earning $30,000 to buy the same home as an FHA-disable household earning $60,000. Taxpayers involuntarily chip in 1/2 the long-term purchase cost.
2) Part of the proposal is to increase the FHA loan size, and also waive downpayment requirements. Waiving the requirement for buyers to have their own skin in the game will increase default risk in the borrower pool. The FHA’s balance sheet will be loaded with a flood of toxic mortgage debt, which will be implicitly insured by the U.S. taxpayer, who gets to pay the cleanup costs for massive defaults on homes the low-income buyers cannot afford to pay off
at some unspecified future point in time.
2006 Discretionary Budget Authority: $28.5 billion
(Decrease from 2005: 11 percent)
http://www.whitehouse.gov/omb/budget/fy2006/hud.html
The FHA is a division of HUD, and HUD had a budget of 28 Billion last year. Has any congressmember that is seriously considering this program made estimates of what the budget will be in ‘08, ‘09 or ‘10?
28 Billion is equivalent to the cost of just 3 weeks in Iraq. I don’t think they are going to have the money to do much of anything.
Why can’t they just ignore the implicit costs of the interest rate subsidy and the insurance subsidy in their calculations? There is plenty of other accounting chicanery currently used to understate federal govt spending; what would a little more hurt?
It would appear particularly easy to overlook the true cost of the insurance subsidy part of the bill. Some dimensions that would be easily ignored (because most Americans don’t have a clue about them) would be:
1) Waving downpayment requirements would increase the future foreclosure rate on FHA loans, a natural consequence of requiring borrowers to have no skin in the game (BTW, this explains why over 60 private subprime lenders have gone belly up this year, but that won’t stop the government from rolling this failed business model into a federally insured program!).
2) Increasing the FHA limit in bubble markets would make it possible for many more low-income households to purchase homes they cannot afford, and increase the required size of the future taxpayer-funded bailout.
3) Relaxing qualification standards for a highly-subsidized taxpayer-insured program will suck in far more participants, and those who are sucked in will be of worse average credit risk than those currently in the program (back to that no-skin-in-the-game issue).
Note that 1) is an intensive-margin effect, separate from the extensive-margin effect of 3).
But getting this calculation right would require a deliberate act of thought which would potentially thwart the efforts currently underway to quickly pass a bailout measure (brings to mind the early days after Hurricane Katrina!).
GS, I agree but will pick one nit. The FHA limits have always been unrealistically low in certain areas. My understanding is that they are at best regionally adjusted, so you get markets in which even the cheapest shack cannot qualify for an FHA loan at the bottom of a slump, let alone at top-of-the-bubble pricing. At the same time, you get other markets in which an FHA loan will buy you a house that is high-end for the area.
In general, the FHA loan limit for high-cost areas is 87 percent of the conforming (Fan/Fred) loan ceiling.
If the government is going to be in the loan business at all, it needs to do a better job of matching the limits to the market.
“…interest rates 3 to 4 percentage points lower than subprime loans,…”
GS, That means 40 -80 bps above conventional 30 year fixed. Plus FHA requires “Upfront Mortgage Insurance” priced to the “credit risk” with the minimum amount of Upfront Mortgage Insurance = 1.5% of loan amount and minimum monthly insurance of 0.5% of mortgage payment.
It is not 3 -4% lower than conventional rates.
ANYONE WITH EFFECTIVE STRATEGIES FOR OPPOSING THE TRANSFORMATION OF THE FHA INTO A GOVT SPONSORED SUBPRIME LENDER PLEASE SHARE!
I suspect that you are watching the wrong shell. The truth isn’t in these folks. It isn’t concievable for me that the gov gives one hoot if the wage earner can buy a home. What they must want more than anything is to prevent panic, to keep the music playing. None of the things the pols are talking about is even remotely a tool to keep prices ratcheting up and keep us buying crap.
If the pea is under a different shell, I wonder which one.
Read nhz’s post below before you become too confident. It is also quite possible that the FHA bailout scheme is one small piece of a “death-by-1000-cuts” (nonpoint source) bailout strategy which is designed to get past the political radar screen. Senator Dodd learned the hard way the way voters feel about highly publicized Great Society programs to funnel tax dollars into rat holes.
I am not confident, I am grown suspicious and paranoid. I expect the serpent they show me is not the one that will bite me. The puny plans they are discussing aren’t the deep drink that I think (feel) we will take.
It sucks to have your own government be the biggest threat to health, wealth and happiness.
Spend a little time on solari.com…..specifically Austin Fitts’ lengthy article about Dillon Read, et al. Then figure out if any of us can expect more than same-old, same-old from the criminal enterprise we euphemistically call our federal government..
Arlington — isn’t there a typo in the first paragraph of your post? Shouldn’t “underserved” be “undeserving?”
just for the record: most of this is already common practice in the Netherlands, about 70% of recent mortgages are covered by such a system. Up to now the cost for the government is close to zero, homeprices are still climbing here and although foreclosures are rising too the numbers are small and the fund that insures the loans does not need any external money (yet). Because the loans are assumed to be totally without risk for the lender, the effective rates for homeowners within the program are low, it is assumed to be a win-win situation. In Netherlands there is a limit of 250K euro for these loans, that is just above the average home price (244K). With a minor or no downpayment, you can get a fully-insured mortgage for the value of an average home plus some additional cost. The limit will probably be raised next year to 350K euro (which will probably push the average home price in Netherlands close to 350K euro). Of course some people buy more expensive homes within the system, e.g. because they use equity from a previous home.
Despite (or because of) this system, homeownership in Netherlands is just 55%, almost the same as 30 years ago.
“…homeownership in Netherlands is just 55%,…”
It is good to hear from you, nhz, that policies adopted in the Netherlands ostensibly designed to promote home ownership have had little effect. And I am not at all surprised. I believe when the dust settles on future collapses of Fannie Mae, the FHA and maybe Freddie Mac to boot, it will become clear in retrospect that all these policies which were sold to the American taxpayer as means of increasing homeownership rates will turn out to have mainly been about subsidizing the REIC.
Almost forgot to explain my reasoning.
REIC subsidies benefit buyers lucky enough to be in current homeownership status when the subsidy measure is adopted, but then they are nearly immediately capitalized into property values — a version of the open access problem. The next generation of would-be homeowners is then priced out until another subsidy program gooses demand a bit higher (with the subsidies locked in forever). And so it goes until either the Ponzi scheme collapses, or fewer-than-ever newly-formed households can afford to buy a home (other than direct recipients of the subsidies, like FHA borrowers subject to 0% downpayment requirements…).
Sincere hat tip to mrincomestream, for posting that he had changed his mind (based on his new information) on whether the bailout would reinflate the bubble.
That’s twice now he’s come back to the board to acknowledge a complete reversal of position.
Class.
ajh……I have to agree.
From what I’ve seen of his posts, mrincomestream is a class act and gives very good critic and advice.
Classic flip-flopper (nothing wrong with changing your mind, based upon new data)
Motion carries.
Not to be a total fanboy, but…
Mr. Income Stream is a valued poster and in my book still has one of the best posts ever.
Yea, thanks guys… You can also thank my title company for being lazy. I was looking for something specific for a client and thought since foreclosures were supposedly rampant I’d check the sheets and see if I could find what they were looking for. The Title Company didn’t want to sort it for me so they they just sent it raw. Which made me have to sort it, one thing lead to another.
I was absolutely amazed at what was coming back and what people had done. The bailout will stem some, so instead of a reversal of price of 60% I’m now at 50% at least.
Things don’t always go as you expect department…
aladinsane’s grandpappy was a wealthy man, back in the day, in Czechoslovakia. He was an architect, a man about town and wise.
He saw the writing on the wall in 1938, and shrewdly deposited 5,000 Pounds Sterling in an English bank in Prague for each of his 3 children, including my father, their future, or so he thought.
He was going to be a smartie and out think the nazi party.
After the Sudatenland was annexed late in ‘38, adolf and crowd wanted more and traipsed into Prague in 1939, without a whimper from the English or French, who trying to appease the beast, said nothing, when the looting of foreign banks took place by said fascists.
Goodbye 15,000 Pounds.
Was save our homes designed to keep (or throw) low and moderate income buyers out of Florida? IOW, did yesteryear’s Floridian claim Florida for himself, allowing into Florida only people willing and able to pay his taxes/community expenses?
Some Chicago datapoints. I’ve been in the market for a few months and monitoring properties. Not too many have closed. But here’s the data for those that have. These are primarly 3br/2ba duplex condos in the north neighborhoods outside downtown. For 13 properties ranging in asking price from $459K-$549.9K the average closing price was 3% off the asking. Two properties sold for asking price; six were 3% off; the other five were between 4-5% off. Four of these were new construction so they don’t take into account any concessions to the buyer. All in all, the market here is stubborn. Not many properties are moving, and the sellers are reluctant to lower prices. Good properties seem to move more quickly and the cookie-cutter ones seem to linger. National City’s valuation has Chicago at 15.8% overvalued as a whole, so I’ll be sitting out a bit longer until prices come in line.
Lurk longer and buy nothing.
Where are you getting your data?
Most condos in Chicago list with parking excluded but sell with parking included. As you probably know, the parking spaces normally have a separate PIN and thus ownership doesn’t have to be by the same person. The seller doesn’t mind keeping the parking space - he can almost always rent it to a commuter with a quick post on craigslist.
So… if you are going by the average asking-to-closing ratio that the MLS puts out, keep in mind that that figure does not account for what happens when the parking space is not included in the asking price yet sells in the same transaction as the condo. And as I said, it is extremely common with condos in Chicago.
Things may be “stubborn” in Chicago but are definitely getting soft.
Every few days I check the listings in 60610 and 60611. OK, sometimes I look at 60606, too. Quantity is creeping up, with prices coming down. We’re at early/mid 2005 pricing here.
From the WSJ:
… “People will go to great lengths to get out of a legally binding transaction,” said Larry Sorsby, chief financial officer of Hovnanian Enterprises Inc. “They were willing to ride the real-estate boom on the way up, but some are not willing to ride it on the way down.”
“People will go to great lengths to get out of a legally binding transaction,” said Larry Sorsby, chief financial officer of Hovnanian Enterprises Inc. “They were willing to ride the real-estate boom on the way up, but some are not willing to ride it on the way down.”
Reality can be such a “b*tch”
Real estate short sales: “win-win” or reward for failure to live within one’s means?
By Carol Lloyd, Special to SF Gate
Friday, May 4, 2007
“I accept that whatever banks, regulators and homeowners can do to stave off foreclosure is probably for the good of all — but forgiving a $600,000 loan? Whatever happened to personal responsibility? It’s a weird facet of American society, which better rewards those who try to live the American dream and fail miserably than those who live within their means. In the end, those left carrying a fat debt, bad credit scores and lingering regrets are as much a mirror of our system as all the happy homeowners who make their mortgage payments month after month.”
My thanks to Carol Lloyd for writing that.
“It’s a weird facet of American society, which better rewards those who try to live the American dream and fail miserably than those who live within their means.”
This is where our top policymakers are currently getting it wrong. Encouraging people to make foolish personal household decisions (like buying a $600,000 home on a $30,000 income) is a bit different than providing incentives for entrepreneurial activity that might produce something of value to society. We have too many government-sponsored risk incentives that foster stupid and destructive decisions, and not enough that encourage potential high-risk/high-potential-reward decisions.
I submit that this would change if Mit Romney were elected president, as the Mormon culture abhors profligately burying one’s self in debt in order to live beyond one’s means.
“Mitt”
Romney could even go so far as to call for a cease fire in the Fed’s War on Savers. I personally don’t see how the negative savings rate problem will end without a change of course, as Americans rationally view dollar-denominated savings accounts as fraught with future inflation risk under the current regime.
‘President Benson, 13th president of the Church of Jesus Christ of Latter-day Saints, said, “I would respectfully urge you to live by the fundamental principles of work, thrift, and self-reliance, and to teach your children by your example. It was never intended in God’s divine plan that man should live off the labor of someone else. Live within your own earnings. Put a portion of those earnings regularly into savings. Avoid unnecessary debt. Be wise by not trying to expand too rapidly. Learn to manage well what you have before you think of expanding further. This is the kind of advice I would give my own, and is, in my opinion, the key to sound home, business, and government management.’
(Teachings of Ezra Taft Benson, Pg.262-263.)
http://waltonfeed.com/peoples/lds/finance.html
I am sorry, I don’t agree with you on Romney. He goes with the flow, no spine like ALL politicians. When in MA, abortion fine, universal health care etc…Now, running for Prez…abortion is BAD, no universal health care etc…JUST ANOTHER POLITICIAN.
For me, I believe a woman should have all rights, especially the right to choose. If men got pregnant, you can be DAMN sure we would have that right.
No need to apologize, dukes. My mind is not made up at this point. But I would be more inclined to vote for a candidate who tried to reinstate incentives for personal responsibility, including an end to the War on Savers which is underway at the moment. I know this may be wishful thinking, but the future of our country depends on it happening.
Have you researched Ron Paul yet? How can he not have your vote. The guys is all about fiscal responsbility. Best of all, he has the record to prove it.
I agree that Ron Paul is the only guy currently running who understands the fraud of the “inflation tax” (or will at least admit to it).
“But I would be more inclined to vote for a candidate who tried to reinstate incentives for personal responsibility, including an end to the War on Savers which is underway at the moment.”
Ron Paul. The only person in the entire congress who can prove his demand for personal responsibility through his voting record — 100%, not even 99%.
I’m supporting both Ron Paul and Tom Tancredo. Time to send a message to the out-of-touch Republican elites. I watched the GOP Presidential Candidate’s debate for about eleven minutes, long enough to realize that with the exception of Paul & Tancredo, the rest were the “hollow men” described by T.S. Elliott.
Zevon on Zunday?
I saw a housewolf with a subprime mortgage in his hand
Walking through the streets of i.e. in the rain
He was looking for a place called suburbia
Going to get himself a dish of McMansion, with no financial pain
Housewolves of the Inland Empire
If you hear him howling around with the newly poor
Better not let him in
Little old lady got foreclosed upon
Housewolves of the Empire’ again
Housewolves of Inland Empire
He’s the hairy-handed gent, who ran amuck and spent
Lately he’s been overheard, nowhere
Better stay away from him
He’ll hit you up for a loan, Jim
I’d not like to meet this failure
Housewolves of Inland Empire
Well, I saw paris hilton, doing the perp walk
Doing the
I saw paris hilton doing the perp walk
Doing the
I saw a housewolf buying yuppie food at Trader Joe’s
His cart was loaded
Housewolves of Inland Empire
Draw blood
There is a property close to me that, in spite of being priced well above equivalent (same development, same size) houses has gone to contract. Any advice on how to warn the Realtor involved that cash back is fraud and a local vigilante might check records as soon as the sale closes. And, maybe if the Realtor got such a warning in time they could avoid the fraud investigation by the FBI by ensuring everything is squeaky clean. Any good web sites to cite? (”Anonymous vigilante cites sites, details at 11).
Could you elaborate a bit on how cash-back and closing help is fraud? I think I understand the type of fraud where the buyer borrows more than the appraised value, buyer gives the difference to the seller, and they both ride off into the sunset with the bank’s money, leaving the property to forclose.
But how is it fraud when the seller gives money to th buyer? I’m confused…
“But how is it fraud when the seller gives money to th buyer?”
Do you think the seller would have handed over $50K to the buyer even if the home sale transaction had not been CONsummated?
Here is how the deal works:
1) Buyer agrees to pay $50K more than the home is worth as the officially-stated “sale price.”
2) Fraudulent appraiser rubber-stamps the deal, based on 2006 comps.
3) Loan is approved and deal goes through for $50K over current market value.
4) Seller hands $50K cash payment to the buyer at closing.
5) FB is shocked three years down the road when he discovers he cannot sell for $50K over current market value, due to tightening lending standards which preclude the use of appraisal fraud to generate cash back at closing.
Substitute the nonpecuniary prize of your choice (HI vacation, brand new luxury automobile, etc.) valued at $50K into appropriate points in the above story to transform it into an explanation of how homebuilder incentives work.
So this whole cash-back ploy is just a way to keep the price, comps, and commisions artificially high? There’s no actual “stealing” involved?
The buyer–>seller kickback scheme is totally different, then. because that invovles running off with real cash.
Sorry to be a bug, I’m a scientist, not an economist…
Some bank somewhere loans more money than the house (loan security) is really worth. Appraisal fraud. If the bank isn’t informed of their stupidity, then it is mortgage fraud.
It’s fraud to the lender to give a cash -back to the buyer because its inflating the value of the home beyond the true market . Not only does a inflated appraisal comp increase taxes and give a false comp to appraisers data bank , the lender is giving a loan based on a inflated price so it increases the risk of the loan .Investors/depositers in banks have a right to know the risk of a loan they invest in . If a lender goes over 100% on the loan , if the borrower goes into foreclosure the lenders will have a greater loss . In other words , it’s fraud to do anything that would hide the true risk of a loan on a property . If a buyer pays cash for a joint than it isn’t as much of a issue but fraud on the terms of sale to the lender is .Remember the County sets property taxes and the lender sets loan amounts based on sale prices . Also a cash -back sale could be a issue for the IRS in that it is a gift that is taxable .
The seller paying for closing costs or minor repairs (if disclosed ) has usually been allowed but it’s subject to the lenders approval to make sure its not a kick-back with a inflated appraisal .
Oxide,
It is stealing and it is a felony. The fraud is committed in the contract and the appraisal. The non-disclosure to the lender creates collusion. The lender is taking on a hidden risk, since the loan amount is based on a false price, and the buyer is not bringing cash to the table. That is why the law exists.
LongIslandLost, leave the Realtor a VM from a pay phone? And if the deal goes thru, report it to the IRS. Cash back thru mortgage fraud is taxable as regular income. The IRS will reward you with 15-30% of what they recover, including penalties and interest. So your reward grows at 20%/year while they nail the b@stards. The IRS has a special form for the purpose here: http://www.irs.gov/businesses/small/article/0,,id=168257,00.html
$100,000 tax fraud should be worth $30,000 in taxes. So have fun and make your self $5,000 to $10,000 this weekend.
A ha, got it. Thank you. I knew about the inflated price fraud, but I kept confusing it with all the other frauds out there.
Even most of the posters at SDCIA, to their credit, acknowledge that this is fraud.
If you clue the agent, you probably prevent just one fraud in that area. If you nail the fraud after it occurs, having tipped off the authorities that you’re following it, then you might prevent additional ones.
–
Note the publication date.
American Nightmare: PREDATORY LENDING AND THE FORECLUSURE OF THE AMERICAN DREAM
by Richard Lord (Author)
http://www.amazon.com/dp/1567513050/ref=pe_pe_606_5645810_pe_ar_t3
Editorial Reviews
Book Description
Homeowners who can’t borrow from banks have long turned to the subprime lending industry for mortgages. Increasingly, that industry has turned on them by charging outrageous fees and usurious interest, and then taking their homes through foreclosure. Richard Lord explores the spread of predatory lending practices. And it tells the stories of borrowers who’ve been taken, contractors and brokers who’ve been co-opted, lenders who’ve cheated-and the world’s biggest financial titans, who’ve cashed in. A battle is taking shape that could determine whether home ownership for working people will be an achievable dream or an American nightmare.
Richard Lord is a writer for the Pittsburgh City Paper whose work on subprime lending has won numerous awards.
Product Description
Homeowners who can’t borrow from banks have long turned to the subprime lending industry for mortgages. Increasingly, that industry has turned on them by charging outrageous fees and usurious interest, and then taking their homes through foreclosure. Richard Lord explores the spread of predatory lending practices. And it tells the stories of borrowers who’ve been taken, contractors and brokers who’ve been co-opted, lenders who’ve cheated-and the world’s biggest financial titans, who’ve cashed in. A battle is taking shape that could determine whether home ownership for working people will be an achievable dream or an American nightmare.
Richard Lord is a writer for the Pittsburgh City Paper whose work on subprime lending has won numerous awards.
Product Details
Hardcover: 352 pages
Publisher: Common Courage Press (October 30, 2004)
Language: English
ISBN-10: 1567513050
ISBN-13: 978-1567513059
Product Dimensions: 7.7 x 5 x 0.9 inches
I wonder what the author is thinking now? I wonder if he believed that the party could go on so long after his book was written and published.
Another voice in the wilderness…
“Increasingly, that industry has turned on them by charging outrageous fees and usurious interest, and then taking their homes through foreclosure.”
Wow! This was out there already in 2004, but it took the likes of Dodd, Schumer, Clinton, Obama, Frank and Waters (to name a few Demo-rats who are trying hard to socially engineer a taxpayer-funded “fix” to the subprime debacle) until 2007 to act on it. And now they will ask all Americans to pony up the bailout costs, rather than targeting the industry which perpetrated the predatory lending, but which also pays their campaign contributions. SCANDALOUS!
Please leave your partisanship behind. Guess who is supporting the FHA bailout? And guess who did last year? Bush
This is related to housing, although I agree, in general, we should limit partisan attacks. If you go to the opencongress.org site, you will see the six sponsors of the bill are all Dems. I usually vote Dem and it pains me to see it.
I only get partisan when I notice that all the vocal supporters of a stupid policy are from the same party.
The borrowers will tell you they didn’t understand that their loan would go up .
For the industry to say that they were putting people into homes when they were charging them a effective interest rate of 10 to 13% is a joke . This is making a sub-prime borrower pay twice the price for home-ownership in a 5 to 6% fixed rate market .I know they were getting in on no down loans but these interest rates are punitive punishment for the sub-prime credit scores .
It use to be in prior lending cycles that you charged higher rates for a” bail out type loan “that usually had a short term to it and those loans had a low loan to value . The lender fully knew that these were “emergency loans”, and it gave the borrowers time to sell ,or get a new job, or go into foreclosure .These were always only refinance loans ,not purchase money loans ,( they called them ‘hard money loans” ).
To put a subprime borrower on a no down loan with a teaser rate that will increases more than 100% over the market rate for prime borrowers is madness .But to tell borrowers that they can refinance out of these loans when it would be based on having future equity is adding insult to injury . Course what did sub-prime borrowers have to lose with this gamble with no skin in the purchase .
We are going to see thousands of foreclosures because of this faulty lending . These sub-prime loans are pure madness to begin with but to make them no down stated income to encourage fraud is the real kicker .
“Course what did sub-prime borrowers have to lose with this gamble with no skin in the purchase .”
I suppose that is true, IF the monthly payment (PITI + maintenance) is no higher than the rent for an equivalent place. In effect, they are only renting anyway and will have their credit dinged to boot.
“To put a subprime borrower on a no down loan with a teaser rate that will increases more than 100% over the market rate for prime borrowers is madness.”
It is a madness which goes unmentioned in Congressional appeals for “save our homes” bailout plans.
Schiff
http://www.gold-eagle.com/editorials_05/schiff050407.html
First quarter profits at MasterCard surged 70%…
Things that make you go ‘Hmmmmm’. I wonder if people are in aggregate rolling over bigger balances because it’s suddenly harder to get refi’s.
Absolutely. All those “profits” come from loaning money that they’ll never see again. They’ll get a portion back from the people who have above-median incomes at the time they file bankruptcy, but it wouldn’t surprise me to see a lot of people no longer having that much income by the time they file. From the rest they’ll get nothing. I’d expect profits to be down at that point :-).
does Schiff have a verifiable track record?
Take advice from winners only, that means at least 10 years of 12%+ results.
Here’s another fine article from the WashPost Real Estate Advertisement section … it calls for the IRS to stop taxing as income portions of debt which are forgiven by lenders. Mr. Harney believes such forgiveness is ‘intangible’ income.
http://www.washingtonpost.com/wp-dyn/content/article/2007/05/04/AR2007050400904.html
“…it calls for the IRS to stop taxing as income portions of debt which are forgiven by lenders.”
Anything to ensure that ‘real estate always goes up’ is all for the good.
I think there is a very good chance that this will be a part of the “bailout,” but that it will (initially, as in much governmental legerdemain) have a limit of a certain number of years. It will be touted as a means of humanely “clean out the closet” without doing permanent harm.
Brrrr… at least the stock market is still hot, though! But I cannot foresee how slow pay raises and weak hiring will enable absorption of the glut of homes on the bubble markets priced at $500K on up.
———————————————————————————
Economic chill curbs new hires, pay rates
By Jeannine Aversa
ASSOCIATED PRESS
May 5, 2007
WASHINGTON – The U.S. unemployment rate edged up to 4.5 percent last month as the economy cooled and wary employers added the fewest positions in 2½ years.
The fresh picture provided yesterday by the Labor Department showed that payrolls grew by 88,000 as losses spread beyond manufacturing and construction and into retailing and financial services. Paychecks also grew more slowly.
Given the housing slump, rising energy prices and overall sluggish economic activity, “businesses are a bit more cautious and reluctant to hire as aggressively as they had,” said Mark Zandi, chief economist at Moody’s Economy.com.
http://www.signonsandiego.com/uniontrib/20070505/news_1b5economy.html
Yes, the economy is slowing. I work for a major automotive electronics supplier & Ford is / was our #1 customer. Usually we have 7+ new / enhanced engine controllers a year. We are now down to 1.. No layoffs (yet). With the plant closing @ Ford & GM looming, the current wrenching RE slowdown in Detroit will really blast into high gear. Also, oh there will be no collateral damage from the RE meltdown ???
bahahahahahaha
Aww… this little flipper bought in La Jolla and is losing his patience plus his shirt. His asking price is now $150K below his purchase price in December ‘06.
He has some alligator anxiety issues and manages to insult anyone reading his ad. Nicely done!
http://sandiego.craigslist.org/rfs/324756729.html
This just made me laugh.
“What’s it going to take for you to live in this great neighborhood only 5 to 6 blocks to that beautiful Pacific Ocean and sandy beach??? COME ON OUT, FOLKS. Take a look. Make a solid offer. We’re looking for immediate buyers. It’s time for you to stop “waiting for the market to drop”. GET REAL!!! THIS IS COASTAL SAN DIEGO. HOUSING PRICES AREN’T LIKELY TO GET ANY LOWER THAN THEY ARE RIGHT NOW. You want to live where the weather is just about the best in the WORLD???? They say…that’s right here, in San Diego. Sure, you can wait another year or two before you finally decide to buy a home here, but all you’ll have by then is a higher price than it is now…..AND YOU’LL BE TWO YEARS OLDER. Get with it. Open House….come on out…make an Offer to Purchase and let’s close this deal now on this 2 bedroom, 2 bath, 2 story Single Family house, upgraded, GOOD OCEAN and City Views….IN LA JOLLA SCHOOLS ATTENDANCE AREA!!!!! 1,660 sq.ft house on a 3,600 sq.ft level lot with street access plus paved rear alley access from both Cass St and La Jolla Mesa Blvd. WHAT’S YOUR PROBLEM??? DO YOU REALLY WANT TO ONLY BE 2 YEARS OLDER 2 YEARS FROM NOW??? OR DO YOU WANT TO HAVE HAD 2 YEARS OF LIVING THIS CLOSE TO THE BEACH AND ALSO HAVE 2 YEARS WORTH OF EQUITY BY THEN??? COME ON, FOLKS….DECISION TIME IS NOW!!! BRING ALL OFFERS.”
If this is the lowest of the low of the market what is he doing selling.
Hmm, that must be the old saw about buy high and sell low.
Is the price on that 1.2 million, sheesh you have to be kidding me 1600 sgft on a 3600 sgft lot 1.2 … Wow
I smell fear….
I wonder what kind of person can be goaded into buying a 1.2 million dollar house by “WHAT’S YOUR PROBLEM??? DO YOU REALLY WANT TO ONLY BE 2 YEARS OLDER 2 YEARS FROM NOW???”
And, as a matter of fact, I DO hope to only be 2 years older 2 years from now.
‘It’s time for you to stop “waiting for the market to drop”. GET REAL!!! THIS IS COASTAL SAN DIEGO. HOUSING PRICES AREN’T LIKELY TO GET ANY LOWER THAN THEY ARE RIGHT NOW.’
The number of suckers with bank who might fall for this stupid ad is likely to continue its pattern of steady decline for the next several years, though.
Thought this might be of interest to local (Inland Empire) HBBs: a 2-hour lecture on global financial volatility by Nobel Laureate* Robert Engle. Next Friday at 8 p.m. @ UC Riverside.
http://tinyurl.com/2383xc
*Bank of Sweden version
Engle formulated the models which help Da Boyz make loads of dough when stocks bob up and down in a trading range while Momma and Poppa Longstocks wonder why their investments never go up much.
‘Rent Loan* - possible new term to describe loans taken out by parents in order to buy their kid a house/condo in a college town. Thus creating artificial demand and driving up home prices for the locals.
*Parent Loan
College kid could then be termed: ‘renter.
~Misstrial
Hey, I just found a cure for the renter’s blues. Been going to open houses, and I’ve found out how truly perfect I am. Makes me feel good. Every place I go to, we chat a bit, and the realtor tells me, “My god, you are the PERFECT person for this house. This house is just what you need.”
Ha. Not hardly. Remember the old Samples song “I Have a Dark Side”???
Another observation, may seem like OT, but can’t have houses w/o h20, as aladinsane often notes.
Colorado water basin runoff predicted to be at 50% of normal this year.
Another teensy weensy problem for those of you dependant upon the Colorado River’s bounty…
The dreaded Quagga & Zebra Mussels showed up in Lake Mead and 14 miles downstream this year.
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/01/20/MNG96NM0A71.DTL
Mother Nature always bat’s last…
Zebra mussels have turned the great lakes a beautiful blue, but unfortunately sterile. I have to take my boat out of the water twice a year to clean the pests from the hull. Usually they are in clumps of 5 to 20 mussels (a few ozs), however I have pulled off 5 lb clumps of these mussels. The hull is teflon coated and supposed to prevent build up.
Subprime Won’t Be `Any Huge Anchor’ to Economy, Buffett Says
By Erik Holm and Josh P. Hamilton
May 5 (Bloomberg) — The subprime mortgage crisis won’t be “any huge anchor” to the economy, though lenders and borrowers will have “plenty of misery,” Berkshire Hathaway Inc. Chairman Warren Buffett said today.
“It will be a very big problem for those involved, but I think it is unlikely that factor alone triggers anything in the larger economy,” Buffett, 76, said at the company’s annual shareholder meeting in Omaha, Nebraska. That assumes unemployment doesn’t increase “significantly” and interest rates don’t go up “dramatically,” he said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aS1KgkM4aE2c&refer=home
‘That assumes unemployment doesn’t increase “significantly’’ and interest rates don’t go up “dramatically,’’ he said.’
“I pull in resolution, and begin
To doubt the equivocation of the fiend
That lies like truth: ‘Fear not, till Birnam wood
Do come to Dunsinane:’ and now a wood
Comes toward Dunsinane.”
The Tragedy of Macbeth — SCENE V. Dunsinane. Within the castle.
William Shakespeare
Formula for foreclosure: resets, no equity
By Holden Lewis • Bankrate.com
“More than 1.1 million homeowners will lose their homes to foreclosure by 2014 because they can’t afford the rising payments on their adjustable-rate mortgages, according to a researcher.
Cagan, a researcher for First American CoreLogic, says the net losses from these foreclosures will total about $100 billion over the next six or seven years. Depending on whether house prices go up or down in the meantime, the financial impact could be lighter or heavier than that, he says.
Cagan says the problem stems from “the double whammy of reset and no equity.”
According to Cagan’s research, the foreclosure wave will hit two classes of people. First are those who had relatively good credit and got mortgages with superlow introductory rates of 1 percent to 2 percent. A lot of these loans allow negative amortization, and at a certain point, their minimum monthly payments can double overnight. The other vulnerable group comprises borrowers with poor credit records who got subprime ARMs.
Cagan says his forecast is “based on conservative recession conditions. I’m trying to do the most intellectually honest, go-ahead-and-get-the-magnifying-glass-out way of doing it.” The problem might not turn out as bad as he predicts, or it might be worse. Under his model, every 1 percent drop in the national average home price would lead to 70,000 more foreclosures over several years.
Michael Moskowitz, president of Equity Now, a mortgage lender, says the criteria for some loans have become too strict. “Now it’s a little tougher to do deals that are actually good deals,” he says. “But I think that in a matter of months, the industry will self-correct and the good deals will be easier to get done.”"
The full article can be read at
http://www.bankrate.com/brm/news/mortgages/20070503_reset_equity_foreclosure_a1.asp