Seeing The Backlash Of The Looseness In California
Inside Bay Area reports from California. “A year ago, short sales of homes were in short supply. Not anymore. Today, short sale, or discounted, listings are on the rise in the Bay Area and San Joaquin County due to cooling home sales, soaring foreclosure rates and the resetting of easy-money loans into higher mortgage payments, observers say.”
“In early May 2006, there were hardly any short-sale listings in Fremont, Hayward, Newark and Union City, said Steve Dhillon, a Realtor in Fremont. One year later, almost 8 percent of homes on the market in Fremont were listed as short sales, according to data from the multiple-listing service used by Realtors.”
“In Union City, 15 percent of listings were short sales, followed by 10 percent in Hayward and 7 percent in Newark.”
“Another reason for the increase in short sales over the last year is that many borrowers have taken cash-out equity loans, said Sarah Baggott, manager of the Hercules and El Cerrito offices of Prudential California Realty, who is seeing short sales in El Cerrito, Richmond, San Pablo and Hercules.”
“‘Most of them are because people have pulled out equity over and over again,’ Baggott said. ‘Some people have pulled out so much, their payments are too high. Every time you pull out money, your payment goes up and they don’t think about that.’”
“In early May, almost 7 percent of the homes for sale in Tracy were short-sale listings, said Realtor Dave Konesky. Although there is variation among properties, a typical short-sale discount would be 10 percent off the underlying mortgage, he said.”
“‘I think the biggest thing (leading to the short-sale increases) are the loans,’ he said. ‘And now we are seeing the backlash of that, the looseness (of loan underwriting requirements) is now turning around and biting us,’ he said.”
“Short sales are also on the rise on the Peninsula. Bob Marshall Sr., broker in San Bruno, has been in the real estate business in northern San Mateo County for close to five decades. ‘We have three (short sales) right now being processed,’ he said.”
“In the Bay Area, negative amortization loans soared from 1.7 percent of mortgages taken out in 2002 to 28.3 percent in 2005, according to LoanPerformance. During the same period, interest-only loans increased from 12 percent to 43 percent.”
“San Joaquin County also saw similar growth. Negative amortization loans jumped from just 0.3 percent of loans taken out in 2002 to 21.1 percent in 2005. Interest-only loans went from 2.9 percent of loans taken out in 2002 to 37.5 percent in 2005.”
The Sacramento Bee. “So far, consumers and businesses have borne the brunt of suffering tied to the economy. But now local jurisdictions from El Dorado County to Elk Grove are starting to cope with a revenue squeeze brought on by falling home construction, lower home values and softer retail sales.”
“‘Really the slowdown in property tax has just started to hit the tax rolls and the budgets of our municipalities and statewide,’ county Chief Financial Officer Geoff Davey said. ‘A year from now, that is when you’re really going to see budgetary impacts.’”
“In the first quarter of the year, more than 1,500 homeowners in eight area counties, including Sacramento, lost their homes to foreclosure, 10 times more than in the same quarter in 2006, according to a Dataquick report issued in April.”
“And that was before troubles in the subprime lending market forced another dip in new home sales locally. Fallout from those developments will hit the local governments sometime next year.”
The Union Tribune. “Near the peak of San Diego’s housing boom, home builder D.R. Horton purchased a steep, nine-acre hillside along Friars Road for $22 million. The land was earmarked for Fashion Walk, a trendy, 161-unit condo project. D.R. Horton spent $1.5 million on a retaining wall to hold back the slope.”
“But this March, D.R. Horton walked. It sold the property to apartment developer AvalonBay of Newport Beach. The price: $19.2 million.”
“At San Elijo Hills, a 3,463-home subdivision in San Marcos, four home builders under contract to purchase 257 single-family lots passed on the deals, forfeiting deposits totaling $12.6 million, according to filings with securities regulators.”
“At Del Sur, a master-planned community in Carmel Valley, builders not only have walked away from options on 70 lots but have sought delays in closing sales, said Fred Maas, president of Del Sur’s parent company.”
“‘I’m a very strong believer in the San Diego market, but it has been one of the most difficult markets in the U.S. from a real estate perspective,’ said Richard Douglass, division president of Centex. ‘It certainly went into decline earlier, and I think the decline has been more severe than most people expected.’”
“Most suburban master-planned communities don’t have to cut discount deals, real estate brokers say. ‘Every master-planned community had a crazy run-up in value,’ said Graham Weiss, president of GW Realty Co., which specializes in residential land. ‘So if you don’t have to sell, don’t in a down market.’”
“At 4S Ranch in Rancho Bernardo, developer Newland Communities has held off releasing 288 lots because of soft demand from builders. ‘We’re going to test the market this summer to see if builders are interested in paying a reasonable price for the lots,’ said Mike Rust, a vice president with Newland. ‘Over the past year, they’ve only wanted to buy discounted, fire-sale-type stuff.’”
“‘The question is how long do you want to have your capital tied up?’ said Douglass, the Centex division president. ‘All your money is tied up in this structure. You close all the units at once, and you depend on all those (presale) buyers being there at the end. The market we’re in today really doesn’t support that.’”
“More than 1,200 people who came to the San Diego Convention Center yesterday morning to bid on nearly 100 houses and condominiums that had been reclaimed by lenders.”
“Reflecting the recent national surge in home loan defaults, the dwellings from San Diego and Imperial counties were put on the block by Real Estate Disposition Corp., a company based in Irvine. It was the first of three such events planned in Southern California this month. REDC’s goal is to sell 300 homes that have gone through foreclosure.”
“A record number of San Diego County homeowners lost their homes in the first three months of the year, as default and foreclosure activity rose throughout the state, DataQuick reported. Locally, 1,182 foreclosures took place from January through March. The previous record was 1,059 in the third quarter of 1996.”
“Robert Friedman, chairman of the auction firm, said yesterday’s sale was REDC’s largest such event since the housing recession of the mid-1990s. ‘These are all foreclosures from major financial institutions,’ said Friedman.”
“Typically, the homes were reclaimed by lenders who were unable to sell them, he said. ‘Maybe the home was too high and there was no equity,’ he said. ‘Now the lender will sell it for less than the outstanding balance, in many situations.’”
“Hamid Gholam, a real estate agent from Irvine, said he saw reasonable deals but few true bargains. For investors like himself, ‘I don’t think there’s much money to be made,’ he said.”
‘Simpson Manufacturing Co. is battling to stay afloat in a housing market swamped by a slump in home building and sales. The company, one of the East Bay’s largest publicly held firms, makes fasteners, ties and other gear that construction workers use to join the wooden parts of homes and small commercial buildings.’
‘We are affected by the housing slowdown,’ said Terry Kingsfather, president of Simpson Strong-Tie, which is the principal operating unit of Simpson Manufacturing. ‘Builders are returning pieces of property, they are watching their sales dwindle, and that affects us.’
‘The turmoil in the mortgage industry is beginning to take its toll on local jobs. It’s hard to get a handle on the actual number because the companies are notoriously tight-lipped about job cuts. Based on company announcements and public filings since Jan. 1, the Register has identified at least 17 large or mid-size mortgage companies that have closed, filed bankruptcy or announced layoffs in Orange County. The total is 3,200 local workers and climbing.’
‘That doesn’t include an unknown number of layoffs by companies like Fremont Investment & Loan, which said ‘many’ of its 2,400 workers would lose their jobs this month after the lender shut down its subprime operation.’
‘Recent mid-month home-price reports from DataQuick shows the median resale price at what would be a new record high for a full month. The current record, $705,000, was set in April 2006. We asked visitors to the Lansner on Real Estate blog if this was a solid statistic, or just a statistical quirk?’
‘The median doesn’t take into account seller concessions, or the shifts to higher end homes caused by lenders tightening up their requirements, which started months ago. It also doesn’t reflect the quality of homes being sold. In 2005 everything sold, with no staging whatsoever, and no seller concessions. Now the sellers are spending thousands to properly prepare and stage their homes.’
‘My house in ‘05-’06, was selling for $640,000. Today the wishing price is about $560,000 — and still not selling.’
Do (does) the median price reflect short sales? REO’s? Auctions? Builder concessions? If not, why not? The question I’m asking is: how can we calculate the true median price? Are we getting BS?
You are asking all the right questions, and I hope someone who knows the answer can address them.
I strongly suspect that REO sales are systematically excluded from the median calculation during a bust, which would help explain why real estate (nearly) always goes up.
‘Recent mid-month home-price reports from DataQuick shows the median resale price at what would be a new record high for a full month. The current record, $705,000, was set in April 2006. We asked visitors to the Lansner on Real Estate blog if this was a solid statistic, or just a statistical quirk?’
Still a lot of funny money swirling around. We’ve still got a ways to go before buyer psychology changes, and the easy credit dries up. Hard to believe how many GF’s are still chomping at the bit.
The Housing Market’s Great! (Or So Say Ads From Realtors)
Category Jacks Outlay by 20.3% to Dispel ‘Myth’ That It’s a Bad Time to Buy
By Mya Frazier
Published: May 14, 2007
“It’s a great time to buy or sell a home,” declared a print ad that ran in dozens of major national newspapers late last year from the National Association of Realtors.
Six months later, though, that rosy, upbeat message contrasts starkly with the facts: 2006 was the worst real-estate market in five years. Sales dropped 8.4%, and home prices rose a meager 1.1%, according to data from the association’s own research arm.
Yet in TV spots for the NAR launching nationwide, an earnest Realtor implores: “It’s a great move-up market” and “This is the best market in years [long pause] … in terms of choice.” Then there’s the ecstatic couple ensconced on comfy couches with two smiling toddlers: “When you have a family, it’s always a good time to buy.”
The hope, of course, is for the industry to advertise itself out of a down market and save the economy from a housing bust.
But will consumers buy it?
More ad spending at market downturn
Other categories might cut advertising spending when times are tough, but real-estate outlays jumped 20.3% to $3.1 billion in 2006. NAR alone will spend 60% more, or $40 million, this year according to Frank Sibley, senior VP-communications and conventions and manager of the campaign, handled by Most, Newport Beach, Calif.
The association’s 1.3 million members voted to up dues $5 to $30 to fund the increase, and Mr. Sibley said the campaign has been extended to 11 months from seven months. “If we ask members, 98% want us to do more advertising.”
But spending more won’t help, according to Brad Inman, an industry pundit who founded a real-estate-news service that bears his name. Realtors “are trying to counteract that tipping of consumer confidence,” he said. “None of those ad campaigns is going to counteract a bad market.”
As a trade association, “A lot of what [the NAR does] is to please its members as opposed to doing what is really going to persuade the public,” Mr. Inman added.
Positive awareness
NAR’s latest push is a sharp departure from its “public-awareness campaign” launched amid a 1996 real-estate boom to create more positive awareness and preference among consumers for Realtors vs. licensed agents. “We wanted to be viewed more like doctors and teachers, and a lot less like bankers and lawyers,” Mr. Sibley said. (Nationally, there are 2.6 million agents, but only about 1.3 million are NAR members. The others are licensed agents.)
But the directional change is needed, said Mr. Sibley, as the NAR wages a battle for public perception. “There was a lot of negative publicity in the media, so we wanted to counteract that,” he said.
“The financial media creates issues to try and make people uncomfortable about investing in real estate and more comfortable about investing in equities. If you read Forbes, Fortune or the business sections of major newspapers, they would tend to argue if you have money to invest you should put it in equities — that would be a better choice than in real estate, so their national coverage tends to reflect that inclination and they come up with things like there is a [housing] bubble.”
Wrote Century 21 CEO Tom Kunz in Real Estate Magazine in late 2006: “It’s our responsibility to dispel the myth of doom and gloom, and replace the media’s rhetoric with some cold hard facts.”
Fallout
NAR is especially sensitive to accusations of cheerleading these days. Its chief economist, David Lereah, extensively quoted throughout the housing boom in the financial and mainstream media, stepped down one day before the organization released another round of bad numbers May 1; it reported an 11.3% drop in existing-home sales in March, compared to last March. It is the biggest drop in 18 years.
Bloggers went nuts, and even personal-finance website Motley Fool weighed in about how Mr. Lereah “consistently told the press that all was well. I still have no idea how self-respecting business journalists anywhere could have parroted his biased misinformation for so long.”
But spin is clearly part of marketing. In sending its latest data to Ad Age, Walter Moloney, NAR’s head of public affairs, offered caveats and lengthy explanations of why today’s slump differs from the last two housing downturns.
It gets worse …
Yet more bad news looms: 2 million homeowners could soon go into foreclosures. March foreclosures soared a shocking 47% to almost 150,000, compared to the same time last year, according to RealtyTrac. At the end of 2006, more homes than ever were sitting vacant — 16.7 million out of 126.6 homes nationwide, according to the most recent figures from the U.S. Census Bureau.
The National Association of Realtors isn’t the only advertiser in the category to gloss over industry woes. “There is a lot of bad news, but this is still the second- or third-strongest year historically over the past 30 to 40 years, and it is still a very strong, vibrant market,” said Bev Thorne, senior VP-marketing at Century 21.
But that’s tempered by a dose of realism. Despite the spending increase for the entire category, Century 21 did not raise its budget in 2006. The brand’s overall spending declined 6% to $79.5 million, according TNS Media Intelligence.
Exercising caution
Charlie Young, senior VP-marketing at Coldwell Banker, said the brand’s spending will be flat in 2007. Additionally, the brand is being careful not to give the appearance of cheerleading.
“You have to remain credible,” he said. “It’s a very traditional response to say, ‘Hey, it’s a buyer’s market.’ But for us, on a national brand level, that’s not the strategy we’ve chosen to take.”
That’s a smart move, according to Tom Davidoff, a professor of housing economics at the University of California at Berkley. He said in a down real-estate market, advertising should stick to the realistic goal of winning share.
“I don’t think, in the aggregate, the amount of advertising on TV is going to make the slightest bit of difference,” Mr. Davidoff said. “I don’t think anyone … sees an ad for Century 21 and says to themselves, ‘I should go put my house for sale.”
http://adage.com
NAR got a black eye Sunday nite on 60 minutes.
all about their 6% commission + near monoply on listings
exclusion of competition using state and federal laws underwritten
by NAR and State Realtors assocations.
Did you know that May is “Coldwell Banker Open House Month”?
I didn’t either.
“When you have a family, it’s always a good time to buy.”
Except when you’re going to become a defaulting deadbeat, like MOST people who bought in the past couple of years.
Bye Bye Realtors. Say good by to 6% commissions.
60 minutes tonight!
http://www.cbsnews.com/stories/1998/07/08/60minutes/main13502.shtml
6% - Realtors’ sacrosanct commission rate of 6 percent may be in jeopardy due to emerging online competition from Internet real estate sellers and buyers. Lesley Stahl reports. Richard Bonin is the producer.
Even without the Internet making their job easier, agents shouldn’t be getting 6% - with home prices tripling, why should their commissions triple also? Are they doing 3 x as much work?
I hope I can remember to see that tonight.6% is simply ridiculous this day in age.The internet has enabled people to do a lot of research themselves.I think a great business would be consulting in real estate.Helping people fill out the right forms, stageing and getting the right inspections would go a long ways.Let the people show their own dam house and save a few thousand. It is not that difficult to open an escrow at a title company.
I really don’t like being mean to people, but I hope realtors and real estate agents get a hot poker shoved up their collective corn chutes. Those people have turned homeownership into a speculative venture. There used to be a time when a home was where you lived and raised kids and grew old and died in your own bed. No longer. Thanks to realtors and real estate agents a home is now a treated like a whore, to be exploited for money.
Well stated.
~Misstrial
Any post that uses the term “corn chute” is well stated.
Specuvestors are the new pimp daddys!
I’ll debate… I don’t think you can solely blame the realtors. People think they are going to get rich as well, they have dollar signs in their eyes. I mean, we would all like to not have to work.
Only schmucks pay 6% - if you price your home right, a Realtor should jump at 3%.
http://centralcoasthousingbubble.blogspot.com/
Bwahhaaa only a starving non-performing rookie would jump at that…
And then they would get blacklisted.
Rightfully so, if you’re not strong enough to close for your own paycheck, why in the hell are you in the industry. It’s a sign of weakness and also a sign that if you’re looking out for your buyers you want no part of this weak kneed agent and his physcho seller that he has no inflluence with.
Coffee is for closers….
People are silly if an agent is not strong enough to close for his fee why in the hell would you want him/her out on the open market representing you on the sale of your house… That should be the first thing you look for.
“People are silly if an agent is not strong enough to close for his fee why in the hell would you want him/her out on the open market representing you on the sale of your house… That should be the first thing you look for.”
You’re grasping.
Should have read:
“You’re grasping at straws”.
I don’t think so. I just watched the lead in to that show on the internet. Are you kidding me… The reporter was even uncomfortable spouting that nonsense. Lastly I’m going to wait and see if the con-realtors are astute as they think they are… I saw something there that made me want to become an internet jockey.
Whatever they say, the Internet changes everything. The last time I bought a car, my starting point was online where I checked the invoice price and then phoned every dealer in town against the invoice. I will never use a pressuring dealer since.
Besides the obvious freedom of information that will kill the 6% comissions, the other point is demographics - the young generation is very computer savvy, they will laugh at someone with a GED (good enough diploma) getting a 6% comission.
Same here, Max.
We listed on the MLS for a flat fee of $300, IIRC. House sold within an hour. Easy escrow (of course, we didn’t look a gift horse in the mouth, either).
When we bought a car, did the same thing. Looked on-line and called dealers all around So Cal until we found one that agreed to our price. Went to pick up the car at the dealership & didn’t have to hassle with a moronic salesperson. Just let them know we wanted to do business and leave.
And it’s because of the internet that we have access to Ben’s blog, here. Thank you, Ben!
I LOVE THE INTERNET!!!
I suspect dealer “invoice” reflects some kind of landed cost. I generally get the “one at this price” car from Sundays ads. My last car a 2004 Camry SE V6 generally listed at $22.5K with an invoice of 21K and a Costco price of 21.5K - I paid 20K even. I guess they hope to switch you on colors or to other more profitable models, financing etc.
I was once told by a broker that their fee was negotiable, but never to something below 5%.
I laughed and told him that it wasn’t really negotiable, was it?
Deborah Arends, a realtor in Seattle on 60 minutes, tried to say she has to charge the full 6% to pay for gas. This lady is a moron.
You’re misrepresenting what she said…
They said why do you need to charge the same 3% fee and she said to pay for things like gas. How is that misrepresentation? You are the one misrepresenting.
See below…
When she was asked about the 6% remaining when prices of the homes have skyrocketed, she did say that thier expences, like gas, have gone up as well. She was implying that they need the full 6% to keep up and do the great service they provide. What a crock!
Diggs-
Prove her wrong with facts. Let’s see it.
If your fee doubles, and your costs double, that still means your profits double.
Pre:
6% on $100K house = $6K = $3k to each side. Costs $1K = $2K profit.
Post:
6% on $200K = $12K = $6K each side. Costs = $2K. $4K profit.
So, costs doubling is NOT in itself anything close to justification for comission doubling.
You’re not serious with that are you…
I don’t take offense to a 6% fee. I take offense to the stance that brokerage firms take with respect to negotiating the fee. Buying and selling a home is one of the biggest transactions of your life, which is why there will always be a market for brokers to convince people to buy, and to help the sellers through the process. BUT, it becomes a cartel once all major brokerages decide to NOT negotiate their fees.
If every TV manufacturer decided to charge $500 per 27″ tube TV, and that it was non-negotiable, we would all claim price collusion. Why is it different with residential real estate brokers?
Commercial real estate brokers make lots of money, and every fee is negotiable. Good brokers are very successful, bad brokers aren’t. Sales commissions range, from
“Deborah Arends, a realtor in Seattle on 60 minutes, tried to say she has to charge the full 6% to pay for gas. This lady is a moron.”
Gas and postage. That increase to $.41 tomorrow will really hit her bottom line. She will be asking 7%.
What did you think of her PT Cruiser?
She probably traded in the gas hog Suburuban Assault Vehicle for that to save on gas. I wonder what commission she let the car salesman charge her.
Didn’t see the P.T. Cruiser i’m reading the transcript off the net.
“Wish that were true,” Arends says. “I think what’s happened is a lot of expenses have gone up, everything from postage to gas, which affect real estate agents’ profits.”
She says she has to spend money to make money for her clients, especially when they’re trying to sell a house in today’s down market.
To move a property, Arends comes up with a strategy, then creates buzz by blanketing neighborhoods with fliers and sending postcards to notify other agents. She also spiffs up a house for viewing. As an accredited “staging” professional, she polishes, re-decorates and de-clutters.
An agents expenses are not just limited to postage and gas. There’s insurance costs, Newspaper Ad costs, Office Costs etc etc.
And yea that 41 cents will effect her just like it will effect any other business.
“As an accredited “staging” professional, she polishes, re-decorates and de-clutters.”
This was pretty funny. She is licensed to fluff pillows and create a non-functional home environment.
Are you really saying that $.02 extra on postage will do anything to seriously bite into the increase in profitability that Seattle real estate agents have seen in the last 5 years? In 2000 a house was probably $200,000 and total commission equal to $12,000. Today the house would probably go for $400,000 and a total commission of $24,000. That’s a lot of stamps and gas.
Miss Arends was an awful representative for the industry. She came across very poorly if you watched the show. I would guess a lot of agents watched her and cringed.
Well you didn’t actually see the way she said it. Reading a transcript is one thing, watching her say it with her own lips is another.
Im my area prices have gone over 350% in less than 8 years. The RE whore on 60 minutes was beyond any logic. It would make anyones blood boil.
I saw the video (just now, after midnight) and was not impressed with Arends’s excuses, and I do hope that on-line services get good enough to replace the 6% agents. As I noted on an earlier thread, Redfin doesn’t seem to function very well (enter a zip code, it gives you listings for a bunch of other zip codes).
Arends is just a typical realtor you will find any any state.
No surprise there…
The Realtors got SLAMMED!
They even called out states that the NAR has influenced to pass laws to keep the discounters out. Shame on Texas and Oregon.
Did everybody get a commercial for the National Associaction of Realtors right at the end of the show? Here in NYC we did. They said interest rates are low. But I thought rising rates caused the slump. They also said there hasn’t been this much to choose from in years. But excess supply won’t cause prices to decline. I was so proud when they had one guy talking about throwing his money away on rent.
My friends are throwing their money away on buying. Especially that their mortgage and HOA fees are close to 3k a month and the house next to them that is bigger and has a pool rents for $1250 a month.
OUCH!
I don’t think people in general would mind the realtors fees on the inflated real estate so much had their incomes gone up 300% also .But than we wouldn’t be having a housing crash would we .
It’s true that the realtors don’t show the listings they are getting paid less on so all you have to do is take down the phone numbers and call the listing agent later . You should know every listing in the neighborhood your shopping in .
Look at how the builders were paying 10% realtor commissions in some cases to steal the business from the used home market .
Now the realtors do have to work alot harder for a commission than they did during the mania because during the mania it was just order taking almost . Real Estate was selling so fast that you didn’t have to advertise that much to get a sale . Low costs put into each listing to get a sale during the boom . Now the borrowers want to see 100 properties instead of 5 .
So I guess I’m saying that as the property values go down so shall the realtors commission take ,and they will work harder for each deal and each deal will costs more to market. The realtors will also have more of a fall-out rate in a declining market .
But, if real estate inflated beyond true inflation in the last 7 years (due to a mania ) that means the realtors were getting commissions paid on bogus inflated value .
“bogus inflated value”
Fake multiple bids levied on the buyer. The buyer are weak minded and believe and need to pay extra (overbid) with spreads into future transactions. Its very common in San Francisco Bay Area.
“I don’t think people in general would mind the realtors fees on the inflated real estate so much had their incomes gone up 300% also”
Wiz-
You’ve said it all right there. Most of the cheering for the downfall of agents and I’ve covered this before is jealously. Some slug buried his head in a book for 6 years got his degree became a cubicle jockey, planted his nose firmly up his bosses rearend for nickles and it irks him to see someone who he feels is less capable justified or not make a few more dollars than him. Human nature. Newsflash: I can’t think of one profession other than Surgeon that their pay is reasonable. Everyone else is overpaid. I mean I’ve read about janitors making 60k a year, Government clerks with GED’s making 50k now to me that’s insane.
Here’s why I say never let the cheering in the crowd get to you. Most missed this part. Because no one commented on it. The Redfin guy states that he did eight deals in a week. Let’s take his example of 30,000.00 commission he says he gets eight deals a week. Gives back 20k to the Buyer for a net of 10k. He makes 80k a week sitting on his ass while these savvy internet geniuses run around parroting how smart they are and putting agents out of business. LOL yea sign me up. Even if he’s doing a fourth of that, that’s a million dollars a year. i should be so lucky.
I know what your saying mrincomestream and in my own little way I’m trying to say it’s not the 5% or 6% so much that is the problem as much as the high real estate prices make the commissions go beyond inflation .The discount brokers just do a volume business and give limited service ,as you pointed out .
it’s hard to explain to people how salespeople put many hours in that they don’t get paid and than they get alot when they do get paid (at least that is the way it is in a market that isn’t just a order-taker market ).
I don’t think the system will ever change that you need real estate agents to sell and list property .The general public has a real hard time with selling for sale by owner .What I think has been broken is the trust factor with the REIC and there will be alot of damage because of that .
RE industry is clinging to this 6% tradition with its fingernails, but time is running out. Internet/disintermediation will bring them into the 21st century, kicking and screaming.
I streamed the 60 Minutes show. The agent came across as the typical jaded sleaze, by comparison with the young, scrubbed new-paradigm Redfin people. I checked the Redfin website, where they had posted an apology for poor response times because of the web traffic inspired by the 60 Minutes coverage. They had put cleverly put up a demo video, to give a flavor of how the site works for those who couldn’t get in.
IMHO, there are too many RE agents doing too way to little to earn their occasional big paydays. The industry is secretive, inefficient and services are overpriced. A little competition is just what the doctor ordered.
I just check out REDFIN …..I’m impressed …They even provide sales history . This Company is not holding out on imformation and I like that . Could be that it will be major competition .
Yes nice piece but lets face it, the media like 60 minutes havent even scratched the surface on. The CEO of Redfin said… RE Industry has plenty of wrongs. Too bad they didnt talk about the fraud that goes on.
There is plenty more at Bens site on RE coruption.
Thank you for posting the link!!!
Real estate agents will be far fewer in number, working a lot harder, and making reasonable commissions in very short order.
“‘Most of them are because people have pulled out equity over and over again,’ Baggott said. ‘Some people have pulled out so much, their payments are too high. Every time you pull out money, your payment goes up and they don’t think about that.’”
Serial refinancing worked great as long as home prices were going up by 10%+ year after year. Now these folks are learning the hard way that money cannot grow on trees forever, as appreciation has gone into reverse.
The people who have sucked the money out of the house every year are going to give the house right back to the bank soon.They might have to get real jobs now that the funny money is drying up.
wages, eeew
Hmm, not much good employment for folks with poor credit - not the kind I suspect they need to make their payments with at any rate.
I think this is a very important point. Plan B for these people was “hand the keys back to the lender”. There is no way they thought through the ramifications of bad credit. Try getting a job in the financial industry with a bankruptcy on your record. Companies just can’t take that risk.
The only thing the FBs can hope for is that there are so many credit histories destroyed that employers have to hire people with bad credit because there aren’t enough people with good credit.
That’s not as far fetched as you think…
Like I said before, these people don’t even realize that they’re living beyond their means. The RE bubble has enabled them to go far deeper into debt than would normally be the case.
‘… the decline has been more severe than most people expected.’
Is this the new moniker? It should be, as some expert is quoted in the MSM saying something very close to this remark on a daily basis.
I can understand J6P being “Bedazzled” by the sudden and unforeseen change in the market, but economists, builders, brokers, lenders, realtors…..editorial staff at major news agencies?
Stoppit.
For Stephen Colbert to be poking fun at the housing bubble 24 hours after the dam broke, this was old news a comin’ for everyone in the media, for a long long time.
“Most suburban master-planned communities don’t have to cut discount deals, real estate brokers say. ‘Every master-planned community had a crazy run-up in value,’ said Graham Weiss, president of GW Realty Co., which specializes in residential land. ‘So if you don’t have to sell, don’t in a down market.’”
This approach could backfire if land prices slowly deflate over a period of years (the way they have in every other real estate bust in U.S. history). It is wiser to unload your falling knife early, than to ride the market all the way down to the basement.
Who ever said builder’s are smart. Let them fall on the knife. Maybe “take a number” and wait in lines are over?
“Who ever said builder’s are smart.”
Give credit where due. They cashed out lots of stock in August 2005, when everything still looked rosy.
Makes you wonder how many builders’ officials screwed themselves with greed. I’ll bet some of them used debt or excess cash (in the boom times) to buy back stock so that they could sell at nice, high prices, but thereby depleted the companies cash and credit so that they won’t survive the belt tightening. If that is the case, I say ‘let em burn!’ Hope they kept enough cash, because I don’t think any company will want former CEOs of BK builders anywhere NEAR their company headquarters.
“‘Every master-planned community had a crazy run-up in value,’ said Graham Weiss”
Who would live in a master-planned community if they had a choice? Maybe hard-core golfers who need to live on a golf course?
Maybe it’s just me, but I would rather live in real neighborhood with real houses, not McCookieCutter imitation detached condos.
I would rather live in real neighborhood with real houses
And most importantly, with no *#$^ing HOA!
“….four home builders under contract to purchase 257 single-family lots passed on the deals, forfeiting deposits totaling $12.6 million…”
Ouch, that is $50,000/lot to NOT buy the property. That is so strange that no one can deny this market is upside down.
It is sort of like my landlord’s problem. I pay $1950/mon rent. My landlord’s wife is complaining she adds $3450/mon to my rent to make the loan payment. All my friends laugh, saying the GF is paying me $40,000/year to live in his house. How long can that continue, when the $725,000 he paid for this model a year ago is now selling at $535,000. Not long.
It’s like a stop loss order. They’re forfitting 50k but the land has probably gone down in value more than 50k.
If the market is moving very fast - their is no guarantee that you will get a fill at your stop loss - unless it is a limit order. Even then, you might not get out at your number.
So, it’s more like buying a call option. They determined that the value of the underlying property had fallen below the strike price for the call, so they didn’t exercise the call.
So, it’s more like buying a call option.
—————————-
That’s exactly what it is. These builders were using *options* on the land. Basically, call options on the land.
“Most suburban master-planned communities don’t have to cut discount deals, real estate brokers say. ‘Every master-planned community had a crazy run-up in value,’ said Graham Weiss, president of GW Realty Co., which specializes in residential land. ‘So if you don’t have to sell, don’t in a down market.’”
My Gosh, these people are hallucinating. What great financial advice to a manufacturing business (home building) with enormous debts from buying the land under the houses (which is probably all of cost of the property over about $110/sq ft for building, so for a 2000 sq ft $500k place, half of that is land cost) and thousands of employees, and a listing on the stock exchange… “don’t sell for a few years” until the (nominal) prices recover… Oh, yeah, now THAT is good advice… I’m sure the homebuilders will be lining up to hire Mr. Weiss as CFO. Not.
Next I’ll be he’ll be giving GM some good advice, like put all your cars in storage and sell them in 2010 when you might get more for them. What. A. Moron.
Maybe RE professionals don’t understand the concept of ‘Cash Flow’. They see insane investors that are willing to lend money at the drop of a hat, and have had bundles of money flowing into their pockets for minimal work. “We don’t need no stinkin’ cash flow…” Yeah, the banks and firms who lent to the builders (and if builders finances are anything like the industries I have worked in, such as mining, EVERYTHING is bought on credit, from land to materials) will be just jolly to get the old ‘Um, we have decided to hold off selling houses for awhile, you don’t mind us paying a tad late, do you…” My guess is that the time line for selling before the cash dries up has gotten pretty short, as holding reserves would not be competitive in the bubble times. I do think that builders will have to sell whether or not they make a profit, just to keep up cash flow.
Yeah, his advice is pure idiocy. You can tell that guy has never worked in an real company that actually builds something in order generate…Gross MARGIN. How about that for a concept. How about lowering the price and continuing to build just as long as the grosse margins are there to generate cash flow? Oh that would just make too much sense wouldnt it.
Yeah, his advice is pure idiocy. You can tell that guy has never worked in an real company that actually builds something in order generate…Gross MARGIN. How about that for a concept. How about lowering the price and continuing to build just as long as the grosse margins are there to generate cash flow? Oh that would just make too much sense wouldnt it.
“Most suburban master-planned communities don’t have to cut discount deals, real estate brokers say. ‘Every master-planned community had a crazy run-up in value,’ said Graham Weiss, president of GW Realty Co., which specializes in residential land.”
Uh, well no. California City is master-planned. Same with Lake Los Angeles. Not good places to live at all.
~Misstrial
Every ghetto housing project is master-planned, too.
“It is wiser to unload your falling knife early, than to ride the market all the way down to the basement.”
The companies who develop the master planned communities don’t seem to be the same as the builders. For instance in 4S Ranch, Newland Communities is the developer and the builders are different companies. And I suspect that the developer is actually acting more like a partner with the original owner of the land than as a investor. So if the original owner can wait a couple years, they may be able to weather the downturn. Sort of like a oil producing country deciding on sitting on their reserve rather than pumping oil during times when oil price is low…
“‘We’re going to test the market this summer to see if builders are interested in paying a reasonable price for the lots,’ said Mike Rust, a vice president with Newland. ‘Over the past year, they’ve only wanted to buy discounted, fire-sale-type stuff.’”
That’s cool but I wouldnt’ wait too long because the rumor around town is that builders are going to be looking to buy discounted, dust-bowl-type stuff pretty soon.
“builders are interested in paying a reasonable price for the lots”,
What the heck is reasonable anyway?Reasonable to me is a lot different than a lot of the folks running amuck out there. Seems when you have to work for your money, reasonable is much different to those throwing around ATM money.
“What the heck is reasonable anyway?”
I would guess you would have to apply a different definition of “reasonable” when prices are going up by over 10% / year than when prices are dropping.
Seems when you have to work for your money, reasonable is much different to those throwing around ATM money.
Damn straight. It wasn’t too long ago that $600k quite rightly bought you a very nice house, even in California. People’s wages have barely changed since then; indeed, many Californians will be hard-pressed to come up with $600,000 in their entire lifetimes.
Right, they just have to compete with people who are willing to sign up for a $600K loan IO neg-am 1% teaser rate.
Could we have reached critical Maas?
“At Del Sur, a master-planned community in Carmel Valley, builders not only have walked away from options on 70 lots but have sought delays in closing sales, said Fred Maas, president of Del Sur’s parent company.”
Possibly an ‘implosive’ community?
A ‘disaster-planned’ community…
I still think the bankers won’t really start sharting in their shorts until around fall of this year. There should be plenty of fear and panic by then with the mounting REOs.
Got 10% down?
“Got 10% down? ”
Why yes, I do. Not to mention lots of time.
What’s neat is that if you take that 10% and stick it in a mattress, 6-7 years from now the market will automagically increase it to 20% down.
JB - clever way to phrase it.
“Why yes, I do. Not to mention lots of time.”
I’m not so sure that statement was intended to be funny, but it sure had me laughing out loud and looking like a fool. Oh well!!
I was at the gym the other day (Ventura County, CA) and overheard a friend talking about his brother who is a “loan officer”. Friend said: “He is really hurting, he has BMWs, 5 houses and lives in a big house. He has to make big bucks every month to pay all his bills. He is really down and out; I have never heard him so down and out even the way he talks is different.”
Was it wrong for me to smile when I heard this?
Loan arrangers aren’t what they used to be.
Hi ho Silver !
That made my day.I will laugh at the fool as I drive by him pan handleing soon.
I know a 26 year old mortgage broker here in San Diego. One of the strongest memories I have of the peak of the bubble was at a bar. He pulled a $100 bill out of his wallet, pushed his way up to the bar and started waving it at bar tenders. A guy next to me looked me and we shook our heads at the insanity and ego of it all.
He was making well over six figures at the peak. Last month I saw him at a bar and he said it’s tough, he’s now making $60,000 a year and has an $800,000 mortgage for a McMansion to contend with. I didn’t smile when I heard this.
I think in the old days you had to pay some dues to make that kind of money. The bubble acted like hollywood does to child stars. It’s a meat grinder, especially when the money goes away. I imagine Britney and Paris will be bumping into a lot of mortgage brokers in rehab (not to mention jail).
“Last month I saw him at a bar and he said it’s tough, he’s now making $60,000 a year and has an $800,000 mortgage for a McMansion to contend with. I didn’t smile when I heard this.”
You must have a heart of stone.
Yeah, and it pumps ice-cold Frazee through my veins
Ah yes, and where do you think that money came from really? Uncle Al Greenspan, that’s where. Near 0% interest rates (when considering inflation) and exponential growth in the M3 (credit) money supply is why you had twentysomethings taking down such huge $’s. Interpret that comment how you will, but you cant tell me anyone in that age group in that industry had the knowledge and skills to earn that kind of money.
Effectively speaking, that money came out of your pockets savers. That’s right, the next time you see some D-Bag mortgage broker driving around in a porsche, you contributed to that. Theft by inflation. Nice huh?
Helicopter drops of liquidity appear to be difficult to target.
Yes indeed.
“Ah yes, and where do you think that money came from really? Uncle Al Greenspan, that’s where. ”
When Alan Greedspan left office, I recall people viewed him with awe and seem to feel that the guy was a genius for creating wealth. When the truth fully plays out, Alan Greedspan will go down as one of the great villains in US history.
I share that view.
“When Alan Greedspan left office, I recall people viewed him with awe and seem to feel that the guy was a genius for creating wealth.”
Except on this blog, where he was reviled from Day One.
Except on this blog, where he was reviled from Day One.
—————–
Yep.
“you cant tell me anyone in that age group in that industry had the knowledge and skills to earn that kind of money.”
Sure they did. The knowledge was in how to screw people. The skill was in not caring.
I think in the old days you had to pay some dues to make that kind of money. The bubble acted like hollywood does to child stars. I disagree with the first sentance, but agree with the second. Sometimes being lucky enough to be in the right place at the right time. There were receptionists who started out at AOL and ended up millionares with their stock options. The old hands must have realized that this loan market couldn’t last, and didn’t spend their salary like it would go on forever. OTOH, true believers are usually the best salesmen.
Thats too bad…… maybe I can buy one of thoses five houses in a couple of years when hes totaly broke. Then maybe he will not only talk funny but walk funny as well
I was in the business when they were paying loan agents $100 to S200 dollars to make a loan (direct lenders ). Mortgage brokers always got a little more ( depending on how many points they could get ) .When your getting 4k to 20k to make some stupid loan most, of these people could not stop themselves from fraud or misleading the borrower . Same with the realtors ,just to much money in these transactions because of the high price of real estate .
the war on savers is starting to move into the savers favor. they’ve established a beach head and are working through the hedge rows.
There have only been what, two years, since the 1930s when the U.S. national household savings rate remained steadily negative? — roughly mid-2005 through the present. Do you think this can last indefinitely, or will something have to give?
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation.”
-AG inflate pop, inflate pop, etc just keep shucking and jiving
Bookends:
1972: The republican convention begs out of diego de la san, the locals react by calling themselves “America’s Finest City”
2007: Ground Zero for foreclosure pain, pension pain and lots more, how can they up the ante, name-wise? “America’s Foreclosure City”
How about land of the house whoes?
How about land of the house hoes?
Every Realtor I have ever dealt with wanted to spend as little time as possible showing me houses…Their only goal is to get you to price your home below market value put it in the MLS and then blow smoke up your ass….Everything else is BS…Holding open houses does not sell your home…I’ve had it with Realtors I’ll never use one again. I can do what they do for 1/10th of what they charge….
Noice!
http://www.thestreet.com/_tsccom/newsanalysis/opinion/10356410.html
“How bad can things get? How far can home prices fall? It depends on which economist you ask. Months ago, Robert Z. Aliber, retired University of Chicago economics professor, told me home prices would drop 30%. The forecast was so shocking that I hesitated to print it.”
He must have been talking about flyover country. They will have farther than 30% (real) to fall in coastal bubble zones in order to bridge the gap between household incomes and prices in the absence of subprime loans handed out freely with no underwriting standards.
“Months ago, Robert Z. Aliber, retired University of Chicago economics professor, told me home prices would drop 30%. The forecast was so shocking that I hesitated to print it.”
We are so fortunate that journalists are protecting us from things that might make us uncomfortable. They had no problem printing the most rosy, insane predictions made by ever industry shill. Somebody makes a prediction that is pretty easy to back up with just a small slice of common sense and the public must be protected. How many professions have thrown away their credibility in the past 5 years?
The columnist here goes on to quote Gary Shilling, whose predictions are more negative than Aliber’s, and whose expectation of 40%-50% off in bubble areas has been around for more than “months” - more than two years, I am sure. Forbes printed Shilling, but most MSM weren’t listening.
Shudder…Blam..Rippp..Shudder…Splat !
NOT to worry Folks. THAT sound that you just heard in the cabin was JUST the left inboard engine of US Air Credit Flight $$$ FALLING OFF at 32,000 Feet.
We have the problem contained..contained..cantained…
LOL!
Back in world war II, they used gliders to deliver troops and equipment behing enemy lines. Now the pilot and co-pilot were issued parachutes. But mostly they didn’t bother wearing them. Why? There were 12 well armed killing machines whose only chance of survival was a successful landing sitting between the pilots and the only exit.
Off topic, but the gliders were a failure, with casualty rates higher than for paratroopers. They didn’t have great glide ratios, and only one chance to land, frequently at night with a dark moon on unfamiliar terrain, and more often than not far from the assigned target.
God bless my old neighbor and my Scoutmaster who landed very early in the morning of June 6, 1944 in Normandy as a glider co-pilot. Pressed into service when the real co-pilot needed an operation.
AND they slowed down the planes towing them, making them more vulnerable to AAA. OTOH they really had NO other way of getting large equipment into the drop zone. Planes with big clamshell doors in the back were in the future. Jeeps, small antitank guns, mountain howitzers; there was no way to manhandle that sort of material out the side doors of aircraft.
I don’t know why I’m contining to post on a stale, OT thread but here goes:
To say that they were a failure because they had a higher casualty rate compared to paratroopers implies that they were an alternative to paratroopers. They weren’t, they were an addition to paratroopers. They were largely manufactured using companies that were uninvolved in aircraft production. The troops carried in gliders didn’t have room in the aircraft to parachute from and the resources used to manufacture the gliders couldn’t really have been used to manufacture more powered aircraft.
Whether they were successful or not has to be judged on whether the extra men and equipment in the airhead was worth the extra casualties. I’m not asserting that it was, just saying that the logic of resource allocation in total war is different than that which we have had the luxury of making. That was a world where radial engines were more limited than lives.
Thank you for posting that info!
~Misstrial (former DAL F/A)
I know the numbers aren’t new information, but they still amaze me. What could possibly be the end result with the following stats:
Interest-only loans increased from 12 percent to 43 percent.
Negative amortization loans from 1.7 percent to 28.3 percent.
This is huge. This is not the story of one strawberry picker with a 10k annual income buying a 700k house. This is an ENORMOUS block of ALL buyers. As Bay Area property values begins a slow decline, roughly 1/3 of buyers in the last …. 2-3 years(?) will recognize themselves as nothing more than loanowners, and many with the loan growing. There will be a lot of despair over the next several years. Mortgage payments of 4k-5k on a 600k house will get a bit old when there is no appreciation (been there…. the no appreciation part).
We are probably moving back to the East Bay sometime between the end of this year and 2009. Saw several pretty nice rental homes in Pleasanton/San Ramon, that would easily be $1M or more - renting for 2.5-3k. Kind of a no-brainer.
The 28 percent negative amortization crowd will be washed out well before 2010. I can’t wait.
Those numbers stunned me, too, and I was already fairly bearish. Is it really correct that over **70%** of Bay Area mortgages issued in 2005 were either interest-only or negative-amortization?
So much for “it’s different here”. The vast majority of those 70% are going to be completely screwed. The foreclosures that we are seeing now are only the tip of the iceberg. This is going to be absolutely unprecedented.
“and many with the loan growing.’ It sounds like a toe fungus.
- I guess the cure would be to ‘cut it off.’
There are home remedies for Toe Fungus…..
I wonder if there are toe remedies for Home Fungus?
(I think it’s called a kick in the A$$ out the front door)
Interest-only loans increased from 12 percent to 43 percent.
Negative amortization loans from 1.7 percent to 28.3 percent.
The SF Chronicle ran an article sometime last year that 65% of home purchases were made with an IO adjustable loan. In Santa Rosa, the % was over 70%. The Chronicle still crows that since we don’t have “the subprime flu”, we’ll be fine here. But just wait for all that AltA paper to start to adjust. And there won’t be a House ATM to delay the day of reckoning any more. Everyone who bought recently is highly leveraged, and I doubt many can afford higher payments over the long haul.
From zillow a San Jose, CA property.
http://www.zillow.com/HomeDetails.htm?zprop=19839081
223 Vineyard Dr, San Jose, CA 95119
04/11/2007: $569,231
04/25/2006: $675,000
03/29/1996: $198,000
Yes, the termites have reached the core of Bay Area, and are about to begin the feast.
Guess what the zillow estimate is 1 month later?
http://www.zillow.com/HomeDetails.htm?zprop=19839081
Zillow is crapola as far as I’m concerned.
I suspect zillow is rigged to give the appearance that prices are holding steady. it is either willfully misleading or totally incompetent. I’ve seen several junked houses that have a ridiculously high zestimate.
Yeah, you’re right. I looked up a house I used to own in Seattle the other day and was floored. $530k for 1660 sqft in an okay neighborhood. The thing is, I know this house intimately. The bathroom on the first floor is only big enough for the tub/shower, toilet, and 1 person. Your knees actually touch the tub when on the toilet. The two rooms upstairs had tiny little closets defined by the roof slope. The kitchen was pretty grim in layout. Nice looking place, but too small for three people. $530k? No way Jose. You’d be a fool to pay that.
Come on ,no short sales for borrowers that have taken out equity in the last 36 months or more . How stupid can you lenders be when you see a borrower take out a equity refinance just a few month ago and than they are claiming “short sale me please “. Where did the money go on that inflated appraisal refinance ? I guess they didn’t decide to spend it on their first obligation ,which is paying the mortgage loan .What about proof that they had to sell like a job tranfer . What about proof that they lost their job or do not a assets that can bring some money to the closing table .
Make no mistake that the realtors/borrowers can not be trusted regarding “short sales ” requests . These borrowers are just walking in spite of having money to bring to the table because they were speculators .
Damn straight, HW. These dolts need to be strip searched and have all their toys repo’ed before even filling out an application for said short-sale!
I would like to see the banks make these folks sign another signatory loan for the difference which allows for the garnishment of wages should default occur as part of the short sale process. I can’t believe that no one is asking the question about where the “cash” went on all these refi’s, etc? Disgusting!
When the bank leaves piles of money on the sidewalk, can you blame the thieves for grabbing a few bundles? I say let the lenders and MBS buyers eat the crap for their stupidity
I don’t say what your saying because I know damn well they are going to want the tax-payers to pay for these crooks . I believe that the person that spends the money should pay for the sin .
“I don’t say what your saying because I know damn well they are going to want the tax-payers to pay for these crooks.”
Good point. This is why banks are letting everybody and their aunt get away with blatant fraud. I’ve been wondering why banks are not going after fraud because everyone in the world knows that fraud was the name of the game in the RE industry (agents, brokers, appraisars, etc.). Your point makes sense. Lenders are not going after the crooks because they will prefer the easy money from tax payer bailout! What an ugly mess…
And we will, at least to the extant that these people use insolvency to get out of paying taxes on all the imputed income that they get 1099′d for.
“Print the money” and they all come running. Endless supply of monopoly money thanks to our federal reserve which has no shame for those seeking their boardwalks only it is not a game. History tells us what happens with debased currency only we have but few historians who know the outcome. We just have to learn the hard way and this is not a “fun” game as we are seeing now.
What about proof that they had to sell like a job tranfer . What about proof that they lost their job or do not a assets that can bring some money to the closing table .
How do you know that they didn’t require this proof? What’s to say these people aren’t well and truly f’d???
Because we have had a few posts in recent weeks that suggest that the borrowers are pulling out equity and than asking for short sales within a short time .
HW,
I have no doubt that people would try. However, I highly doubt the banks would let them.
I doubted that the banks would make low down loans to liar unqualified borrowers, but they ended up doing it .
Yes, but just because everyone wants to make hay while the sun shines doesn’t mean they also want to share in the losses when the SHTF.
A realtor’s blog
http://www.1siliconvalley.com/
Indulgent self-absorbed navel gazers in Silly Valley. Next!
I just love it how realtors always write articles on how to get buyer’s to buy over priced real estate . Selling payment ,even if it isn’t long term like a teaser rate seems to be the first way they get people to buy . Of course the no-down loans made it easy to get a lot of unqualified borrowers/speculators to buy overpriced property .Well located real estate can be overpriced also so claiming location , location , location is also a myth .
As the housing mania progressed the claim of non-stop in the bag appreciation of 10 to 40 % a year became the sales pitch of choice by the REIC to get people to buy or speculate .At that point it didn’t matter what type of loan you got so it wasn’t hard for these clowns to sell these crap loans to the masses . That’s why people didn’t read their loan documents , they didn’t care .
“Selling payment ,even if it isn’t long term like a teaser rate seems to be the first way they get people to buy .”
Wiz that’s all anybody wants to hear now…
Come on mrincomestream ,are you telling me that people are still actually falling for that teaser rate BS ?
That’s what I’m telling you… I actually had a gentleman the other day who wanted to buy a multi-million dollar multi-family project and his sole concern was the monthly payment nothing else. I walked away in disbelief.
And I still get it on the phone daily in regards to houses. That’s all people care about is the monthly nut nothing else matters and for me when that mentality infects commercial buyers there is truly trouble in Bangkok.
You ain’t a-kidding ,real trouble in Bangkok .I’m not out there anymore ,so you can understand that I’m shocked and wondering where all the IQ points went to .
“I just love it how realtors always write articles on how to get buyer’s to buy over priced real estate . ”
RE agents have no decency; many would sell their mothers on mother’s day to get an extra commission.
Six charts of median home prices. These Realtors (TM) LOVE these median home price charts! Kindas reminds me of “my favorite chart” from the SDCIA. By the way, Jeff has now been AWOL for about 2 weeks.
Got 10% down?
Some people have pulled out so much, their payments are too high. Every time you pull out money, your payment goes up and they don’t think about that.
As part of the application process, the borrower should be required to calculate what his new payment will be. Wrong answer means no loan.
seriously.
And bring current paystubs to document they can make the new payments. Sorry I forgot, the whole lending industry would collapse if people actually had to qualify on real income. Oh yeah, the industry IS collapsing!
$4 gas in San Fran
http://news.yahoo.com/photo/070510/480/e40d7495b8bf4846aaed7db81fd3db3b
At least if you commute East BaySan Francisco you’re now forced to take the train, so you get to avoid the high gas prices!
The owner done it as a protest. Here is the complete article.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/05/10/MNGUKPOGKJ1.DTL&hw=shell+gas+station&sn=001&sc=1000
That’s insane, I’m going to seriously look into making my own biodiesel and buying a diesel if this keeps up.
And you will pay alot more for meat.
Most of the used cooking oil is rendered into animal feed. Stop using those cheap calories to grow meat and power trucks is gonna leave a mark.
Get a coconut tree.
http://tinyurl.com/2zswa2
I’m looking forward to seeing the new crop of diesels that are due out in 2008 and beyond. They have some different sort of technology that apparently renders both noticeably improved mileage and cleaner emissions.
It’s funny. I commute about 20K per year which for my 36mpg toyota is about 46 gallons/month or 200 bucks a month. Meh. Wake me when it gets to $10/gallon and I’ll think about changing my lifestyle. Even at that level the monthly cost for gas will only be pulling even with depreciation and insurance.
“Wake me when it gets to $10/gallon and I’ll think about changing my lifestyle. Even at that level the monthly cost for gas will only be pulling even with depreciation and insurance.”
You’re not factoring in every hurt $10 gas would cause. Think high transportation costs = $10/gal milk perhaps? Hamburger at that price also? It’s not just your car involved in high energy costs, it’s just about everything you consume. Wake up.
Gas prices are going up in dollars, I wonder if gas is going up in Euros? Weak dollar policy = inflation.
…precisely why the ‘core inflation’ numbers
(which don’t include FOOD and FUEL)
are so stupid and misleading and Effing Ridiculous.
IMHO, the coming carnage/beatdown is Just What America Needs. Not pretty, but the muscle/scar tissue will do the Braying Herd some good.
Now KNUCKLE UP, Sheeple! It’s called the Enlightenment! Half of you believe something COMES OUT OF YOUR EYE when you see! Jesus H. Tapdancing Christ on a Beanpole!
*exclamation-point-fueled rant off
High oil prices are deflationary for the overall prices, since the total money supply left for the goods and services minus the oil is smaller. Since the costs cannot be passed onto consumers, they eat into profit margins, which in turn eat into compensations. That in turn makes a case for an overall deflation.
The median price for all homes in the Bay Area peaked at $225,000 in January 1990 before dipping to $205,000 in January 1991, almost a 9 percent decline, according to DataQuick.
The article fails to mention that prices proceeded to remain nominally flat for the next five years, thereby resulting in another 15% real loss or so.
I just did an analysis using the Case-Shiller index, which tracks same-house sales from 1987 to present. Assuming 3% constant annual inflation, that index shows that Bay Area houses suffered a real drop of nearly 25% from 1989 to 1996 or so.
Putting it another way, after adjusting for inflation, the Bay Area house price index was the same in 1996 as it was in 1987.
I expect a similar retraction this time around.
Hey America…
What would you DO if you bought a really, really Expen$ive house in the last 5 years and NOW…NOBODY WANTS IT ?
Kinda MAKES you think a LITTLE, Doesn’t IT …huh ?
Yea, it does kind of put things in a weird perspective
!!!! *Mother’s Day cupcake bits fly out onto keyboard*
~Misstrial
2002-2005 Buy high sell higher
2006-2016 Buy low sell lower
The first SD Union Tribune article linked into this thread
( http://www.signonsandiego.com/news/business/20070513-9999-1b13develop.html )
has a sidebar entitled “New-home market snapshot” which can be accessed through the hot link in the article.
It shows YOY (3/06-3/07) changes in sales (off by 30.7%), median new SFR prices (down by 18.2%), and inventory. There are two inventory graphs; the first shows existing new home inventory (including condos) up by 23.6% YOY, from 3510 to 4338, while “all home types including future phases” is down from 17,939 to 15,139 (15.6% drop) which shows strong evidence of the residential RE construction recession underway in San Diego.
Months inventory is shown increasing from 20.5 months (3/06) to 25.75 months (3/07). I can’t match the former figure to sales and inventory, but the 3/07 figure works out as current inventory (all home types) divided by March 2007 sales (all home types):
15,139 / 588 = 25.75 months to clear out all home types’ inventory at the most recent sales rate, including future construction phases of existing development projects. That would take us out until July 2009. Who predicts the San Diego market is going to come back by year-end 2007?
“…median new SFR prices (down by 18.2%),…”
Almost forgot to mention: This figure is biased to the upside, as it does not reflect the use of builder incentives to hide the actual magnitude of price decline.
I don’t know GS, that sure sounds like a….ASS-POUNDING to me!
and, the figure doesn’t take into account the very likely increase in foreclosures and REO’s (think Credit Suisse chart).
I just ran into a real estate agent last week in my business. I asked her what percentage of home buyers recently were investors. She said 70%. I was shocked and asked her again. She said in the last 3 years everyone buying was hoping to flip in 3 years and get out. Most agents got out about 2 years ago, she said. Now many of the regular folks don’t want to sell but wait it out, the problem is that they can not refinance without a major correction in monthly payments. Therefore we are seeing foreclosures increase. 2008 will be the critical year. If we drop 10% we will see a slow trickle of 5%-7% drop yearly until 2011. So we can see a 50% drop in housing prices in certain areas.
Here in southern New Mexico, I would say that many RE agents are still caught in the downturn. And are getting burned.
~Misstrial
OP
What area of the country are you in?
See , the realtors knew all along how many investors were really in the market and they were selling “real estate flipping “. I contend regarding each transaction that the realtor/lender knows what the borrower/purchaser is in it for . Does anybody really think that the REIC was putting people into homes for shelter ?
Let us not allow a tax-payer bailout as if this RE investment scheme was all about putting people into homes for long term ownership .
Exactly. A friend of mine bought a spec condo in Scottsdale at absolutely the worst time (summer 05). I tried to talk him out of it, but he said if he couldn’t flip it, he would rent it out. I asked him if the condo development had some sort of restriction against renting out the unit immediately after closing. He said yes, but his realtor told him it wouldn’t be a problem…”just don’t put a sign in the window”. I think he also lied on the paperwork regarding owner occupancy, etc.
FARMERS BRANCH, Texas (May 13) - Voters in this Dallas suburb became the first in the nation Saturday to prohibit landlords from renting to most illegal immigrants.
The ban was approved by a vote of 68 percent to 32 percent in final, unofficial returns.
The balloting marked the first public vote on a local government measure to crack down on illegal immigration .
“It says especially to Congress that we’re tired of the out-of-control illegal immigration problem. That if Congress doesn’t do something about it, cities will,” said Tim O’Hare, a City Council member who was the ordinance’s lead proponent.
The ordinance requires apartment managers to verify that renters are U.S. citizens or legal immigrants before leasing to them, with some exceptions.
Property managers or owners who break the rule face a misdemeanor charge punishable by a fine of up to $500.
Have you seen the other side line up big money to overturn this ruling? Goal is to beat this little city to a pulp because they voted on this and won. Now the goal is to send a message to other cities. Imagine if NY, Chicago or LA had done this they can afford to go to supreme court, but a little city is gonna get tested.
They have been successful in beating it back before it got too a vote in other cities. It will be interesting to see how this plays out.
The big money is corporate…those illegals hold down wages, and work without health or liability insurance…adding to the profitable bottom line. Course if they are injured, they go to the local emergency room and the costs on dumped on local taxpayers.
Corporate hiring of illegals has helped this admin gut the OSHA laws, making the workplace far more dangerous for all Americans. Americans, formerly middle class, and illegals…increasingly just serfs for corporate interests.
” prohibit landlords from renting to most illegal immigrants.”
- This was in the LA Times today. It’s about time that we did that in So Cal. The word ‘Illegal’ … means illegal; against the law, lawbreaker. If I make an illegal U-Turn it is against the law. It has nothing to do with immigration laws - it’s against the law and not debateable.
Interesting thought. If I strongly suspect (or, worse yet, know) that someone has committed a felony and I shelter them, I can be criminally charged as an accessory after the fact, and I would be open to civil suits if they committed crimes after I had the opportunity to turn them in. Would landlords/ employers who could reasonably known their employees/renters were illegal immigrants be similarly civilly and criminally liable? THAT would make them sweat…
“Would landlords/ employers who could reasonably known their employees/renters were illegal immigrants be similarly civilly and criminally liable?”
Status can easily be determined from the info given on any Application to Rent form.
~Misstrial
voters DID do this in So Cal. In Escondido down in San Diego. The ACLU killed it.
I don’t get it, if the voters want it, and the Constitution protects CITIZENS, why are we *NOT* doing this…. could it be big buisness runs the country, not the voters?
“…with some exceptions.”
Wonder what that covers.
Seems a little lame to hold landlords responsible/accountable for what the country’s federal govt is legally supposed to be responsible for doing, but is apparently unwilling or unable to do. Since this is a city level effort, why not make supermarkets, restaurants, gas stations and other stores in the city responsible by punishing them for selling them food, gas and clothing?
I read the article elsewhere, and apparently one of the exceptions is where some in a group of people living together are legal residents, and some not.
“‘Really the slowdown in property tax has just started to hit the tax rolls and the budgets of our municipalities and statewide,’ county Chief Financial Officer Geoff Davey said. ‘A year from now, that is when you’re really going to see budgetary impacts.’”
IMO, this will be one of the huge follow-on effects of the bust. Developer fees, property taxes, income taxes, retail sales taxes… they’re all going to take huge hits. Combine that with huge and growing benefit obligations and every government entity will soon be cutting jobs faster than sub-prime lenders.
Comment by clearview
2007-05-13 12:21:35
I really don’t like being mean to people, but I hope realtors and real estate agents get a hot poker shoved up their collective corn chutes. Those people have turned homeownership into a speculative venture. There used to be a time when a home was where you lived and raised kids and grew old and died in your own bed. No longer. Thanks to realtors and real estate agents a home is now a treated like a whore, to be exploited for money.
=======
These greedy @$$@# have destroyed the homebuying experience by making it like a wild west shootout.
Are you friggin kidding me…? Get a dose of reality. Both of you. the Realtors weren’t the only ones complicit in this nor were they the biggest cheerleaders…
I’ll throw some more pokers on the fire
I dont believe that completely. I have been looking for a condo for over a year and every few weeks when I would go with the realtor she would come up with a different reasoning for why now is a good time to buy. No other place for me has said it was a good time to buy.
Are you friggin kidding me…? Get a dose of reality. Both of you. the Realtors weren’t the only ones complicit in this nor were they the biggest cheerleaders…
We got to add lenders and the advertisers to this list ,and what about Wallstreet .
Why dont you go live in Venezuela. They are doing that right now.
What about the mortgage brokers who suckered many people by putting them into loans that gave them the best comission on the front and back, the lending companies who threw standards out the window,and the buyers who thought we lived in a world that you could get something for nothing..The blame is larger than just the realtor..
Thats what I call a Service Based Economy. When you lost your manfacturing base all the snakes and sharks come out to pinch
your wallet from anything that can be peddled.
You can’t apply the term “illegal” to people. This is planet Earth. No one is “illegal”. There are basic human rights.
Get a grip. Does your neighbor have a “basic human right” to live in your house?
No. But the poster brought up the ordinance that “illegals” would be not able to rent from landlords. Presumably that would mean that the “illegals” would be paying rent.
Only if the new law has an applicable retro-active date.
All LLs would have to do is check the info given on any rental application form. Only costs $20 to do a credit check. About $40 to do a background check. IRS has an online SS# check system. There are really no excuses. Amazing though, how many LLs who “maintain” (coughs) substandard properties come to me and want a UD on these same (illegals) tenants because they don’t pay rent.
~Misstrial
Haah! I’d like to see how you would like living in Singapore. Certain acts are illegal. By doing such an act you are linked to the illegality of the act, hence a person who enters a sovereign nation illegaly is an “illegal” alien.
Would you like us to go back to the good old days of Wop? Would that satisfy your semantic guilt since some immigrants certainly are without papers.
Take that story to the Mexican government. They have the Mexican army stationed all along their southern border…to stop Central americans from entering Mexico illegally. And while you’re talking to the Mexicans, ask them about their policies on asylum seekers or those with refugee status. Then explain to them that Mexico is part of Planet Earth.See if you survive the experience.
If you were Mexican, would YOU want to be excluded?
I think there is a concept of being a sovereign nation that comes into play here. If we were in Mexico I would be excluded.
Hey if Mexico wants to open up its border so Americans can go down and buy beachfront property and develop the place or allow American trucks to drive right through the checkpoint and onto Mexican roads, i’d be all for opening up the US borders to do the same. They seem to think its a one way street.
observer,
Until Mexico (and Mexicans) straighten out **their own** problems, please do not expect U.S. citizens to have a “pro-immigration” mentality.
Here are the facts: most of us who have lived in parts of the U.S. where illegal immigration was rampant have witnessed a **severe** decline in quality of life.
Our schools have become overcrowded with students who don’t speak English, have a poor educational background and require additional services (”bi-lingual” ed, extra school supplies in different languages, free breakfast & lunch programs, etc.). BTW, our **teachers** are being blamed for the lower test scores which are really a result of the immigration problem.
Illegal immigrants are living in more dense housing arrangements, and are causing once-nice neighborhoods to deteriorate into slums.
Our emergency rooms are being closed because there are too many uninsured illegal immigrants using their services.
Our prisons are crowded with illegal immigrants — each one using a taxpayer-funded defense attorney.
Our neighborhoods are becoming much more dangerous, and much of that crime is attributable to illegal immigrants.
Our jobs are being taken away because illegal immigrants don’t care if they make a living wage — they just pile more people into that single-family house.
What we “save” on the cost of goods/services done by illegals does not compensate for our loss of wages and quickly sinking quality of life.
If immigrants want to be welcomed with open arms, they must first learn to assimilate and to try to IMPROVE their neighborhoods and surroundings. They need to make it obvious that they are a BENEFIT to the middle-class people who live here, and not a tremendous burden — which is how many/most Americans seem to think of them.
The answer lies in how immigrants behave and handle their affairs. It’s not up to U.S. citizens to “tolerate” them. They supposedly come here for a better way of life. They ought to work toward our standards, not impose their (third-world, in many cases) standards on us.
It doesn’t get any clearer than that…nicely done CA Renter.
Yep, well stated.
The 60 minutes article was interesting. The Remax agent trying real hard to justify the 6%, and making the internet provider look like “walmart” service. I hope that Redfin is successful, and undoes this type of schmuck.
I will take Walmart over Bloomingdals any day, but then again im a guy
who uses reason and is accountable. The buyers (the young couble) on the 60min were pleased they can save for their wedding. Else it would have gone to the Realtors shopping spree.
One of the places where real estate agents could be very helpful and worth their 6% is exactly where they often failed most profoundly. That would be using their knowledge to point out honest appraisers and good inspectors. Unfortunately, they often used that knowledge to select pushover appraisers and lazy inspectors. Some source of good, unbiased information about the quality of appraisers and inspectors would be very valuable to a buyer.
I just got back from a weekend in DC. Stayed at the Washington Court Hotel on New Jersey Ave, NW. Got out of the car, handed my keys to the valet and looked right across the street- The National Association of Realtors office. A few blocks from the Capitol , a lot closer than K street. Not a particularly relevant observation , but I found it slightly amusing. Even in this age of instant telecommunications, you can never get close enough to ” press the flesh” of the right people.
I live in southern cal about 60 miles east of LA. today I asked another relator about the statistic and he disagreed. He did say that there are quite a few people out there who bought second homes hoping to sell later. These are people who are just giving it a shot and can afford to hang on because they went in with other family members. Once we add these people to the mix along with those whose income takes a hit because it was real estate connected and we will see prices come down to where they were in 2003
More like 2000/2001 (or before!) pricing, IMHO.
CA prices had doubled in our area just between 1997/1998 and 2001. It was already beyond affordable in 2001.
The Housing Market’s Great! (Or So Say Ads From Realtors).
A good take on Realtors “Verbal Diarrhea”
http://adage.com/article?article_id=116601
some dopes still buy load mutual funds
mort broker commisions will get his hardest and realwhores will get chopped too
Couple that used RedFin: We sold for $7K under list, but we saved about $23K on comission by using Redfin.
Cut to Realtor: But they may have left some money on the table. I’m trained to get them every dollar they can.
Obvious counter NOT said: $23K more to cover your extra FEE?????? So what if you got them $7K more if they had to pay you an extra $23K?????
Right now, the lock for the Realtor is that the buyer doesn’t pay. Therefore, there is no incentive for the buyer to not use a Realtor. If the buyer is using a Realtor, then as a seller, you have to use the Realtor or the buyer never sees your house.
Once this cash back from the comission gets out, BAMMMMM!!!! Instant incentive for the buyer to not get an agent. Poof goes the Realtor’s strangle hold on the industry.
He ll, if I were buying, I’d offer to get me “cash back” to the seller if they came down on price. Depress the sell price so I can save on taxes and insurance.
I think the biggest difference with operations like Redfin is that the do essentially nothing for you unless they get paid up front. For example, if you use them to buy, they suggest you get the showing done by the listing agent. Good luck with that, if you tell them they will not represent you. If a Redfin agent shows you houses, the first 3 hours is free — after that it is $125 per showing or $250 per three hours. While that may be cheaper in the long run, I think it is not going to appeal to people who don’t even know for sure where they want to live (such as moi). They’ll make money, to be sure, but they’re going to be working a limited market — trying to skim the cream by eliminating all the tire-kickers regular agents get stuck with.
I’d be happy to pay this price. One day I’m going to be a serious buyer and I’m going to do my due diligence before asking to see countless houses. I’d much rather pay per house–anything to break down the all-or-nothing price structure.
No its a flat fee of $3000. RF is the future like Schwab was to stock market with flat fees.
Not true read the article on the website.
Why not just go to open houses then? Why do you need a realtor to take you to the house? Go to open houses, if you are serious about anything you see, get your real estate attorney ready and contact the owners of the house and make an offer.
1. The buyer does pay. They finance that 3% for 30 years.
2. If I bought by simply going to the listing agent (no agent to represent me), I would lower my offer by 3%.
http://www.redfin.com/stingray/do/start
I saw a Coldwell Banker ad today. Come buy because there is SO much inventory to choose from.
Ummmm… not until prices crash, thank you very much.
Between commissions, Appraiser BS, Broker/Agent related In House Title Insurance Holding Company kickbacks, Loan kickbacks, greedy tax colletors as well as plain old Lender Fraud, the US consumer is about as SAFE as a Plump Turkey around Thanksgiving Eve.
This ISN’T a simple situation of ‘Buyer Beware”…This is a TOTAL well prepared, pre-planned L shaped REIC AMBUSH !
You should see the fake bids they create so the only buyer keeps overbidding.
mikey ,could not of said it better .
What a spin that is to say that one should buy now because you have so much inventory to choose from. My first question would be ,
‘”Why are there so many houses for sale ?”
When everybody wants out nobody wants in ,when everybody wants in nobody wants out .
Buy now, before housing prices crash!
LOL.
I was looking at new homes last week and the salespeople in essence told me that the builders were going to raise the prices in a month ,so I should buy now .The new home tracts were trying to sell their fall-outs and they were move in ready .
Just wake me up when people buy houses they can afford to live in .Also I think we went from a 10% investor market to a 50% to 70% short term investor market during this boom . Does anybody really know just how unstable that makes the real estate market in many places ?
Hamid Gholam, a real estate agent from Irvine, said he saw reasonable deals but few true bargains. For investors like himself, ‘I don’t think there’s much money to be made,’ he said.”
Hey folks…Ben…this is a string I keep harping on, but I’m telling you this has been eating at me…realtors taking the pickings…they are partly to blame…I bet if you do a story on these guys you’d find several of them to be upside down…moreover, this guy Hamid…per the story, is he a Realtor, or an investor?????
crush
Foreclosure facing more homeowners
http://www.app.com/apps/pbcs.dll/article?AID=/20070513/NEWS/705130389
6% commission too high?
Most successful realtors (among other things) spend 100’s of hours each month hanging around complaining about discount brokers, harassing FSBO sellers, sending junk mail to target neighborhoods, badgering their listees to lower prices, annoying friends and acquaintances to provide new listings, and developing creative and bizarre new lies to tell to newspaper reporters about the next boom.
All that time and hard work must be compensated
Did you catch the 60 Minutes interview with Glenn Kelman, CEO of Redfin online real estate? I believe he said, “Real estate is by far the most screwed up industry in America.”
If I ever again buy a home, there is a good chance I will work through him or one of his online brethren. This sounds like the best hope to break the NAR’s monopoly grip that is destroying the U.S. national (non-local) housing market.
http://www.redfin.com/stingray/do/start
Print newspapers will rarely criticize real estate in general with one of their last remaining cash cows - local real estate advertising - especially with CRAIGS LIST and similar entities hanging at the doorstep