People Are Turning Into Professional Buyers
The Des Moines Register reports from Iowa. “Iowa Realty agent Lora Murphy could be called a motivated seller because the three-bedroom home she’s marketing is her own. Murphy has no illusions that a new owner will emerge as quickly as she did a year ago, when the home sat on the market for a day. Nor that it will sell in less than the week it took in 2004, amidst of a five-year housing boom.”
“Home sales last month dipped 3.4 percent from a year ago. The average sale price fell 3 percent, nearly $5,000,to $158,631.” “April’s home sales report from the Des Moines Area Association of Realtors showed the market had 453 more homes on the market than a year ago. In April, 6,616 homes were listed.”
“‘There’s a lot of great inventory and a lot of choice,’ said Carolyn Helmlinger, who leads Coldwell Banker Mid-America Group. ‘It’s going to take a lot longer to make a decision.’”
The Journal Sentinel from Wisconsin. “Wisconsin’s spring housing market is like a clogged drainpipe. Sometimes sales flow; sometimes it’s no go. The clog: contingencies. Most fearsome among contingencies is the sale of the would-be buyer’s home, said Peter M. Stefaniak, partner with The Stefaniak Group in Milwaukee.”
“‘Sellers are happy to have an offer, but the offer’s chock-full of contingencies,’ said Wisconsin Realtors Association chairman Roger C. Rushman.”
“‘Two years ago, buyers were willing to buy without making their own home sale a contingency. Now there’s fear it won’t get sold and the buyer will be stuck with two mortgages,’ Stefaniak said. ‘We’re doing contingencies these days even on the market’s lower end. And on a lot of the upper end, the seller has offers, but some unrealistic buyers won’t come down on their own house’s price.’”
“Sluggish sales times aren’t news to Jim and Bonnie Hemmerich, who put their 4-year-old Okauchee Lake home on the market for $1.19 million in March. Now asking $1.09 million, they’ve endured a steady stream of seemingly casual lookers.”
“‘Buyers are more demanding,’ says Jim Hemmerich. ‘One broker told us that one guy has seen 100 houses, and nothing is satisfactory. Seems like some people are turning into professional buyers.’”
From WLNS 6 in Michigan. “Dozens of foreclosed homes are on the auction block. 18 are being auctioned off by John Leggett. He says with foreclosures rising, his company is holding more auctions all across the state.”
“Leggett says many of the homes will probably sell for a deep discount. While most the homes need improvements, Leggett says your could save between twenty 5-50% on the homes. ‘Sellers are getting rid of these properties because they want them off the books, because they have a lot coming in.’”
The Enquirer from Ohio. “Ohio’s Foreclosure Prevention Task Force held its fourth meeting today in what was billed as an opportunity for borrowers facing foreclosure or people who’ve been through the foreclosure process to tell their stories.”
“Mark Lawson, a senior attorney for the Legal Aid Society of Southwest Ohio, told the panel that his organization has so many people calling for help with mortgage-related problems that it can’t begin to handle them all.”
“Lawson cited one example of an unidentified woman who bought a two-family house in 2005 with an adjustable-rate mortgage that started with an interest rate of 9.5 percent. The property was appraised at $130,000, although an earlier appraisal put its value at only about $70,000.”
“She bought it on the recommendation of a real estate agent who, Lawson later discovered, was an owner of the company that arranged the mortgage.”
“The loan included $15,000 for repairs necessary to make the second unit rentable, which the real estate agent contracted to perform himself, Lawson said. The repairs were never completed, and the woman will probably have to give up the property, he said.”
From CBS 2 in Chicago. “A record number of homeowners are now defaulting on their loans and risk losing their homes, 7,000 in the Chicago area in April alone.” “Debbie Clark owns a home in Marquette and recently got the shock of her life. Her adjustable rate mortgage, or ARM, will jump from 7 to 13 percent in a year.”
“‘It’s all over the city,’ researcher David Rose said. ‘Even neighborhoods like this one in Jefferson Park saw an 89 percent increase in foreclosures.’”
“Hot neighborhoods like the West Loop saw foreclosures soar 440 percent; the South Loop by 600 percent; and Washington Park, a potential site for the 2016 Olympic Games, by 786 percent.”
“Investor T.J. McKinney says that there are plenty of foreclosures in suburbs, like Glenview, Naperville, Plainfield, Forest Park and Oak Park.”
“Here’s what they have in common: most were ARMs. ‘The adjustable rate mortgages gave people a false sense of what was affordable,’ McKinney said.”
“The interest in an adjustable rate mortgage goes up or down based on a specific financial index. That’s the kind of loan that got Clark in trouble. For the last two years, she’s paid about $1,000 a month. In August, it jumps to $1,300, in February $1,410, finally capping at $1,635.”
“‘They would say do not worry, when you have to worry, because if you don’t worry, they will come two years later, hike your mortgage up so high that you cannot even eat,’ she said.”
“But experts say this is just the tip of the foreclosure iceberg. ‘The actual crisis hasn’t started yet,’ said John Groene of Neighborhood Housing Services. ‘We’ll see that in a couple years.’”
The Southern Illinoisan. “The housing bubble in Southern Illinois hasn’t burst yet. No one really expected it to, largely because there was never a bubble to burst.”
“The Illinois Association of Realtors reports homes sales dropped 13.9 percent in Williamson County from the first quarter of 2006 to quarter one of 2007. Five other counties, Franklin, Johnson, Perry, Pulaski and Randolph, also experience drops in that time frame.”
“Marion broker Dave Thompson hopes potential buyers won’t be dissuaded by what they hear about the housing market on television and in other media. ‘I think the biggest thing right now is we listen to too much of the national news, and I think (buyers) are having difficulty making decisions,’ he said.”
The Register Mail from Illinois. “For the first quarter of this year, 114 single family homes were sold in Knox County, down 25.5 percent from the 153 for the first quarter of 2006. However, the median home price remained basically unchanged, down 1 percent from $53,000 in 2006 to $52,450 in 2007.”
“Single family home sales across the state were down 15.5 percent for the first quarter of the year. The statewide median home price was down 1.9 percent.”
“Some area counties did better than Knox County, while others also had a tough first quarter. In Warren County, first quarter sales were down 20 percent, while the median home price was down 8.2 percent, from $49,000 to $45,000.”
“‘Looking forward, we are likely to see smaller year-to-year declines as we enter the traditional buying season,’ said Robert Zoretich, president of the Illinois Association of Realtors. ‘Homes that are priced to reflect realities of today’s market will continue to sell.’”
des moines- thats corn country
I would think next to Ngas that’s as good as it gets
http://money.cnn.com/2007/05/22/magazines/moneymag/retirement_interrupted.moneymag/index.htm?cnn=yes
the FB stories never end. there must be 10 million such people.
Greedy flippers. These people are 1.6 million ahead on paper. SO, drop everything by 50% and you are still ahead 800K in cash. Now, go rent for a year, using that 800K to pay you 40K a year in interest. Then when the bottom hits in 2-5 years, go buy for 200K cash and live off the interest of the remaining 600K in the bank, which would be @5%, 30K a year. Not a bad lifestyle even after taxes. If need be, get a partime consulting job or something.
Man, these people who want to retire, do nothing, and live the “Lifestyles of the Rich and Shameless” for the next 30 years kill me, esp. when they have some wiggle room and options.
I am so tired of the gotta have it all, gotta have it now crowd that I am sick to my stomach!
I do not want to beat a dead horse here, but people in this country need to get a grip. The Daimlers need to spend some time in Darfur or Iraq.
No offense to anyone. I am just sick and tired of the pompous attitude in our society. These people by any measure are in the top 10% of the world socioeconomic scale and they are cryin’ ’cause they can’t live like the neighbors.
Buck the EFF up!
Rant off!
But even for the well-heeled, the victim attitude is on display. They’re keeping their 900k vacation home, but the wife is skipping her Lipitor, because they can’t afford it.
It’s so sad that they’re so well-off, because the government isn’t handing them free medications while they deal with their RE investment stress.
Good to read you Spike. You can’t imagine how pissed this couple makes me. They have room to move and still bank almost 7 figures in liquid funds, BUUUUUUUUUT NOOOOOOOOO! Flippers are bad enough, but dumb flippers with means are worse.
Besides, what is the point of this story? Should we cry for them or what. I just want to ring both of their necks for the stupidity they are displaying.
I hear you. And then Carol’s “emotional attachment to the house” and then we have stuck molasses!
Sweet Cheezus on rye with a dill pickle on the side…this couple is spending $9600/year on groceries/dining out!!! They own two cars - one’s a Mercedes.
Hey, idiots, I’ve got a suggestion for you: learn to cook, sell the Mercedes, sell your houses, and get your butts back to work!
“We’re in this beautiful area and see our neighbors doing fun things like cruises, golfing and going to the country club, and we can’t enjoy any of it,” says a frustrated Carol.
“Frustrated” because unlike their neighbors, they can’t play anymore, they have to find work. My heart bleeds.
It’s still astonishing to me that these people have no shame in displaying their greed and envy. Education, good health, political stability…the things 80% of the world’s folks are missing, and they’re whining because they’re not Paris Hilton.
Older folks used to have some dignity…they were shrewd about money, they’d outgrown conspicuous display, they’d pared their lives down to the simple and meaningful.
You could suggest these folks unload the alligators, pay off the debt, get rid of the mercedes and the other useless toys, but then who would they be? Nobodies?
Having gotten to be 60 without backbone or character, it’s unlikely they would take advice or profit from it.
I might have mentioned some acquaintances of ours a while back. She is a stay at home Mom and he is a commercial pilot. His income has been cut twice in the past several years.
I’ve been hearing they were nervous of the income cuts. She needed to go to work but didn’t want to be tired for when the 3 got home, etc.
They refinanced and even went out and bought more furniture. Their kids wear Abercrombie, they belong to the local country club. I noticed she had a lovely pedicure with her nice new outfit. I suppose cutting back was never an option. This is going to end badly.
I bet they are lousy tippers at restaurants, too! I don’t understand how they are so rich on paper, yet use the “oh woe is me” phrase. Sick.
dude ? you mean June/July
“‘Looking forward, we are likely to see smaller year-to-year declines as we enter the traditional buying season,’
“Marion broker Dave Thompson hopes potential buyers won’t be dissuaded by what they hear about the housing market on television and in other media. ‘I think the biggest thing right now is we listen to too much of the national news, and I think (buyers) are having difficulty making decisions,’ he said.”
Yes I am having trouble making a decision….Do I buy in 2008 or 2009 Hmmmmmm?
” ‘The actual crisis hasn’t started yet,’ said John Groene of Neighborhood Financial Services. ‘We’ll see that in a couple of years.’ ” — There’s your answer, Not-Catchin.
oops, Neighborhood Housing Services
Something tells me he’s seen the Adjustable reset chart.
‘I think the biggest thing right now is we listen to too much of the national news, and I think (buyers) are having difficulty making decisions,’ he said.”
Translation: We need more uninformed suckers
“‘Buyers are more demanding,’ says Jim Hemmerich. ‘One broker told us that one guy has seen 100 houses, and nothing is satisfactory. Seems like some people are turning into professional buyers.’”
Or maybe the buyer is somebody from here who just wants to waste his broker’s time.
But wait… if realtors are in it for the client’s interest then given that they toute ‘its a great time to buy because of all the choices’ shouldn’t they be psyched that this guy is seeing everything? Wouldn’t that be the advise of a fee-only real estate advisor?
Who’s paying for the gas in the agent’s Lexus SUV? I’m guessing it’s not the “looker” (notice how I didn’t use the term “buyer”?).
Buyers naturally become more choosy when a home purchase comes with a perceived risk of catching a falling knife. Sellers can easily offset this by lowering their prices. At a low enough list price, they could sell in a matter of a few days. But it seems like “hundreds of sellers” can’t grasp this most elementary principle of marketing success.
When they are constantly bombarded by NAR articles that mention prices are only down a few percent, is it any wonder that they hold the price after a paltry discount?
The realtors (NAR articles) need to start telling the truth if they want sellers to lower prices.
Stucco, do you really want them to just “give away” their houses?
I do >; )
There is no “give away” since they are not THEIR houses, they are the BANKS’ houses. A seller only has to LEAVE the bank’s house since he just can’t afford the rentgage (a.k.a. rent-to-lose).
And you can include those that can grasp, but can’t or won’t lower their “need” price…
We put our house on the market at the end this April. It still needs work, so we priced it about the cost of a pristine mobile home on owned land. We were under contract in the first week and if everything goes through (knock on wood) we stand to make a healthy profit.
Meanwhile, there’s a house down the street - larger and in move-in condition that’s been on the market for over a year. They want $300K + for their house. Price is everything.
To be honest if I were looking it would be hard for me to find something I thought was a good value for my money. I could look at 100’s of houses and not be satisfied. And after waiting for 6 years I’m not willing to settle for less. That’s why I refuse to look at anything yet. I don’t want to waste my time or anyone elses.
It could be the buyers are just picky. Some friends of ours were house hunting in the 90’s. They looked and dozens of homes. The frustrated realtor suggested to the husband his wife needed a shrink. It was pretty damn funny because her husband was a shrink.
his wife needed a shrink..
Bet that comment made the sale.
Nah, they both got a good laugh out of it. Not too long after that they found a really nice house for a great price in Rancho San Diego.
See, this is all about price and VALUE! Sellers, like the Daimlers above, need to realize the only potentail buyers left are not going to by so you can:
1. Pay off all your old debts for crap toys and boob jobs and whatever else you blew your income on.
2. Pay for diddums and Hayley and Dakota’s college tution at Harvard and Yale and Princeton.
3. Pay off the matching Benz and Escalade.
4. Pay off your retirement home mortgage.
5. And lastly, pay for your freakin RETIREMENT!
If you don’t like that, go back to work like the rest of us.
Or:
Do I go to the open house with the cookies…or the barbeque
Go to the BBQ open house first, then go to the open house with cookies/cupcakes/etc. for dessert. Just make sure not to consume too much alcohol or you could end up making an offer on them.
I’m an agressive drunk so I’d offer a 50% hair cut.
I will only go to open houses that are serving the koi platter with a mesclin squirrel salad.
Good one! Like Nigel Swaby’s koi pond?
‘Looking forward, we are likely to see smaller year-to-year declines as we enter the traditional buying season,’ said Robert Zoretich, president of the Illinois Association of Realtors.
Let’s see…
House prices have gone up for 4-6 years. But they only go down for 6 months? Get a clue…
And while you’re at it get a new job.
Marion broker Dave Thompson hopes potential buyers won’t be dissuaded by what they hear about the housing market on television and in other media. ‘I think the biggest thing right now is we listen to too much of the national news.
Dave Thompson thinks we should really get our information from the NAR and Countrywide’s “TAN-MAN”
Marion broker Dave Thompson hopes potential buyers won’t be dissuaded by what they hear about the housing market on television and in other media. ‘I think the biggest thing right now is we listen to too much of the national news
I don’t remember these dipsh*ts complaining when the media was talking up how great the real estate market was over the past few years.
TAN-MAN roflow for the 2 minute hate
but I can’t let LIErah go yet
“Marion broker Dave Thompson hopes potential buyers won’t be dissuaded by what they hear about the housing market on television and in other media. ‘I think the biggest thing right now is we listen to too much of the national news, and I think (buyers) are having difficulty making decisions,’ he said.”
This has been said before here, but I’ll say it again - when the media is being their shill, all’s well, nothing said, but when it’s not…
“Most fearsome among contingencies is the sale of the would-be buyer’s home, said Peter M. Stefaniak, partner with The Stefaniak Group in Milwaukee.”
Munch, munch, munch…
Bugs: “Taz sit down, things are beginning to swirl, your swirling,… someone’s knocking at the door,…the land line phone is ringing, the cell phone is rattling…Daffy’s yapping, Foghorn Leghorn is crowing, Tweedy Bird is squawking…and that pesky Martin the Martian is blasting his laser gun around the room.
Neil, bring more of the buttered popcorn…it’s gonna be crowded in here…munch, munch, munch
“Most fearsome among contingencies is the sale of the would-be buyer’s home,
Welcome to the world of normal real estate transactions. The one contingency that buyers circa 2002-2005 should have insisted on was the inspection contingency. So many houses in my area changed hands without a pre-closing inspection. I wonder how many big (unpleasant) surprises now face those homeowners.
I made the mistake of using the home inspector who my agent enthusiastically recommended. Big mistake.
So far, I’ve had to replace a washing machine, a swamp cooler, and some of the ductwork below the cooler. I’ve also had to have a sink drain line rebuilt. Total cost: around $3,000. All three things could have been pointed out to me during the home inspection.
Word to the wise: Find your own home inspector. Use him or her, regardless of how much flak your agent give you.
Whoops. My bad. That was four things. Not three things.
Another thing…make sure you are on site during the inspection, and ask questions. Our (independant) inspector was here for 5 hours and the report was multiple pages long. We renegotiated the price and still got the house. Still, there were things that happened that were not on that report. I’m not sure you can possibly expect them to catch everything without ripping out walls and ceilings.
We found a good inspector through word of mouth in the (civil) engineering community- if you know any engineers they might be a good place to start. This inspector was great. The sellers were flabbergasted about some of the things the inspector found (i.e. elevated radon in the basement, which had to be remediated, was one).
What’s a swamp cooler?
A refridgeration device that uses water evaporation as the heat transfer mechanism. Not as effective as A/C, but a whole lot cheaper to run. They can be quite effective in dry climates.
Told my better half that when we eventually go house-hunting I’ll want an inspector that was previously employed as a Marine drill sergeant.
“Murphy has no illusions that a new owner will emerge as quickly as she did a year ago, when the home sat on the market for a day. Nor that it will sell in less than the week it took in 2004, amidst of a five-year housing boom.”
If she lowered the list price to market value, then she could sell it in a day once again…
People hate the idea of leaving money on the table, even if its just fantasy money.
‘Murphy has no illusions that a new owner will emerge as quickly as she did a year ago, when the home sat on the market for a day. Nor that it will sell in less than the week it took in 2004, amidst of a five-year housing boom.’
But the hyper activity was supposed to only be on the coasts!
“…supposed to only be…”
Clearly it’s different this time…
According to NAR definitions starting at the Mississippi going east is the East Coast and starting at the Mississippi going west is the West Coast. So technically we have only seen hyper activity in the coastal regions.
p.s. Is that NAR Economist job posting filled yet, because I’ve got some ideas and my middle name is spin.
starting at the Mississippi going east is the East Coast and starting at the Mississippi going west is the West Coast.
Awesome! So my riverboat is going to keep appreciating. Makes sense - they aren’t making any more water.
So true. What’s also interesting is that it seems to be ‘good’ only when prices rise. In reality, it’s only good for the sellers. When prices fall, it’s ‘good’ for the buyers. So let’s stop defining a ‘good’ real estate market as increasing prices and start calling an affordable market ‘good’.
There are a lot of Realtor flippers “flopping” out there. The one thing that you do not see mentioned much is the conflict of interest that Realtors have when they promote housing while they themselves are trying to unload.
Every time a Realtor is quoted in the media they should be asked one simple question:
Are you currently trying to sell any properties that you own personally?
I’d like them to be asked their IQs too, just for kicks: “Betty Realtor, who is trying to unload 10 houses that she owns in Palm County and has an IQ of 65, says, “This is a great time to buy in Palm County.” Yeah, I like that.
Two questions. And do you live in this house?
“‘It’s all over the city,’ researcher David Rose said. ‘Even neighborhoods like this one in Jefferson Park saw an 89 percent increase in foreclosures.’”
“Hot neighborhoods like the West Loop saw foreclosures soar 440 percent; the South Loop by 600 percent; and Washington Park, a potential site for the 2016 Olympic Games, by 786 percent.”
This is really a shame for Chicago, my home town. These neighborhoods had long been depressed parts of the city and the new developments really were making Chicago a ‘world class’ city.
Although I will say if prices fall enough there I will not be able to resist moving from SF back to Chi-town and buying some huge duplex for the price of a small SF studio.
So…sell the SF studio, park the cash, rent in Chicago and wait…real money is always made on the fringe. It’s a risk (prices head up again) but not much of one.
BDB,
Chicago is going to face some serious issues from a budget perspective. It has sold two of its best assets (Chicago Skyway, City Parking Garages) over the last two years in order to fill one-time budget gaps. This is on top of a TIF district on every corner to spur economic development. All roads lead to a reduction in future revenue (tolls, parking fees, tax base) with an expense line item (patronage) that remains constant. I don’t think trading SF/CA Gov’t insolvency for CHI/IL Gov’t insolvency gets you any further along in terms of financial independence or safety/security in regard to gov’t services. I’m willing to be persuaded otherwise.
-Vert
If Chicago gets the Olympics that money, what’s left of it, will be pissed away five minutes after the announcement.
Can we say Daley family/political machinery.
West and South loop probably had the heaviest investor action if I had to guess. The word loop is right in there but if you have 300k + to throw around on a condo why not live where the well off live. It should never have cost so much to be part of something ‘up and coming’. As always the rich neighborhoods will be fine, because they buy their own police if need be.
It seems to me River North had its share of “investors” too. I’ve seen many ads in various places that were touting a “condo for rent” usually around 40% below what the PITI would be.
People in the more established neighborhoods of Chicago seem to think that the high rates of foreclosures in the “gentrifying” areas won’t hurt their values any. They forget that the gentrifying areas contributed to their appreciation.
“the new developments really were making Chicago a ‘world class’ city.”
I’ve noticed lots of places striving and spending to become “world class” cities…any possibility that way of thinking is actually bubble-related, or even bubble-inducing? Whole cities trying to spend their way into being something that’s somehow “more” than what they really are? Somehow that reminds me of the thought process that seems to drive McMansion sales…
You nailed it. The same people afflicted with keep-up-with-the-Joneses-itis also buy into the delusion that their hometown has to have all kinds of amenities if it doesn’t want to be called hick. And they don’t want to live in Hicksville.
We get this attitude preached at us all the time in the Twin Cities (MN). If we don’t get a new football stadium, or baseball stadium, or college football stadium, or outdoor theatre, or hockey arena, or concert arena — well then, we’ll be nothing but a “cold Omaha”. The ‘cold Omaha” insult has been successfully used here for decades to sucker the locals into supporting large publicly-funded projects. Because we sure as hell don’t want to live in Hicksville. What would that make us?
I kinda liked Omaha…
“Hot neighborhoods like the West Loop saw foreclosures soar 440 percent; the South Loop by 600 percent; and Washington Park, a potential site for the 2016 Olympic Games, by 786 percent.”
I live in the West Loop and have been looking at real estate here (and in the South Loop) for the last 2 years. There’s a distinct line to be drawn between the developments that were improving the city and the those that were not. The nicest of the developments in the South and West Loop (and there are thousands of condo units that fall into this category) are not seeing much turnover. It’s hard to say what the values are because people are simply not listing them for sale.
To me, the West Loop should not stretch past Halsted St. However, Realtors count anything that falls in the Near West Side community boundaries as the West Loop. Which means that the endless streets of cookie-cutter loft-style mid-rises that goes all the way out to the United Center get included. And I am not surprised that the foreclosures are piling up. The residents of those buildings have been very active NIMBYs fighting any sort of development that actually would have improved their neighborhood. They wanted to maintain their car-dependent suburban lifestyle at all costs, and now it’s costing them their homes. I looked at about 6 condos and decided that there was no appeal to living there, even with a 50% haircut. The streets are lifeless - they’ve ensured that there is no reason to want to walk around. There’s no nearby grocery - one agent said “no problem, grocery stores are just a 15 minute drive away”. Yeah, that’s my kind of neighborhood.
The South Loop is the same way. Except some nicer buildings are getting built, so there is hope for the place to become a decent neighborhood someday.
We are grateful that the suburbanites started the development wave. The problem with their desire to maintain suburbia in the city is that they ran out of people interested in living in such a neighborhood. The ability to pay the bills is problem #2.
And even scarier about the West side…the buildings may be improved but the legacy population is still there…
at least we are experiencing the transition from the “Peak” buying season (Spring) to the “Traditional” buying season (Summer?)
its all a “___________ Buying Season”
when’s Foreclosure season?
when’s “Im so upside down Im walking away season?”
when’s “Arson Season?”
whens “Traditional Im So upside down Im murdering my wife and burning the house Season?”
Arson season is around mischiff night in Detroit.
its all a “___________ Buying Season”
“LOST”
Final episode…munch,munch,munch
It might take a Heimlich Maneuver, to force the issue…
“‘There’s a lot of great inventory and a lot of choice,’ said Carolyn Helmlinger, who leads Coldwell Banker Mid-America Group. ‘It’s going to take a lot longer to make a decision.’”
“Iowa Realty agent Lora Murphy could be called a motivated seller because the three-bedroom home she’s marketing is her own. Murphy has no illusions that a new owner will emerge as quickly as she did a year ago, when the home sat on the market for a day. Nor that it will sell in less than the week it took in 2004, amidst of a five-year housing boom.”
An enormous amount of homes on the market are realtor owned. I am sure this has a lot to do with the continued fantasy pricing, since these birdbrains are frantically trying to get out unscathed. I bet the number of realtors with “investment” properties is staggering.
Particularly brilliant thinking on their part, isn’t it? “Let’s see–I’ll invest heavily via leverage in a market that is also the source of my paycheck….hhhmmmm….” You can almost see the wheels not turning. No thought to the potential carnage in a slowdown that impacts their paycheck at precisely the time they are bleeding cash. Brilliant.
“But experts say this is just the tip of the foreclosure iceberg. ‘The actual crisis hasn’t started yet,’ said John Groene of Neighborhood Housing Services. ‘We’ll see that in a couple years.’”
‘Subprime is contained.’ But what about high-risk Alt-A and prime lending? Is that contained, as well?
Sure, each is “contained” in their own little category. Of course, all of them have toxic loans that will bite them, and declining house values, slow GDP growth (or a recession), and the elimination of some real estate related jobs will only exacerbate the problem of these toxic loans, but you can rest assured that the Fed, “experts” and others will continue to proclaim that each is “contained.” And since the Alt-A toxic loans don’t reset in force for a couple of years, during which time most of the subprime toxic loans will wash out, they will claim that there is no spill-over or contagion.
What most don’t realize is that most folks with bad credit had good credit at one point. Same goes for the Prime and ALT-A group, particularly the latter. They have good credit until they don’t, and then become the next sub-prime group, although I doubt there will be a sub-prime again for a very long time. Once the ALT-A loans start to reset, in a market where prices have fallen considerably from todays values, ever increasing numbers will be impacted. The math behind this is pure and simple. If you borrowed more than you can afford to repay you are in deep dimshi!
What will also be interesting is the impact of foreclosures on people who hold any credit cards. Their rates will jump to max (if they are not there already).
‘The actual crisis hasn’t started yet,’ said John Groene of Neighborhood Housing Services. ‘We’ll see that in a couple years.’”
I was so glad to hear that guy say that when I watched that report. Here’s a guy with a non profit group that has no financial interest either way. He can see the writing on the wall but according to the realtors everyone who says stuff like this is painting a gloomy picture because they have an “agenda”.
Like this guy…
http://www.paperdinero.com/BNN.aspx?id=196
Personally, I’m enjoying being a “lookey-loo!” Bwahahahahahahah!
“Debbie Clark owns a home in Marquette and recently got the shock of her life. Her adjustable rate mortgage, or ARM, will jump from 7 to 13 percent in a year.”
Her adjustable rate mortgage adjusted??!! Oh noes the horror. Who could have forseen it??
I know, still trying to wrap my brain around why it was such a shock to Debbie.
Maybe she was sold on the idea that the rate could adjust down?
Lots of folks were told Enron was a great buy as well.
She never planned to be stuck in the home past 2 years. There was obviously no Plan B if she couldn’t sell for a huge profit.
Most of these idiots simply fell for their mortgage broker’s line: “Oh, don’t worry - you can just refinance in a year or two.” The obvious question these suckers should’ve fired back was, “Why not do it right the first time, so I don’t have to refinance, bud?”
“”Her adjustable rate mortgage ,or ARM,will jump from 7 to 13 percent in a year .”‘
The interest rate increase in that short of time is the part that kills me .Why would anybody go on a loan like that unless they were going to flip the house in 6 months ?
To pay a 13% interest rate in a 5.75% prime rate market is really steep for purchase loan money .That much of a higher rate use to be the kind of penalty they would charge on bail out hard money loans where the loan was based on having equity only . Those sort of high interest penalty loans were only made on a short term basis (in past lending cycles ) because they were considered the buy a little time before you have to sell loans .
That kind of rate increase is not sustainable for a long term loan ,especially if it’s increased that quickly IMO.
The borrower seems to be shocked at the terms of her loan ,meaning she didn’t read her loan docs. ,or again someone trusted the salesperson and didn’t do their homework .
Just to many borrowers didn’t seem to understand the loans.
“To pay a 13% interest rate in a 5.75% prime rate market is really steep for purchase loan money”
Minor quibble with your use of “prime rate” here. Historically, the prime rate is considered to be 250-300 basis points above the Fed Fund Rate, which is currently at 5.75%.
For example, the WSJ publishes a “prime rate” which it defines as “The base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks.” As of today, that rate is 8.25%, 250 basis points above the FFR.
See: http://www.bankrate.com/brm/ratewatch/wsjPrimeRate.asp“
“Seems like some people are turning into professional buyers.’”
Who’s buying? I’d call them professional tire kickers.
IT’S THIS SIMPLE DOPES, HOUSES ARE OVER PRICED TO THE TUNE OF 50% IN LALA MARKETS.
It is not a buyers market until phoney artificially inflated house prices drop 50% in lalalala housing markets.
anyone with a braincell left can figure out what markets are lala.
Most fearsome among contingencies is the sale of the would-be buyer’s home, said Peter M. Stefaniak, partner with The Stefaniak Group in Milwaukee.”
Forget the contingencies AND worry about the nearly 200 HOUSES for Sale coming on line per week my good Pete. Get to selling ALL those Crappy Foreclosures Stefaniak, they’re clogging up the gutters.
Does anyone know if the NAR is lumping foreclosure sales as “sales” thereby skewing the numbers higher? Perhaps even “transferring” the house back to the bank would qualify somehow as a sale to them?
I wouldn’t put it past them to do that. Is anyone a good detective to determine if that is happening?
That’s a great question!
“‘They would say do not worry, when you have to worry, because if you don’t worry, they will come two years later, hike your mortgage up so high that you cannot even eat,’ she said.”
WTF!?!?!
A couple of quick stories from the SW florida area. My wife was down there visiting our good friends, which you may recall went “all in” during the RE run up to the tune of a few million in loans.
Anyway, they are living in one of their “investments” which is a condo they bought for 1.2m on the coast. They are one of 4 residents out of 60 in their tower(the rest empty). There are 2 out of 60 next tower over and there is an empty 3rd tower just being completed.
My wife was sitting in the hot tub quaffing a couple of colds ones when a couple of guys show up. The wife asks if they live there and they respond that they are looking over some condos for a possible purchase. Turns out that all 3 penthouse suites are available (big surprise) and that the builder has offered the middle one for 1.2m (formerly 3.0 m). Also mentioned that a similar one to my friend’s condo “might” fetch 750K. Turns out that these knife catchers are realtors (what a shock) still drinking the kool-aid of a quick rebound and are out “lowballing” some of the nicer condos around town. Long story short, our friends weren’t too happy with the report.
Second story, at the airport on the way home my wife stikes up a conversation with the gate agent. It turns out that he was supposed to retire this year but will no longer be doing so. Apparently he purchased 3 investment homes that underwent sales recently. He told my wife that he liquidated 250K (basically all) of his retirement savings to get out from under that mistake and he will be working for the foreseeable future.
So, to conclude, that whole area is getting a very painful ass-pounding as we speak and the reports of 15% price declines are woefully understated. This concludes your “shades of fruit” (or however it is pronounced/spelled) report for today.
“The wife asks if they live there and they respond that they are looking over some condos for a possible purchase.”
“Alfred Whitehead: “..the impossible I believe…it’s the improbable have have problems with…”
“…and are out “lowballing” some of the nicer condos around town.”
It’s possible they just wanted a free jacuzzi…together?
Or it’s possible that they are sitting on a huge nest egg gotten as comissions from FBs and that they aren’t smart enough to avoid catching a falling knife.
What a dumb-ass! Liquidating retirement funds is one of the worst things to do to get out from under your alligators. Retirement funds (in tax-deferred accounts, at least–401k, 403b, etc) are generally “exempt” under backruptcy. Many people who are facing massive RE losses would be better off going bankrupt than draining their retirements funds.
Crooks, Gamblers and Loan Sharks seldom give up.
Between the CA “strawberry pickers”, the Florida “Greed Rush Fever” Survivors and a few GOOD Lenders, the flyover states housing GLUT should be over in about two weeks.
Love that flyover country…
Sweating the $550 price swings~
“For the first quarter of this year, 114 single family homes were sold in Knox County, down 25.5 percent from the 153 for the first quarter of 2006. However, the median home price remained basically unchanged, down 1 percent from $53,000 in 2006 to $52,450 in 2007.”
“She bought it on the recommendation of a real estate agent who, Lawson later discovered, was an owner of the company that arranged the mortgage.”
I think women in particular are susceptible to trusting in “experts,” especially fellow females who build a false rapport while picking their pockets the whole time. Look at that succubus wife on the “Suzanne Researched This” Century 21 commercial - it should be self-evident that you can NEVER expect disinterested, objective, sound buying advice from someone with a vested interest in selling you something. In about 9 out of 10 cases, women are much more susceptible to accepting realtor claims at face value because the RE harpy tells them exactly what they want to hear, and they’d rather not apply something as inconvenient as logic and common sense. “Suzanne researched this, ergo, it’s the right thing to do, and not coincidentially, IT’LL HELP GRATIFY MY MONSTROUS SENSE OF ENTITLEMENT!”
That’s one of the points Suze Orman makes in “Women and Money”. Orman’s personality is abrasive, true, but the things she says are often spot-on. She writes of her women clients (when she was a stockbroker, also a position with a built-in conflict of interest): “They did not want the responsibility of managing their money. I always felt they hired me simply to baby-sit their money for them.” Here’s a nice big chunk of the book, which describes how 95 percent of the women I know (and me, too, at one point!) handle their money:
http://tinyurl.com/2k4yep