Bits Bucket And Craigslist Finds For June 11, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
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Baltimore real estate investor can’t make good on taxes on $14k house in the City of Rochester, NY; city forecloses, sells it. Now he wants something back.
http://rnews.com/Story_2004.cfm?ID=49969&rnews_story_type=18
Welcome to Rochester, buddy.
In Cali that house would be “worth” at least $400K!
With an interest only negative amortization subprime loan.
How can you not make taxes on a $14k home? Skip a few Friday nights out and you’ve got the dough!
Oh my god! That thing is a million dollar home in LA! Even in Compton!
LOL
A Rochester man whose rental property was mistakenly auctioned off by the city is close to getting the property back.
It sounds like the foreclosure wasn’t supposed to happen in the first place.
Also, Mark, always torch before foreclose. It’s a neighborhood tradition.
http://www.13wham.com/news/local/story.aspx?content_id=8eb49a44-c1e9-4392-8c33-0b17504f0bdd
I rode by one of these Saturday morning. A foreclosed house that somehow must have spontaneously combusted last week.
Not always the owner. Vacants are great places for illegal drug trade, murder, etc. What better way to cover up than burn it down.
Most home insurance policies will not cover a vacant house. Insurance coverage for a vacant or empty house is typically 2-4 times the cost of an occupied house.
Yes it is “IF” you can get it at all….
What foreclosure sites are people partial to? It’s too early in the cycle to buy, but I would like to start sniffing around the market.
None, as far as I have experienced, they all are fee-based.
However, banks have free lists. Also, depending on your State, county court clerks may have a free list of foreclosure auctions calendared on the court steps. Give them a call. Also free.
~Misstrial
Another fluff piece from the Boston Globe’s Kimberly Blanton:
http://www.boston.com/business/globe/articles/2007/06/11/home_costs_stay_beyond_reach_of_many/?p1=MEWell_Pos4
Apparently, prices will never go down because of the influx of immigrants.
I saw that this morning. First she writes this:
Retsinas said demand will come partly from Boston’s rapidly growing immigrant population , which competes for the limited supply of homes and puts upward pressure on prices. The area’s foreign-born population makes up 17 percent of all homebuyers, more than the nation as a whole.
Then she writes this:
David Wluka, former president of the Massachusetts Association of Realtors, said high housing prices are the biggest reason recent college graduates and young professionals leave Boston and relocate to the Southeast, Sun Belt, and other locations where homes costs less.
So, poorly paid immigrants are flooding into the area while well-paid college grads are leaving in droves. Yet, prices will remain high.
Is Kimberly Blanton trying to make the case these immigrants hold better jobs and are more highly paid than the general population for which affordability is the issue?
maybe it is similar to what I see in some areas in the Netherlands, especially bigger and older homes in the inner cities: immigrants are willing to live with sometimes 10-20 persons in an average home. Assuming most of them are working that is a lot more income than the average Dutch family (1.5-2 incomes). And if they are illegals without an official job, they get a free home from local government that buys up the most expensive homes on the market for this purpose (usually the most expensive homes are available right away, and for government cost is totally irrelevant). The middle class is disappearing from the cities, the equity rich (usually older people who purchased 10-20 years ago) and the lower class stay.
Does any city in the world have a middle class anymore? I mean, Philadelphia is quickly becoming one of the last cities in America to become third world. I think Cleveland might be the only other one left.
If they are Molsems and there are enough of them they may change the liberal European culture. Go back to the middle ages where the church makes the rules and imprisions the rule breakers.
From my recent visit, I would say Phoenix (and surrounding communities), east valley being upper-middle class, Tucson, upper-middle class in Prescott-area, Flagstaff. Also, middle class in Albuquerque NM, parts of Las Cruces. Las Vegas is a mix of upper-middle & middle class. Parts of California are still middle class or upper-middle.
And I would say we (I am in the upper-middle class) all know that we are economically targeted by certain groups looking to finance their wealth on our destruction.
~Misstrial
ditto for my take on the philly RE market. it is common to see immigrant buyers paying exorbitant prices to get into the game, then divide the mortgage among the 5 or 6 others who are going to live there.
Followers of the Religion of Peace™ don’t “imprison” rule-breakers, they kill them (chop off their heads, throw golf ball sized rocks at their heads while shouting “allah is greatest”, etc).
Drop the moral equivalence between the “church” and islam.
My Boston brother mentioned this to me in 1985. In his neighborhood, extended immigrant families would “buy” a triple decker, move into it — maybe 30 people in all, and all work together to pay it off, and then expand to newly purchased properties. Their main problem was where to park all their cars, although most of these places were close to public transportation & basic retail outlets.
how about the church humps little boys then covers up you unrealtor moron.
Would that also be the same church that used to burn people alive for having the wrong beliefs?
And as I recall right in your neck of the woods God-fearing Protestants used to hang women for being “witches”.
Recent history indicates that the least qualified buyers with the most toxic loans set the prices in bubble areas. We’ll see if the subprime implosion changes that permanently.
That article is pure nonsensical drivel. Seems to be a trend at the Boston Globe. It is ridiculously unlikely that immigrants of all people will have both the ability and desire to purchase a $400K moldy shitbox.
I love how Kimberly fails to mention how rents have gone down in the last five years. I pay around 1300 for 2BR 1500 square feet of modern living space in a nice area of Boston. That’s down $200 in the last five years. If I purchased the unit, it would run me at least $3000K. Why would I do that? Why would immigrants do that?
Actually, in my hometown the new immigrants are legal, highly educated professionals who come for the good schools, the relatively new mosque (maybe about 10 years or a little more - relocated from another city closer to Boston) and the general suburban lifestyle. They are doctors, dentists, scientists and engineers. Once they get settled, they make good money and buy expensive houses.
However, I doubt they are the majority of the immigrants who are new to Massachusetts, and that demographic is no where near 17% of the home buyers of Massachusetts. But there are local pockets.
than the nation as a whole.
Even buyers with six-figure incomes have trouble finding housing in the soft market. Acia Adams-Heath and Raymond Heath together earn $110,000 a year but have not been able to identify an appropriate three-bedroom home in Dorchester to purchase so that they and their two children can be near their extended family.
They saved $3,000 for a down payment and calculate they can afford no more than $250,000.
So they make 110K and can only save 3k? Where does the rest of the money go?
DirecTV, Verizon Wireless, Toyota Credit, Visa, Netflix…
More likely, they owe 75-100K for private university educations. Add child care for a kid or two and you have a problem even at 110K.
Try healthcare insurance, life insurance, retirement savings, 529’s, student loan payments, taxes, and daycare, which can chew up an enormous chunk of a six-figure salary. Yes, it’s a healthy salary, but even fiscally-responsible people can find it hard to put anything aside for a house, especially if they know that retirement savings are a much better vehicle for future wealth than real estate, and they act accordingly.
My husband and I live very comfortably on his $100k salary, but I don’t work and therefore have time to cook & maintain our home while our children are young. I also pay our bills and keep an eye on our investments. I’m constantly amazed at how fast the money goes. This year, we’ll put a combined total of $25,000 in just his 401k, my IRA, & our children’s 529’s. On top of that, my husband’s employer has slowly been decreasing the amount they’ll chip in for healthcare at the same time that costs is rising, to the tune of almost $500 (pre-tax) per month. I can’t even imagine being able to afford daycare at $800/month (average for our area) on top of that.
My point is that it’s easy to think that this family is frittering away their money on luxuries, but it’s not necessarily an accurate assessment.
And at that salary, AMT is kicking in. Start saying goodbye to all your itemized deductions, since you are now ‘rich.’
redhead68:
Call up your investment company(s) and ask about AMT-free investment vehicles (like AMT-free municipal bonds, money markets, etc.) and minimums to enter.
All the best to you
~Misstrial
Thanks for the advice. We use both an investment advisor & a tax advisor, and so far, we have been able to avoid AMT.
A couple of years ago, we received a $400k windfall, so we keep very close track of our money. It’s been growing very nicely, and someday will make for a great retirement. (We have our eyes on beach property in northern California.) So, in the meantime, we live relatively frugally and dream of the day when we can while away our evenings watching the Pacific sunsets.
Atta girl
~Misstrial
redhead,
You’re totally correct regarding 100K not going very far, especially if you have a family.
We’re in the same bracket, have 3 kids, manage to save some, but are not swimming in extra money by any stretch of the imagination.
If not for the sale of our former house (sold to rent), we’d be just like everyone else, either living barely making ends meet & not having a life or living on credit cards.
We love renting!
I think one of the interesting things about the elusive $100k salary is that it often comes to people who are carrying enormous education debt. It’s a lot of money for a company to shell out for an employee, and companies want a lot back for it, which often translates to an advanced degree. It’s not always the case, but often enough.
We have friends who both have ivy-league degrees. One is in medicine & the other is an attorney. Between the two of them, they earn in excess of $250k as mid-thirty-somethings. I remember being taken aback by how big that number seemed, but surprisingly, we live just as well as they do, if not a little better, on less than half of that. The demands of their careers, which include unbelievable hours, mean they have to hire a lot of help, including a nanny to take care of their two children. Add that to a suffocating amount of education debt and it depletes their checkbooks pretty fast. While not spendthrifts, they’re definitely on a financial merry-go-round. I don’t envy their life at all.
My spouse and I are debt-free at this point in our lives: no car loans, no student debt, no credit card debt, no mortgage. It’s an amazing sense of freedom. Our friends may have a higher family income, but it comes with golden handcuffs.
Hey, at least their calculation on “affordable” is right. I was told by a RE agent yesterday that they can still get 7-8X income loans through one of their lenders. Using that calculation, I can almost afford to buy Mar-a-lago (kidding, of course, but I could afford a home that would be absolute insanity for me to even consider.. Of course, eating would be a problem, but hey, who really needs to eat?).
Once people come to the conclusion (that we all kind of took as a “given” before 1999 or so) that 3X-4X income is the MAX affordable loan amount we will hopefully see the return to sanity in the housing market. It is lunacy that somone who makes 200K a year is bidding against someone who makes 50K a year on the same home. But, trust me, I have very first hand knowledge of this happening several times in the past year, just among my small circle of friends.
Nice of the RE agent to tell you something like that too; huh? “You can definately outbid this guy, you make 4X what he does”. WTF? Why are we even looking at the same home??
Where does the money go? Daycare! Two children under 5 years old can run a cool $ 30,000 a year, and that is not one of the fancier centers. But you won’t get much quality if you pay less, because competent daycare workers can’;t get paid enough to be worth working, they can’t afford the high cost of living.
Here is a interesting tid-bit regarding day care….Spoke with a large developer the other day…They were trying to purchase a school to redevelope it…Got beat out by Google….Google purchased the school and turn the entire school into a day care center for their employees…This is 2nd hand information but comes from a strong source…
Good for Google! I wish more companies provided on-site daycare for their employees. They’d see a tremendous increase in productivity, IMHO.
Did it give an age for their kids? If they are under five, child care will eat any available dough. I wonder how much they save for retirement? If anything.
My fiancee and I make $130K. I pay $12K-ish a year child support, but she collects $3K-ish…. So net is about -10K there.. taxes on that $10K is another $3.5K or so fed and state. So we’re really the equiv of $115K or so.
We have modest vehicle payments totalling $450 for both. Both will be paid off within 6 months.
Our problem is consumer debt from medical bills, divorces, custody battle, and student loans… And a huge chunk of consumer debt I ran up while paying off $40K in alimony over the past 5 years.
We pay $900 a month on the mortgage, and $2000 a month on other debt.
Empty out your savings, down to 2 months buffer, and pay off those credit cards.
If there’s an emergency, you can run up the credit cards again, but if there isn’t, you’ll be out from under that burden sooner.
Savings…. ha ha ha ha ha… you made a funny.
Nothing but what is locked into our 401Ks.
Our interest rates aren’t an “issue” per se. I’ve got the blk of the balances at 5% until paid off, 4% until paid off, etc. Less than $10K is at or above 9%.
The problem is the sheer bulk of the debt. $60K student loans. $40K second mortgage from medical bills, divorce and custody battle. $40K consumer debt.
We’re selling the house. If we get the “wish for” price, it would pay off all the debt excpet the students loans, and put $35K in the bank. If we go 7% under market that I think we should list for, we’d pay off all but the student loans, and put $20K in the bank.
Then we live DEBT FREE!!!!!
I hear ya. Life happens and then we are left with the cleanup. I was lucky enough to get some decent bonuses while I went through the custody battle and until the alimony step down so I did not go in debt paying that. But I would have had to if I had no bonuses at that time.
You are probably already doing this, but list all of your debt by interest rates high to low. Take as much as you can and throw that at the highest rate payment each month in addition to the minimum payment until that one is paid off. Pay the minimum on the others. Do not close the paid off accounts (FICO hit). Move the entire payment of the retired debt to the next payment down the list until that is paid off. This will snowball and the debt reduction will move very quickly after a while. Good luck.
I would just add that paying your secured debt (2nd mortgage) takes priority. Unsecured debt, (cc) and the student loans would come in 2nd & 3rd, respectively. Still making payments, mind you, but the priority would go to paying down the 2nd mortgage. Look into making bi-monthly mortgage payments = same amount but divided in 2 = takes YEARS off your payment schedule. Ex: $1000/mo mortgage payment on a 30 year fixed. Bi-monthly = $500 every 2 weeks = 7 years off of your loan. Savings on interest is awesome.
~Misstrial
They’ll need to spend more than $250,000 if they don’t want to deal with flying bullets every night.
Taxes. But by living in Mass., they consent to have their money stolen by the government.
I don’t read Blanton’s latest as a “fluff piece”. It’s mostly about unaffordability, and in that regard, is right on target. The apparent REIC bias in it (from “our” point of view) arises from her liberally quoting Nicolas Retsinas from the Harvard Joint Center for Housing Studies. He expects a rebound in late 2007 or early 2008. I am highly skeptical of that prediction but, Mass isn’t Calif. A friend was recently discussing price-to-rent ratios with me. In her Camb neighborhood, wishing prices may be 20x annual rent — too high, but not the absurd 30x-40x that you see in Florida and some other places.
My problem with Blanton is that she always quotes “optimistic” (that is, positively biased) sources–something you noted in the article.
Sure, she didn’t come out and say, “Prices will never go down.” But she implies it by the optimistic slant in her articles.
Using the Globe’s search engine, I looked for Kimberly Blanton articles that mention Robert Shiller or the Case-Shiller index. She has mentioned Shiller once, in a May 3, 2005 piece about condo conversions. His name appeared in the second-to-last paragraph:
In his 2000 book ”Irrational Exuberance,” Yale University professor Robert Shiller foresaw the bubble in tech stocks. He predicts real estate may be next.
But Matthew Kiefer, a real estate partner at Goulston & Storrs, said strong demand is a stabilizer in Boston. ”If there’s a correction,” he said, ”it will be a modest one.”
G’mornign all,…
az_lender…what do you mean by Mass isn’t Calif? Are you saying it’s diff. in Mass? If so, how is Mass diff. from Cali?
thx
While still very overpriced, Mass real estate isn’t as overvalued as Cali. Need an example, just look at the median value home vs median value income.
Mass median family income seems to be quoted lately at $74K while the median house sold is approx $320, a ratio of 4.32. I don’t know the numbers for Cali, but I imagine the ratio is much higher.
Also, eastern Mass is heavily developed, with significant amounts of older stock housing and significant barriers to new construction. What is constructed tends to be at the higher end of housing, limiting supply even further. Population density in Mass is concentrated in the eastern half, and is fairly dense, making competition for decent housing even greater.
Another trend: Where I am on the south coast, many of the beach towns have become destination locations for NY and CT money (Wall St.), not to mention Cape Cod and the Islands.
With all that, I’m not saying real-estate can’t decline significantly from here, but I think it will take a recession/depression to make that happen. There is still too much available money, too much pent-up demand, and too little quality housing at affordable prices.
On a side note, I had a conversation with my neighbor this weekend, and it turns out he owned a number of investment properties in the area He started aquiring rental units in 1965 and peaked with about 400 units. He bought my property in 1974 for $18K (was a 6-family then). I bought it for $330 in 2004 (as a 4-family). At the time he owned it, rent was $15/wk including utilities & furnishings. Today, annual rental income is $33K with no utilities (it’s actually less because I live in one unit). If that isn’t scary, I don’t know what is…
Those are all salient points. But they don’t answer this fundamental question:
If most homes are unaffordable for most people, who will buy those homes?
That is the million dollar question…
My guess is nobody, at least until incomes catch up through inflation. It’s been said here previously that the real estate market would just seize up, as sellers won’t lower prices and buyers are waiting for deals. While pricing may be set at the margins and things like foreclosure/relo/job loss will force some sales, it doesn’t help me if the quality houses I would consider purchasing never come on the market, or are bid up quickly because of pent up demand.
Too many sellers still think they “won’t give it away” so instead of dropping prices, they take it off. In a market like Mass, where there aren’t significant numbers of new single family home builders competing with existing home owners for sales, there is little incentive to drop the price.
My expectation is years of low single digit declines while incomes (and inflation) increase until relative afforability is returned. However, relative affordability for our market may be 3.5 times income, so I’m not as interested in timing the bottom of the market as I am of buying an SFH when it makes sense for us, i.e. we can pay our mortgage on a 30year fixed, fund our retirement accounts and college savings plan and have a positive monthly cash flow of at least $1500. If we can do that on a 3/2 in a community with good schools then we’ll buy. Otherwise, we stay put and pay down the mortgage on the 4-family.
no one’s gonna buy them, and i say it’s gonna get a lot worse. double digit declines, huge inventories that don’t move. hence, the crash. when 250 starts to look like 125, i’ll know it’s time to jump back in.
Northeastener sounds like pint up seller.
$279000 HURRY! Get in on the next boom in Miami!!
http://miami.craigslist.org/rfs/348320090.html
What boom would that be? Ah, yeah, right! The foreclosure boom.
The sad part is that somebody will fall for his nonsensical pitch.
“You know that increased building brings increased values, so don’t miss this chance!!”
Greater supply equals higher prices. Who knew?
“People are falling in love with these units, so don’t wait¦”
More like, people will be “falling” off their balconies once they realize how upside down they are.
Notice that he does not specifically name the building, or even where the “Health District” (near a hospital or two?) is located.
My guess is that this is a bait-and-switch type operation - and that there isn’t really a specific “1 br / 2 ba + den” place for $279k that is anything more than a drawing board project at this point.
Whoop dee doo. 2BR/2BA apt for $309K.
Yaaaaaawwwwwwwwwnnn.
You can rent the same place for $1600:
http://miami.backpage.com/realestate/classifieds/ViewAd?oid=oid%3A1148913&name=real%20estate%20wanted
Sounds exciting. Particularly the “walking closet”. I guess it comes to you when you need to get changed.
Don’t have to worry about health when the murder and violent crime rate is so high. Won’t live that long.
Wall Street Gets Lift From SEC Rule, May Earn $4.4 Billion More
http://www.bloomberg.com/apps/news?pid=20601087&sid=aomFfZxHgzRA&refer=home
I think this has had a lot to do with the vertical rise this spring. They’re leveraged and double leveraged.
and from the article
Leverage ratios show that Wall Street already is testing S&P’s tolerance. The average leverage at the five biggest firms climbed to 26.9 in the first quarter from 24.6 at the end of 2005, as the firms began adjusting to the SEC’s new capital requirements.
The increase explains why trading and principal investing have become the industry’s dominant moneymakers, said Richard Bove, an analyst at Punk Ziegel & Co. in Lutz, Florida.
`Great Debate’
“The great debate is whether the risk-management mechanisms that the firms have in place do actually eliminate risk,” Bove said. “The pendulum has swung in the direction of less regulation, and the softening of capital requirements is part of that.”
David Hendler, an analyst at CreditSights Inc. in New York, is skeptical that securities firms will reserve enough when there’s so much money to be made by adding leverage and taking risks. Now that so much of their investments are in hard-to-sell assets, such as real estate, “you can argue that their capital isn’t liquid enough for the types of risks they face,” Hendler said.
“you can argue that their capital isn’t liquid enough for the types of risks they face,’’ Hendler said.”
It doesn’t take a rocket scientist to see that there has been too much liquidity chasing too many illiquid assets. The only question is when will the money supply enter into a drought phase.
It won’t be this week. Watch the meltup.
and we’re long now. Might as well make a few dirty pennies as Casey likes to say.
WASHINGTON, June 11 (Reuters) - A senior U.S. Treasury Department official warned on Monday that investors need to be wary of the possibility of damaging systemic risk as hedge funds and others spread abundant capital around the world.
He said investors should not be “lulled into a false sense of confidence” simply because there are more means for dispersing risk, and should understand that “a systemic event in the financial markets cannot be discounted and its impact will be significant.”
MOVE ALONG, NOTHING TO SEE HERE
This is going to end badly.
The spousal unit and I drove by some open houses this weekend, (forgot the popcorn damit) no traffic, rabid realtors, even houses with serious price reductions had NO traffic, on house didn’t even have a realtor in it, (it was empty but still) I think the population of GF’s has been culled down here, or everyone was having sopranos parties…
Come on, you know if you asked, they would have told you they had multiple offers, that you need to hurry and get your bid in — and it better not be low — they other offers are very good.
only one tried the ” it will be gone tomorrow” spiel, most of them seemed to be trolling to “hook” us, “I have other listings you may be interested in, blah blah blah…
Did the same. We’ve been to 24 open houses in a certain price range. Yesterday, we finally saw one that was great (for us great means a good layout, not a busy street, fairly good condition, good neighborhood). By then end of the day, there were three offers on it. It’s been on the market for 4 days.
The other 23 homes have not had any offers.
The crummy ones have to come down.
“By then end of the day, there were three offers on it. It’s been on the market for 4 days.
The other 23 homes have not had any offers.”
Interesting. Sounds like there is a LOT of crap out there (looks like it, too, from what I can see around here) so the decent properties still get a lot of interest and do get bids.
Where is this?
Waltham, Newton MA
Yes they got offers, but will they be able to complete the deal? Interest rates are up .5% since early May and 100% financing is getting tougher and tougher to find. Now if one of these offers has 20% down thats a no brainer, but really how likely is that?
This is why the recent pending sales numbers was down - sales are falling out of escrow. Anyone got numbers on that activity?
I hate to say it but 100% financing is STILL alive and well. Sure some loan houses went kaput…new loan houses stepped in to fill the bill. It’s all crap.Still specuvestors and 0 downers buying all over th SFV in LA. Anything good gets snapped right up.Hate it hate it hate it
My friend in your hood has informed me that his next door neighbor has put their unit on the market now since the mortgage just adjusted and the payment has jumped $1K per month. Unfortunately for them, they can’t sell at break even as an indentical unit across the street is priced 25K lower.
and thus it begins
The spousal unit and I…
Here are a couple of observations from the Minneapolis area.
Wife and I went on a drive in SW area so she could show me a new development near Spring Lake. Turns out that Toll Bros. is touting a place it is calling “Spring Lake Estates”. Here is what they’ve done, the bought a 5-10 acre chunk of land on spring lake with several hundred feet of lake shore. According to my wife, they planned to put in a beach, park and dock area there. To date it is still woods.
Then, across the two lane frontage road that is highly traveled, a road was put in up to an old farmers field. All the road/sewer/utilities are in with numbered lot markers for around a hundred homes. There are about 4 built which includes a model and an empty spec that is for sale. We stopped by and looked at the flyer for the spec. 4200sqft, two level on a walkout basement, no view and fairly plain on the outside. Asking price? $740K. This is out in the middle of a field that is surrounded by farmers and a several hundred yard walk to the woods that adjoin a small recreational lake (mn is the land of 10,000 lakes to give you an idea of the rarity of this particular parcel). I was astounded to say the least.
To top off our weekend we went to a friends house for dinner and the wife (who became a realtor recently) mentioned that in her office (wayzata area) there are over 275 realtors trying to share a dozen offices and a large common area. Apparently quite a debacle if I was interpreting her tone correctly.
Oh, almost forgot, there were no realtors at either the spec house OR the model although I could see lights that had been left on through the front windows.
If one had had no scruples, you could have a sideline selling spec house fixtures on ebay;-)
Come on now don’t give people ideas!
Why go that far? You can just sell the stripped fixtures to local recycling facilities. They almost never check i.d. or ask any questions as to where the materials came from. No need to ebay them where the authorities where some internet do-gooder might catch you.
My husband always keeps all the old metal plumbing fixtures from his jobs, as almost none of the customers want to keep them after they’ve been replaced. He spends maybe an hour or two a week taking the metal pieces out, resells them to a local recycling/scrap yard=instant cash.
Oh yeah, he loves any kind of fixtures with copper in them, as copper prices have gone through the roof the past couple of years.
I’m going to hate to see what the local crackheads, tweekers, and morgaged FBers are going to do the empty Vegas investor/spec houses here in Vegas over the next couple of years.
auger, this sort of thing makes me want to just throw my hands up. Yesterday, on the local news, there was a story about a huge parcel of land (27,000 acres) in eastern Pasco County north of Tampa, Florida. It is an area called Lake Pasadena. I’ve been there, at one time years ago I wanted to purchase some property there, it was a nice, quite, pastoral area with orange groves, etc. Some county commissioner was talking about how they are “working” with developers to develop the area so as not to disturb the current residents, ecology, blah, blah. (Probably trying to head off the same situation that’s going on in Wesley Chapel with a big planned development)
I’m completely dumbfounded. Pasco is the most F’ed county in Florida, since it has like 80% of ALL the sinkhole insurance claims in the state. Only Citizens insures there. You almost can’t give away a house in Pasco right now. WTF?
cape coral has to be a close second- love those unfinished streets etc…….
In the early 90’s I live about 25 miles west of philly in beautiful Chester county. There were quite a few places like that. The builder/developer had put all the infrastructure in and then nothing else - no spec home even - for several years. Weeds took over the place and then woody perennials. I can imagine the same thing will happen in many places.
Am off to explore the market in GA and AL for the next couple of weeks. I don’t have any confidence that both prices and taxes will revert to the “old days” here in Florida — there’s too much addiction to spending. Prices will come down a lot, but that’s only part of the problem.
Chip, I think the main event is this fall, with the most vicious wave of mortgage re-sets to break like a tsunami. In a way, that’s why I think these builders are building frantically right now, to get their money and get ahead of the neutron bomb. It’s gonna be a lousy Christmas season, the “Season of the Witch”, so to speak.
I’d wait to see what happens in Florida after that, because that’s when the real capitulation will come. Can’t squeeze blood from a stone. As to the tax situation, in fact it is a non-situation. There is no tax problem, just an inflated bubble problem that drove taxes up. And there is an insurance problem that nothing can be done about, so people are looking at tax “reform” as a solution to another problem. Always a bad idea.
Most governments have an addiction to spending. It can happen just as easily in GA and AL as anywhere else.
I think that you are forgetting the surety bond that these builders take out with each town that they build in. Do they walk away from 3.3 million or do they build the houses (most building products have dropped by 40-50%) and then sell them at a 20 -30k loss. If they do that they are way ahead because they get their 3.3 million back.
Palmetto — thanks — I agree in that I will never give up completely on my home state. But, being less optimistic than yourself, I am gauging my likelihood of success against properties out of state “just in case.”
An update: I had a friend selling an older house in McLean, Va. (not the nicest part, but pretty good area) after purchasing a home in suburban Maryland. I thought he had priced it pretty well at 769k two weeks ago - they dropped the price to 759k a week later, and got a very solid contract (and solid buyer) for $750k, with a nice, quick settlement (they are settling very soon on the new place). They’ve been in there about 7 or 8 years, so he’s pulling out plenty of equity. Overall, I’d say he priced it right, and that he’s happy to get it sold in a total of two weeks on the market. For those of you who think the price is low-ish for McLean detached SFR, the house has a few drawbacks like small yard, no garage, and minimally updated kitchen/bath, etc. - but, it compares favorably with pricier, newer townhouses in terms of size and not having an HOA. I think he could have sold it for 800k or perhaps more 18 months ago.
But what will the house sell for 2 years down the road. Someone may be upside down at $750k. Bottom is not even close.
Agree with Ghostwriter.
“small yard, no garage”??? Definitely overpriced by 600k. Especially since it snows there.
I wonder if their over-rated house was their only asset.
~Misstrial
The no garage thing is common in that part of the country. It was amazing to me after living in California, where even average tract houses sport three-car garages. And, as far as the snow thing, Maryland actually doesn’t get that much. Occasionally, they’ll get whalloped, but it’s infrequent.
They do pretty well — two good incomes, and a lot of nearby family to assist with childcare. And, I suspect they’ll be in this next home for 20 years or so.
It’ll be interesting to see what happens in that area going forward — I think that area will do better than a lot of other DC area locales, as it is pretty close in, not a lot of buildable area nearby (except in-fill) and really good schools.
If that kind of house is selling for $50k less (or worse) two years from now, it’ll mean the Washington area is still really struggling.
And - while I mention “small yard” - it’s not nearly as cramped as all those new California/Arizona/Vegas developments where the houses themselves are literally 6-8 feet apart. Houses to either side are about 40 feet away — it’s just that the front and back yards are smaller than average for an SFR in this area. And - they have plenty of parking, even if no garage.
plenty of greater fools left in the NoVA area. plenty.
THIS IS A MUST READ!!!
http://tinyurl.com/2oe7q9
Look at the picture. The guy is sitting on a giant zucchini. What would you expect him to say?
Tese are my favorite quotes from the article…
“There’s a reason that homes and real estate aren’t traded like commodities on the Chicago Mercantile…The value of real estate isn’t driven by speculation…”
Did the guy just get out of a coma?! That’s exactly what happened the past 5 years!
I read that article already and I think he must have written during the last boom.
What an A-hole. Lumber was $415 per thousand board feet in 2005 recently it was at $240.
People should make sure that George W. Mantor is remembered for having stood on the points in June, 2007, that “[t]here is no bubble” and that “[t]he value of real estate isn’t driven by speculation.”
Hahaha,another George W.
Point 1: The Real Estate sky isn’t falling, because over-supply creates downward pressure on prices, which encourages demand to meet the over-supply, and we meet at a happy medium.
By that same analysis, our current catastrophic levels of over-supply will equate to catastrophic downward pressure on prices.
When your rationale proves, in reality, the exact opposite conclusion, THAT, Alanis, is ironic.
“encourages demand to meet over supply”….
These clowns are really expecting us to own multiple homes.
I also love how he doesn’t see anything wrong with needing multiple jobs to afford to buy a house that not too long ago only required a single middle class income. If that isn’t a bubble, then what is a bubble?
HHAHAHAHH,
What a dickhead!!!
OK, here’s a great one.
I have never known of a place sellling in Knoxville, Tennessee for over US$300 psf. This place was listed last year for about $390 psf. and didn’t sell. Now some Las Vegas “value buyer” buys it and immediately re-lists it for US$900 psf! All yours for US$40 million!
http://www.dupontregistry.com/Homes/search/hmSRDetails.asp?sessionkey={45AB4BB6-A956-431A-A63B-B8B886F2315C}&itemid=368776&res=1
http://www.knoxnews.com/kns/local_news/article/0,1406,KNS_347_5576102,00.html
Conley’s probably got divorced because they were each having affairs in other parts of the house and neither one knew. What the h*ll would you need 49 rooms for unless you were running an orphanage.
Just got back from a week in Flyover Country (Northern Ohio). Amazing to see the difference from the Carolinas. Relatively nice homes sell for about 1/2 to 1/3 what they are here. A quality house with a manicured lawn, in a nice close-in Cleveland suburb (the one Drew Carey modeled his TV show on) had a sign in front for $79,900. There were a bunch for sale on the street. Houses were for sale everywhere we went.
One huge difference I noticed was in the age of people. There was a huge vacuum of upper middle class types between 25-45 years old. There were old people everywhere. A childhood friend who is in his mid-30’s said he and the wife would love to move somewhere else, but stay for family reasons. It made me realize that most of the people I see here daily in our area of Greenville/Greer, SC are healthy, fit, upscale, educated, and in the prime of life.
“most of the people I see here daily in our area of Greenville/Greer, SC are healthy, fit, upscale, educated, and in the prime of life.”
Nothing to be concerned about. Lindsay Graham is trying his level best to ensure that this sort of thing comes to an end.
Yes, he is doing his best to come back to his old law office in Seneca, SC after the next election…
No doubt about it! He hit the point of no return for me, this “bigot” won’t vote for him.
I’m from Ohio, about 1 hr southeast of Cleveland. You won’t see many 25-45 year olds. They all had to leave the state to get jobs. My kids are mid 20’s and college educated and there is nothing here careerwise. My husband (56) retires next year with a good pension as an inner city high school principal and we’re out of here then. We may rent a year or so after we sell, to watch the market. My house here, already paid for (2000 sf colonial on 6 acres) is worth maybe $225k in this market and the same house in FL would sell for about $600K-700k. At one time it would have been almost an even trade. Maybe it will be again. Not maybe, probably will be again from what I’m seeing. It’s going to take another year for total desperation and panic to set in. Once prices start tumbing it’s going to be a bloodbath in the areas that doubled and tripled. They may loose all their gain and then some.
Interesting observation Gwriter….It appears we have some markets in full meltdown…
Ditto. I’m from Eastern suburbs of Cleveland. (Go Cavs!!)
I took my first (and only) offer out of college and used it to transfer within the company to various other cities. I really like Cleveland but everyone there seems tired to me. The older demographics are very noticeable when I visit. There are a lot of great old mansions in places like Cleveland Hts. and Lakewood, though.
Manufacturing industry there is dead. My dad recently told me another Ford facility is either closing or scaling way back.
I have family in Shaker Heights. Whenever I go there, I drool over the housing prices (4 bed 3 bath for $175!). The problem with Cleveland is that there are no jobs. Cleveland Clinic is the biggest employer in NE Ohio, but not everyone can work in healthcare. I’m studying to be a nurse, so I’ve considered moving out there, but the city of Cleveland is fast becoming Newark on the Lake, which is bleeding into the first-ring suburbs (like Shaker and Warrensville).
BTW - The Knoxville place is kinda jinxed.
The old site was originally bought in the early 1980’s by Dr. Yateau. He built a large place, affectionately known as the “Chateau Yateau.” Within 6 months, the Yateau’s divorced. It was then bought by Conley. Who divorce either during construction or within 6 months thereafter. Doesn’t seem to be a good place for marriages.
In any case, across the street and up the hill is where Westcliff once stood.
“One of the South’s finest architects, Charles Barber, designed and built the Mediterranean-style home for Fulton and his wife. Fulton’s estate was already underway when it caught the eye of another American millionaire, William Randolph Hearst.
Fulton’s niece, Ruth Fulton Tiedcmann, of Overland Park, Kansas, says her uncle actually built his home first. Some historians have said Fulton copied the famous Hearst home, but Tiedemann insists Hearst copied the design from her uncle and named it San Simeon. Knoxville officials demolished Westcliff in 1968 to make way for apartments, which carry the name Westcliff today.”
Weston Fulton was a great inventor and held over 125 patents.
A short bio on Fulton:
Fulton’s sylph was a simple bellows. It looks like a soft drink can on steroids. It is corrugated and under pressure, it can go up and down, and even bend. It is something of a solid toy slinky, if that gives you a picture. He eventually made them in all sizes, from smaller than a coin to larger than a steel drum.
His bellows became so important to industry that the word Sylphon (the bellows) is now a normal part of engineering vocabulary. The bellows had so many practical applications it
would take a fast computer to list the many instruments, engines, gauges, switches, controllers, missile components, bomb detonation switches, thermostats of all kinds to comprehend completely the enormity of what Fulton created.
In fact, the Fulton bellows helped the Allies in World War I. Bomb-makers used it to switch on bombs at certain depths when the Allies were trying lo root mil German II Boats wreaking havoc on the seas. The bellows would trigger the bomb at a given depth, and was instrumental in shortening the war with Germany.
Fulton, of course, became a very wealthy man, but died at the age of 75. At the time of his death, he was working on another use of the bellows, to shut off coal furnaces automatically. He, in fact, had such a rich, inventive mind, that the United States Patent Office in Washington, D.C., had to add another room just to hold his patents, some 125 in all.
http://www.scotchirish.net/forum/lofiversion/index.php/t2988.html
“We’re having a housing bust,” said Gross, who manages Pacific Investment Management Co.’s $103 billion Total Return Fund. Not an adjustment …“… a housing bust” (From Bloomberg.Com)
Bill Gross..what does he know?
Question: Is there a tracking service that tracks specuvestor/flipper activity in the real estate sector?
For example, I am aware that the bubble apparently started in California & NYC in 2002, from there moved to FL and NV (approx 2003), from there moved to AZ (2004), NM (2004/5), TX, NJ, NC, UT, etc. Not sure if these figures/dates are exact.
If no such tracking system exists, I would like to suggest that one be set up to make sure this bubble crap does not happen ever again. This system could be nationwide and sort of be like NORAD to discourage specuvestors because then we would ALL know at once what is going on (which ruins speculative conduct - which I think, is to swoop down, make an economic killing before anyone else knows about it, and move on to another economic killing field).
~Misstrial
What good is the tracking system when the night shift comes back from the can and the whole screen is red?
I rent a nice townhouse for 1500. 2 bedroom 3 bath, about 1200 sq. feet. They were selling (2005) for about 400k. One sold recently for 350. Anyway, a unit went into foreclosure, and I saw it up for sale yesterday. 405k Unbelievable. It just never stops. This is in so cal.
Yes. The lenders haven’t gotten the memo yet. Must have been sent via “snail mail”. We’ve seen the same thing (San Diego county).
Did anyone see Bought and Sold and My First Place on HGTV last night? The home buyers were just putty in the hands of the agents. I believe they’re both fairly new shows and both are completely nauseating. Bought and Sold had first time buyers upping their bid because “steve” said the sellers would “laugh” at the first offer. The other buyer was a complete idiot. She just oohed and ahhed infront of the sellers (flippers) and had to have the house.
On My First Place, the buyers got into a bidding war. And then during that process magically a third bid was introduced. In Roswell, Georgia of all places. Where there is hardly any inventory.
http://www.metrobrokers.com Notice the sign in the lower left corner.
DirecTV subscriber (Total Choice Premier) here - I don’t watch those shows.
Watched and taped a CNBC show this past Saturday evening - all about retiring rich. Only good guest on was David Bach - he had a great idea on cutting one’s mortgage by calling up the bank and asking for the “bi-monthly” mortgage plan. Can shave 7 years off your 30-year fixed.
Another guest (older female) was a rah-rah RE investor. “BUY within the next 6 months!!!” sort of thing. yawn.
~Misstrial
WS bulls are still trying their hardest to party like it’s 1999, but the 30-yr T-bond rate is on the verge of breaching the psychologically-important 5.25% level. Something’s gotta give…
http://www.marketwatch.com/tools/marketsummary/
Gold and T-bond yields are bubbling up, reflecting a lack of conviction about the Fed’s commitment to keep inflation under control. What is it that WS bulls don’t get about “no helicopter drops in the outlook”?
“What is it that WS bulls don’t get about “no helicopter drops in the outlook”? ”
WS understands loud and clear what is going on….but they have a vested interest in keeping the party going as long as possible. It allows the Gov’t to falsely brag about a booming economy and of course WS profits off this.
Rising yields are bearish for the stock market BTW
“Rising yields are bearish for the stock market BTW”
That is why I am guessing they are stabilized by capping them…
Thank you for that link, GS. I am currently watching the 30 year like a hawk. Getting ready to bid at the next auction.
~Misstrial
Do you think 5.25% is the new PPT cap on the 30-year? A great way to make sure stock prices always go up is to make sure the competing investment (l-t Treasuries) don’t start looking overly attractive…
I heard that the 30 year may go to 6.25% (which would be great!).
Yeah, I think there has been a war against bonds for a looong time. Funny since my grandfather was a stockbroker and yet he had a diversified bond portfolio plus precious metals (co-owned a South American gold mine) along with his stock holdings. Such a negative attitude against bonds & bondholders in recent times - simply unjustifed.
~Misstrial
Wanted to clarify that 6.25% would not be happening right away,of course. But within 3 years, possibly yes.
~Misstrial
One should weigh the null hypothesis that the l-t T-bond yields are sticky to the upside, because of a tug-of-war between inflation pressures against recession worries, versus the alternative hypothesis that stabilization policy is used to hold the l-t T-bond yield in an artificially narrow (conundrumish / low upside volatity) trading range. The alternative hypothesis is consistent with a policy of placating bovines (sheeple and bulls) by making sure the stock market “always goes up.” Unfortunately, the inherent tendency of such a policy to systematically ramp up systemic risk, in the form of fundamental stock market disequilibrium, which might have its limits.
It is also worth noting that PE ratios cannot be directly compared between 1989 and 2007, as l-t T-bond interest rates must be taken into consideration when comparing the fundamental value of l-t T-bond investments to stocks. This is a point which I have seen glossed over in some recent WSJ articles, which have breathed a sigh of relief over the observation that PE ratios are lower now than in 1989. It is ‘different’ when a conundrum is unwinding.
“Wanted to clarify that 6.25% would not be happening right away,of course. But within 3 years, possibly yes.”
So I am not clear what you are planning to do. You would not want to buy l-t T-bonds now if you thought their price would fall (and yields would rise appreciably) in the foreseeable future, would you?
Going to buy in the near term. I like laddering so when or if 6.25% comes around I will already have some l-ts in my portfolio.
I always look forward to your views (i.e.: alternative hypothesis) on bonds G/S - you and bill in Phoenix. I consider myself to be a novice investor for l-t T bonds - i-bonds & corporates are another matter.
~Misstrial
Thank you Misstrial - you are too kind!
Actually it looks as though this week’s 10 year note issue will be a 9 year and 11 month note at 4.5%, which is disappointing. But right then and there I ordered the August 15 issue, which could certainly be above 5% for the yield. Mostly (and I stress that), my treasuries are in 3 month T-bills. I’m doing a kind of value averaging into notes and will probably venture into the 30 year bond at some higher yield. I have a voice inside my head that keeps telling me “fools rush in,” and it keeps me from becoming just another FB in the long run!
http://tinyurl.com/2jekk7
Thank you!
~Misstrial
A senior U.S. Treasury Department official warned on Monday that investors need to be wary of the possibility of damaging systemic risk as hedge funds and others spread abundant capital around the world. from the text……”a systemic event in the financial markets cannot be discounted and its impact will be significant.”
© Reuters 2007. All Rights Reserved
keep the powder dry folks, when this type of language becomes the conventional wisdom…..look out below.
Noted. Thank you. (Actually I cut-&-pasted that quote into my “Investments Info” Folder.)
Too much money amongst too few.
But, wasn’t that the point of our wonderful Administration’s fiscal & trade policies??? (stated sarcastically)
~Misstrial
I happened to catch the 5PM local news yesterday on KGUN-9 in Tucson. One of the first items was housing in Tucson. The reporter was standing in front of a house in one of the older non descript neighborhoods with a For Sale from some realty company. He started by telling us viewers that “inventory is up 40% from this itme last year, which means that for every 100 houses for sale last year there are now 140″. Well duh.
Then he said sales were down because of “rising interest rates” but did not give figure for that. Finished by saying that if you have the money ,buying a house now is a “steal”. I’m sorry but I did not catch whether that was his take or provided by local realty association.
The station motto is “KGUN-9 on your side”
desertfox
I don’t watch the local news (I can’t stomach it anymore). Anyone know if any of the Denver stations are doing the “its a great time to buy” schtick lately.
I mean, why bother watching? They could replay previous news casts and who would know the difference?: gang violence, illegal immigrant sob stories, local sports teams that keep losing, bogus inflation and other economic news, and of course the fluffy “human interest” stories. Remember “Bart’s People” on the Simpsons? quote Lisa: “I’ll fill them up with so much sap they’ll blow their nose with a pancake”
Actually, I rarely watch it anymore ,as the lead story usually is the murder du jour or some drunk being chased by police mainming some poor soul having the green light. This is relatively new phenomenon for Tucson. Those not arrested at the scene are “believed to have fled back to Mexico”, all too often. Shootouts on I-10 ,coyotes competing for human smuggling traffic .One of the local pundits recently wrote how long time Tusconan families(I assume ’shakers and movers’ talking of moving elsewhere. To where ?
desertfox
I would tell you that they are moving here but then the local realtors will seize on it (as they do just about anything) and use that info to raise home prices for everyone.
~Misstrial
“I don’t watch the local news (I can’t stomach it anymore).”
You’re among many like yourself who can’t stand sitting in front of the boob-tube while the Madison Avenue shills program you with their propaganda.
Very true. I think there is an unusually high proportion of people on this site who watch little/no TV.
BTW, Good luck on selling the house, Darrell!
‘buying a house now is a “steal”. ”
True statement. If you buy now, the seller is stealing from you. My house will be in MLS this afternoon. I want to get in on some of this legal stealing!
msnrealestate has a forum up about people losing their homes. check it out if you get a chance. I think there are a few HBB’ers writing. Mostly a lot of whining though.
msn real estate “are you losing your home to foreclosure or know someone else who is?”
Thank you for the heads up. I will check it out.
~Misstrial
Here is the link to that discussion:
http://boards.msn.com/RealEstateboards/thread.aspx?ThreadID=160924
Some sad stories on MSN foreclosure sight, but more stupid stories than anything. If you can’t afford to buy a house with a regular bank, but qualify with a mortgage company, something should click in your head that says something is wrong with this picture. If you own two homes, you created your own problems from greed, or keeping up with the Jones’, or from trying to bridge. When I sold real estate I had many people who wanted to bridge. When I laid out on paper what their payments would be when 6 months down the road the 1st house hadn’t sold and the bridge loan turned into a regular loan, none of my clients bridged. They slept better at night and so did I. I’ve seen very few mortgage companies I would even borrow a nickel from. If they still wanted to use a mortgage company, I told them to find another agent. Because don’t even think for a minute if the mortgage company they picked out screwed them, that they wouldn’t come back on the agent too. If you don’t qualify one place, you don’t really qualify at all. Wait it out, save, rent and then buy. I had several that saved, straightened out their credit and then came back to me several years later to buy when they qualified. In the meantime they sent me many other customers that did qualify to buy.
A lot of lawsuits against realtors going on right now.
I cannot go into any detail, but some FBs are filing actions and naming RE agents personally as well as the RE firm(s) involved.
~Misstrial
Interesting info in some of the posts at the MSN board….
—————————————————
Hello my advise to any one is to not use your homes equity unless you really really have to ! I lost my six figure job in march of 2006 . I had just refinanced my house with a interest only loan and had not even made the first payment . Then I received the dreaded news from the IRS they were attaching a lien on everything (they got any savings and my checking - which I had already written checks on !) we some how managed for a while by selling what we could. I have had a terrible time finding employment in my field (sales manager / automotive) .Eventually we had to leave our home as we had no equity to pull ourselves out we are now homeless ! I am still trying to get some employment but I am in the wrong field! Nobody’s buying cars ! So please do yourself a favor never take your present position in life for granted and if you can never use your house’s equity like it’s an ATM machine and pull out all its worth as you may be like that guy thinking the tornado will never hit him !
Lucky I didn’t have food in my mouth! Selling cars, now there is a stable guaranteed $100K, why didn’t I think of that instead of wasting time in school learning readin’, writin’ and ‘rithmetic…
Yikes! The car salesman should have learned from other people. I learned from my FB mistake in the 1990s and got on with living life.
I especially love his lesson learned quote and have been living that quote religiously since 1996: never take your present position in life for granted
I have to remember that quote. Thanks for sharing that one!
The MSN boards don’t like Opera.
Yes, I have the same problem. Change the settings to “Mask as Internet Explorer” for the MSN site (right click, edit site preferences –> network)
No dice, even when I try to “mask as Mozilla.” Maybe it just doesn’t like Mac.
Bingo! IMO, MSN (Micro$haft Network) goes out of it’s way to be anti-Mac. I used to visit a few of thier boards until, one day, they wouldn’t work with my Mac browsers (Safari, Mozilla). Screw them! I do my best to avoid anything MS that I can.
Group homes, anyone? LOL
http://dallas.craigslist.org/rfs/349644978.html
Text, in case it disappears from CL.
——————————
Real Estate Investor looking for Partner!
Reply to: jrroach80@yahoo.com
Date: 2007-06-11, 11:07AM CDT
ATTN: GROUP HOME OWNER/OPERATORS!!!
Real Estate investor looking to partner with group home owner/operators. I have large homes that can be converted to group homes. Please call John for details 214-227-XXXX or email to XXXXXX@yahoo.com
When I was in school, New Hampshire had a rule that any 5 women (might have been 6) not related to eachother and living in the same house were a brothel. The police could come and shut them down. The sororities and co-ed houses depended on recognition by the college to keep them in business. The town would gladly have shut them down given a chance.
Someone better fight this. We had a couple who sold their home as a group home. Anyone under 21 who hasn’t graduated from high school must be educated in the district that the group home is located. This particular home took in a girl with a scary criminal record. She would have been a danger to other students in our small 1000 student rural school. We had to hire a teacher full time to teach her privately at the group home. Your tax money pays for these homes and these kids education.
Beautiful - to have the home next door converted into such a facility. I’ve had relatives in such homes though - one a nephew who was seriously injured in a car accident. Yes, they have to live somewhere. I can see both sides of the issue. A hard issue for me. Another relative was in a home in a much more rural setting, and that’s how group homes should be.
This is big business in CA. The state pays the owners thousands a month as I understand.
Yep. “Clown Houses” are big business here, especially in the IE.
San Diego, May ‘07:
http://www.foreclosureforum.com/stats.html
Notices of Default: 1597
Trustee Deeds: 614
Interesting to note from that history; it looks like % of trustees deeds going to sale was at a maximum of 38% in Sep 1992 on a total of 300 TDs. Today in our “no bubble, no meltdown” housing market it seems we hit 40% TDs going to sale on 600+ TDs last month. Any guesses how high TDs climb, and how high the percentage going to sale goes??? Seems like we are already worse than the 92 downtown.. How bad will it get?
(Sorry, originally posted this in the wrong place)
Shout-out to the California AARP artist community for a GF:
http://tucson.craigslist.org/apa/349675821.html
Hello Everyone,
It’s been awhile since posting here.
Some observations I’ve made.
1) There are TONS of houses for sale in San Diego.
2) There are TONS of short sales going on.
3) Regarding those short sales. My realtor friend has told me that they have stopped bothering having people put in offers on short sales due to the inability of lenders to respond to offers (due to too much paperwork.)
4) A huge % of the short sales are falling into foreclosure due to this problem of the inability of lenders to cope with the number of distressed properties.
5) The pricing of these foreclosures by the lenders does not seem to
show that they are aware of the current market conditions (they are way overpricing the properties). I’m assuming this is because they want to avoid losing money on them.
6) It seems unavoidable that the lenders will lose money on these foreclosures based on the current market, and the fact that rates are rising.
Which brings me to the questions I have regarding these facts.
1) What happens when the lenders lose money on the properties?
- does PMI cover these losses for the lender?
2) If PMI does cover these losses - what happens when the claims increase in number so much so that the insurance companies cannot cover the lender?
3) Who backs the insurance companies?
I’d be interested to hear the responses…
Your question #1: It depends on what type of loan. Part of the allure of 80/20 product was the ability to skirt the PMI, so most 80/20 loans have no insurance to the lender. The lender who takes a loss (usually the issuer of the “20″) will need to write it down and it will hit thier earnings. This is why lenders are still asking wishing prices for thier stock of REOs. At this time they can pretty much value them at the wishing price, and they won’t take a hit on the financials.
Your #2: Probably won’t happen, see my answer to #1 above.
Your #3: I think I see the reason for your question, can you say “systemic risk”? Having said that I’d be suprised to see PMI issuers as bag holders due to losses in PMI transactions.
Thanks! Ok based on your answers…more questions
1) What type of monthly costs do the lenders incur while they hold these REO’s while they wait for them to sell?
2) What incentive do the lenders have to sell these properties for less than what is owed on them?
San Diego May ‘07 statistics:
http://www.sandicor.com/statistics/stats2007/05statistics.html
To my untrained eye, these numbers do not look sustainable:
Total April Used SFR New Listings by Listing Value = $3.56b (4295 new listings)
Total April Used SFR Sales by Sale Price = $1.1b (1460 sales)
Difference between value of new listings and value of sales = $2.46b
This is totally OT but… Apple just released a beta (possibly buggy) version of it’s Safari web browser that runs on Windows. Not a big deal but… You can re-size text entry windows on *any* website! Really cool for sites like this, where once you get to a certain point you can’t see what you previously typed. Like right now. But I just re-sized it!
Now I can see the whole message. And check for typos.
I
Can
See
All
of This!
I know… way OT, but pretty cool!
I’ve been running Safari on Windows all day. A few things cause crashes but overall very impressive. Good for Apple & Joe Q. Netsurfer. Bad for Micro$oft.
Challenge: Find a listing crazier than this one: http://redfin.com/stingray/do/printable-listing?listing-id=815239.
Cute house, but waaaay overpriced!
I put on my tinfoil hat and realized we don’t have any bees this year. Very few humming birds either. My garden is a disaster. Oh well, food is not included in the CPI. I guess I’m OK.