Bits Bucket And Craigslist Finds For June 13, 2007
Please post off-topic ideas, links and Craigslist finds here.
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I should not be so gleeful about the 10 year rates….bu t isn’t this fun?
I can sense all the buyers backing off as they no longer can get a mortgage that leaves them more than 50% net income for other than housing expenses.
Oops….
Here is what Robert Chapman said in his letter this week:
If you look at the charts you see that in spite of central bank intervention, on June 7, 2007, the 10-year US Treasury note broke out and over its resistance point of 5%. We expect further resistance between 5.00% and 5.05%. After that it will work its way up to 5.65% probably to near 7%. A move to those levels will put the 30-year fixed rate mortgage at 7% to 7-1/4%. Due to the leverage within the housing structure this should have a profound affect on real estate sales and prices.
When we bought our first (and so far only) house in 1995, we were paying 7.5%. At the time that was a deal.
I pulled out the file this past weekend from that purchase. I looked at all the paperwork. They asked for everything but the kitchen sink and required a hefty down payment. We were young DINKs then, and even with two incomes and little debt, we still had to jump through hoops in order to get a loan.
Netherlands in 1992: rates around 11% for 5-year fixed, 20% downpayment, perfect credit and many details required, maximum loan 3-4x personal income (with second family income adding maybe a little to the maximum loan amount).
Netherlands in 2007: rates around 4% for 5-year fixed, no downpayment or good credit history required, maximum loan 8-10x family income; all kinds of starter subsidies, free loans for special groups and state-backed mortgage guarantees (if you cannot pay the mortgage after selling your home, a semi-gov fund will pay for the difference).
No wonder the average home price is now around 8.5x income. It’s a great time if you don’t have any money and want to live the good live; can’t wait to see the US problems spread to Europe so all the lunacy can start to unwind here as well.
Lou –
I am guessing “starter homes” were not priced starting at $500K back then? 7.5% of $500K = $37,500 — over half the median SD household income getting thrown away on the interest rate component of PITI. I guess if a home is in the 15% tax bracket, you can lop 15% off that interest payment to reflect the mortgage interest deduction, bringing the interest payment down to a relatively more affordable $31,875, but then there is principle amortization (low initially but crushing later), property taxes, insurance and falling knife home equity losses to consider.
Good luck to all home buyers and sellers in the face of rapidly increasing interest rates!
homehousehold“We were young DINKs then, and even with two incomes and little debt, we still had to jump through hoops in order to get a loan.”
Lou, at least you avoided one of txchic’s anal exams.
Lest anyone thought I was exaggerating with my $500K starter home example…
‘Subprime Crash Squeezes Out First-Time Home Buyers (Update1)
By Bob Ivry
June 13 (Bloomberg) — Josh Tullis, who in his eight years as a senior loan officer rarely felt compelled to reject a first-time home buyer’s mortgage application, is sending people away empty- handed in 2007.
Tullis’s latest clients are a married couple that banks ought to love. Between them they make $70,000 a year and they’ve been renting the same apartment for three years with zero late payments, he said.
Lenders won’t approve them because they don’t have enough money in the bank, said Tullis, Virginia sales director at A. Anderson Scott Mortgage Group in Falls Church. With mortgage companies cracking down due to rising subprime defaults, Tullis needs them to sock away two months of payments for the $500,000 townhouse in Fairfax.
“Six months ago, these folks might have qualified, a year ago, definitely,” Tullis said. “It’s a lot, lot harder than it used to be for first-time home buyers.”’
http://www.bloomberg.com/apps/news?pid=20601109&sid=a9WrgkMoBpyI&refer=home
Uh. 2 payments for a townhome purchased at 7x income isn’t going to turn people getting in way over their head into people with a comfortable situation. And what about a down payment?
Better for them to be turned away, even if they never realize it.
I know what you mean. From all I’ve read here, we should of had a breeze getting the mortage on this house that we bought in 2003, but instead it was a grueling documentation grind. I am surprised 3 pints of blood weren’t required.
I applied for a 15-year, non jumbo, 4.875% from a major bank (where I had accounts for 10+ years at). We had 20% down, Loan was 1.6x income, Fico of 824, employed 8 years at current, and they were saying “not sure we can do this” until I documented enough liquid assets to put 94% down. I am not kidding.
Banks are always very conservative on any loans they make.
And they should be.
I remember I started the process in 1994. All our history was impeccable, but not long enough, so they would only give us 1 1/2 times income. I felt they were being too stingy, but from their point of view it was the right thing to do.
Same here when we first bought in 1994. We needed W2s, letter from the landlord that we were never late, had to show that all the downpayment (huh? what’s that?) money was ours and didn’t come from anyone else and of course no CC balances, please. I had a student loan balance and even that raised an eyebrow, but they graciously went ahead and approved us. I even wore a suit when we met with the loan officer — this was an occasion.
After reading this board for a few months and finding out what has gone on, I feel as though I might as well be describing a house purchase in the 1940s.
you said, goirish, when I first started realizing what had been going on with credit I couldn’t believe it. Then, of course, I began to realize how many of my friends had gotten their 5000 footers and granite kitchens and I went, ohhhhh, I get it.
Will we ever see those good old days again?
When we bought this home in March 2002 we were jumping thru hoops bringing $85k with us putting more than 50% down. I was so frustrated that all until closing they kept asking for more documentation. Of course, all that paperwork was already packed and they would make me go hunt it down and fax it to them.
This for a employee that was on transferring within the same company and had an easily documentable and stable income.
At the time I thought it reflected on the weaker employment picture out here in Syracuse (vs Boston). Now I’m very thankful for the oversight as I’m not pulling up long foreclosure lists for ours or neighboring towns and when I read about Florida, AZ, etc. I almost want to cry. I can’t imagine being a homeowner in one of those ghost town neighborhoods.
Depends on the rate you are getting. If you’re paying .5% over the bank’s costs, they’re going to probe you every which way. Back in ‘93 when I was getting a loan, they wanted to to explain why I was 3 days late with a CC payment of $17, 2 years earlier.
However, if you’re getting an ARM for 8%, with 6 month resets that can go to 12%, with 2% points and other “fees” and 6-months rent pre-pay penalty and…..
Well, for that kind of margain, just about anyone can get a loan!!!
? add 1.5% to the 10 year for a fair 30 year mort
When we bought our first (and so far only) house in 1995, we were paying 7.5%. At the time that was a deal.
I pulled out the file this past weekend from that purchase. I looked at all the paperwork. They asked for everything but the kitchen sink and required a hefty down payment. We were young DINKs then, and even with two incomes and little debt, we still had to jump through hoops in order to get a loan.
(Dupe? The message hasn’t shown up.)
‘After that it will work its way up to 5.65% probably to near 7%. A move to those levels will put the 30-year fixed rate mortgage at 7% to 7-1/4%.”
I agree, but you’re underestimating the move in long term rates. Yesterday we pretty much reached 7.125% on the 30yr if you wanted no points, no origination. 7.125% was (1.375) in YSP, a level I have not seen in a long, long time. A move in the bond to 5.65 would have us at 7.5% on the 30yr, no problem. 7% bond yeild? Now you’re talking 8% and up on the 30yr.
But I agree, this move in the bond market is like strapping a canon to the leg of an already sinking (sunk) housing market.
These guys should get out of their ivory towers once in a while. Just try to get a 30 year fixed rate with 0 points at 6.75 today and thats with a 10 year bond yield at 5.25%. If the ten year hits 7% 30 year fixed will be over 8%.
Sniggle,
And costs for other expenses go up and up.
This month we’re looking at:
Water Softener Tune-up ……over $200 last time
45M mile car tune up…………….$180ish
New brakes……………………….$200ish
Pet check up and innoculations….$150ish
Total up to $750 in basic maintenance costs added to my ever escalating weekly budget.
Then there’s the health insurance co-pay for emergencies is up to $75 when I used to pay $20 (why do kids tend to get sick/hurt on Friday evenings?) and my co-pay for regular visits is up $300%. But the real pain comes from the fact that more and more comes out of the paycheck to pay for that employee coverage in the first place.
So how are people going to afford those homes w/o the i/o and neg am loans and with higher interest rates? The truth it is isn’t just housing costs that have increased in greater proportions than income. That little fact is making the 3X income rule for a home still unworkable at more and more income levels.
Damn, CarrieAnn - you should have bought a BMW! Had mine in for service last week and the service manager called the next day and said that they forgot to do some required service and requested we come back. Went back got the service and walked away with a $50 check. I have not paid to service my car in over 5 years - Get yourself a BMW and you will be pleased.
Yeah, but I bet your car hasn’t lasted 45 million miles!
Well put it this way WAman, when we didn’t pay the $$$$ for the vehicle undercoating, I could hear the manager having a meltdown in the backroom. Let’s just say I used to be a buyer in my former life and they didn’t make any extra on me. This on a Toyota Sienna wagon, not a car w/tons of inventory sitting on the lot at the time.
BTW, my h put on the tires purchased 1/2 price online and will be doing the brakes too. If he wasn’t so busy putting in our front walk he’d do the other maintenance too. I was just referring to costs the average “can’t get dirty” type has to pay out.
BTW,I would prefer the BMW ride of course, but that’s for after the Sienna dies. Convertible of course.
So how are people going to afford those homes w/o the i/o and neg am loans and with higher interest rates? The truth is it isn’t just housing costs that have increased in greater proportions than income.
CarrieAnn, great post. And there is one more thing that maybe hasn’t happened to you yet. That’s when your kids’ pediatrician begins to feel the pinch and decides that he/she won’t deal with health insurance companies any more, so, in an emergency, you’re stuck with paying for the consultation and hoping to get a little refund from the insurance that has upped the rates 50% in the past couple of years but has not seen it fit to up the doctor’s fees. Then, you have to scramble to find a doctor who will cover your insurance, whether you like him/her or not. Where is all that money going to? It is certainly not going into better patient care, nor into the pockets of doctors (I know, my husband is one).
In my neck of the woods in California’s Central Valley…
We’ve been losing talented medical professionals, from orderlies right on up to doctors, to the California prison system.
They get paid up to twice as much, and their clientelle may complain a bit, but no malpractice suits come their way.
That’s right. A convicted felon probably gets better health care, than you or me…
Cassiopeia,
That is so alarming to me that doctors’ children are facing that situation. I can only imagine how unhappy that makes the two of you. We have already had problems finding proper coverage for certain things. Dentists in this area will not accept insurance. You have to pay up front, then get reimbursed….so you need an extra thousand laying around just in case you need a couple of crowns or something. Course, insurance never pays the full amount either and the cost is higher because there is no negotiation.
There are other areas where it is almost impossible to find certain specialists that will accept my husband’s insurance.
But my husband is not in the medical field. Is your situation a hospital decision (like my psychologiest friend in MA that has weak insurance coverage)? Man, our medical infrastructure is going to collapse isn’t it?
Man, our medical infrastructure is going to collapse isn’t it?
Disclaimer: OT rant, nothing to do with the bubble.
Carrie Ann, it is not “going” to collapse, it’s collapsing as we speak. As with everything else, it’s becoming a rich vs. poor society. I know, aladinsane, the prisoners get health care, but you have to think that, considering the type of population and the “proximity’, it’s a major public health concern to keep those people with some kind of medical care. If some doctors are choosing to take care of them, good for them, but it’s not the nicest kind of practice.
Carrie Ann, we pay for a big national PPO insurance privately, have been doing so for a long time. It used to be one of the “goodish” insurances. You could be almost certain to get some kind of coverage everywhere you went, and most doctors accepted it. Not so any more. The funny thing is, the insurance costs more and more every year and covers less. Just yesterday I had to buy an antibiotic and ear drops for one of my kids. The antibiotic was covered, so I got it for only 10 bucks. The ear drops were not (these are antibiotic drops, not some kind of palliative thing), so I had to shell out 89 bucks. Sometimes I think that the only reason to have insurance is to be able to pay the “negotiated” fee. Basically, we’re paying a big premium to get a good price cut when we need a doctor. The big health corporations and pharmaceutical companies are getting rich on the backs of patients and doctors, that’s just the way it is.
also on a side note, I was paying for health insurance for myself and family and it was going up 150$ per year, close to 15%. while Like Cassiopeia said we were getting less coverage. as for accepting health insurance, with the fees they pay I would make less in private practive (accepting their pathetic fees ) than working for an employer outside. so the prudent thing to do was not accept most health insurance if I wanted to stay in business.
Thats why I dont take most insurances any more, I would be out of business.
We have 100% HMO insurance (plus co-pays, emergencies, prescriptions, etc.), and have started just seeing private doctors (paid entirely out of pocket) anytime we want good service. Check-ups, etc. we get through insurance, but for screenings, “minor emergencies”, etc., we do our own thing.
I have a feeling more and more people will begin doing this.
Don’t even get me on the healthcare rant!
(Sigh!)
Ben sorry to go OT but this is also going to impact affordability in housing. Soon how large a proportion of our population will be scraping by even to rent?
IMHO, the healthcare issue is one of the top economic concerns. I know this is a housing bubble blog, but these things are all inter-related.
I have to bite my tongue when healthcare issues are brought up. So many things that need to be fixed there.
One thing that really baffles me is how we hold up capitalism as the shining light — and everyone should follow our lead. While that may be true in many cases, healthcare is not an area best served by a capitalistic system.
People can’t seem to grasp the tremendous conflict of interest in a system where the healthcare industry is best served when people are sick and require life-long treatment (usually just masking the symptoms).
Ack! I’ll shut up now!
“That little fact is making the 3X income rule for a home still unworkable at more and more income levels. ”
True statement. Core CPI doesn’t includes real things like health insurance, life insurance, disability insurance (AFLAC), car insurance, etc. When you really sit down and put all your expenses down on paper, it makes things much clearer. I suspect if any of the FB’s had spent a few hours going thru the prior year’s expenditures, they may have determined that buying a home is not really affordable after all - especially at higher than 28% payment ratio with a fixed rate loan.
10-year benchmark hits new 5-year high!
Treasury yields soared to a new 5-year high Wednesday, surpassing the Federal Reserve’s benchmark rate of 5.25 percent, prompted by fears of higher interest rates amid strong global economic growth.
The dollar gained against the euro and the yen.
The 10-year benchmark extended losses to climb 5.32 percent, falling 6/32, or $1.87 on a $1,000 note, up sharply from 5.29 percent Tuesday.
Up…..Up……and away
http://biz.yahoo.com/cnnm/070613/061307_bonds.html?.v=1
Volatility!
Treasuries Erase Losses After Yield Rises to Highest in 5 Years
By Anchalee Worrachate and Kevin Lim
“June 13 (Bloomberg) — Treasuries erased losses after a slump that earlier pushed yields on 10-year notes to the highest in more than five years.
The yield on the benchmark 10-year note fell 1 basis point to 5.291 percent as of 7:48 a.m. in New York, according to bond broker Cantor Fitzgerald LP. It rose to 5.323 percent earlier, the highest since April 2002.”
Down…down… before going up…up
I clicked on your link… The big annoying advertisement is telling me that mortgage rates have fallen again!
LOL
unfortunately, in Europe rates are barely moving. They inched up about 0.1% in Netherlands over the last month, and rates on savings accounts are still near all-time lows. Spread between variable rate and 30-year fixed mortgages is now smaller than ever, often less than 1%. You can still find a 30-year fixed mortgage here for around 5% if you shop around. Dutch banks report that unlike 1-2 years ago, almost all new mortgages use at least 5-10 year fixed rate. This will probably prolong (and slow) any downslide in the housing market significantly. But in Spain both mortgage rates and rates on savings accounts are increasing significantly lately (strange, it is all the same euro currency). Maybe the market is starting to price in the local housing bubble risks?
That pretty much describes the bond & mortgage markets in the U.S. for the past year+.
Remember when we were all watching the bond market (in 2005, IIRC) and there was some decent volatility? Then, once the Fed decided to sit tight, everything went dead (no volatility). It’s baa-ack!
Loving the action in the bond market & hoping it will shake things up a bit. The FBs really had a terrific opportunity (over a year) to get their business in order & refi into longer-term mortgages, much to bears’ chagrin. Hoping that will change in our favor for a long, long time to come!
Here’s hoping it spreads to Europe, nhz!
In case you didn’t see this on the California thread
http://www.foreclosurecode.com
No surprise at all. Next thing he’ll be the highlight on Okras book club.
what a jackazz.
Jackass, yes, but more power to him if he can make some $$$ off his errors. Hell, I’d rather him not file bankruptcy and make good on his loans.
Would you buy his book? Would anyone on this blog consider buying it?
Not a chance in hell that anyone I know would be buying that thing.
Not me.
What’s he going to talk about? Jamba Juice? Wheat grass shots? Troubles with G?
All of his places ended up foreclosed. Can’t think of what he could possibly have to say.
~Misstrial
The COVER gives away the surprise ending.
Q: How did he purchase AND LOSE $2.2 Million in real estate?
A: 24 year old real estate investor
That child is a karma black hole. I’ll put money on him being hit by a meteorite.
He only lost 2.2 mil if he cashed out and had it in his bank account before reinvesting otherwise it is just a ‘blue sky’ fantasy!
Agree!
~Misstrial
I hope that’s a joke, if not I hope all the mortgage co’s step in and lock up any proceeds.
At first glance it looks like a really good Photoshop send-up. I’m thinking it’s a gag.
Why is there a picture of a woman on the cover?
That’s not a woman that’s him…
I thought he dumped his wife and was now in Au? There should be no women on that cover.
Not divorced (yet). Have had some serious marriage problems, but they are still together.
Wouldn’t be surprised if they split up. In situations like this there is a tremendous desire to finger-point & lay blame elsewhere. There are a lot of anger issues as the hardships of loss of credit scores/foreclosure history begin to bear down on them. In about 60 days, couples in their category realize the consequences of having poor credit.
RE gurus, seminar scammers, shady lenders/realtors/brokers are not around to lay into and eventually, couples start blaming each other. Eventually one of them begins to look for a way out as a self-protective mechanism. Will it happen to Casey & Galina? Not sure, but it may become an attractive option to one of them since they are so young. The “I have my whole life ahead of me” thinking may enter in and once that thought takes hold, its downhill from there.
~Misstrial
Pretty sure he fled the country and left G with the tab. Rob Cote had some news about it on his blog.
Well, with a reputation like that, he’s sure to attract plenty of new mates in Australia (not). HA HA!
He IS the woman! He looks like a girley man in real life.
At the top it says: Volume 1 !!!!!!!!!!!!
;-O 
At Ben’s HBB: “It gets better & better every day!”
Here’s my prediction for C ass ey…He’ll hook up with that Kato kid that used to live in cottage at O.J.’s house…they’ll become lovers…and do an exercise video with tele tubies and those workout balls
hwy50, lol, you made my day….
It’s being published next month? That seems soon if they are just putting the book together now.
This video is priceless, note the FB at the end.
http://www.winknews.com/news/local/7896352.html?video=YHI&t=a
Wow! Those townhouses look exactly like a Centex townhouse my sister bought in Maitland (Orlando, Florida) in December 2005 despite my advice. Poor Sis.
Then: $300K. Now: $145K.
“They promised us they wouldn’t go below the market value.”
Boo hoo. That IS the market value, sucker.
The builder wants to “unload” the last 50 units. When they were selling for $300,000.00+ it’s called a “lifestyle” change an opprotunity of a “life time” Now it’s time to unload this POS, but we do feel sorry for you first in suckers/bagholders! Ha,ha,ha!
When this was posted before, I found the Greg’s public record that shows that he actually paid $329,100 just six month ago for a property that is now worth $145K:
http://www.leepa.org/Scripts/PropertyQuery.asp?FolioID=10513678
Ouch! FB indeed.
Nice find Gator! Just think, if he had only waited a few months, he could have bought TWO!
Straight up…
These are the people who had jobs/good credit and just said “Screw it” and mailed the keys back to the lenders when i lived in socal 15 years ago…Didn’t want that negative equity albatross around their necks…
Chris
Great link.
I’d say those FBs are in the psychological stage of anger right now…
Nice to See Mr. Greg Toher on video alongwith some other GFs - he was mentioned in one of the stories Ben posted a few days back.
“Dude… that’s not fair!”
Dude? I am supposed to take a 60 year-old you says “dude” seriously?
Waaaahhhhhhhhhhhh!
WHat’s wrong with saying “dude”? By the way, the other day I was talking to someone and he “goes…and then I “go”…then he “goes”
sarcasm off
“It’s not fair!” That’s great!
May Foreclosures-
data: http://www.realtytrac.com/ContentManagement/pressrelease.aspx?ChannelID=9&ItemID=2635&accnt=64847
charts: http://www.recharts.com/foreclosures.htm
——————
Recent Weekly Mortgage Applications Survey-
data: http://www.mortgagebankers.org/NewsandMedia/PressCenter/55113.htm
charts: http://www.recharts.com/mba/mba.html
Holy crap! In VA, notices of default are up 34200% YOY!!
That means there were only 2 NODs a year ago. That seems low. I’m guessing it’s probably incomplete data.
Awesome data - thanks for posting it!
One thing that seems odd about most of the foreclosure data I’ve seen is that it jumps around a lot. The general trend is definitely up, but it goes in fits and starts, such that sometimes month-over-month it goes down actually, then takes a huge jump the next month. Anyone know why this is?
One would expect the trends to be fairly consistent - it’s not like retail sales or phone calls that are driven by holidays, or even weather for that matter. Since foreclosure is a long drawn-out process one would think that the trends would be much more smooth.
Realtytrac has bogus numbers and is not to be trusted. They’re just like the NAR; they open their mouth and the press comes running. Several months ago I pointed out that they were reporting nearly zero REO’s for Maryland, but yet Countrywide alone had 41 of them on their website…
Nor do you need to pay them to find foreclosures in Md. Just visit this site and search by the first letter of a last name to find the NOD’s. For example to find all the “A” last names just put an “A” in the last name field.
http://casesearch.courts.state.md.us/inquiry/inquiry-index.jsp
Set the case type to civil and type person to find as defendant.
Any way to get a similar link for CA? I wonder if there is one for just Yolo and Sacramento counties.
Gwynster, Go here and you can see some good info, but not all the details:
http://www.foreclosurestogo.com/
Select the state, then Yolo and you can see streets for NODs. The NOTs are masked.
excellent!
thanks for posting the link
Another sign of stretched homeowners?
Yesterday I was surprised to see my local gourmet supermarket with big red signs: STORE CLOSING EVERYTHING 30% OFF.
That particular retail space hasn’t been able to keep an upscale food tenant. The one closing is the third to go down - in six years. It’s one of the anchor stores of a strip of “Shoppes” that took the place of a beautiful stand of trees. The strip appeared in order to accommodate the mover-uppers crashing the longtime residents’ semi-rural party.
I’d always suspected that the newcomers were way overextended - the prices on new construction are about 8x average HHI. They’ve managed to appear affluent, but when it comes to the food they consume, it’s Shop-n-Save all the way, baby! They simply don’t have the disposable income to support a serious foodie habit.
This particular gourmet store’s original outlet is located in Bryn Mawr, has been for over a decade or so. No signs of stress there. And the newest store is in Greenville, DE - an enclave of older money. I guess if I really miss their products I’ll have to drive to Greenville.
should have put in a Pat’s Cheesesteak, that would have done well.
A store in the new upscale mall in Glenwood Springs (Colo.) just closed. It was very nice, took new clothes that hadn’t sold from stores in nearby Aspen and sold them at wholesale prices. The owner’s comment in the paper, “I guess it’s not as important to people here to look good as it is in Aspen” - or something to that effect. I suspect, from what I saw, that the wholesale prices were more than what the hoi polloi could afford.
Isn’t Glenwood Springs where the workers who are bussed into Aspen live? I think they probably shop at the Walmart.
Don’t get me wrong. GS is a lovely spot and the springs are great. But for a while it looked like Colorado housing was only for the upscale, skiing elite. Guess not.
“But for a while it looked like Colorado housing was only for the upscale, skiing elite.”
You’re right about the housing, Glenwood is now too expensive for most people (my daughter has a nice Leave it to Beaver house there worth 500k), so they commute from even farther downvalley to work in Aspen. Some do live in Glenwood, packeed into houses or apartments like rats. I checked out the rental market, it’s almost nonexistent, and you can get a rathole for $1500 if you’re lucky.
But those were clothes that didn’t sell in Aspen, so they probably looked like A$$.
Yep, gourmet kitchen supply store disappeared over a weekend…3 months in a newly remodeled historic building…great foot traffic, great store front windows…guess those granite counters won’t seem the same with utensils from Wal-Fart.
Seeing more and more well dressed ladies in BMW’s…Lexus…Cadillac SUV…shopping at the Dollar store. The x3 gift bags for a $1.00 seem to be a big hit…
I’ve seen the same too…phoney rich people shopping at Dollar Stores…I guess cash poor, but debt rich!
Watch your pennies and the dollars will take care of themselves.
Truth be told, my folks have the money to shop at these yup-scale food places. But they prefer the supermarkets, and this is because of…
…price.
I liked the foodie place because it was convenient, but mainly for two items: they had great fresh brewed organic coffee, and a pretty good salad bar. Most of their traffic was the lunchtime biz crowd.
I’m shooting over there again today hoping the 30% off is now 40% or more. I loves me my Sarabeth preserves, but talk about expensive…oh yeah and capogiro gelato. There was still a lot of that in the freezer yesterday, even at 30% off!
*splurge time* he he
My town is hardly upscale, but the boom it here, too. There’s a big new shopping center down the road with a lot of midddle-class stores, Costco, Target, and Home Depot. Pier 1 Imports closed last month.
Pier 1 Imports, now there is store full of overpriced crap.
I wonder if Wegman’s (CNY high end grocer) will have similar problems. They just expanded one of the local stores but I have to say its usually way over capacity. A little thinning out would be considered a good thing by many. Maybe the Wegman brothers saw the writing on the wall when they decided not to build more stores.
Actually, I thought Wegman’s would have done well in the now defunct gourmet space. From what I’ve seen of Wegman’s, they strike a balance between price and quality. The gelato and preserves I posted about went for $10.99 (pint) and $8-10 respectively. I don’t think Wegman’s merch is that pricey.
Plus, there’s talk that Wegman’s is opening a store across the street from failed foodie store. If that is the case, Wegman’s would have crushed it anyway.
Wegman’s is considered cheaper than P&C and Price Chopper the other local grocers. And neither of them are considered upscale. I just can’t deal with the crowds and refuse to shop there when I’ve got fresh produce from the locals available and a great fish truck from Boston that is within walking distance from my house.
This is rich…
http://www.bloomberg.com/apps/news?pid=20601103&sid=a80p9kFFOTtU&refer=news
Couple makes 70k/yr and can’t get a $500k home loan. Why? Not because they can’t afford it, but because they don’t have 2 months payments saved up.
The loan officer thinks a $500K loan is okay with $70k/year income? I think that he’s nuts. Our first place was $106K and I was making about $60K back then and I was terrified.
How about $210K as the upper limit on the loan?
Their mortgage, taxes, and insurance would be about $4,000 per month, their after-tax income would be about $5,000 per month. A year ago people such as this were getting loans? How does someone pay for cars, insurance, GAS, electricity, water, clothes, health insurance, medical co-pays, food, etc., etc. on $1,000/month? How do they eat? What do they do if they need new tires? How would they ever go out to eat, or to the movies, or on a vacation?
HELOC silly! heh
Exactly, that’s other non-necessities like health insurance, life insurance, etc, those are what HELOC’s are for. Get with the new paradigm.
sarcasm off
How are they going to afford 2 new IPOD’s @ 600.00 ea?
SoBay
you mean iPhones not iPods?
My wife and I have a combined income of 200K a year. A 500K home loan would make things tight for us, I just don’t see how someone making 70K a year could even consider something like that.
Insane, isn’t it? It just seems like a guaranteed forclosure/BK in their future if they get that house, but they’re going to try again next month. If people like this were for sure getting a loan a year ago, that explains a lot of the rising prices. Fools and their money…
“It just seems like a guaranteed forclosure/BK in their future if they get that house, but they’re going to try again next month.”
There was a time when a loan officer would “set straight” folks like these.
There are a lot of disturbing attitudes and view of the world in that article.
Per Bloomberg: “With mortgage companies cracking down due to rising subprime defaults, Tullis needs them to sock away two months of payments for the $500,000 townhouse in Fairfax.”
Reality: With mortgage companies cracking down due to rising subprime defaults, Tullis needs them to sock away two months of payments to pay $500,000 for the $250,000 townhouse in Fairfax.”
The only way this article makes any sense is if we’re talking about a 2 month mortgage.
If a person wants a house they should set aside the amount of the remaining balance of that mortgage.
ex. my rent is 875.
For a $250k loan with no money down + insurance + PMI is about $1800 a month.
So $1800 - $875 = 925 I need to have left after my current bills are paid.
I would actually need $1200 extra after my bills to be on the safe side and that does not include saving which should be $500 or more a month.
WT,
You see things to clearly…put on some $500.00 Oakley sunglasses…you need to at least hide that gleam in your eye when make observations like that. ;-0
Cripes! 5+ years ago, when I was making $60k, I barely qualified for a $250k Fairfax townhouse. This was with 20% down, 30-yr fixed at 6.5%, near perfect FICA, a steady job, and 8-years of homeownershop under my belt. My PITI ended up coming out to 29-30% of my income.
Why the hell did these people link they should be qualified for a $500k townhouse when the only make $70k? If they can’t afford to save two months of payments, then they definitely can not afford a that townhouse.
Oh, well, one less GF. Glad I was able to sell when I did.
‘Why the hell did these people link they should be qualified for a $500k townhouse’
Here in So Cal we get strawberry pickers earning 15k into 700k homes. It’s the American Dream(Right?).
cool beans in 2000 out in ? 05 that’s a hel of a trade
22151 is off 13% and now steady
In at 2002, out in 07. Wish I was out in 06, but personal matters prevented that.
Even in 02 I was close to renting.
Ha ha — your profile, loan and time-frame are almost exactly the same as mine (except my townhouse purchase in Alexandria was my first purchase).
I also forgot to mention that I had no debts (save the gas I had charged on my car the day before) to my name.
That’s what lending standards were like in 2002, and how they should be today.
As an aside - I’m sorry - but $500,000 for a townhouse anywhere, with the *possible* exceptions of Manhattan, San Francisco, or Miami Beach, is absolutely nuts.
I live near Fairfax - generally townhomes there should be running about $150k maybe $200k at most. It’s just a suburb of DC - not even on the river.
I’ve seen some townhouses in Fairfax that I’d give $500k for, of course they are listed for over a million.
Considering rents, that $500k townhouse is probably worth $275k at the most.
I agree!
Agreed. Try condo’s starting at $350,000 in Scottsdale. Yeah right, what they mean to say are $80,000 1br condo’s with a $350,000 wishing price.
This is getting real entertaining…. from the Bloomberg article - cynicalgirl’s link:
—————-
“You’re safer taking a ride with Lindsay Lohan than being in homebuilder stocks,” said David Lichtenstein, chief executive officer of Lightstone Group LLC in Lakewood, New Jersey, which owns malls and hotels. Actress Lohan was arrested May 26 for driving under the influence after crashing her car.
I toss this up for the statistic junkies like me out here….
Before i transfered with my company i sold my place in Columbus,Oh in 02. I was looking at buying land in/around Urbana,Oh where my brother lives. When i was looking the choices were very slim. Like 5-10 lots and all around 70k per acre. My bother mentioned a lot more choices have popped on the market lately,so i pulled land up on realtor.com.
As of today you can pick up 3 acres just outside of town for less than 30k. You also have 56 lots to choose from. There are also 349 SFR’s available. I can not remember that many houses for sale. Oh and the best part is the job market around there pretty much sucks…If it wasn’t for the cold and snow i would transfer back up to the area and buy a house for cash…I NEVER thought i would see small town Ohio in this bad of shape…The vacant houses are going to sit a looooooong time IMHO.
Chris
Let me know when global waming is a little more advanced and everybody’s lost 100 lbs. and learned to speak English (talking about native English speakers) and I’ll move back to rural Va.
Urbana? Too funny. I grew up in that area, and you couldn’t pay me to live there again for any price. Yuck!
Need some help on these retail sales #s.
When retail sales increase, is that stricty a $ amount, not volume. If inflation is hitting retail products, then all things equal, retail sales $’s will increase? Is there a situation where people are buying fewer things, but retail sales $’s are increasing?
Anyone know…
I don’t believe the sales numbers are adjusted for–real–inflation; ie, the numbers could reflect less product sold m-o-m or y-o-y, but at higher prices.
Answer to all questions is yes. Also, figures are not actual data but are (1) estimates based on incomplete data (2) which have been seasonally adjusted using a smoothing formula that weights most recent years’ months data most. That’s as much as I know, but retail sales data are probably better than most in terms of being reliable.
Is the data as reliable as that of new home sales?
As per http://biz.yahoo.com/ap/070613/economy.html?.v=10
“…Sales would have been strong even without last month’s big jump in gasoline prices, which saw prices top $3.20 per gallon. Excluding sales at gasoline stations, overall retail sales would still have been up 1.2 percent….”
Retail sales are not adjusted for inflation. see the yahoo report.
Biggest increase was gasoline, because of increase in prices
still surprising considering hloec dough has been blown
Not surprising at all - tax refunds come about two weeks after April 17 or right around May 1.
Actually, the HELOC money is still flowing for many. It’ll take a few more years for that to run dry.
The HELOC money paid down the credit cards. This is just the cards running up to the max, again.
April sales were down. May sales are up from a bad April. Normal statistical variation. Not a trend or economic indication.
Bingo, Ed
***UPDATE***
On 5/29 I posted this regarding a condo on the west side of Chicago…
http://thehousingbubbleblog.com/?p=2870#comments
“On May 17th I received this email from a Realtwhore (R)…
PENTHOUSE PRICE REDUCTION
My seller relocated to Wisconsin and needs to off-load his condo in Chicago. This penthouse condo is priced way below market at $249,000. Comparable condos in the area are listed between $289,000- $309,000. He’s looking for the best offer by May 22nd! That’s only 5 days away!
Today I received this email for the same condo 6 days after the supposed final offer date…
PRICE LOWERED FOR THE LAST TIME!!!
Seller has relocated and needs to off-load! LAST WEEK ON THE MARKET AND WILL CONSIDER ALL OFFERS!!! 2 year old pentouse features: 42″ maple cabinets, granite counters, sky lights, in-unit laundry, hardwood floors throughout, large deck with skyline view and owned-secured parking. 2 minutes to United Center
Thing is, it’s still priced at $249,000. Where’s the lowered price?!”
Well, now they have actually lowered the price to $235,000. I guess it wasn’t lowered for the last time.
It sold for $229,000 in March of ‘05. Here’s the listing http://tinyurl.com/27xlco
Here’s the e-mail I received from the Realtor…
“Here’s a listing update for a penthouse condo on the edge of East Garfield Park, bordering the Near West Side. This is s beautiful top floor penthouse, roughly 1300 sqft, 2 bedrooms, 2 FULL bathrooms, large open floorplan with hardwood floors throughout.
Seller has relocated and needs to off-load! WILL CONSIDER ALL OFFERS! Already priced well below market at $235,000! Similar penthouse units in the area are priced at $279 and up.
Listed here are some of the home features: 42†maple cabinets, granite counters, sky lights, in-unit laundry, hardwood floors, wireless alarm system, low assessments, large deck with skyline view and secured parking.
The seller has purchased a home in Wisconsin and really wants to sell. He is willing to look at all offers.
I have enclosed the complete listing with pictures for you review. Please contact me if you are interested.”
PRICE LOWERED FOR THE LAST TIME!!!!!
LOL! Reminds me of the stupid MLS listings that were popular for a while in Seattle about a year ago: “2 weeks only at this price!!”
Same house was always still on the list a month or 2 later at same or lower price. Haven’t seen one of those for a while now. guess that gimmick wasn’t working for them…
I always liked “Hurry,won’t last long at this price” and a year later the same quote is still in the MLS
I guess WS bulls like high l-t T-bond yields. They are “taking a shine” to data (and apparently ignoring the elephant in the room of an ongoing bond market crash)…
http://www.marketwatch.com/tools/marketsummary/
It sounds to me like the Fed will have to tighten soon. Is this what is making WS bulls so euphoric today? Cause I thought they liked low interest rates?
——————————————————————————
MARKETWATCH FIRST TAKE
Financial markets reeling from economy’s turn
Commentary: Consumer-spending data demonstrate growth is back
By MarketWatch
Last Update: 9:28 AM ET Jun 13, 2007
WASHINGTON (MarketWatch) — A 180-degree turn in the economic data has the financial markets spinning.
A few months ago, it looked like the U.S. economy was on its sickbed.
The economy grew at an anemic 0.6% pace in the first quarter. And the future looked a little bleak, with the continuing collapse of the housing market, the slump in the factory sector and a credit-strapped consumer faced with $3.25-a-gallon gas.
Now, that’s all forgotten (except that housing is still mired in the swamp).
The consumer is back. The factory sector is back. And bond yields are back above 5.30%, perhaps heading for 5.50%.
Wednesday’s retail-sales data from the Commerce Department were uniformly strong — the best since early 2006.
http://www.marketwatch.com/news/story/financial-markets-reeling-economys-turn/story.aspx?guid=%7B79CF005B%2D8572%2D497A%2D928B%2DBF7C3D3AA7E6%7D
“There’s a big disconnect between the government’s spending data and what the companies are reporting. It could take months to sift through the differences.”
More cooked data from this administration? Housing’s collapsing, consumers are tapped out, sales are dropping at stores, yet consumer spending is up? Sure it is. Just keep telling yourself the same thing over and and over and it must be so.
Today’s data can only exacerbate the bond selloff. We’re off to the races. Signpost ahead reads 570 and beyond.
I guess I will just never understand the workings of the bovine brain.
It looks like the PPT has locked in the DJIA at the 13,350 level.
This home started out with a listing price of around $270K. It was then reduced (rather quickly) to around $250K. Another quick reduction and we’re at $220K. Here’s the history (I’ve referenced this home on here before): this house was badly flooded in 2001 when a tropical storm stalled over this area. We’re talking probably at least 2-3 ft. of standing water. Then it sat…and sat…and sat…until one day someone started renovating it. How do I know so much about this house? It sits on the corner of a very busy intersection. Living in this house would be like living in the corner 7-11 store. Wonder what it will finally sell for (if it does…). I suppose someone who doesn’t know its history (or this area’s history of bad flooding) could come along and think they got a steal.
http://homes.realtor.com/search/searchresults.aspx?mlslid=4957131&ml=3&typ=7
It’s down to $137/sq.ft.
Is there a lot of inventory in Hatboro? If there is, this house will continue to sit unsold. The old real estate rules are starting to reappear, and the first one is Location, etc.etc.
Our local grocery store raised the price of a gallon of milk from 3.19 to 4.29 this week.
Move along, There’s nothing to see here…
Bond sell-off triggers stock fall
Dow gives up 129 points as yields keep climbing
By Vikas Bajaj
NEW YORK TIMES NEWS SERVICE
June 13, 2007
NEW YORK – The cost of borrowing headed higher yesterday and drove the stock market down sharply.
…
But investors’ expectations of inflation, which traditionally drive bond yields higher, do not appear to be the prime reason for the move. Although inflation continues to run above the Federal Reserve’s comfort level of about 2 percent, there has been little to suggest it is picking up pace.
“This is not about inflation, in my view,” said Jane Caron, chief economic strategist at Dwight Asset Management, a bond firm in Vermont. Yields “got down to a level that were not particularly compelling.”
http://www.signonsandiego.com/uniontrib/20070613/news_1b13bonds.html
“In a situation where the economy is growing, the stock market’s advance is inevitable and long term gains in the Chinese market are inevitable.” Wu Xiaoling Deputy Governor People’s Bank of China
GS, now you have to worry about a Chinese PPT. LOL
So goods imported from China increased in price by 0.3% last month or slightly more than 3.6% annually and it is not about inflation. The pass through from the increased cost of raw materials has not yet hit. News analysts speak a lot of drivel, but when foreign buyers of 10 Yr T Bonds were non existent yesterday -it is time to worry.
Criminally inaccurate reporting - the core rate is 2%, not the real inflation, which underreported anyways.
No, the media will turn this into a good thing:
The consumer is back! Retail purchases rose 34% in one week! Washington breathes a sigh of relief as the Dow soars 150 points.
I switched to soy milk. It’s cheaper, much lower in fat, high in antioxidants, easier to digest, healthier all around.
If you’re pouring it on cereal it all tastes the same anyway.
Someone told me that soy gives men b00bs.
I’m sure you would enjoy that.
Jeez I pay $2.69 per gallon.
I’m on vacation in atlanta, and the real estate here is tanking. probably because the people in florida can’t sell their houses. every market is going to be in a freefall.
The ankle bones connected to the… hip bone, the hip bones connected to the neck bone, the neck bones connected to… the butt bone
Here’s how the seasonal adjustment used to work, more or less (as I once again avoid getting my butt in gear for the day):
Take year n sales and divide by 12. Take each month m of year n and compare it to n/12. The reciprocal of that ratio (or, more simply, n/12m), becomes the adjustment for that year’s data to be used in future years - if 12m n the data is adjusted down.
Now, assign a coefficient i to each year’s data that is being used such that (1) the sum of all the i coefficients is 1, and (2) i(n-1) > i(n-2) > … > i(n-K), where k is the number of years’ data being used (usually 5-10, if memory serves). In other words, most recent years always count more than more distant years.
So, we get the estimate for May 2007 data, and it is raised or lowered roughly by the following: i(2006)[(n(2006i)/12*May(2006)] + i(2005)[(n(2005)12*May(2005)]+ . . . i(last yr in adjustment)[n(last yr)/12*May(last year)]
In engineering it’s called a (discrete) finite-response filter (all zeroes, no poles). This particular filter has a decaying impulse response (older samples are attenuated more than the recent ones).
Terrific footage of outraged FBs responding to auction results of remaining units in their development:
http://tinyurl.com/37f8xh
“They *promised* us that they were not going to go below the market value!”
Delicious.
“They *promised* us that they were not going to go below the market value!”
In reality, they did go for…”market value.”
Thanks for the link, but I cannot help but imagine that some of those teachers and firefighters that may have gotten some of those houses will never close on them due to the recent interest rate rise.
That’s why you never buy property so fricking close to the line that 1 rate rise is going to kill you….
Finally some of the MSM is starting to take notice on how foreclosure are NOT largely contained regardless of what Bernanke says.
This morning on the way to work, NPR did a report on how the rising foreclosure rates will start affecting the economy. They even mentioned that foreclosures are going to get worse over the next four months.
You can listen or read the text here: http://tinyurl.com/2f9xj5
Then there was this AP story about the dispute between hedge funds and mortgage banks as the forclosure mess gets worse: http://tinyurl.com/29d8f3
Again, this article mentions how it’s just going to get worse: “And monthly payments on more than 8.4 million adjustable-rate mortgages issued since 2004 will be affected by rising interest rates on reset dates the next few years. Research firm First American CoreLogic predicts $326 billion, or 13 percent, of outstanding loans will default.”
Have you guys been busy sending the Credit Suisse chart to reporters at the MSM?
“While Gross accurately predicted a slowing economy, he failed to realize that the Fed was pegging the interest rate to high nominal corporate global earnings boosted by a regime of universal currency devaluation, but with the US dollar devaluing at a faster rate than many other currencies, thus increasing overseas earnings in dollar terms. Pimco’s bond portfolios lost on two levels from its bad interest-rate call: from a collapse in nominal bond prices as rates stayed high and from a net long-term decline in the real purchasing power of the dollars its bonds held after persistent devaluation against real assets.”
Economics of denial
By Henry C K Liu
http://atimes.com/atimes/Global_Economy/IF13Dj01.html
What Asia times and Mr. Liu failed to pick up was Mr. Gross’ investments in the Euro which increased 12% - with his investment of 136B in Euros, they won’t have any sob tales at PIMCO.
Until you know a traders total position it is not possible to determine if it is a losing or winning strategy.
“The Brazilian real advanced against the dollar Friday in New York. After dropping at 8 am ET, the real gained steadily soon after that. At 1:50 pm, the Brazilian currency fetched a mark of 1.9630. This is compared to an intraday high of 1.9625 at 10:20 am and an intraday low of 1.9790. Traders were still digesting Wednesday’s decision by the Brazilian Central Bank, which lowered the benchmark Selic interest rate by 0.5 percentage points to 12%.
On Friday, Pacific Investment Management’s chief investment officer Bill Gross appeared in an interview on CNBC. Gross revealed that the group had invested in the Brazilian real to take advantage of its yield advantage of over 10%. Gross referred to the real as “our favorite currency.”
What Mr. Gross does is beyond the realm of small traders such as myself or economists such as Mr. Liu.
The article covers a lot of things from Volcker to Gross. I couldn’t find a good paragraph that summarizes his point so I posted one that I thought would be of interest to the blog.
I think one of the main points of his article is that he is critical of the ‘gradualism’ of the fed in a world that is volatile and fast.
I know, but Asia TImes is a suspect source - it is paid advertising. Not that Mr. Gross is always right, his historical returns are taking a beating this year and Mr. Liu is trying to sell his own fund.
Henry C K Liu is chairman of a New York-based private investment group. His website is at http://www.henryckliu.com.
“The embarrassing question is never asked: Why is a central bank even needed if financial markets are on self-adjusting autopilot? “
HBB friends, wish me luck! I’m in Montrose, Colorado (pop 15k, near Telluride), getting ready to list my dad’s house today with a realtor at 4%. My parents lived in this house for 35 years! I don’t think anyone but their generation does things like that (they’d be in their late 80s if still here).
The house is small, 1100 sq. ft., old, but comfortable and in a prime location, nice big yard with huge trees, etc. My brother and I decided to ask 129k, even though one realtor said we should start at 145. The realtor we decided on will go 4%, and he’s very astute and seemed honest. Everyone says this part of the country won’t drop because of Telluride and the nearby energy industry, but this realtor said he’d hate to own and be trying to sell anything over 300k here now, as nothing expensive is selling. (I know these prices will sound low to most of you, but we don’t have much of an employment base, the average wage is prob. $8/hour, a lot of people drive an hour one way each day over a mountain pass to work in Telluride.) I would sell the house myself but don’t want to stay here. We’re trying to sell it quickly in a disappearing market, using the advice from you all to price aggressively and sell quickly.
So…am very glad we own the house free and clear (my folks paid $18000 for it) and aren’t FBs. The houses next door were built during the boom (on lots that had set empty for years) and are HUGE and just sold a year ago for 400k each - I’m enjoying sitting out in the evenings watching the owners powerwash their various new SUVs and boats and then disappear early in the morning to work in To-hell-u-ride - I bet they’re sweating it right now, all people in their early 30s and I bet IN DEBT up to their eyeballs (as I drink coffee and read Ben’s blog in my PJs). Wish me luck!
So what do the FB’s do for a living in Telluride? What is the employment base there? Are they all hotel managers? I wonder if some of them work in Grand Junction? Both are about 80 miles from Montrose.
They service the really weathy and the wanna-bees that live and visit there. And no, you don’t go through ouray to get there (10 miles on up the road from where you turn at Ridgway). It is a beautiful drive but crazy in winter.
So like in Glenwood Springs, there is no real economy in Montrose. Sweet.
Not necessarily. My spouse’s boss lives way out I-70 west of Denver. He makes a high six-figure salary as an IT manager and works remotely in a nicely appointed home office. I think he commutes in once every couple of weeks for meetings; otherwise, everything is done via e-mail & conference calls.
Best of luck you you, lost! Please keep us updated as to how things go.
Ditto what CArenter said! Good luck!
Through the beautiful town of Ouray no doubt!
Question: what happens to a house which goes into foreclosure with the mortgage balance in excess of the home’s value BUT the mortgage was sold to investors as part of a pool? Does a bank or investor representative buy the property at auction? Is it different than when a bank is the mortgage holder and ultimately the property becomes REO?
In theory the company that is servicing the mortgage will do everything that a bank would do. In reality, there is a substantial possibility that nothing will happen because they will be unable to locate all the paperwork or get approval from the other parties involved, etc. etc. An FB in this situation really should investigate and talk to a lawyer before mailing in the keys or putting a lot of effort into a short sale.
Thanks. The specific house is being listed for price paid in ‘05 plus realtors fees. The current ask is 7% off 1st ask and still little interest. Short sales aren’t very common here (we’re one of the last “it can’t happen here” markets). The property goes to auction fairly soon, and after auction I guess the servicer would get the property as REO?
“The property goes to auction fairly soon, and after auction I guess the servicer would get the property as REO? ”
The servicer will hope someone else buys it for a good price (as much or more than what the servicer thinks they can sell for on open market). If no one is jumping on it, then the serevicer will buy it (making it REO) and then list it through a realtor/MLS just like anyone else trying to sell for near market price.
Thanks. You can see my post below but I’m pretty sure its an 80/20 or 80/10 with the loan balance greater than the “market value” so I’m not seeing a buyer bidding more than the loan balance.
Prime = servicer can sell the loan without giving up “first right of proceeds”. So, if a prime loans goes to foreclosure, the servicer forecloses, takes their cut for costs, then give the bond holders whatever is left.
Sub-prime = servicers could only sell these into the secondary market if they agreed to give the bond-holder first right to proceeds. So, if a sub-prime (or Alt-A) goes into foreclosure, the servicer has to take the house and sell it. The money goes to the bond holders, and if any is left over, than the servicer gets paid their fees.
Thanks. Very interesting. How do you think the house would be sold after foreclosure and proceeds are distributed and someone owns the house “free and clear”? Would it just be relisted with a realtor through MLS or reauctioned or on some obscure bank REO website?
“Retail sales jump 1.4 percent, double forecasts - a sign that a pillar of the economy remains solidly in place.”
This leader from CNN news says it all - cracks me up - retail sales the pillar of the economy? It seems to be the ONLY thing we have left in the US economy.
We have become a nation of shopkeepers…
I would feel a little better if we actually made the stuff we buy.
Some pillar. What do you actually PRODUCE? Even the hewers of wood, oil and water leave your economy behind.
Schadenfreude anyone?
This showed up in a thread on fark.com about the housing price plunge in Florida: http://www.winknews.com/news/local/7896352.html
Click the video link for speculator/investor/flipper/FB whining goodness.
Gave me a warm fuzzy feeling all over….
I forgot to mention that I especially enjoyed the lady in the video who said “They promised us they were not going to go below the market value.”
I’m still grinning over that one. Newsflash for you lady: They didn’t go below market Value. Your house is worth EXACTLY market value.
That just happens to be a pantload less than you paid for it.
How many folks here think those folks who bought those town homes at the high price were absolutely convinced that “Real Estate Never Goes Down”? No wonder they were so ticked off.
OT Question for TxChic57:
TxChic, what software package do you use/prefer to handle your stock/options trading?
Realtick. It isn’t the latest and greatest but I’ve been using it since 1997.
http://www.realtick.com/v2_getpage.asp?page=educ_demo
You don’t use thinkorswim’s software?
Thanks. I’m taking a hard look at InstaQuote right now. It’s all very insteresting…
Maryland governor signs on to mortgage bailout bandwagon
The Maryland Government is already complicit in this mess. They’ll give you a toxic loan and then help bail you out when it goes bad…
http://www.mdhousing.org/Lifeline/Index.aspx
http://www.morehouse4less.com/
“Martin O’Malley, aiming to help prevent home foreclosures, announced Wednesday the establishment of the Maryland Homeownership Preservation Task Force”
My guess is that this is a task force that will recommend a framework for setting up a committee that can suggest a possible structure for an agency that will evaluate the problem…. 5 years from now.
Here’s another gem from that article:
“One program will be run by the state Department of Housing and Community Development. It’s called Homeowners Preserving Equity (HOPE) and is designed to help homeowners protect equity in their homes.”
What a fitting name, “HOPE”.
Oh, and BTW: “protect equity”, what equity?
I know you’re being sarcastic, but that’s waaay too close to how govt actually works.
From Traverse City Record-Eagle: 60 abandoned pets found in foreclosed home.
These people are pure garbage.
Goldilocks is back from summer vacation early…
ECONOMIC REPORT
Economy growing at modest pace, Beige Book says
By Rex Nutting, MarketWatch
Last Update: 2:32 PM ET Jun 13, 2007
WASHINGTON (MarketWatch) — The economy continued to expand at a moderate pace in most regions of the country, the Federal Reserve said Wednesday in its occasional Beige Book report on the economy.
Most regions reported steady, modest growth, with few heightened worries about inflation. The report’s tenor was largely in line with the current views of Fed officials. Read the full report.
Consumer spending and manufacturing were growing in April and May, the 12 Federal Reserve banks reported. Housing remained weak, offset partially by better conditions for commercial real estate. Inflationary pressures were present, but not getting stronger.
The anecdotal report, based on thousands of contracts around the country and produced by the Federal Reserve Bank of Philadelphia, painted a broadly upbeat view of the economy, which was growing either at a modest pace or at a slightly faster pace in all 12 regions, compared with the last Beige Book report in late April.
The Beige Book does not present the official views of the Federal Open Market Committee, which sets interest rates. Rather, the FOMC uses the Beige Book as a guide to its discussions. The FOMC meets next on June 27 and 28. Analysts expect no change in the Fed’s interest rate target, now at 5.25%.
http://www.marketwatch.com/news/story/us-economy-growing-moderate-pace/story.aspx?guid=%7B65EB7EBA%2DE1F6%2D43D9%2DA34A%2DA0B2AA8F7862%7D
I’m a little surprised at today’s market upswing (not really, as I’ve strong faith in the ppt’s ability—haha). Still, I think treasuries are going to move in the yield range of 570 to 600 by summer’s end. I think the broader market sell-off is in the cards some time in the fall. Of course we could get the proverbial black swan before then. In fact the recent bond movement defiantly caught some big gamblers completely off guard. Carnage to follow? Not today, dow up 170 and change.
Still under the 20 dma. Just noise at this point.
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 bank owned properties for less than what is owed on them?
I’d like to hear some opinions on this….
Thanks
I can’t say for sure what the total costs are, but I would guess that they pay for both insurance and taxes. If there are fines for not keeping a lawn mowed etc. those could also accrue if they are not paying a company to keep the exterior presentable. Lending agencies are not the in business of being a landlord, so they want to avoid holding onto something for a long time, especially if it’s declining in value due to market changes. Holding onto a vacant building that is at flat or declining appreciation is just bleeding your funds away while assuming a great deal of risk if squatters, crack heads, or the various insects and rodents that inhabit houses, or even mold, get the upper hand while no one is paying attention.
Try posting your questions early in the day and see if you can get better information.
“What incentive do the lenders have to sell bank owned properties for less than what is owed on them?”
To get an unwanted asset off their books. REO’s are a ball and chain on a lender’s balance sheet. Houses don’t count toward reserves that lenders can make loans against. Cash does.
Buttonwood
Gored by the bull
May 10th 2007
From The Economist print edition
Why higher share prices are not good for everybody
RISING asset prices are generally seen as a good thing. There is jubilation when Wall Street soars to a new high, but despondency when share prices tumble. Central banks do not generally worry about asset-price inflation, except in so far (through the wealth effect) that it spills over into consumer prices. The Federal Reserve did not think pricking the dotcom bubble was part of its job, nor indeed did it believe it could judge whether it was a bubble at all.
But rising markets have victims, just as falling ones do. An obvious example is housing. High home prices in Britain and America may be excellent news for middle-class people who started climbing the property ladder 20 years ago. But they make life difficult for young people wanting to buy their first home and for those trying to create affordable housing (even rental accommodation) for low-paid, but vital, workers, such as nurses. That may well reduce labour mobility, imposing a high cost on the economy.
http://economist.com/finance/displaystory.cfm?story_id=9155396
I cannot *wait* til the downside of rising home costs begins to recieve more attention in the media.
Lordy, it’s not like there’s not PLENTY of downside to discuss.
ABC News has a decent article on the foreclosure debacle and the comments section is worth a look too.
http://tinyurl.com/3aothv