The Same Bubble As The Rest Of The Nation
The Roanoke Times reports from Virginia. “Foreclosures are up an estimated 35 percent to 45 percent in the Roanoke Valley, according to Kathy Nunnally, president of the Roanoke Valley Association of Realtors. Virginia recorded 1,455 foreclosures in April, according to RealtyTrac. That’s a 400 percent increase over the same period last year.”
“Wesley Stroop, an agent in Roanoke, said he has seen more foreclosures this year than in the 20 years he has been in the business. In February alone, Stroop had 40 real estate listings for homes that had been previously foreclosed upon. Five years ago he would have dealt with that number in the entire year.”
“‘A lot of it I blame on the loan officers because loan officers are paid on a commission basis and they are pushing to get that loan through,’ said Bonnie Hall, an agent in Roanoke.”
“Borrowers have the option of getting out of default by catching up on late payments, but often the debt is insurmountable. ‘Ninety-nine percent of people can’t do it,’ Hall said. ‘If they can’t pay their payment on time, how are they going to pay three times that amount all at once?’”
“Stephanie Hicks and her husband took out a $204,000 construction loan to build their house. They said their lender had promised to roll that loan into a subprime mortgage that would cost them $1,000 a month. Their combined income was $34,000 last year.”
“But two months after they moved in, the lender withdrew its loan offer as troubles mounted in the industry. The Hickses said the lender instead offered new terms with a payment of $1,172 per month. But the couple decided they couldn’t afford that. Soon they will be looking for another home.”
“‘I blame it all on the subprime market,’ Stephanie Hicks said. ‘It’s not good for anyone.’”
“But some in the mortgage industry believe the increase in foreclosures is only temporary and that long-term effects will be minimal. ‘The economy in the state is good,’ said Steve Baugher, executive director of the Virginia Association of Mortgage Brokers. ‘Real estate is still holding its value.’”
“Subprime lending is not solely to blame for recent foreclosures, Baugher added. ‘I think a lot of the new homeowners may have stretched and got in on a shoestring,’ he said. ‘They don’t have much margin for error.’”
“After several years of rapid home price appreciation in the industry, a phenomenon that caused many to jump into risky investments, increases in real estate values have leveled off, causing investors to lose money. Appreciation has gone from 10 percent to 12 percent earlier in the decade, and back to 1 percent to 2 percent now, according to Baugher.”
“‘I think we just have to give it time,’ he said.”
The Times Dispatch from Virginia. “More people in Virginia are having trouble paying their mortgages. Virginia foreclosures nearly doubled in the first three months of the year from the same period a year ago, according to the Mortgage Bankers Association.”
“Nationally, the percentage of subprime ARMs at least 30 days late was 13.87 percent in the first three months of the year, up from 10.58 percent in the same period a year ago. Subprime mortgages serve people with poor credit.”
“Virginia saw a similar rise with 12.93 percent of all subprime ARMS past due, up from 8.6 percent a year ago.”
The Times Democrat from Virginia. “In Fauquier County, property values are declining. Presently, properties are remaining on the market an average of 90 to 110 days. Only one out of five listings goes under contract, and we currently have a year and a half of inventory on the market, making it even more likely that the borrower who is caught up in a bridge loan will find themselves not being able to afford both payments.”
“They may be forced into having to renegotiate with the bank or do a short sale. In our present mortgage climate people are willing to walk away from the debt they owe the bank, and the bank is willing to take the loss as long as it makes sense.”
“One truth behind foreclosures with a Federal Deposit Insurance Corporation insured bank is that the bank must put aside eight times the amount foreclosed, which means the bank is unable to lend that amount to another client. This is not a good scenario for a bank.’
From WVNS 59 in West Virginia. “The economic bubble that has brought substantial second home and resort home construction to Greenbrier County may be losing a little bit of air, local developers say.”
“‘The bubble didn’t burst, but a little of the air went out of it,’ said Robert Samples, a Charleston businessman who founded Eimors Construction in 1984.”
“A significant amount of Eimors’ work has been focused in Greenbrier County in recent years, thanks in part to the rapid building of luxury homes in gated developments. And the company is betting its future, Samples said, on construction continuing for years to come. But right now, Samples is a little nervous.”
“‘It’s a nice new thing to have resort growth in West Virginia. I’d love to be more excited by it,’ Samples said. ‘It’s kind of frustrating though, but I guess it’s typical West Virginia. When there is a boom, it’s not happening here. When there is a bust, it doesn’t happen here either because there was no boom.’”
“Realtor Mardi McMillan said the market in Greenbrier County is still going strong. ‘We have a very steady and solid real estate market in Greenbrier County,’ she said. ‘We did not experience the same bubble as the rest of the nation.’”
“‘The market of the early 2000s and in the last couple of years couldn’t continue forever. It is going to plateau,’ said Craig Picken, director of sales at The Greenbrier Sporting Club.”
“In fact, in the past month, six properties either have been put up for auction or are about to be auctioned at The Sporting Club. Samples said four homes at the exclusive development were almost auctioned off on May 22, but the sale was canceled when only one potential buyer showed up. Realtors in the county said another two lots are expected to be sold by BB&T bank at a foreclosure auction June 28.”
“Does that mean the bubble isn’t just leaking air, but on the brink of bursting? Not necessarily. ‘(The auctions) don’t worry me at all,’ Picken said. ‘It’s something that could happen at any development.’”
“People see the homes at The Sporting Club as an investment, he said. Owners view the property not only as a place to relax or retire, but as a lasting, stable investment they may leave their children.”
“‘We had one couple purchase a home, and I asked them what made them decide to buy here,’ Picken said. ‘They said, ‘We’ve been coming to The Greenbrier for 25 years.’ Plus they know the home is going to appreciate.’”
“But the plateauing is enough to make Samples and his partners change their focus a bit. Instead of doing a lot of speculative projects, the company is now reaching out to end users.”
“He said his eyes have been opened a little bit. ‘You realize how slow it’s going to happen,’ Samples said. ‘Things like this just take time, and right now we just have to wait for the end-user market to catch up.’”
The News Star from North Carolina. “The Wilmington housing market, but sales continued to track below the past three years. The Wilmington Regional Association of Realtors reported 601 home sales in May, 20 percent lower than May 2006 and 35 percent lower than in 2005, when the area’s housing market was in full churn.”
“‘It’s a little more quiet than what we’re used to,’ said Jonathan Barfield, president of the Wilmington Realtors. ‘I think the market is just trying to level out.’”
“The Brunswick County Association of Realtors saw a bigger drop in sales volume. The number of homes sold dropped to 150 from 230 in May of last year, a 35 percent decline.”
“With fewer properties flying off the shelves and prices staying relatively flat, many investors are content to sit back and wait for the market to make a move, said Pete Chilberg, an officer in the Coastal Carolina Real Estate Investors Association.”
“‘Everybody is waiting for it to go in one direction,’ Chilberg said. ‘Even investors are being really, really cautious these days.’”
“The Wilmington association has 2,200 primary members. But experts expect reductions to escalate eventually, Barfield said. ‘I think in another year or two we’re definitely going to see the number of people declining,’ he said.”
“The current climate, however, is nothing new for agents who have been doing business here for a while, he said. ‘The market we’re in now is the market I came into nine years ago,’ Barfield said.”
‘First Charter Corp. says it made loans in connection with residential developments in Spruce Pine, N.C., that regulators say were priced based on inflated appraisals.’
‘N.C. Attorney General Roy Cooper’s office alleges various defendants, including real estate development companies, individuals and an appraiser, engaged in deceptive practices to induce consumers to obtain loans to purchase lots in The Village at Penland and related projects.’
‘Several years ago, the dot-com sector of the economy proved to be a blessing and a curse for the Virginia budget. Now the housing market could become the same double-edged sword.’
‘With state revenues falling below expectations and the fiscal year set to end June 30, Gov. Timothy M. Kaine is casting a wary eye at softening home sales, refinancing activity and other housing-related activity.’
Anyone know what the market is like in the Winston-Salem/Greensborough area? My brother wants to move to Raleigh and needs to seel his house. He bought it 11 years ago so he should have some wiggle room if discounting is necessary.
Raleigh is doing pretty ok. Sales are within 30 days for the most part. Transplants figure they’re getting a good deal when a house goes for $150K and they can work in RTP for $100K/year within research (much less offshorable than IT)
Foreclosures are up sharply, so where is the 100k going:
http://tinyurl.com/2zllmm
whats RTP? An industry? I thought everyone here was in IT…
Research Triangle Park –where all the big tech firms are located.
Raleigh is doing pretty ok.
But how about the Winston-Salem area?
“‘A lot of it I blame on the loan officers because loan officers are paid on a commission basis and they are pushing to get that loan through,’ said Bonnie Hall, an agent in Roanoke.”
Aren’t agents paid on a commission basis as well? Sounds like the donkey calling the burro an a$$ to me.
The Agents were the same as the Lenders sitting there panting that the deal got closed so they could get their commission. But, isn’t the Appraiser responsible for all of this mess? The Blame Game continues…
Why does the blame game always come back to the appraiser? It’s the lender who loaned these UNQUALIFIED buyers the money to purchase. They were lent $200,000 on a $34,000 income, come on. It’s clear to see where the blame lies here.
They were UNQUALIFIED buyers, that doesnt’ have anything to do with the appraiser or the property’s market value. Property values were soaring in most states for the past 5 years. That’s not the doing of the appraiser, that due to supply and demand. If the lender weren’t lending money to these UNQUALIFIED buyers we wouldn’t have had this over zealous demand by these UNQUALIFIED buyers.
I was goofing, it is the whole system that was messed up. Like all industry you have bad seeds. (Agents, Lenders, Appraisers, and of course Borrowers/Buyers)
I tend to agree with you best wishes . It’s up to the underwriters to make sure the borrower is qualified for the loan .So many of the foreclosures are due to the borrower not being able to make the payments . Loans were made based on real estate going up and that would hide all the sins/fraud from the RE industry and the borrowers .It’s also up to the underwriters to rate loan risk and know when a loan is a speculation loan verses a end-user loan .Lenders and appraisers should not of accepted 40 or 50% increases in real estate prices in one year and should of known that wasn’t stable .
That being said , had the appraisers refused to just hit the mark on any purchase or refinance they would of starved because only appraisers that went along with the program got work . A group of appraisers went to Washington trying to fight the corruption and were turned away .Nobody was sucessful with stopping the false pumped up mania RE market wave and the main stream media didn’t rock the boat either because of advertising .The loan investors kept investing because the ratings on this junk loan paper were over-rated and defaults hadn’t started yet to send out the red flag that the ratings were wrong .
The idea that you could make loans to people who didn’t qualify for the payment long term without requiring any down payment is counting on real estate going up to bail out the unqualified . Those high risk loans should of never been made and the market would not of continued to go up without this faulty lending .All appraisals are faulty because the buyers were not really qualified so the demand was false . A stable RE market price is defined by a willing and “able” buyer engaged in a arms length transaction without fraud .The appraisers had no way of knowing if the buyer was able or not , that’s the job of the lender /loan underwriting .
Everybody is going to try to blame everybody else for this lending madness and faulty ratings on the loan risks . It cracks me up when I see realtors now trying to blame the lenders when the truth is the realtors were the set up people for this faulty lending .The realtors took these unqualified people to these overpriced properties and put people into houses they knew they could not afford because they believed it didn’t matter because real estate would go up ,and they knew the lenders/appraisers would do the deal .”Get in now or be priced out forever”, was the myth that would justify anything the realtors did .
Also ,you need a real crook appraiser to go along with some of these cash out fraud deals because it should be pretty clear when you get a high sale in a area that was listed at a lower price before ,while all the other listing are lower .
Right now lenders have to require more down just to prevent fraud but better yet the truth is the market is so wacked that any comp in a declining market could be faulty . If I was a lender I would just back off from lending unless I had a good down payment and proof of ability to pay long term .
Nobody is “qualified” for a zero-down loan. Nobody has the incentive to pay off a zero-down loan if the value of the underlying asset declines. From my perspective, a 30%-down loan is something for which anybody qualifies. If they can come up with 30% of the price, they are not likely to be walking away, and amortization will take care of part of an ensuing decline, because a 30% decline does not happen overnight.
My point is, that the borrowers’ credit quality is almost an irrelevancy.
It really blows my mind az-lender how stupid the lenders were about this no down lending . Anyway , I agree with everything you say .
Why does the blame game always come back to the appraiser?
Everyone knows Ben Jones is the ral culprit!
Nice catch!
These sleazy RE Agents, as well as others in the REIC, are quick to pass the buck of responsiblity.
“How much house can you Afford ?” and “let US help pre-qualify you for the house of your dreams”. “Buy ALL the house you CAN Afford”.
1. “Bu..but I JUST SHOWED them the overpriced POS !”
2. “Bu..but I JUST TOOK the Loan Application !”
3. “Bu..but I JUST HIT the numbers !”
4. “Bu..but I JUSTED GAVE them the Mortgage !”
5. “Bu..but I JUST RESOLD the Mortgage !”
6. “Bu..but I JUST SERVICED their Loan Payments!”
7, “Bu..But I just SOLD their house on the Court House Steps!”
8. “Bu..but EVERYONE said that I COULD Afford that overpriced POS !”
9. Now ALL together NOW …sing the REIC Chorus…
“But..but IT WAS the Evildoer Buyers THAT EXPLODED the HOUSING BOMB.” “It WASN’T US….Honest !”
munch ..munch
Ultimately, it is everyones fault, and especially the buyer because they hold all the cards with being able to research and drill down for the truth and have that magic saying “no thanks”.
Scum bags for sure, but no sympathy for the people who could easily ask around and find out the truth and avoided this whole situation. I bet they spend more time on comparing and researching car insurance than their loan docs.
“Ultimately, it is everyones fault,”
Don’t blame me! I live within my means and save as much money as I can. Once the true face of the housing slump is seen I’ll also be the one buying property from idiots that can’t afford their mortgage.
He meant everyone in the selling-buying chain
Some of them probably did do research—in the way they thought was right. Want to know about loans and real estate?
Ask a loan officer and a real estate agent. It’s an obvious answer for the naive.
Well, you do have to assume that everyone is going to maximize their own income, especially when there is some “ambiguity” in the ethical responsibilities. I say that critical flaw in the chain outlined above is the other folks in the chain having a say in who the appraiser is. The person with responsibility for killing a bad deal (and reducing everyone else’s income) must NOT depend on the others for their livelihood at a minimum. After that’s in place there are still the possible bribery and conspiracy issues that would need to be addressed to keep the appraisers fully independent.
munch ..munch
Is right… this a financial bomb that is about to go off. Storing tons of ammonia nitrate fertilizer right under leaky diesel fuel might not have been a bright idea… Not when you know the local kids like to go down there to play with fireworks…
Declines are almost everywhere…
I stand by my prediction that, excluding FHA loans, 25% down payments will be required during the darkest days of this downturn.
Got popcorn?
Neil
Agree with you Neil . When this time bomb goes off the lenders will have no choice but to over correct and that will lead us into a tight money market .
“I stand by my prediction that, excluding FHA loans, 25% down payments will be required during the darkest days of this downturn.”
I hope you’re right.
Personally, I’m praying for 50%-down requirements.
Wow that will be amazing to go from 125%/cash out on purchase to 25% down!
The people in the article didnt move into thier CUSTOM NEW HOME due to payment being a mere 170 higher than anticpated. Imagine what will happen in coastal and/or CA. I mean my directv bill is 120 a month. how poor are those people? and why build a custom home if your that poor?
BLOODBATH COMING!
This IS a HUGE economic housing Bomb with an uncertain impact time.
Despite how the REIC “Experts, MSM and vested business interests spin it, everyone from NAR, the Fed, Wall St, to the local banks and gov’t are scurrying and looking for cover.
And when it goes off, it’s so big that everyone in America will feel some of the degree of pain from the local gov’t costs of downward property reassestments to the crushing losses of flim flam men on Wall street.
FAC PILOT
“Jets will bomb in 30 seconds. Get your people back and
heads down. This is gonna be a big one.”
A P O C A L Y P S E N O W
Too many comission based people in the home buying/selling process.
Chicago real estate bubble, you’ve got it right. Commission driven people are at the root of this evil.
This mess is going to unwind like no other before it. Hold on for it is a long way down. I predict property values will decline as much as 50% from their peak in 2005 and in some cases even more. This mess will takes years to unwind.
The Times Democrat from Virginia. “In Fauquier County, property values are declining. Presently, properties are remaining on the market an average of 90 to 110 days. Only one out of five listings goes under contract, and we currently have a year and a half of inventory on the mark.
- Since only 1 out of 5 goes under contract … probably only 30% of those actually close.
Does that “90 to 110 days” on market refer to only the houses that sell, or all houses that are listed?
(yes, I know realtors play games with ‘days on market’, but just trying to understand where that 90-100 number comes from when 80% are not selling at all)
It refers to those that have sold. One of the many reasons why in this kind of market, dom is complete fiction.
A bit worse according to the May 2007 statistics for Fauquier County from http://www.mris.com/reports/stats/
Average DOM = 149 this year, 74 last year
We live in Fauquier and work close by (unusual for the region). We’re taking our time to buy back in with 16 months of inventory. There are also hundreds of houses in the “new” pipeline here.
“One truth behind foreclosures with a Federal Deposit Insurance Corporation insured bank is that the bank must put aside eight times the amount foreclosed, which means the bank is unable to lend that amount to another client.”
Eight times? I would have expected 100%, not 800%. Does somebody know why it is so much?
What happens when the loans are all sold off to Fanny or Freddy? Since they are not banks per se.
Perhaps the cockroach rule? (There’s never just one of them.)
The writer of this article is incorrect in other parts, so I’m going to assume this part is wrong as well. They have the “urban legend” view when they say that the bank only lends 10% of its own money vs 90% as a journal entry. A reserve requirement of 10% means that 10% of the total of (deposits + loans) must be held by the bank. If the bank lent out more money than the deposits, the reserve would be a negative number.
You’re correct up until that last statement. I believe a reserve of 10% means that they can’t loan out more than 9 times what they hold.
Thus a bank can lend *way* more money than what’s deposited. If 100k is deposited, they can loan 900k using the 100k as collateral. This leaves the reserve (100k) at 10% of the total deposited + loaned (1,000k), with a reserve ratio of 9:1.
Here’s an excellent video to watch on the subject:
http://tinyurl.com/2esm82
Go to the Fed’s website, and look up what their stated reserve requirements are. 10% is the maximum required. In some instances, it is zero. It is how the money supply is expanded.
I put in 100K, and they can (notice can-they need to find people to take on debt) loan out more than 900K (10% is the maximum for the requirement-it is less in some cases). When they loan that money, some is secured (by a house in this case). When a limited amount of homes that secured the loan drop in value, it isn’t a major problem. When a large enough number do drop below the secured value of the loan and the bank gets it back, that is trouble. Not only for the bank/broker, but for the holder of that claim to the money.
I’ve studied economics, and you are not correct.
If the bank lent out 900k using a 100k deposit, the assets would equal 900K(the iou is an asset), and the liabilities would be 100k(the deposit is a liability because the bank has to pay it back). The reserve would be (100k - 900k) which would be -800k. This is “not” possible. they cannot lend out more than their deposits.
Wikipedia finally has the correct description of fractional-reserve banking(they had incorrect info for a long time).
http://en.wikipedia.org/wiki/Fractional-reserve_banking
I went to the link, and it is a fallacious example of fractional reserve lending. I’m not sure what they described, but it isn’t fractional reserve lending. If banks couldn’t increase the money supply, where would the money for interest be generated?
The fractional reserve process is iterative. If I give them 100k, they can only loan out 90k intially. They must keep a minimum of 10% in reserve. Their books are now balanced. However, they loan the 90K to A to buy a house from B. B takes the money and deposits it into the same bank. Now they have an additional 90K in deposits, and can loan out 81K. Their books are still balanced, but the original 100K has now turned into 190K in the economy. The problem arises when the loans are used for consumption instead of production, or in the case of housing, to buy something that is worth less now than it was before. That is a problem for the bank and others.
Action Assets Liabilities New $ Reserve
100k dep 100K 100K 0 100%
Loan A 90K 10K+90K IOU 100K 90K 10%
B dep 90K 190K 190K still 90K 100%
From the example above, the books are balanced, on paper they have 100% reserve, but if myself and B both want our money (190K) they are short by 90K. As the process continues, the maximum amount of new money in the economy, with 10% reserve ratio, will be 9 times the original. This is what generates a run on the bank.
What (Really) Happened in 1995 by Aaron Krowne
The key event that happened around 1995 is that the fractional reserve ratio was not only lowered, it was effectively eliminated entirely. You read that right. The net result of changes during that period is that banks are not required to back assets which largely correspond to M3 or “broad money” with cash reserves. As a consequence, banks can effectively create money without limitation.
Roanoke has also become “Asheville-ized,” with a trendy downtown/market area and the requisite bums and crime. Roanoke was once called the Magic City because it sprang up into a good-sized berg out of nowhere in the early 20th century around Norfolk and Western (headquartered here) and was a huge transportation hub for both rail - handling the coal from WV, KY and SW VA - and trucking. After merger with Southern, Norfolk Southern relocated headquarters to Norfolk. Biggest employment is trucking, railroad, and health care.
Not as expensive as Charlottesville, Tidewater, or NoVa, but probably just as overpriced relative to incomes. Even the smaller Western Va. cities such as Waynesboro, Lexington, Radford have gone from cheap housing to expensive housing in five years. You gotta really go to the sticks, away from cable, internet, and cell phones, and then it’s cheap.
Funny and pretty sad when you think about it… Comments at the bottom are very telling on what people’s thoughts are about this even…
Realtors attend worship service to pray for better market
http://www.nwfdailynews.com/article/6725
The time may be better spent trying to convince their clients to reduce their prices so they will sell and they get a commission.
But my realtor talked my fiancee into putting our house on the market for MORE than I wanted to list it for….
Go figure.
Pathetic.
Some of the biggest hipocrits I know go to church every Sunday.
“Not willing to forego any help from a higher being, the real estate agents then attended an Excorcism featuring a casting out of the devil from one of their demonically possessed members by a Jesuit priest, a Voodoo ritual involving a Cajun Witch reading the bones of a dead chicken, and Pagan human sacrifice of a Sub-Prime borrower who had just had their home foreclose upon.”
They’re praying to the wrong God. “You cannot worship both God and Money.”
“‘The bubble didn’t burst, but a little of the air went out of it,’ said Robert Samples, a Charleston businessman who founded Eimors Construction in 1984.”
That WAS a lot of hot air. The bubble is just in the first stages of bursting. Can anyone show me ANY evidence at all that factors are in place for prices to flatten or increase any time soon? Credit is tightening. The job market is stagnated. Folks are up to their eyes in consumer debt, and house prices are currently way above affordability levels.
In UK prices continue to climb, but this is due to the vast amount of Russian and Arab oil money being pumped into London as they buy up high end properties. Once a single high end property in london sells, it sets up a chain of sales across the country. We do not have that here to any degree any more.
“Stephanie Hicks and her husband took out a $204,000 construction loan to build their house….Their combined income was $34,000 last year.”
This is 6x their gross income, before property taxes, insurance and maintenance.
Until banks “just say no” to these ratios unless someone makes a huge downpayment, I wonder if we’ll see serious price declines.
Plus, they were balking at just a $172 a month increase. What would they have done when their taxes increased, pray for a raise? Talk about living paycheck to paycheck, or close to the margin.
What about when the garbage disposal broke? $172 a deal breaker? I hope they make their own clothes and grow their own food.
“Plus, they were balking at just a $172 a month increase.”
This is exactly what I was thinking. That’s really not a lot of wiggle room. What were they planning on doing if they had to repair/replace something? Heck, how were they planning to landscape the place? Not that it’s necessary, but why own a house if you’re not going to make it look a little nice? The meager amount of container gardening I did this year has already run me about $100.
ok but the shocking bit is they built a NEW CUSTOM HOME for 200k and cant afford an extra 172 a month.
this why people move to FO, stories like this. Welfare people buying new homes. In coastal CA only the wealthy can buy a new home. Even doctors live in old crapshacks because they want to keep thier prop 13 tax rate from 1900.
Bingo we have a winner.
“Until banks “just say no” to these ratios unless someone makes a huge downpayment, I wonder if we’ll see serious price declines.”
Well said Lisa.
“‘We had one couple purchase a home, and I asked them what made them decide to buy here,’ Picken said. ‘They said, ‘We’ve been coming to The Greenbrier for 25 years.’ Plus they know the home is going to appreciate.’”
FBs in the making…
“Plus they know the home is going to appreciate.’”
Amazing how so many people are clairvoyant when it comes to Real Estate.
I had to laugh. The Greenbrier is a resort in a pretty remote location in WV. Great for visiting royalty and Congressmen but…to live there? You will never get your money back.
Yeah, but isn’t there some sort of underground complex in that area that’s supposed to be a bolt-hole for the chosen gov’t elites in case of nuclear attack or widespread panic? Wonder how much a cubby-hole would cost and can I get it with a neg-am loan?
Yeah I’ve heard that too. Problem is that like you say - unless you buy a below-ground house you’re actually *worse* off near Greenbriar, since you have a better chance at being nuked than the rest of the country
The Greenbrier Hotel and underground Complex was a super secret cold war hideout for the entire US Congress durring the Cold War.
Maybe the buyers thought it was a great place to hide from toxic and radioactive housing WASTE
http://www.avhub.net/congressionalhideawaygreenbriar.htm
http://www.conelrad.com/groundzero/greenbrier.html
It’s funny, this got me thinking, he won’t later be able to deny that he sold the home based in substantial part on the premise of appreciation, he put it right there in print…
You have no idea how embarasing it is for an auctioneer to have just one potential buyer show up…
It’d be like throwing a party and buying enough food and drink for 50 people, and just one person shows.
“In fact, in the past month, six properties either have been put up for auction or are about to be auctioned at The Sporting Club. Samples said four homes at the exclusive development were almost auctioned off on May 22, but the sale was canceled when only one potential buyer showed up. Realtors in the county said another two lots are expected to be sold by BB&T bank at a foreclosure auction June 28.”
“some in the mortgage industry believe the increase in foreclosures is only temporary…‘The economy in the state is good,’”
Riddle me this, Batman. Why is the foreclosure rate up so much when the economy is so good? Isn’t it the least bit odd to you that foreclosures are so high (and rising) when you claim that the economy is so good?
And if that is the case, how can you, with a straight face, say that you believe that the worst is over…you don’t seem to know *why* we are in the current situation.
Again, “statements pulled from the tush”. Get with it, reporters, and do some reporting, not shilling.
Exactly! What has changed to improve the situation? Nothing!
The common notion in these parts is that if you have a “job” any job, you are fine. I disagree. If you are one of the millions who work low wage jobs, you are only subsisting and with so many better paying jobs offshored and competition from cheap foreign labor, things are NOT in good shape economy wise. With regards to foreclosures, people simply borrowed magnitudes more than they could afford to repay, counting on the continued escalation of prices and are now in trouble. It has nothing to do with prime / sub prime. simply folks borrowing more than they should.
Why foreclosures high with economy so strong? Same reason people were taking out ARMs while interest rates were at historic lows.
House price was completely disconnected from affordability.
What’s the economy got to do with it? Prices got way out of line with incomes. The economy never held back prices. Won’t support prices either.
Just got back from Miami. Holy S^&*. There is no way they will fill all these condos in before 2050. Went to some Trump developments on the beach to kick the tires. Salesman offered me 20 different units at 2003 prices in “sold out buildings.” Each one had a flipper sob story attached: recently widowed, divorce, medical… etc…
Interesting thing: Even if I bought a unit on the spot, the flipper does not get their 20% down payment back from the developer until the units close in 2008.
“some in the mortgage industry believe the increase in foreclosures is only temporary…‘The economy in the state is good,’”
The boom started when the economy was bad. It rose against fundementals, it can fall against their perceived good fundementals.
“Get with it, reporters, and do some reporting, not schilling. ”
Your kidding, aren’t you?
While I agree, my favorite quote in EVERY article about sub-prime loans is “these are loans made to people with poor credit”. This, of course, is not true.
These are loans that are made to people with little or none of their own money in the property, or with bad credit, or a number of other factors that make the loan risk higher.
I believe most of the sub-prime loans went to buyers who were purchasing their 3rd or 4th “primary residence”.
That is the reason for the melt-down. They have no incentive to pay for an asset that is falling in “value”.
They are underwater and hoping to unload, any way they can.
But, that story about sub-primes never comes out. It’s always about poor families who are losing their homes.
Most are in thrall that they will “become rich” in the future, through lottery winnings or some relative dying and leaving them some money. Or better yet hoping for a raise. Usually raises are about 3-4% a year, not something to hang your hopes on. The folks in the US are so screwed in the most part by the increasing interest rates that will push up prices no matter what on the consumable items in your life. Houses not so, too many and too many of them are vacant. If you put all the economists end to end you would never reach a conclusion. That was a quote from somewhere or other. Things are going to get bad and really bad in the next couple of years, being debt free is only part of the solution.
We all know that we are in the middle of a huge wave of ARM resets, per the Credit Suisse report/graph…
Well here is what the 5/1 ARM environment that these people are reseting into looks like:
http://realestate.yahoo.com/loans/rate_trends.html?type=mtg&period=5y&prod_id4=on&national=on&state_code=CA&submit=Update+Chart
Good luck…
Why would anyone want a second home in Greenbrier County, WV? Does it have anything to do with the congressional NUCLEAR FALLOUT SHELTER there?
“”‘The economy in the state is good,’ said Steve Baugher, executive director of the Virginia Association of Mortgage Brokers. ‘Real estate is still holding its value.’”
“Subprime lending is not solely to blame for recent foreclosures, Baugher added. ‘I think a lot of the new homeowners may have stretched and got in on a shoestring,’ he said. ‘They don’t have much margin for error.’”
“After several years of rapid home price appreciation in the industry, a phenomenon that caused many to jump into risky investments, increases in real estate values have leveled off, causing investors to lose money. Appreciation has gone from 10 percent to 12 percent earlier in the decade, and back to 1 percent to 2 percent now, according to Baugher.”
“‘I think we just have to give it time,’ he said.”
Wher do they find the effing buffons?! He says real estate is still holding it’s value, yet admits is is appreciating slower than the rate of inflation, and that investors are losing money. He cops to the fact that people who couldn’t afford houses have been purchasing, creating false demand, yet cites a strong economy as reason not to worry. Can’t this idiot read the writing on the wall?
It’s amazing, isn’t it? The quotes are always from moronic RE shills or moronic FBs, rarely from informed people like, say, HBB readers. That’s quality journalism right there.
613 CONCORD CT S
STERLING, VA 20164
List Price: $200,000
Prior Sale: $325,000 09/27/2005
Listing Date: 06/17/07
-38.5%
2540 PORT POTOMAC AVE
WOODBRIDGE, VA 22191
List Price: $479,900
Prior Sale: $740,000 9/5/2006
Listing Date: 04/16/07
-35.1%
3820 LIGHTFOOT ST #318
CHANTILLY, VA 20151
List Price: $280,000
Prior Sale: $430,000 11/22/2005
Listing Date: 05/20/07
-34.9%
18174 CAMDENHURST DR
GAINESVILLE, VA 20155
List Price: $459,900
Prior Sale: $703,000 5/17/2006
Listing Date: 04/24/07
-34.6%
700 BIRCH CT
HERNDON, VA 20170
List Price: $279,900
Prior Sale: $417,000 06/09/2006
Listing Date: 04/10/07
-32.9%
http://novabubblefallout.blogspot.com/
Thought this was an Interesting Twist to the Collapsing Bubble. I wonder how much of this will go on before it’s over.
Secretary bound and gagged at Ocala lawyer’s office
BY AUSTIN L. MILLER
STAR-BANNER
(Updated 12:10 p.m.) OCALA - A gunman barged into an attorney’s office claiming the lawyer took his home in a foreclosure, bound and gagged a secretary, and took her purse before escaping in the woman’s car this morning, according to police and the lawyer.
I’ve been wondering that myself. There were several high-profile shootings by (former) day traders at stock brokers’ offices back during the dotcom crash. I’m sure we’ll see many more this time, sadly, because this crash will hit closer to home (no pun intended).
Did the gunman use a ball-gag and also “also get the gimp?”
oops, wrote also twice.
Pulp fiction anyone?
Illegal immigrants will likely be used as “bounty hunters” to serve eviction notices that sheriffs will be too nervous or busy to fill. For $1000, a now unemployed dry waller will most certainly take the risk of evicting the defunct “homeowner”.
“Secretary bound and gagged at Ocala lawyers’s office. ”
A FB taking matters into his own hands . Another reason why lenders/realtors etc. should not of lied to the stupid greedy sheep .
of = have
Merrill Sells Portion of $850 Million Bear Funds, Person Says
By Jody Shenn
June 21 (Bloomberg) — Merrill Lynch & Co. backed away from its threat to dump about $850 million of securities it seized from Bear Stearns Cos. hedge funds, according to a person with knowledge of the firm’s plans.
Merrill Lynch sold a small portion of the collateralized debt obligations through an auction, said the person, who declined to be identified because the decision hasn’t been announced. The firm plans to hold onto the remaining securities for now, the person said.
The threat by Merrill Lynch to sell all the securities had sent shudders across Wall Street because it would have forced banks, brokerages and owners of similar securities to revalue their assets.
Collateralized debt obligations, or CDOs exceed $1 trillion and comprise the fastest-growing part of the bond market.
Merrill Lynch spokeswoman Jessica Oppenheim declined to comment.
I’m sure “someone” “guaranteed” the downside. Nice. Wish they’d do that for me when I buy index puts.
The powers that be are desperately trying to hide the ugly truths of this debacle.
Oh, and here’s the ugly crapcastle you can get in west virginia for 3.8 million…at Greenbrier
http://www.dpsdevelopment.com/listings/?id=148&todo=show
Is the bathtub whiskey-still included out back too?
I wouldn’t pay $4M for it but I think it’s a nice place. I like those mountain type places out in the country.
And I thought you had good taste! That ostentatious eyesore isn’t out in the country, but right next to the sandtrap on the golf course. I’ve got friends who could shank one right through their window. I’d sure want more that .58 acres for $4 mil.
This house in Ohio would probably not sell for more than 1.5mil in an upscale area and WVa is worse off than Ohio. Way, way overpriced. It’s only 4800 sf on 1/2 acre.
Southeastern WV - Lewisburg, White Sulphur, Beckley, Bluefield - is better off than northern WV, which is more like Ohio. Greenbrier (and Homestead in Hot Springs, Va.) have always commanded premiums. But, yeah, way overpriced.
The world’s largest popcorn ball, as measured by the Guinness Book of World Records: 12 feet in diameter, containing 2,000 pounds of corn, 40,000 pounds of sugar, 280 gallons of corn syrup and 400 gallons of water.
“Stephanie Hicks and her husband took out a $204,000 construction loan to build their house….Their combined income was $34,000 last year.”
$34,000 joint income? Let me show you a nice double-wide. What in God’s name are they doing with a $204,000 loan? At 6% for 30 years that is $1,223/mo. Bump it up to 7% and it is $1,357/mo. Add insurance and taxes and we’re pushing into the $1800/mo range. Utilities will put them into the $2,000/mo. range and we haven’t even begun to discuss maintenance.
Net pay on a $34,000 annual salary will be around $2,300/mo. That leaves about $300/mo. for all other living expenses. I guess they plan to walk everywhere, eat rice and beans, and shop for clothes at Good Will.
The San Francisco Chronicle ran a “heartwarming” front page story today on a teacher who bought a condominium in Oakland, with the help of a variety of loan programs to “help her”.
Her annual income is $52,000. The condo she bought is $383,000. That is over 7x her gross income, just for the mortgage payment.
The teacher then goes on to gush that AFTER income tax savings, the condo is still $500 more a month than her $1,022 a month rental. Quote: “She plans to get summer jobs to boost her income.”
And this is a story to be “celebrated” on the front page??
C’mon, Lisa, she was ’saved’ from the social indignity of continuing to be a jealous, bitter renter! Renter = social leper, don’t you know that?? That alone is worth the extra 50% in carrying costs (which is probably very understated, as MSM ‘math’ rarely factors in things like HOA, maintenance, insurance or property tax).
I have no doubt what they really planned was to sell their eventual POS construction project for some ridiculously overinflated value, thereby raking in a fortune and leveraging it to construct two or three more POSs on option ARMs and sell them for even more money, because hey, RE only goes up, don’t ya know?
Reality bites when you’re a FB…
Stephanie Hicks and her husband took out a $204,000 construction loan to build their house. They said their lender had promised to roll that loan into a subprime mortgage that would cost them $1,000 a month. Their combined income was $34,000 last year.
This damned ENTITLEMENT mentality. Someone making that low of an income should be renting a cheap apartment and be trying to improve their income. My income is way above that w/o extra stuff doing and making a payment is enough of a stretch. For these people, it would be impossible (unless of course - no need to eat, wear clothes, drive a car to work, have a vacation, etc) unless they want to be a slave to the slab of concrete and pile of lumber. They would deserve to be foreclosed on when they can’t take a $1200 payment.
With all of the braindead quotes Ben finds, I wouldn’t be surprised to read an account of an FB who’s foregone clothing, autos, and regular meals in order to realize their “dream home”.
“I wouldn’t be surprised to read an account of an FB who’s foregone clothing, autos, and regular meals in order to realize their “dream home”.”
In our old neighborhood, I gave one of our extra winter coats to my son’s classmate. He was wearing a denim jacket layered over a hooded sweatshirt as his outerwear in January. We live in Massachusetts.
These people lived in a waterfront home that had just been remodeled. She actually had the nerve to say to me, “Admit it, if you just worked a little harder, you’d be able to afford a home too.” Fortunately I got the satisfaction of watching them squirm and fight amongst themselves when their mortgage reset and he expected her to go back to work. I, on the other hand, moved to a nicer, cheaper, rental in a better town and can still afford to stay home with the kids. Oh, and we all got new coats, boots, gloves, etc. for Christmas.
In my new neighborhood, I’m a little surprised at the number of people with large, fancy homes who do their own landscaping. They looked hot, tired and unfashionable as I drove past them on my way to the beauty parlor last weekend. I suspected many of them had been working all day, although I’m not entirely sure, since I spent much of the afternoon napping, so I’d be well rested for my hair appointment followed by dinner out.
It’s good to be the Queen (in a rented castle).
“In my new neighborhood, I’m a little surprised at the number of people with large, fancy homes who do their own landscaping. They looked hot, tired and unfashionable as I drove past them on my way to the beauty parlor last weekend. I suspected many of them had been working all day, although I’m not entirely sure, since I spent much of the afternoon napping, so I’d be well rested for my hair appointment followed by dinner out.”
That’s funny stuff!
That is funny stuff . I suspect that in the new home contract the buyers agreed to put landscaping in by a certain cut off date . Unless the builder is supplying landscaping with the purchase price ,landscaping is another expense that buyers of new homes have .
While I could afford to hire someone to redo my landscaping , I decided to do it myself .The guy who mows my lawn just told me it turned out great ,but it did get hot and dirty while I was doing it .
Mortgage Insider: H&R Block swings to loss on Option One woes
http://tinyurl.com/26dahk
But last week the Hickses felt the security of homeownership shatter. Two months after moving into the new home, growing troubles in the mortgage-lending industry caused their lender to renege on a mortgage it had promised the couple.
Lately, Stephanie Hicks has missed days of work, sick to her stomach with worry about the future. Soon, the couple will have to give up the house and move out.
“Me and my husband were both crying our eyes out,” she said Thursday.
These are like little children who don’t want to give up their toys. What’s up with this ‘homeownership’ sh*t? Why are the people that can least afford an SFH insist on owning one instead just renting? Don’t they learn anything about personal finance as they reach adulthood?
The worst thing about this bubble is that pretty much everyone who has bought had to stretch to do so. When was the last time you heard of someone buying at 3x gross income, which is the standard “safety net” range for a home purchase.
Whether you’re making $50K or $150K, a lot of people are over their heads.
We bought at 3x gross income, our payments with tx/ins were 25% of our salary and we put 33% down. We had no other debt. It was still tight. How do these people do it?
“We bought at 3x gross income, our payments with tx/ins were 25% of our salary and we put 33% down. We had no other debt. It was still tight. How do these people do it?”
They don’t -); I think with all the resets starting to kick in, that’s why we’re seeing huge jumps in foreclosures. People can’t do it.
I bought in ‘96 at 3x gross with 10% down, and it was very, very tight those first few years. No vacations. I had to watch every penny. I agree, buying at crazy multiples is almost a guarantee of foreclosure.
My and my partner’s gross combined income is just over $100,000
We paid $224,000 for our house is Dec 2005. I could have streached it and bought a $300,000 home with all the upgrades but we bought what was comfortable for us and now we can sleep at night.. it’s about common sense. Live within your means.
I don’t know where they get this crap about the economy being good in Virginia, apart from Northern Va., that is. My wife and I just drove I-81 through western Va. this past weekend, and everywhere except suburban Bristol looked like an economic dead zone, especially Radford and Christiansburg. Lots and lots of boarded-up commercial property and run-down housing. I’m sure there are new ‘exclusive’ communities going up, but that stuff sure isn’t going to be purchased by locals, based on what I saw. Rural America is dying, which I find to be a scary thing.
“They said their lender had promised to roll that loan into a subprime mortgage” …
“I blame it all on the subprime market,’ Stephanie Hicks said. ‘It’s not good for anyone.”
Does anyone else see the hypocracy here?
As to Winston and Greensboro: We never had the big run-up (except two or three neighborhoods in each city) other places had. Thus, although there’s record inventory, and relatively flat in-migration the past few years, the prices are still a bit higher than you’d expect. We have been waiting for a drop than may never come. So, the 3x rule may be pretty close to what we pay. Trouble is, I am a big believer in Elizabeth Warren’s warnings about “The Two-Income Trap”. If anything happened to either of us, unless we are insured to the hilt for every contigency, it could be impossible to keep up payments. Unforeseen medical expenses are the #1 instigator of foreclosures.
http://www.law.harvard.edu/news/2003/09/08_warren.php