The Real Estate Boom Has Busted
The Staten Island Advance reports from New York. “Selling themselves was not something home builders had to do during the real estate boom just a few years ago, when new homes sold rapidly. But with housing inventory up and prices down, builders are beefing up the incentives. They’re cutting prices and offering upgrades, and even gift baskets.”
“‘It’s a Buyer’s Market — The Choice is Yours’ was last week’s ad, which ran only in the Sunday Advance and was endorsed by the National Association of Home Builders and the local Building Industry Association of New York City.”
“‘You always want to buy low and sell high,’ added Larry Brinker, executive officer of the Building Industry Association. But for people who must also sell their home in order to buy another house, selling high is often the hard part.”
“Buyers say they found the homes they wanted for what they considered reasonable prices, but they then had to sell existing homes, often for lower than they expected.”
“‘Having two mortgages for three months — that was not fun,’ recalled Jennifer Rinella, who bought a new home in Prince’s Bay before she sold her high ranch just a few blocks away.”
“She expects to close this week on her old home, which she sold after dropping the price to just below $600,000.”
“‘We’ve all been forced to raise the bar a little bit and the guys who are doing it are moving product,’ said builder Robert Kelly., who is also a Realtor. ‘The guys who aren’t are not moving product.’”
“Annette Cartigiano got a welcome basket with a champagne bottle and gift certificates from local restaurants from her builder after she moved into a new home at the Tides of Charleston.”
“Mrs. Cartigiano loves her new home but she said it took six months and several price cuts to sell her former house. She said a friend who also planned to buy in the Tides was nervous about her ability to sell her home and backed out.”
“‘It all depends what situation you are in,’ she said. ‘It’s scary when you have your money on the line and you can’t sell your house.’”
The Long Island Business News from New York. “The Long Island Association’s chief economist panned a National Association of Realtors’ prediction that home sales will recover in 2008, calling the outlook ‘overly optimistic.’”
“Pearl Kamer of the LIA said Long Island’s housing fortunes would continue to sag into 2009, as part of a drawn-out market correction. ‘We still have to liquidate a excess inventory of homes,’ Kamer said. ‘And as of Sept. 1, lending practices will tighten, so fewer buyers will qualify for mortgages.’”
“Through May, there were 18,749 homes for sale in Suffolk, up 26 percent from a year ago. In Nassau, 12,711 homes were up for sale, a 21-percent increase from the same period in 2006.”
“It wasn’t all doom and gloom from the LIA’s economic fortress. Kamer said the slow market correction has actually helped the Long Island market. ‘The worry has been that the bubble would burst,’ Kamer said. ‘Thankfully that didn’t happen, because a steep decline would have hurt consumer spending, which makes up two-thirds of the Long Island economy.’”
The New York Daily News. “Carol David was sure her dream of home ownership was about to come true when she answered an ad offer to move into a house 30 days after making a $10,000 down payment. ‘But it was the beginning of a nightmare,’ David said.”
“‘The paperwork wasn’t explained. It was just ’sign here, sign there,’ she said. ‘When I went home and went through it, I realized I had been tricked.’”
“David was expecting her mortgage would be $1,776 a month. In reviewing the paperwork, she discovered two interest rates, and when her first house note came due, she discovered she was to pay $6,069 a month.”
“State Sen. Jeffrey Klein estimates that more than 50,000 New Yorkers stand to lose their homes to foreclosures from loans they took out in 2005 and 2006.”
“Sara Ludwig, executive director of the Neighborhood Economic Development Advocacy Project, said there also has been a concentration of foreclosures in Flatbush, East New York, Canarsie, Bushwick and Ocean Hill in Brooklyn. In Queens, the concentration is in Rochdale, Jamaica and St. Albans, Ludwig said.”
The Boston Globe from Massachusetts. “Foreclosure actions against Massachusetts homeowners continued at a quick pace in May. The number of homeowners facing foreclosure auctions more than doubled in May compared to a year ago, according to the Warren Group. And the number of foreclosure actions initiated jumped 39 percent from a year earlier.”
“Foreclosure petitions, the first step in the foreclosure process, rose to 2,164, compared to 1,553 a year ago, and were also slightly above April levels. It was the eighth consecutive month that foreclosure notices topped 2,000.”
“‘The Bay State has not yet seen this problem peak,’ said Timothy Warren, chief executive of Warren Group. ‘”It becomes evident that homeowners are finding it difficult to refinance their mortgage or sell their homes before they reach auction.’”
“Foreclosure actions have soared this year. The 6,419 auction notices through May nearly matches 6,720 for all of 2006. Larissa Duzhansky, regional economist at Global Insight, a Waltham, Mass., forecasting firm, said the foreclosure problem will keep downward pressure on the housing market.”
From Fosters Online in New Hampshire. “Foreclosures in Rockingham County have more than doubled in the first half of this year and officials cite predatory lending and a slower real estate market as the cause.”
“Register of Deeds Cathy Stacey said through the end of May, the county has seen 163 foreclosures compared to 74 during the same period last year. In Strafford County from January to June, there were 85 foreclosures compared with 49 last year, according to Registrar of Deeds Leo Lessard.”
“‘You have some shady practices happening, where you’re lending money to borrowers who from the get-go couldn’t afford what they were getting into,’ Stacey said.”
“‘We haven’t seen this type of activity since the ’80s,’ she said, referring to the savings and loan crisis.”
“There have been more liens filed on properties in Rockingham County — 711 through May of this year compared with 450 during a similar time period last year.”
“‘You have the whole issue with the real estate market not moving and the subprime lending. On top of that, you have the emergency of people who are overextending themselves via credit cards and those companies are coming in and attaching properties. It’s kind of a double whammy,’ she said.”
The Pawtucket Times from Rhode Island. “Are you still having trouble finding somewhere you can afford to live? If so, you’re not alone. Despite the recent downturn, Rhode Island still has a healthy real estate market in one important respect: every seller is able to find a buyer, even if they may not be able to get the price they want.”
“But even after a few months’ slide, the reverse isn’t true: some buyers still can’t find anything they can afford.”
“According to national statistics from the Federal Reserve, around a quarter of total investment in real estate is speculative. These are purchases made not to provide a home to anyone, but in order to resell at a higher price.”
“For a local analysis, I obtained records of all the real estate sales in Providence between 2003 and 2006: 14,967 records. About a quarter of the sales records were for properties sold at least twice in the period, and 5.5 percent were property flips, where the buyer held the property for less than six months.”
“That doesn’t sound like a huge number, but in many neighborhoods, the number of short-term investors was much higher. In plat 43, which covers part of the West End, about 40 percent of sales between 2003 and 2006 were sold again before 2006. One hundred and ninety-seven properties there changed hands during that time, but 87 of them were involved in 220 sales.”
“The data also show that resale activity is clearly related to the level of prices. I ran some simple statistical tests on the property and saw that resold property went for 15-25 percent more money compared to its assessment than property that was only sold once in the study period.”
“What’s more, only one reseller in nine made any significant improvements to the property while they held it.”
“In dollar terms, approximately 21 percent of real estate investment in Providence was investment made for short-term gains alone. That is, 21 percent of the money spent on city real estate in 2003 was spent on property that was sold by 2006, and usually long before. This is a huge proportion, and still misses all the investors who waited just a few months more.”
“Real estate agents will tell you that the prices went up because there was so much demand, and in a way that’s true, but the extra demand was from the one buyer in five who was only shopping for a short-term investment, not for a home.”
“The short version of all this is that if you have trouble finding an affordable place to live, or if you are feeling the pinch of the downturn in housing prices, a large part of the blame rests with people who see buying and selling houses as a way to make money rather than as a way to find somewhere to live.”
“The real estate boom has busted and things are settling down now, but people whose memory only reaches back to the 1980s will remember that we had a nearly identical real estate frenzy then. Its aftermath was similar to what we’re seeing now: people stuck with unaffordable mortgages, foreclosures, rising rents and an increase in homelessness.”
“Unfortunately, this is what we have to look forward to in the coming months and years.”
Real estate agents will tell you that the prices went up because there was so much demand
Now that the demand is gone, prices should reverse. The investors have left the building, inventory is way up, and credit standards which were a joke are now much tougher. Down payments are making a come-back. I just cannot see prices going anywhere but WAY down in the comming years.
GH, the investors are TRYING to leave the building. But they just can’t seem to sell the “investments” that they bought.
“It’s kind of a double whammy,’ she said.”
I don’t know about the rest of you, but I love a good double whammy! Give me more, please!! Time to get back to some semblance of reality.
Absolutely right Gh. I saw a RE mortgage ad on TV last night, and it included wording with “downpayment requirments”.
Funny, all of us here knew the reasons for traditional lending practices with downpayments.
Same here. We should see 50%+ price cuts in the more overpriced markets. Anyone who buys now commits financial suicide.
“‘And as of Sept. 1, lending practices will tighten, so fewer buyers will qualify for mortgages.’”
I haven’t heard about this. If true, it may explain why I’m beginning to see “Real Estate Auction” signs posted in Dutchess County.
The full article from the Long Island Business News gives no explanation of the prediction that Sept 1 will mark an increased credit tightening.
Can anybody confirm this date of Sept. 1 for tighter lending standards. I did a quick google search and found nothing. Is this guy blowing smoke?
Freddie and Fannie are planning on adopting both the Nontraditional Mortgage Guidance and Subprime Mortgage Guidance on September 13th. This will apply to both bank and non-bank lenders who sell loans to F&F.
jb
So let me guess James. RealTurd logic would say the bottom would be in by september and the market as nowhere to go but up.
This would explain Richomond Americans Deal in SOCAL
LIMITED-TIME OFFER: $5 Earnest Money Deposit*
*Offer valid for pre-qualified new buyers on new contracts signed on or after July 12, 2007 and on or before July 31, 2007 which close by August 31, 2007.
They are reaching for the last buyer to catch that falling knife
That’s just Darwinism at work there. Anyone that dumb deserves to lose their home to foreclosure.
Whoever’s familiar with the movie “Finding Nemo” (yes I have a 2-year-old and thus know it by heart) - the scene with the anglerfish comes to mind, where it attracts its prey with a pretty dangling light… and then CHOMP. I think that’s a pretty apt metaphor for the lending practices problem.
“Ooooo - look at the pretty mortgage payment! Only $900 a month for a $400,000 house!”
Chomp.
Burp!
I don’t agree with this opinion at all. Our society has created a bunch of financial idiots. If you are not fortunate enough to have someone explain it to you or figure it out on your own, you are taken advantage of. This might work with Darwin’s theory, but it does not create a good society. The thought that people can go around invoking Darwin as an excuse to take advantage of people creates a scary society in my mind. This goes against everything that I’ve learned from a Christian perspective.
Far be it from me to be a raving fan of his, but Robert Kiyosaki had it right when he said that financial illiteracy is a huge problem in this country.
I read Kiyosaki’s books. It was years ago, but I still remember him insisting again and again that you buy property for income, not for expected appreciation.
He also said back in 2005 that housing was not just in a bubble, but a mania.
Imagine the money that could have been saved if people had listened. Enough to turn Rich Dad green with envy, I’m sure.
“Christian perspective”
It is a curious thing to me that most in our Society are or claim to be Christian and yet;
“neither a Borrower nor a Lender be” doesn’t apply??
I don’t blame the Rothchilds, they don’t read King James(at least not the 2nd book). If the guy who said that is right, were in a heap of trouble.
Maybe the BIble has something similar, but
“Neither a borrower nor a lender be”
is a quote from Polonius in Shakespeare’s Hamlet.
There’s lots of verses that advise not going into debt (and interestingly being a cosigner on a loan and there are prohibitions on borrowing without repayment). Romans has a verse saying owe no man anything but to love him. Generally the prohibitions on debt are this is best rather than thou shalt not. In the Law, interest was not to be charged on the poor or the widow.
Between Christians and Muslims rationalizing their behavior, is there no one left who believes that religion is a private matter, not a political one?
If you need to quote someone, how about Ben Franklin, “a penny saved is a penny earned”.
How many people on this blog can answer the following questions?
1. What is money? (what are the characteristics that distinguish the things we call money from other things such as sand, leaves of grass, etc.)
2. What is a dollar?
Money is an item used to pay off a debt.
A dollar is a piece of paper.
Money is used:
1. as a store of value
2. as a medium of exchange
Dollar is just a ‘currency’, and is not money. it’s an IOU. ever notice how the dollar is a “Federal Reserve Note”. Dollars are not money. Money can be anything that has intrinsic value, traditionally gold and silver due to their rarity, but could be firewood if we so desired.
“Our society has created a bunch of financial idiots.”
Is it that everyone is financially illiterate or that the financiers have purposefully made everything difficult for the layperson, and learned, to fully understand without the assistance of an attorney and/or financial professional.
Mostly the latter, Ostriches. As a lender I don’t have to work at making things incomprehensible to my clientele. They already think they know everything, and in particular they are certain that a low, fixed payment is a good deal and that Real Estate always goes up. I hint at the improbability of the second proposition but not the first.
Agree. And even worse than “purposefully made everything difficult for the layperson”, they purposefully made everything easy to misunderstand. In our society it’s OK to tell a lie if you can prove you had your fingers crossed, or the small print tells the truth. A little bit like labeling a bag of greasy chips “60% Fat-Free!”, i.e. 40% fat content….
“This goes against everything that I’ve learned from a Christian perspective.”
Amen Brother…. And I still haven’t heard a logical explanation as to how the Christian voters are part of the party that espouses insane Darwinian like economics.
Not to start a religious war but I stopped going to church after I was flipped off by a guy driving like a maniac in a Ford Expedition with a FLAG sticker, who I followed into the church parking lot.
Remember that it’s only wrong if SOMEONE else does it.
maybe he used to drive Humvees in Iraq. did you ever stop to consider that!!!?? that would explain his erratic driving and the flag. lmao
” Our society has created a bunch of financial idiots.”
Where is it written that “society” has any kind of obligation to educate people? I don’t mean providing the means to become educated, everyone agrees upon that, I mean how can any society INSURE people are educated?
Lincoln educated himself (as did many others) without a tenth of the resources available today (available as much to the poor in many cases as to the rich or middle class). Access to information abounds, virtually entirely free, to people who are at least literate.
I was raised and have raised three children on the premise that one has to educate oneself. To do otherwise is simply to expose yourself to uncounted risks of physical, financial and even emotional damage.
I’m Christian and I believe in the saying “God helps those that help themselves”. If someone wants to gamble on buying an appliance without doing some basic research, fine but every adult here has had horrific experiences with even basic appliances from “major” manufacturers who sometimes produce crap. Maybe the time spent on smaller “assets” isn’t worth it to many people and the risk is too small to bother.
Yet is there any adult who would say a mortgage obligation of hundreds of thousands of dollars is trivial enough to merely saunter through, unguided by RELIABLE professionals or without any self-education?
Yes, it is “Un-Christian” to take advantage of the ignorant but, alas, everyone isn’t Christian and (as all Christian’s should know) even devote Christians are prone to SIN when confronted with TEMPTATION.
So, for better or for worse, Christians have to operate in a world forever beset with sin with their freakin eyes open. A Christian who assumes his faith innoculates themselves from the evil choices other sinners makes is simply an ignorant Christian who, unfortunately, gets what they deserve by virtue of their personal LAZINESS.
The more people who accept the notion that “society” will “protect”, insure or provide for their personal needs the more enfeebled “society” will become until it is overwhelmed with helpless souls.
“Feed a man fish and he’ll eat for a day, teach him to fish and he’ll eat for a lifetime”, right? Well teach a man someone will always bail him out of a mess and he’ll always get into messes. Teach him he’s responsible for his choices and he’ll LEARN the techniques to making better decisions….fast.
I’m Christian and I believe in the saying “God helps those that help themselves”.
Well I have to inform you that there is nothing Christian about this absurd expression that you believe in. In fact everything about it is anti-Christian. Why does anyone need Christ if they can help their own human condition? Sounds very catholic but then again, there is nothing Christian about catholics. Further to the point, God warns us NOT to engage in borrow with His warning “a debtor is slave to the lender”.
everyone, go get your bible, pick a passage that supports your biased arguement, quote it…..all is well..anyone can take the bible, twist the words to form a support for an arguement, and guess what? its all twisted words.
and you can take your Catholic bashing somplace else.
I’m not bashing catholics. My apologies if you percieved it at such. Face it, catholics pray to DEAD PEOPLE. I don’t see a whole lot of Christ in that practice.
I’m Christian and I believe in the saying “God helps those that help themselves”.
If I am not mistaken, it was Benjamin Franklin who said that.
I’m Christian and I believe in the saying “God helps those that help themselves”
If you try reading the Bible sometime, you’d find that Jesus taught that “God helps people who help others“.
“Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal.
But store up for yourselves treasures in heaven, where neither moth nor rust destroys, and where thieves do not break in or steal; for where your treasure is, there your heart will be also.
The eye is the lamp of the body; so then if your eye is clear, your whole body will be full of light. But if your eye is bad, your whole body will be full of darkness. If then the light that is in you is darkness, how great is the darkness!
No one can serve two masters; for either he will hate the one and love the other, or he will be devoted to one and despise the other. You cannot serve God and wealth.”
BINGO Yogurt. When someone states “Well I’m a Christian and” is when I first begin to question if they are a genuine Christian. Usually what comes out of their mouth is scripturally false, legalistic or licentious.
I do wish people would stop dragging their religion into everything. All I ask is that folks act like responsible, decent citizens. Your religion or lack of it is of no concern to anyone else.
Hear, hear Spike.
I liked it much better when religion was ‘personal’. Let’s keep it that way here, eh?
Jag,
Other than saying I feel all organized religions that take monies are corrupt I will leave the theology alone.
I do however support your notion of educating ones self. I was tossed from HS with a .7 GPA and just finished my accounting BS on the deans list. It was my choice to be a F*$k up in HS and my choice to pay attention in college.
My wife gets made at the time it takes my son to do his homework and at the way I refuse to walk him through it. I force him to do it, then show me his work and then I let him know what is wrong and how he might fix it. He used to not pay any attention to me when explaining things, but now does. He now understands that by not reading, listening and performing his task correctly he will be sitting there all night. It is now clear to him that his homework is his task and must be correct before he is realeased. I am eager to help him with his problem areas, but I’ll be damned if I do any of his work for him. He now knows better than to ask me if blah, blah, blah is correct. He figures it out and writes it down, only then will I correct his work.
Now even my wife knows not to answer his questions,, like what is 7+14?? The proper question for a child should be is 7+14 x(some number). The worst thing to do to a child is answer that 7+14 is 21!!!! That exchange is not supposed to be to verify my ability to add, but rather to support their ability to learn.
“My wife gets made at the time it takes my son to do his homework and at the way I refuse to walk him through it. I force him to do it”
PLEASE GOD, if anyone takes anything away from this let it be this quote…
My mother used to sit at the table and literally DO my brother’s homework for him because she could not get him to do it himself. He watch TV until she found the answer and told him what to write. On the subjects she wasn’t good at, she asked me to do it. Even in my teenage years I realized this was wrong and refused to help him. She would get upset with me but I still refused. I said “If he is willing to learn, I will help. But if I have to do it for him, I will not.” This continued pretty much through his older years.
Today, he is in his mid-20s, drugs, felony conviction, destroyed mutliple cars, bad checks, unpaid tickets, illegitimate child and STILL LIVES AT HOME with my parents.
Please stop trying to be friends to your kids and making life “easy” for them because you “had it hard”. You having it hard is what made you who you are today and you are probably better off for it. Your kids will never survive on their own (or won’t survive well) if everything is handed to them!
Hey, Jesus’ first miracle was turning water into wine for a wedding party. And when he saw moneylenders associating with religion, he beat the cr@p out of them. My kind of guy. But he’d be thrown out of any evangelical ‘christian’ religous group…
“but, alas, everyone isn’t Christian”
This is so offensive on so many levels. I wish Ben would simply delete this thread, as so many azzhat comments have been made. Any one who drags their religion into business has little business sense or religious faith. Drink up, it’s Elmer Gantry time.
If there’s a societal problem at the core of this, it’s a growing lack of the sense of personal responsibility.
Signing one’s name to something used to be very important. It meant (and still means) “I, the undersigned, take full responsibility to fulfill my part of this agreement”.
Actually, you agree more than you realize. I don’t think you caught the gist of my statement. I’m most definitely not advocating or even excusing predatory lending practices - I’m just stating that someone who’s not willing to take the time and effort to learn about what they’re getting into will be taken advantage of. I only invoke Darwin to make the point (e.g. the famous “Darwin awards” I’m sure you’ve heard of).
As a Christian myself - I believe it’s our responsibility to look out for our best interests - to not allow ourselves to be taken advantage of, e.g.:
Proverbs 27:23 - “Know well the condition of your flocks, [And] pay attention to your herds”.
Plus I know there’s plenty of other verses with regards to being wary of evil, and also of not allowing yourself to get into deep debt, though don’t know any specific ones off the top of my head.
Ha HAHHAHAH,
no offense intended, but a Christian invoking Darwin seems amusing. I take it your not of the insane “creation museaum” advocates.
Again, no offense intended.
Ha ha - no, I’m not. I shake my head at that museum - it gives other Christians a bad name.
Guess this isn’t really the place for such an obviously loaded subject, but let’s just say I’m open minded on the subject, and don’t believe that most or all of Darwin’s theories necessarily conflict with creation. Whether or not you’re a believer in creation - you can’t deny that Darwin’s theories are scientifically valid, since many have indeed been proven in our lifetime.
Natural selection in particular (back to the subject) is one of those proven theories now a principle/law - and is now being proven in homeownership as well.
All this cryin’ and wringin’ of hands following the realization what the mortgagge contract really said, aptly demonstrates the total, absolute BS nature of the title BUYER’S BROKER.
If these POS’s were acting in any sort of ethical capacity relative to protecting the buyer’s interest (as their title implies), they would review the mortgage conditions and provide experienced counsel.
These pukes all know exactly what the score is.
The only alligence these gutter swimmers have is to their commission check.
theres no such thing as a buyer’s broker.
A broker is an intermediary.. a negotiator.. someone who tries to make a deal between two parties.
He has, if any, equal responsibilities to both the buyer and the seller.
http://www.investorwords.com/584/broker.html
JinC
There is a distinction between a buyers and seller broker in some states.
I won’t go into specific’s because the legalese outlining the difference between each is enough to make your head spin.
However, the evolution of the species came from the fact that traditionally, a broker was operating in the exclusive interest of the seller meaning the “buyer” was crap out of luck if problems were to evolve. To eliminate the “caveat emptor” of the purchasing process, the “Buyer” broker evolved from an enabling state’s legistlative process.
Thus a buyer’s broker was invented to PROTECT the buyer’s interests. My experience with these types is that they are still wolves in sheeps clothes.
Bottom line is the same. Seller pays the big commish and all these buzzards want is a closed deal to get their dough.
“..a distinction between a buyers and seller broker..”
ok. Assuming these two species do exist, which one is out there taking advantage of buyers? The buyer’s broker.. ?
I went on a blind date thinking she was going to look like Salma Hayek. Boy was I pissed when she looked more like Edward Olmos.
did you get lucky with the Olmos look-a-like? LMAO
If the builder sold the loan it’s clearly fraud on their part. Sure this lady was ignorant, but unless you’re using your own personal cash, to lend money on terms like this is fraud and dishonest. The lady should be foreclosed on, no question, but whoever presented her with the paperwork should be forced to pay the shortfall to whoever they sold the loan to.
I just went to the Realtor.com website. Never saw this before…ever.
After typing in a zip code, a RE survey pops up with about 10 questions regarding the market. It’s great. They must have finally figured out that RE prices have totally disconnected from reality.
If everything is fine and RE always goes up, why would Realtor.com post this kind of survey?
http://www.realtor.com/
darn, for once I’m sorry my pop-up blocker protects me from whatever you are talking about
Can you copy/paste the questions?
I just went back to Realtor.com and the survey didnt pop up again for me. These were some of the questions:
1) Do you own or rent?
2) Are you planning on buying a house in 6 months?
3) Do you feel that RE will: 4 choices and various degrees, from: going up higher to going down much lower
4) What is your age bracket?
5) What is your income bracket?
6) What percentage (higher or lower) do you think houses will change this year? (I loved this question-I answered 20% prices going down)
7) What is the zip code of where you live?
I think there were 2 more questions, but these are the ones that stand out to me.
From what I have been reading lately coupled with stricter Sept loan apps and higher property and homeowners insurance, home prices in my mind will be tumbling in this September. In my area alone a 100k drop will not be unrealistic.
age? feelings? your plan? what do you think about…
seems transparent enough..The better they know you, the better a salesperson can tailor the pitch to appeal to you..
My zip (95678) didn’t get the survey. Damn.
“‘The paperwork wasn’t explained. It was just ’sign here, sign there,’ she said. ‘When I went home and went through it, I realized I had been tricked.’”
why should non business people not be able to buy a house? why does it take a princeton grad to buy or lease? i wish the old friendly days were back. it would be nice to trust what you sign.
Agreed that it would be nice to trust what you sign, but not without explanation. Now if I get an explanation before I sign and the explanation was a bold face lie, ok then it’s a problem. People need to ask questions, too. I am the queen of asking questions to ensure what I think should be the outcome is the outcome. Any tap dancing of any kind by the person answering my questions and I bail.
if i ever get out of my lease im consulting HBBers before i sign.
‘When I went home and went through it, I realized I had been tricked.’”
New York has three day “right of recission” which allows you to back out of the loan without cost. She is either lying about figuring out she was “duped” so quickly or twice damned due either to her ignorance, laziness and/or abject stupidity.
She couldn’t read the documents through that STATE the right of recission? She couldn’t call a friend, an attorney or a real estate professional (of virtually any kind, everyone knows this clause)?
My bet is she’s lying. She thought she could flip it and now she can’t. If she is just stupid she should be bared from ever making another financial decision, alone, in her lifetime.
She read “recission” and it wasn’t in the dictionary, and she didn’t know to look under “recision” or “rescission.” She will soon be “bared” because she won’t have any money to buy clothing or visit the laundromat.
I agree with you jag that she’s a lying wannabe flipper.
It’s too bad the MSM goes along with this - a huge number of the wannabe flippers are now crying predatory lending because their flips flopped, when they knew exactly what they were getting into.
Hopefully some of that will come out in the courtroom antics to come - you’ll have people crying predatory lending, I didn’t know what I was signing, and then their across the street neighbor coming in to testify that they were bragging about what a real estate genius they were…
Yip, these people want to blame everyone else. Reminds me of the poor flippers trying to find a tile that has a crack in the floor for an excuse to get out of a purchase contract. I’d like to see the builders’ sue and force people to complete their contracts to purchase on spec properties. If the market was still going up, they wouldn’t mind missing tile at all.
No one wants to be a bagholder, especially the person who is wanting to offload bags.
She says “recission” isn’t in the dictionary, but did she try “gullible?” Nope, not there, they took the word out and put her photo in its place (sorry, old joke).
It used to be common practice to hire an attorney who specialized in Real Estate to go over the paperwork and make sure you weren’t getting screwed in the contract. When did this go out of style? I’ve used one on every property I’ve purchased. The seller’s attorney and/or the bank’s attorney is not looking out for your best interests…
Massachusetts actually requires lawyers to be involved in closings.
No, her problem is that she waited until she got home to “go through it.” Sounds to me like she understood, after actually reading the document, full well what she signed. Her mistake was not reading it FIRST. Sorry, she’s a moron.
And if you don’t understand the loan document yourself, there are these wonderful things called RE Attorneys who can help. If you can’t afford the couple hundred for the attorney, you probably shouldn’t be buying the house.
I once bought a car for $400/month payment. When I got home I realized that the terms were for 90 months, not 60 months! This was a few months later once I finally read the paperwork that I had signed for the first time. Who can I sue?
JUST JOKING!!!!
“..wish the old friendly days were back. it would be nice to trust what you sign.”
hmm.. and these old days were days on this planet? Earth?
I admit I am an alumnus of the “Public Ivey” University of Texas at Austin, however, English is my third language. I am frustrated by people like you. I insist on reading everything I sign my name to.
As, for people who try to explain contracts to me, they are invariably wrong. If you are going to buy an extended warranty on a two hundred dollar phone you should read the warranty. If you want to take on a debt of two hundred thousand dollars you should read the contract.
Anyway, if you are really functionally illiterate spend $500 to have your own attorney review the paper work
Why not bring a tape recorder to the closing?
For those thinking of buying, don’t let anyone talk you into becoming a greater fool. This is not the middle or the end of this mess. It’s just a slow start. Yesterday, I got a sharp stick in the eye to remind me of that fact.
A close friend I’ve known for 30 + years called me yesterday. He told me he had bought a unit in a “Over 55″ complex in Santa Clarita, Ca. I know he sails close to the edge financially, so I took a deep breath and asked, “How did you get a loan?” He replied, “It’s one of those sub-prime loans. No interest for 5 years.” The reason I asked was because of the following:
He’s 76 years old. He has no assets because he went bankrupt when the condo he owned in Los Angeles got hit in the 1994 earthquake and he had no insurance and he never got back on his feet financially after that. He gets a small ($400.00 a month) US goverment pension. Here’s the kicker. He has just had a major operation for cancer and the doctor told him it’s a 50/50 survival deal.
I asked him when he got the mortgage and he said 6 months ago so he might have just got under the wire when a lot of these scam mortgage brokers were still operating. I know some still are. However, he said the interest only lasts for 5 years. Quick math. That makes him 81 years old if he lasts that long. Repo anyone?
Frankly, I think those that know just how bad it is out there, are hiding the REAL depth of this mess because if the dam bursts……..! As for buying, I’m even more convinced than ever that renting is by far the best option for a loooooong way into the future. And I’m talking a looooong way. How many more 76 year old cancer patients with no assets and no income are out there living in $470,000 properties and paying their mortgages with interest only loans. For the 76 year old, you can substitute dozens of alternatives from waiters making $20,000 a year to illegal immigrants making $18,000 a year as gardeners or fast food workers…..single moms working at places like WalMart and struggling to survive financially, etc. No wonder HUD is begging China’s central bank to buy more US mortgage backed securities. Frankly, I don’t think the Chinese will be that dumb. Pathetic…
I don’t understand how the 76-yo is paying the interest on $470K with his annual $4800 income. You say his original statement was “no interest for 5 years,” and that sounds like what he’s really planning to pay. Even a 1% teaser rate would use up 98% of his gross income according to your story. (???)
One assumes he gets social security payments as well.
He has a couple of odd jobs. One with a “sympathetic” relative who gives him work in his store. Another job takes up a few hours a week delivering which brings up another subject. Inflation. EVERYONE I speak to says inflation is way up but according to the Fed it’s just perking along. I read that the underground economy (cash jobs like the friend does and the illegal immigrant jobs) is hiding the true rate of inflation.
My guess is that his understanding of “no interest” and what the loan actually mandates are two very, very different things. And, that the five-year period is subject to change very quickly, once certain debt-to-value limits are broached.
I’d suggest you — or someone — look at his loan agreements, and see what they really say. Except, of course, it would probably break your heart, or his. Ugh.
Sounds like if he can keep the place (and stay alive) for 5 years he’ll have the last laugh on the lender. What are they going to do to a 81 yo cancer patient on SS?
IMO, He needs advice on asset shielding since he has already screwed himself by purchasing with a suicide loan.
“Asset shielding”???
I think this guy’s assets are his clothes, TV, and recliner.
Sounds to me like the old guy is just trying to survive for whatever time he has left, without regard to financial planning.
“..76 year old cancer patients with no assets and no income are out there living in $470,000 properties and paying their mortgages with interest only loans.”
if ya ask me, i’d say this guy is pretty slick and shouldn’t be underestimated..
Yeah, he really burned the bank a new one here…
maybe..there could be more to it. I know one guy who definately is broke and has serious health concerns. His being broke was a deliberate, well planned and legal act. In essence, his assets were transfered to a relative’s control.
Serious health problems tend to attract some serious bills..
Maybe he took a suicide loan on purpose. He figures he won’t live 3 years, let alone 5 years and why rent when his suicide loan is cheaper? He won’t be alive to see the mess. The banks will lose all that money and he will be broke and dead anyway.
Agreed. Might as well live nicely with what time he as left.
Point taken, though. No doubt there’s millions more RE time bombs out there just like him.
Does this statment make any sense?
…In Husing’s view, the Inland Empire market for existing homes would benefit from a 20 percent correction — home values here are nearly twice the national average at a time when there is little difference in incomes locally and nationally. …
From an article in the Daily Press regarding the housing market in the Inland Empire.
http://www.vvdailypress.com/news/market_1847___article.html/inland_husing.html
If it makes sense, then California is different!
My Mother lives in Victorville CA. The Friday Daily Press said that 65 homes had acutally closed escrow for the month of June. This is a city of 100k….they are toast.
Here’s a different kind of “Real Estate Crash”:
http://tinyurl.com/2fgp4s
i wonder if Hooker sold him a house he couldn’t afford? Apt name?
hmmm… looks like NJ plates.
Look at the newly planned development in MD
http://www.konterra.com
Construction is underway!!! I say 50-50 this will be a ghost town in 2010. I think the ICC (a $3 billion intercounty connector or another name for highway) may rescue it though. Man, this is crazy. 500K houses in Prince Georges County, MD.
bring 2 clips and duck
That’s right. I heard about a big gang style shoot out on 7/13.
Great place to live!
where you at novasold ?
I’m in 22151- things are steady after a 13% drop from peak
what shootout are we talking about here? I know PG is pretty bad but some areas are decent, right? Let’s ignore the facts that PG schools are crap, taxes are high, and foreclosure rate is 3 times higher than nearby counties. Why the HELL would anyone buy $500Khouse in PG?
I think this is the shooting. It doesn’t match the news report I saw exactly but this is probably it. The news report described it as a shootout that might be gang related.
http://www.potomacnews.com/servlet/Satellite?pagename=WPN%2FMGArticle%2FWPN_BasicArticle&c=MGArticle&cid=1173352013024&path=
Flat: I’m in Fairfax County in Falls Church. Sadly the gang stuff is everywhere. NoVa and S.MD are becoming much like NYC was when I first moved there out of college. There was just some neighborhoods you didn’t go into.
Sad to see that happen here.
nova
more like 20 clips and an armored personnel carrier
The ICC might help it, I noticed they show it on the map in the upper left on the home page. They have it as a thinner line than 95 and 495, but no where do they explain that it hasn’t been built yet.
That is a heavily congested area as several commuters make their way pass there to reach DC from Columbia and Baltimore. Also I believe most reports regarding the ICC, which will be a toll road IIRC, claim that it will not decrease congestion. And when College Park has a game, that entire area is a nightmare to drive through.
What I find odd is that they would plan a community at this point in time with all the facts in front of them telling them not to. Forget the national outlook, all they need to do is look up the road. The other end of the ICC is Rockville, and their new planned community Rockville Town Square had to convert 75% of the 600 condo units (3 out of the 4 buildings) into apartments because of lackluster sales.
you can by da big house inside the Beltway in PG for 300k
great commute- just drive fast
there was 2 articles in the ny daily news yesterday (sorry no link)
that made these foreclosure candidates out to be victims
and of course it was implied it was all latino/african american or other immigrant communities that were being “preyed upon”
just like i have read here for the longest time
if the value of their homes went up they would be saying
they are real estate guru’s but now they are victims
Foreclosure got their chips cashed in, keep movin’, like the do-dah man
Together, more or less in line, just keep movin’ on
Arrows of neon and flashing flippers plying their trade out on main street
Inland Empire, Sedona, Florida and it’s all on the same street
Your typical city involved in a typical housing bubble
Hanging out on Ben’s blog and see what tomorrow brings
Dallas, got a soft market, Houston, too humid for a human being
New Yorks got the ways & means, and they tell you it’s different there, prices can’t go down… oh no!
Story in Orlando Sentinel yesterday about how you can donate your house to charity for the tax breaks….
http://www.orlandosentinel.com/classified/realestate/orl-lewsell1507jul15,0,5143207.story
Yup, in the early 90’s I bought a piece of junk desert at an auction. Falling knife department, but luckily the price was at that time no more than 1/2 of 1 percent of my net worth. After a few years of figuring out it was worthless, I gave it to the Calif Assoc for the Blind, as they always advertise for cars and boats. I took a deduction equal to my purchase price, since the annual prop tax bill was based on that assessment.
4 comments up already - 3 negative on the article (1 mine) and one just a random “Orlando is toast” comment. Read it soon. That article will be gone soon if the paper is keeping track.
This just in!!!
a picture of the road to real estate riches
http://www.charter.net/news/read.php?id=13853566&ps=1018&cat=&cps=0&show=big&lang=en
Kansas city has a free paper called the pitch. Had a story about how Kansas city was involved in “killing the american dream” since novastar is located here.
http://tinyurl.com/3br4ol
Anyway, had a sob story about a fb who upgraded to a bigger house in 2003, initial payment of 1161. Owners stated that It kept resetting to where it wasn’t affordable every 6 months. Story mentioned that there was no paperwork to prove the morgage company did anything wrong since the paperword by the owners was thrown in the trash. It was foreclosed on at the peak in April, 2005 when the arm was set to reset. So you have hearsay of a fb taken at face value, no docs to prove why the payments went up between 2003 nd 2005 before it was to reset (pretty sure it was taxes, or shortfalls in the escrow.)Initial payment 1161. Payment at time of foreclosure 1400. (just an increase of 240 over 2 years) Of yeah, it stated that they had $ money issues due to a broken high chair due to the movers breaking it and other items, so they refinanced and took out 18,000. WTF?
Interesting quote:
When a mortgage goes bad, it’s not just the borrower who suffers. Foreclosures drag down the property values of surrounding homes. Nearby schools suffer collateral damage, too. “Anytime there’s a home foreclosure, that means there’s no tax money coming in. And anytime there’s no tax money coming, the district in essence loses money,” says John Baccala, a spokesman for the Hickman Mills School District.
Since when do banks as property owners not pay taxes?
test
A sob story article about a FB who bought in 03, foreclosed on in 05 (payment was 1161, at the end before the reset was 1400). They make this article around novastar helping kill the american dream. FB’rs don’t have loan paperwork, article on thier part of the story is just hearsay, So much in the article, have a read.
http://tinyurl.com/3br4ol
http://tinyurl.com/3br4ol
The funny thing about this article is that the person took home the paperwork after she signed it and was able to figure out that it was a bad deal. Lets not pretend that the paperwork was so complicated that she could not have possibly figured out what it said. The problem is that she read the paperwork AFTER signing instead of BEFORE signing.
A fine and excellent insight. Yes, no screwed over buyer here - just a lazy reader signing her life away depending on the goodwill of others.
This is all so odd to me, was it that long ago, was 1998 just so far back that we are in a new time and space? I remember it being a time when I could afford a house, and most other Americans could as well. Sure we had a bubble then the Internet, however we had affordable housing…so weird how after 2000 the country ramped up to light speed stupidity, turbo greed with Gov? What was the catalyst for all of this, the hands off approach on banking? what ever, I will not mis this stupidity and I will not shed a tear when we lose the worst President in American history either.
Amen Sister.
“Patricio” is Patrick in Spanish.
I don’t know why our reporter from the Pawtucket Times thinks we should expect “rising rents” in this market, especially with so much new construction, and a huge number of new projects still in progress because they wouldn’t pull the plug once they’d gotten started.
We have thousands of vacant homes and people desperate to hold on to them - rents are falling, not rising, at least here in LA, and I don’t think the FBs are really going to be pushing up rents, they’re just going to be renting the same places they “owned” before, only down the street and at 1/2 the monthly cost… you see lots of wishing prices for rentals on CL, but many of them are listed for long periods of time, and when they go, I’m betting they get rented for far less than what is being advertised…
You need to understand what Pawtucket really is… It is one of the ugliest post industrial towns in the northeast. It is the proud home to most of the Illegal immigrant population in the providence/boston area, and it is chock full of triple, and 4 deckers stacked one next to another. When you go through the place, down I95 you see them right next to the interstate, and you ask yourself who on earth would ***WANT*** to live there? I certainly do not. There are parts of it that have older homes that are very well kept, but they are closer to the Providence line. I still would not want my kids growing up there, as they would need to be in a gang in order to survive….
Pennypincher,
I agree with your analysis of Pawtucket. I’ve been considering buying there but they still want between 150-200 times the Gross Monthly Rents. In those neighborhoods, they are crazy.
My only knowledge of Pawtucket comes from references to the …
Ok, maybe this will work…
Pawtucket Patriot
Rising rents is a red herring issue. Oft proclaimed because as people get foreclosed they have to live somewhere. And that somewhere is often an apartment, so then more people completing for the same supply of apartments. The disjoin is that people forget (when no one is buying) that the foreclosed homes go back on the market, often as rentals, resulting is a homeostatic rental supply/demand cycle.
(My apt mgr told me the same thing - rents only go UP, but I just heard they have decided not to increase this year, which is really a decrease)
From the Rhode Island story:
“In dollar terms, approximately 21 percent of real estate investment in Providence was investment made for short-term gains alone. That is, 21 percent of the money spent on city real estate in 2003 was spent on property that was sold by 2006, and usually long before. This is a huge proportion, and still misses all the investors who waited just a few months more.
Projecting out to the state level, this is almost a billion dollars a year in our $4.6 billion market. Real estate agents will tell you that the prices went up because there was so much demand, and in a way that’s true, but the extra demand was from the one buyer in five who was only shopping for a short-term investment, not for a home.”
And these are conservative numbers. In many areas, the speculators made up more than 50% of all transactions. Anyone trying to downplay the size of this bubble is a liar or a fool. This was the mother of all bubbles, and will have excruciating effects on the entire economy nationwide. The miniscule price declines are nothing compared to what’s in store. It’s only logical.
To buy houses in this market now is like borrowing money from your stock margin account and buying stocks in a bear market.
‘The worry has been that the bubble would burst,’ Kamer said. ‘Thankfully that didn’t happen…
Jumping the gun a little, aren’t we?
“‘The worry has been that the bubble would burst,’ Kamer said. ‘Thankfully that didn’t happen…”
Heh heh…says the reported directly under the Hindenberg who can’t see the flames yet…