A Bad Time To Buy In California
The Sacramento Bee reports from California. “Sacramento real estate broker Carey Covey has so much business these days he can hardly handle any more. Covey sells homes repossessed by the banks. And all signs point to a lot more of them coming onto the market. ‘It’s steadily been increasing for a year,’ said Covey, a 20-year veteran of selling homes taken back by banks. ‘I think it’s worse than the ’90s.’”
“Christine McCullough will lose her Natomas house to the bank in September. Last year the Sacramento County employee lost $1,800 in extra monthly consulting income that had made the 2005 purchase possible. She says her lender wouldn’t work out alternatives while she was still current on payments.”
“‘It was a bad time to buy,’ she said. ‘I shouldn’t have purchased. It was just a bad time.’”
From USA Today. “Lupe Arroyo and her husband just took their Sacramento home off the market. Having tried to sell it since April, they cut their $369,000 asking price three times, to $329,500.”
“‘This last reduction was well below market value,’ Arroyo says. ‘It was a giveaway (price), and we still had a low-ball offer.’”
The Recordnet. “San Joaquin County mortgage holders were among the most likely in California to fall behind on their payments, (Dataquick) reported. ‘They were making loans that were about as liberal as we’ve ever seen,’ Stockton real estate broker Art Godi said. ‘In my 46 years in real estate, they were the most liberal terms I’ve ever seen.”
“‘And now what’s happening, that’s exacerbating the situation, is the pendulum swings the other way,’ Godi said.”
The Press Democrat. “More and more Sonoma County homeowners are falling behind on their mortgage payments. Lenders sent default notices to 462 homeowners in Sonoma County during the second quarter, up 129 percent from the same period a year ago, DataQuick reported.”
“Meanwhile, the number of people who ultimately lose their homes is soaring. Broker Sandra Geary said she recently listed a home for $435,000 that a couple paid $535,000 for two years ago. The sellers can no longer afford the home after the payment on their adjustable-rate mortgage increased $600 a month.”
“‘It makes you want to cry, because what do you think that does to the house down the street?’ Geary said.”
The Mercury News. “More Santa Clara County borrowers defaulted on their loans in the second quarter than any time in the past 14 years, a real estate information firm reported.”
“‘People are getting notices that their payments are going up anywhere from $800 to $2,000 more,’ said Michelle Gutierrez, local president of the National Association of Hispanic Real Estate Professionals. ‘They got into this home that they thought was going to appreciate, of course that’s what we all want, but it’s just not happening. They have no equity and they have to go back to renting homes.’”
“Peter Van Dam, (an) associate broker who specializes in listing properties that have been repossessed by lenders, said three of the 18 such listings he has were sold at auction in the past week. Two were three-bedroom houses in San Jose’s East Side, priced at around $600,000 a few months ago. At a crowded public auction held Saturday in Concord, he said, one house sold for $420,000, the other for $445,000.”
“‘How is a couple of $450,000 comps (comparable sales) going to change the market? The more of those auction prices hit the market, the more downward pressure we’ll see on prices,’ he said.”
The San Mateo County Times. “Default notices jumped considerably throughout the Bay Area this quarter, mirroring a statewide trend that saw default notices reach their highest level in more than a decade.”
“‘When the lenders started allowing stated-income loans (when a borrower does not have to prove his or her income) and 100 percent financing,’ the trouble started, said Chuck Edell, president of the Bay East Association of Realtors and 30-year East Bay Realtor.”
The Bakersfield Californian. “The 1,593 default notices mailed to Kern homeowners between April and June marked the third-straight quarter of record setting foreclosure activity for the county. Local default notices increased by 190.2 percent this spring over a year before, reported DataQuick.”
“Stretched is how Rosedale homeowners Darrin and Diane Couch have been feeling since February. That’s when their monthly loan payments jumped from $1,300 a month to $2,700. The couple bought their home with a $137,000 loan in 2001.”
“Four years later, as home values were shooting up, they refinanced with a $206,000 adjustable rate mortgage to fund home improvements. ‘The rates were good and we just did it,’ Diane Couch said. ‘It was the biggest mistake.’”
“Bakersfield’s median home price was $274,500 in June. That represents a 10.9 percent drop from June 2006, according to the California Association of Realtors.”
“The local price decline may be steep because new home sale prices were lumped together with existing home prices in the report, Bakersfield appraiser Jim Henderson said. ‘What’s going on with the new houses right now is that the builders have built so much that they’ve slashed their prices,’ Henderson said.”
“A quick search on Bakersfield’s MLS showed 73 new listings and just 13 houses sold in the past 24 hours, Henderson said.”
The Daily News. “Foreclosures soared an annual 799 percent in Los Angeles County and California in the second quarter. In the county, 2,581 properties went into foreclosure, up from 287 a year ago, DataQuick reported.”
“Parts of the booming Inland Empire area were hit even harder, with foreclosures jumping 986.9 percent.”
“‘The housing industry is in a recession, pure and simple, and it’s going to last until 2009,’ said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. ‘It’s going to get worse. I think it’s going to get very scary.’”
“The (statewide) second-quarter foreclosure total of 17,408 is the highest since DataQuick began tracking the statistic in 1988 and eclipsed the prior record of 15,418 owners who lost houses and condominiums in the third quarter of 1996.”
“DataQuick analyst John Karevoll said the record number is essentially because of complicated foreclosure issues regarding multiple loans. In the 1990s when a property went into default, owners had several options, including refinancing, short sales or working directly with the lender.”
“‘Because there are multiple loans, it has got to go all the way through the foreclosure process because at the very end it removes the second and third loans as well as the other liens on the property,’ Karevoll explained.”
The Ventura County Star. “In Ventura County, there were 316 trustees’ deeds recorded, or the loss of a home to foreclosure, DataQuick reported. The number of foreclosures was up 754.1 percent from 37 over the same April to June period a year ago.”
“‘We’re going from a market that was red-hot, fueled by easy lending, that is now basically stone-cold,’ said economist said Jack Kyser.”
“A stalemate, with no winners and losers, is how Bill Wilson describes the housing market. But there’s still some pain out there.”
“‘The market’s slapped me on the hand, and now I’ll be a little less greedy,’ said Wilson, a semi-retired Camarillo resident (who) now works part time as an agent at Century 21.”
“Wilson flips houses as a hobby. He has two that he’s been trying to sell since January. He refuses to budge on the price of a Simi Valley town house that’s listed at $459,000. Wilson has been able to break even by renting it.”
“The other property is a Thousand Oaks house he purchased at a foreclosure auction in October. He listed it for $865,000 in January, but cut the price to $789,000 in May, killing his hope of turning a $150,000 profit. Instead, he’ll probably make $30,000, a typical return when he flips houses. He’s anxious to sell before he loses money on the house.”
“Wilson is far from losing faith. ‘I wish I had more money,’ he said. ‘I would love to swoop up all the deals right now.’”
“While homeowners watch prices in their neighborhoods decline, the median price has stayed fairly static because higher-end housing is strong and supports the market’s overall value, even as demand and prices for low-end homes slip.”
“Dave Lake, an IT analyst from Westlake Village, sold his Camarillo home in 2004, and then sold an investment property in Los Angeles. He plans to rent until the market corrects to a sustainable level.”
“‘I call it a renter’s market,’ Lake said. ‘The money you’re throwing away by renting is substantially less than what you would be throwing away with the current depreciation.’”
“Lake says he spends about $35,000 a year to rent an $800,000 house in Westlake Village. If he owned it, Lake said, he would have a hefty monthly mortgage, plus annual expenses that would run about $15,000 for taxes and maintenance. There’s also a chance the house could depreciate.”
“‘Prices have stickiness on the way down, and nothing sells,’ Lake said. ‘There’s a standoff that lasts for a year, until people have to move.’”
“He expects the next three or four years to bring more bad news for the Conejo Valley, with possible layoffs at Countrywide Financial Corp. and Amgen Inc.”
“‘We’re seeing this huge foreclosure tsunami that’s going to continue for three to four years,’ Lake said. ‘Foreclosures probably won’t peak until 2009 or later. The crash will continue for a few more years. Demand is going to be suppressed for the next five to 10 years.’”
“Eliseo Cisneros of Oxnard, a mortgage planner with America’s Lending Partners, says tightening mortgage underwriting standards are making it more difficult to qualify first-time home buyers.”
“‘In some ways, it’s good, so we won’t be experiencing the foreclosures like we are now,’ Cisneros said. ‘But then it’s a bad thing for business.’”
“Out of the 25 leads Cisneros generated in June, only two qualified for financing. Cisneros sees many people who need to sell growing more desperate and lowering their prices.”
“For example, he’s helping an 81-year-old woman who is selling her three-bedroom, one-bathroom home in Oxnard. She listed her home for $490,000 about four months ago, then recently reduced it to $425,000. She knows it’s a bad time to sell but needs to for health reasons, Cisneros said.”
“‘She’s anxious and frustrated, and is very aware that the market is slow,’ he said.”
“‘This last reduction was well below market value,’ Arroyo says. ‘It was a giveaway (price), and we still had a low-ball offer.’”
Sounds like it was very much in the strike zone to me…
That low-ball offer WAS the market price.
Was.
I’m sure market price is even lower now.
While we’re into baseball analogies, I’d say this decline is now in the third inning. MSM is covering it, realtors are no longer predicting a near-term turnaround, and you hear phrases like, “it’s going to get really ugly.”
Still a long way to go.
The first base coach is busy arguing with the ump, still.
“Median is UP!”
“Housing is OUT!”
“But median is UP!”
“Housing is still OUT!”
I can’t wait for him to get ejected (people stop listening to the NAR at all.)
Hey don’t ya know it’s all good here on the San Mateo Coast…everything is up!….according to this incredibly delusional RE agent Steve “Buster” Hymen (OK that’s our pet name for this clown) he says …’Is Coastside real estate market is bouncing back?” It’s the very last paragraph that really set me off on a rant. Betcha you all didn’t know we’ve missed the bottom of the market…here’s the link to the Half Moon Bay Review….
http://hmbreview.com/articles/2007/07/26/real_estate/storyo.txt
Interesting, I was sitting at the San Mateo library this afternoon and overheard a realtor on her cell phone. The basic gist of the conversation went like this…
Well, the guy has a net worth of $5 million, but what does that mean?
Yeah, well we’re somehow going to have to clean up his 1003 to hide all the loans and properties that he owes on…
The market where he lives is 1.5 to 1.5, and they need a 700K construction loan for the lot which is not very much…
No, at the very least he won’t want to put his wife and kids out on the street…
Oh yeah, this was right after I had lunch down in Half Moon Bay - Flying fish Grill - cheap, but the best Fish & Chips in the Bay Area.
Got this off Yahoo..now its a crisis !!!
In Depth: The Housing Crisis
Mortgage Woes May Worsen
Its just gets better and better every passing day.
Bill, you may be right. Then again, it could go into extra innings.
And we may have some slow-working pitchers. This thing won’t be over until babies grow beards.
I’d argue its the end of the 2nd… the home team is at bat and whiffing it. The start of the 3rd had 11 visitors with steroid pumped biceps ready to bat around.
The sheeple will still be surprised.
A coworker just rejected a “lowball” offer on his home. I wanted to shake him and point out the next offer won’t be a lowball… nor as generous. Sigh… Smart guy too… just not willing to “give it away.”
Got popcorn?
Neil
Let’s say it’s the bottom of the 2nd…
What’s the score?
Bottom of the first 0 : 0 w/ 2 outs runner on 2nd; Mr. Henry Paulson up to bat.
Bulls vs. Bears
Bulls 1 0 0 . . . . . . 10*
Bears 1 2 3* . . . . . . 6
*Bulls entered game with 9-run lead. Bears still batting in bottom of the 3rd. One out. Bases loaded.
I’ll agree that the bulls are ahead.
10 to 3.
Its going to be interesting when the bears bat around!
LOL….
I’ll be playing ’til the ninth inning.
But the ‘Bulls’ are not ahead, to quote Alan Greenspan “Who are they going to sell them to”. The markets have evaporated, vanished, gone into ‘limbo’; their is no moneys left - no hitter that poses a threat. This is a BK trading up to bat. Stocks, bonds, houses, art, classic cars are all on injured reserve.
He probably paid too much for it to accept “lowball” offers. Bet he walks away and gets foreclosed.
If they sold before the peak then they got lucky to find a greater fool. Those who haven’t sold will see their house values drop by over 50%
I’m just glad the pair of fools got quoted in USA Today. They can have that quote thrust back in their face in a few years.
“For example, he’s helping an 81-year-old woman who is selling her three-bedroom, one-bathroom home in Oxnard. She listed her home for $490,000 about four months ago, then recently reduced it to $425,000. She knows it’s a bad time to sell but needs to for health reasons, Cisneros said.”
“‘She’s anxious and frustrated, and is very aware that the market is slow,’ he said.”
Sorry old lady, you’re going down. LET THE BODIES HIT THE FLOOR, WHOOOOOOOSSSSSSHHHHHHH
Greed comes in all shapes and ages. I bet she never even heard of the bubble until some family member (wanting their inheritance money) tipped her off. Now she is anxious and frustrated.
She should just sell her house for what she thought it was worth before the tip off and be done with it.
some of the “older widows” deserve 75k…
thats what I made on the tech bubble.
This last reduction was well below market value,’ Arroyo says. ‘It was a giveaway (price), and we still had a low-ball offer.’”
you aint seen nothin yet.
Realetors do not define ‘market value’ … the buyer does.
Well said.
“‘When the lenders started allowing stated-income loans (when a borrower does not have to prove his or her income) and 100 percent financing,’ the trouble started, said Chuck Edell, president of the Bay East Association of Realtors and 30-year East Bay Realtor.”
*********
Hey Chuck - where were you in 2004 on this?
I would bet you were selling houses to beat the band.
Thanks for the obvious.
“Two were three-bedroom houses in San Jose’s East Side, priced at around $600,000 a few months ago. At a crowded public auction held Saturday in Concord, he said, one house sold for $420,000, the other for $445,000.”
$445,000 is still a ridiculous price for a 3 bedroom house. How many people can really afford that? It’s going to take a whole lot of inflation to make these houses fairly priced - otherwise the prices still have a way to go.
Can the realtors hide those auction sales so they don’t show up as comps? Can an appraiser ignore them if they’re not in the comps? Do laws or regulations cover this, or is it up to the realtors themselves?
Hopefully a realtor, or better yet a broker, can provide some answers, at least for their county or state.
It all depends. If these sales made up enough of the activity in a neighborhood, then they would be relevant. An example would be if there were five recent sales and two of them were these auction sales (at below market), then the appraiser would either need to include them and make an adjustment (if warranted) back up to the prices of the other normal arm’s length sales (OR) the appraiser would give them the most weight if they were considered to be reflective of the trend of the market or more representative of where the market is heading (downward). As more auctions and short sales and REO sales take place, it will be harder for appraisers to render a quality opinion of value and they will have to do more research (and probably include recent listings and reduced price listings). If they are realistic, then the banks won’t want to use them.
Tyically a realtor will print out a few high priced most recent sales that will favor the seller. You have to do your own research. Dont bother even asking your (buyers) agent to do this. Its cuts their commission and sales quota.
Its up to you to low the hell out of the deal. Ignore any counter offer or “other bids”.
Well, it’s to the point now where the appraisers chosen by the broker are becoming less relevant. Lenders are doing a lot of their own appraisals and cutting values, effectively killing deals now that LTV isn’t such a joke anymore. They’re even using asking prices for comps, which are undercutting 6 mo old sales in some markets.
The whole “hitting the value” business plan is drying up as fast as the lenders who are having to buy back their deadbeat loans.
$445k in East San Jose, no less. Not the most desirable of areas, to say the least.
Knife-catchers–gotta luv em.
if you cant pony up at least 20% and be set for a minimum of TEN years, while paying OFF the mortgage in 7.5, dont bother.
“Two were three-bedroom houses in San Jose’s East Side, priced at around $600,000 a few months ago. At a crowded public auction held Saturday in Concord, he said, one house sold for $420,000, the other for $445,000.”
In the East San Jose Side! It should be at $200,000 with some barb wires as a fence! LOL!
Climber, it’s not just monetary inflation that will do the trick, you need the salaries to keep up with the monetary inflation which also can then afford the 445K price tag. And then there’s one more caveat…what will the real estate market look like with the 10 year hovering around 12%?
There are a lot of floors below in this free fall down the elevator shaft IMO.
“Stretched is how Rosedale homeowners Darrin and Diane Couch have been feeling since February. That’s when their monthly loan payments jumped from $1,300 a month to $2,700. The couple bought their home with a $137,000 loan in 2001.”
What kind of loan do these people have?I cannot believe a payment jump like that.Must have refied several times I guess.
I would guess a recasted option-arm loan, that’s what it sounds like.
Agreed … many were selling for under 200K in 1998…
so a deline of 10 percent isnt giving any justice.
Many places should be under 300K based on long term trends.
We wont see inflation in our life time.. .the spiral away inflation of the 70s will never come back.
“Wilson is far from losing faith. ‘I wish I had more money,’ he said. ‘I would love to swoop up all the deals right now.’”
Here is the perfect example of what one would call an idiot.
“Wilson flips houses as a hobby. He has two that he’s been trying to sell since January. He refuses to budge on the price of a Simi Valley town house that’s listed at $459,000. Wilson has been able to break even by renting it.”
Yeah, right. How much are you collecting in rent, and how much are you paying out in mortgage, taxes, etc?
I think that his “semi-retired” status will change soon - welcome back to the work force!
“Wilson has been able to break even by renting it.”
to cover 459K mortgage+HOA+InS, he had to get 3500 as rent.
Simivalley TH would not rent for that much.
Most likely he has an adjustable rate mortgage, much like my Land lord in TOaks (near by) who has 465K TH rented to me , 100K down, adjustbale for the remaining.
I pay her 1850. 4 BR 2 Bath, all wood floor.
My neighbour bought the unit - very similar- no wood floor for 432K last month.
There is another listed for 399K- bank foreclosure/shor sale
That’s his sales price, not his mortgage amount.
You could be like this guy and pay 35000 a year to live in the Conejo valley
“Lake says he spends about $35,000 a year to rent an $800,000 house in Westlake Village. If he owned it, Lake said, he would have a hefty monthly mortgage, plus annual expenses that would run about $15,000 for taxes and maintenance. There’s also a chance the house could depreciate.”
I used to work in Westlake Village , they were not paying me enough to live with all the millionares in that area.
‘You could be like this guy and pay 35000 a year to live in the Conejo valley’
I was actually living in a small condo in WLV for $1500/month for the past year and a half, but just moved to a big house and now spend that amount. It is excessive but I have a need for to be in that place for a year or so. Now that I know what it’s like living in both neighborhoods, I’ll be ready to move in once the motherlode of REOs comes in about two years from now.
Some homeowners do not have a good grasp of real vs. nominal numbers or opportunity costs in general. Paying $650K in cash on a $325K house to get $2000 a month in rent is not my idea of a fun time.
I’ve given up talking to the sheeple about opportunity costs. Either by age 35 someone understands it… or they never will…
I even broke down the difference in in terms they would understand! (A new leased mercedes Eclass every 3 years for life!) Nope…
A bunch of fleecing is about to commence.
Got popcorn?
Neil
nobody, and I mean it, sheers MY sheep.
Always a need for greeters at Wal-Mart. “Good morning, welcome to Wal-Mart. There are t-shirts for 99 cents in the back that say ‘Alt-A-hole’ and ’subprime moron’.
LET THE BODIES HIT THE FLOOR, WHOOOOOOSSSSSHHHHHH
When things get worse over the next two years, these early buyers will get hit with big losses. Wilson is thinking the market has bottomed. He needs to get history books on RE cycles and asset market cycles and spend serious time learning. It is boom/bust dude!
IMHO
History books and RE cycles will not help. This is a bubble! Never before in the entire history of the world has real estate and housing been treated as an asset unless the real estate generated income.
From 1987 to today personal debt is up 400%, but GDP is up 200%. These are facts. Government debt has gone from 7.5 B to 54 B . This is in only 20 yrs.
I see nothing in the future that will change these figures, I hope I am wrong.
MrincomeStream:
I love it. I’m glad you’ve stuck around despite the intermittent unwarranted bashing.
if I’m ever unfortunate enough to have to move to your part of the country, I’m gonna find you and you can help me with any home purchase, unless I rent!
HIC
LOL thanks HIC let’s hope you remain fortunate.
unwarrented bashing?
what happened, who dares?
I wonder if his friends call him Flip Wilson?
good one!
They should call him “Dork”.
Son, there ain’t no draft no more.
Hey, somebody dig up the address of the this clown’s T.O. flip house. I’d like to drive by and see what a cash furnace looks like.
Just drive down any residential street in So-Cal.
“Son, there ain’t no draft no more.”
There was one?
(great flick)
‘They should call him “Dork”.’
That would be an insult to whales.
its a “Dorkus”
I believe this Wilson has more sense than to catch a falling knife!!
http://en.wikipedia.org/wiki/Wilson_the_Volleyball
“Lupe Arroyo and her husband just took their Sacramento home off the market. Having tried to sell it since April, they cut their $369,000 asking price three times, to $329,500.”
“‘This last reduction was well below market value,’ Arroyo says. ‘It was a giveaway (price), and we still had a low-ball offer.’”
*******
Keep it up all you lowballers!
We need some real knifecatchers to make the stubborn sellers realistic.
People are going to start to wish they had accepted some of those offers. When the banks and wall street start dumping R.E.O.’s to recoup capital they are going to kill any chance of you getting out of your property for the next 10+ years if you’ve bought during the bubble.
Lower the price to market value, and you can get out in one week’s time.
Yea, but must private sellers haven’t grasped that concept GS and left to their own devices they won’t. The only thing they understand is that if they paid that for it you should too or pay more in some instances because they graced it with their presence. No one likes too look like a fool. that’s why I say the lenders will set the market. They don’t care they’ll make the losses up over time with fee’s and interest rates.
There are 3 forces to be reckoned with in selling your home…
1. Yourself
2. New Houses
3. Pre 2001 housebuyer looking to get out now
I would say the builders are doing a great job at recalibrating the market for the dumba$$es out there.
Don’t discount the vast amount of people that are sitting on rather huge profits, that kind of forgot to sell during the run-up…
My mom & dad paid $49k for our family house 39 years ago and is worth around 15x that~
No way a homebuilder can compete with an old school homeowner.
That house isn’t worth 15 times anything until they actually get somebody to fork over the dough.
Income, good points.
Fortunately, I did remember to sell my last residence in a Los Angeles suburb about three years ago for just under $600K. I purchased the house in June 1999 for $292K. I had three 15-year fixed rate loans (with progressively lower interest rates) during three years I owned the house. The rest of the time I had 30-year fixed rate loans (also with progressively lower interest rates). It did take courage and much financial discipline to take out my first 15-year fixed rate loan. With the loans (except for the last loan just before I sold the house), I regularly paid additional principal with each regular loan payment. (I ate a lot of chicken, hot dogs from Costco, pasta, and fresh fruits and vegetables when I owned the house and I only had the house and myself to support. Thank goodness I still am single, never got married, and do not have any children.) Fortunately, all of the refinancing fees were very, very low. $250K of my long-term capital gain was tax-exempt. That was nice! When I sold the house, I also obtained the approximate $50K in equity build-up from paying down the loans. I now am renting an apartment. With much credit to the sale of the house in addition to my financial investments, I now am retired from the working “rat race.”
Sure can…by short sale with a hefty tax bill to boot!
oi, pay the ill-gotten gains to uncle sam….and start eating beans and rice.
Walk in to a local open house. Ask the price if they say for example 350K you say 250K … say its not worth more than that. Kind of like multiple low ball offers.
You are correct, if you are not out of it… you are wearing it.
When-oh-when will we see a journalist who actually understands the definition of “market value” (much less one who is willing to confront a clueless FB about it’s mis-use)?
The journalist was correct THIS TIME. The journalist was providing a quote to back up the previous quote by Realtors saying their clients had taken homes off the market due to frustration. In fact, the whole article is bearish, saying inventories are dropping due to frustration, not sales.
True, but many people reading that article will be left with the impression that houses are selling for less than their market value. Obviously that’s not the case.
dispatch immediately,
take it ALL off the market….now what?
DOM is no longer relevant…
cant hide whats not important anymore.
“Parts of the booming Inland Empire area were hit even harder, with foreclosures jumping 986.9 percent.”
Anybody mind if I round it up to 1,000 percent?
Sorry, No inflation allowed.
“Anybody mind if I round it up to 1,000 percent?”
Of course I would; that would be a dirstortion of the facts.
However, your local Realtor® can report a “slight expected increase.”
The Inland Empire at some point will lead the nation in forclosures. It is absolutely ‘Mexico Central’ out there and their are no more construction jobs to support the drywallers, painters, landscapers, pool cleaners, framers, plumbers helpers, stucco, roofers and clean up workers. Did I miss any trades?
meth lab workers, generally supported by burglars
Don’t forget all those folks in Joes Furniture Shack and Larry’s Bar Stools & Billards. How long can the owners keep staring at their lonely employees. No more HomeATM, means no more chances to fill them up with junk.
Browse the Inland Empire Craiglist for brand new home furnishings for fun and leisure.
Yeah, I’m seeing lots of good prices on toys on CL & eBay these days…
electric, HVAC, and finish carpentry. Oh, and construction lawyers. They’re pretty much standard on any development project these days.
13.1 is still a significant number…
I flunked stats the first go round
“…with possible layoffs at Countrywide Financial Corp…”
Mozillo’s recent actions and statements causes concerns. If layoffs are all that happen I would consider it a good thing. But I don’t think that is the case. It sounds like they are threading water and if that is the case the situation is even worse than I thought and that causes me concern. Because if it’s uglier than I thought… man oh man.
Your comment makes me recognize that this is a step in the process of this housing downturn.
At first, people (non-HBB’ers?) stopped buying houses because they were simply unaffordable; or they finally decided they were not going to do something stupid (the craziest of lenders also perhaps “ran out of buyers”).
Next, perhaps very soon or presently, more non-buyers have headed for the sidelines because they can’t get any form of financing at what they consider reasonable terms.
After that, we are going to see buyers staying out of the market because they are genuinely concerned about their personal (and perhaps macro) financial future.
Personally, I think we have a ways to go to see the latter scenario because the public’s perception is slow to change.
But I suppose eventually we’ll find out.
You have it right, Jack.
What surprises me about this market is the sales volume is only back at 2002-2003 levels, which means a fair number of people are still buying.
It will get MUCH more interesting when the psychology shift is complete and the public perception is down-right bearish.
If things can be this ugly with historically-reasonable volume, imagine the blood-letting (both volume and pricing) that will occur when J6P catches on!
ARMLS, AZ MLS posted data show that fewer houses sold in 2nd quarter 2007 than sold for the preceding 6 years same quarter. Go Arizona! http://www.armls.com/pdfs/SoldChartJune07.pdf
Mrincomestream , man oh man is right . Isn’t this mess just getting real ugly ? Mozillo’s statements were really telling . Since I know you ,I hope everything will be OK with you .
Wiz-
No worries for me, as I’ve said before I’m semi-retired I could close shop tommorrow and never look back and with a little recalibration be ok for the duration. The wife may commit Hari-Kari because of all the face time but that’s another issue and really out of my control
Hari-Kari, the old Cubs announcer? I thought he died.
Geez, “Hara-kiri” is that better? Do you get the point now?
I’m sure he got the point, but isn’t always fun to make a Harey Carey/ Hari kiri joke?
After blowing a 2-0 lead to the Padres in the 1984 playoffs, Cubs fans were committing Harey Carey.
Dave Lake, an IT analyst from Westlake Village: “The crash will continue for a few more years. Demand is going to be suppressed for the next five to 10 years.”
This guy is smarter than all those overpaid idiot economists…combined.
I wouldnt be surprised if he frequents this blog!!
Dave, are you out there?????
I second Bubble Butt, Dave Lake is a poster. What’s your handle?
We have a quorum.
But I’ll understand him not wanting his HBB name tied in with his “meat world” name.
Another thing I’ve noticed… we’re just taking these bearish comments in stride. The pro-REIC comments still sink in with some… but on this blog have become something to mock.
What I wonder is when the big corporate moves commence out of bubble states. What I worry about is when layoffs will get crazy.
TJ will note I’m progressively getting more bearish… I am. But I still believe this is just going to be the worst recession of our lives. (”Just!”) Not a depression.
Then again, I’m trying to figure out how to get the rest of my savings out of the country! I’m thinking low cost alcohol producers.
(The worse the economy, the more people need to get drunk.)
Got popcorn?
Neil
Yes, you’re coming along quite nicely!
I am!
I am. Out there.
I do I.T. at my company (financial) and I am the only one that has been able to speak sensibly on this subject for the past 2 years. I first horrified people at the office when I proclaimed, “I wouldn’t buy in this market until at least 2008.” That was in the summer of 2005. Mouths gaped and I became a source of much laughing and ridicule. Nobody’s laughing any more. I was way ahead of the game and that was before finding the HBB.
I think the I.T. guy was more likely to see this than the financial people because the financial people stubbornly follow traditional news sources. They would laugh at a blog such as this one. Here on the HBB I have gotten what I would consider an education worthy of a master’s degree in economics. They have been spoon-fed by a harem of shills.
A poster earlier today posted that they have been reading here for 2 years and just today made their first contribution to Ben. Come on, people. Get out your wallets and pony something up like the rest of us. Or you can go read the crap my co-workers do and walk around with your head shoved up your Lereah.
“That was in the summer of 2005. Mouths gaped and I became a source of much laughing and ridicule.”
Su 2005 was, coincidently, when I learned that one does not question the wisdom of San Diego real estate pundits (a house-proud group which consists of pretty much anyone who is sufficiently privileged to own a home here). At the time, I mortified a few folks by suggesting that the real estate investing craze seemed to have reached a peak. I had one especially memorable conversation with a Phx developer who was visiting his ex-wife (in our neighborhood), who was completely dismissive of my suggestion that Phx might be a tad overbuilt. Since aggravating myself over many disconnected conversations where my explanations went in one ear and out the other, I have pretty much limited my real estate discussions to this blog and to my lovely wife’s ear. She is quite impressed that much of what I had to say back in 2005 has recently shown up in MSM financial press articles as of late. I must either be lucky or smart
“There’s no better person to help promote a significant part of the American Dream, that being home ownership, than somebody who came to our country from a country that doesn’t encourage home ownership.
“We’re working together to make sure home ownership becomes a reality for any citizen in America who shares that dream, regardless of where they live or their background.”
-George W Bush, December, 2001
http://www.whitehouse.gov/news/releases/2001/12/20011204-17.html
Another quote that will live in infamy.
If only Realtors were allowed to practice their love with women all across this country.
LOL - hey, what about us men?
Another quote that will live in infamy.
Yup, I cringed the day he let loose with that one.
Another member of the “Let them eat cake crowd”
“A chicken in every pot, and an SUV in every driveway…”
And borrowers who have the opportunity to state their incomes and hedgies and banker Pig Men who can mark their portfolios to model.
With neither facing reality very well.
When history judges this chimp. They will first recall Florida 2000 and the recount. What if?
Title: Worst president ever & ever & ever is fitting.
Taking responsibility for:
1) Making sure Warren Buffet has a lower % paid to taxes than I do.
2) Starting a war and being responsible for 200-300 innocent people dying every day. Just because they they don’t attent the same church doesn’t mean they are not innocent.
3) Selling out the middle class for a few elite.
4) THE HOUSING BUBBLE.
When I suppose Ben can thank you for having this blog be such a success.
There is the 2000-2002 stock market crash also.
I think the responsibility for the 200-300 innocent people dying every day, if indeed there are that many, lies with the nice people who are actually killing them.
Oh no it doesn’t. They are just doing their job.
Who? The extremeists? You need to think about who is doing all damage over there, it sure isn’t our troops.
If Mexico invaded USA & occupied it and suddenly murder rate increases by 2000 to 3000 everyday because our cities have daily explosions.
Who would you blame USA or Mexico?
Well, if the U.S. were governed by the KKK, which had been slaughtering minorities for a decade, and the KKK, after it was removed from power, went underground and started killing people with car bombs, and various other extremist groups got into the mass-murder business, too, then yeah, I’d still blame the murderers, not the Mexican army that was trying to stop them.
Rentor is yet another perfect example of “anybody but my country, right or wrong.”
And then a couple of years after that he signed legislation revising the bankruptcy laws.
The financial people in the know knew very well how this would all play out.
Maybe he can pardon all the corrupt mortgage brokers.
you can bet your one week mortgage that this guy will not leave without taking us down with him/them.
Anyone watching Cramer on CNBC? He looks actually scared, I’ve never seen him like this, he’s usually bull, bull, bull. Now he’s saying get out of anything financial, mortage, housing or DOMESTIC SPENDING related. A little late for that advice, obviously, but it seems like he knows something he’s not letting on about some more bad news happening, especially regarding his advice about not relying on domestic spending.
Jeez, I guess you have to be careful what you wish for, all I wanted was a real estate sale in West LA or at least So. Cal., not a freaking national depression!
He actually warned yesterday to get out of finanicals, housing stocks and retail.
Oh, I must have missed that, but yesterday was about a year too late too, LOL
if you ar long financials, housing (whether builder or bond bag holder), or consumer cyclicals….you gotta be a fricken nutcase.
I don’t watch Cramer, but perhaps what “got to him” was the fact that prime borrowers are facing problems with their creditors. That even this group is under a lot of pressure handling their finances (”It’s the debt, stupid!”).
Like a lightbulb went on for him and recently the market.
Just a thought.
“Debt” always has been and always will be a 4-letter word to anybody that is functionally literate financially.
House prices are a matter of opinion. Debt is real.
Yeah, he was more somber today, and talked about capital preservation.
Maybe he does know something. Well, that “something” has actually been right in front of our faces for a while now hasn’t it?
LOL@ “..all I wanted was a real estate sale in West LA or at least So. Cal., not a freaking national depression! “
Yesterday’s cheerleader is now rooting for a national depression. Despicable!
LOL, way to twist the knife in the back there GS… too funny.
Hear the guests for tomorrow morning’s Squak Box? 4 big names in govt. Paulson, head of presidential commette on economy, someone from the fed, and I forget the 4th. All 4 will be in at the same time, for a live interview tomorrow morning….
Wonder what this says about the GDP number for tomorrow.
Somebody is scared poopless. Only in third-world countries do ministers have to defend their economies to Wall Sreet. Welcome to the third-world Uncle Sam.
Lets hope it works so that Mr. Paulson can get moneys from China next week.
I saw him tonight. 360 from yesterday and the day before.
I think you mean a 180?
360 would result in him facing the same direction he did before.
Cramer is a bull market momentum trader, in fact “There’s always a bull market somewhere” is his slogan. He’s not the kind of guy who likes unloved sectors, finding value, has patience, buys 1-2 years before the price moves, etc. Listen to him just as entertainment rather than as a financial planner and you won’t be disappointed.
Everyone has harped about housing and its problems for years, just now those formerly in denial are accepting that the problem goes beyond subprime. Because of the pre-warning I’m not sure the middle of the road money managers will panic and sell any time soon. They are looking 5 years down the road at a more competitive global economy where the US will have advantages at that time.
GIve it a little while to buy, but don’t wait for US stocks to fall a *lot,* as they have been pretty flat for several years. I would certainly buy US stock soon, with a reasonable correction.
“they have been pretty flat for several years.”
FLAT? I’ve made a boatload on index funds since 2003 (yes, I listen to Bob Brinker), and now I’m looking for exit points to pare down my exposure…kind of like inching for the door while still nodding and smiling…I’m one of those weirdos that think that world markets are going to go down because of the credit bubble popping.
Ditto that for the SFV.
Anyone watching Cramer on CNBC? He looks actually scared,
Brian Williams on NBC actually used the termed “HOUSING BUBBLE” 3 times in the broadcast.
Man, those FL condo developer’s are in some deep shite.
If the housing bust don’t get’em the them meltin’ ice caps resulting in rising sea levels sure will. Damn things are right on the shoreline.
I wonder if he will ever scrape up the brass one’s to invite Peter Schiff back for a one on one. That one should be a pay-per-view produced by Ben.
“Christine McCullough will lose her Natomas house to the bank in September. Last year the Sacramento County employee lost $1,800 in extra monthly consulting income that had made the 2005 purchase possible. She says her lender wouldn’t work out alternatives while she was still current on payments.”
“‘It was a bad time to buy,’ she said. ‘I shouldn’t have purchased. It was just a bad time.’”
********
Bad time!?
Christine wins an award for recognizing that there exists such a thing as a “housing cycle.”
Doh!
These are especially apparent in California and today we are just starting down the Shiller roller coaster.
Even people who should know better, or at least know of such here in the Alt-A Bay Area, are still in denial.
The stages of real estate agent denial:
1.Real estate never goes down.
2. Real estate in California never goes down.
3. Real estate in the Bay Area never goes down.
4. Real estate in the West Bay never goes down.
5. Real estate in San Francisco never goes down.
6. Real estate in good neighborhoods in San Francisco never goes down.
7. Real estate in Pacific Heights never goes down.
8. The market has bottomed out…
9. Real estate always goes up — in the long run.
10. Real estate always goes up — in the very long run.
11. In the long run we are all dead.
12. Easy credit is created because of the profit boom. Kudlow
13. GoldeLooks ugly
Suzanne,
Sumner Redstone would disagree with you! LOL
Last week he said “They can replace me, if I die.” I believe Sumner is 82 or 84
11. Real estate goes up with inflation - in the long run
12. Real estate real returns are 0% - in the long run
Land values go up or down correlative to population changes. The majority of “improvements” on land (e.g., houses) go to zero due to rot, fire, and obsolescence.
11. Real estate returns 0% after accounting for inflation - in the long run
I’m wondering if we can do an experiment, and see what happens with this. Maybe we pick a listing, in an affluent neighborhood in So Cal. Take some thing that is around $765k price point and then talk to the realtwhore and start sending in offers…..around where the house should be $350-$375k and see what they say. I mean they will be indignant on the first one - by the 10th they might be in despair. Yeah I know I am mean and diabolical but who cares this might just be entertaining and interesting. I would also say we have 20% down in the offer as well.
No thanks. You just might buy a house by accident and have to come up with 70k.
I always thought it would be neat to form a “buyer’s club” for houses. Among a group of friends where one wants to buy a house that’s listed for, let’s say $500K, have the friends make offers starting around $300K, with each offer being a bit less. This freaks out the seller, and then the person who really wants it puts in an offer of $350K, which just might be gratefully accepted.
The bogus buyers can put in a contingency, such as they must sell their house first, just in case the seller accepts one of their low-balls.
Apparently you have never invested in real estate with “friends.” I’d put “invest with friends” in the same category as “loan money to friends.”
Sort of like the realtors’ manufactured bidding wars, only in reverse. I like it.
Dutch auction
Oh please oh please let me pick the victim, I mean target, there are so many 2 and 1’s around here on 3000 foot lots for 950K I could play “eenee meanie miny mo”.
You would need about 50 to 100 offers like that to snap that seller/realtor back to reality. I don’t think a few friends would get that done.
You are probably right, but it sounds like fun. Count me in.
Someone could post a listing on this board, there are a few bubble believers around here…
well shoot, if nobody else is going to propose a listing…
I have a perfect one:
http://www.bizzyblondes.com/address.php?property_ID=79
I know the asking is a little high, but I think we should start making offers around 700k and then work our way down from there.
Why I nominate this property:
1. The name of the listing company is BIZZY BLONDES.
2. The asking price is totally out of whack.
3. I went to the open house and the listing agent (the dude in the middle of the two blondes on the website) was all nervous about the price. After I told him the price was high he started asking me “what do you think it’s worth? what would you pay?”
4. After I told him I wouldn’t pay anything, he moved on to a 20-something girl who was looking to rent and he was trying to convince her that “you can afford to buy a house for the same price as renting”. Her eyes lit up “really?” It was so sad.
Let me know when you want to get started and I’ll make an offer!
700k, you got to be joking, how about 350k.
“He expects the next three or four years to bring more bad news for the Cojones Valley…”
Heh
*** ALERT ***
Cramer just said “wait to buy a house” on NBC!
It’s a new paradigm!
Maybe he learned his lesson from the tech bust of 7 years ago. Took him 5 years to get a new audience of college kids that are too young to remember his a$$clown buy, buy, buy recomendations as the NASDAQ plunged 80%.
Cramer is now saying exactly the opposite of Barbara Corcoran!
I saw that video someone posted earlier and she was essentially doing a Blodget on herself - that thing has to be archived.
I don’t know how that woman could look herself in the mirror after that appearance on the Today show.
Stop on by San Fran Jack. We will do a walking tour of my neighborhood and I will show you the completely ludicrous buildings being condo-ized by the Corcoran Group. One of them is beatwilliam.com. This is hideous. Another one we found the other day is the most awful (maybe worse than 59 John Street) called 145Hudson. This is on a little land island right outside the mouth of the Holland Tunnel. This thing is beyond belief.
That little troll needs to spew her nonsense. Her group has exposure to potentially millions upon millions of losses in Manhattan. Never mistake a bull market for genius and never mistake Barbara Corcoran for a person.
Dang! NBC Nightly News with Brian Williams was a HBB’rs dream! They showed cranes in Miami, interviewed people that kept saying things like “pop” and “bust” and “overbuilt.”
Man, it was great.
And I’m being yelled at on HGTV’s real eastate blog for using the term dead cat bounce.
http://en.wikipedia.org/wiki/Dead_cat_bounce
The other posters are accusing buyers who are waiting out the market of purposely trying to rip sellers off. Methinks there are are some very nervous FBs out there.
http://tinyurl.com/2opfae
purposely ripping off FB’ers?
that so does not make any sense whatsoever
I’m tellin’ ya, that has to be one of the most asinine statements ever. So I’m trying to rip people off because I’m not buying a house right now? Unreal. Definitely mass insanity.
By not buying, they are taking advantage of the seller. I didn’t explain the arguement well - trying to work, read, and post at the same time.
Those selfish renters won’t stop renting!
Gwynster, you have to remember you are on an HGTV blog. That’s not exactly a MENSA meeting.
LOL NY so true, so true. Just thought I’d share a little schadenfreude. The poster that screamed about the dead cat comment is a realtor in FL. She’s understandably a little fragile right now >; )
Yeah HGTV promises you every dollar spent at its sponsors’ stores turns into sweet instant equity. It’s impossible to spend money on your house and not increase its value. Add a $1500 flat screen? Your house goes up $5K. See, it’s so easy. Add a $15,000 kitchen range? Your house goes up $50K. So easy.
Koi Pond… add $80k, candle in the living room… add $2k
Free 1987 Pontiac… subtract $120k
NYCityboy,
There is not Taittinger on my keyboard… Great one!
Neil
lol
you cant give that thing in the yard away!
though i prefer the caprice.
seriously though,
the idea that a “fence sitter” or “potential buyer” or “somebody who’s plugged in” who is in it for the money is shorting your sh@tbox…..
“That’s not exactly a MENSA meeting.”
LMFAO!
I should go on the board and apoligize. I always wanted to be a future statistic.
I should go on the board and apoligize. I always wanted to be a future statistic.
I just have to say what a great day to be short homebuilders! Did you see Hovnanian and Beazer today?
Yeah, and those CFC August puts I bought last month made MY day.
I was really unhappy with my CFC puts.
I had a nice chunk of them, but they expired on 7/21, and I was slow re-upping.
Damn, months of waiting for it to crumble, and I missed it by a few friggin days by being busy with other things!
Yep, my Jan 08s are looking pretty sweet too after today. Thanks TanGelo…..
Same here with Jan 08. We get one more quarter’s pain to be reflected. Maybe by fall they will carry actual property values on their books. Watch out below.
I bought Jan 09’s in april. very nice! also bought jan 09 Pulte.
Of course, I have to be fair and list the one’s that AREN’T doing so well…those being my Jan 09 Apple puts.
From the Press Democrat article:
“On primary mortgages statewide, homeowners were a median five months behind on their payments when the lender started the default process. Borrowers owed a median $11,126 on a median $342,000 mortgage.
“On lines of credit statewide, homeowners were a median eight months behind on their payments. Borrowers owed a median $3,457 on a median $67,121 credit line.”
Seems like banks are taking their time (median of 5 months and 8 months delinquent) before starting the foreclosure process. So, the NODs from 2Q07 actually started defaulting between Nov. ‘06 -Jan. ‘07 (for primary mortgages) and Sep. ‘06 - Nov. ‘06 (for HELOCs). This was before the major credit crunch started. Seems like the rapid rise in NODs and foreclosures will continue for quite some time.
cash strapped banks are having a really hard time just keeping up with the FC process…tough spot.
HELP WANTED:
HEARTLESS PITBULL for speeding up worthless cretins processing foreclosure paperwork. Long hours. Paid by Commission only.
invest in a service the provides support to bringing “non-performing” loans to “performing”
money in that.
“‘It makes you want to cry, because what do you think that does to the house down the street?’ Geary said.”
Makes it more affordable?
And lowers her commission - thus the tears. Sorry, Geary, no sympathy for Realtors.
“‘It makes you want to cry, because what do you think that does to the house down the street?’ Geary said.”
I love this statement, like there’s really any question about what it does to the house down the street. This is why Subprime won’t be contained. A short sale, a foreclosure here & there, and everyone’s values are impacted.
A dumba$$ here and there with a wad of subprime money was what drove the prices up. So, this seems fitting that the same dumba$$ should drive the prices down.
“Broker Sandra Geary said she recently listed a home for $435,000 that a couple paid $535,000 for two years ago. The sellers can no longer afford the home after the payment on their adjustable-rate mortgage increased $600 a month.”
“‘It makes you want to cry, because what do you think that does to the house down the street?’ Geary said.”
—
2 comments:
1) Ouch. that must SUCK to take that 100k loss!
2) classic comment. Who cares about the fact that thes FBs just took a 100k hit on their net worth? Instead, let’s worry about the “house down the street”. And why, pray tell, is the realtor worried about the house down the street? why, probably because it’ll lower the comp so the commission will be lower on that one too.
that quote just irked me badly.
HIC
It means the house down the street will be foreclosed, go to foreclosure auction where it is hard to bid, be bought as a REO by the bank, relisted in bank auction where it is much easier to buy, and eventually end up in the hands of someone else, without having to use a Realtor anywhere in the process.
I’d be more willing to take these realtor quotes at face value if any of them had been doing something other than cheerleading the bubble over the last few years.
“And why, pray tell, is the realtor worried about the house down the street? ”
He owns it.
LOL!
“‘It makes you want to cry, because what do you think that does to the house down the street?’ Geary said.”
Are those crocodile tears or tears of a clown?
perhaps HER house is the one down the street. ;-D
The bigger issue is how the f* do you get foreclosed on over only $600 per month…and there are two of them working???
Spot on!
The razor margin between a peaceful life and disaster.
Yeah, some of these reset stories are quite silly. Mortgages adding a few hundred dollars to their monthly. I don’t believe they can’t cover it, I believe they don’t want to — the bubble mentality is gone, the house isn’t going to double in value every three years so it’s time to bail.
Houses are funny…
I’d daresay that a 30 year old house in an established neighborhood, is more valuable than a brand new house, in a newly developed area.
It’d be like a 1977 Cessna 172 airplane being more desirable than a brand new 2007 version~
apples to airplanes
Have you seen how bad the used airplane market is getting.
…a 30 year old house in an established neighborhood, is more valuable…
Hear! Hear!
I’ll take a mid-80’s burnt adobe brick on a half-acre over these mud-and-stick shitboxes any day.
Actuall, had one until ‘05 (sniff, sniff)
I guess that depends on (1) whether the 30 year old house was well-maintained; (2) whether the new house is full of pump-and-dump construction defects.
http://www.defective-homes.net/
Wells Fargo is shutting down it’s subprime business. Add another one to Implode-o-meter count..
story at Yahoo dot com. under stock symbol WFC
Awesome! I’m waiting for Washington Mutual to follow suit…
How wrong you are, Bubble Butt. Read that headline again. Wells Fargo is shutting their “nonprime” division.
That is what the article says “nonprime”.
News Article from Wells Fargo website
The implications of this are huge, once other lenders fall in behind and they will in short order.
It seems that they don’t want to deal with mortgage brokers anymore. It looks like risk aversion to me.
you have to “rehire” in loan servitude so fence sitters have someone to talk to.
“And Karevoll said a surprisingly high number, 54.6 percent, of the homeowners in default emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe. A year ago, it was 88 percent.”
Surprisingly high number? Since when is 54.6% a high number? Last year it was 88%, and I’ve seen reports that in the last downturn only about 30-40% of NODs went all the way to foreclosure. From the article (Daily News) it’s hard to tell if the “surprisingly high” came from Karevoll or was simply the reporter’s spin.
Most of these people don’t have the money to bring in for back payments, the equity to refi, or the ability to lower the house far enough to sell (due to size of mortgage).
I’m wondering if they are brought current by the current owner or some tote-the-note door-to-door salesman who scour the NOD rolls for suckers.
goin door-to-door.
the new paradigm
We’re looking at cash being the place to be in the very near term, and oil, uranium, gold, silver, corn, water and nat gas for the next 10 years.
There’s simply no way we *won’t* have massive inflation in the US — and most likely globally. One thing is absolutely certain about the Fed — when the banks themselves get into trouble, the Fed *will* save them by creating money.
At the end of the day, our central banker is exactly that: a banker.
Get ready for money to be created, and for raw goods/limited resources to skyrocket.
Inflation is bad for banks, because they borrow short and lend long. Or to put it another way, inflation is good for debtors and bad for creditors.
And it’s not too good for any other business - check out how the stock market did during the inflation decade, the 1970’s.
And whether or not the US gets high inflation, the rest of the world is not going to follow suit. There’s nothing in it for them. The US is going to have to pay for oil in real money, if it trashes its own.
Inflation is good for the first in line. The first in line is banks, during the 1970s bank profits soared - the stocks did not move. Last in line are 96% of all Americans.
Inflation is great for banks.
Correct. If you depend on the credit of others, you can’t hyperinflate your problems away. Your creditors will simply raise the rates they charge you, and if you don’t follow along, then you don’t get anymore credit.
I mean Yogurt is correct…
the price of oil is in USD
“And whether or not the US gets high inflation, the rest of the world is not going to follow suit. There’s nothing in it for them. ”
They’ll try and inflate too. The still want their stuff to be affordable to the american consumers.
Anybody have any thoughts on GLD, a gold ETF? Safe?
Safe? Yes. But remember it tracks the price of gold, but doesn’t actually have to “own” gold. It *does* own gold, simply because that’s the easiest way to track the gold price — for now. But the real requirement of the ETF is simply to track the POG.
As a result, its very existence keeps the price of gold down. Investors buying GLD don’t actually take gold off the market. They profit (or lose) from moves in the spot price, but they don’t actually make the market. As a result, thousands of investors who would normally be contributing to a rising price of gold, are actually contributing to a slower increase in valuation simply because they’re “not” buying gold.
Thanks. My Dad is convinced that the ETFs are the work of the PPT and the Kramers of the world. The problem is that my POS 401K doesn’t allow any gold investments except for the miners or GLD. Fidelity does have a gold fund, but I can’t move money into it. So many things are due for correction in this country - not just our banking system and the equity markets. ERISA has been nothing but a sham on the American worker and has had the dual benefit of (i) putting an enormous amount of money inflows in the hands of a few brokerage houses, thereby helping the PPT and PAT to “manage” Wall Street, and (ii) has allowed corporations to shirk their good citizen responsibilities by eliminating retirement obligations. My investment choices in my 401 plan are a total joke. I put as much as the plan allows into miner stocks and GLD. My concern with the GLD is that it’s backed by nothing. Thanks for your input.
SLV does in fact hold physical silver, though.
No, it doesn’t. Prospectus was recently modified to reflect that fact.
The money supply is increasing over 10%. They have eliminated reporting on the increases in M-3 but John Williams, The Shadow Government, has data.Go check it out. Inflation,figured pre-Clinton is over 7% not the b.s. that the BLS gives us.Your wife knows what the real inflation number is!
My next door neighbor here in Oregon has had his home on the market since April as well, originally at $369k. He too has dropped it down to even less, $309k, and still no offers. Another friend has his condo on the market and he too is having extreme difficulty even getting an offer..
my neighbor in Oregon has had one on the market at 225k
not even a looky-loo
“‘It makes you want to cry, because what do you think that does to the house down the street?’ Geary said.”
Oh, I know! Oh! Oh! Oh! Pick me! Pick me!
Makes it more affordable for those who chose not to engage in the mania and fraud that made prices so high to begin with?
Darnit Stucco,
You always get to answer first! That post wasn’t there a few minutes ago!
“SAN FRANCISCO (MarketWatch) — Bear Stearns Cos. said late Thursday that it seized assets from its High-Grade Structured Credit Strategies Fund after the hedge fund suffered huge losses in mortgage-backed securities and structured-finance markets.
The bank lent $1.6 billion to the hedge fund earlier this month after the losses. On Thursday Bear said that $1.3 billion of the loan remained.
Bear took control of the assets because the fund couldn’t meet its margin obligations as part of the loan agreement, the bank explained.”
So, all you foreclosures out there waiting to happen, just do like BS. Seize your own house, tell the bank, “listen up, this house will sell, and it will sell in an orderly fashion. Now go away. I DONT CARE ABOUT ANY LOAN COVENANT!! THIS IS MY HOUSE!!!”
uuhhmmm, not gonna work when the local law-dogs show up with sidearms.
So, Bear lost $300 million in about 3 weeks, and now owns the crap. Did it somehow get first right to the assets when it loaned itself the money to keep the fund open?
“‘The housing industry is in a recession, pure and simple, and it’s going to last until 2009,’ said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. ‘It’s going to get worse. I think it’s going to get very scary.’”
Not as scary as Count Floyd, kids…
http://www.youtube.com/watch?v=zbw9eqy6I0o&NR=1
“Wilson is far from losing faith. ‘I wish I had more money,’ he said. ‘I would love to swoop up all the deals right now.’”
Gah!! What friggin’ deals?
lowball offers maybe?
“A stalemate, with no winners and losers, is how Bill Wilson describes the housing market. But there’s still some pain out there.”
“‘The market’s slapped me on the hand, and now I’ll be a little less greedy,’ said Wilson, a semi-retired Camarillo resident (who) now works part time as an agent at Century 21.”
“Wilson flips houses as a hobby.
He has two that he’s been trying to sell since January.
He refuses to budge on the price of a Simi Valley town house that’s listed at $459,000.
“The other property is a Thousand Oaks house he purchased at a foreclosure auction in October. He listed it for $865,000 in January, but cut the price to $789,000 in May, killing his hope of turning a $150,000 profit. Instead, he’ll probably make $30,000, a typical return when he flips houses. He’s anxious to sell before he loses money on the house.”
“Wilson is far from losing faith. ‘I wish I had more money,’ he said. ‘I would love to swoop up all the deals right now.’”
- Hey Bill, you are going to have your face ‘Slapped’ with a bit of reality very soon! You are a delusional loser.
A 4 bed/2 bath house in Livermore we looked at about 6 weeks ago was priced at $575,000 when we did the walk through. Nice house but too close to a main feeder street into the neighborhood for our liking and of course overpriced for what we would get. We didn’t see reason to make an offer. The house is now listed at $549,500…hmmmm me thinks the sellers are finally starting to get the idea their origianal price was too high. Still the house on a good day should only be about $450,000 at most. I’m tracking it to see what happens.
The housing pyramid scheme is collapsing and many sellers are finally realizing the last bus load of idiots pulled into the station in August of 2005.
lookin for who left 100 to 150k on the table.
that my friens IS real money…
awww, shed a tear for all the FB’s
$450k? haha try $200-250k
I am seeing many transactions fall out of escrow here in San Gabriel Valley.
I am beginning to think that people actually have to qualify for a loan now and have been denied.
Can this be possible?
Hey Mr. Vincent,
You’re in the San Gabriel Valley, too? Which part? I’m in So. Pasadena and waiting for price drops here is like waiting for paint to dry. Slow and boring. If the prices drop elsewhere in the Valley, it’ll help to speed things up here.
trishyla
Hi Trish,
I am very close to you…Alhambra.
Well, I hope it works out for you. Prices are way too high for what you get here right now.
Lucky for me I bought this place in 1994 and moved back into it a couple of years ago.
Hi Trish,
There are a few of us here, I am in Alhambra as well.
Just being a devil’s advocate here….Wouldn’t it be better to purchase a home with an I/O 10 years fixed and sell the house 10 years from now. By then you could probably walk away with some equity built up. Why put a 30 years fixed with 20% down, when most of your payment goes toward interest on your mortgage, anyway?
Because lenders can’t give away 10 year I/O’s anymore without the buyer being able to qualify for the fully amortized payment when it converts. The I/O has pretty much been taken off the table by the Fed’s.
I had a friend do this a few months ago. Put 20% down, then I/O for 10 years, 30 year amortization.
Last I checked, you pay a higher rate for the 10 yr I/O loan relative to 30 yr fixed. I could be wrong.
Why would you expect to have equity built up? Kind of the way it built up on houses in the 1930s and is building up now? Why put money down on anything you use and wear out? Just borrow 100% and let the equity build up. Sheesh.
If it is interest only, then, by definition, no equity will be built up.
If you could get that loan, it means you’ll be competing against more people who could also get that loan than if all anyone could get was a 30 year fixed with 20% down, so that is not a good time to buy.
Lots of people can qualify for credit; very few people have the discipline to save. I’d rather wait until only the savers can qualify for a mortgage.
Dani W,
Your thoughts about non-competition mirror mine. I posted in my blog how certain coworkers are excited about buying (even now), but they’re the type who could only buy sub-prime. The more rational… air waiting it out.
And the sub-prime non-savers outnumber the savers quite a bit.
Let them foreclose.
Got popcorn?
Neil
The spin zone:
http://biz.yahoo.com/ap/070725/mortgage_woes.html?.v=4
Here’s a scary thought about the latest bad news on housing: A surprising increase in late loan payments and defaults among home owners with good credit is so far coming from traditional woes, like divorces, job losses and unexpected medical bills.
Isn’t this part of the equation?
I think I need to see a doctor I am behind on my House payments.
My wife is also pissed off with me.
Did I mention my boss looks sadly at me.
Alright Mr. Lake what is your handle on the HBB?!
Awaiting bubble rubble.
What she didn’t print (due to brevity) is the the reason I didn’t buy again during the period of sustained low rates after selling my properties over two years ago. At the time I had invested in real estate and also worked in the mortgage industry, as a business analyst in secondary marketing for several years, and was aware of all the smoke and mirrors at that time. Incentives in that industry are all about closing deals and completely divorced from risk, which is sold on the secondary markets. The utterly predictable explosion inforeclosures is in no way limited to subprime lending. The industry also borrowed a great deal of demand from the future, taking renters who would have been qualified buyers 3-8 years in the future and putting them into these absurd suicide loans just to close deals. Many if not most will be in foreclosure by 2009 and then be unable to buy for the next 5-7 years, depressing demand for housing even as supply increases dramatically in an unprecedented tsunami of foreclosures.
The median house price runup from 2000-2005 was based 20% on (unsustainably) low interest rates, 50% on(unsustainable) hokey financing schemes, 25% on the (unsustainable) speculative mania resulting from the appreciation, and 5% on inflation. Appreciation due to the unsustainable parts will all go away as the flood of foreclosures enters the market. Insasmuch ss this bubble is much larger than previous ones and the housing crash could bring on a recession (this week the equities markets have finally begun to acknowledge the magnitude of this crash for the first time), there will likely be an overcorrection and we may indeed see 1999 prices in some areas, particularly those hit hard by layoffs, crime, and school closures.
Also… regarding any economic statistic in the Thousand Oaks area of Ventura County, watch the news about Amgen for the next few weeks.
With all these vacant houses which aren’t selling shouldn’t rents in Bay Area & CA plummet.
There is a lot of inventory in those areas that is just plain empty while they hope to sell.
Now in Sacramento, they are going to start slapping fines on the owners of vacant property as these have become real crime magnets. Once those hit and carrying costs skyrocket, prices will come down to get the home sold quick or they’ll be rented out. The Alt A bay area would be smart to get something like this going as well.
I’m sure the munis are hoping this will function like a cattle prod to get the market moving again.
John Karevoll “the record number is essentially because of complicated foreclosure issues regarding multiple loans. In the 1990s when a property went into default, owners had several options, including refinancing, short sales or working directly with the lender.”
I have no idea if Karevoll is correct, but if he is correct this decline is going to be a lot worse than even I believed. If banks are not able to renegotiate because of 2nd mortgages, then this is just the first wave and the decline will be even longer. IMHO if you buy a house in 2007 with 20% down, you will be underwater by 2010.
UPDATE: Bear Stearns Seizes Assets Of Its High-Grade Hedge Fund.
http://money.cnn.com/news/newsfeeds/articles/djf500/200707261819DOWJONESDJONLINE001424_FORTUNE5.htm
Can somebody explain to me what “containment” means?
I could explain it to you, but first you’ll have to take this iocane powder
Is it tasteless ?
“You seem a decent fellow. I hate to kill you.”
“You seem a decent fellow. I hate to die.”
It tastes good first few months then the bitterness sets in. And you can’t brush it away with an ARM.
The IO is part of IOU. U being You.
“rolling containment”
it means that while subprime is contained, if it spreads it is just “recontained” and in a few days passes to “contained.” once is spreads, it’s just “recontained” again and etc.
see, that way it’s always contained!
I noticed today that Paulson is now using the word “containable”. LOL.
Off topic, but you just need to take a look at this
MLS ID # 200745770 Prices really need to come down.
Guess this relator is out to lunch. LOL In zip code 33928
SW Forida
Behold the talking heads on FOX News trying every trick in the book to spin today’s sell-off as a “good time to buy”.
http://tinyurl.com/2g9p7b
* It was “Profit taking”
* “The smart money is buying in now”
* “The media only covers the bad news, nobody covered the rise to Dow 14,000″. (?!)
* “The average consumer is too smart to sell now”
OMG… it never ends. Does anybody listen to FOX News? They’re so painfully obvious at every step.
I saw that and thought to myself, how stupid do they think their audience is? Talk about a load of happy horse shit. It’s the leverage money going bye bye baby. Add to that the subprime mess and the housing crash. It’s the perfect storm. Do they really think they can contain the storm of the century? What a bunch of morons on Fox News.
“how stupid do they think their audience is”
really stupid
I saw that and thought to myself, how stupid do they think their audience is? Talk about a load of happy horse sh@t. It’s the leverage money going bye bye baby. Add to that the subprime mess and the housing crash. It’s the perfect storm. Do they really think they can contain the storm of the century? What a bunch of morons on Fox News.
Oh I get it. Lead the sheep to the slaughter.
Dinner was lamb tonight.
Fox News has just lost their NEWS part of their name…
We now call them FOX OPINION
I just sent an e-mail off to O’Rielly saying just about the same as I wrote above.
i cannot remember where i read the word “actors” was used to describe them. very appropriate.
Yee-haw! Nikkei off 435 points.
That’s off 2.5 percent early. Big drop.
It’s off 409 right now and I’m pretty surprised that NAZ, DOW and S&P futures are currently all down.
I thought the CROX and BIDU miracle might make tomorrow a “great time to buy”. Looking at the techs like RIMM, BIDU, AAPL, etc. makes me think a mini-tech bubble is brewing. At some point there will be fortunes to be made selling short. The question is all in the timing.
The stockmarket is down 2.5% in Australia. Who said this thing is contained????
all ordinaries Down 152.60 (2.42%)
Nissei 225 17,265.49 Down 436.60 (2.47%)
NZX 50 4,234.98 Down 90.81 (2.10%)
KOSPI 1,912.50 Down 51.04 (2.60%)
Dollar is rallying against the Yen and falling against the Euro - Carry Trade - Back on.
We should keep an eye on India & China stock markets. Since, out fortunes are also tied to those 2 countires.
If they start correcting because USA goes into recession look out.
Could be different under Dems wrt offshoring & outsourcing.
Shanghai hit a record Wednesday, even as Japan has been going down, and remember that that is denominated in an appreciating yuan. I think Chinese bonds make sense here, mainly due to a still-undervalued yuan, but I’ll be damned if I know how to buy them, or a good proxy. Any suggestions, or do I have to call Jim Rogers?
All Ordinaries 6,175.50 Down 125.90 (2.00%)
Shanghai Composite 4,340.69 Down 5.77 (0.13%)
Hang Seng 22,679.66 Down 532.03 (2.29%)
Jakarta Composite 2,328.93 Down 36.33 (1.54%)
Nikkei 225 17,291.23 Down 410.86 (2.32%)
NZSE 50 4,241.91 Down 83.87 (1.94%)
Straits Times 3,486.26 Down 93.47 (2.61%)
Kospi 1,910.46 Down 53.08 (2.70%)
Taiwan Weighted 9,375.36 Down 191.06 (2.00%)
Yen is still falling 119.32
Euro is rallying 137.53
Carry On!
Jim Rogers is a sharp cat…..you want his side of the trade.
Shanghai opened down 0.11 and rallying. A US disconnect anyone?
TOKYO, July 27 (Reuters) - The yen hit a three-month high against the dollar and a six-week high versus the euro on Friday as a sell-off in credit and stock markets forced investors to cut back on risky carry trades.
“…But the yen quickly gave up gains, with the high-yielding Australian and New Zealand dollars jumping about 1.5 percent as Japanese investors took the yen’s rally as an opportunity to buy foreign currencies and assets.
“Japanese retail investors have not changed their strategy of buying foreign currencies when they dip,” said a senior trader at a big Japanese bank.
The dollar hit a fresh three-month low against the yen at 118.02 yen on electronic trading platform EBS in early Asian trade before recovering to around 119.15 yen.
Market players also booked profits on the yen’s surge after U.S. share prices declined sharply on Thursday, as a big widening in credit spreads stoked fears that problems in the subprime mortgage market are leading to a severe credit crunch….”
This is just the first inning, in a nine inning game. It is not going to end with a quick sell off. There is 10X as much at stake as a few measly house mortgages.
These California news stories read like a children’s novel, or an NPR politically correct news story. Do all California journalists have the mentality of a 6 year old, incapable of capturing an adult readers interest, with a more imaginative take on the subject?
“Do all California journalists have the mentality of a 6 year old, incapable of capturing an adult readers interest, with a more imaginative take on the subject?”
Yes. Yes they do.
I refuse to answer that question for fear that I know some of them and may not be invited to dinner parties any more.
Someone at my work is 3 months behind on their home payments. They sent in a check for 2k and the bank sent it back saying that they want everything owed or they would forclose on them! Looks like the banks want to sell the house before it depreciates any more.
when the money is no good, sell the fixtures for whatever you can get, and get gone.
talking about a bad time to buy in California.
http://sandiego.craigslist.org/rfs/382604402.html
“Christine McCullough will lose her Natomas house to the bank in September. Last year the Sacramento County employee lost $1,800 in extra monthly consulting income that had made the 2005 purchase possible. She says her lender wouldn’t work out alternatives while she was still current on payments.”
“‘It was a bad time to buy,’ she said. ‘I shouldn’t have purchased. It was just a bad time.’”
Well you should have done your research. Even I knew how overpriced houses were back in college
Last year the Sacramento County employee lost $1,800 in extra monthly consulting income that had made the 2005 purchase possible.
Pants on fire. She did a one-off job, called it a consulting business, and added it to her income.
From USA Today. “Lupe Arroyo and her husband just took their Sacramento home off the market. Having tried to sell it since April, they cut their $369,000 asking price three times, to $329,500.”
“‘This last reduction was well below market value,’ Arroyo says. ‘It was a giveaway (price), and we still had a low-ball offer.’”
Keep dreaming and drinking the kool aid. That low ball offer was probably more than fair because your house won’t be worth that much soon. You lose.
who on this blog is considering writing covered calls over the weekend?
I suspect, none.
market has legs, Im a buyer all the way down……..
I will always write covered calls, provided the theta, delta and gamma meet my criteria. Writing calls are about the only thing the Fisher Black equations are suitable to trade. I would just as soon sell a ‘call’ as a ‘put’ - they are the same.
this was a great day. Gone to europe for a month see you all around and hope the euro does not get much stronger
” Standard Pacific Corp. (SPF.N: Quote, Profile, Research), a builder of homes primarily in the western United States, on Thursday posted a quarterly net loss versus a year-ago profit, hurt by impairment charges and weakness in the U.S. Southwest and Southeast.
The company reported a net loss of $165.9 million, or $2.56 a share, compared with a net profit in the year-earlier quarter of $96.5 million, or $1.44 a share.
Excluding one-time impairment charges, the company said it earned 35 cents a share.
Revenue fell 31 percent to $694.8 million from $1 billion in the year-ago period.
Due to the uncertainties surrounding the housing market, the company will no longer provide any earnings or operational guidance, and is withdrawing its 2007 deliveries, revenues and margins forecasts, Chief Executive Stephen Scarborough said in a statement.
“It is possible that the company will incur additional impairment charges until our markets stabilize, particularly with respect to the pricing of new homes,” Scarborough said.
http://tinyurl.com/38bcme
Reuters
Here’s the best solution for the housing bubble: why don’t these people get a second job? Work at night? On the weekend? That one lady was losing her house because payments jumped $600 per month. She could make close to that working at a coffee shop on the nights and weekends. Does is suck? Yes. However, I’d rather buck it up and work than have a foreclosure on my credit report and the inconvenience of moving and then renting. . . also it’s humiliating to lose your house when you tell friends and family.