It’s Going To Get A Little More Rough Before It Gets Better
The Union Tribune reports from California. “San Diego County’s highflying housing boom is over, but real estate agents specializing in foreclosure sales say business hasn’t been this good since the deep recession of the mid-1990s. In the first half of 2007, the county had a record 2,896 foreclosures, compared with 445 during the first half of 2006, a 551 percent increase.”
“Today, of the nearly 24,000 listings of resale houses, condominiums and mobile homes, roughly one-fifth were identified by Sandicor, a local MLS, as distressed properties either in foreclosure or approaching the stage where owners could lose their homes.”
“During the second quarter of this year, the proportion of foreclosure sales shot up to 9.7 percent of all resales, compared with just 1.7 percent a year earlier. But that’s still off the peak of nearly 15 percent seen twice during the mid-1990s, according to DataQuick.”
“Analyst Christopher Cagan researched foreclosure sales a year ago in areas where there was a much higher proportion of distressed properties, Cagan found that they sold at significant discounts, sometimes as much as 20 percent to 30 percent.”
“‘We’re not there yet, but time will tell,’ said Cagan. ‘In general, the discounts right now are modest.’”
The Orange County Register. “Us: What have you learned about the Orange County new-home market since you began producing this report? Patrick: ‘The median asking price for all types of new homes during May of this year in Orange County was down by 3.4 percent from a year earlier, and it was even higher for single-family homes (down by 18.6 percent) and townhomes and plexes (down by 13.2 percent).’”
“‘What’s really interesting is that as sales of condominium flats in the county have tanked by nearly 19 percent from last May, median asking prices have actually risen by nearly 8 percent. I must also offer an important caveat: Many times the actual sales prices, not asking prices, are masked by various incentives that are difficult to track.’”
“Us: High home prices, coupled with an increase in interest rates, got the blame for starting the slowdown. What are other factors? Patrick: I think the psychological impact is huge because the news about the housing industry keeps getting worse, with an almost perfect storm of high home prices, tighter lending requirements and rising foreclosures. And there’s not much to do about this particular downturn other than wait for the market to correct itself.’”
“‘Builders aren’t personally invested, so they’re not as likely to be insulted at a low-ball offer. Builders have lowered their prices to the point that they’re often a better deal than a comparable resale, so until owners of resale homes face their own reality of a lower price they’re just not going to be as competitive. While many resale homeowners have simply taken their homes off the market, that doesn’t mean the value will return by simply waiting.’”
The Press Democrat. “Foreclosures have soared to a level not seen in more than 15 years in Sonoma County The fallout could extend the housing slump in Sonoma County, where home buyers are finding that loans are tougher to get and cost more than mortgages issued just a month ago.”
“‘The investors in the market really are shying away because of the reawakening from the subprime loans,’ said Greg Jahn, chief investment officer for Exchange Bank in Santa Rosa. ‘It’s starting to spill over into other types of lending. Financial institutions in general are saying, ‘We’re not going to make credit as easy as it was.’”
“In Sonoma County, the median price has dropped 12 consecutive months in year-to-year comparisons. Lenders sent default notices to 462 homeowners during the second quarter, the highest level on record, and repossessed 163 homes during the same period.”
“Many of those defaulting on their loans stretched their finances to purchase homes, primarily around the market’s peak two years ago.”
“‘We could clearly see this fallout. They were overleveraged, their home values have declined, and interest rates are higher,’ said Marty McCormick, owner of a Santa Rosa mortgage broker.”
“Someone who bought a $600,000 home 2½ years ago with an interest-only loan and a 20 percent down payment could see monthly payments jump from $2,150 to $3,100.”
“‘It’s hard to predict panics. It might last a little longer,’ said Charles Biderman, founder of Santa Rosa-based TrimTabs Investment Research. ‘People who can afford to pay the mortgage on their house, they’re doing fine. Those who gambled lost,’ Biderman said.”
“About half of all loan applications are rejected today, twice the number from two to three years ago, said Joan Picard, a Cal-Bay Mortgage senior loan officer and president of the Redwood Empire Mortgage Lenders Association.”
“‘It’s going to get a little more rough before it gets better,’ she said.”
“National City Mortgage laid off 40 loan officers at its Santa Rosa call center this week and an additional 60 employees will lose jobs by September, the latest blow from the housing market’s downturn.”
“The housing industry slowdown contributed to a loss of 450 financial services and construction jobs in Sonoma County during the second quarter of this year, according to Moody’s Economy.com.”
“One of the employees who lost her job this week said the announcement was unexpected, coming two weeks after senior executives had reassured workers no cuts were imminent.”
“‘It was a shock to every single person in the office; not even the branch manager had expected it,’ said the employee. She added the announcement was made on a long-distance phone call broadcast over a speaker phone. ‘We were huddled all around it. It was so abrupt that they didn’t even have time to prepare.’”
“‘There’s just not a lot of money out there. Investors are going to cherry-pick. They’re going to want the best borrowers and the best loans,’ said John Klein, executive VP for a Santa Rosa mortgage broker. ‘It’s all supply and demand. This is a cyclical thing.’”
“‘They just don’t have enough business, so you have to stop the bleeding. Everybody is doing the same thing, cutting back and reducing staff,’ said Joan Picard, president of the Redwood Empire Mortgage Lenders Association.”
The Modesto Bee. “Real estate stories are filled with foreclosures, loans gone sideways and homeowners on the brink of financial ruin. In a recent poll of about 1,000 adults by Bankrate.com, about 34 percent of homeowners had no idea what kind of mortgage they had, said Greg McBride, a senior analyst for the Web site.”
“‘It’s one of those out-of-sight, out-of-mind things,’ McBride said.”
“Not only did many people not understand their mortgage conditions, they believed they could refinance the loan or sell the home to get out of problems. ‘A lot of people have been burned,” said Albert Dadesho, a broker in Modesto.”
“People who were priced out of the market before the downturn, he said, should learn from the mistakes made by those who jumped in.”
The Bakersfield Californian. “Between October 2005 and the following summer, a low-level office worker at the former Crisp & Cole Real Estate company bought four homes. Three are now in default. The fourth sits empty, a for-sale sign posted out front.”
“The office worker’s estranged husband is angry. He believes his ex never really owned the units. ‘At 14 bucks an hour she can’t afford any of those homes,’ said Gabe Stockton, a local real estate agent, of his former partner, Janie ‘JJ’ Stockton.”
“Gabe Stockton believes JJ and other employees were pressured to put their names on properties in order to make the company more money through related transactions. ‘You’re talking about some very professional salesmen, men with a lot of money and power, literally using people who are sometimes naive or in a weak position,’ Stockton said.”
“JJ’s most expensive property was bought from Alan Cole, son of Crisp & Cole’s one-time managing broker Carl Cole. JJ paid $795,000 for a southwest home in April 2006, property records show. What Alan Cole previously paid isn’t indicated.”
“Gabe Stockton, meanwhile, has been trying to sell the Ordsall Street house as a favor to JJ. He first listed the home at $711,000, then dropped the price to $699,000. People just drove on by, he said.”
“Last week, it was listed at $585,000, more than 26 percent lower than the sum JJ paid Alan Cole last year.”
“As of Thursday, at least 80 homes tied to Crisp & Cole’s former employees, their families, business associates and customers have defaulted since the beginning of the year, an ongoing Californian tally has found. Some have already foreclosed.”
“Even folks who never dealt directly with Crisp & Cole feel fallout in some neighborhoods where the company did heavy business. Greg and Elaine Hull moved to the upscale Grand Island development last year, never thinking the gated neighborhood would soon be dotted by abandoned properties with brown lawns and dead trees.”
“‘I’m livid,’ Elaine Hull said. ‘I have to look at that every morning.’”
“Three of the 11 homes on Ordsall Street, a block-long segment amidst new development west of Buena Vista Road, are in Crisp & Cole-related default.”
“‘The neighborhood was clean when we moved here in April 2006,’ Greg Hull said. ‘Then the lawns started dying. Our property value has definitely gone down, I’d say by $100,000.’”
“‘When you go for a walk, there are so many houses unoccupied,’ said Ravi Nandakumar, who moved here in early 2004. His tidy home sits next to a pair of defaulted properties owned by former Crisp & Cole employees.”
“Nandakumar has watched neighbors come and go. Most houses on his block have sold twice already, he said. With property values falling, he plans to stay put.”
“‘We are not moving at this point because it’s very difficult to sell,’ he said.”
BTW, anyone interested in the Crisp and Cole situation can find lots more about the appraisals, etc, in the BC article.
If you can the print editions have a few extra nuggets as well.
I was in the house Gabe Stockton is trying to sell a few weeks ago. Before he lowered the price. I dont know him. When I walked in with my family he immediately dropped the price by $40k and asked if I wanted a great deal. LMAO!!
My wife and I both looked at each other and laughed as we saw all the other high end homes in the neighborhood with brown lawns. $40k off - Keep dreaming. There will be so much pain in the 4 neighboorhoods these guys worked over.
This whole thing was nothing but a ponzi scheme! TElling people they had other buyers ready to replace them.
Buy the house at 1906 Heaton St., Cazares said he was told, and use a promised $65,000 cash at closing to keep up with monthly mortgage checks of $6,000.
Crisp and Costa also promised to resell the house within a year, Cazares said.
The 29-year-old plumbing business owner took the opportunity, putting the property in the name of his wife, Michelle Cazares.
They owned two other rental properties — one a former home and the other a gift from parents — but the Heaton Street house was their first investment purchase.
“Just the way they paint the picture for you,” Cazares said. “They said they have this list of buyers who in less than a year will get it out of your name.”
Buy the house at 1906 Heaton St., Cazares said he was told, and use a promised $65,000 cash at closing to keep up with monthly mortgage checks of $6,000.
Crisp and Costa also promised to resell the house within a year, Cazares said.
The 29-year-old plumbing business owner took the opportunity, putting the property in the name of his wife, Michelle Cazares.
They owned two other rental properties — one a former home and the other a gift from parents — but the Heaton Street house was their first investment purchase.
“Just the way they paint the picture for you,” Cazares said. “They said they have this list of buyers who in less than a year will get it out of your name.”
IS THIS THE DEFINITION OF A PONZI SCHEME??
Give them enough money to make the payments long enough so there is no ‘Buy Back’ trigger from the suck—, I mean secondary lenders. Good marketing by the Crispies.
Crispy,
Looks like a lot of what you suspected was right. This is just like what came out after the S&L’s collapsed.
Ben,
I would go a step further. Crispy has been broadcasting this fraud longer than I’ve been on the housing blogs. Kudos to C&C.
The reference to the S&L gives me the shivers… there are going to be many ‘unintended consequences’ in the fall out.
Got popcorn?
Neil
The fall will be long and hard and it’s going to be painful for the FBs and 401Kers caught holding the bag…
But Neil, the real show will be the movie we never see.
Those are the most wicked of all.
Films about the slick mortgage brokers, bankers and fund managers that are running scared into the hills and onto the oceans with their bags of cash like some modern-day snake oil salesman.
Those types will self destruct with their inner guilt.
I’m not talking religious guilt.
It’s beyond that.
It’s a deep down psychological impact that overrides the greed of the id and destructs the wicked men from the core…
kind of like a nuclear implosion.
They’ll realize that the margarita their drinking isn’t enough.
The service at the Latin American resort is not right.
They might wake up every morning for the next 20 years in some kind of dream-hell reality where they finally figure out what they did was BAD…
On a human livel.
Wish I had popcorn to see that.
Maybe we will.
“They might wake up every morning for the next 20 years in some kind of dream-hell reality where they finally figure out what they did was BAD…”
Nope. They’re psychopaths (3 in ten are). They already know what they did was bad - they just don’t care.
This is also what happened in the strawberry picker case,
the Realtor “helped” with the first few payments, so
the fraud could not be detected immediately.
Employee straw buyers for the cash out schemes of crooked real estate people . Does anyone wonder how some prices got inflated . I tell you in some neighborhoods the real estate professionals were the ones driving up the prices by either double escrows or straw buyer set ups .
I’m wondering if this was the common thing occuring in San Diego, Las Vegas, Phoenix, and other bubblicious areas? If so, it’s the scam of the century. It could have been added fuel to the fire of greedy individuals who also overly inflated their home prices.
How come these crooks did not do this in the previous bubble in the late 1980s?
bill in Phoenix
They didn’t do it before because they didn’t have zero percent financing.
I’m not sure if this was posted here before:
http://tinyurl.com/2c28vf
But according to this article from the L.A. Times, the same kind of thing has been going on in Beverly Hills lately.
A couple of key quotes:
Two high-profile Beverly Hills real estate agents and two licensed appraisers were indicted Thursday on charges of joining in a sophisticated scheme that lenders said cost them more than $40 million in fraudulent loans for homes in some of Southern California’s most expensive neighborhoods.
Joseph Babajian and Kyle Grasso, agents with Prudential California Realty, along with appraisers Lila Rizk of Trabuco Canyon and Scott Robinson of Dana Point, were each indicted on multiple counts of conspiracy, bank fraud and loan fraud. They face several years in prison if convicted, said Assistant . U.S. Atty. Jeremy Matz. Babajian and Grasso are also charged with money laundering.
From 2000 to 2003, Fitzgerald, Abrams and the others allegedly doctored paperwork, including preparing bogus real estate purchase contracts and appraisals, to trick banks into funding mortgage loans that were hundreds of thousands of dollars higher than the homes actually cost, according to court documents.
The defendants played different roles, with some allegedly acting as “straw” buyers and others allegedly using their professional licenses to obtain title insurance and other documents necessary for property transactions.
They sometimes allegedly “flipped” properties: buying at one price and reselling to a straw buyer at a significantly higher price. In the process, they inflated comparable sales data for neighborhoods in Beverly Hills, Holmby Hills and Malibu, prosecutors said. That helped them continue the alleged scheme because they used the “false” data to persuade banks to fund subsequent purchases, court documents show.
One transaction detailed in the indictment was the 2000 purchase of a Beverly Hills home by Fitzgerald and Abrams for $2 million, which they told the bank was purchased for $4.395 million after receiving allegedly inflated appraisals from Rizk and Robinson, prosecutors said.
Same crap, bigger price tag. But interesting to speculate on how much of the upside in Richistan has been caused by fraud, too. Also interesting to note…the MLS sales prices can be manipulated, according to these charges.
LMAO Joe has been around for awhile. He has defined sleeze for a long time… Interesting.
I just read the whole story LMAO that’s going to kill the Westside. It in effect says people have been buying in a manipulated market since 2000. LAIG you’re going to get your investment property yet. Joe is huge on the Westside. You’re going to have tons of people questioning their values and transactions with the money to sue. This is going to have severe repercussions in L.A. LMAO It doesn’t get any better than this.
“Buy the house at 1906 Heaton St…use a promised $65,000 cash at closing to keep up with monthly mortgage checks of $6,000…resell the house within a year….[put] the property in the name of his wife, Michelle Cazares…owned two other rental properties…this list of buyers who in less than a year will get it out of your name.”
You stupid low life greedy ba$tard…
I don’t want anybody to get burned but I do want this market to hurry up and correct itself. I guess the two are not possible. Oh well.
“real estate” and “hurry up” are mutually exclusive terms.
Although, “burning” might help ‘accelerate’ the process, if you know what I mean…. (grin)
““burning” might help ‘accelerate’ the process”
Not necessarily. It will reduce the excess inventory!
LOL.
“Gabe Stockton, meanwhile, has been trying to sell the Ordsall Street house as a favor to JJ. He first listed the home at $711,000, then dropped the price to $699,000. People just drove on by, he said.”
Gabe: “Let’s list your house at $711K.”
JJ: “Dy-no-mite!”
Don’t think it will be very long before people start to realize what the “lowly” sum of $ 711,000 or $ 699,000 really is let alone the multi million dollar price tags floating around on various properties “everywhere”. Regardless of one’s pre-tax and pre-cost of lving wages, these are incredibly large sums of money that ought not to be taken lightly. In fact, i think that a bag of cash in these kinds of dollars could likely make living in fly over land quite accomodative if one looks after his ducks and lives simply with a simple job.
Does anyone remember Emerson, Lake and Palmer?
Well, they updated the lyrics to an old piece, it’s now called:
“Con Evil 9: Leaves Impression”
Cold and misty morning, I heard a warning borne in the air
About an age of HELOCs where no one had a reason to care,
Of late the loans have withered, bankrupt owners shivered in the cold
Now their faces captured in the lenses of the jackals for gold.
I’ll be there
I’ll be there
I will be there.
Suffering in silence, they’ve all been waylaid.
They tempt them and they cheat them, in a salesmanlike way,
Praying for survival at the end of the day.
There is no compassion for those who strayed.
I’ll be there
I’ll be there
I will be there.
There must be someone who can set them free:
To help them borrow from a mortgagee
To help the feckless and the poor FB
To ask what’s left of humanity.
Can’t you see
Can’t you see
Can’t you see.
I’ll be there
I’ll be there
I will be there;
To help them borrow
To make them borrow
Blight tommorow!
Step inside! Hello! We’ve the most amazing show
You’ll enjoy it all we know
Step inside! Step Inside!
We’ve got thrills and shocks, supersonic falling stocks.
Leave your Hummers at the box
Come Inside! Come Inside!
Roll up! Roll up! Roll up!
See the show!
Left behind the bars, rows of Brokers heads in jars
and a mortgage on a car
Spectacular! Spectacular!
If you follow me there’s a speciality
some tears for you to see
Misery, misery,
Roll up! Roll up! Roll up!
See the show!
Next upon the bill is our house upon the hill
We’ve a spokesman who’s a shill
What a thrill! What a thrill!
And not content with that, with our hands behind our backs,
We pull Greenspan from a hat,
Get into that! Get into that!
Roll up! Roll up! Roll up!
See the show!
Welcome back my friends to the show that never ends
We’re so glad you could attend
Come inside! Come inside!
There behind the glass, is a record unsurpassed
Be careful as you pass.
It won’t last! Move along!
Come inside, the show’s about to start
Guaranteed to blow your bank apart
Rest assured you’ll get your money’s worth
The greatest show in Heaven, Hell or Earth.
You’ve got to see the show, it’s about to blow
You’ve got to see the show, it’s rock and roll…
Soon the Realtor Queen with the Subprime Loan Machine
Will perform on guillotine
What a scene! What a scene!
Next up on broadband will you please extend a hand
to the Blogger’s Ragtag Band
Sell some land, take a stand.
Roll up! Roll up! Roll up!
See the show!
Performing on a stool we’ve a sight to make you drool
Handcuffed brokers and a mule
Keep it cool. Keep it cool.
We would like it to be known the exhibits that were shown
were exclusively our own,
All our own. All our own.
Come and see the show! Come and see the show! Come and see the show!
See the show!
brain salad surgery one fantastic album. Early 70’s classic rock rules!
“‘We could clearly see this fallout. They were overleveraged, their home values have declined, and interest rates are higher,’ said Marty McCormick, owner of a Santa Rosa mortgage broker.”
———————————————–
He could see the fallout when he was shoehorning people into the loans. Mortgage borkers (did I just invent a word?) not only promised FBs they could always refi, they knew the FBs would HAVE to refi and so wrote them as to guarantee themselves repeat FB business, even going for the jugular with prepayment penalties.
Mortgage bonkers?
Mortgage barkers?
Yet another piece of wisdom from Mr Denninger
“If you want to get cute with an interest-only loan, option-arm or other means of committing financial suicide via lender extortion so that Wall Street can pay out a few billion in bonuses and mortgage house CEOs can cash half a billion in options over 2 years, sorry, that window has been closed.
THAT IS A WINDOW THAT SHOULD HAVE NEVER BEEN OPENED, AND THE PEOPLE WHO DID OPEN IT SHOULD BE IN FEDERAL PRISON FOR THEFT BY CONVERSION FROM THE AMERICAN PUBLIC, NOT WHINING TO UNCLE BEN AND DEMANDING FED RATE CUTS (which wouldn’t help anyway!)” That means you Jim Cramer.
It’s always about money. Who makes the most? Fees on loans are big bucks.Make the loans, turn them over to the “next sucker”. End of story. PS. Don’t get caught holding the loan. Take your cash and run, perhaps many Wall St boys are/will live overseas now and will be “ready” for the next scam. Plenty of stupied investors will invest again if they got the money.
“…Take your cash and run…”
It would be easier and more profitable if we left Iraq and invaded the Cayman Islands instead. Oh, more amusing, also. And (following the presidential candidates) we shouldn’t take ‘nukes off the table’.
You tell them JWM in SD.
I think the public is going to be surprised at just how many transactions that are now defaulting and going into foreclosure where the by product of schemes by the real estate professionals . I have often wondered why more real estate people didn’t stand up and object to some of this stuff they clearly saw going on in the real estate office . When your own Broker Boss is sitting up straw-buyer deals ,what do we expect from the industry . Real estate brokers are suppose to supervise all agents that hold their sales agent license under that Broker of record .
Precisely HW. I have said this many times on this and other blogs. I live in SD…the epicenter of this bubble. I can’t tell you how many MBZs and Escalades I see each day. If you want to know where the value of your savings relative to house prices went in the past five years you need look no further than the DBag Mortgage Brokers and Scummy RE agents running around in their Beemers and MBZs acting like they are doing real business. That is where the value of your savings went and they don’t even understand why. They have been grifting off alternate hyperinflation that was M3 credit for the past several years. While the REIC scum was making 100s of thousands of dollars here in SoCal, their Hedge Fund enablers on WS were making tens of millions by putting the financially unsavy into debt.
This is sickening to core and I look around right now and i know most people within my eyesight have no clue. They just think it’s some weird WS Hedge Fund Financial Guys who screwed up and it will have no effect on them. The next 3 months are going to be a real eye opener for a lot of people here in SoCal. It’s about time.
You know, i have to agree with you there especially after reading that L.A. Times article above. The fuse has been lit in L.A. everything else is par for the course. How far will it fall.
Yes, the fuse has been lit for LA for sometime now in my opinion. That fuse extends all the way to Miami burns through Phoenix and the IE.
Everyone thinks that the $1M plus properties are immune and that is bullsh*t. Credit standards are going to get yanked harder still. Dont believe me? Look at what happened with Sarbanes Oxley act as a result of Enron and Worldcom. This Credit / RE bubble makes those two look like a drop in Lake Michigan.
I know you and I have had our differences in the past, but I’d like to bury the hatchet so to speak.
This is the Natual outcome of all the COMMISSION ONLY SCAMS that are flooding America today.
Last year on Craigslist there were maybe 100 day in NYC, today over 500 a day, by xmas i predict 1000 a day of FREE WORK Make six figure with a fortune 500 company, Be your own boss and earn UNLIMITED Income..nothing but Commission only “opportunities”….
This is where all the “GOOD JOBS ARE”….and why the unemployment rate is so absurdly low….
Wiz~
RE: I have often wondered why more real estate people didn’t stand up and object to some of this stuff they clearly saw going on in the real estate office
Carloads of appraisers went to Washington DC to protest the
abolishment of the rotational fee panel system in return for a system whereby the originator could select whoever they wanted.
Congress has known “the punch the number we tell you-or you get no more work” fix is in.
The fraud and corruption goes all the way to the top.
Unfortunately it looks like “The Top” is so ignorant that it still doesn’t know shxt from shinola. Thus instead of the Three Stooges we have The Stooge and therefore the consequence of the fall out after the Wall Street Gangs have once again raped and pillaged Main Street. This is the biggest political setup and sham since the lead up to the last Great Depression.
A friend used to sell mortgages, and started to point out that people couldn’t afford the mortgages they were putting people into. She refused to process questionable loans, and she was fired.
I would HIRE that kind of ethic!
Exactly. They should all be in prison.
BTW, the only person with balls to go after financial gangsters is a man named Putin. And he got slammed for doing it. But he took out the richest and most corrupt ahole in Russia.
What a strange role reversal.
Putin took them out and his cronies ended up with all the assets. Do you really think there is no corruption in Russia?
LOL
He defended the rule of law. Something we should try once in a while in the US. Putin went after Khodorkovsky because he broke the law. Funny to hear people ignore this basic fact.
Anyone that goes after a rich ahole must have another motive.
The law is the law. Period.
There is corruption everyone, especially in the US. But Putin actually put the richest man in Russia in prison. Let me know when that happens here.
Putin is awesome.
If you like Putin, Stalin must be your dream date.
Joe : Putin go after gangsters. Bwhaa.
You sound like the CEO for ‘Whole foods’?
Putin is the Grandfather behind it all. The reason he went after Khodorkovsky was that Khodorkovsky was dumb enough to openly finance Putin’s opposition.
Khodorkovsky didn’t realize whilst rich, he was still living under a Kleptocracy. Besided he didn’t Yukos through hard work either.
Exactly. I am AMAZED I read this kind of pro-Putin talk on this intelligent blog. Wake up, Putin has KGB written all over him. He IS the gangster. A couple of years ago, when he was visiting with W on his TX ranch, I heard W say something like “I looked him in the eye and shook his hand”, and that was a new day of hope… I wonder how many days it took W to wash the blood, dirt and slime off his hands after that KGB handshake… I will take the [dire] situation here over Russia’s lawlessness - every day of the week and twice on Sundays. BTW, I grew up there, still have friends there, and know what I am talking about.
I am getting sooo excited I can hardly contain myself. I have made a few of my friends (who are homeowners) mad as hell by suggesting home prices will fall a further 30 to 40% before they become fairly valued - mind you - fairly valued is still not a great deal. I think a 50 to 60% drop is a GREAT deal.
I have been tolling away at my 40 hr per week cube job saving every penny (for a down payment) for the last 7 years waiting for this perfect storm to form and now its FINALLY here.
I think I am within striking distance now (i.e. 1 to 2 years) from getting my dream house in Southern California at a 50% discount from some sobbing family who just lost it all. Makes me feel GREAT…Capitalism at a work.
Sounds like you might be a logical future customer for the Realtor quoted in the SD Union Tribune piece:
“People say to me, ‘I know how bad the market is; just hang in there,’ ” veteran San Diego agent Gary Kent said. “I say, ‘I am busier than I have ever been because I am handling foreclosures.’ ”
Kent, who helped buyers chase escalating prices as home values doubled between 2000 and 2005, said moving to the distressed side of the business was a practical decision. “I have to go where the business is.”
On one hand I admire the practicality.
On the other… what a greedy hartless… (the Realtor ™, not GS).
I should be numb to this by now… but somehow I’m not.
Got popcorn?
Neil
Woo Hoo! I think you’re getting it man.
I can’t wait to supervise the Sheriff kicking out the hapless squatters who defaulted on MY property preferably in the winter so they’ll be standing in the snow. “On to the street but you can leave the stainless steel kitchen appliances thank you!” I can see myself standing there….
Little Girl Toddler: Mr. Why is the Sheriff kicking us out of our house?
Me: Well, it’s because Mommy and Daddy mortgaged your future by buying a house they couldn’t afford because they thought it would go up in price and they’d get rich quick and easy.
Little Girl Toddler: Oh. Can I watch Sponge Bob?
Oh by the way, Forbes or Barons cover is “Bonfire of the Builders”. Inside is a picture close to the one I’ve been predicting for Time magazine: Mother holding swaddling, father holding hand of boy toddler “The End of the American Dream”. You know, drama, drama, drama over a bunch of idiots who needed to learn the hard way about “buy low and sell high”. Yes, given access to instant wealth beyond my generations’ dreams they promptly wasted it because they don’t know the value of a dollar anymore.
it was business week, not forbes
I think it’s the cover of Business Week.
Sorry, posted without refreshing my computer after being gone for a few hours.
Anyone has heard any recent comments from Chris Thornburg?
You prompted me to Google him and I think it’s Thornberg (even though there are some items where it’s spelled with a U).
“Don’t tell that to Rich Garrett, a general contractor who’s convinced he got a steal on a 1,900-square-foot home that sits on an acre in Fallbrook. He bought it in June for $470,000.”
““Foreclosures are great,” he added. “For people willing to put in sweat equity, this is a good deal. So far I’ve spent $30,000, I’ll spend another $50,000, and it will be worth $850,000 when I’m done.””
How long will it take him to find that $850K buyer? It could be awhile. Will his contracting work tide him over until it does?
This investor is toast but he does not know it. What buyer would buy in todays market or even in the next few years at his asking price? Still plenty of fools out there and no one can help them except for a reality awakening.
I just shook my head reading about that asshole, the other guy too - the engineer who bought a “fixer” in Tierrasanta for 575K. What a couple of tools! I mean with everything we have seen and what we still know is coming, and with the siezing up of the mortgage market this week these guys are still leveraging their ENTIRE FINANCIAL FUTURE on SoCAl housing. Freaking UNBELIEVABLE~
‘1,900-square-foot home that sits on an acre in Fallbrook. He bought it in June for $470,000.”
- For one acre in Fallbrook he might of only overpaid by 100k. It is as hot as hell there and twice as dry.
“For one acre in Fallbrook he might of only overpaid by 100k”
Gosh, you’re right, because everyone KNOWS that Fallbrook is full of doctors and executives.
Yup - 800 FICO-toting trust funders (pretty much the only people that can get loans these days) are dying to move to FALLBROOK…
What a joke. Was in Fallbrook last week for a wedding - what a dump. My wife and I needed to stop to ask for directions, but were too scared by the look of the local tattoo-sporting, baggy-short-wearing gangster types to even stop…so we just drove on and showed up 20 minutes late.
Damn! If it wasn’t for your wussy-ness you would have been on time. Take a self-defense course and grow a pair. Fallbrook is not bad, it sure beats all of the OC east of the 405.
Have you ever been east of the 405? Ever heard of Yorba Linda? Irvine? Coto de Caza? Not exactly ghettos.
No, but I’ve been pretty far east into Anaheim on the La Palma and it was not pretty.
“No, but I’ve been pretty far east into Anaheim on the La Palma and it was not pretty. ”
Northwest OC which is the OC north of the 55 fwy has slowly transformed into a heavily immigrant region overall. True there are no real ghettos such as Scentral LA but there are pockets of low-income apt districts in such areas a buena park, Stanton, westminister, south fullerton, La Palma, old Anaheim central district, Santa Ana, GG, La Habra, Orange, which is not an inclusive list.
There are still lots of solid middle class communities, or predominantly middle class such as Yorba Linda, Brea, PLacentia, Tustin, Cypress 90630, GG 92845, huntington beach, fountain valley, costa mesa,north Fullerton,Anahein hills,not an inclusive list but these areas still fairly stable and predominately SFH areas. This is NW OC, or north OC above the 55 fwy.
Yeah, the drive along LA Palma ave thru Central/west Anaheim goes thru one of the worst immigrant-impacted OC slummified zones, thou not nearly as bad as LA county ghettos. But this is unrepresentative of NW OC overall, which is still over 50% clean middle class stable, though fraying a bit at the edges here and there.
To rate region by region on a rough scale, i would take NW OC over IE and most of LA county anytime. My favorite city would be Huntington beach, next is Costa Mesa, then Yorba linda. Garden Grove 90845 very clean and solid middle class, thou a small blip on the map.
Geez, how about suggesting the purchase of a GPS. Works great and you don’t have to try to be a hero if you get lost and then end up shot because you “had some”.
Better yet, some wireless companies have a by the day option for GPS instructions to your cell phone.
Stan, I hate to break it to you, but the only thing noteworthy about Fallbrook is/was Tom Etzger (and that isn’t a selling point for me)…
Sorry, sb Metzger
““Foreclosures are great,” he added.
By around 2010, some piece of property somewhere, will achieve the absolute record for foreclosures.. like 9 (or 19?) consecutive owners/foreclosures in a 5 year period.
If it’s luck holds out, Rich Garrett’s property might be in the running..
CNBC survey on what the FED will do and should do.
Have fun.
http://www.questionpro.com/akira/TakeSurvey?id=754937
Somebody designed that in about 30 minutes. All sorts of leading questions, forced answers, etc. Worthless.
got a question for some of the more experienced folks here. I am a first time home buyer and have never dealt with a Realtor or a Mortgage Broker. My questions are:
1) how do you approach a Realtor and say that a) you just want to make low ball offers. b) are in no hurry to buy and if he / she pressures you in anyway you will show them the door and c) are willing to sign on the dotted line if they can bring you a good deal so as not to waste their time? Is it as simple as just telling them or do realtor’s usually get turned-off when approached about that?
2) How do you keep from getting ripped off by Mortgage Brokers (.i.e. former French Fry flippers)? From what I understand, there are so MANY hidden fees and incentives to get you to sign for a higher interest rate that obviously they are not working in your best interest. Also, if it helps to answer this question, my credit history is excellent.
Any help would be much appreciated.
Thanks in advance.
Atrain,
Why deal with mortgage brokers at all? I’d deal directly with a bank.
Sadly, here in Vancouver, I’ll have to wait about two or three years before I can even look at real estate.
Atrain:
1. Unlikely you will find a Realtor willing to do what you want unless you make it worth their while somehow. It’s really too soon to make lowball offers in most markets, so I would wait a while unless you see sales happening at 30% discounts or better in your market. Realtors won’t help you unless they think that they can work you up to a price that they believe sellers will accept.
2. Just say no to mortgage borkers. Deal directly with a lender. At this point, a broker can’t get you a better deal than what you can probably get from your local bank or thrift.
My advice: save up a bigger pile of cash and wait for the bloodletting to come.
My advice: save up a bigger pile of cash and wait for the bloodletting to come.
I agree. Eventually, realtors are going to learn that they need to start kissing the buyer’s ass, not the seller’s.
Whatever else you do, formulate a complete list of shopping parameters and then stick to your guns.
Do not accept anything less than an agent that is, without question, 100% on your team… Even then do not trust them unless and until both their skill and fidelity towards you is proven.
Prepare to be hunting for an agent / broker for a while.. the good ones are always in high demand, although in this dead market it might be somewhat easier.
You “keep from getting ripped off” by doing your homework.. it’s your money.
Considering you have about 2-3 years until things get really interesting, why not get a RE sales license so you can access MLS listings and get your commission back? There are offices that offer you no support but you can sign up with them for less than the monthly cost of a gym membership. If you’re in So. Cal., Goldstar is one example.
Atrain:
The I agree with the comments here about mortgage brokers. The reason to go to a Mortg broker these last few years has been to get 100% financing when you needed to lie about your income. You got a 2 year interest only loan at an artificially low rate with a prepayment penalty.
At your bank you have a relationship (you should if you do not yet.) At my bank, the loan officers are typically very experienced (average 15 to 20 years experience) and well educated (typically BS/BA degree.) They are subject to a thorough background check, and will not last long if any complaints by customers. Go direct and save.
Well educated. Like those Harvard grads on Wall Street who are about to plunge the country into a depression?
Low ball offers were a common everyday event up to a few years ago. Everyone an their great grand dad lowballed the offers on homes. So no problem there…
If realtors tell you to offer above asking, they are lying.
Any help would be much appreciated.
Be goddamn sure you ask what will happen to your mortgage after you close and who will do the servicing.
I’d be lookin’ for a lender who’s keepin’ their origination stuff.
Might pay a little higher rate of interest, but if you ever need some forebearance because of hard times, you sure ain’t gonna get from some Chinese guy living in Lam Le Lou.
I personally knew one guy who’s note got sold so many times his payments never caught up to the current holder.
He was constantly getting nasty collection notices; allusions to foreclosure and what-not which was unnerving and stressful for he and his wife.
I warned him to go with the local saving bank, but he ignored me much to his later chagrin.
Good points hd74man. By the way ,that blew me away that Washington didn’t respond in a serious way to the Appraisers that alerted them to the corruption going on at the time . I hope this comes out in the wash ,in the “Great Investigation ” that takes place way to late after the horse is out of the barn and the damage has already been done .
You can just tell the Realtor what you want and they’ll tell you what they think your chances are. They want your business so they’ll be polite, but truthful about it. They don’t want to waste their own time with something who has no chance of buying.
One thing that’s always helped me when buying, don’t get attached emotionally to a house. Your greatest power in these situations is the ability to walk away from the deal. If you get attached to the house emotionally, you will pay a lot more for it.
As an extreme but common example of that, look how much people were willing to pay for houses during the boom. They hocked their futures just to own a shack some of them. Don’t be a loser like that.
Don’t Bank on Bernanke Riding in on White Horse:
http://www.signonsandiego.com/uniontrib/20070805/news_1b5fed.html
got deflation?
Sounds like an eventual bailout is in the bag…
“Most of these upsets stabilize on their own, but some do not. I’m not saying that the Fed should ignore what happened last week – we need to understand what is happening,” William Poole, governor of the St. Louis Fed, said in a speech Tuesday. “However, it is important that the Fed not permit uncertainty over policy to add to the existing uncertainty. The market understands, I believe, that the Fed will act in due time, if and when evidence accumulates that action would be appropriate.”
This is my biggest fascination– I don’t think it’s an eventual bailout… but it’s not deflation either. The Fed only cares about perception– that it controls interest rates, money supply, and won’t let things get too out of hand. Well, I think they’ve been really worried about inflation from this whole housing bubble. There’s a lot of unrealized gains there that people haven’t spent against yet (it’s true!), and it’s freaking amazing that with weak dollar + housing wealth you can still get 50″ plasmas sub-$1000 and beamers sub-30k.
So I think they’ve been biting nails about all that debt that’s entered into the money supply being spent (and they got really nervous when they tightened repeatedly and credit loosened substantially). And now it’s a big relief! Let all these foreclosures, credit tightening wipe out that inflation and they are cracking champagne and watching the cramer vid on repeat. AND the value of the $USD is being propped up by the “flight to quality” (10yr at 4.68!).
So it’s like they are holding the leashes of 3 dogs that are pulling in opposite directions. If they drop a leash (by lowering, tightening, or watching dollar plummet against yen), they are in big trouble. So I think they don’t mind if tight credit causes consumer spending to drop, we do some recession, unemployment at 6.0%. Most importantly, China takes it on the chin. Because they know that when they loosen, they can still affect inflation immediately. We’re not Japan yet.
I just saw on CBS marketwatch and Richard Russell that the stock market shills are crying for Ben B to lower the discount rate! What a bunch of cry babies. If they were really smart they would take the other side of the action(as I did) and buy puts on the lenders and home builders as a hedge. Has worked out very nicely. Why bail out STUPIDs. I blame the CTA(Teachers) and NEA(Education) for not educating the peoples to read and write and math skills. Plus the lefty Nanny attitudes. Oh, sorry that I stepped on your brain.You should go to the nut house with Cramer.
got Armageddon?
Bwaaa haaa ha!
Oops, I really need to learn to hold that in.
Cramer , might end up getting the blame for Monday… wouldn’t that be poetic. I’m watching Bloomberg and they’re predicting a really bad start to the Hong Kong stock exchange. Before they show Asian indexes they warn “cover the eyes of small children, this will traumatize them.” Ok, the numbers aren’t bad… but momentum is down.
I’m going to steal your tag line Paul (just for this, then back to my trademark popcorn).
Got Armageddon?
Neil
-563 for Hang Seng index
-903 for HSI Finance
-759 Materials on an index of 16700
Gonna be an interesting day later on
Yen/Dollar down to 117.56-59
For those who are worried about timing the bottom right for a home purchase in San Diego, here is yet another rule of thumb: Don’t buy until the foreclosure share of sales exceeds the twin peak levels of the 1990s. At the current rate of adjustment, it looks like we may be there by mid-2008 or sooner.
I am (conservatively) assuming an approximately-linear adjustment trajectory since one year back; projecting linearly at the recent rate of adjustment for another year would get you to 2 X 9.7 - 1.7 = 17.7 percent share of sales by this time next year. An exponential projection would get you there much sooner. A more conservative assumption of a leveling off of foreclosures is not warranted yet, as the recent rate of foreclosure increase shows no signs of slowing.
“During the second quarter of this year, the proportion of foreclosure sales shot up to 9.7 percent of all resales, compared with just 1.7 percent a year earlier. But that’s still off the peak of nearly 15 percent seen twice during the mid-1990s, according to DataQuick.”
In San Deigo, Sacramento, Las Vegas, Phoenix… foreclosure sales will break 25% of sales (in the darkest days of this downturn).
Buy in Summer 2008? No. Winter 2009 is the earliest. Some of my fellow bloggers will argue 2010/2011. They are more likely to be right than for my Winter 2009 to be too late. (By about 20:1).
Got popcorn?
Neil
Neil…. Are futures on POPCORN going to go through the roof on Monday?
$250 billion more will reset by Xmas. $500 billion more will reset by July ‘08. Where is Dandy Don and his song when we need him?
With websites like zillow.com and trulia.com around, you can now time the bottom pretty well. They have numerous statistics about any neighborhood in the country.
Oh wait…
“Someone who bought a $600,000 home 2½ years ago with an interest-only loan and a 20 percent down payment [yadda yadda]…”
Wahahahaha! That’s a good one. 20 percent DP. LOL
In reading other threads yesterday, there were comments about how LA doesn’t seem to be getting hit by the downturn. For those of you looking for a ray of hope…
Been tracking Countrywide’s REO lists for the past 7 or 8 months. Besides more than doubling, I’ve noticed in the past 2 months that there are more and more Orange County and Ventura County listings, where there were none three months ago. It’s like the indians are circling the wagons.
Also, prices are dropping quite a bit in the less sought after areas of LA. You can now get a 2 bedroom condo in Los Feliz and Silverlake for under $500,000 (about 10% to 15% drop). Don’t even get me talking about Downtown and Hollywood. Looking at a perfect storm of inventory + timing next year.
So, don’t fret my dears. Just like I can smell a rain storm coming, the faint odor of disaster is drifting about the air around us all.
Pardon me if I don’t get excited about seeing two-bedroom condos in Los Feliz/Silverlake selling for *only* $500,000. When they get down to $250K, then we’re approaching reality. What would a 2-bed condo in Silverlake rent for? Maybe $2200/month? So they’re worth about $220K..
I agree that next year some time we’ll see some serious movement.
I was thinking the same thing. A 2/2 condo in Los F is a punishment. Life has sooooo much more to offer if you think bigger.
my friend bought a 2 bd townhouse in an ok van nuys section and paid 135k in 1998. vn will be a dump soon, but at least he didn’t pay thru the nose. i would not pay 250k for a CONDO unless it had spectacular views/oceanfront or spectacular, well established neighborhood and sl and lf do not qualify on any measure.
Called a broker friend of mine servicing Countrywide’s REOs and he said they are still , ‘not real’. Trying to get ALL their capital out even though most are under water! ‘09 at the earliest IMHO.
Is Countrywide just servicing these homes? I know that Countrywide sold a lot of their mortgages to Lehman and securitized a bunch of others and sold the bonds directly, but they kept the servicing role. My eyes bleed whenever I read a ’sales and service’ contract such as the ones archived by the SEC, so I am hazy about the details, but the servicer (Countrywide) might be on the hook for the lost principal when the house finally sells, but they may be able to hold off on selling them for up to three years after foreclosure. Perhaps they are holding these houses in a desperate hope of some bailout instead of forking over good money to the bondholders. Or, perhaps they are considering the possibility of defaulting on their service contracts?
“It’s like the indians are circling the wagons.”
Or like the floating turds circling the drain. “Honey, please put the seat down when you’re done.”
Like I said, serious movement. May take several flushes
When Zero down goes away, the pressure will start building.
Stand back, stuff could fly everywhere!
LA will drop and drop hard. I still recall 1994/1995. It amazed me how certain neighborhoods kept most of their value and then fell the hardest in the last years of the recession.
Expect to hear about employee movements in November; quite the Christmas present for LA.
Not much will happen this year in LA until the November to February timeframe. Where I want to live has dropped 4% to 15%. (Yes, some areas are harder hit than many realize. I’m just looking at certain quality 2,200 ft^2 to 2,500 ft^2.)
Got popcorn?
Neil
When Los Angeles goes, well, I like to use this analogy from a previous disaster involving a bunch of nitwits who thought they were invulnerable….
“ONE LONG MOAN”
And then with all these there fell on the ear the most appalling noise that human being has ever listened to–the cries of hundreds of fellow-beings struggling in the icy cold water, crying for help with a cry that could not be answered.
Third Officer Herbert John Pitman, in charge of one of the boats, described this cry of agony in his testimony before the Senatorial Investigating Committee, under the questioning of Senator Smith:
“I heard no cries of distress until after the ship went down,” he said.
“How far away were the cries from your life-boat?”
“Several hundred yards, probably, some of them.”
“Describe the screams.”
“Don’t, sir, please! I’d rather not talk about it.”
“I’m sorry to press it, but what was it like? Were the screams spasmodic?”
“It was one long continuous moan.”
Been tracking West Hollywood for the past couple of years. Realty Trac has 140 or so REOs in 90046 alone. And the MLS lists 4 foreclosures and one short sale among the 190 or so condos listed for sale — the highest number I’ve seen yet. It’s coming, just more slowly. There’s been a lot of speculation in my neck of the woods, so maybe here sooner rather than later.
And there’s not much to do about this particular downturn other than wait for the market to correct itself.
——————————————————————————–
There IS one thing, and ONLY ONE thing you can do about this particular downturn…
Drop the prices. ALOT!
Only then will the market correct itself.
Some excerpts from this article.
“I’m a little nervous that this could be a brush fire that could get out of hand,” Mr. DiClemente said.”
“This would be a good time for the Fed to impose some discipline on financial markets that we haven’t seen in a while,”
http://www.nytimes.com/2007/08/05/weekinreview/05berenson.html
“‘It’s one of those out-of-sight, out-of-mind things,’ McBride said.”
out-of-pocket
Seems like prices aren’t going to drop all that much as a result of market forces. The banks will just assume ever larger amounts of REO, until the regulators swoop in and say, “your balance sheet looks like ass, liquidate!”
Josh
“They’re going to want the best borrowers and the best loans”
Absolutely correct. Why would I fool with homeowners any more if I can get the same rate from the national govt of Iceland and the national govt of Brazil, and get paid back in currencies that are not being intentionally devalued.
“and get paid back in currencies that are not being intentionally devalued.”…Yet… Wait until the competitive devaluations begin. I’m not so sure about Iceland, but I have no confidence in South American governments’ behavior when the going gets tough.
I’m going with the cd’s of this nation…
http://en.wikipedia.org/wiki/Nation_of_Celestial_Space
iceland is over 50% drunk. they would not notice anyway!
You may be right, but maybe my underlying attitude is that the USA now has, in effect, a South-American-style government.
Testify, az. Mirrored sunglasses for all politicians.
“Even folks who never dealt directly with Crisp & Cole feel fallout in some neighborhoods where the company did heavy business. Greg and Elaine Hull moved to the upscale Grand Island development last year, never thinking the gated neighborhood would soon be dotted by abandoned properties with brown lawns and dead trees.”
“‘I’m livid,’ Elaine Hull said. ‘I have to look at that every morning.’”
- Don’t worry Elaine, you will soon be upside down on price so much that you will either walk away or foreclose.
Anyone on board for FAF puts this week?
Not “this week”. It’s suck to high heaven but it is due to a bounce. If I was an Elliotician, I say that most of wave 3 of current downward slide may be done. I’d wait until OPEX to buy.
What is interesting is a huge Jun 08 50 Call. 11K block. This is biggest bet of all the months I tabbed through. The largest put block is ~2k of Aug 45’s.
I was thinking, someone knows something I don’t. Well it turns out that volume was placed back in May 07. Ever since then, it has been going down from ~7.20 to 1.90 today. I think someone who bought these must be drinking the cool aid. The person who sold them, must be laughing big time.
Wait, I see a 19k block of Jan 09 60 calls which best prices in mar-June. After that SHTF and down > 50%.
Don’t make it so, number 1…
“About half of all loan applications are rejected today, twice the number from two to three years ago, said Joan Picard, a Cal-Bay Mortgage senior loan officer and president of the Redwood Empire Mortgage Lenders Association.”
Engage!
what kind of losers were the 25% who were denied last year? anyone with a pulse seemed to get any toxic mortgage they wanted…
Sadly the 25% were more likley fixed rate apps that they decided would be better off as interest only.
Next year: “About 100% of all loan applications are rejected today, twice the number of a year ago.”
Ben, please tell me you are not going to drop another one of my posts again???????
You also? This sucks.
what are you guys doin.. selling dope?
Pulling off land fraud is Dyn-O-Mite…
“JJ’s most expensive property was bought from Alan Cole, son of Crisp & Cole’s one-time managing broker Carl Cole. JJ paid $795,000 for a southwest home in April 2006, property records show. What Alan Cole previously paid isn’t indicated.”
I checked Bezar’s website for No. VA and all of their house clusters are in the far, far suburbs. Far as in 2 hour commute just for Tysons. They will not sell now.
I believe the Hispanic population is disapearing in metro DC. Why? More wait staff is white which I have never seen in some of these resturants. Or the commute is to far for them as most have been pushed out to the far burbs also.
Tommorow a house is being auctioned off in my neighborhood.
Supposedly according to one of my agency friends the next 60 days is not looking good. The possibility of an event based on blah-blah has really climbed. I believe Bin Laden said he could not beat us but he could bankrupt us.
I believe Bin Laden said he could not beat us but he could bankrupt us.
Right on observation!
I believe we bankrupted ourselves by wasting all our time and energy on McMansions.
Right you are, jerry. BTW, I think someone mentioned that the big joke about Al-Queda is that it is also known as Al-CIA-DUH, on account of back in the day, it was an organization that was covertly US backed to keep the USSR out of Afghanistan.
how much of a run up on the price of caves in the last 5 years?
More like overt, there was nothing secretive about it. I remember a Reader’s Digest article back then about how we trained the Afghanis to fight the Russians.
And when all out economic collapse hits - you can bet money that ‘bin Laden’ will get the blame.
Yep. Karmic retribution for some of us.
My beloved nephew is going to Iraq to face those bombs I taught the Iranian’s and Afgans to make.
Damn fool wants to go. Damn it all.
“I believe Bin Laden said he could not beat us but he could bankrupt us. ”
I think we’re quite capable to bankrupt ourselves; we don’t need Bin Laden’s help.
Funny, that was precisely how we beat the Soviet Union.
Here’s a post from the Roubini blog.
For those who understand german:
http://www.tagesschau.de/video/0,1315,OID7221678,00.html
This is a comment from the ARD about the “problems” which have occured. It was broadcasted on Friday.
What he basically is saying is that the comparison with the 1931 Banking Crisis by the Bafin boss Sanio should have never been told publically. BUT he thanks him, since what he said is the truth. The Americans have been living over their means for so long and have an “Empire of debt”. It is time for everybody to reconsider their saving attitudes. The price for Gold and other “Safe” investments is going to go up.
Bit by bit .. the severity of this crises is working it´s self closer to the wide masses.
The Sunday Night Recap:
“NovaStar temporarily suspends funding due to “severe secondary market disruptions”
1st National Lending Services suspends all of the following products: Jumbo, Alt A, Pay Option Arm’s, and Seconds indefinitely (email to brokers) and throws in a round of layoffs for good measure
First Magnus suspends all jumbo ARMs and expanded and niche products (email to brokers)
Credit Suisse Wholesale suspends Subprime, Second Lien, Choice Payment ARMs and all 2 and 3 year ARMs
Wachovia pulls out of Alt-A temporarily
Wells Fargo pulls out of Alt-A
Aegis Wholesale suspends option ARMs, expanded Alt-A and second lien products (email)
Homecomings eliminates rebate on all Option ARMs (email)
Countrywide increases pricing and fees on the LTV/FICO/ Documentation type grids for all documentation types, adjustments for Subordinate Financing, Cash out transactions and larger loan balances (email)
National City makes changes
IndyMac increases pricing and spreads on Alt-A products
American Home Mortgage workers pack it up
Fieldstone stops funding ”
Posted by Yal at CR from blownmortgage.com.
Add to this, Bear Stearns has a Board of Directors meeting,on Sunday, in August, to oust Spector, their fixed-income maven.
The ground is really shifting.
This is pretty big…
First Magnus, Wachovial/World, Wells, Aegis and Homecomings. That is a guillotine to Alt-A. Do folks put “sold” signs up when their deal is about to close, or after it’s already closed and funded? I imagine there are a lot of deals and a lot of contingencies that are about to fall through.
This is just since last Thursday. The speed of the credit tightening is astonishing to me.
I got to say ,being a old lending dude from the past , that once I found out what kind of loans they were making ,I knew it would be fast and brutal once the investors started losing money .
In the past prior to 1998 ,investing in long term mortgages in the United States was a low risk investment . The higher down payments covered potential loss as well as PMI insurance on low down deals .Insurance Companies and pensions plans used to invest alot in long term mortgages in the secondary market in the past . I don’t know how heavy these institutions got into the recent credit markets,but it stands to reason these big players were into it .
We all know that when Insurance Companies lose money they like to pass the cost on to the consumer .
Was wasn’t all these crooks and flippers and greedy a-holes in the RE business ,who were pumping up the prices, thinking about how the loss to other parties would be passed right back on to the consumers in the long run ?
What about the loss to future generations and the higher prices in taxes and other bail outs that will strain the peoples budgets in the future because of the bubble of all bubbles in housing . It’s just a crying shame ,I tell you ,it’s just a crying shame .
What about the loss to future generations and the higher prices in taxes and other bail outs that will strain the peoples budgets in the future because of the bubble of all bubbles in housing . It’s just a crying shame ,I tell you ,it’s just a crying shame .
But, but… LAInvestorgirl told us that asset bubbles are victim-less crimes.
This is like in a western movie where something bad is coming to town and everybody is pulling their shutters closed. Bar the door, Katy!
The music of your life…
http://www.youtube.com/watch?v=G0e4saINO_s
Arroyogrande posted this earlier. I wanted to repost it. Comments?
Is the Real Estate Market in Bubble Trouble?
By Kendra Todd, winner of “The Apprentice 3″
September 26, 2006
http://tinyurl.com/ydjfbp
“You can’t go anywhere without hearing people talk about “the real estate bubble.” Such talk drives me to distraction, and I’ll tell you why. It’s because there is no real estate bubble. Bubbles are for bathtubs.
Despite a thousand articles in Sunday newspaper real estate sections, the bubble is a myth. The real estate markets in many areas are going through a normal correction cycle. I’m going to tell you how to recognize the signs of a correction in your market, how you can avoid getting sucked into “bubble trouble” and how you can even benefit from the current environment.”
“Now is not the time to sell. But it is a great time to buy.”
According to the OED:
wannabe (n) see Kendra Todd.
Freaking Airhead!
Despite all of the real-world numbers and statistical data pointing to signs of a definite bubble, Kendra dismisses it all with her superior logic and intellect by saying “bubbles are for bathtubs”. Thank you Kendra. Now that you’ve set me straight I’ll head off to Countrywide to get the biggest I/O ARM that I can “qualify” for and bid more than the asking price on a Miami condo.
More…I’ll have to do a “best of Kendra” post soon…
I like how a market is considered “bubble proof” if it declines *no more than* 5% a year:
What Makes a Market Bubble-Proof?
By Kendra Todd, winner of “The Apprentice 3″
January 10, 2007
http://tinyurl.com/2bkhjy
“…overall, the “bubble” was nothing more than a long-overdue correction expected in markets across the board. That’s only natural after the run-up in prices we’ve seen over the last few years. Yes, some markets are experiencing considerable value declines that can be classified as a “bubble,” but I could probably count those markets on one hand.
Avoiding the Pain of the Next Correction
What does this mean? It appears that we have hit the low of the market’s down cycle and are slowly recovering. Median prices on resale homes nationally are down 3.6 percent from a year ago, but we should start seeing prices stabilize. As prices bottom out, the buyers who have been sitting on the bench waiting for the best deal on a home will get into the game, increasing competition and driving prices back up again, though I wouldn’t expect another boom any time soon…”
“…Chances are you can find more than one bubble-proof market within 100 miles of where you live.
Keep in mind, however, that while some markets are bubble-proof — I define this as being unlikely to experience a decline in prices of more than 5 percent in a single year…”
You know, I watched the first season of the apprentice, and a tiny bit of the second. I am so glad that I quit viewing that nonsense. Just a bunch of typical morons who are only chosen for the show based on diversity and drama. Maybe this dimwit is trying to land a cushy top job with the NAR. Idiot.
“Someone who bought a $600,000 home 2½ years ago with an interest-only loan and a 20 percent down payment could see monthly payments jump from $2,150 to $3,100.”
Did anyone actually buy 2½ years ago with an interest-only loan and a 20 percent down payment, or is this guy talking about some kind of mythical creature?
And if such buyers existed 2½ years ago, I have to suspect they are nearly extinct, as most Americans don’t bother with cash savings on the order of $120,000, and anybody who has this kind of dough to sink into a current home purchase has to wonder if it will get wiped out in the downdraft…
“…has to wonder if it will get wiped out in the downdraft…”
and here I wait, with multiples of that. I figure by the time it’s safe to go back in the water I’ll be able to just pay outright with cash.
Seeing as how prices will (hopefully) be at rock bottom and cannot fall further when the time to buy arrives, i’m toying with the idea of leveraging to the max.. and begin a Joey-Dynasty that’ll last for generations.
As far as a 480K IO loan, i can see doing it but only if the plan is to fixer-upper and turn the property over asap… if possible in a few months max… AND have a buyer lined up even berfore taking control of the property. Of course, it’s always risky and now is certainly not the time to try it.
Whoever got stuck in such a situation for 2 1/2 years and counting was either a fool or had some really bad luck.. or both.
Anyone who bought a $600,000 house with an I/O loan did not put down anywhere near 20%. In fact I’d bet my life savings that they put down nothing at all. The entire point of an I/O loan is so the buyer does not pay anything more than absolutely necessary to get the house. The worst part is these fools think they’re so much better than renters because they are “building equity”. Renting from the bank does not build equity.
20% maybe more likely than you think — I’m assuming that it was a trade-up.
We sold our Sonoma County house in 2005. I expect to see it show up on the foreclosure list any day now.
Just an FYI my login of smart renter no longer applies.
I left central California as a design engineer and relocated to Austin TX. Go figure I got a job that pays more and yep I purchased a home. I looked at renting and it was a losing deal, here it’s actually cheaper to buy then rent.
Goodbye California, someone please turn out the lights when the last engineer leaves!
Hey, take it easy. Everyone wants to leave, I mean live, here…except you. Buying cheaper than renting…how absurd.
I hear you reuben.
I left Austin,TX in summer 2006 [sold our 3 yr home in 2005 for a big loss] and moved to SoCal where the pay is significantly lower while rent/house prices are outrageous.
And all I got was a slightly better weather. Argh.
I’m getting out of here ASAP. Interviewing out of state next week. I’m going where property is really cheap. I’m not telling you buzzards because I don’t want you descending on the place and raising the prices.
“I’m not telling you buzzards because I don’t want you descending on the place and raising the prices.”
HAHAHA, Yeah!
I have never ever watched ‘The Apprentice’, and that is because the stuff atop Donald Trump, theoretically his ‘hair’, makes me as crazy as a weasel in a blender with two icecubes. I mean it, I can’t tolerate it for two little seconds and must flee.
But if nitwits like this Kendra ‘No Such Thing as a Bubble’ Todd person appear on the show, then clearly I have missed nothing and I was fine just sticking with SciFi and the cooking channel. Speaking of t.v., is it true that ‘Flip this House’ is now showing people who make no money and instead reveal themselves as REtards? Because I might watch that, too.
I liked your pray to Jebus post : )
“Speaking of t.v., is it true that ‘Flip this House’ is now showing people who make no money and instead reveal themselves as REtards? Because I might watch that, too. ”
Well, it’s getting closer, but we’re not quite there yet. They still don’t take in to account holding costs and realtwhore fees.
Seems like the bay area is one of the very few not declining. And I’m getting tired of waiting.
Can someone explain why its holding up?
Thanks.
yeah, they call it Alt-A bay for a reason. Alt-A is now dead, by sudden stuttering rerationality of lenders. In September and October you will hear that August and September were “record declines” (possibly “the bottom (false)”). After that, prices will decline gradually through february and (miraculously) rise again. Around Next August it will begin declining more precipitously for the next year, and bump up less steeply in spring. So on, so forth, losing about 15-20%/yr.
But you’re lucky! On the way up, price is determined by the most anxious buyer, on the way down by the most desperate seller. The secondary market will create more desperation in the high end earlier than history dictates. The “golden age” for buyers in affluent areas will only begin tomorrow as “Alt-A” has only collapsed as of midnight 8/3/07.
Unfortunately, if you are in Bay Area, Seattle, LA, Manhattan, (everywhere else that’s white and “different”) realize that the market only peaked about 13 minutes ago, and you are riding a long… long… long… wave down to the bottom. Or you eat $50k per year on a $500K house.
If you aren’t patient you are going to end up in the financial meat grinder along with everyone else. Impatience is what got these dummies to buy houses at 3x 4x what they are really worth (compared to equivalent rental expenses).
Ah, don’t waste breath on Bluzer. Who’s to say that he (she?) would actually qualify for a loan these days anyway?
ajas — yep, it’s going to be a tough slog to the bottom. There’s plenty of smart money on the sidelines that is waiting for the bottom, too, so it’s going to be sticky and we’ll see plenty of mixed signals.
Add in the 10s of thousands of H1B immigrants wanting to relocate their parents from the home country, not much infill building going on, and you’ve got one mess of a market for people like me just looking for that 2002-level pricing.
We may get there, we may not.
It’s too soon to start lowballing. Wait until the sellers actually lower their prices, then lowball those lower prices. We need to shake out the “casual” sellers who don’t have to sell, who are just seeing what idiot will pay them 3x what they bought their house for. If someone isn’t in distress, you don’t have much leverage on them. You’ll be able to see the distressed sellers by looking up information about the property on zillow.com, seeing how much they paid for it and if they are underwater.
Be patient. In a few months we will be in steep monthly price declines. I was shocked to find out that mortgage companies only recently (days) clamped down on no doc and no money down mortgages. With these instruments out of the picture, 30% of the buyers are gone. If you aren’t patient, I have no sympathy. You are going to get screwed and whoever sells their house to you will be laughing about the sucker that just rescued them from financial oblivion.
Arm Reset Schedule:
The reset for Jan - July 07 was $240 billion
Reset for Aug - Dec 07 is $275 Billion
*** Reset for Jan - June 08 is $521 billion ****
Patience, grasshopper…..
If you all wait ,believe me, there will be fantastic deals down the pike . You people that refused to buy something you didn’t really qualify for will be rewarded for being sane .
I do feel sorry for some of the people that got brainwashed into buying a house that would stress the family budget based on the hype that they would be priced out forever if they didn’t purchase .These fear-based borrowers weren’t operating on greed as much as they were fearful of never being able to buy a home if they didn’t act now .Some people would say these fear- based borrowers bought under duress because of the real estate myths and spin going on at the time .
Yeah, the sad part for me personally is this whole thing has soured me so much on SoCal, I’m fixing to leave. Landlord’s raising my rent on already insane levels. Add in traffic and what will happen to the tax base in the interim…not such a pretty picture.
Oh, I forgot to add, despite having the cash to move in when prices go soft.
Probably not good that Warren Spector resigned from bear Stearns.
http://www.marketwatch.com/news/story/report-spector-resigns-bear-stearns/story.aspx?guid=%7B84BFA9A5%2DCF97%2D4D79%2D9E9D%2DA9B91E7A3C99%7D
Now onto more fun stuff. I just drove up and down a lot of PCH in Malibu today to go to the beach. I couldnt believe it, but at least every other house was for sale on the actual PCH right on the water or across the street looking at the water. It was crazy to see that. I can’t even imagine that there are that many people that can afford that stuff around here. Maybe its going to work its way from the beach towards downtown LA and from the IE towards downtown LA.
Dude, post a pic of Malibu! It would be really interesting to see all of the Bimmers, Benz, Porsches, et al, with for sale signs in them as well.
Robert Nardelli who caused an outcry about executive compensation and Golden parachutes will be taking the helm at Chrysler as their Chairman and CEO.
http://money.aol.com/news/articles/_a/ex-home-depot-boss-at-chrysler-helm/n20070806010409990007
Should do for Chrysler what he did for Home Despot…..
Chrysler’s toast….Nardelli is there to pick its bones for Cerberus the three headed dog.
Maybe an exec would be less likely to do these things if their compensation was a fleet of minivans, or lawnmowers.
Re Housing Wiz:
The reset for Jan - July 07 was $240 billion
Reset for Aug - Dec 07 is $275 Billion
*** Reset for Jan - June 08 is $521 billion ****
If folks think it is bad now, just wait until the first quarter of 2008!
Sorry for the multiple posts…