A Huge Problem From Wall Street To Main Street
A report from the Washington Post. “If 2006 was the year the boom market began to fade, 2007 is shaping up to be the year that beach communities along the Delaware, Maryland and Virginia shorelines see their economic engines, largely driven by tourism and real estate, downshift from overdrive, economic and tourism analysts say. That means job and income growth is slowing, vacations are being scaled back, and real estate opportunities have shifted in favor of buyers.”
“To lure buyers and ameliorate losses, developers have slowed their pace of construction, dropped prices, advertised upgrades as standard features and then offered discounts on land they haven’t built on yet.”
“In the Hampton Roads-Virginia Beach area, the value of single-family homes for which building permits have been issued declined about 16 percent, according to an analysis by Old Dominion University. In Ocean City, the pace of development has slowed considerably; the city has approved new construction worth $69.9 million for the first seven months of the year, down 32 percent from the comparable period last year.”
“The trends, at least in the real estate market, are working in the favor of Susan Gordon, a former Bethesda resident in the market for a condominium or townhouse in Rehoboth.”
“She’s considering a property along the canal, Blue Point Villas, where the developer is offering to pay her mortgage for six months, plus six years of condo association fees, $5,000 toward closing and a 15 percent ‘developer closeout’ discount on the sale price.”
“‘Builders are getting so low on prices, it’s getting down to materials,’ (realtor) Steve Conlon said. ‘They’re already dropping prices 20 percent, then people come in and think they’re going to get 25 percent off that.’”
“Fairfax County officials are predicting that the budget shortfall for the coming year could hit $120 million because the slumping real estate market has led to the lowest annual revenue rate increase in 15 years.”
“Throughout Northern Virginia, local governments are grappling with falling home sales and prices and more foreclosures, which are driving down real estate assessments. About 60 percent of Fairfax’s revenue comes from real estate taxes.”
“‘All of us are in the same boat in Northern Virginia,’ said Board of Supervisors Chairman Gerald E. Connolly.”
“Deputy Fairfax County Executive Edward L. Long Jr….said that the number of home sales had dropped, prices had leveled off and the number of home foreclosures had risen sharply, from 190 in the first six months of 2006 to 987 so far this year.”
“There are similar spikes in foreclosures elsewhere in the region. In Loudoun County, there were 66 foreclosures recorded in 2006. For roughly the first half of this year, there have been 188.”
“In Prince William County, there were 40 for all of 2006 and an estimated 300 in the first six months of 2007, according to each county’s commissioner of accounts. In Montgomery County, 1,238 homes were lost to the lender in 2006 and 1,824 in about the first half of the year.”
The Examiner from Virginia. “The sharp dip in property values that forced Prince William County into its first spending decrease in 15 years this spring is lasting longer than officials originally anticipated and is looming over preparations for next year’s budget.”
“Home sales have fallen off 40 percent from June 2006 to June 2007, and appraisal values could fall as much as 8 percent, officials said.”
“‘We’ve really seen the bursting of the bubble,’ Prince William County Chairman Corey Stewart said. ‘That’s going to affect our budgets for at least two years.’”
“‘We had hoped that come this spring, things would begin to improve. … They have not,’ said Chris Martino, Prince William County director of finance. ‘We’re basically where we were all last fall and continuing to trend down.’”
“While 732 property sales accounted for $316 million in June 2006, the 456 sales in June 2007 registered just $186 million. With more than a year’s supply of vacant homes for sale, the average house sits on the market for 106 days, he said.”
“Martino anticipated a 2 percent drop in property values this year, but new estimates based on soft figures show the decline could quadruple, he said. ‘We do not know where it will land,’ he said.”
The Baltimore Sun from Maryland. “A major mortgage lender filed for bankruptcy-law protection yesterday and other financial companies curtailed lending or laid off employees as the end to easy credit on Wall Street continues to trickle down, leaving consumers with fewer choices for home loans.”
“American Home Mortgage Investment Corp. filed for bankruptcy-law protection after laying off several hundred employees in Maryland and thousands across the country in recent days. Also, First NLC Financial Services closed an office in Greenbelt and subprime lender Fieldstone Investment Corp. of Columbia stopped accepting new loan applications last week.”
“Cleveland-based National City Corp.’s home equity unit suspended additional loans or lines of credit yesterday, and Houston-based subprime lender Aegis Mortgage Corp. said it would not accept any more applications.”
“Mortgage brokers who remain in business say they are no longer able to offer many of the loans that became the rage during the housing-market boom but led to a spike in defaults and foreclosures.”
“‘As the mortgage market shrinks because investors are drying up, you’re going to see more of this,’ said Joseph E. Rooney, deputy commissioner of Maryland Office of Financial Regulation. ‘It’s a huge problem from Wall Street to Main Street.’”
“Nationally, about one-seventh of subprime borrowers were more than two months late on payments in May, almost twice the rate from a year before, data from First American LoanPerformance show. Foreclosure rates for subprime borrowers also doubled to nearly 5 percent. In Maryland, one in 10 borrowers were delinquent.”
“‘It is unfortunate that American Home Mortgage, a company which we built into a highly successful business, experienced this sudden reversal of its fortunes due to the unanticipated and rather sudden deterioration in the secondary and national real estate markets,’ the company’s CEO, Michael Strauss, said in a statement yesterday.”
“Columbia-based Fieldstone stopped accepting new loan applications last week. Several Fieldstone employees, who did not want to comment publicly because of corporate policy, said yesterday that the company laid off some headquarters staff Friday.”
“First NLC Financial Services shuttered offices last week, including its Greenbelt branch, where it laid off about a dozen workers. The company, which specializes in subprime mortgages.”
“‘Unfortunately, we had to let some people go in order to compete in the marketplace as it is today,’ said Andrew Henschel, a vice president of corporate governance. ‘It’s a very, very difficult time.’”
“Christopher Ortiz of Neighborhood Housing Services of Baltimore Inc. said that problems arose with subprime loans because unscrupulous brokers and lenders extended loans that many buyers couldn’t afford over the long term.”
“‘Housing prices haven’t sunk significantly, and credit standards have tightened,’ Ortiz said. ‘How much money can you put down if you are low-income? Chances are you can’t save that much even though you have the dream of home ownership.’”
“Charles DiPino, president of the Maryland Association of Mortgage Brokers, called the mortgage industry shakeout the ‘natural progression’ of a cycle in which the housing boom and credit expansion inflated the ranks of those in the business.”
“‘If your home purchase was closing tomorrow and your lender is going out of business, you’re going to have to start all over, and that’s a scary situation. That’s where people are scrambling.’ said DiPino.”
I tried to warn co officials and was scoffed at- here it comes -they always spend all the money
Flatfflan. “They always spend all the money.” Shouldn’t that read: “They always spend everyone elses money.”
Flatfflan. “They always spend all the money.” Shouldn’t that read: “They always spend everyone elses money.”
They always spend everyone else’s money, then they borrow more, and spend that, ad nauseaum.
To all: This year-end price data is from the Northern Virginia Association of Realtors site, [nvar.com, click on market stats.] The site is one of the few that provides enough historical data to figure things out for yourself.
It shows that the average price of a home in NoVa went up 144% in the ten year period from 1997 to 2006, with the bulge of the snake occurring from 2001 to 2005.
The previous ten year period, 1987 to 1996, showed a 51% increase.
So using that as a rough guideline for normal, the appropriate price in NoVa should be about $332,730.
Which represents a potential fall of $207,268 from the current average price, or 38%.
Even allowing for bigger homes, granite and stainless, you’re looking at 25% off $539K, or about $400K, as the bottom. Which is still more than 3X earnings, of course. but let’s say the new math allows for 5X, with you know, a 50 year loan, point is, prices have to drop at least 25% before they even approach affordable in NoVa.
2006 $539,998.00
2005 $538,144.00
2004 $440,506.00
2003 $365,209.00
2002 $323,408.00
2001 $285,159.00
2000 $252,374.00
1999 $238,496.00
1998 $229,151.00
1997 $220,932.00
“Fairfax County officials are predicting that the budget shortfall for the coming year could hit $120 million because the slumping real estate market has led to the lowest annual revenue rate increase in 15 years.”
Sorry for the duplication, but I think my comments on the bits bucket are worth repeating here, because public finance is something I happen to know something about.
The biggest cost of local government is the massive, locked in pension and health care benefits for retirees. Like businesses, governments don’t fund these adequately while the workers are delivering the services. They do popular things like cut taxes and raise spending instead (or, in the private case, hand out stock options).
For fast growing areas like Fairfax that makes government look “efficient” in the short run — they have lots and lots of new, young employees providing services, but relatively few retirees getting paid for nothing.
But as soon as growth slows down and the age distribution of the work force normalizes, spending for retirees grabs a larger and larger share of the budget, taxes soar, and services collapse.
What is worse, the unions move in and negotiate even better deals for those cashing in and moving out in exchange for lower pay and benefits for new hires. We’ve had round after round of this in NYC for 30 years. That’s why NYC’s taxes are so high, yet in virtually every category its public employees are low paid, with the $25K starting pay for police officers the most noted example.
NYC has already survived this, albeit with fewer services and higher taxes than Fairfax, which also has few poor people. The suburbs are in for a big surprise.
The bubble disguised the pension and retiree health care crunch for post-war suburbs, and postponed the pain, by providing a gusher of money. Once that gusher disappears (taking some of the pension fund assets with it) you’ll see a nationwide fiscal crisis, especially in areas that assumed they had “effective” government not “big” government. What was effective was getting services now and paying later.
Just another aspect, along with rotting infrastructure, of the generational war.
One more point here. Someone, reading my description of this on my own public policy blog, said “local governments are like sharks — if they don’t keep moving forward they die.” So once the amount of new development drops, and you have lots of old development passed down to the less well off, and the expansion of local government drops, and you have a static tax base with more and more retirees, the result is a very difficult transition to higher taxes and lower service expectations.
In NYC, that’s what we’re used to, and talk about no bailout, I certainly wouldn’t want to be taxed to bail out localities with lower taxes and better services than we have.
WT: excellent comments. I have always been amazed that people think the current public pension system is sustainable. My cousin is a young fireman in his later 20s and makes over $100K. Retirees from that city (in bay area) fire department are also making six figures, along with all the health benefits. In the 1970s they greatly expanded the number of fire personnel and have been steadily rising since. I know for a fact that they are looking at a big chunk of retirements over the next few years as all those boomers hired in the 70s muster out. With the present salaries and benefits, how can they maintain the system without raising taxes, and/or reducing service? It’s not possible and people are in for a rude awakening. What is the name of your public policy blog? I’d like to take a look.
Fires are down in Boston by over 1/3.
So, yes, cutting fire service is an option from a rational standpoint but not a political one. Local fire deparments are seen at, literally, fender benders just to create a phony “call” to put in the statistics.
No offense to firemen but the need has fallen 50% given the improvements in so many buildings over the last few decades.
A recent news article noted that 6 California prison guards earn more than the guv at an average of 220K per year. And over 1400 earned 50K plus in overtime. When these boys and girls retire and their wage mulipliers kick in, those $175,000/yr pensions for 25 years of work will catch a few headlines, I’m guessing.
A recent news article noted that 6 California prison guards earn more than the guv at an average of 220K per year
And that’s without all the free dope
>
I hate how cops and firefighters love to portray themselves as poorly paid public servants. Few things grind my gears more than when one of their fraternal associations calls me at dinner time asking for a “donation”. What’s amazing is that even though I read them them riot act (they are paid handsomely, they have fat juicy pensions waiting for them and they retire young) they keep calling.
Don’t be sure that the people calling you at dinner time are really with the FOP or Fire fighters. Ask this simple question, “What percentage of my donation goes to the FOP?” I asked that of someone collecting for the fire department, 30% of the donation went to the dept, the rest went to cover their so-called overhead of making the calls. Who knows if the fire department even authorizes them to collect for them. If you want to donate to them, give it to them in person. One I always pull when they try to take a donation to get a sticker “So if I buy the sticker will I not get a ticket?” and they should saying something to the effect of “We can’t promise that, but it will show you financially support them.” “Oh, in that case I’m going to peel a sticker off of someone’s car and put it on mine… that is cool, I’ll save even more money.” Guy got mad. I love the percentage thing, it will astonish you.
Take it one step further. According to the do-not call law, they can only call as a charity if the people actually doing the calling are police officers. Ask them if they are a police officer, and if not, then you’re entitled to be on their do not call list. At that point you must request to be placed on their don’t call list. If they call again, you file against them with the FTC.
CA guy: Public safety can retire at 55 yrs with 100% of salary. The worst part was the Ventura decision (Ventura Co.) which said that overtime, uniform allowance, etc all counted to arrive at total salary and in CA that is a one year high. Ergo you have many soon to be retirees taking all the overtime they can get their last year of work. I know of a homicide detective in SD that would have retired at around 60K going out around 120K. JQ public needs to get informed and get rid of safety retirement. The fire department was able to get their salary raised when they put in CPR even though most ambulance services get to the scene first or at the same time.
Here is some little tidbit from the Salinas paper:
Police Officer wanted Seaside (you could rent there for $1500mo.) City pays 9% pers contribution 3% @ 50 pers retirement; 2.5% longevity pay; 7% Post certificate pay; city paid med/vision/dental; 21 days vacation;vacation buy back plan;14 paid holidays; college tuition/book reimbursement program; paid retiree med insurance after ten years; $100K housing assistance available; requirements for the job:21yrs/HS grad/valid CA drivers license: pay $4753-$5655 mo.
We are talking a very, very small community here folks. Who needs college and college debt when you can fall in a sewer and come out smelling like a rose.
These guys are the biggest crooks on the block. On the job “disabilities” net them 100% retirement bennies. You’d be amazed at how many of our heroes have sustained permanent injuries at the firehouse or on the job then retire to a life of playing golf and competing in rodeo. This on top of the money they’ve put away working at their real jobs when they’re off duty. Forty-eight hours of watching soft core porno and playing handball interspersed with occasionally pulling pensioners off the toilet constitute a week’s salary.
Illegal aliens do all the actual fire fighting.
What a scam.
Maybe there should be a Pension Bubble Blog.
I think we’re expecting a pension plan implode blog.
Maybe http://www.pp-implode.com?
Chuck Ponzi
WT:
How can we afford 20 years and full pension anymore in America? Sure it’s a civil service union but with so few new hires are smoking and more people living longer, ALL pensions are Bankrput in America.
Its going to have to be 30 years and full pension …we don’t really have any other choices. Call it the unintended consequences of all the non-smoking campaigns.
This will be one of the most fascinating Fed meetings in years.
A drop in interest rates will make the dollar singularly unappealing and spark import inflation.
Hold fast with rates and panic may set in among the Wall Street professionals.
Throw the wall street professionals to the sharks. They were the ones who invited them.
When did cramer start careing about homeowners anyway? He is talking about 7 million homeowners at risk of loseing their homes.All this bailout talk disgusts me. I think a lot of people should lose their home which would enable responsible buyers to be able to afford homes. Why are these clowns intent on keeping real estate prices artifically inflated?
he should lose his show for this populist bs display - he’s supporting fraud”burn your house” and bail
Methinks Cramer could care less about homeowners. His tirade was just a transparent attempt to manipulate the FED to drop rates. But he sure made an ass of himself in the process.
If the FEDs drop rates, they will have listened to this clown. I say 95% chance they will stay or raise rates. When do they decide?
Devil: watched the Cramer piece a couple of times, highly entertaining! Don’t agree but he has nothing to be ashamed of, Ben Bernake and William Poole are public figures and are open to public comment/criticism.
It might be entertaining if Cramer was some guy they just pulled in off the street. In the context of Cramer’s background and current job(s) at CNBC, it is irresponsible, contradictory, nonsensical, juvenile, and despicable.
His concern was to protect his buddies at GS,BS, MS etc. I wonder how many inside deals he was being let in on and how many of his buddies were making money off his trades expounded on his show.
“When did cramer start careing about homeowners anyway?”
He doesn’t. You think he wants to waste his time with a bunch of yahoos? Crowd the screen with images of those sorry sheep to cheer on a bail-out, while the Fed does it’s best to bail out ibanks and hedge fund players.
Big money owns the government–and big money will be protected.
How many of these are just losing their 2nd or 3rd home. Not to have a vacation home, oh the horror!
Hey, we have to cut the negativity.
Don’t you know real estate always goes up?
There is a well known shortage of land!
The baby boomers need multiple retirement homes and will be going around gobbling up 2nd and 3rd homes while retaining their 1st homes.
This is but a blip and all we have to do is wait for the superbowl for a huge rebound in the buying season.
Subprime is contained!
Jobs are growing!
We have the best run most liquid equity markets in the world!
Can you tell I’m in a really sarcastic mood today? The Fed cannot do anything correct today. As ‘Bye FL’ already noted, any decision is wrong. Especially holding rates. Bwaa haa haa!
Got popcorn?
Neil
“‘If your home purchase was closing tomorrow and your lender is going out of business, you’re going to have to start all over, and that’s a scary situation. That’s where people are scrambling.’”
Lots of sales that were thought already in the bag aren’t going to close because of this, it seems. So much for that optimistic NAR pending sales number.
Blessing in disguise for buyers.
anyone catch the Today show this morning. The had a segment with Barabara Corcoran “Today Real estate contributor” of course Today fails to identify her as the former owner of NYC’s largest residential RE broker.
And what sage advice did the shil give to avoid foreclosure? Rent your house to cover your note. She went on to say that as more houses go on the market rents will go up(!). And where, pray tell, is the family suppsee to live while they rent out their house–why another rental of course.
Th eflagrant dishonest would be breathtraking were in not so pervasive.
And, Corcoran is no dummy, she sold her brokerage business in October ‘05–guess she heard the bell ring at the top.
She is totally screwed up. I would think that as more rentals come on board the rents will go down, not up.
Loved her romance novel about the couple that bought at the top of the market, and lived penniless ever after…
The experts that say things that those of us on this board consider stupid are neither stupid or screwed up. They know what’s going on and have for some time. But they’ve sold their souls and are thoroughly dishonest and corrupt. Their comments are for the increasingly smaller pool of fools left that have yet to be separated from their money.
Yes they have divided up their souls into 7 parts - 7 horcruxe’s.
Hey no spoilers - some of us just pried the book out of our friend’s hands and are just getting started.
The MSM quoted “experts” don’t have a very good track record for providing good advice. Wasn’t it less than a year ago the “financial expert” Suze Orman was quoted by MSM as saying the housing market was going to “rust” but not “bust”. Oh Suzie, you were so wrong.
Suze Orman sucks. I have never seen her offer any advice that can’t be found on most or all investment firm web sites. Alot of her stuff is just common sense, and yet she makes millions off of her sheeple audience.
She gives advice to a bunch of idiots, so that’s what you get. Most of her callers are people with massive credit card debt, a good indication of her viewership.
I think you are wrong and have an agenda. The usual thing with the last two bubbles at least has been for housing prices to fall with annoying slowness, the infamous “sticky prices”, while inflation does most of the work. Stocks don’t correct with the same efficiency as stocks, and shame on you for claiming that they do.
Suze mostly gives out basic advice, and a lot of times it is very common situations that are broadly helpful. Lots of Americans have plenty coming in, but hardly any savings. Not good. Suze can talk people out of this in an entertaining way. I have seen her turn a number of professionals around to the point where they actually think about their money sometimes and save at least some. To you that is nothing, to them it is a big deal. Are you just upset because you have no influence over anyone?
There is a bubble and it is serious, but all this hate for basic advice givers is just plain nasty. You want everyone to be super well paid and on top of their fincances and saving like crazy and damn anyone who dares to talk about the fact that is pretty rare and should be discussed. You may be all on top of yourself, but most people aren’t. Scolding Suze Orman for telling people to save some of their money doesn’t help anything but your ego.
Suze Orman called Casey Serin “smart.”
’nuff said.
‘Alot of her stuff is just common sense…’
And when you can pedal common sense as a novel idea, little of it exists.
Suze Orman sucks. I have never seen her offer any advice that can’t be found on most or all investment firm web sites.
So do those sites suck too? Or is it just that she’s rich and you aren’t? Give her a break already. I think she’s pretty knowledgeable and astute.
Suze sucks and Ann -orexic sucks. Two dumb blonds with nothing to say, but they get face time. America the stupid.
There are other shows that give “common sense” advice on investing, but unlike Suze’s show, they are somewhat entertaining. I’d rather watch grass grow than watch her painfully boring show. It was a few years ago (3-4 ?) that I saw a clip of her show where she told someone they could afford a house around $100k and the caller was from California. I think Suze was oblivious to the fact that there probably weren’t any homes available for $100k and also made no mention about checking to see if renting versus owning was better.
Here’s a transcript…
http://www.msnbc.msn.com/id/20161309/from/RS.4/
Tip #3: Get a reverse mortgage.
Huh?????????
If you are STUCK and ALMOST DEAD. It still isn’t great advice, but you sure aren’t shy about showing your agenda, are you? Leave off the qualifiers and things suddenly sound scary. By the way, have you ever looked into the studies that show that selling and moving on tends to kill off the ALMOST DEAD rather reliably? I guess if you want to clear out the chaff in your family and deal with the inheritance thing as soon as possible then following your advice might be one way.
And where are the FB’s turned renters going to come up with 1st & last mo. rent and cleaning deposit? They are going to end up with deadbeat renters who destroy the property while taking months to evict. Yeah, go ahead and rent ‘um.
“‘Housing prices haven’t sunk significantly, and credit standards have tightened,’ Ortiz said. ‘How much money can you put down if you are low-income?
In the bits bucket, there’s a post quoting Senator Clinton wanting more “affordable housing options.”
If the govt. just leaves this market alone, there will be all kinds of affordable options in a year or so.
Write your congressmen - tell them NO BAILOUT. Let the market crash and we will all have affordable housing.
NO BAILOUT.
“Senator Clinton wanting more “affordable housing options.”
HIlbil has to be among the most corrupt around…for someone who made bank in cattle futures first time out, and has always been cosy with big money, do you think she doesn’t know that housing prices will collapse? She like these old dem slogans from the ’40s–makes her sound “caring” while her real constituency–big money–knows it means nothing.
Hey Spike66, “HIlbil has to be among the most corrupt around”
you are sounding like Fox Opinion. I came here for real estate news. Time for me to make another contribution to the DNC
Hey Spike66, “HIlbil has to be among the most corrupt around”
you are sounding like Fox Opinion. I came here for real estate news. Time for me to make another contribution to the DNC
Hey Spike66, “HIlbil has to be among the most corrupt around”
you are sounding like Fox Opinion. I came here for real estate news. Time for me to make another contribution to the DNC
David cee,
make yourself happy. I have voted dem all my life, but living in NYC and watching this clinton game for 6 years, I am done.
Ron Paul is the man.
Hillary Rodham must be the only person in history who, after turning $10,000 into $100,000 in a year STOPPED.
Call me crazy but why would a widely renowned “genius”, in a financial situation of relatively low income and virtually no accumulated wealth, STOP doing something that was incredibly successful?
Is that what “smart” people do? Quit doing things that are making them rich overnight?
“If the govt. just leaves this market alone, there will be all kinds of affordable options in a year or so.”
Exactly. Unfortunately govt. will probably break ground on new affordable projects right before this thing really explodes.
Maryland-based lender Impac Mortgage Holdings announces that it is stopping the funding of Alt-A loans immediately (oh, and firing a bunch of people too):
http://biz.yahoo.com/prnews/070807/cltu062.html?.v=96
“In light of the continued and widely publicized volatility in the secondary and securitization markets, we have suspended funding on loans previously referred to as Alt-A loans. The Company will continue to fund loans through our wholesale and retail platforms that are eligible to be sold to government sponsored agencies.”
“Further, in response to lower loan volumes, we have over the last three months significantly decreased our expenses with the reduction of our nationwide workforce and will continue to make additional adjustments as necessary. While this is a difficult and painful decision, we believe that it’s a prudent strategy in light of the current business environment.”
“The Company will continue to fund loans through our wholesale and retail platforms that are eligible to be sold to government sponsored agencies.”
What credit crunch? Doesn’t look like conforming loans are going away, just bubble bullcrap.
Which reminds me, for all those who said regulations were lax, the regulations were still there. The market was merely allowed to “innovate” outside the regulations if investors were willing to buy. Let them take their losses.
In the DC area, 80% of the purchase price of the median priced home is a non-conforming loan. That would certainly look like a credit crunch here.
Conforming loans are supposed to be to assist low income households. I don’t think there are too many low income households in Mont., Fairfax, or Loudon counties.
my fancy sister and her super charged husband bought a fixer upper on the chesapeake bay. i heard there was no plumbing. my mom told me they are giving up on fixing it up and selling.
not to worry. they have a three story home on monument ave in Richmond, and another mansion in the blue ridge mountains.
Monument Ave house, is it near the General Jackson statue, or is Lee standing defiantly looking northward?
“Monument Ave house, is it near the General Jackson statue, or is Lee standing defiantly looking northward”
there are a bunch of statues on her street and she is on the 2200 block.
Hey, if it is close to Roanoke, let me know where it is and I’ll rent it from them
That’s funny, sounds like people I know. Are their initials A.T. (wife) and B.T. (husband)?
“‘If your home purchase was closing tomorrow and your lender is going out of business, you’re going to have to start all over, and that’s a scary situation.”
What’s far scarier is if your home SALE was closing tomorrow and your buyer’s lender is going out of business…” Especially if you’ve already bought your next home. It could be a year or more before another qualified buyer comes along.
My friend in Rockville who has a contract for his home there and who has now moved to his retirement home in Florida must be sweating bullets. Closure on the Maryland home isn’t scheduled until September.
“They’re already dropping prices 20 percent, then people come in and think they’re going to get 25 percent off that.”
It’s fascinanting how people can’t comprehend double-digit depreciation in the same manner they welcomed double-digit appreciation.
yep. another 25% off is a given. it’s just a matter of time. the people coming in and asking for an extra 25% off are doing the right thing. if the builders start seeing only offers at 25% off, eventually they’ll get the message.
Well, the guy is a realtor, and if they lop another 25% off then his commission won’t be as large.
“It’s difficult to make a man understand something when his livelihood depends upon him not understanding.” - Upton Sinclair (?)
“‘If your home purchase was closing tomorrow and your lender is going out of business, you’re going to have to start all over, and that’s a scary situation.”
A scarier situation - you have a home purchase closing tomorrow and your lender is NOT going out of business. People in that situation are going to lose a lot of money.
lol…
Jim Cramer on Mad Money last night got a question from a guy asking him if he wanted a bellout for all the hedge funds etc…
He said, I think they should pay the price. I don’t believe in helping rich people. He then said, this is about saving 7 million people from losing their homes.
It was pretty intense. I almost cried until I recalled he said, I have done this for 25 years and people out there are losing their jobs (referring to his hedge fund buddies etc).
People are going to lose their homes because they lost all connection with rational thought, believing that housing would appreciate forever and they would never have to worry about the future again. Sorry, but no sympathy here. Dumb-ass Joe Six Pack needs to realize that high housing costs are not only unsustainable, but they are also bad for the long-term economic health of his community. Let the bloodletting begin.
About the Washington Post/Fairfax County article:
Another remarkable twist in logic is that the county is raising the minimum “living wage” of about 40 employees to a whopping “$11.80 an hour, or $24,544 a year,” hoping that will help those employees to afford an efficiency apartment at $10,728 per year. (Yet the county was counting on ever-increasing residential real estate gains to afford its future budgets). They’re also seeking to hire 10 code enforcement workers to help with the crackdown on illegal boarding houses.
Here’s a solution: zone for boarding houses. (McMansion Zones)
fx co spends like there’s no tomorrow
more http://www.fcta.org
“‘Housing prices haven’t sunk significantly, and credit standards have tightened,’ Ortiz said. ‘How much money can you put down if you are low-income? Chances are you can’t save that much even though you have the dream of home ownership.’”
I hope part of this bust will be the disappearance of these entitlement statements. Just because you can dream it doesn’t mean you should have it, for crying out loud.
Home ownership is not for people who cannot save money, whether it’s because their income is too low or they cannot control their spending habits.
Here’s a comment left after the Washington Post article:
Saving for a downpayment is not IMPOSSIBLE, doofus, it requires sacrifice and discipline. And describing himself as “capable mid/upper level profs” indicates a very reasonable salary level.
So, doofus, cut out the cell phones and second car, cut out the excess in your grocery budget, cut out the luxe vacations, cut out the expensive clothes, cut out the lawnmowing service and live frugally. If you haven’t got a decent savings account, you are not a middle-class american. You’re just an indebted wannabe. Suck it up or leave town–really, who cares.
Why do you call this guy a “doofus” just for asking a question?
Jay,
I was responding to the posted comment…”saving for a downpmnt in the DC area is IMPOSSIBLE”, not to Arwen.
Well said Spike. Delayed consumption is the key to saving.
If this means “capable mid/upper level profs” like himself will be leaving the DC area, then the DC area can only benefit from this.
What will remain in the DC area will be the genuine “capable mid/upper level profs” who know how to manage a budget.
Imagine that.
Got 10% down?
Saving for a downpayment is not IMPOSSIBLE, doofus, it requires sacrifice and discipline.
What is name-calling supposed to accomplish?
According to bankrate.com, the median home price in Washington D.C. is just under $675,000. A 20% down payment would be $135,000. That’s a lot of money to a lot of people, especially a first-time buyer.
Last night, I sold all my mutual funds. Every penny went into a money market fund. This is the first time in 6 six years that I’ve sold out of all my funds… Last time, I did it was in early 2000… totally missed the decline of the dot-com bubble! Maybe the second times a charm… Will the bursting housing bubble cause a burst of this equally inflated stock bubble of late?
I’m with you. I’m just worried about the quality of money market funds now.
get 5.25% at ING DIRECT. FDIC insured
I moved the majority of mine last year and the remainder a few weeks ago. I have been looking for high quality money markets and even those appear to be tainted. My money market option in my 401k invests in MBS, and it is the safest option. My money outside the 401k is in the Vanguard treasury money market. It only invests in securities backed by the full faith of the US government. I figure if that fails then nothing will be unscathed. Sadly, I dont think that is even safe enough.
It is not safe, because althought the full faith etc protects Vanguard, it doesn’t protect you. Look at your prospectus– if it is like many mutual funds, the fund company can take money from your fund to bail out one of its failing funds. It may not be as illiquid as a hedge fund, but it certainly not near as safe as buying your treasuries directly from the Treasury.
Ditto for money market mutual funds (not talking about FDIC-insured bank mutual funds).
I wouldn’t think that anything in a mutual fund is safe, if we are really talking about that level of safety.
My money outside the 401k is in the Vanguard treasury money market. It only invests in securities backed by the full faith of the US government. I figure if that fails then nothing will be unscathed. Sadly, I dont think that is even safe enough.
There are safer things than that, IMO. But they aren’t denominated in “US dollars”.
I too am all in cash. My buddy, who voted for Bush just went into the market on thurs $32k. To each his own. Not everyone can see the writing on the wall.
So he voted for Bush, so did I but I’m not in the market and I know several Gore/Kerry supporters who are all in, both RE and stocks.
“Basically I drove up here … and 15 minutes later I owned a house,” said Dane Andrew, winning bidder of the Castro Valley house. “I think I did pretty well.”
todays sf chronicle
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/08/07/BUNLRE4JA2.DTL&tsp=1
Oh God, HRC just on CNBC she said she was going to bail out the banks and FB “win-win” for everybody. She also said she was going to “invest” in our future. Here comes the tax and spend folks.
Zimbabwe here we come!
What’s worse, tax-and-spend or tax-cut-and-spend-even-more? I think it’s funny what you are afraid of, given how the last 7 years have played out.
I’m cozying up to Ron Paul more and more every day.
Tax cuts have created record tax receipts. You are right about the spending, however yout ain’t seen nothing yet if she wins.
you sure it was tax cuts that created record receipts, rather than an uber-bull market economy based on cheap credit?? Get real.
Bull market economy? WTF The only bubble I have seen is in housing. Have you ever heard of the Laffer curve?
You mean that absurd delusional theory call supply side that has been proven wrong over and over again? Criminals like Laffer should suffer agonizing torture for the monstrous lie he and his ilk perpetuated using his name. Laffers laffing alright. All the way to the bank.
Record inflation has led to record tax receipts.
Ron Paul? Isn’t that the “earmarks” guy?
Ron Paul on earmarks:
http://www.house.gov/paul/tst/tst2007/tst061807.htm
The day Hildebeast becomes POTUS, is the day I buy lots of silver coins, can goods and ammo…rough four years then she will suspend the Constitution like Mugabe.
Inflation will at least kill what is left of my mortgage.
Calling all mortgage brokers..better turn that BMW in for a Honda because you just went from being a $200K earner to a $50K earner OVERNIGHT!
I read a few posts on a loan officers board last week and those folks sure are proud. It appears that they earn a lot of money and have a lot of work flexibility and many take their jobs and lifestyles for granted though some were obviously worried. It was surprising at how they look down at the loan officers that work at banks.
That’s funny. History will rhyme again.
Agreed conceptually, but I think $30,000 is more like it. Lots are people are going to soon be competing for cream of the crop jobs paying over $2500…
OH by the way you are going to need a 60 hour work week to W-O-R-K that 50K!
Have you checked the price of Hondas lately? Maybe a KIA would be more appropriate?
Broderick Perkins at Realty Times is unsually quite sensible, but I’m afraid he has started a crack cocain habit:
http://realtytimes.com/rtcpages/20070807_equivgold.htm
“Whew.
Finally.
Some good housing market news.
And good housing market news is good economic news.
Homeowners are enjoying more equity to burn than ever.
It’s tough for first time homebuyers to find financing, refinancing ain’t easy and you may not be able to tap as much equity as you think you have.
However, if you’ve owned a home for just several years or more (less in some still hot market pockets), you continue to enjoy what the Milken Institute once referred to as the “psychological equivalent of gold” .
A recent slide in equity use may not bode well for the economy ahead, but right now? Homeowners are tapping greater levels of equity than in any economic recovery since 1960, according to the Economic Policy Institute, an independent think tank for economic concerns.
Even many income-poor homeowners feel like they are loaded.
Forget for a moment that the real estate market is not in a recovery mode just yet. The rest of the economy is growing and consumer spending is the boost that’s making it boom, if only a little.
Today, a lot of that extra spending still comes from the money-to-burn power of homeownership.”
“Cashed-out equity can be used to increase a household’s purchasing power. Right now that means purchasing power perhaps like never before.”
Then a little bit of sense?:
“An equity loan, by its very nature, is an equity depleting loan.
Conservative financial experts advise against ever using your equity. They say the idea behind a 30 year mortgage is to give you enough time to comfortably pay it off before you retire so you can live “rent free” on your fixed income.”
No no no, here’s what the real experst say:
“Most financial and investment experts say it’s OK to use equity for capital improvements and investments that provide an equal or better return on your money than the cost of the loan. Certain home improvements, education for the kids and new business financing are relatively better uses of equity than say buying cars and boats, debt consolidation and vacations.
An exception to all the rules, is to use your equity for emergencies and unforeseen events of limited duration that might reduce your income or place added demands on your wages, including births, deaths, illness, injuries and job loss.”
The FED held….. boo hoo for booyah boy!!!!
Did that announcement come a little before 2:00 - 2:15 EST?
http://images.bloomberg.com/r06/homepage/HP_INDU.png
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