The 2nd Year Of What Is Likely To Be A Multiyear Downturn
The Kane County Chronicle reports from Illinois. “Real-estate agent Rob Buhrow recently performed a market analysis on an Elgin property for a local bank, and every comparable home he turned up was a foreclosure property. ‘I’m like, ‘Oh my God,’ Buhrow said. ‘It makes you think – what’s really going on?’”
“Buhrow is not the only one asking that question. The numbers paint a jarring picture. In March 2007, for instance, the number of foreclosure filings in Kane County numbered 497. That is more than the total number of foreclosure lawsuits for the entire first three months of 2006 combined.”
“Karla Sitko, manager at Avenue Mortgage’s St. Charles branch, said that when the housing boom was hot, many lenders rushed to grab a piece of the market, writing loans to consumers who couldn’t really afford them, Sitko said.”
“‘If they were doing it to keep up with the Joneses, they should not have had those loans,’ Sitko said. ‘And there were a lot of lenders who were writing these bad loans, and knew they were writing the bad loans, and just didn’t care.’”
“And as the market has turned, there might be no way out for some saddled with those bad loans, said Keith Wolf of Winfield Realty, who now markets foreclosed properties after a career in banking and finance.”
“‘Because of the housing boom, with prices appreciating, a lot of people in trouble could just refinance,’ Wolf said. ‘But now a lot of those people are back in foreclosure.’”
From Chicago Business in Illinois. “The depressed housing market has pushed the supply of vacant lots for new homes in the Chicago area to its highest level in about 15 years, according to a new report.”
“Builders were sitting on 66,246 lots at the end of the second quarter, a 2.3% increase over the first quarter and a 14.0% jump from the year-ago period, according to Metrostudy, a Houston-based research firm that tracks the housing market. That represents a 34.3-month supply of lots, based on the current sales pace, the largest inventory since the early 1990s.”
From BlueridgeNow in Illinois. “Plenty of companies are absorbing the ill effects of the yearlong slump in housing construction and sales. But few have felt it as forcefully or as suddenly as the USG Corporation, the nation’s largest maker of drywall, the paper-wrapped plaster boards used to build walls in homes and offices.”
“USG, based here in Chicago, is in some ways a throwback to earlier times, when far larger swaths of the economy were unprotected against the brutal ups and downs of the business cycle.”
“‘Business is tough,’ said William C. Foote, CEO of USG. ‘The housing recession is entering the second year of what is likely to be a multiyear downturn.’”
The Lacross Tribune from Wisconsin. “Home foreclosures in La Crosse County this year are up by nearly a third over the pace in 2006, mirroring a statewide rise of nearly two-thirds.”
“‘It is an alarming trend, and banks have already admitted they’ve been too loosey-goosey with lending and they’ve pulled back considerably,’ said Sheridan Glen, manager of the Capitol Corridor office of First Weber Realtors in Madison.”
The Star Tribune from Minnesota. “The foreclosure problem in Minnesota last year was almost twice as bad as previously estimated. Based on sheriff’s sales of foreclosed properties, there were 11,207 foreclosures statewide last year, nearly double the 5,995 previously reported in Minnesota by RealtyTrac.”
“Warren Hanson, president of the Housing Fund, describes the situation as a ‘natural disaster’ akin to ‘10 Red River Valley floods hitting Minnesota all at one time.’”
CNN Money on Michigan. “Nouveau Riche offers real estate investment classes -and a host of related products and services - to would-be tycoons. The way the Michigan real estate market is headed, it might not be so easy.”
“According to Judy Brant, a broker in Fenton for more than 20 years with Coldwell Banker, the inventory of homes in Genesee County, which includes Fenton, averaged 2,000 units in 2005. Today it is 8,000, up 300%.”
“When Brant heard that Nouveau Riche students had bought 60 condo units in her town, sight unseen, she said, ‘I’m speechless…prices are falling faster than you can imagine: 10% last year and another 10% this year. Who knows when it will reach rock bottom? As far as rental properties, it’s hard to rent anything here now. Houses and apartments sit empty all over town.’”
The Springfield Business Journal from Missouri. “Upscale homes haven’t escaped a wave of foreclosures that’s flooding the Springfield housing market with a record amount of bank-owned real estate.” “Foreclosures in Greene County are up 43 percent over last year through July 31, according to the Recorder of Deeds office.” “Lenders are repossessing homes in some of the area’s most prestigious subdivisions. And in the exclusive gated community of Highland Springs, a recent streak of defaults prompted lenders to foreclose on some of the market’s priciest homes, two of which sold for more than $1 million in 2005, according to Greene County property records.” “‘We’re in a transition market, so it’s hard to judge foreclosures,’ said Scott Rose, president of the Greater Springfield Board of Realtors. ‘Unfortunately, it’s kind of that subprime story.’”
“Rose said the rising number of foreclosures in Greene County also may be a sign that area builders riding the real estate boom had too much new housing inventory when the market began cooling last year. ”
“Springfield Realtor Peggy Mitchell, who specializes in foreclosure properties, thinks there’s a simpler explanation. ‘When you’ve had a very strong economy where more people could get loans, you’re going to see more repos,’ said Mitchell. ‘It means you’ve had a great economy, and people that should have rented, bought. A certain number of people lose their homes.’”
“‘That’s just the American way,’ said Mitchell.”
FYI, our server is overloaded today, so please check back if you are having problems posting. We are adding a second server tonight and doing some other upgrades, so this blog will be off-line for a few minutes.
I am having problems! Hope the fix is quick. I enjoy reading your blogs
Yes, repair it rapidly, because I need the steady fix. More important than coffee.
Want some dark chocolate and sweet wine plus a good cuddle? I saw some of your angry posts yesterday. Those condiments will help a lady relax
Oh god, shut up Romeo ..
Alright, that’s enough..
Yeah, I’ve said some inappropriate things. Never went back to see if Ben allowed them LOL!
Matter a fact, yes. I do, so there. And it might save a life. Although it would be some worthless builder’s life, and that doesn’t count.
I’m fairly sorry I was so bitter and cussing, I believe I took the name of Baby Jebus in vain as well, but if you had had to listen to what I had to listen to yesterday you would have joined with me in going forth and beating the evil snot spang out of the first person in a hardhat we were to encounter.
Would you pay $10 to WebBucks to get your housing bubble fix?
Some HBBer posted a link to nouveau riche u. a few months ago. I thought it was a joke.
Not so -
Several months ago Silvia Cuevas took stock of her life, and it was a profoundly unsettling experience. At 40 she had a solid job with a modest salary at the public library in Santa Ana, Calif. She’d carefully squirreled away some savings and bought herself a little house. She was financially secure - and utterly dissatisfied. All around her, Santa Ana throbbed with the feverish energy of recent immigrants eager to cash in on the promises of America. A short drive from Disneyland, Santa Ana boasts one of the highest concentrations of Latinos of any city in the U.S., and these days it is a hotbed of entrepreneurial activity. Cuevas, though, felt as conservative, meek, and, well, dull as a church mouse in Vegas. “I was going nowhere,” she recalls. “How was I going to find my fortune?” Then a girlfriend introduced her to Nouveau Riche University.
The piece describes how after she paid 16k for one week tuition, she proceeded to extract most of her home’s equity to purchase multiple properties scattered across this great land of ours.
Oh, and Casey Serin also makes an appearance in the article.
Add this one to the Dewey Fleecem and Howe file.
Can you provide a link to this article? Thanks.
Ben provides the link in his post
http://money.cnn.com/2007/08/06/magazines/fsb/real_estate.fsb/index.htm?postversion=2007080706
OMFG…that Piccolo guy is not only a criminal, he must be on drugs…and so are the sheeple handing over $16K to learn what you can learn for free on the Web or your local library.
Link in Ben’s post. From the article
In 2008, Piccolo intends to break ground on a new campus with modern steel and glass classrooms and four luxury dorms, each with its own pool and barbecue pit. The pools will be linked by a man-made river; students will be able to float from dorm to dorm, riding the river on inner tubes. “It’ll be very theme-y,” he says. “We’re going to build a Disneyworld for investors and entrepreneurs.”
The thought all these secretaries, firefighters, and coffee shop workers tubing around NRU looking to flip stucco sh-t holes makes this wall street guy shutter.
Update on actual construction status circa mid-2008:
Half-completed steel & glass towers remain dark and empty, due to lack of funding to complete the project.
“Luxury dorms” never made it past grading phase, and campus has now turned into a shantytown populated by newly bankrupt NRU “students”, who are tapped out and have no other place to live.
The BBQ “pit” is a 55-gal. steel drum that’s been converted into a communal grill, where possums, squirrels and various local critters are roasted and distributed among the starving inhabitants.
The man-made “river” has turned into an open sewer, where the only thing “floating” is not something any person would want to come into direct contact with.
“All around her, Santa Ana throbbed with the feverish energy of recent immigrants eager to cash in on the promises of America.”
“Throbbed;” “Feverish;” “eager.” Well, no wonder she got all hotted up to enroll — aren’t those the key words in every bodice-ripper?
Oh greed got the best of her. That’s gonna be a hard lesson in life being broke and stuck as a renter.
On the other hand [She] can always fall back on folding bed sheets for the Motel 6 in El Centro.
No matter how obvious a scam you’re running, there will always be suckers that fall for it. Amazing…
“Lenders are repossessing homes in some of the area’s most prestigious subdivisions. And in the exclusive gated community of Highland Springs, a recent streak of defaults prompted lenders to foreclose on some of the market’s priciest homes, two of which sold for more than $1 million in 2005″
I guess this goes to show that no location is immune. Even the expensive locations will fall!
True, but $1Million plus homes in a town of about 125 thousand is RE-TAR-DED. Ever been to Springfield, MO? So the Ozarks are close, big friggin deal. There is a good Waffle House on I 44 though.
Ben Stein has been saying there is no housing bubble. I used to think he knew what he was talking about, but now I’m wondering if he hasn’t lost his mind: http://finance.yahoo.com/expert/article/yourlife/41148
I get that the co’s listed on the exchanges deal internationally now and how one could argue that a US RE bust might not crash the whole ball of wax, but those are some seriously rose-colored glasses he’s looking thru!
“Housing a Theory
Yes, the housing market has slowed from a spectacular bubble level to a simply pretty good level. Housing sales and starts are now about what they were in 2002, and no one thought we were in a housing depression then.
In any event, housing is only about 5 percent of the economy. If it falls by 15 percent, that would represent a fall-off of about .75 percent. That’s not trivial, but it’s also not the stuff of which recessions are made.
The fact is that there is no recession. The economy is suffering from a labor shortage, not a surplus of unemployment. The Fed is worried about excess demand, not slack demand.
Corporate profits set new records every day. Whatever’s happening in residential sales and building is simply not slowing down the economy. Why should a Boeing or a Merck or a Pfizer have any reaction to housing at all? Because the speculators sell everything they can when nervousness sets in — and for no other reason.”
I agree he was wrong about the Housing Bubble. And thus, he is likely wrong now.
But I do wonder how much the housing market will bring down the US economy? A lot of the “doom and gloom” people who comment on this blog strike me as the type of people who thought Y2K was going to be disastrous for the US.
Here’s the difference - the people on this board tend to be contrarian. The “y2k sky is falling” crowd were generally the propagandized masses, as is the “real estate never goes down” crowd.
So I would disagree - I’d bet you that most of the people on this board were NOT in line buying canned foods and bottled water on 12/31/99.
I bought a small reserve of groceries & a few gallons of gas at Y2K just in case, but I knew any problem wouldn’t last more than a few days because of the intense public reaction to FIX IT !!
I didn’t panic, I was just cautious.
Unlike now where the overall denial is sickening.
As far as I’m concerned Y2K did happen. If the code hadn’t been corrected things would have gone bad. In fact, I couldn’t get my car in 1/1/2000 because the parking garage gates & computer was old and did in fact go bust at the roll over. Lots of things could have gone bust if they hadn’t fixed them.
I’ll bet the parking garage attendant was laughing his azz off watching you from behind the bushes while twirling the gates power cord.
Actually, I was pretty involved in the y2k thing, and it was no joke - if for only one reason: the power grid.
We all know the last nuclear power plant was built decades ago. When we y2k-tested the power plants in the Southeast, the six I was in charge of ALL had to have their core software modified. The programming was so obsolete we had to track down the original programmers - all retired, and they basically named their price. I personally had to push one senile old fart into the control room in his wheelchair to redo his 20 year-old code.
Put it this way - does it really matter if the electronics in your home were y2k-compliant if there’s no frickin electricity on Jan 1, 2000????
“I’d bet you that most of the people on this board were NOT in line buying canned foods and bottled water on 12/31/99.”
Anyone need 30 cases of Spam?
Oh, we had plenty of bottled water on 12/31/99…but Y2K had nothing to do with it.
But I do wonder how much the housing market will bring down the US economy? A lot of the “doom and gloom” people who comment on this blog strike me as the type of people who thought Y2K was going to be disastrous for the US.
The gloom and doom people you mention have supporting facts to back up their comments. The Y2K issues you mentioned were from people who knew nothing about computers and had no supporting facts. There is a big difference between facts and BS. Do some research and you too will have an eye opener when you get the facts and can truly see what is happening now and in the near future. I can assure you one thing, it’s not good news! Better yet, if you are so confident the bloggers on this site are gloom and doom, go out and purchase several properties in Florida and watch what happens to your investments. Then you will find out the truth!
80% of what I sell is to men in the construction industry. And most of them have almost nill to no business. So that means my business will be affected. And then I won’t be able to get my hair and nails done all the time. Then that will affect their business. I definately see this as a trckle down effect
Ah, yes, the old y2k thing. That was first trotted out by the REIC about mid-2005. Taint by association. It never worked and guess what; the REIC was wrong.
NEXT!
I’m with you, Justin. The U.S. economy is not imploding or exploding.
Two-thirds of the U.S. population will not be affected by the housing crash to any significant degree. Again, people in this country tend to forget that 40 percent of all U.S. revenues are now generated overseas. And think of all the housing that will be built in China and India during the next 20 years!! The builders and developers who survive this housing bubble will make massive profits 3-10 years from now if they position themselves correctly.
Further, our long term prospects here are good. There’s a HUGE cohort of people aged 8-22 in this country. Their numbers are greater than the boomers. In the coming decades, there will be much demand for products from that age group. Demographics is king.
Aside from all this, it will be great listening to Boortz et al in Ames, Iowa, this weekend. Fair Tax here I come! If we citizenry manage to push that puppy through, our standard of living will increase markedly across all income categories.
The doom-and-gloomers here should get a copy of The Fair Tax book and demand their officials to pay heed.
Agree on long-term prospects. Disagree on short term ones.
The same 2/3rds that were not affected by the great depression?
Or the 2/3rds that were not affected by WWI or WWII?
I just want my family and friends in the 2/3rds not affected.
This is not 1929-1939. Nor is it 1939-1945. It’s not even 1979-1982. The scenario and the protections we now have in place (FDIC protection of up $100K per account - to mention one very basic and significant one) make any talk about a revisit of the 1930s Depression-era laughable.
Is The End Of The World a hot topic on all of our country’s so-called ‘news’ channels these past 2-3 weeks? Hell, the sky hasn’t even fallen yet!
I guess the time to turn bullish on real estate will arrive sooner than I thought. Like 2-3 years from now instead of five years plus.
Sorry Eudemon, I think you are light on years. I see no reason to believe that it will be less than 10 more years before RE ticks up. I also think you were right when you wrote “Two-thirds of the U.S. population will not be affected by the housing crash to any significant degree.”
I wish to stay in that 2/3rds with family and friends. And for historical purposes why don’t you look up the effects of the Smoot-Hawley Tariff Act of 1930 and see what happens if our inept congress enacts the proposed legislation against China. Or if you have a penchant for looking up historical financial tidbits, look up the panic of 1893 - that only took 16 years to recover.
The sky does not need to fall, the economic structure of the US is just as vulnerable as our infrastructure. Out of date and unrepaired.
The wonderful government agencies like the FDIC and SIPC are at best a stop gap. Ask any investor in the Texas Savings and Loans how long it took to get their moneys back from the Government. Ask them if they received any interest.
The government is not your friend and is not going to be your friend.
The scenario and the protections we now have in place (FDIC protection of up $100K per account - to mention one very basic and significant one) make any talk about a revisit of the 1930s Depression-era laughable.
True. It won’t be like the 1930’s.
It will be worse.
Relying on historical events from 75-120 years ago and applying what happened then, and what was done back then, to today’s scenario is a joke. I could just as easily dig up events and facts from the 1920s, 1950s and 1960s to “prove” how rosy our future will be. But I don’t do such things because that too would be nonsense.
You know what cracks me up about Permabears? They waste decades of their life waiting for the clock to strike 13. And then when it does, they declare themselves geniuses. What’s that old saying again - that even a non-running clock gets the time correct twice a day?
technovelist - how will this be worse than the 1930s? Going to have to go without your cell phone, X-Box, Internet, Starbucks latte and cable television? Oh, the calamity! Oh, the horror! Those who ate paint and bark off trees in the 1930s would laugh in your face.
And remind us of how stocks, 401k’s, and homes are FDIC insured.
Can you site a source for the “8-22 y.o. population outnumbering the boomers” claim?
I haven’t looked it up, but everything I’ve ever studied says quite the contrary.
OK, so I looked it up myself. Here are the population by age estimates extrapolated from the 2000 census… Ages 8-22 fall out of scope a bit, but on the whole that claim just doesn’t hold water…
Table 2a. Projected Population of the United States, by Age and Sex: 2000 to 2050
(In thousands except as indicated. As of July 1. Resident population.)
(leading dots indicate sub-parts)
Population or percent, sex, and age 2000 2010 2020 2030 2040 2050
POPULATION
.TOTAL
..TOTAL 282,125 308,936 335,805 363,584 391,946 419,854
..0-4 19,218 21,426 22,932 24,272 26,299 28,080
..5-19 61,331 61,810 65,955 70,832 75,326 81,067
..20-44 104,075 104,444 108,632 114,747 121,659 130,897
..45-64 62,440 81,012 83,653 82,280 88,611 93,104
..65-84 30,794 34,120 47,363 61,850 64,640 65,844
..85+ 4,267 6,123 7,269 9,603 15,409 20,861
That doesn’t paste well in a blog, but the spreadsheet can be found: http://www.census.gov/ipc/www/usinterimproj/
That REALLY didn’t paste well in a blog
Here are the applicable totals projected for 2010:
Age 5-20 = 61,810,000
Age 45+ = 121,255,000
Funny, those aren’t quite the figures that the 2006 World Almanac lists on page 483. Its source is the Bureau of the Census, U.S. Dept. of Congress. Here’s what it says:
Projections for 2010:
5-24 years: 83, 485,000.
45-64 years: 81,013,000.
Note that neither figure includes illegal immigrants.
Eudemon,
Those who do not know the past are destined to repeat it.
Wow, I’m on a roll, or something…
“There’s a HUGE cohort of people aged 8-22 in this country. Their numbers are greater than the boomers. In the coming decades, there will be much demand for products from that age group. Demographics is king.”
Much demand for products? Products manufactured where? Not the US, since our manufacturing has been shipped overseas.
What jobs will be left to purchase such products, after
“those who survive this housing bubble will make massive profits 3-10 years from now if they position themselves correctly” - positioned where? Positioned themselves to build and operate overseas?
The current massive trade imbalance will only get worse. 3rd-world status here we come!
As a computer guy, I totally laughed at Y2K. I thought people were goofy, and nuts. Sure I worried just a slight bit that municipalities or other small organizations might lack the talent, but I saw the over-reaction before hand at the gov’t places I worked. I remember reading the nutty articles in the NRA and other gun magazines my roomate got, and how so-called computer experts were advising people to stock pile guns. That worried me.
This is a bit different. It’s just the sheep going to slaughter. A ton of people do own their homes, and probably haven’t extracted a ton of money from them recently. All the newcomers will get pwned, but the rich will remain rich. And life will go on.
In the long term, I’m more concerned with the jobs that will be availible in the future for Americans, since I really think we will get passed by other countries in much innovation and education. We on this blog saw this, were able to figure it out, why didn’t the rest of America?
“Corporate profits set new records every day.”
This is because of corporate buy backs temporarily pumping up the eps.
Oh, yes, many corporations are posting record DECLINES too!
What Mr. Stein fails to appreciate and why he missed the boat is that from 2003 to the present 70% of the GDP in the US is from the consumer. As has been pointed out many times, the consumer has been living from the MEW. And what can be seen in company layoffs is discretionary spending has gone poof. Hospitals are cutting back staff, Not for Profits are cutting back staff and Leisure companies are cutting back staff. There was an article today that hospitals have cut burn units to the point that if there were another 9/11 type of event there would not be sufficient units available to treat the patients.
I have never seen as many corporate balance sheets look as suspect as I have seen over the last 5 quarters. Corporate debt is ugly. These are all early warning signs that something is not right.
Justin, you may very well be correct and that we will continue with ’smoke and mirrors’ for another decade or two. I do not expect the end of the US market, I just do not expect it to go anywhere.
My caveat, if the US Congress and Senate decide to impose trade restrictions on Chindia and, by default Japan, we will have another recession/depression. Since this appears likely during this election cycle, prepare for the worst and hope for the best.
Stein is in bed with “Ryland Homes”….Not sure what the relationship is but he is always pumping Ryland as the finest of the home builders….
Thank you, Hoz. Hopefully, we are finally gettin’ through to some people. This debt bubble, not really a housing bubble, rather a debt bubble is going to burst big time and even the collateral damage is going to be bad. BTW, despite my doom and gloom, I was not a Y2K maniac. Never really bought into that lunacy, seriously. However, as one who has navigated through life with serious debt, I can honestly say from experience this is gonna get bad. Way toooooooo much debt at every level of life in this country!
I started 1 yr ago, paying off all my debt knowing we were headed for this situation. But there are further reasons to be debt free. It has to do with Freedom!!!!!!!!!!!!!!!!!!!!!!!!!
Amen. I don’t worry about losing my job, paying my rent, my car breaking down…because I ave no debt and enough money in the bank to carry me for two years.
“Freedom!!!!!!!!!!!!!!!!!!!!!!!!! ”
William Wallace would be proud.
Thanks Hoz
What Mr. Stein fails to appreciate and why he missed the boat is that from 2003 to the present 70% of the GDP in the US is from the consumer….
- Exactly my thoughts. A coworker who is thrifty and makes over 68k told me today that he won’t take a vacation this year. They just got there college bound son a car and are now shelling out dough for him and that is that. The consumer is getting killed. Wall street has yet to connect the dots to the housing boom / consumer confidence fall that is upon us.
Let’s see….The couple bought a CAR for their son and is now shelling out money to pay for a COLLEGE EDUCATION.
Since when is either not a consumer item? A car certainly is, as is college since it (well, half of it at least anyway) is not paid for via taxes.
The car may very well have been purchased second hand, therefore out of the reach of corporate America. So, if it decreases their net consumption of “new” consumables, then there is definitely an effect.
“Subprime is a mess. But it’s a small mess. Subprime mortgages account for roughly 20 percent of mortgages even in the most heavily exposed states. About 20 percent of them are delinquent in some way. That’s 4 percent of mortgages… 2 percent, will go into foreclosure. There will be roughly 50 percent recovery on sale of these. This is a loss of 1 percent in the mortgage market ”
Atl-A & Subprine account for 40% of all mortgages from 2004-06. Ultimately about 20 - 50% of them will go into foreclosure with recovery rates of about 50%. So that makes about 4 - 10% total loss on all loans made during that time.
I bet that some of these mortgage backed securities are a steal right now. Problem is that you don’t know what exactly is backing them. If there’d be a way to find out you stand to make a fortune. Especially the early 2004 vintage is probably not in too much trouble.
I am proof Ben Stein is a MORON…..labor shortage what BoolSheet, Just place an ad on CL and you will get 200+ resumes for one part time job. Nobody returns an email receipt, let alone answer an email or return a phone message.
Labor shortage Prove it to me……..you can’t!
anecdotal…I agree I had 2 openings at the facility I work at and I am now inundated with resumes and phone calls. I even had a specialized employee who used to make over 100K call about a job that pays 45k “because there is just nothing out there”.
Whattayaknow? A former lawyer and speech writer for Richard Nixon engaging in disingenuous behavior! Whodathunkit?!?
no, that guys name was Ben Shillstein.
“housing is only about 5 percent of the economy”
Me thinks he only means the finished product. What about the bankers, builders, construction teams, suppliers, furniture warehouses, carpet and tile suppliers, etc, gardners, pool cleaners, gov. dependent on property taxes, schools affect by lower enrollment, etc. Ben Stein seems to be bent over sharply looking into a black abyss.
“Yes, the housing market has slowed from a spectacular bubble level to a simply pretty good level. Housing sales and starts are now about what they were in 2002, and no one thought we were in a housing depression then.”
I can’t believe Ben pull out that tired refrain.
Ben, in ‘02 the arrow was pointing up. In ‘07 it’s pointing down. Will ‘08 be like ‘01? ‘09 like ‘00? etc etc etc.
SoCalMtgGuy has a new post up!! link.
For you newbees out there, he’s the one who coined ‘FB’. SoCalMtgGuy deserves to be in the bubble bursting pantheon along with BenJ. His predictions were amazingly accurate, and we all (especially you with the big winning put positions) owe him (and Ben) a huge thank you.
An example of why housing is a mess –
Two years ago I spent three weeks on the Gulf Coast doing disaster relief. I’ve kept in touch with one friend. A third member of our group dropped out of sight. Today I got word from my friend that the other guy had finally telephoned. He had been ashamed to call earlier because he was having his house forclosed.
His situation… not working, wife works, 5 kids. Monthly nut jumped up to over $3000 (who would have guessed).
His reaction – he’s planning to take wife and five kids to Disneyworld for two weeks, using the CCs. OMG!!! My friend and I were speechless. Foreclosure, and he’s concerned about Disney World?
I see both sides of the trip to DisneyWorld:
On one hand, you need to have a roof over your head & food to eat.
On the other hand, the kids do grow up & you can’t ever recapture their youth ,,, and if yer gonna lose it all soon you might as well create a few good memories out of the rubble.
I wouldn’t defraud anyone but I would also go to DisneyWorld & at least have SOME good memories to ease my forever wage garnishment, toiling in the salt mines to repay the debts that will outlive me.
Disney doesn’t have a monopoly or a patent on ‘good memories.’ Just more FB thinking on the part of this FB.
Disney world in the middle of August or September, I think he is going to go kill his family.
LOL
I wonder how many people might choose to bail out of the US altogether? For instance, I could see a lot of SoCal folk heading south of the border if that’s what it takes to escape wage garnishment. Take the F-350 and run!
Colorado you are right. I just saw an ad and guess who is at the top of the new construction business in Tijuana. Donald Trump.
“he’s planning to take wife and five kids to Disneyworld for two weeks, using the CCs.”
Little story on the local Tampa Bay Florida news the other night about how Disneyworld is raising its entrance/ticket fees. They broke out the various expenses of going to Disney (tickets, food, parking, souvenirs, etc.). Although a long time Floridian, I haven’t been back since the early 1980s and enjoyed reading a story in Rolling Stone back then about Epcot Center called “It’s a Dull World After All”. It exactly reflected my experience of a corporate shill attraction. Read a very similar story in Vanity Fair within the past year about the overall Disneyworld experience. I guess it is magical for children, but to me, it is a hot, humid contrived hellhole.
I wonder where they get off raising the rates in times like these? Well apparently your friend is willing to ante up, despite the fact he’s being foreclosed on. I guess Disney feels enough people are willing to pay for their “special” experience.
Disney Grad Night used to be THE big thing for graduating seniors in FL.
I remember back in Sarasota HIgh (no I am NOT an effin sailor thank-you-very-much although that Sailor Circus was pretty cool) it was advertised heavily … I think the chaperones got in free if I recall?
But yeah, the lines are hellaciously long.
Followup comment: I also remember the Disney/EPCOT tour bus guide yammerin’ ” Disney WORLD is SOOOOO BIG that we can fit Disneyland in our parking lot ” !!!!!
Bein a native Califonian that comment rankled me as to so what ?!? but I kept my trap shut . For a change.
Write your congressman - say NO BAILOUT to this mess. Let it all crash. Not one penny of taxpayer money should be used to help. As a matter of fact, congressmen even talking about the potential of a bailout is wasting our taxpayer capital on their overinflated salaries and bonuses.
SAY NO TO ANY BAILOUT!
I fear the fix is already in. You and I will be paying dearly to support the finance men in the style they are accustomed to, and the US will slowly become a 2nd tier economic entity.
Irrespective, write your congressmen and voice your opinion - tell them that you will vote accordingly when they are up for re-election.
the US will slowly become a 2nd tier economic entity.
37 $$$$$ trillion in Fed debt says we’re already there.
A friend of mine wrote this, in an e-mail today:
“The time to have become suspicious was when Greenspan used the word “conundrum.” There are no conundrums at his level, only secrets.”
Question -
Why would a homeower who’s house is now worth 100k less than he owes want to be bailed out? Is he going to ‘Put his shoulder to the old mill stone’ and wait for the house to regain the lost value over the next 8 years?
I wish it were that easy, unfortunately for most of us when the majority of the population is either stupid, uneducated, or misinformed, it is hard to not pay for their mistakes.
2/3’s of this country’s population are homeowners, they typically vote, and they are likely to vote selfishly.
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world’s greatest civilizations has been 200 years.
Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage. ”
Attributed to Alexander Tytler
But 2/3’s are not FB
Wow….
(shocked and speechless)
“Several months ago Silvia Cuevas took stock of her life, and it was a profoundly unsettling experience. At 40 she had a solid job with a modest salary at the public library in Santa Ana, Calif. She’d carefully squirreled away some savings and bought herself a little house. She was financially secure - and utterly dissatisfied. All around her, Santa Ana throbbed with the feverish energy of recent immigrants eager to cash in on the promises of America…Cuevas, though, felt as conservative, meek, and, well, dull as a church mouse in Vegas. “I was going nowhere,” she recalls. “How was I going to find my fortune?” Then a girlfriend introduced her to Nouveau Riche University.
Not exactly a university, Nouveau Riche offers real estate investment classes -and a host of related products and services - to would-be tycoons. In April, Cuevas plunked down tuition of $16,000 and attended a weeklong program in Phoenix. Two weeks later, emboldened by her instructors and an advisor assigned by the university, she refinanced her home, taking out $200,000 - a large share of her equity. She used the money for down payments to buy - sight unseen in one case - three investment properties through a real estate agency controlled by Nouveau Riche. By midsummer Cuevas’ portfolio of investments had grown to include a condo in Colorado, three acres of undeveloped land in the Smoky Mountains, and a three-bedroom house in San Antonio. Her debt load has grown too, thanks to the hundreds of thousands of dollars in loans she took out on the properties, but she doesn’t worry. “I learned how to be bold at Nouveau Riche,” Cuevas says. “They’re the market experts, so I trust them to help me buy. I can’t wait to make my next purchase!”
I sense another post for my blog - ‘Dumb Greedy Bit$h of the Week’
Well, it would be interesting to know her current position.
Prone.
You’re nasty! LOL
But true.
In truth, I feel somewhat sorry for this woman. It sounds more like she was trying to get some excitement or meaning out of a dreary life. Would guess she didn’t make the Playmate cut, so had few avenues to pursue. And there forever will be those who prey on such people.
The specuvestors for whom I have nothing but scorn are the arrogant, self-important ones.
Yes, sadly she fell prey to the new Potemkin American Work Ethic: all style, no substance, instant gratification.
Potemkin American Work Ethic: all style, no substance, instant gratification.
This one deserves to go into the housing bubble glossary.
as seen on tv
Chip, Dont feel bad. If it werent Nouveau Riche, it would be
Rico Suave, seperating Silvia from her paltry savings.
My wife’s uncle went to one of these. He never would say how much money he spent for “tuition.” What is funny he is that he is a full-bird colonel in the Air Force. His pension would make some people cry. On top of that his wife works in a lab, can’t be hurtin’ either. Additionelly, howns a golf course home in the Phoenix area that only cost him 250K years and years ago. Even if he sold now, he would still walk away pretty good. What I think is going on is that he and the wifey have incurred some debt along the walk of life and he wants to make some fast money to pay it off and still have some left. As a colonel, he can’t be hurting for pension, esp. since his wife has a retirement, too.
‘When you’ve had a very strong economy where more people could get loans, you’re going to see more repos,’ said Mitchell. ‘It means you’ve had a great economy, and people that should have rented, bought. A certain number of people lose their homes.’”
“‘That’s just the American way,’ said Mitchell.”
Not much need for comment, Ms. Mitchell opened her mouth and the ignorance rolled out. This lays to rest any thoughts that I may have had about a small portion of Americans have some grasp of how money and economies work.
“When Brant heard that Nouveau Riche students had bought 60 condo units in her town, sight unseen, she said, ‘I’m speechless…prices are falling faster than you can imagine: 10% last year and another 10% this year.
These students who bought these condos will now get a lesson on economics and corporate spin. It will be a very costly lesson, but a lesson well learned through first hand experience!
They are also out $16,000 that their bogus “education” cost. They all will end up foreclosed and feeling very stupid.
We’re assuming they all didn’t get cash-back and the foreclosure will only hurt the lender. Meanwhile, they’ve bought three-50 more with cash-back.
And to think she could have gotten the Botoxed lips and breast enhancement! Those are the real money makers.
“Real-estate agent Rob Buhrow recently performed a market analysis on an Elgin property for a local bank, and every comparable home he turned up was a foreclosure property. ‘I’m like, ‘Oh my God,’ Buhrow said. ‘It makes you think – what’s really going on?’”
Buhrow also recounted his conversation with a colleague earlier that day:
‘ I’m all, “Foreclosure comps; what’s up with that?” And he’s all, “Dude, their ARMs are resetting; duh-uh.” And I’m like, “Hel-lo. Earth to me.” And then he’s all, “Yeh-ah.” ‘
“And as the market has turned, there might be no way out for some saddled with those bad loans, said Keith Wolf of Winfield Realty, who now markets foreclosed properties after a career in banking and finance.”
The Wolf: I’m Winston Wolfe. I solve problems.
Jimmie: Good, we got one.
The Wolf: So I heard. May I come in?
Jimmie: Uh, yeah, please do.
And still they build in my Bushville part of Texas.
They are selling to h1-bs working at the local tech planet. Very ironic things happening in this country right now. In fact, the person who hires at the large tech company near here is an h1-b too.
Now they want me, joe tax payer, to pay for the bail out too.
NO BAILOUTS!!!
I hope not!
Another nail in the coffin:
http://money.cnn.com/2007/08/07/real_estate/jumbo_jam/index.htm?postversion=2007080711
“The cost of financing an expensive home purchase is jumping, making high-end buyers the latest victims of the mortgage meltdown.”
“Wells Fargo, one of the nation’s biggest mortgage lenders, raised the interest rates on it 30-year, fixed-rate, non-conforming (AKA jumbo) loan to 8 percent last week, up from 6.875 percent. Other lenders followed suit and more are likely to join them.”
“Why should jumbos, whose borrowers often boast high incomes and assets, cost more than conforming loans? It’s because Wall Street has stopped buying the loans.
Conforming mortgages, or loans below $417,000, carry much lower risk, because Freddie Mac and Fannie Mae guarantee a market for them. In a tighter credit market, lenders are charging more for jumbos because of the extra risk of not being able to sell them to the investment community.
Allen Hardester, a mortgage broker in Maryland, said that jumbos have lost their appeal for investors. “[Lenders] are having trouble unloading even prime, fully documented, 20 percent down jumbos. Nobody has any faith in real estate,” he said.”
This is huge for bubblicious markets like Los Angeles.
OC baby OC….blood bath median here is over 600k.
Wells Fargo, one of the nation’s biggest mortgage lenders, raised the interest rates on it 30-year, fixed-rate, non-conforming (AKA jumbo) loan to 8 percent last week, up from 6.875 percent.
Fifth Voice had it right (from The Music Man, “Wells Fargo Wagon”):
People:
O-ho the Wells Fargo Wagon is a-comin’ down the street,
Oh please let it be for me!
O-ho the Wells Fargo Wagon is a-comin’ down the street,
I wish, I wish I knew what it could be!
First Voice:
I got a box of maple sugar on my birthday.
Second Voice:
In March I got a gray mackinaw.
Third Voice:
And once I got some grapefruit from Tampa.
Fourth Voice:
Montgom’ry Ward sent me a bathtub and a cross-cut saw.
People:
O-ho the Wells Fargo Wagon is a-comin’ now
Is it a prepaid surprise or C.O.D.
Fifth Voice:
It could be curtains!
Sixth Voice:
“Or a double-boiler!!”
(For all those FBs who don’t realize that high prices are dependent on easy money.)
“Nobody has any faith in real estate,” he said.”
What? This fellow just touched the 3rd rail!
What will they tell the fruit that has that new FLIP a house show out in LA? When he goes for his next loan.
RE always goes up,….says the man in the bottom of a pit.
“Warren Hanson, president of the Housing Fund, describes the situation as a ‘natural disaster’ akin to ‘10 Red River Valley floods hitting Minnesota all at one time.’”
Into this valley they say you are going
We will miss your suburban keepin’ up with the Joneses style
For they say you are getting foreclosed on
To be honest, we’ve seen it coming for quite awhile
Come and sit by the side as the sheriff arrives
Do hasten to get your stuff out, before we bid you adieu
But remember the Red River Valley, full of foreclosures
And the loanmen, who seemingly didn’t have a clue….
Do you write for Wierd Al Yankovich?
Jim Cramer says he wants Fannie to bailout homeowners and lower interest rates to make it happen.
(He didn’t say that by doing this, he would also be bailing out the banks that made bad loans).
I said about the same thing yesterday regarding Mr. Cramer. He should have been FIRED for that psychotic rant last Friday. He has no credibility left(If he ever did). NONE! JIMBO! NONE! Only a hack acts that way, the true artists of finance salivate at volatile times.
Everybody is talking about his performance. Cramer is a car wreck. The point is to get you to look. That is when the advertisers, his employers, do their thing.
I’m thinking this might be a GOOD thing………
What if you lowered interest rates to 3-4-5% and a fixed rate 30 year.
Which would knock off $500-1000+ a month off the payment.
People would not get foreclosed on, and the penalty…. they wont be able to sell the house either (unless they bring $$$ to the table) because the new buyer will have to pay the going interest rate. Which makes the house un-affordable. Talk about a house slave!
As soon as the house next door is half what they owe, they’ll walk,m regardless of how low their interest rate is.
Cramer is making me sick .The way he is smiling and thinking that his meltdown was the cause of concessions on the part of the Feds is just sickening . These guys are all spoiled brats that are use to cheap money fueling a market . The price of money is going up Cramer and why should the taxpayers bail out your investment scheme buddies ?
Everyone that is calling for a fannie /fred bail-out is missing the point on the purpose of that entity as a funding source . F/F was designed to create “new money” for qualified loan borrowers at favorable market rates . F/F purpose was never to bail out “old money ” that had gone wrong . Cramer and his elk is asking that the lending agency of (F/F) be used to rescue defaulting bad loans that would normally cause great loss to the private lending sector .
This old money that has already been lent is a loss cause .Let those lenders clean up their own mess .
This cheap ,easy money has been inflating the RE markets as well as the stock market and general economy because of the debt spending . Who ever promised people that they were entitled to cheap money with no qualifying forever ,or that the taxpayers role is to bail-out bad debt ?
I don’t buy this BS that the WALL STREET loan makers can’t re-write
loans and save some of their defaulting loans . The truth is that the loans are so bad that they can’t be saved, especially in a RE market that is correcting downward .
The loan makers are so use to passing on risk that they just want to pass their fraudulent junk loan paper to the taxpapers in the form of cheap money and underwriting available by Fannie/Freddie .
The truth is that the loans are so bad that they can’t be saved, especially in a RE market that is correcting downward .
Hell-hole trashed out dumps of homes; in horrible locations; financed by people who don’t have a clue or a penny.
Ugh…I get the jeebies just thinkin’ about it.
Damn right those loans can’t be saved.
The reality is we are headed straight for the Japan experience. And that means rates are ultimately going right back down to 1% or less. Prices will continue to dive as well.
Actually it might be good for buyers. Prices are collapsing regardless of the rates, and now that confidence has been shaken, lower prices AND lower rates are EXACTLY what the doctor ordered.
“Real-estate agent Rob Buhrow recently performed a market analysis on an Elgin property for a local bank, and every comparable home he turned up was a foreclosure property. ‘I’m like, ‘Oh my God,’ Buhrow said. ‘It makes you think – what’s really going on?’”
Finally! A real estate agent admits they have no clue what is going on. Baby steps.