Seeing A Significant Slowdown
A report from the Idaho Statesman. “The Treasure Valley single-family residential market promises to remain in the doldrums for some time to come, according to a report released this week. Metrostudy reported this week that demand for housing has slowed because of saturated housing market and a lack of consumers who can afford the price of a new home.”
“Don Hubble, owner of Hubble Homes, said Tuesday that his firm is offering agents who bring a qualified buyer a $5,000 bonus, over and above their commission, and $5,000 in upgrades for the buyer.”
“‘That amounts to about 5 percent to 7 percent off our price,’ Hubble conceded. ‘But sales have been so slow that we’re trying anything we can to stimulate the market.’”
“According to the IMLS statistics, the Ada County inventory of homes for sale at the end of June was 5,054 homes, of which only 1,624 were newly constructed. Canyon County’s total inventory of 2,583 included just 767 new homes.”
“Heinrich Wiebe, co-founder of Boise-based Genius Realty, said the consumer should remember that they’re dealing with a builder’s ‘asking price.’”
“He said builders in the Valley have routinely been dropping prices between 3 percent and 7 percent in order to sell homes. In a couple of ‘extreme cases’ the builder has given a 20 percent cut to unload a home, he added.”
“‘Their price on a home is just a starting point. Most builders are willing to negotiate a lower price,’ Wiebe said.”
The Mail Tribune from Oregon. “Armed with a bit of hopeful foresight and the right location, Rob Patridge and his partners Matt and Chris Smith are making a frontal assault on the slumped real estate market. The 1,605- and 1,990-square-foot plans begin at $349,900 in an area where several nearby homes sell for $600,000 or more.”
“‘We saw the market niche that was there and what was missing,’ said Patridge. ‘Our price point of $350,000 to under $400,000 is unique in east Medford. You’re not going to find single-family residential houses like this and there is a lot of inventory over the half-million price range.’”
“Indeed there is a lot of inventory all over the map: Southern Oregon MMLS reported Tuesday that 3,041 single-family residences, including condominium units, are now on the market, up 15 percent over last year.”
“The median price for new homes dropped 11.6 percent to $318,000 during the rolling quarter ending July 31, with 93 new homes sold. SOMLS reported 481 existing homes were sold for the period ending July 31, compared to 554 during a similar period in 2006.”
The Wall Street Journal on Washington. “The number of homes on the market in 18 major U.S. metropolitan areas…increased 19% from a year earlier. The biggest increase in supply was in the Seattle metro area, up 6.1% in July. Until recently, the supply of Seattle area homes on the market was lean.”
“But now ‘we’re seeing a significant slowdown in Seattle,’ said Pat Lashinsky, CEO of ZipRealty. Sellers generally have been reluctant to trim their asking prices, he said, and ‘buyers are sitting on the sidelines, trying to figure out what’s going on.’”
The Seattle Times. “Prices of King County houses and condominiums last month increased 9 percent compared to a year earlier, even while the number of available properties grew 51 percent.”
“Likewise, the number of homes for sale was up 57 percent in neighboring Snohomish County and 47 percent in Pierce County, according to July numbers released Monday by the Northwest MLS.”
“July pending sales were down 6.5 percent in King County compared with the previous July. They dipped 14.2 percent in Snohomish County and 15.8 percent in Pierce County.”
“That gave buyers in some areas a distinct advantage. ‘People are able to shop around for quality and value,’ said broker David Milot. ‘Anything substandard is not being snapped up.’”
“‘Two years ago, if a seller wanted to [insist on a maximum] price, it might sit on the market for a couple of months, then appreciation would catch up and it would sell,’ noted Windermere Real Estate general manager Matt Deasy. Now they may wait awhile but will eventually drop their price to land a sale.”
The Olympian from Washington. “Thurston County sales of single-family homes and condominiums are struggling to measure up to last year’s hot real estate market as sales dropped about 15 percent in July, the Northwest MLS reported Monday.”
“July data for single-family house sales show a drop in sales of 14.4 percent to 387 units, down from 452 units, (and) a 22.9 percent increase in inventory to 2,306 units, up from 1,877 units.”
“July condo sales data show a drop in sales of 25 percent to nine units, down from 12 units, (and) a 43.1 percent increase in inventory to 73 units, up from 51 units.”
“While higher inventory levels mean more choices for buyers, it doesn’t mean that homes aren’t selling, Van Dorm Realty Manager Jeff Pust said. But the home has to be priced correctly, he said.”
“‘The price has to be on or (a sale) is not going to happen,’ he said.”
“Besides higher inventory levels, other factors that have slowed down the South Sound housing market include higher mortgage interest rates, more new construction and slower rates of home price appreciation, Abbey Realty real estate agent Ted Leland said.”
“‘A lot of people got spoiled with low mortgage interest rates and the high rates of appreciation,’ Leland said.”
“Now that home prices aren’t appreciating 20 percent a year as they did two summers ago, some buyers aren’t nearly as excited to invest in property, Leland said.”
“Five of Leland’s real estate transactions this year have fallen apart because the buyers couldn’t qualify for home loans, he said. A year ago, it wouldn’t have been a problem qualifying, Leland said.”
“Because of the shakeout in the subprime mortgage market and the American Home Mortgage bankruptcy, there has been a major contraction in home loan products, said Terry Wilson, Heritage Bank’s home loan manager.”
“Increasingly harder to find, for example, are zero-down loans that don’t require income verification, he said. ‘I don’t think it’s a shock that they are going away,’ Wilson said. ‘The shock is that some of them even existed.’”
Of the listing service’s markets, Whatcom County was one of the few that had more homes sold this month than in July 2006. Overall in the Northwest service area, home and condo sales were down 7.4 percent in July compared to a year ago.’
‘There were 75 condo units sold in July, up from 70 a year ago. However, the median price was significantly lower. Last month the median price for condos was $198,900, down from $223,995 a year ago.’
Next month, median prices will FALL because the jumbos have been repriced. Thus the trend toward higher-priced homes still moving a bit and pulling up the median will reverse. This will be a “got popcorn?” event. Don’tcha think?
Let see, I have the popcorn, I have the hot air from the NAR and FB, and butter, too. I’m set….
Neil,
You can use the NAR hot air to fill up the baloons for the party!
And the butter to… oh, never mind.
ROTFL
Ok, their hot air will pop popcorn, and run turbines.
For the ballons, we’ll buy helium. It smells less.
As to the butter… naa… Joshua Trees should be “dry.”
Got popcorn?
Neil
I just had a quick discussion about higher priced homes with my boss. He lives in Pacific Palisades, CA and is convinced higher priced homes in nice areas of LA will not be affected during this correction. He said some of the “modest” homes (~$2M) in his area are still getting multiple offers over list price. I just nodded and said “I guess we’ll have to wait and see”.
I’d think that’s a good thing to say. You get to come back tomorrow.
I’ve spent most of my life living in the Palisades. I wouldn’t be surprised that there’s still a lot of competition for houses there, especially at the 2M price point. (That’s not quite modest BTW, the median there is 1.5M.) However, once the outlying areas erode, the Palisades will be hit very, very hard. I have a close friend who lost 400K in a matter of months back in the 90’s in the Palisades when he bought the next-door house before he sold his own house. The slide happened very fast. At this level, I would bet almost all of it is trade-up. I have a friend who was looking in Rustic canyon at another friend’s house which was on the market for 4.5M. He was tempted, but in order to do so, he would have had to sell his house for 3.5M or so. It’s all funny money at that stage. One giant Ponzi scheme. One of the reasons why the Palisades and Santa Monica will be hit so hard, IMO, is that your boss’ arrogant attitudes mirror many there: they can’t conceive of it ever happening. This is all the more amazing in that a rapid and painful decline has happened so recently.
Why can’t they conceive of it ever happening, given that it just happened 15 years ago? You can’t call that a short memory, it’s more like willful ignorance.
I’d guess the jumbo mortgage interest rate increase won’t hit for a few more months–sales were already in the pipeline.
The inventory in the South Snohomish county town I live in has gone from 180 active listings to 280 in the last 4 weeks.
In a couple of ‘extreme cases’ the builder has given a 20 percent cut to unload a home, he said.
You have not yet seen extreme buddy. You will wish all it took was 20% oh that’s right your company will be bankrupt and it will be the banks/lenders problem. These must be young folks that have never be through a correction. Well here comes a mother…
Well here comes a mother…
Mother of all recessions?
Sadly… that’s not a joke.
I’m still trying to figure out where the money opportunities are, where its safe to “park” funds, etc. Yes, I’ve read the comments here… But food and ammo are not my first picks. 
Got popcorn?
Neil
i’m almost resigned to admit there are no and will be no safe places to park it, much less profitable ones.
Perhaps the only way to really capitalize on this situation will be some sort of business venture that focuses on the peculiar needs that a recession normally triggers.
Crap time to quit my cushy job and start up a dot com eh?
Oh well, good to see sanity retuning even if the timing sucks.
Neil, A lot of the old fashion rules still apply, have little or no debt, holding some PM’s is not a bad idea. They have never been worth nothing as all paper money is eventually. There is money to made in a down turn just as there is an upturn. I know you know all of these things. ‘Ol Will Rogers once said ” You can’t break a man that don’t borrow” and those that have become debt slaves will find that out they can be broke(n). It ain’t the end of the world, it’s a good thing in the long run, of course the powers that be will throw up a mighty resistance to it. Enjoy the show… I know you’ve got popcorn!
You can’t break a man that don’t borrow”
nice one. Never heard that one.
8 month CD’s paying 4.50 at World Savings Bank is a safe cozy niche while the markets tumble.
That’s odd; branch rate in Phoenix (85004) is 5.21%, APY 5.35%. 8 month, ten Thou$and minimum.
Forget selling, that’s 3-7% off. Now we’re talking about “unloading” at 20% off.
“‘The price has to be on or (a sale) is not going to happen,’
The price has to be down 40% or (a sale) is not going to happen,’
what area is #1 for slide from peak ?
FL cities or Denver or ?
fill in the blank
San Fran!!!!
Denver? Sure everyone is going to slide, but appreciation out here has been in the low single digits since 2000.
I think the 2nd home/vacation home market is going to be hit hardest. Not sure about major metro areas, likely candidates are Miami, LA, and SF Bay Area.
OC is different - it’s going to get hammered!
Think the DOW can be saved in the last 6 minutes?
No. But all you PPT denziens - “they” should make an appearance tomorrow as we are sitting on the 200 dma - the Maginot line between bull and bear market.
The PPT rewls!
Not a chance. Tomorrow is Friday and nobody wants to get filleted over the weekend. All those banker boys vacations are going to be cut short, many are probably calling their MD’s and shrinks, some might even be cleaning their guns. Ever since Cramer’s outburst last Friday the crescendo of fear in the banking world is coming across the tube loud and clear.
I said they’d appear. I didn’t say it would work.
Saw the interview on CNBC.com with Billionaire Wilbur Ross; he brought up something that TxChick mentioned last weekend: that August 15th is the day that hedge fund investors can request redemptions, and that it could make for a pretty nasty couple of weeks ahead as lots of hedgies sell off stock to meet the anticipated flood of redemptions.
Guess not. Unless they revise, looks like closing is down 387.18 today, or 2.83%.
Billionare Wilbur Ross on CNBC sounded like a parrott of this blog. In an interview with a quiet Maria he cataloged every negative aspect of this bubble. He pulled no punches. And refered to the subprime reset chart and said the pain won’t subside until atleast late ‘08. This guy has credibility and commands much respect. And couldn’t be cut off or discounted. Beautiful.
Believie it or not, the subprime problem really is contained. It is not expected to spread beyond planet Earth.
I don’t know, tim, what about those dancing aliens that keep appearing in the mortgage ads?
The vibes are already well beyond the atmosphere with the launch of Endeavour yesterday. It’s probably the main capsule talk.
Saw it; quiet cuz worried — rightly so — about Giraffe Dress upstaging her now; nothing to do with Ross.
Well, as much as Maria pisses me off, I’d still hire her. . . to clean my windows.
Jen: Could you please explain the Giraffe Dress reference to someone who avoids watching the Shill Network?
I saw Jim Cramer claiming he went nuts last week because of the giraffe outfit the chick who was interviewing him was wearing! Is that the giraffe dress reference?!
What amazing crap women still have to take from the nutscratchers out there, blaming her dress for his acting like he should head back to the zoo; she should have slapped a s**t-eating grin onto that man’s face right then lol.
“Well, as much as Maria pisses me off, I’d still hire her. . . to clean my windows.”…
……and buff my helmet.
I think I got it - GD is EB, right?
A little OT and good for a smile. Look at the yahoo finance web page at the yahoo finance videos right now .
Wilbur is laying the groundwork for a large equity stake in an ALt-A Sub-prime windfall thats coming, late 2010
Dow Down 365. Thank you ECB!
OT - I haven’t been keeping up with all the topics as I’d like to but I wanted to share this with the group. Apologies if this has already been posted. (this is a repost from the previous topic)
A friend keeps up with Atlanta news and sent me this:
Attorney Serves 3 years In Jail for Mortgage Fraud
http://www.ajc.com/metro/content/metro/northfulton/stories/2007/08/09/fraud_0809.html
Excerpt -
“A former closing attorney from Cumming was sentenced Wednesday to three years and one month in federal prison for his role in a mortgage fraud scheme that defrauded lenders of millions.
Christopher Halcomb, 45, who has already been disbarred over his involvement in the scheme, also was ordered to pay $15.6 million in restitution, according to the U.S. Attorney’s Office.
Evidence showed Halcomb participated in a mortgage fraudscheme orchestrated by Florida resident Phillip E. Hill, 49 from early 2000 to early 2001.
According to federal prosecutors, Halcomb helped Hill and others defraud some banks and other mortgage lenders by fraudulently inflating property values and submitting false borrower qualifying information to obtain loans.”
BayQT~
We may see a lot more of these. Wonder how many of his victims he’ll share prison with? Nah, former lawyer, they’ll send him to one with manicured lawns.
You gotta love our criminal justice system. Hold up a 7-11, abscond with $200, and get 10 years in prison, especially if you’re black. Steal millions while wearing a white shirt and tie and get a slap on the wrist. WTF?
Any criminal pointing a gun at somebody deserves at least 10 years. You would feel the same way if you had a 357 magnum pointed at your face. It isn’t that the robber’s sentence is too long, but the lawyer’s sentence was too short.
-380 wow
Going late today. When will they ring the closing bell?
But look at BZH potentially filing for BK but stocks up 12%!! Can someone please explain why all the builders stocks gained today??
Maybe all the shorts were covered, and now they’re out?
Probably the case… It certainly wasn’t the Dread Pirate PPT.
They need to cover during trading. Nobody wants to hold overnight.
Check out my scoop in BZH:
http://bakersfieldbubble.blogspot.com
Reportedly, more than half of BZH’s outstanding shares are shorted. Primed for a short squeeze.
cmon guys you can shoe-horn another short in there somewhere.
http://biz.yahoo.com/ap/070809/wall_street.html?.v=69
Note the comment by Battaglia-”EVERYTHING DENIED IS NOW COMING TRUE…”
Say, hey, baby…should have been readin’ Ben’s Blog. You’d have known the score 2 years ago.
Bears just got a bases-clearing double in the bottom of the 3rd. Nice 6-run rally. Looking to drive in man from second tomorrow. Score now 10-9 Bulls.
Yesterday was so mundane. Today is special.
“Increasingly harder to find, for example, are zero-down loans that don’t require income verification, he said. ‘I don’t think it’s a shock that they are going away,’ Wilson said. ‘The shock is that some of them even existed.’”
Bingo!
Hmm, anyone else think that credit concerns will ever affect buy here pay here type of car dealers? They’ve been “creative” with financing for years and years.
Not the ones using their own money to do the financing. The down payment on the smaller lots is what they have in the car the rest is the gravy/profit. Some repo and resell the same car over and over again.
Depends on the precautions they take.
Quite a few put an ignition interrupt that disables the car if the proper *weekly* payment code is not typed in. Yes, those can be ripped out… But then the alarm is automatically triggered. (Not fun for the kid doing the job.)
The “creative financing” has such high ROI that they can handle a short drop in payments. If anything, these subprime car lenders will probably see more business:
1. low FICO customers driven to them.
2. There is certainly a surplus of late model cars available for resale.
3. Low risk per transaction.
I think many types of financing are gone. But the car loan sharks… they’ll be around a bit.
Got popcorn?
Neil
Very good points. Thanks!
Come to think of it, I have seen that repo, resell, repo, resell a few times at a dealer that used to be a few blocks from me.
While the rich might find it a useful convenience and not at all problematic, the insane stupidity was that “zero-down loans that don’t require income verification” were given to exactly the wrong people.. the poor.
You’re right, but even the poor are greedy.
Speak the truth, WM! And boy, have I seen a lot of poor-greed in the past month.
Slim, share anecdotes!
This debacle has convinced me that the average J6P is very greedy. At least with the dot coms I knew a lot of technophiles who went over their head. Heck, most of the people I know who lost big were employees who watched their “options” fade to black.
This time I have blue collar workers yelling at me because I don’t believe their four flips will return huge profits. Last week a few of “OC’s finest” got incredibly pissy with me (totally unprofessional) because they *heard* that I didn’t think their “palaces” were worth 1.5M. Why? They found out about the meeting where low/mid/senior managers sat and chatted about going to Houston.
(Note: No one in on the decision process, just rumor sharing.)
Anger because their greed is being impeded by market forces and corporate attrition.
I’m convinced we’ll see riots. Where? When? I don’t know. These riots will be pass off as “race riots,” but that won’t be why. It will be the shattered dreams of the stupid and greedy.
Got popcorn and ethics?
Neil
I knew three non-techie J6Ps at my former employer who bought into a Nasdaq 100 index (one of whom did it with his entire $100k+ inheritence) at the very tippy top of the tech bubble, and then after the pop they blamed everything and everyone else for their losses. Most people become greedy when presented with the opportunity to act that way, and have since the dawn of mankind.
The poor are greedy, by definition. They consume more than they produce.
Yep - basic rule of business lending: lend to those who have means to repay, not those who need the money.
(Breaking keecaps is not a profit center)
That would be incorrect.
The poor would be the first ones affected by no-verification loans, but let me give an example of how the ‘rich’ (not the super-rich, but those starting with incomes in the low 6 figures) can easily get in trouble.
If I wanted to ‘invest’ (speculate) in properties during the boom, why would I want to use a standard loan? I wouldn’t. I would have picked a neg-am loan, since reducing my principal was not the method used to increased equity. I would increase my equity by holding on to the property for x amount of time.
Therefore, I would attempt to have the minimum payment necessary to hold on to the property prior to sale. I might even get a cashback deal (inflating the price) to get a little money to help me make the minimum mortgage payment.
So in this way I could ‘invest’ in several higher-priced properties without spending any of my money.
But with the market having cratered, and the rates resetting, I will easily get into massive trouble.
“But with the market having cratered, and the rates resetting, I will easily get into massive trouble. ”
But, wealthy or not, a truely capable RE dealer/flipper/fixerupper/investor is not likely to get into this sort of bind.. He did the homework.
At the least s/he is wise and experienced enough to have a complete business plan formulated and laid out ahead of the purchase, including a projection on market trends, local and national.. Holding time, remodeling contractors / subs waiting, and all material costs figured out ahead of time.. along with contingencies for possible delays and the price for those should they occur.. and even may go as far as having a couple of prospective buyers lined up.
but then again, sh!t happens .. no way to eliminate all risk.
A REAL investor has a “back door” to every house. If you can’t sell, you rent. But this is factored in before hand. You don’t buy if your payment is more than the area rent, unless you are POSITIVE you can get in and out quickly. I don’t mean the “specuvestor” idea of positive (that is that they saw a TV show so it must be true)
Real investors should have left this market as soon as the rent/price ratio went out of whack, and that was a long time ago.
Whoever purchased after 2004, if not 2003, never meant to be an accidental landlord.
“Real investors should have left this market as soon as the rent/price ratio went out of whack, and that was a long time ago.”
Exactly…this whole barrel of crap is quite diverse I’d guess, people who’d never have been in even a first house 5 years ago, people who’d never have been in as big a house 5 years ago, people who’d never have been buying second ones, who’d never have been ‘flipping’ or playing with subcontractor spreadsheets…
The injection of money by the European Central Bank to the tune of $130 Billion (largest ever) shows that banks are getting hit very hard. I can see a run on the banks coming. My wife is reconfirming our FDIC coverage for each of our accounts to make sure we haven’t messed anything up.
Dangerous times IMO.
I’ve made sure to keep under $90k per bank.
I cannot convince my wife to pull her money out of Indymac. (”They pay so well on their CD’s!”) So as long as its below $90k and has FDIC, I consider it a lesson to come.
$130 billion (USD equivalent, it was done in Euros…) is INSANE! In rough numbers, that was 250 Euros per capita suddenly injected into their economy. In other words, the typical European will work one day this year just to pay (in inflated prices) for today’s “bail out.” Worth it to keep the banks going? Yes. Still insane…
Got popcorn?
Neil
But is it ” Aladinsane ” ?
(que open mic for poetry/music)
Neil, look up the S&L crisis from the 1980s. Rule number 1) When a bank is paying higher CDs than competitors something is not right.
Use this quote
“I do remember that I was very relieved that I did not have to go into a bank with them. I had, as you recall, I had already been brought into a bank before and it was better to be sitting outside.”
Patty Hearst
I heard on the tube that that was 2X what was available after 9/11. What does that say about the ‘unsaid’ magnitude of todays event?
B of A will match indymac…I’ve got a large (2x fdic limits) CD maturing on august 15 and I’ve already recieved a call from a “premier banker” offering to extend the 5.45 APY terms.
If there’s a run on B of A, I’m in trouble though!
I had a financial “advisor” try to talk me out of having multiple banks and investment brokers. He’s not an advisor to me anymore.
My brother is still waiting for some FDIC money to come in (months). It’s hard to pay the bills with FDIC promises. SIPC is even worse, it only guarantees that they won’t lose your investment documentation. It doesn’t mean you get any money as they sit around waiting for it to turn up as the prices tank.
“Five of Leland’s real estate transactions this year have fallen apart because the buyers couldn’t qualify for home loans, he said. A year ago, it wouldn’t have been a problem qualifying, Leland said.”
Isn’t part of the value of an agent to screen out unqualified buyers? I don”t want to be tied up in negotiations with someone who won’t qualify for a loan. I don’t care what last year’s standards were, sellers are paying big bucks to these guys, it’s their job to keep on top of things.
The problem is, the lending standards are likely to be getting tougher during the loan application process. I saw this happen before in 1989. I was the seller in a tough market. The buyer was pre-approved but then the bank balked. My ‘89 story is ancient history but it usually repeats.
I’m seeing “pending” sales sit longer, and longer as the summer drags into fall… Two reasons, most likely, (1) contingent upon sale of current home; and (2) contingent upon financing. Both of those owls are getting mighty constipated!
A year ago we made a cash low ball offer for a FSBO that had been sitting a while, and the owner laughed at the idea that a cash offer was more valuable. “Whether you pay cash or get a loan, it is all the same to me.” Not anymore! Think of all those sellers with pending offers contingent upon financing out there, sweating it all the way to closing.
“My ‘89 story is ancient history ”
Hey baby, same age as my car!
one of the pitfalls of using an agent- like the 5-6% you leave on the table
“..the value of an agent to screen out unqualified buyers..”
sure .. and those who prove to be of no value will be flipping burgers soon enough.
but as far as sellers paying them big bucks, doesn’t all the “money” ultimately come from the buyer? Without a buyer, a seller assets consist of a lot of wood, stucco and concrete, but no money.
“But now ‘we’re seeing a significant slowdown in Seattle,’ said Pat Lashinsky, CEO of ZipRealty. Sellers generally have been reluctant to trim their asking prices, he said, and ‘buyers are sitting on the sidelines, trying to figure out what’s going on.’”
But I thought Seattle was supposed to be different! :-O
Must have been a Boeing layoff I didn’t read about.
If they’re sitting on the sidelines, they’ve already figured out what’s going on.
quoting a comment i saw just recently, “patience young grasshopper. patience.” in english - No wall around Seattle: Housing food chain destroyed, no more loans for anybody, speculators creamed, people underwater. Prices FALL when people HAVE to sell.
Ya - but the news needs to get into the Times and PI at somepoint. Thats what i am waiting for
We have a major cash crunch. Those that have it are being rewarded with exponential buying power jumps. Those that don’t have it are desperately looking for it.
I still can not believe the housing prices in Southern Oregon. Where do these people work? In Medford you work for the county, for the hospital or for Harry and David - nothing that supports 400K houses for the masses. How could houses there be more expensive per square foot then most parts of Seattle? maybe Ashland I can see since it is a cultural magnet for wealthy types but most of So. Oregon is like Arkansas or Oklahoma in industry, culture and amenties - does not make sense…
the short answer to what supports the prices is air.. that thing with which the bubble is inflated.
Agreed… We visited my wife’s parents in Roseburg last Fall and, to my utter astonishment, a development of $300k+ houses was being built near theirs. ($300k+, in freakin’ Roseburg!) The development has since come to a screaching halt (mom heard second-hand that the developer committed BK), the value of the few finished houses has since plummeted, etc. How surprising.
It’s California retirees. However, once THEY stop coming (because they can’t sell their CA place) then the party is over. I’m watching Bend about to absolutely crash.
That’s why I moved to Portland - it has real jobs (albeit at lower salaries than SF or Seattle).
Southern Oregon is hideously overpriced. Things are slowly starting to move in the right direction, though.
I follow the Ashland market obsessively, and Ashland’s YOY median for existing homes May through July is down 9%.
Ashland 2006:$462,000 2007:$420,500 (-9.0%)
Here’s a link to all the data for Jackson County:
http://www.jacstats.com
Retired Ca. equity locusts.like me. We also support their schools, sheriff and courts, although we don’t use any of them.
“Don Hubble, owner of Hubble Homes, said Tuesday that his firm is offering agents who bring a qualified buyer a $5,000 bonus, over and above their commission, and $5,000 in upgrades for the buyer.”
Bounties for FBs… what desperation tactic will the builders resort to next?
How about something totally ridiculous like giving away a free car with a house purchase, thinking that anyone would be stupid enough to roll the cost of a car into a 30- or 40-year mortgage rather than demand a comparable discount at the very least. Oh wait, they’ve already done that. Never mind.
FB bounty hunting — a growth industry.
Got mullet?
is it legal for a seller to offer the buyer’s agent a bonus? it certainly isn’t ethical.
They’ve been doing this for a very long time… In MLS there is a field for “buyers aget comission”. Not always a standard 3%. Really want buyers to be shown your home, ack it up to 3 or 4% for the buyers agent, and showing will go up!!!
Now, the buyers agent has a feduciary responsibility to steer you to the best house for you, NOT thier comission… Definately a raised eyebrow from this!!!
well, is the buyer’s agent required to disclose a non-standard commission to the buyer?
Hedgies take a massive black swan guano drop…
http://www.marketwatch.com/news/story/portfolio-liquidation-triggers-turmoil-among/story.aspx?guid=%7B9562090F%2D2CC0%2D4EE2%2DACBF%2D2688F60061DA%7D
Here’s the money quote:
‘Clearly, something is amiss in the markets that few in our strategy, if anyone, have experienced before.’
— Letter to Black Mesa investors
Jesus Christ on a popsicle stick! How long have these idiots been in the market????? This sort of thing happened less than ten years ago! This is the problem. There are a bunch of kids 30 and under, video game types, running other people’s money who don’t have a clue what to do when daddy (fed) takes the money bag away. This is no different from the homebuilder “executives” who have never seen a difficult market.
I think the next few years will bring the proper premium to COMMON SENSE and MARKET EXPERIENCE and not soon enough!
“Sellers of asset-backed commercial paper are offering yields at six-year highs for overnight borrowing as losses from U.S. subprime mortgages spread.
Yields on asset-backed commercial paper rated A1, the second-highest short-term rating by Standard & Poor’s, and maturing the next day rose 20 basis points to 5.56 percent, the highest since March 2001, according to data compiled by Bloomberg. The increase is the biggest since September 2005. …’
The failure of some companies to pay on time has cast a pall over the securities, which are considered to be almost risk free.
Extendible notes allow the issuer to delay repayment for as long as 397 days, the maximum U.S. money market funds may hold. …”
Bloomberg
This is a problem.
Sounds to me like they’re just trying to spin it like “We’re not jackasses. Nobody could have seen this coming. I’ve never seen anything like this!”
Think of all the 40 and 50 year old’s in the investment and banking world RIFed because they weren’t young enough to keep up with the trading action. Experience is a employment negative.
Sweet fancy Moses! How much longer must we endure such irreverence? That’s our lord and savory whose name you invoke. I think Jim Nabors said it best: “Shame, shame, shame.”
It’s a joke these Ivy League brats with their financial models on spreadsheets think they are better than guys like Warren Buffett and John Templeton. The amazing thing is that their employers have the same mindset, as if you could just plug numbers into the equations and make 30% gains with no risks.
“The warning is causing disruptions and triggering big losses among other so-called market-neutral hedge funds.”
I guess market-neutral means long up the wahzoo.
Market neutral means “you can’t lose”. At least that is what they tell the patsy.
Yay, Neil! NYT roundup of today’s market plunge has a quote from a fella who not afraid to bite your famous metaphor…
“It’s like popcorn in a kettle,” said James Melcher, president of Balestra Capital, a hedge fund based in New York. “First you have one or two pops, then it turns into a cacophony.”
http://tinyurl.com/2qyfec
The next stage of this debacle is going to be recession, bank failures, and significant price drops across most asset classes, especially real estate.
We are going to need more popcorn.
Immediate news release from Countrywide.
Very Important- Guideline Changes Effective August 9, 2007
* All borrowers must have one blue eye and one brown eye to qualify.
* LTV > 65% SIVA requires minimum credit score of 849.
* For all LTV > 65%, 360 months of payment reserves are now required.
* Borrower’s must have no previous bankruptcies in their family history going back three generations.
* A minimum of 25 years self-employment history (at same location) now required for all NIV Programs.
* Minimum credit score for Subprime Loans raised to 720.
* All non-arm’s length transaction borrowers (mortgage, real estate professionals, family members) will be required to provide full-documentation, subject to criminal background checks, wire tapping, strip-searches, and a minimum of 12 hours of interrogation by the Department of Homeland Security.
* Borrowers must be nonsmokers, with a family history of no heart disease or kidney problems and pass a fitness test. (Subject to working out 5 times per week or more).
Please note that these changes will go into effect within the next five minutes. So please lock you existing loans immediately. All existing loans in your pipeline must fund by noon tomorrow, sorry no exceptions.
We apologize for the inconvenience. We realize these are tough times in the mortgage industry for all of us. We ask for your continued understanding and cooperation.
ORANGZILLO
I qualify. Where do I go for my strip search?
Hillary Clinton urges expansion of Fannie Mae and Freddie Mac. She also said the caps should be lifted and Dems are calling on them to stabilize the mortgage market.
WHO THE HELL CAN YOU VOTE FOR? I hate picking the least of 2 evils. They are both evil!
In bizarro world, it happened today. Bush made the right call, and said let the GSE’s straighten out first, and then he might discuss it.
I’m still disoriented– w made the right call.
Funny we are waiting till the last couple years of his presidency LOL!
I’ll always appreciate GW’s going out and kicking ass after 9-11 . He’s served his purpose, imo.
(while I, being far less tolerant, woulda completely destroyed a few major cities in various ME countries and moved on to.. well.. its not important.)
But I do not credit him with making anything other than a prudent political decision here.. one that’s sure to be well supported by a huge majority in the coming election season.
And i believe that those who makes noises like they support bailouts would be wise to back off asap, or their election hopes (and campaign coffers) will surely shrink for it.
Heard on CNBC: We are hoping that with the global economy that the debt is spread equally and shallow and that will allow for a soft landing. Gee, this must be the ‘New Age Economic Model of Investing: Quake Model’. Unfortunately they forgot that quakes come in varying magnitudes and this one is wide and deep, 8.0 on the Richter scale.
Try a 9.5
Wow ! Can’t believe how much the cat is out of the bag now .
I can’t figure out who is going to buy all these REO’s and vacant properties now that credit is drying up as fast as it is.
They let the horse out of the barn (subslime, toxic) and are now locking the door, sealing it and throwing away the key.
The central banks are bailing out the big boys for now, but this is going to be way worse than the 90 - 92 housing recession and may trigger something more akin to 80 -82. And of course no Ivy League MBA on wall st is over 30, so……
In case it hasn’t been posted earlier–Cramer was on Colbert last night…
http://www.comedycentral.com/motherload/?ml_video=91179
China should consider using its $1.33 trillion currency reserves as a “bargaining chip,” after some U.S. senators threatened trade sanctions on Chinese imports unless the yuan appreciates, a government researcher said.
“Using them as a bargaining chip isn’t something that can’t be considered in response to some silly U.S. senators,” Xia Bin, director of financial research at the State Council Development Research Center, said in an interview. He said his opinions don’t represent the views of the State Council, China’s cabinet. ”
Bloomberg
Boy, I can see all the Senators standing inline for the handout now! “Mr. Senator would you be interested in some of our bargaining chips?”
As to China, an old John Maynard Keynes saying comes to mind (the British economist): “Lend a man a thousand pounds, and he is at your mercy. Lend him a million, and the situation is reversed.”
That’s why all the banks are in trouble, the loaned out sublime at 1000 a pop and now are millions in the red, who has the bigger problem, one FB or Goldman, Merrill, Bear, Indy, Countrywide? The list is endless, except for those who already imploded.
Is that where The Donald got it. He rephrased it to…. Owe the bank $50K, and they own you. Owe then $50M and you own them.
I don’t get this China angle.
US wants China to upvalue Yuan.
China says that under threat they will devalue USD.
What’s the difference?
US wants China to upvalue Yuan.
China says that under threat they will devalue USD.
What’s the difference ?
The point is who is more vulnerable… right now it is definitely US.
Gee….. after the smoke clears at some point we could have a new emerging environmental movement.
People actually having to live within their means.