There Will Always Be A Better Deal Down The Road
The Herald Tribune reports from Florida. “‘Like the proverbial butterfly that flaps its wings and sets off a tidal wave on the other side of the world, Sarasota, Florida is the centre of the U.S. housing bust that sent shockwaves through global markets,’ said the London-based Financial Times. The Times was wrong to single out Sarasota as the epicenter of the global financial crisis, but focusing on the Sunshine States makes a lot of sense, said real estate analyst Jack McCabe.”
“‘Naples, Fort Myers, the Cape Coral market has experienced the largest price drop in the U.S.,’ McCabe said. ‘So they botched that one.’”
“‘Florida is where the boom started and ended, and where the bust started,’ McCabe said. ‘Previous boom-and-bust cycles have started in California. This time, Florida is the state that experienced the height of speculative activity that drove the boom.”
“Locals who read the story, titled ‘Canary in the cage’ tells of housing woes,’ agreed that it was not too far off the mark.”
“‘We were in the lead when everything was going up and everything was wonderful,’ said Joe Hembree, president of the Sarasota Realtors Association. ‘Now prices have to go back down. But it’s a relative thing. Prices have not been going down as fast as they went up.’”
The St Petersburg Times from Florida. “It’s been the glut that wouldn’t give, gumming up any chance of a housing recovery in the Tampa Bay area. We’re talking listings of houses and condominiums for sale, a figure that in April topped 50,000 in Pinellas, Pasco and Hillsborough counties.”
“Only now the glut appears to be in retreat. Home listings are at their lowest in more than year. In July the market counted just under 42,000 homes for sale.”
“Though encouraging news on its face, real estate boosters shouldn’t cheer just yet. Sales have continued their postboom sluggishness, running about 40 percent under last year’s numbers. And a significant part of the story is sellers who have grown sick of trying to move their properties and turned to renting.”
“At this rate it’s still about a year before the region could eat through the inventory. Prices have suffered as supply outpaces demand.”
“Ann Guiberson, head of the Pinellas Realtors Organization, notes another trend: Agents refusing to take on listings when they think owners are overpricing properties.”
“Clearwater Realtor Tony Marottoli spurns even million-dollar listings if he believes owners are unrealistic. Here’s an example from Belleair Beach: The owner bought a house for $400,000 three years ago and wanted Marottoli to list it for $1.4-million. He wasn’t interested.”
“‘Not gonna happen,’ Marottoli said. ‘It’s old. It’s dated. It’s a ’60s house. If the market weren’t dead, it could be a different story.’”
The Sun Sentinel from Florida. “Stung by the downturn in the U.S. housing market, Fort Lauderdale-based builder Levitt Corp. on Friday announced a $58.1 million loss for the quarter ended June 30.”
“The loss included a pretax charge of about $63 million to revalue its home-building inventory. The company said the ‘large’ impairment charge reflects the ‘continued deterioration’ of its home-building markets, especially Florida, the need for ‘aggressive pricing and discounting strategies’ to increase sales, and ‘the prolonged duration of the weakness in the market.’”
“The outlook appeared dim for future sales. Roughly 39 percent of total orders for new homes were canceled during the quarter, up from 21 percent canceled in the same period a year earlier, the company said.”
“Demand was especially weak for Levitt’s active adult and family communities in Florida, which made up 58 percent of unsold lot inventory. Average selling prices for orders in the quarter fell to $256,000 from $283,000 in the same period a year earlier.”
“‘We intend to continue to employ aggressive discounting strategies in an attempt to reduce this inventory going forward,’ the company said.”
“If you’re hunting for a home loan and have lousy credit, plan to keep looking. Even if your credit is stellar, prepare to pony up a sizable down payment and prove every penny of income to the lender.”
“‘Banks, especially those in South Florida, are becoming increasingly tight-fisted,’ said Ken Thomas, a Miami-based industry analyst.”
“‘Lenders created riskier and riskier instruments to get more and more homeowners,’ said Jeff Kaufman, a senior VP for SunTrust Bank in South Florida. ‘Now we’re paying the price for all those aggressive loans.’”
“Indeed, foreclosure filings are skyrocketing across Palm Beach and Broward counties because homeowners no longer can make their monthly payments as adjustable-rate mortgages rise.”
“Robert Toll, chairman of luxury builder Toll Brothers, this week described the southeast Florida housing market as a ‘flunk minus.’”
“‘This is definitely going to put a speed bump in the home-purchase business in South Florida,’ said Louis Spagnuolo, VP of mortgage banking for WCS Lending in Boca Raton.”
The Charlotte Observer from North Carolina. “Troubled homebuilder Beazer Homes USA may have understated expenses in past filings with securities regulators, the company said Friday. The Atlanta homebuilder blamed its former chief accounting officer, saying he may have ’caused’ the wrong numbers to be reported.”
“The disclosure may deepen concern about Beazer’s financial health. The company already faces a federal criminal investigation of its mortgage practices.”
“The Observer has reported, in articles since March, that Beazer’s operations in the Charlotte area sometimes violated federal laws and regulations. The Observer found the company’s aggressive sales practices contributed to a high rate of foreclosures in many of its local developments.”
“In a four-part series, the Observer found Beazer Homes USA sometimes crossed the line between selling to people who could barely afford homes and selling to people who couldn’t. Ten Beazer developments in Mecklenburg have foreclosure rates of 20 percent or higher.”
The Post & Courier from South Carolina. “Home sales in the Charleston area fell last month, dragging down the median sale price as the Charleston real estate market continued to cool. The number of homes sold in the Charleston area in July was down 12.6 percent from a year earlier, according to the Charleston Trident Association of Realtors’ MLS.”
“For the year to date, sales totaled 7,912 houses, down 1,850, or nearly 19 percent, from the 9,762 sold in the same period last year.”
“Broker Rob Woodul said the falling prices could be a reflection of sellers who are listing their homes at more reasonable rates. ‘I think that sellers are being more realistic about what they can get for their homes,’ Woodul said.”
“Experts blame the housing slowdown on tighter lending standards, the loss of investor dollars and a glut of homes on the market.”
“As of Friday, there were 10,779 homes for sale in the tri-county area, up 3 percent from last month. With all those listings, sellers have to be ‘extremely careful’ in pricing their homes, said agent Liz Dettrey.”
“The drop in median home prices last month could mean that sellers are doing just that, and the figure leaves buyers who are waiting for ‘the bottom’ wondering: Is this it?”
“Earlier this summer, the National Association of Realtors said it would likely take until the second quarter of 2008 for the market to turn, several months later than they first thought.”
“‘I think it might last even longer,’ said agent Lou Russo, who’s bracing for an overall market rebound in 2009.”
“Builders are discounting their new homes and throwing in upgrades. Homeowners are competing by covering closing costs and offering to take on small home improvement projects.”
“Russo compared the situation to a consumer who wants to buy a computer but keeps waiting for the most advanced model to come out, they’ll never commit to a sale, he said.”
“‘There will always be a better deal down the road,’ he said.”
Hats off to the Charlotte Observer on the Beazer story. They had covered the company in one of the earliest subprime reports I know of.
‘As a result of recent market changes, Option One has decided to reprice loans in the pipeline and make the necessary eligibility. Option One will only originate Full Doc loans secured by Owner Occupied properties (No 2nd Homes). Increase in disposable income requirements.’
‘ Option One will stop accepting refinance submissions: If the property is vacant. On any property listed for sale in the last 3 months. LTV limitations on cash out refinances for properties listed for sale more than 3 months ago but less than 6.’
‘ 3-year ARM: 3-year ARM loans in the pipeline will automatically be transitioned into 5-year ARMs at no cost to the borrower. Moving forward, the 3-year ARM will no longer be offered. This transition to the 5-year ARM provides a fixed rate for a longer period with the same 24 month prepayment penalty.’
‘Florida Condos: Option One will not accept submissions secured by condos in Florida.’
‘Avatar Holdings Inc. today reported a decrease of 81% for the three months ended June 30, 2006. A significant deterioration continues in the markets in which Avatar operates.’
‘The number of investor-owned units for sale, the significant tightening of mortgage underwriting standards, the availability of significant discounts and incentives, the difficulty of potential purchasers in selling their existing homes at prices they are willing to accept, and the significant amount of standing inventory continue to adversely affect both the number of homes Avatar has been able to sell and the prices at which they are sold. The level and duration of the downturn cannot currently be predicted.’
‘Avatar Holdings Inc. is primarily engaged in real estate operations in Florida and Arizona. Its principal real estate operations are conducted at Poinciana, Solivita and Bellalago in central Florida near Orlando, Cory Lake Isles in Tampa, Florida, and at Rio Rico, south of Tucson, AZ.’
The collapse of the secondary mortgage market and is something I had not anticipated that should radically increase the speed at which the bubble bursts. Prior to the collapse, I saw the bubble bursting as follows: (1) prices stop increasing, thereby making it impossible for marginal borrowers to refinance, (2) ARMs reset, causing some marginal borrowers who cannot sell, cannot refinance, and cannot make the higher payments to default, (3) foreclosures increase, thereby increasing supply and decreasing prices further until a balance is reached. With the collapse of the secondary market for mortgages, the speed of the entire process will increase dramatically. Whereas before marginal borrowers could put 5% down and get a 3/27 ARM, now they must put 20% down and get a 30 year fixed. This instantly lowers prices for housing across the board and should radically speed up the entire process. People simply do not have the money for down payments that are going to be required on a going forward basis. I am not sure that any of this is priced into either the homebuilders or the lenders.
For example, I spoke to a mortgage broker here in Dallas last week who told me that the vast majority of investor programs had vanished. He had a lady with 750+ FICO, good income, and 60k in the bank; he previously had gotten her three rent houses with 5% down; now, the only thing he could get was 20% down at 9% and 1 1/2 points and there was only a single lender offering that. Likewise, my understanding is that Wells Fargo increased the interest rate on owner-occupied jumbos to 8% on a 30 year fixed with 20% down.
During the bubble, houses came to be priced based primarily upon what the payments were; i.e., buyers did not focus on the price of the house, only on how much their monthly payment would be for the first 2-3 years prior to reset. Buyers were not putting anything down. Now, most buyers are priced out because they need a down payment and, even if they had one, the payments will be higher because interest rates are higher and exotic financing is not available.
And no matter how much money the FED lends, this will not change. If Freddie or Fannie get in the game, it will only save Jumbos on those with good credit and they will have to put money down.
Many of those doing the exotic financing were the foreign banks, hedge funds, and Wall Street (to package as MBSs to pension funds and whatnot) looking for higher growth. Not only are they not getting higher growth, they are losing their shirts. The appetite for these kind of loans as dried up.
Speaking of Freddie and Fannie, I wonder if the FHA revitalation bill that sailed thru the House has a chance of passing in the Senate. And if it does pass, would it prop up the mortgage mess?
Anyone care to comment?
Historically is was very tough to get FHA approved to be a FHA appraiser. Most appraisers shunned the reports as they were so difficult to do.
Quietly this past month FHA dropped their standards and now all you have to do it answer 10 questions on the application which includes the answers.
Clearly they are gearing up to bail out the system and they are putting the players in place.
Appraisers who caused this mess are now going to be working for the guvmint. Is this a great country or what?
Jungle,
See my post below for a more in depth discussion, but, imho, NO, even if Fran/Fred all allowed to buy jumbo loans, it will not fix the problem. Unless they were willing to buy low down jumbos (something I have not even seen suggested) the downpayment requirement for a conforming loan (20%) is going to prevent almost everyone from using a conforming product, even if they raise the allowable loan amount to 10M dollars.
And no matter how much money the FED lends, this will not change.
Note that the FED is making outright purchases of mortgage securities in the secondary market. This is not lending.
“Anyone care to comment?”
The Senate successfully killed a similar bill last summer, but with the likes of D-ratic Senators Dodd, Schumer and Clinton clamoring for a bailout plus the CIC’s endorsement, I am not very hopeful this go-round…
‘Bush’s Remarks
August 9, 2007 2:52 p.m.
…
The word “bailout,” I’m not exactly sure what you mean. If you mean direct grants to homeowners, the answer would be no, I don’t support that. If you mean making sure that financial institutions like the FHA have got flexibility to help these folks refinance their homes, the answer is yes, I support that.‘
http://online.wsj.com/article/SB118667957578193202.html?mod=googlenews_wsj
And remember, 12 years ago FHA picked the appraiser on a loan. Then Congress stopped that, and now the lender gets to pick the appraiser for an FHA loan. I suspect some sort of FHA bill will pass. The FHA limit will never be high enough to bail out the FBs in CA, and FHA doesn’t allow stated income, so the 10X income FBs in Alt-A will still be toast. But I still suspect that a lot of underwater FBs in the middle of the country will refi into FHA in the next year.
We have been talking about the “crash” for acouple of years. If I understand correctly FHA will prevent “the crash” and it will be businees as usual.
Don’t think so since it does no good if the homedebtor is underwater on the loan. All you are doing is keeping them in the house longer before they default since they can’t sell. Maybe a few more will sell but the key is how many are underwater with little or no equity. Overall what this may do is keep a few houses off the market for longer and spread out the pain. But once you have 3 years of inventory reducing it too 4 does not make a big difference. Thats all the government can do.
And of course a FHA loan does not help if you don’t have a job.
And they single out Florida condos - ouch! How many other lenders will follow suit - and in how many other regions as this plays out? Condos are going to get walloped but good.
Translation = WCI is so screwed. They are the condo king in FL. On top of that, are their crap s over $417k. Forget Fannie or Freddie financing that!
FL condos are so toast it’s just staggering to think about the losses that will be incurred over the next few years. Condos in MARGINAL areas were selling at 250/sq/ft; it would not suprise me to see them under $100/sq/ft next year.
The SFH market in FL is in crisis. The condo market is dead; bring in the body bags and the repo guys; it’s time to cut the losses and move on.
I wonder if we need another condo built (for the demand) in the next 10 years down here? It would not shock me if we have enough to sasify demand for a decade.
It certainly sounds as if you do. I wonder how all those Brit & Euro investors feel about that?
…it would not suprise me to see them under $100/sq/ft next year.
Definitely, and even lower in 2009. There were already enough “luxury tower condos” to meet normal demand prior to the bubble. Now they’ll have to lure those that would normally have opted for a SFH, which will be difficult given the killer HOAs.
most of the Beazer gaming wasn’t subprime, it was FHA.
“Demand was especially weak for Levitt’s active adult and family communities in Florida, which made up 58 percent of unsold lot inventory.”
Wait a tick. What happened to the willing and able to buy Boomer segment? Did they stop buying too? That’s not good.
Maven, don’t forget the Boomers are “redefining” retirement. This includes viewing retirement communities as passe. The boomers I know want to live in normal communities and not old people storage.
I agree. Here is a link to one of Levitt’s active adult communities:
http://www.levittandsons.com/Communities/FL-Cascades_at_World_Golf_Village.aspx?gclid=CMHj05LX7Y0CFUtyOAodxhMftw
“Ideal for non-golfers alike.”
WTF! No it ain’t!
Amen to that. I’m retired and I now rent even though I could buy for cash. I can think of no greater hell that living in shitb*x in a retirement community by a golf course. Nothing like watching the daily arrival of an ambulance to take the next old fart to his/her final resting place or watching a bunch of old people struggling to get into their cars because their arthritis is playing up while you spend your days watching golfers hit little white balls across a feild. Jeez. Pass the nembutal and that bottle of wine, please.
Mike,
We live in one of those communities. In the past seven days my wife played golf twice and I played once. I was also on the tennis courts three mornings. We both worked out at the fitness center two mornings. We haven’t taken the boat out this week ‘cuz it’s been too hot. Yesterday my wife went shopping with a neighbor lady for pretty much the whole day, while I stayed home and did some computer programming (Visual Basic). I’ll be presenting it to a group in a few weeks. Tonite we’ll have another, older neighbor over for dinner. His wife is still recovering from hip surgery last week. The support that’s in place in this community is wonderful.
How did you spend the last seven days?
Yesterday my wife went shopping with a neighbor lady for pretty much the whole day, while I stayed home and did some computer programming (Visual Basic).
Were you the guy playing the piano in the new Viagra commercial? Viva Viagra……….
Don’t need it yet. What I’ve been reading about ED is that when you start needing (as opposed to just having fun using) Viagra, you’re only a few years away from a major coronary event.
My point in posting the above is that we’re enjoying life far more by being in a community of other retirees. In Sarasota, we bought in a brand new community. All our neighbors had school-age kids so we were friends with practically no one. Here, with all the available activities, a “kick back and relax” day is a welcome change.
Last point. Retire as soon as your finances allow. The good retirement years, where you still have good health and essentially no activity restrictions, don’t last forever. The later you start your retirement, the fewer such years you will have.
“Boomers are “redefining” retirement”
Boomers who saved/prepared yes, but enough look to be working to 70. So, yes, many might have to live in the general population - if only to be closer to fast food and big box employers.
I’m a boomer and I wouldn’t live in a 55 and over community if you gave me the house. I prefer a normal mix of all ages in a regular community.
“Troubled homebuilder Beazer Homes USA may have understated expenses in past filings with securities regulators, the company said Friday….”
Rotten sales operation. Rotten accounting. Are these guys for real?
Beazer will file BK no way around it. I understand there are many more law suits on the way. There “product” is very poor.
I love these guys. Due primarily to dumb luck, I had puts when the accounting guy got fired for shredding documents, when the informal inquiry became formal, and now this. Not quite as much fun as when AHM delayed their dividend a couple of Fridays ago, but a nice Friday after-the-close bonus nonetheless.
What good is Sarbannes Oxley?
‘Previous boom-and-bust cycles have started in California. This time, Florida is the state that experienced the height of speculative activity that drove the boom.”
Uh, first of all, I recall Mass as being the state where prices FIRST went into the stratosphere, about a year or more before Florida’s prices skyrocketed. Secondly, a large part of what drove Florida’s bubble were specuvestors from California. Sandyaygo in particular.
Palmetto:
I think you have said before you were on the west coast. In SFL it really started about 99-2000. Our home price in 99 actually went up 30,000 while the builder was building it (our builder let us know several times). A friend of mine did not see the same inflationary appreciation on the west coast until 2002-2003.
When did it start in Sarasota? We got there in 2002 and paid $100/sf for a new block/stucco home. 10′ ceilings, tile everywhere except the bedrooms, upgraded kitchen (not granite!), 12,000 sq ft lot. No pool however. We sold in 2005 at $185/sf.
If we had gotten there and bought that house in 1999, how much less do you think it would have been?
I remember visiting Sarasota for a conference, and pulling out one of those local realestate books, and remarking how cheap houses were there (we were from the midwest).
“Earlier this summer, the National Association of Realtors said it would likely take until the second quarter of 2008 for the market to turn, several months later than they first thought.”
That’s very optomistic. Unless the NAR starts a lending operation, it’s not going to happen.
mrktMaven FL. After all this, surely you don’t think the NAR or any of the different organizations in the business of selling property are going to tell you the truth. Hidden agendas, my friend. Hidden agendas.
Here’s some truth. This mess will not be contained without serious damage in several areas of the economy. Forget the Fed and the government. You can always guarantee one thing if they get involved. A screw up. Take a look at Iraq. Take a look at Katrina. Take a look at the state of the US infra-structure. Take a look at the Medicare. If they try and buy their way out by printing more money (as if there wasn’t enough confetti dollars sloshing around the world right now) it will make it worse. A half point or a 1 point or even a 2 point drop in interest rates will not work to save the property world. Those who bought into the sub-prime scam couldn’t afford to buy in the first place and a drop of 1% isn’t going to help a waitress making $20,000 a year keep her $400,000 sh*tbox. Domestically, lowering interest rates creates another problem. It means overseas investors will go elsewhere to get a higher yeild and the US cannot survive economically without overseas investors.
I only hope the most powerful country in the world (China) doesn’t get bored with hearing the Bush administration begging the Chinese to help us out - and start dumping all the IOU’s we’ve been giving them.
The most powerful nation is still the USA. Chinese GDP is 1/4th ours. Yes, we are going down but we will take the world with us. China can sell our debt but that process will just kill the value of the debt they have to sell.
The decline will be in our standard of living which has been flat for 20 years and kept on life support through debt. Americans will come out of this leaner and meaner. It is just a huge cycle and the nation will recover stronger for it.
I love all the wishful talking points that keep mentioning “months”. The most negative thing about the NAR’s statement is the word “several”. This garbage will take YEARS to unwind, so get ready for the really bad times ahead.
I stopped by to visit the family in Florida a couple of weeks ago and everybody was bringing up how bad the real estate market is. A friend of my brother’s just opened a bar in S Fort Myers and he was worried about the business going down the tank because all the Junior Trumps were really hurting.
I get back to Dallas and in less than a week I’m getting calls from people in Florida all headed for foreclosure. Nobody really understands just how many people are going over the edge at this point. The sheer number has got to be staggering, and those folks will drag everybody else down with them.
“I’m getting calls from people in Florida all headed for foreclosure.”
Same here. Instead of saying ‘I told you’, my response has been:
Oh my. I can’t believe it!
CNBC has David Lareah on yesterday. I’m surprised that guy has the stones to show himself in public anymore.
Translation.
Q2 08 really means Q1 10.
And, for FL, that number moves even further out. The areas most impacted by the boom will be the areas with the longest and most severe price depreciation. So, my idea on FL is, unless the MTG market stays like it is today (no appetite at all for jumbo MTG) we will still bottom out after everyone else has hit bottom.
If the MTG market remains like this for another 3-4 months, we will hit bottom before the end of the year. People do not realize the effect of pulling all jumbo MTG products in a market like FL (and CA will be even worse). It’s truly the end game scenerio.
No matter how hard Reality pounds them in the face, a lot of sellers are still caught in a state of Suspended Disbelief.
After pouring a ton of money over the last year on a ‘flip gone wild,’ my relatives are still hoping to break-even in St Lucie. They are so friggin effed. However, to save face, they bleat ‘break-even.’
Oh lord, a flip in PSL? They are screwed, big, big time. PSL is like Palm Beach county, only with even MORE buildable land, and less business to support the prices. Once you get north of Jupiter there is land EVERYWHERE. Huge tracts of land; and nothing to keep 10’s of thousands of homes from popping up all over the place.
As I have pointed out many times, out of land is a myth in almost ALL of S. FL. The possible exception is Miami, however, even in Miami, “out of land” does not mean “not enough places to live”!
If those jumbo loans are truly gone (or horribly unaffordable), the game is over for FL, CA, Las Vegas, and other high cost areas. And as another poster pointed out (which, I agree with, but had not thought about before) even if Frannie and Freddie start to buy loans for 10M dollars it will not fix the issue if all of those loans are conforming (20% down, fixed rate, no more then 33% on total debt service), because, as we all know, conforming loans would NEVER have allowed this market to get into this situation. Unless the jumbo, negative am, 0 down loans come back the game is up. Now we just watch the trainwreck.
I almost bought lots in St. Lucie county in late 90’s for $1250 to $1500 a piece. I didn’t because I thought they were still over priced.
Nope. I suspect it’s going to take a lot longer than that. First we still have YEARS of resets to go. Second the banks need to start dumping their REOs and who knows when that will start.
Here’s an idea for the Feds. The “National Housing Administration”, banks are allowed to keep REOs on their books at face value and they’re rented out until the market clears in a few decades.
The NAR must have studied Soviet Communist Party Doctrine. Forward to Communism! Only five more years and we will have Communism! With the NAR its always 6 more months to the recovery!
The NAR is a joke and everyone is starting to catch on.
They are in the fight of their lives for their profession - and the collective despair is showing.
The NAR truly scr*wed the pooch on this one!
You are correct, they are in the fight of their lives to maintain some relevence in the online/information driven market that we have today. However, when you are in a fight to prove your “worth” in a market, typically the thing that you do not do is send all of your customers to the chopping block! Great way to engender some serious negative sentiment! If they had been responsible (well, first off, it probably never could have/would have happened) during the bubble and told people “If I were you, I would rent until this thing settles down” they would have a huge bank of goodwill today. However, they did exactly the opposite, and now, are going to reap the backlash for scre*ing over an entire generation of Internet savvy buyers.
Yes, FSBO will only grow. Honestly, as a buyer I only remember the agent giving me MLS sheets with properties matching my criteria - I took the research from there. After that all they did was communicate my offer. As a seller - it was only the lawyer that I really considered necessary.
“And a significant part of the story is sellers who have grown sick of trying to move their properties and turned to renting.”
WHAT? You mean you uppity home “owners” want us low life renters to bail your sorry a… out! Imagine that. BTW you’ll be needing to drop that price also.
The Post & Courier from South Carolina. “Home sales in the Charleston area fell last month, dragging down the median sale price as the Charleston real estate market continued to cool.
This can’t be happening in the ‘Holy City’ why just last year a friend of ours splained to me how prices never drop on the coast… Snow birds just can’t pass the deals up.
wmbz-
Have you read the book “South Carolina” by Henry Leifermann? Part history/culture and part travel guide. Published by Fodor’s. Great book. There’s a quote attributed to Charlestonites, “I’d rather be dead in Charleston than alive in Columbia or rich in Greenville.”
OT but I wonder if this will be what happens at food banks in the US.
http://www.cnn.com/video/#/video/offbeat/2007/08/10/vo.russia.cat.lady.reut
“This is definitely going to put a speed bump in the home-purchase business in South Florida” said Louis Spagnuol. He then checked his watch, looked at his calendar and announced, “I’m having mac and cheese for dinner.”
It’s funny they mention Sarasota. Stephen King has a Winter Home here. I was going around a roundabout when he almost hit me with his Dodge Ram pickup truck. I looked up to yell at the idiot driving and BAM, it was Stephen King staring right at me saying he was sorry LOL. I didn’t get an autograph. : ) I was so pissed…
I think the irony of him nearly killing someone with a truck was probably not lost on him, though.
The guy in the minivan that hit Stephen King died soon after the incident…
–
“There Will Always Be A Better Deal Down The Road”
This is precisely the psychology that takes root once prices are falling and inventory keeps rising, which is the best indication of future price declines. This can go on until most people totally lose interest in buying a home now. When homes are selling at 10 times the yearly rent then it does make sense for many who plan to live in an area for a long time to buy.
Jas
What would you do if you were Ben Bernanke?
I would jack up rates 25 basis points to discombobulate the market and prop up the dollar.
That is what Paul Volcker would do. Yesterday’s openly-announced “liquidity injections” used to prop up the high-risk MBS that private investors are currently shunning does not give me much confidence that BB will follow suit.
Then the banks that control the BOD of the Fed would fire your azz!
So what? BB has a job for which few are qualified, and it is hard to imagine many members of this elite pool envying his current position. Moreover, it is not as though he will have a hard time eeking out a living if the “BOD of the Fed … (fired) his azz.” I personally see no impediments to his doing exactly what he perceives as the best course of action; this is not to suggest that such a course is readily identified under the circumstances, though.
“I personally see no impediments to his doing exactly what he perceives as the best course of action”
I see no impediments to him doing exactly as he is told.
B just flooded the market with over $50 billion over the last two days after saying everything was cool on Tuesday. The stakes are in the tens if not the hundreds of billons of $USD. People have been killed in this world for a fricken cup of cofee.
When it comes to an “us” or “them” inflection point, B will support the banks against inflation, the USD, employment, etc. That’s his real job.
I like the owner trying to sale his Brady bunch home for 1 mil plus. Again that’s a wake up call for sellers-get real about your pricing.
How to find ground zero - What states/areas/cities/neighborhoods have had the fastest rate of growth over the past 10 years? This is why Cape Coral is on average worse off than Sarasota, why IE is worse than West L.A., etc.
A separate thought: much talk Friday about the debt markets seizing up because there is no ability to prolperly price the mortgage-backed securities market. But even that is itself a symptom - there is no proper pricing of MBS because there is no ability to price in the market for the underlying assets themselves - the houses.
It is the stalemate and lack of price discovery in the HOUSING market that is driving the freeze-up in the credit markets.
Now, if you think prices in the housing market will ultimately go lower than the average investor does, then it follows that you think prices of the MBS will also go lower than Mr. Market currently thinks. Put me in that camp, which makes it hard to be sanguine about the market’s prospects.
Good point. Add to the equation the fact that a significant percentage of people who bought in 2005-06 are underwater on their mortgage such that they are better off, as Cramer observed, walking away; further, consider the fact that mortgages were artificially cheap before. So, houses go down in price, which causes loans secured by houses to go down in price, which causes houses to go down in price even more, which further erodes the price of the CDOs, thereby making mortgages more expensive on a going forward basis, which, in turn, causes houses to go down in price, etc., etc., etc.
“It is the stalemate and lack of price discovery in the HOUSING market that is driving the freeze-up in the credit markets.”
That’s the big picture the contained crowd seems to be missing. At the end of the day, the underlying collateral is falling all across the board.
How to find ground zero - What states/areas/cities/neighborhoods have had the fastest rate of growth over the past 10 years? This is why Cape Coral is on average worse off than Sarasota, why IE is worse than West L.A., etc.
A separate thought: much talk Friday about the debt markets seizing up because there is no ability to prolperly price the mortgage-backed securities market. But even that is itself a symptom - there is no proper pricing of MBS because there is no ability to price in the market for the underlying assets themselves - the houses.
It is the stalemate and lack of price discovery in the HOUSING market that is driving the freeze-up in the credit markets.
Now, if you think prices in the housing market will ultimately go lower than the average investor does, then it follows that you think prices of the MBS will also go lower than Mr. Market currently thinks. Put me in that camp, which makes it hard to be sanguine about the market’s prospects.
“…it follows that you think prices of the MBS will also go lower than Mr. Market currently thinks.”
It is a bit hard to predict that given the Fed’s apparent willingness in a moment of crisis to abandon stated principles and directly bail out the illiquid market for high-risk MBS.
Paul in Jax . In that some people are predicting up to a 50% drop in some areas and across the board most economists have admitted 10 to 15% National drop in prices might happen ,you would think they could determine a potential for 30% drop in value across the board on the MBS’s or CDO’s as a ballpark figure ,given the current excess inventory and affordability numbers that can really qualify .Add to that broad guess ,the cost of foreclosure should be added also to the potential loss figure .
Anyway ,I’m sure they have a better idea ,at least on the sub-prime what the loss is going to be .I guess some of the trenches are a total wipe out based on how they set up this mortgage backed junk paper .
I’m not sure if it’s worse than they say or worse than they think, but either way it’s worse. And it’s a snowball headed for hell. Every time a downward mark is entered, like at a hedge fund, it spurs redemptions, which effectively drops demand, which causes further drops, etc.
“‘Like the proverbial butterfly that flaps its wings and sets off a tidal wave on the other side of the world, Sarasota, Florida is the centre of the U.S. housing bust that sent shockwaves through global markets,’ said the London-based Financial Times.”
Did the writer properly attribute that line to GetStucco, who coined it here?
I happen to have semi-retired relatives from out-of-state who bought several properties in Sarasota during the boom. One is used as a snowbird winter residence, and the others are essentially alligators. Even today these relatives consistently are presented to me as the smart ones in the family, whereas I am the idiot neglecting my family’s future.
Fellow blogsters - Ben just got new servers, and I’m betting they weren’t free. If you think you’ve gotten advice on this blog that was worth at least $20 to you, how about sending $20 to Ben to help him pay for the new servers?
For those writing checks, send them to:
HBB
PO Box 3312
Sedona, AZ 86340
“Only now the glut appears to be in retreat. Home listings are at their lowest in more than year. In July the market counted just under 42,000 homes for sale.”
A drive along a St. Petersburg residential street provides ample evidence of an ongoing glut: Every fifth house along a given block has a For Sale sign out front.
What they are counting is houses listed with the local Board of Realtors. The Brokers charge a hefty fee and are not doing them any service, as their houses are not selling.
Most likely, after 6 months to a year with NO SALE, they simply went FSBO, so they could lower the price by not paying some shill a fat commission check.
I suspect the count is very inaccurate. I am seeing more and more “owner” signs in the yards in the Tampa Bay area.
Speaking of better deals down the road, I just checked the median list price on the San Diego 92127 (Rancho Bernardo W) MLS SFR inventory, and it has dipped below $1.3m for the first time in many months. It was near $1.4m the last time I checked (within the past week).
It is too early at this point to distinguish whether this is a mere blip or a trend innovation.
I’m living in a suburb of Chicago (Oak Park) and we’re still seeing housing going up. I think it’s because we’ve always been the slighly funky location to be in with a wide mixture of people and income levels. Am just about to close on a 1-bedroom condo, very good quality, great location, under $250K, plan to stay there at least until the mortgage is paid off (15 years. Flat rate, 5.75%) Someone is trying to flip a 2-bedroom right nearby at $385K–they’ve already come down from over $400K. They may actually get it–townhouses in this area are going $650K and up which is ridiculous. “High end” condos (meaning a gas fireplace and wooden flooring) are going for $400K and up. It’s the sleazier, older buildings and condos that are having their prices collapse–everything else is still increasing. (Probably getting sold to people who can’t afford the Gold Coast)