Balancing Opportunity With Challenges In California
The San Francisco Chronicle reports from California. “Mortgage woes have moved upstream, landing even in tony neighborhoods. For instance, a multimillion-dollar deal in Larkspur went belly-up last week when the lender yanked the financing at the last minute. ‘The loan was approved and locked in. People were ordering moving trucks, everyone was feeling euphoric,’ said Bill Hogan, a Realtor in Greenbrae.”
“On Thursday, the couple buying the house learned that their lender was rescinding their loan because they were making only a 10 percent down payment. ‘This was not a subprime loan; this was fully documented, people with outstanding credit who own a $5 million home now and didn’t need to sell it to buy this one,’ Hogan said.”
“The buyers could have gotten a mortgage at a substantially higher rate, just under 8 percent, Hogan said, but ‘they crunched the numbers and said, ‘Hell, no, maybe this is a sign for us to get out.’”
“The buyers walked away from the deal, forfeiting their $73,000 deposit. The home is back on the market for $2.2 million, its original asking price.”
The Sacramento Bee. “Remember the old days of down payments and fixed-rate loans? They’re back. Troubled times in the nation’s mortgage business are driving a back-to-basics movement for aspiring Sacramento-area homebuyers, say mortgage lenders, real estate agents and home builders.”
“‘I get 50 notices a day (from sources of mortgage funds) saying, ‘We changed this. That program is no longer available. This has restrictions,’ said Jon Dobbel, Elk Grove branch manager for Gold River-based Summit Funding.”
“Sacramento buyer Amy Chan recently locked in a loan with no down payment to buy a new house in Lincoln. After she signed a contract to buy the house from Pulte Homes, the lender backed out, says grandson Richlin Chan. That set the stage for a dispute between the builder and the would-be buyer about Chan’s deposit.”
“Richlin Chan says Pulte kept $5,000 of a $10,000 deposit because Amy Chan wouldn’t put 5 percent down to get the loan and complete the sale.”
“‘Wall Street created all this,’ said Vitek’s Kaempfer, a California Association of Mortgage Brokers board member. ‘Now they’re eating it. Now somebody on Wall Street will get creative and come up with something new for all this.’”
From KCRA.com. “A new report says Stockton’s foreclosure rate is the worst in the country, and Sacramento is not far behind. Homebuilding in the Central Valley skyrocketed in 2000 and home prices doubled over a period of four years, thanks in large part to Bay Area commuters.”
“‘It was a cheaper source of housing, the investors, there was a lot of greed in the market, everybody got very greedy, and everybody wanted to make a quick buck,’ said Matt Davies of Partners Real Estate.”
“One foreclosed property in north Stockton has been on the market for 208 days, it’s dropped in price from $304,000 to $233,000, a $71,000 price difference.”
The Bakersfield Californian. “Bakersfield homeowners are falling behind on their mortgage payments at a rate outpacing borrowers in nearly every other city in the nation, according to a new report released Tuesday.”
“RealtyTrac’s report came as little surprise to Watson Realty ERA agent Jesse Atondo, who says 10 to 15 local families come to him with mortgage problems every week. ‘I’m not only a Realtor,’ Atondo said, ‘I’m a counselor now. These people come crying.’”
“Lenders and real estate agents took advantage of uneducated consumers, he said. ‘There were a lot of Realtors that were encouraging — especially Latino clients — to buy houses they couldn’t afford,’ Atondo said. ‘They’ve left a mess.’”
The LA Times. “With a global credit crunch starting to curtail loans to even the most creditworthy borrowers and the specter of inflation pumping up prices of consumer goods, local real estate watchers predict that even pricey areas could soon start to see prices tumble.”
“The thought of the housing market weakening further overwhelms sellers such as Gretchen Rolfe, a Mission Viejo psychologist. She says she has little choice but to sell the home she has owned for three years after her monthly mortgage payment jumped about 25% last spring and her refinancing options dried up.”
“Now she has set a price range, $725,000 to $775,000, to let any potential buyer know she will be a willing negotiator. With the higher cost of borrowing, she figures, a prospective buyer who had been considering homes in the $800,000 to $900,000 price range might now select her house instead because they can afford less.”
“‘Aside from running outside naked, I don’t know what to do to reach the people who might want to find this house,’ she said.”
“Jeffrey Lane is prepared to spend upward of $1 million on a condo in West Los Angeles, but he is in no rush. ‘I’m waiting to see if prices come down,’ said Lane.”
“Such behavior has Michael Carney, director of Cal Poly Pomona’s Real Estate Research Council, predicting that Southern California home values are likely to fall 5% a year through 2009 before demand starts picking up, ‘assuming that fear doesn’t overtake everything,’ he said.”
“That’s a tall order for Rolfe, who foresees the evaporation of what little equity she has in her home the longer she stays. ‘I’m pulling more out of my pocket every month I’m in the market,’ she said. ‘I can’t wait two more years.’”
The Daily Pilot. “According to statistics released Tuesday, Corona del Mar saw its number of transactions leap from eight to 18 between July 2006 and last month, while Newport Coast plunged from 12 to five. Median sale prices fell in most areas.”
“Joseph Miner, the president of All Cities Realty in Costa Mesa, said most of the brokers he knew were struggling to complete sales. ‘I don’t know what the numbers show, but the market itself is very slow,’ he said. ‘Basically, if you talk to any real estate agents or brokers across the coast, it’s slow. They’ll tell you the phones don’t ring.’”
The Orange County Register. “Last month, Orange County home sales fell to their lowest level in 11 ½ years as lack of easy credit reduced an already shrunken pool of potential home buyers. And sales in August could drop even more.”
“‘None of us anticipated the total retreat of the mortgage market and the impact it’s had on the housing market,’ said Patrick Veling, president of Real Data Strategies Inc. of Brea. ‘No single analyst would have forecast this.’”
“It also was the lowest number of sales for a July in the 20 years that DataQuick has been gathering real estate statistics, and the 12th slowest month in two decades. July typically is the fourth busiest month of the year.”
“Prices appeared to be buoyed by stronger sales in pricier neighborhoods where buyers are less dependent on risky subprime loans or other exotic mortgage products. For example, the 24 Orange County ZIP codes where prices rose last month had median prices well above the 59 ZIP codes where prices fell, DataQuick figures show.”
“In Placentia, for example, prices are off by 5 to 8 percent from last year, said Don Palmer, an agent in that city. ‘In Placentia, like everyone else, we have a lot of listings. The ones that are selling … are the ones in the best condition (at) the higher end,’ Palmer said.”
“Each time an escrow is opened, ‘we hold our collective breath – to make sure that the buyer can get lender approval and that the lender can perform,’ said Debi Peters, a certified senior escrow officer in Laguna Niguel.”
“‘On the transactions that I have on my desk, I’ve had people say to me, ‘I thought we had a loan program that would work for me,’ only to find out that it’s suddenly not available anymore,’ she said.”
The Daily Bulletin. “Real estate agents in the Inland Empire have more to be nervous about than falling prices and sales caused by supply and demand.”
“In a region where home foreclosures keep climbing, banks are steering more toward immediately putting foreclosures up for auction - cutting out the middle-man reseller and dropping neighborhood prices faster than expected.”
“‘(Auctioning) is a way for them to liquidate the properties quickly, and it does drive the prices down,’ said Pete Gliniak, a bankruptcy and pre-foreclosure expert for, (who) works with homeowners across the Inland Empire. ‘The banks are realizing that the market is saturated.’”
“The Dataquick report noted that ‘pockets’ of foreclosures are emerging in the Inland Empire area, and foreclosure resales accounted for 8.3 percent of July’s new and existing home sales. This number is up from 7.7 percent in June.”
“Auction prices for a home can start anywhere from 35 percent to 50 percent of the value of that house on the active-selling market, Gliniak said.”
“Real estate agents know this, but some are reluctant to acknowledge that home prices will most likely keep dropping as banks and lenders take foreclosures straight to the auction house, said Tim Adams, an agent, a bonded auctioneer and a member of the Inland Valley Association of Realtors.”
“‘There are still a chunk of Realtors in the denial process,’ he said. ‘As agents, we want to do anything to maintain values and hold strong. The sad truth is that at some point, the banks will out-maneuver the (foreclosure) sellers if the sellers aren’t moving fast enough with selling.’”
“‘As the market gets flooded with repos, the banks have to say, ‘OK, we’re getting too much (liability) on the books here.’ Adams said. ‘With the amount of foreclosures that are mounting, it’s going to present a huge opportunity to investors.’”
“He said the next year will present an interesting scenario for area real estate agents. Balancing opportunity with challenges will be part of that.”
“‘Yes, all of us as Realtors want to see the highest possible value for the properties, but there are circumstances beyond our control that are driving the market into a direction that we don’t like to see,’ Adams said.”
The Daily Press. “The Victor Valley residential market hit a new low in July as sales of existing single-family homes slumped 51.6 percent compared to the same time last year, according to market research by Larry Trombley.”
“The average price plunged 10.7 percent over the same period, said Trombley, a Realtor with Century 21 Rose Real Estate in Hesperia.”
“Freighted with dead ballast, the residential market currently has a huge inventory of unsold homes, Trombley observed. Of the 4,199 existing houses for sale in the Victor Valley in July, only 196 closed escrow, or 4.7 percent.”
“By comparison, more than 50 percent of existing homes on the market were sold in July 2005.”
“Builders in the High Desert are averaging just under two sales a month for each development community, which is less than half the rate of market absorption during this time last year, said Mike Dwight, VP of Frontier Homes in Hesperia.”
“‘It’s not as much fun as it used to be,’ Dwight dead-panned. ‘The price of new homes climbed beyond the reach of the working-class buyer, and we have a substantial number of folks waiting for prices to come down further,’ he said.”
“‘A lot of agents are doing real estate part time because the market is slow,’ said Dana Gordon, one of the owners of Golden Real Estate in Hesperia, who recently went to work as a retail sales associate while he continues to run his company.”
“‘We could probably continue to get by, but I wanted to have some steady income,’ he said.”
From Rich Toscano at the Voice of San Diego:
‘Lately, the pattern has changed. The size-adjusted median price for both single family homes and condos fell in July, as the accompanying graph indicates, with condos posting a particularly steep month-over-month decline. Even “plain-vanilla” median resale prices fell by in aggregate by 3.8 percent for the month after rising for most of 2007.’
With a credit crunch in full swing, I don’t see where the bid is going to come from to prop up prices anywhere near their recent support levels. The buyers are priced out by credit constraints and sellers who are unwilling to wake up to the new market reality.
Translation: DON’T BUY YET!
But the NAR and NAHB states sales will pick up in the spring, oh wait that’s past, Sales will pick up in the summer, opps almost over and lowest sales figures in 16 years, OK then sales will be higher early next year, yeah thats the ticket, early next year every thing will be fine. We’ll just kinda “sweep” all that ugly leftover under the rug.
Isn’t the translation really: YOU CAN’T BUY YET!!
For most would-be buyers, you are spot on. Some who survived the War on Savers to this point may have a 20% downpayment available, and it is they at whom my comment is targeted.
Oh c’mon, those people went extinct years ago. It’s a new paradigm!
This is not your father’s mortgage payment!
For the median priced home in San Diego at roughly $500,000 that works out to an equity loss of:
$19,000 a month or
$633 a day
Annualized that’s 45.6%
That shouldn’t have any effect on consumer spending right?
“On Thursday, the couple buying the house learned that their lender was rescinding their loan because they were making only a 10 percent down payment. ‘This was not a subprime loan; this was fully documented, people with outstanding credit who own a $5 million home now and didn’t need to sell it to buy this one,’ Hogan said.”
What we have here is a perfect example of our Pendulum economy…
6 months ago, the town drunk could’ve qualified for a home loan~
Now exceptionally qualified folks are being turned down.
Does this country make any sense anymore?
We’re just going back to traditional underwriting standards. That makes sense.
Now to buy, you need to really want the home and be qualified (ie. be willing and able to put 20% down). Clearly these people didn’t really want the home that badly, or they didn’t have the 20% down, which meant that were cash strapped enough to not really be “exceptionally qualified”. Spin, spin, spin MSM.
I wouldn’t be surprised if they didn’t have the liquidity for a $440,000 down payment. Problems with hedge fund redemptions anyone?
CASH IS KING!
LOL!
Couldn’t agree more. Just stick to the guidelines. It doesn’t matter if your granny is going to die tomorrow and will leave you with 10 million or if you have 10 houses worth 10 millions. you need 20% down today. no and if or but. you’re buying a house; you’re not a crack addict; don’t make any excuses just put up the dough. this is the only way to deal with this bubble.
Maybe they saw that neighborhood comps took a dive and this was an excuse to bail.
There are two lawsuits coming that I see. One vs. Pulte, another vs the broker who didn’t put a contingency in the other deal. No way I would walk from $73k, perhaps another vs the (un)lender. Sounds a bit like the UnDead doesn’t it?
They’re making a 10% down payment, and they agree to buy the house for $2.45M, EXACTLY 10% more than list price! Someone needs to investigate this broker for these cash-back fraud deals.
As I said this morning: Jumbo loans effectively no longer exist. You can’t get one unless you have 20% down, and nobody financially savvy enough to have that much money laying around will bite at current prices and rates.
“Such behavior has Michael Carney, director of Cal Poly Pomona’s Real Estate Research Council, predicting that Southern California home values are likely to fall 5% a year through 2009 before demand starts picking up, ‘assuming that fear doesn’t overtake everything,’ he said.”
Let’s see…Fall 2003 to Spring 2006 prices of upscale or beach area LA homes doubled while incomes increased single digit percentage per year. And prices are expected to fall only 5% a year from now through 2009? 15 to 17%? Get real! Wages better go up 50%!
Bill, Bill, If you were selling a used couch would you tell a prospective buyer the lowest amount you will take right at the get go? Let me have their 5%. In the end the math won’t lie.
I’m sure this guy was predicting 5-8% appreciation per year only a few short months ago. He’ll be predicting 10% down per year by fall.
Like sellers chasing the market down, his predictions will change after the drops are bigger than his previous predictions. Of course, it’s easy to predict the past.
This jumbo credit crunch — first spotted by mrincomestream, I recall — is going to be huge for So. California. You can’t even by a crummy little house in Compton any more for under 417K. Hahaha I love it.
TRUE ‘DAT.
http://guests.themls.com/profile_page.cfm?mls=07-191341
PS - Can someone please define “turnkey” for me? My key clearly must be broken….
Ha! Nice sepia photos. It must hide the garish wood-paneled walls.
looks like the inside of a bad trailer…500k my a$$
I’ll give you 25K for that POS!
I have an honest question. What’s a “rompus room”? Is that the area designated for gangbangers to, well, gangbang the house residents during the home invasion, or something different?
Seriously, I haven’t heard that term before.
dimitris-
LMAO Are you kidding… It’s another name for Den or PlayRoom.
Must be the room with no windows where you hide when the bullets start flying.
uhh…can you describe the rompus?
It’s from the 60’s… a rumpus room is basically a den/bar/tv/play room… like Wilbur’s on Mr. Ed.
Turnkey in Compton means it already has bars on the window and security gates over the doors.
You have to turn the key to get in instead of just busting out a window or breaking down a door.
Aw that stinks they removed the living-room picture that had the chalk outline in it. Oh well might have unmotivated a prospective FBer
“Rompus” room? Is that a cross between a rumpus room and Romper Room? Did anyone else watch Romper Room as a kid, or was that only in Kansas?
I watched Romper Room in Long Island, New York many many moons ago…
I watched Romper Room in Long Island, New York many many moons ago…
Get on your Hippity-Hop! Man i feel old now.
I swear, we can not make this stuff up. There are places that defy logic.
Most Comptonians won’t see $500k in their entire lives. Less than ten years ago $500k would have bought you a decent place in Santa Monica. Anyone who thinks real estate in LA won’t drop extremely hard is delusional beyond description.
This jumbo credit crunch is going to be enormous for the world.
“…Concerns have now switched to the huge market in commercial loans across the board. At least five issuers of such loans or “asset-backed commercial paper” - a mix of mortgage loans, credit-card debt and some business loans - have had trouble refinancing that debt when it matured, forcing them to make investors wait for repayment.
Josh Rosner, an analyst at independent research firm Graham Fisher in New York, said: “Asset-backed commercial paper [ABP] problems could be much worse than what we saw in the subprime market.”
Investment managers’ inability to tell whether the ABP they have taken on - the money they have loaned - is “safe” has fuelled the flight of confidence and added to the “perfect storm” in markets. …”
The Scotsman
Aug 15, 2007
http://tinyurl.com/2akcse
OK, where’s all the money? For every FB house buyer and FB MBS buyer someone else made money on the other side of the transactions. That money’s sitting out there, ready to be put to use, when it makes sense. As much as Kudlow and Cramer try to insult the FED into a rate cut, to save their hedge fund friends, there’s a tremendous amount of cash sitting out this mess. I see this money paying cash and picking up the assets of these failed firms at big discounts. In a few years we’ll be reading about these investors who paid pennies on the dollar and made fortunes. Just like what happened in the 90’s, fortunes were later made by smart money, picking up pieces in the rubble.
After the housing boom ended all these mortgage lenders out there became redundant and unnecessary. To try and save them would be an inefficient waste of money, throwing good money after bad. Theirs no need for them, let them fail. The lenders that are left will be able to split up a smaller pie and survive. The hedge funds that ignored risk, levered up and threw money at anyone and everyone, should fail for their ignoring risk and wasteful allocation of capitol.
A free market will reallocate these assets to more responsible custodians. People like Kudlow and Cramer are just trying to keep the scam going. Let the markets clear out the scum.
Kudlow and Cramer are on every night, fomenting panic to force the FED into doing what they want. I think it’s time people start taking them to task for their behavior, as the markets make a necessary correction.
It really is like yelling “fire!” in a darkened theater…the hordes in the seats can’t really see too well, so they assume these guys yelling must know something, but maybe the yellers just want to be able to save their short (not; ha!) buddy from the tall man sitting in front of him and wrecking his view.
Yeah, the fed has *no idea* how bad it is out there; no idea how many of their friends stand to lose their bonus checks this year! Goodness, and what that might in turn do to the luxury retailers?!
Playing devil’s advocate here, if we have such a long way to go down from here, why is Warren Buffett taking a big stake (today) in Bank of America? Either we’re near the bottom, or B of A has limited subslime exposure, or the guy is so rich he has no FB friends and doesn’t know what’s going on in the po’ (used to be known as “middle class”) classes.
My take is that they were just reporting ownership, they might have made the purchase quite a while ago when things looked different.
No, I believe they said he took a big position today in B of A.
Mr. Buffett’s purchase of Bank of America was done between March 31, 2007 and June 30, 2007. He may still have them or he could already have sold these shares. His last quarterly report showed purchase of some railroad stocks and this SEC filing showed the stocks were gone. His next quarterly report will be in November.
He appears to buy a small position to get a feel for the company and management. Mr. Buffett’s investment positions are not privy to me.
With Fed injecting cash left and right, banks are probably the best place to be right now.
Anybody able to explain how the Fed’s cash to banks program works?
Banks trade all sorts of stuff between themselves, including lots of cash and various securities, during a normal business day.
With the mortgage problems, this particular type of security is unwanted. It’s not that they are worthless.. it’s just that with all the foreclosures and problems surfacing banks cannot set an accurate price on them.
So banks have to remove this mortgage stuff from their personal trading “wallet”. They now have less tradable stuff left in the wallet.. and they may have not enough stuff in the wallet to perform all the normal business they must perform. They are short on liquidity.. some valuable stuff is useless for trading.
If so, the Fed might decide to step in and loan the banks money, holding the problem securities for collateral on the short term loan.
This keeps the banking wheels turning.
Actually, the Fed is using a cash loan to inject liquidity.. a means to continue trading.. into the banking system.
(btw, the Fed does this to some degree everyday .. it’s normal.. the fed gives and takes up banking system slack)
There’s an interesting article about what the Fed actually bought with its $38 billion recently: mortgage-backed securities. Unlike September 2001, when the Fed injected $295 billion into the banking system over 4 days by buying Treasury securities, this was the largest purchase of this type of asset ever.
http://www.mises.org/story/2676
“Freighted with dead ballast, the residential market currently has a huge inventory of unsold homes, Trombley observed. Of the 4,199 existing houses for sale in the Victor Valley in July, only 196 closed escrow, or 4.7 percent.”
God I hope I’m not related to any of those 196!!
Okay, gang, crank up those Wal-Mart greeter jokes. Here’s a goodie from the original post:
“‘A lot of agents are doing real estate part time because the market is slow,’ said Dana Gordon, one of the owners of Golden Real Estate in Hesperia, who recently went to work as a retail sales associate while he continues to run his company.”
retail sales associate = walmart store shelf stocker or greeter
Dude,
If I see a realtor ™ working the counter of Cinnabon, forget the low carb diet, the schadenfreude alone will propel the purchase.
chuckle…
Now what fine wine should I have with my popcorn?
Neil
I was at a Quiznos last week in Anahiem and the guy working behind the counter had Century 21 biz cards in a holder beside the cash register. Sandwich maker by day and Real estate agent by night……
A company owner is working part time??!!?? That is a really bad sign.
Yea, a very bad sign. How you run a brokerage and work at a retail shop is beyond me… At that point you might as well close up shop…
nah he’ll keep it open for another 5 yrs for the tax write off.
I know, I know, the write off at that point is hardly worth the time dealing with the paperwork.
My thoughts exactly…
My old neighbor is a realtor and was stacking shelves at Vons.
Oh man… I promise you I will make this joke again and again.
It recalls to mind arguments like “You wouldn’t do your own heart surgery would you?” from relitters talking about FSBO and redfin types.
The list never ends:
You wouldn’t string the shoes you are about to try on would you?
You wouldn’t greet yourself at walmart would you?
You wouldn’t call yourself up on the phone at dinner?
You wouldn’t mop your own public bathroom?
I mean on… and on… and on.
I smell weekend topic possibility.
ROFLMAO!!!
“‘A lot of agents are doing real estate part time because the market is slow,’ said Dana Gordon, one of the owners of Golden Real Estate in Hesperia, who recently went to work as a retail sales associate while he continues to run his company.”
Retail sales associate? LMAO!!
BAHAHHAHA.
Remember when we predicted this. How many times did we sale “future walmart greeters”.
Man this is playing out as expected.
You guys have been really good at predicting things. We should of set up a hedge fund and made some money on some of the predictions here. Some really smart bloggers here.
Everyone but me, I am just riding the coat tails of the smart guys here!
crispy, we are all smarter than this:
“‘Aside from running outside naked, I don’t know what to do to reach the people who might want to find this house,’ she said.”
I wonder if the gal who mentioned the “naked” stunt is MILFY? That WOULD at least get people looking.
I have to agree about the quality of the analysis.
Haha, no way norcal ray! A HBBedge fund would be a disaster.
First, when hedge funds work it’s because they are highly leveraged, and there’s no way the collective HBB conscious would ever consent to using debt to make investments… Then we would break out into a huge inflation/deflation debate and bitterly argue whether to buy gold/yen/srs/fxa/10 yr, and in the middle of that chaos someone would sneak off and contribute all the funds to Ron Paul’s campaign.
And that would be the end of that.
LOL you must be a regular here because that was a spot on analysis
LOL perfect except you forgot add Prop 13 into the debate stream.
Excellent, ajas! You’ve got it down.
Many of us do have hedge funds.
Mine’s called “Dude’s Try Not to be a Friggin Idiot Fund”.
I charge 100% of gains to my sole client.
If only we could predict the california LOTTO here, $148mil this weekend I was told. I put in my $1 to the pool
I’d rather go flush a buck down the toilet. Lotto= tax on poor people and the stupid.
…and those bad at math…
I once read a very fine economic analysis of a lotto ticket (I looked but I can’t find the link-it may have been in Slate).
There is the “odds of winning” analysis, which is clearly a loser.
However, there is an alternate analysis, and that is the opportunity cost (one dollar) compared to what you give up by what is conceded as effectively flushing the dollar down the drain.
By spending one dollar, you have a real opportunity to win (you can’t win if you don’t play, you know). That’s all you need. Prior to spending the dollar=no chance of winning. Spending the dollar=a chance of winning (small, but real).
Then a lot of mumbo jumbo, with the conclusion being that once the Lotto prize reaches a certain number ($25 million if I remember), there is no better use for one dollar than getting in on that opportunity. Not two dollars, just the one.
sans italiques
2nd try
I like the fair bet analysis:
If the odds are 140M : 1, but the payoff after taxes is 150M; its a fair bet.
$1 quick pick please, ooh you were helping my ex look at houses weren’t you?
quick-pick? Yes sir! Coming right up, sir!
But no, i’ve never sold real estate. But I did run a small Savings and Loan a few streets up until recently. Perhaps that’s where we met?
That’ll be one dollar, please.
My mother in law is friends with a Realtor who is now a Macy’s Salsesperson as well as a Real Estate Agent. My wife and her mom were talking to her. She’s in the north SF Bay Area, and when my wife told her what I thought about the housing market, she agreed.
The realtors that panic first and get the other salesjobs are the ones that will do the best. At least until slowing consumer spending gets them laid off from THERE as well!
Become a retail sales person before you are priced out of the market forever.
Trying to turn of italics
Testing.
Does this mean I’ll be getting business cards slipped into my bag of Mickey D’s food ? You know business within a business (wink wink). Don’t they call that “prospecting” in business school ?
The next time you see a Range Rover, BMW, or Escalade in the McD’s parking lot it’ll dawn on you that it probably belongs to the person flippin’ your burger.
Bwwwwaaahhhhaa Does McD’s pay that much to even fill the tank of one of those monsters.
I would not like to be the owner of the franchise, every cash till will be short at night. (If anybody pays cash at the fast food shops anymore).
It just shows you how stupid these people are. You would have thought as many people as they screwed during the past 5 year run-up, that people like this should have tons of money saved up for the coming rainy days. But this guy is broke. LMAO
So right Chris. How many stories did we read about these clowns making “30-40K’ per month. Gezz, I don’t know, but that is close to half a mil a year. At five years, anywhere from 2-2.5 mil. Geez, even at 100K a year salary, that’s 25 years. Didn’t any of these bozos sock away any of the savings in a CD at 5%. If they had saved the entire 2 mil (we’ll go conservative, here) @ 5%, they would be earning 100K per year. Even after taxes, that pays the rent on a verrrrrry nice place.
DOLTS!
But thats the thing Chrisusc, contrary to popular belief here a lot of Realtors didn’t make a lot of money. They were victims of the multiple bid techniques as well. Especially here in L.A. because the inventory was so short, now granted if they got one deal done it was a lot bigger payday than years before which kept them going for a little while longer. But a lot of the new Wal-Mart employees. Have been on the edge for quite awhile now. That 500k active will be 100k by the end of the year. People are falling off the ledge fast.
They didn’t make squat because everybody and their Mama got a real estate license. I read somewhere that average salary of a RE agent was only 15k during the boom.
Don’t make fun of the retail sales associates. They actually contribute to the economy and make a much more honest living than any realwhores ever will!
Thats why I for one am glad to finally see some of these leeches earning a living the old fashion way.
I’ve been an avid reader (addict) / sometimes poster here for over a year. It’s been fascinating watching all the predictions come true, some slower, some recently much quicker. I have to sometimes remember that there will be a lot of suffering as this unwinds, some much deserved and some not. Will we all be sitting in a “bloggers home” sometime in the future asking ourselves “where were you when (insert your mortgage lender here) imploded?”
I believe these are historic times and I hope that all here are prepared for what may unfold. I have to temper my contempt for some and remain hopeful for others.
I’ve seen many funny lines here, but I would believe that there are some real fear’s under all the laughing faces. Let’s not loose our ability to have empathy when deserved.
Amen, anon… I get the feeling there are a bunch of people on this blog that don’t do anything other than day trade and/or “play” the market”. IMHO, they aren’t any better or worse than the realtwhores they make fun of.
True. It’s also why capital gains should be taxed at the same rate as labor. Never did understand how the 15% LT gains tax could be justified (and I’m one of the HBB traders).
Warren Buffet and I agree with you.
Simon Property Group is putting in one of their Premium Outlet Malls in our town. They had to sue the town to get permission to build and it’s going to make a mess of the surrounding neighborhoods. These will be upscale malls (we have tons of the regular malls to the north and south already) and the idea is to attract shoppers from Massachusetts who are expected to drive 40 to 50 miles to shop. I suppose that it might be nice to shop at these stores (no, I don’t mean buying anything) but I really wonder if people will drive that far just for some stores that are nicer than your local malls.
SPG has taken a beating the last six months. That’s what you’d expect to happen to a REIT in a period of declining consumer confidence. I do wish them well as they will provide jobs (and traffic) to the local community and it sounds like there will be some pretty good jobs too.
I’ve never worked retail sales but have had my share of stock boy, library shelver, hospital clerk and doing grounds work in the past.
exactly!
I’m going to be counting my change from retail sales associates in a way I never did before lol.
http://tinyurl.com/3yo9ls
David Lereah back at it again ! This time he’s a “housing market economist”
–
Housing market economist David Lereah explains why lenders are punishing the good:
David Lereah: The lender community got caught with their financial pants down, and now they’re afraid to make the loans. A lot of households that do have the financial wherewithal to purchase the homes are now unable to do so.
Wow, that reporter really needs to check her facts. In the report she says:
“Funny thing is, almost no one defaults on a jumbo loan.”
“Mortgage lenders can sell smaller loans to Fannie Mae and Freddie Mac and pass the risk to the federally-backed agencies. But when loans top $417,000, Fannie and Freddie can’t buy. The government put restrictions in place last year, when regulators worried Fannie and Freddie’s shaky accounting and multibillion-dollar debts were putting the economy at risk.”
Where is she getting her facts that almost no one defaults on a jumbo loan? There’s been plenty of fraud in recent years, and much of it was in jumbo loans (if you’re going to commit the crime, might as well get as much cash as you can).
Also, the prohibition on buying jumbo loans has been in place from the beginning. Freddie and Fannie were created to provide liquidity to the low end of the market. The “restrictions” that were put in place had to do with the size of the loan portfolios, not on the types of loans they could buy. Oh, and technically, Freddie and Fannie are not “federally-backed,” they are GSEs with only an implicit govt guarantee (which has never really been tested to see if the govt would, in fact, back them if the GSEs were unable to honor their commitments).
David Lereah: The lender community got caught with their financial pants down, and now they’re afraid to make the loans.
Afraid? How can they stop being afraid when the arse is still sore? Taunting them that they should go up and hug the bastard that “too advantage” of them before the need for proscription pain killers is done? I don’t think so.
We posted over a year ago how the bankers would get “pucker butt” when things went bad. (Ok, some of you posted earlier I’m sure…) They won’t unclinch for a long time.
Great sitting with a down payment ready.
Not time yet. Not even close.
Got popcorn?
Neil
“‘A lot of agents are doing real estate part time because the market is slow,’ said Dana Gordon, one of the owners of Golden Real Estate in Hesperia, who recently went to work as a retail sales associate while he continues to run his company.”
“‘We could probably continue to get by, but I wanted to have some steady income,’ he said.” ,
LOL, have fun pitching those extended warranties at Circuit City, loser.
my bet is walmart. Lots of big boxes out there. not like they can have a skilled retail job like lowes
haha, oh yeah Circuit city too. They even let you go when you get too good at your job.
Nah, walmart. that’s my guess
Classic.
My feeling is this shows us the type of people we are really dealing with. If they are so necessary and so smart and so knowledgeable that we absolutely need them to buy our houses for us, wouldn’t it stand to reason that they should be smart enough and desirable enough to other companies that they could be hired on into higher-paying corporate jobs? Retail sales is as good as it gets, huh?
Guess we don’t need them afterall. Or better yet, I’ll just grab a cashier from Walmart and give them 2% of the sale. Saves me 4%!
Nah, I’ll just do it myself.
Good points Hailey.
Three cheers for Hailey!
You don’t know how much I wished that I could have responded to this comment earlier.
I think internet based realtor systems that cut the commission and sales price by 2% will soon be the rage. Bwaaa haa ha!
Oh, I have a relative that’s a Realtor ™. She was ready to go two years without an income in 2003. Now (post the boom years), I think her retirement is set. So not all of them will be behind the counter. I really wonder if she’ll find a prior coworker behind the counter… ROTFL. “Why hi Jane six pack! How are you doing? Great seeing you too! Can you help me find this in a smaller size?”
Got popcorn?
Neil
I want to see some of those Realhoretes pole dancing at the local watering spot down town. I remember when the go go dancers were on the bar during lunch hour at the Bull and Bear across the street from the Pacific Exchange in the downturn of the early 60’s.
The buyers walked away from the deal, forfeiting their $73,000 deposit. The home is back on the market for $2.2 million, its original asking price.
Amazing to think these people just lost $73,000 and still made the right decision. Could’ve been a lot worse if the contract went through.
To loose $73,000 is better than to loose 15 or 30% on $2,2 million. I think it was the right decision, but came relatively late. Much better then too late.
Read the article, they actually agreed to “pay” $2.45M. I think their real down payment is 0%.
I thought most real estate contracts allowed the buyer to walk away without penalty if they couldn’t secure financing at the agreed-upon rate.
The story smells to me.
That’s within a contingency period, which probably expired.
Many times the contract just says you cant refuse reasonable or typical financing. The builder’s argument may have been that typical financing at this time is 5% and therefore was unreasonable for them to back out. Further, the writer may be incorrect in that the loan was locked in, it may have not been locked in and may have only been a pre-approval (which is really no approval at all). Besides, the agent knows they just “lost the big one” and there will be no catches in that pond for a long time coming.
You’re right dwr but the agent has to remeber to fill in the part about what financial terms are acceptable. I have a feeling the agent dropped the ball on that one or the builder contract didn’t allow for it.
Yes, I agree mrincomestream. I can’t believe that the agents were so bad that they didn’t fill in the blanks in a protective reasonable manner on putting a cap on interest rates and terms . People are getting screwed when they didn’t need to be .
Is it possible that the lender said, “you’re loan is approved.”, the buyer then said “we waive our financing contingency.”, and then the lender’s credit lines were pulled and couldn’t honor their commitment?
In that case, isn’t the buyer out of luck, and scrambling for another loan with their deposit at risk?
That’s the way it would work in the commercial real estate market…not sure about higher end residential sales…
Agreed. Just shows how self-centered the real estate agents were/are and/or their lack of knowledge of the business.
That is true. Someting is wrong here. You do not loose your deposit if your financing is cancelled.
“‘Wall Street created all this,’ said Vitek’s Kaempfer, a California Association of Mortgage Brokers board member.”
Never trust a mortgage broker with two first names.
Luv,
Jen
Wasn’t that the colonel, in charge, in Hogan’s Heroes?hehehehehehe
Kaempfer is German and means fighter.
Mein Kempf
“‘Aside from running outside naked, I don’t know what to do to reach the people who might want to find this house,’ she said.”
Ode to Stephen Foster…
Beautiful Schemer, wake up and smell the coffee
20% down and an 800 fico score, are what you now need
Financially now it’s a rude world, every day
Lull’d once by low interest rates, they’ve all gone away
Beautiful Schemer, queen of my song
List your house while I woo you with soft melody
Gone are the cares of seeing you naked on your lawn
Beautiful Schemer, you won’t sell it to me…
LMAO
Had lunch with several business people, including a realtor.
Things are bad out there. Several people said sales are off 40-60%. OUCH!
The realtor mentioned a CFC foreclosure first payment default that was purchased for $1,000,000, listed for 6 months sold for $630,000.
WOW!
Hold on tight people this might be worse than people like me thought. I have argued with everyone in here about the “depression” word. I still don’t think that will happen, but several of these business people used the word - Scary!
I’m skeptical of the depression scenario myself. Instead, I picture a severe recession followed by a prolonged bout of extreme hyperinflation after the predictable overexcess of monetary stimulus is introduced into the system. The entire economy will collapse in a spontaneously combusting blaze of fiat currency, and roving gangs of FBs in HeliBen masks will eventually roam the wasted areas of their former residences. Relatively stable neighborhoods like the one my wife and I live in will band together to protect themselves from the oncoming hoards, and we’ll occasionally have to defend our house from slavering HeliBen zombies with our two Browning Hi-Powers blazing like fully automatic weaponry, leaving a trail of fallen bodies as testimony to the reign of the Supreme-Buffoon-Whose-Name-May-Not-Be-Spoken (formerly known as Alan Greenspan, who will be stoned to death in the Great FB Uprising of 2010).
Got Solar InstaPop Soylent Green?
bob - thanks for referencing soylent green… i did last year too. many disturbing aspects of that flick and a possible scenario we may get (not necessarily probable - at least i really hope not)
Agreed! The strange thing is that when I first watched Soylent Green as a kid, I figured out that I will be the same age as Edward G. Robinson was in the movie’s time period (~2020). Anyone who doesn’t think things could possibly turn out that way also doesn’t realize what prolonged hyperinflation could do to our society in the presence of depleted natural resources and out of control entitlement programs.
When I found out about the lending that was going on , my mind moved to the D word real quick . I hope it will be just the ‘R” word .I have always felt that the investors in the secondary market didn’t know they were buying poison dog food junk paper and when they found out ,the shit would hit the fan .
I don’t know if the gov. can do this, but I would freeze all questionable hedge funds and other funds invested in mortgage backed securities until a proper analysis of the fall-out of this loss can be determined . I only say this because you hear the talking heads calling for the Feds to buy the MBS’s and CDO’s as a emergency measure .
It looks like the real problem right now is that nobody want to buy any of this mortgage backed stuff at any price so the market has freezed up . So to prevent a run on the accounts maybe a freeze can be enacted until the situation can be worked out in a more orderly fashion .
Housing Wizard,
Freezing that many funds would end a few industries.
Like it or not, they will need to “restart” the mortgage market. But as Calculated risk noted, Freddie Mac wasn’t winning a significant number of ‘Alt-A’ auctions for a long time as their buying criteria put in lower bids than everyone else.
So now they go back in. There is half the yeild off of an originated mortgage. That’s half the money to pay the business rent, support staff, commisions, etc. In other words, smaller offices, out-sourced call centers, and mortgage brokers making $50k to $75k/year instead of $300k. Oh yea… they still need to come up with down payments, income verification, and many other pesky things.
Like it or not, the concern is to slow the economy sensibly.
Besides, the jumbo loan meltdown alone will keep me in popcorn heaven!
Want to buy a home over $1.5M? Great! Cash only please.
Superjumbo? That will be 40% down.
We’re already at 30% down payments for jumbo. To think that only a few weeks ago my stating that a 25% down payment would become the norm was still a little out there… After waiting so long to see the major change all occur in 5 weeks is mind numbing.
Got popcorn?
Neil
Neil ,its seems to me a force play is going on by the bagholders of MBS’s to pass the bad debt to the Feds ,while they use the excuse to free up the market ,because the normal market isn’t even buying MBS’s.
When I hear talking heads on CNBC calling for the Feds to buy this junk paper , I get worried this might happen . They will claim it was to free up Main Street operations because of a log-jam in the credit markets .
Do you think this “investment” by the pension fund is another “in”directly funded bailout by taxpayers
http://www.oregonlive.com/oregonian/stories/index.ssf?/base/business/118662992961110.xml&coll=7
That is the same thing most pension funds have been doing and continue to do. They are seeking higher returns because low returns are killing them. They do not keep up with recent market moves well, and never have. There is no bailout, and your assertion is conspiracy theory hokum.
I hate to say say. I know it is early, but a few of us have used that word. Anyway, when it happens we def. will not be in any position to tell anyone anything. We are just issuing the warnings.
As for that 1 mil house, going for 630K. WOW, a 37% haircut. Now that is painful.
Holly Cow what in the Heck is worth $630k in Bakersfield? You are talking Bakersfield right?
I agree that this home is still overpriced, however, at $1 million is what just insane that CFC would lend that kind of money.
CFC is F’d is this same scenario plays out all over this country!
Good thing for Mozillo he sold a lot of stock. He knew this was going to happen.
And he told everyone this over a year ago.
Hoz. The part I don’t understand is why did Mozillo continue to make junk loans from a year ago onward if he knew it was going to blow up if he was being so forthright . Seems to me that a CEO would have a duty to shareholders and the public to immediately protect the Company from ending up in the spot that it is in now . Its seems as if he just kept unloading his stock in spite of some public statements that were riddled with alot of positive statement also ..I just have that question in my mind .
His competitors were doing it.
A CEO cannot get in trouble if he does what his competitors are doing. I have gone through the financial statements as publicly reported, it is hard to find fault.
It is important to remember that this incredible event we are living is the result of repricing of $400T in risk. Not one Mortgage backed bond has defaulted. The derivatives of these bonds have defaulted.
Countrywide is in as good (or as bad a shape?) as any other American Bank per the financial statements, its lack of commercial paper funding puts it under severe financial strain.
If Merrill had not placed its warning on the company this morning, would the rumors have gone flying around the world? Thus forcing it into effective insolvency.
There were a lot of things CFC did right over the last year, but it seems to be to late.
Note: SEC investigates Hedge Fund Insider stock trading ring.
http://tinyurl.com/2mvf5b
Reuters
The way someone put it…When everyone is dancing, you have to dance too. It looks as though many went home with the disease infested skank that looked mighty good just an hour before.
The recent options backdating convictions are proof that what you are saying is nonsense. There is a strong lowest common denomenator for finance which does encourage criminality, but it does not work the way you assert.
“The realtor mentioned a CFC foreclosure first payment default that was purchased for $1,000,000, listed for 6 months sold for $630,000.”
And that person still overpaid. LOL
So I take we are not going to see anymore letters to sellers “begging” to buy their house?? Maybe letters to lenders begging them to borrow money for a foolish purchase! LOL
So I take it we are not going to see anymore letters to sellers “begging” to buy their house?? Maybe letters to lenders begging them to borrow money for a foolish purchase! LOL
I have a feeling that owner financing will be back in vogue when this market freezes up.
For those who own their homes outright, this will be popular. Anybody else trying to sell is meat. Rancid meat.
Exactly. You cannot have any liens on the property and pull this off.
Not only that, the sellers needs to be careful to writing the contract as a “lease option to buy” in case of default. e.g., a la an ‘Islamic lease’ with 359 set ‘rental’ payments and the 360th payment ‘purchases the property’ on the option (circumventing Islam’s prohibition on charing ‘ursary’ but on the other hand allowing the rental of a property).
Not many homes will move this way.
Got popcorn?
Neil
…¿Habla Español?
“‘Aside from running outside naked, I don’t know what to do to reach the people who might want to find this house,’ she said.”
Wait a minute… I thought that’s what her Realtwhore was supposed to do to score a sale.
¿Habla Español?
This was supposed to post up there, ignore it.
We need more popcorn. R-movie is coming.
“One foreclosed property in north Stockton has been on the market for 208 days, it’s dropped in price from $304,000 to $233,000, a $71,000 price difference.”
Like that is a big deal the party hasn’t even started yet on pricing .
Maybe we will see 20% return on cash when this RE market is at the bottom.
That is about the return I would need to get back in from an investment standpoint.
I’d be happy with 15, it will be interesting to see how far the Multi-Family slides.
Depends on how big a fence they build.
You know it’s interesting that you say that. With this new get tough stance coming about. I’m really wondering if they are going to be able to starve them out and how it’s going to effect the rental market in illegal havens like Downtown/Rampart here in L.A. I know some landlords will be relieved they’ll be able to turn their buildings and get market rent, but I’m wondering what overall impact that will have.
That’s the way the market was when I got into this business, at the time I just thought that was normal to get a postive return on your investment from the beginning, silly me.
Are you seeing examples like my post above on CFC repo’s?
Not yet
A few weeks ago, I viewed a 1900s 3ba home on a whim in Woodland listed at 310k. It was small, needed work but wasn’t listed as a distressed home (yet). The agent wanted to know what I though and I told him I wouldn’t offer more then 220k. His answer was “if you have good credit and are serious, I’ll be glad to pitch it”.
30% off wasn’t steep enough - wow. It was purchsed in 01 for 153k so if they didn’t pull out money, 220k would probably seem great.
“Mortgage woes have moved upstream, landing even in tony neighborhoods. For instance, a multimillion-dollar deal in Larkspur went belly-up last week when the lender yanked the financing at the last minute. ‘The loan was approved and locked in. People were ordering moving trucks, everyone was feeling euphoric,’ said Bill Hogan, a Realtor in Greenbrae.”
Looks like the tight loan market will start to hit the higher end hard.
Lots of jumbo loans here in the $1 M to $3 M price range.
This might finally have impact on the median prices. What statistic will NAR go to now? Homes with odd number of sprinkler heads sold?
OT. From the FT:
The European Commission is to investigate credit ratings agencies amid growing dismay over their slow response to the subprime mortgage crisis.
“If the rating agencies believe this is going to be business as usual, they are very wrong,” one Commission official said.
http://www.ft.com/cms/s/d27da730-4b5e-11dc-861a-0000779fd2ac.html
“…In the US, the Securities and Exchange Commission introduced rules for agencies in June. French watchdog the Autorité des Marchés Financiers this year cited potential conflicts of interest and a lack of transparency….”
Will any foreign investment house buy an S&P or Moody’s rated investment again?
We American really got them foreigners good.
…
American brokers, investment banks GS, BearStearns earned huge fees and bonus securitizing.
American rating agencies earned huge fee putting AAA stamps on junk bonds.
American mortgage brokers earned >300K.
American Realtors made ton of commission.
American home sellers, appraisers made ton of money.
American builders got huge profit.
American fraudsters and strawberry pickers made ton of money.
…
“‘As the market gets flooded with repos, the banks have to say, ‘OK, we’re getting too much (liability) on the books here.’ Adams said. ‘With the amount of foreclosures that are mounting, it’s going to present a huge opportunity to investors.’”
They’re upside down and repo-y
Investors in the i.e.
They’re altogether denialy
Adams Realty
Their clients house are museums
So few people come to see them
They’re really a bad dream
Adams Realty
Low-hanging fruit:
“Gretchen Rolfe, a Mission Viejo psychologist”….“‘Aside from running outside naked, I don’t know what to do to reach the people who might want to find this house,’ she said.”
Don’t embarrass yourself, Gretch. At least wear your Freudian slip.
Luv,
Jen
Thanks a lot for soda on keyboard moment.
“Besides running outside naked….” Um, do you think she could post some statistics before she tries that? A short description: Age, weight, etc. If she’s overweight, over 50 and out of shape, she might frighten would be buyers away instead of pulling them in.
With a name like Gretchen Rolfe, I’m picturing a 230 lb. East German shotputter.
LOL!
Bake me some cupcakes, then disrobe and we’ll talk.
“the (supposedly rich)couple buying the house learned that their lender was rescinding their loan because they were making only a 10 percent down payment.”
Well, if your so wealthy, then just put down another 10%.
That is WAY too simple!
I guess their thinking probably went something like “Well, if we’re so wealthy, and we have to put down another 10%… whom exactly are we going to sell to?”
Suddenly a 3.3% loss started looking not so bad. I’m guessing this is not the first time they’ve decided to cut their losses, and probably that is one reason they still have money.
Actually, re-reading the article I realized that the house sold for 2.45M while asking was 2.2M. Yeah, guess where that 10% down payment was coming from?
My guess is that the lender reviewed the loan and cut the appraisal to shreds. The higher LTV jacked up the rates and killed the deal.
Being carefully steered and herded into the purchase by everyone involved, i’m thinking maybe this may have been the very first little bump in the road on the way to their dream home .. an unidentified blip on the radar screen.. a wisp of a foul odor on the breeze..
after which they opened their eyes a little and started investigating.
[“The buyers could have gotten a mortgage at a substantially higher rate, just under 8 percent, Hogan said, but ‘they crunched the numbers and said, ‘Hell, no, maybe this is a sign for us to get out.’”
“The buyers walked away from the deal, forfeiting their $73,000 deposit. The home is back on the market for $2.2 million, its original asking price.”]
These folks sound like they have a decent amount of money and while considering buying the $2.2 million home wasn’t the best idea, walking out on the deposit probably was a bright move. They don’t even sound depressed - maybe they’re relieved. But it sounds good when someone actually looks at the numbers at what they want to do and then says that this makes no sense and just walks away. Fortunately they got a second chance.
What catches my attention is that these people own a $5 MILLION dollar home now and are moving to a $2.2 MILLION dollar home. THEY ARE DOWNGRADING… WHY? Perhaps they aren’t so rich as the article makes them sound and they cannot afford their current mortgage anymore. I dunno… but there is something going on there.
Again purchase price was 2.45M. They were getting their 10% down from a cash-back deal. Their probably just a couple of shysters, them and their broker pal.
Always interesting how things are phrased. Do they own a $5MM home or does the bank let them live there? Also, is $5MM the new $2.5MM?
I took it to mean that they have a $5 million home with a good amount of equity in it and that they were buying a second home.
The article could have provided a little more information on their situation. But perhaps it was intentionally vague to allow the reader to use their own interpretation.
“‘A lot of agents are doing real estate part time because the market is slow,’ said Dana Gordon, one of the owners of Golden Real Estate in Hesperia, who recently went to work as a retail sales associate while he continues to run his company.”
“Would you like fries with that? please pay at the 1st window”
Perhaps something for another topic but I’m getting ready to pay my first fulltime college tuition bill for one of our kids and am expecting a bill late August or early September.
I wonder if the popping of the housing bubble will affect the financing of college educations (which I think is another kind of credit bubble) pushing more students to take loans or increasing enrollment at public institutions. Same issue with the stock market decline and some of the hedge fund action.
I haven’t heard of any problems in the student loan market other than bills to squeeze the student lenders’ profits.
College tuition + cost of housing = next generation is screwed big time.
“I’m getting ready to pay my first fulltime college tuition bill for one of our kids and am expecting a bill late August or early September.”
See if you can negotiate a nice discount. Betcha you can, the way things are going. Higher education can be ridiculously overpriced in the US, IMHO.
I can’t help thinking that some enterprising Chinese and Indian universities are going to start online divisions that cater to Americans.
Never thought of that one…
They’re already offering tutoring online for fees as low as $100/month. Feedback is that they are incredibly dedicated to their goals and kids enjoy learning from them.
Hell, just get junior to go to Mumbai for 4 years and get the degree for 1/10 the cost.
Palmetto is right. Also, with offshoring of jobs, H-1 Visas and illegal immigration, ROI on education may not be what it once was, especially if people don’t major in things that actually result in paychecks.
Amen to that. If you look at software development or IT many of the highest paid workers never went to college. They were too busy learning their craft.
If times get tough I doubt we’ll see many more people paying $30,000 a year to attend private schools to get a liberal arts degree. Being well rounded will no longer be worth $125,000.
It’s a state university. You need to do the negotiating stuff in the fall to late winter and we didn’t know that so we’ll work on that for next year. The money is already set aside. Only problem would be if our money market accounts “cut off redemptions”.
In-state tuition is the way to go. Some states even have programs where if you stay in-state for college you get huge scholarships. Many states have a high quality college…
UNC, Illinois, Minnesota, Texas, Cal, Virginia, Georgia Tech, Washington, many many more. It’d be unfortunate to pass up that kind of opportunity.
Also, many State schools have programs where the first year can be taken in the community college system, with guaranteed transfer to the State U. The classes in the CC are usually smaller, not taught by teaching assistants, and much cheaper.
IMO, it’s best to do your first two years at a community college and then transfer to a state college. Usually, the jr. colleges have deals with the state colleges that basically guarantee a student can transfer — and they’re often able to get a higher priority when signing up for classes, IIRC.
Personally, I’m not sure what the benefits are when going directly to univ.
The girls are hotter at the 4-year than the JC.
Hope that helps
Paul
Only problem would be if our money market accounts “cut off redemptions”.
That is a possibility. To prevent it, move to T-bills from Treasury Direct.
“I haven’t heard of any problems in the student loan market other than bills to squeeze the student lenders’ profits.”
You mean reduce the subsidies. Student lenders (Sallie Mae) generally don’t make profits. They take the money from the taxpayers and lend it to students at below market interest rates. Why do you think there are so many schools teaching worthless nonsense who will let anybody in? It’s a big racket that helps provide cushy employment to bums (the prof at CU comes to mind, but there’s a miollion like him) who have no goods and services to offer to the competitive marketplace.
My god man is there no one worthy of collecting a paycheck…LOL First Realtors and now Professors…Sheesh tough room.
Even at UC, which is supposed to be a school aimed at education for CA residents, you’d be surprised at how much money comes here from overseas.
“I’ve had people say to me, ‘I thought we had a loan program that would work for me,’ only to find out that it’s suddenly not available anymore,’ ”
Last I checked, the 15 or 30 yr fixed rate conforming mortgage is still available. If you dont qualify for it, then you should not be buying, its that simple.
I’ve said for a while that I only want to compete against other buyers who can afford a 20% down payment and a 30-year (or 15-year) fixed, fully amortizing mortgage.
Looks like I should begin hunting for desperation from people who can’t refinance, or have some conversations with my friendly neighborhood banker who can point me in the direction of upcoming foreclosures…
That’s what it comes down to, my 20% down payment is finally worth something again, I don’t have to compete with 100% financed clowns anymore, haleluja.
Rental Watch, are you close to buying?
I’m with LAIG: the past 2-3 years it’s like you are competing in an auction with zombies that have raised, immovable arms and lollipop swirls for eyeballs. And no income nor assets.
Okay, so stated is dead and jumbo is dumbo (%rates). But capitulation is around a long, wide, and very blind corner. And those 2/28s are all airplanes in the wires, but the real trick is the wall of option arms.
Be wary of the sea that runs dry quickly, for the wave on the horizon.
Still renting, still watching. I’m going to be waiting until at least mid-’08 (only if things get REALLY bad and we hit capitulation early). If things progress as I expect, it won’t be until 2009-10 until I buy.
I equated the market over the past few years to an NFL with legalized steriods. You can either not use the drugs, and get destroyed by others, or you can use the drugs and destroy yourself.
If you care about your body (credit), the only logical move is to decide not to play the game, work out, and prepare for a time when sanity returns and all the steroid hogs have blown out their livers.
I have a larger down payment now than I ever expected to have.
There’s a great article in the WSJ today about the rating agencies. What became quite clear to me today is that there is no way in hell this credit bubble is re-inflating. The rating agencies have lost all credibility. It will take a lot of explanation, and a lot of proof to convince pension funds worldwide that their ratings going forward are worth more than the paper they are written on.
A start is 20% real cash down, and 6 months of payments in the bank, so that the FICO scores actually mean something.
“‘None of us anticipated the total retreat of the mortgage market and the impact it’s had on the housing market,’ said Patrick Veling, president of Real Data Strategies Inc. of Brea. ‘No single analyst would have forecast this.’”
Hmmmm. Seems like posters here have been forecasting that for quite awhile now. But, I guess it’s just his way of saying that his predictions were wrong, but it isn’t his fault cuz no one could have foreseen this. Even though we did (and many posters on the OC Register blog fought with Pat over his rosy predictions).
Pat V is a poster over at the OC register. He was rude and thought his shit didn’t stink…
He was unebelievably condescending and consistently used an appeal to Authority argument to support his positions.
I tangled with him numerous times but am currently in an uneasy truce.
If he keeps spouting off like that quote, I may call off the truce.
Please do! LOL
“Yes, all of us as Realtors want to see the highest possible value for the properties,….”
NOW I understand why the NAR exists.
Via a monopoly.
surely you never thought it was to help buyers!?!
“‘Aside from running outside naked, I don’t know what to do to reach the people who might want to find this house,’ she said.”
Funny…but sad
Lower the price!!!
Lower the price…. not your drawers!
“‘A lot of agents are doing real estate part time because the market is slow,’ said Dana Gordon, one of the owners of Golden Real Estate in Hesperia, who recently went to work as a retail sales associate while he continues to run his company.”
“‘We could probably continue to get by, but I wanted to have some steady income,’ he said.”
- If I may translate this for you, Dana is now flipping burgers at Jack in the Box.
Flipping burgers = meal preparation engineer.
Retail Sales Associate = Would you like fires with that?
No fires, thank you. The fire department has enough work as it is.
hey spell nazi.. thought of sending him to owschwitz?
‘With the amount of foreclosures that are mounting, it’s going to present a huge opportunity to investors.’
Too bad there ain’t no more easy money to help the investers who didn’t already lose their shirts have another roll at the craps table.
Those investers who happen to not be liquidity constrained will have a great opportunity to catch a falling knife if they jump in at this point…
Sure for a few hundred dollars they could buy some AHMIQ.PK, hope springs eternal….
QUESTION to everyone: Where are you parking your cash???
I have several FDIC insured accounts, with yields between 5% - 5.5%, but even that is making me nervous. One of them is with Countrywide Bank; so what happens if Mozillo declares bankruptcy due to the toxic mortgages???
Do you trust FDIC or should I just cash out and hide everything in the pantry?? Or bed?? Some people say buy gold bullion, but you gotta park it somewhere!
All serious answers much appreciated!
“All serious answers much appreciated!”
I have no choice but to recuse myself.
Luv,
Jen
touche
Much to my chagrin it looks like Mozillo is done. If I were you I’d find another bank ASAP
I am no genius. With that said, imho, I think you better get out of CFC. For the last several months every time these companies have had doom written on them, it has come to pass. CFC seems to be another in the long list of those headed for the scrap heap. Any money there, GET IT OUT. It ain’t worth the extra 0.5%!
Seems that way doesn’t it. When it hit 19.25 this morning. I flushed. I’m a big Mozillo fan. I’ve used him as one of my gauges in this whole mess. If he goes down. Folks are in for a helluva ride down. I guess he’s used up his 9 lives…
My and my wife’s 401(k)s are now 100% in treasuries.
Me too. Unfortunately I still have a lot of cash at Etrade and Ameritrade. I’m thinking of calling Etrade and having them wire the money to Fidelity to park it in treasuries.
Buy something that doesn’t rely on someone else fulfilling a promise, can’t be made at the drop of a hat, is durable, etc.
The FDIC business (this is after you realize they are a lender as well, and have less than 1% reserves on their obligations…according to their website) is still relying on them fulfilling an obligation.
I debated between laddering some treasuries for a few months (never know when I will want to invest in something interesting), and a CA muni bond fund that can be liquid in a day. After some research, I opted for the CA muni-bond fund. The transaction costs of the treasuries hit the yield, and after looking at the muni bond fund’s holdings, I felt sufficiently comfortable that there was safety. Many, many pages of $3-$30MM bonds to various entities throughout CA, summing to a total of about $9B felt well diversified (and well protected–water improvement bond from 1985, road improvement bonds, etc.). Especially when many of the bonds were due in
If you are under FDIC limits, you will be paid back.
However, the timeliness of the payment is not guaranteed.
You could get your nominal money back in 2009 or 2010.
Not a good deal. Try Farmer’s & Merchants bank if you are in So Cal.
It is conservative and California’s strongest retail bank.
“Try Farmer’s & Merchants bank if you are in So Cal.
It is conservative and California’s strongest retail bank. ”
Yes, but you may need to haggle a little wih them to kick up the CD rate to 5%. Been banking there for years.
DOC
Methinks the return on your do re mi is of the smallest importance…
Keeping it intact is job number 1~
Mr T necklace and I cut a hole in the mattress/deposit box
American Century Capital Preservation Fund - invested in short term federal government paper, has check writing privileges.
http://www.americancentury.com/index2.jsp
If you are prior or current military you might look at some of the military credit unions. They pay something like 5%-5.5% on CDs.
I don’t get it. If sales are off so much, why aren’t realtor’s pushing sellers to drop prices farther and faster. 6% Commission on a cheap house is still better then 6% on a house that never sells.
90% of the homes listed can’t refi because of HELOC’s and the other 10% are owned by the flipping realtors themselves, who also can’t drop price for same reason. LOL
Got me. I made this point on the AZ Repugnant web site last week. Volume of transactions will be nothing but down until prices fall back to affordability where people can get loans, buying is cheaper than renting, and builders stop undercutting prices.
Today there is a post from a Realtor that has been arguing with me for months, taking the position that prices are not going to drop. They’ll just e flat a couple years, then start to climb again.
Last week I told him it is past time to stop working on improving buyer psycology. Even if they want to buy, they can’t get a loan. Time to get sellers to drop prices!!!!
Today he posts, Sellers need to be $20-30K below comps, to start, and drop from there if it doesn’t sell quickly.
I think the realtors are seeing which way the wind is blowing.
tell the seller to lower the price?
may as well tell him you want to bang his wife.. or daughter.
imo, in this market, good agents will ignore sellers and stop trying to get listings.. they will instead search for buyers to represent. This requires a different mind set.
Then, as an opposing force, this buyer’s agent can pound the seller into submission without worrying about hurting his feelings..
Repost, but I think this is relevant:
““stabilizing price trends in many local markets” by ensuring that low end homes do not sell”
Yeah, I had fallen into that trap myself…watching Los Angeles “still not go down” by paying attention to the median (aka “headline”) price.
I finally took a look at Case-Schiller data and OFHEO data and found that house for house, Los Angeles is *already* on the decline. OFHEO data is harder to work with as it only covers sales with “conforming” loans, but I think that Case Schiller uses all same-home sales with tweaks for outliers and errors.
Yes, Los Angeles is ALREADY in decline. Halleluiah for those “priced out of the market forever”.
So much for fnm and fre bailing the market out.
http://www.cnbc.com/id/20284544
Yeah, I don’t quite understand the flight from GNMA paper, as that is *actually* guaranteed by the US Government (unlike FNMA paper that people only *believe* has an implicit guarantee).
OMG! This shows that this whole world has been flipped upside down.
I predict stocks down 2% tomorrow just because of this!
http://www.foxnews.com/story/0,2933,293268,00.html
From the article…
Riches wants $63 billion dollars “backed by gold and silver “ delivered to the front gates to the Williamsburg Federal Correctional facility in South Carolina. Riches is an inmate at the facility serving out a wire fraud conviction.
People don’t want dollars! What will people on EBAY pay with? Especially when they are buying Dogs on Ebay? I guess Gold and Silver so they can buy missiles from Iran.
Not $63 billion.
$63 billion billion.
From the article:
‘$63,000,000,000 Billion Dollar’
That is 63,000,000,000,000,000,000,000.
$63 pentillion?
Actually, it would be in American parlance, $63 quintillion.
“‘Aside from running outside naked, I don’t know what to do to reach the people who might want to find this house,’ she said.”
It’s years away, but I think we’ve just identified how to call the bottom. With stagflation and an energy crisis bringing back the 1970s of my youth, can streaking be far behind?
can streaking be far behind?
Don’t say that, that will be next bubble.
At least global warming will keep the streakers from freezing, right?
Streaking without shrinkage… Time to impress!
LOL ,WT Economist …
It’s just a dead market right now . Lenders are tight with the money now and buyers don’t want to buy . Sellers that need to sell are going to be in a world of pain at what the mark to market would be in a dead market with few qualified buyers right now .
A lot more at stake streaking these days given youtube.
Hey, can we see some of those streakers on “Flip That House”?
let’s get real. what should be in the real estate classifieds is not houses for sale but ads from people who have qualified for a loan and how much they are willing to pay for a house. when i get ready to buy, i will use a buyer broker and tell them to adverstise how much i’m willing to pay for a house.
i don’t want to see another stupidly over-priced house ad especially here in
corrupt, big-pig , forty million $75,000 per year civil enigineers at Mass Highway , Massholechusetts.
Yes, i know that the ABX.HE indexes are “so last quarter”, but they are still getting worse…here are the numbers for Series 7, version 2:
AAA 92.06
AA 76.24
A 56.43
BBB 40.66
BBB- 37.34
http://www.markit.com/information/affiliations/abx
The other series and versions are even worse.
Say goodbye to subprime.
Say goodbye to everything on that list, but AAA, and we don’t even know if that will hold.
It won’t…they have the same voodoo loans in there like subprime. It’s just that the credit scores in that pool are better.
Yeah, my understanding is that ALL of the ABX.HE is sub-prime, BBB- all the way up to AAA…it’s just that all of the lower tranches had to “go bad” before the sh*t hit AAA. We can see where AAA is, so that’s why I’m saying “hasta la vista, sub-prime”.
I am not sure that credit score is the biggest factor in loan risk. Correct me if I am wrong. 3X “verifiable” annual income, 20% down should solve the problem. Very few currently in default could afford a 20% downpayment, and those who could most likely would be doing OK right now. Oh yeah, prices would have stayed around 2000 level, so there would not be that many foreclosures at all..
Exactly, GH.
Never did understand why the FICO score held so much weight. Personally, I’d rather know that they had the **ability** to pay off the loan, rather than the intention (evidenced by high FICO score which simply shows they pay their credit card bills on time).
WOW………..NIKKEI off -357 -2.17%
Them sophistamacated types are watching the carrytrade via yen/dollar levels. I don’t know exactly what to watch, but -2.17% can’t be a good sign.
Looks like .87 is key for the yen. Shanghai market is the real wildcard.
ya think…
at 10:36 EDT, Hang Seng - 778, or 3.78%
Reuters
Amgen Inc (AMGN.O: Quote, Profile, Research), the world’s biggest biotechnology company by sales, said on Wednesday it would cut 2,200 to 2,600 jobs, or 12 percent to 14 percent of its workforce, as it grapples with declining sales of its best-selling anemia drug Aranesp.
The company also cut its 2007 adjusted earnings guidance to a range of $4.13 to $4.23 per share from $4.28 per share.
As Amgen has milked its anemia franchise, analysts said rivals like Genentech Inc (DNA.N: Quote, Profile, Research), which now has a bigger market capitalization than Amgen, have turned out innovative products that will drive growth.
Plans to cut research spending unnerved some analysts, who say the once-pioneering company is losing its edge….”
’nuff said, nite all
is this free money?
No, it is just very sad.
Sorry Voz, the only trade I know that is completely risk free was developed by Mr. Peter Lynch. Still available.
I’ll add that as A Fed Gov has stated that emerency rate cuts are not required is a bit sad in the face of helicopter liquidity drops, which are in fact the emergency cut.
My contention at this point is a small window of selling is open, for the money as rates are dropping like a stone.
Here’s that dreaded “P” word again.
Only panic is left……………
http://www.marketwatch.com/news/story/only-panic-left/story.aspx?guid=%7B175F20E8%2D7018%2D41A8%2DAC95%2D53D18D5A1D38%7D
Good catch
“…We’re into the very early beginnings of the unwinding of the derivatives hurricane long forecast by Jim Sinclair (jsmineset.com) and myself….”
IMHO this is correct. I can think of only one way to stop this. The way is for every Hedge Fund to open its trading records for inspection so that rational prices can be placed on all the derivatives. Perhaps the Funds can meet in secret and cross trade the derivatives to eliminate each participants risk. This is not likely.
Yep, sounds right to me.
I have a Countryside mortgage. What happens to my mortgage if Countryside goes under? Anyone know?
“What happens to my mortgage”
It might get sold off to pay creditors, although conceivably the “new, risen from the ashes” Countrywide could still hold it.
IF this were to happen (and this is a big IF, no need to panic yet), you would probably want to make sure that your monthly checks get credited to your account in a timely fashion. IF CW were to go BK, there may be disruptions in the loan servicing (layoffs, etc.), making it more likely that they wouldn’t get around to crediting your account in a timely manner, possibly making some payments seem ‘late’ during the transition period. (Notice I didn’t say “likely”, I just said “more likely”).
If the loan gets sold off (which happens a lot even with solvent companies), just make sure that things transfer smoothly and quickly…you don’t want to be writing checks to Countrywide, while the new loan owners sit there waiting for checks and dinging your credit.
Again, this is all academic, because we aren’t at that point yet.
“IF this were to happen (and this is a big IF, no need to panic yet), you would probably want to make sure that your monthly checks get credited to your account in a timely fashion. IF CW were to go BK, there may be disruptions in the loan servicing (layoffs, etc.), making it more likely that they wouldn’t get around to crediting your account in a timely manner, possibly making some payments seem ‘late’ during the transition period. (Notice I didn’t say “likely”, I just said “more likely”).”
I’d say it’s pretty damn likely they’ll eff it up. My daughter’s mortgage was sold 3 times in the first 6 months she owned her home. None of them properly credited her account and Countrywide was by far the worst. Countrywide is the reason she got a landline.
They usually sell it to another servicing agent / co.
What if no one cares to buy?
Probably a trustee in bankruptcy would handle the sale, at pennies on the dollar.
You’d still have to pay your mortgage, if that’s what your getting at.
I’ll bet Countrywide already sold it, and is just the servicer. In theory, if Countrywide defaults (under the service contract), the ‘owners’ can get another servicer. However, if the securitiser vaporizes too, who knows…
Completely appropos of nothing, I have two words for the real estate listings on craigslist, both sale and rental: PUH. THETIC.
Aug. 15 (Bloomberg) — William Poole, president of the Federal Reserve Bank of St. Louis, said there’s no sign that the subprime-mortgage rout is harming the broader U.S. economy, [i]and an interest-rate cut isn’t yet needed[/i].
http://www.bloomberg.com/apps/news?pid=20601087&sid=a262SkG0p8A0&refer=home
Music to my ears… S&P futures down 5 after the close
Hi guys.
does anyone know what the average forclosure rate on homes was under the Clinton Administration?
Thanks ahead of time.
What the–? Leave it to a politician to think that not only should they “do something,” but that they actually CAN do something.
I have an idea for you, Tom: Let the market solve the problem.
If they served brats and beer, I would go! A free continental breakfast does not excite me. I’ll pass.
Hoz,
Don’t know if you’ll see this (it’s late), but are you willing/able to work as a financial advisor — either officially or unofficially?
From what I read, you seem to be (semi?) retired, but thought it was worth asking. You are obviously very well informed about all things financial.
If not, do you know anyone you’d recommend?
Lawrence Yun and the NAR getting slammed.
http://tinyurl.com/2zcego
“‘Yes, all of us as Realtors want to see the highest possible value for the properties, but there are circumstances beyond our control that are driving the market into a direction that we don’t like to see,’ Adams said.”
It is now out in the open. RE Agents care nothing about the buyer; All they care about is their commission. The higher the price, the higher their commission. SO screw they buyer, they say.
So what’s the big surprise. Anyone who cannot figure out that commissioned salespeople always represent the interests of the seller over the buyer, shouldn’t buy anything more expensive than a refrigerator.
Countrywide has over $300,000 worth of REOs in FL currently. That doesn’t include short sales or anything that is currently in foreclosure or late. This is just where the bank has the keys and is trying to sell the house for what they think it’s worth.
I think that you’re missing a few zeroes there. Maybe three more?
oops yes.. $300 million.
trying to sell the house for what they think it’s worth.
hey countrywide.. wise up already.. sell for what buyers think it’s worth.
Not a pretty picture overseas:
KLSE Composite 1,251.82 5:02AM ET -36.52 (-2.83%)
Nikkei 225 16,061.63 9:42PM ET -413.98 (-2.51%)
NZSE 50 3,949.285 9:41PM ET -55.173 (-1.38%)
Straits Times 3,132.52 10:02PM ET -140.73 (-4.30%)
Seoul Composite 1,689.21 10:02PM ET -128.68 (-7.08%)
Taiwan 8,262.61 10:02PM ET -330.43 (-3.85%)
A great book that is quite timely now, as it describes the Panic of 1907 in quite good detail and is similar in some fashion (human nature doesn’t change much) to what’s occurring @ present…
http://www.amazon.com/Reminiscences-Stock-Operator-Investment-Classics/dp/0471770884
Asian markets down big-time.
Tomorrow is going to be bad. You know it is when CNBC tells you that the NEXT SIX MONTHS are going to be bad.
I couldn’t believe my ears tonight. Of course there was one guy (the fast money guy) who predicted a rebound tomorrow.
New York Times
Aug 16, 2007
More Jitters Over Credit; Markets Fall
…”On the call, analysts and shareholders cheered him on, congratulating him for “getting out ahead of the crisis,” as one analyst said, and one shareholder vowed to buy more stock. In a weary voice, Mr. Fanlo noted that executives from Kohlberg Kravis Roberts, including Henry Kravis and George Roberts, had been working closely with him to get through the “unprecedented” conditions the company faced.
He said he had been through numerous financial crises “and this is the most disturbing liquidity crisis, with real impact throughout the economy if it does not rectify.” …
…One analyst suggested that the market would not recover until more funds and banks detailed their exposures to mortgage securities and other debt acquired during the recent credit boom.
“The more funds that come to confession the better it is,” said Douglas M. Peta, chief market strategist at J. W. Seligman & Company. “Once all this stuff is out, all the analysts and the people with the sharp pencils can figure out how bad it is and they can put prices to it.”…
http://tinyurl.com/ypgoos
Another reason why you don’t want a McManson these days
http://www.urbandictionary.com/define.php?term=phrogging
To sneak into a house and live among its occupants without their knowledge. People who attempt this are referred to as phrogs. Phrogs try to respect the house’s inhabitants as if they were roommates, by not breaking or taking-although mooching food is sometimes necessary for survival. Phrogs rarely stay in a single house for more than a few days as the fear of getting caught settles in. Then it’s usually time to move on and the phrog will hop to a new pad. Phrogging can be attempted solo or in groups.
Anna hated working for a living, but needed money to survive. For years she worked her ass off so that she could watch her hard-earned money disappear as she payed her ridiculously high rent and bills. Then she heard about phrogging and decided to sneak into some of the oversized houses or McMansions in the suburbs. Now she enjoys her afternoons sipping tea and reading while the homeowners are out at work all day.
My wife is a banker for US Bank, which has been far more conservative than the likes of BofA, Wells Fargo, WaMu, in the issuance of loans. Anyway, a fax came across her desk today stating that no 100% HELOCs will be done effective immediately–regardless of credit score, documented assets or income. This thing is unfolding FAST!
Holy Crap Batman.
Nikkei down over 400 points!
http://finance.yahoo.com/q?s=%5EN225
Brazil stock market down over 1600 points.
http://finance.yahoo.com/q?s=%5EBVSP
Argentina Stocks slide over 5%
http://finance.yahoo.com/q?s=%5EMERV
Brazil is still up over 15,000 for the year.
52wk Range: 34,127.00 - 58,293.00
Argentina is still a basket case but
Index Value: 1,924.73
52 week range: 1,580.860 - 2,303.430
both up over 20% even with the drop.
Taiwan down over 3%.
http://finance.yahoo.com/q?s=%5ETWII
ALL ORDINARIES IDX (Aust): - 221.10 (-3.81%)
Down 5% now
Chit……….this is starting to get serious.
Um, I’m starting to miss those nice old bubble days, can we have them back now?
Could this finally be it? A Yen jailbreak with the BOJ powerless to stop it?
Yen surges as carry trade unwinds
By Ambrose Evans-Pritchard
Last Updated: 12:18am BST 16/08/2007
“A dramatic surge in the Japanese yen over recent days has cut off a key source of liquidity for the global asset boom, setting off a panic flight from emerging markets for the first time since the latest turmoil began.”
“apanese investors and foreign funds borrowing in yen at near zero interest rates have accumulated roughly $1,200bn (£603bn) of unhedged positions outside the country, according to BNP Paribas, much of it in high-yielding markets in East Asia or places as far away Iceland, New Zealand and Brazil. The yen flows have been a key prop for world asset markets over the last two years”
“The wild card is the behaviour of hedge funds and speculators who have borrowed an estimated $200bn in yen - often with high leverage through derivative contracts - in order to play the carry trade. All this money has to be repaid in rising yen, perhaps in a brutal “short squeeze”.
“The banks have stopped lending to hedge funds so they are having to raise money where they can, and that means selling their most liquid assets into a falling market,” Mr Redeker said.”
It’s Black Thursday!!!
It sure was in Asia, it has been quite a while since I’ve seen red screens across the board.
Most of the Asian indexes were down 2-4% yesterday. Now today they are down 2 -7%. Ouch.
So far we are about 9% down from the high in mid July (S&P 500). What S&P level did TXChick call for a support level? Take notes, boys and girls, you can’t pay for an education like this.
I need support on this.. I am going to the san diego auction.. first I will start the wave.. then we need some chants..
1. hell no way to much hello no way to much
2. reo…, reo… reo… reo… reo…
3. take it back… take it back.. take it back…
4. lower the price.. lower the price.. lower the price…
5. Pos… pos… pos… pos… pos… pos
I want to turn it upside down.. let them eat cake my ass.. it’s our turn.. anybody who is interested bring signs.. hell no we won’t by..
6. na na na na hey hey subprime.. nananna nanan hey hey subprime..
realtor, mortgage broker and renter since o4.. anybody
I wish I lived in San Diego. Oh, how I wish I lived in SD. Report back. If it goes well, I will mirror your plan in Sacramento!!!
The immature side of me thinks that would be a blast. A bit “schadenfreude-ish”, but fun!
Most importantly auctions are based on hype. They will use it against us. But it does work both ways. I would consider it a win if they go home with nothing sold and we have zero people arrested. Ok 1 or 2 arrested but not me. If you want to send a message the media will have to jump on this.
The American Dream has become the California Nightmare…
I’m calling Schwab tomorrow and rolling my IRA into fixed interest savings for the foreseable future. The red light turns green…..JUMP!
Holy crap! At 10:35 PST, Dow futures are down 200??
I’ve never seen that. Has it ever been that negative?
Boy that is scary sleepless-near-seattle . I did not think it would unravel this fast with the stock market .There seems to be alot of panic .
Yes. I believe when the London subway was bombed (a year or two ago), the futures were down over 200 pts, IIRC. By the time everyone woke up, they were back to positive territory.
Only on very rare occasions do we see negative futures in the triple-digit range (I watch them very late at night/early morning, to get an idea of what’s to come).
I think the bears are getting ready to reach for the barf bags. These are some crazy times!
As many years as I’ve been waiting for this to happen, it’s actually rather frightening to see it come to pass.
Seriously interesting times…
testing, sorry
A therapist running out the street naked to find a home buyer, a guy in West L.A. who WANTS to buy a million dollar condo, “no analyst anticipated this,” from two months’ supply to two years’ supply since July, 2005, a guy says this isn’t as much fun as it used to be-this blog is like porno.