The Wheels Appear To Be Coming Off The Market
The Rocky Mountain News reports from Colorado. “Sales of new homes in the Denver area were down more than one-third in the first half of the year from the first six months of 2006, as the market heads for a 13-year low in sales activity. The report by the Genesis Group shows there were 5,842 new-home sales in the metro area in the first six months, compared with 8,758 sales during the same period in 2006.”
“This is the largest percentage drop in sales since the 1980s, when Denver suffered a housing depression following the collapse of energy prices, said Mike Rinner of the Genesis Group.”
“‘This is not good news,’ said Tom Clark, head of the Metro Denver Economic Development Corp. ‘The home-building industry, in particular, is a bellwether for where the economy is going.’”
“Today’s woes can be traced to 2000 and 2001, when the Denver area lost tens of thousands of high-paying tech jobs, but builders kept constructing homes, Rinner said. Builders were able to sell homes because of the lowest interest rates in a generation, he said.”
“The so-called subprime market drove the first wave of the collapsing mortgage industry. ‘Denver really should have taken this hit to housing in 2001,’ said Jeffrey Willis of Berkeley Homes.”
“Economist Tucker Hart Adams said the slide in new-home sales likely will accelerate, especially with the continuing mortgage crisis. ‘Certainly, at least for the short term, it is going to be more difficult for anybody to get a loan,’ she said.”
The Denver Post from Colorado. “‘There have been significant layoffs among homebuilders,’ said Jeffrey Willis, with Berkeley Homes in Aurora. ‘They have scaled way back with their projects.’”
“Despite that ratcheting down, the inventory of unsold new homes was 3,632, up 3.8 percent from last year. Nearly one of every five new- home sales is getting canceled as buyers back out of contracts. Visits to new developments were at their lowest level since 1994.”
“The Denver metro area recorded 13,412 foreclosures in the first six months of 2007, up 40 percent from 9,574 in the first half of 2006. Foreclosures rose 62 percent in Denver, 50 percent in Adams and 41 percent in Douglas counties in the first half compared with the same period a year ago.”
“At the current pace, about 3.6 percent of all owner-occupied homes in the metro area will end up in foreclosure this year, not far from the record 3.8 percent of homes that entered foreclosure in 1988.”
“With inventories of unsold new and existing homes stabilizing, Rinner initially had hoped that the Denver housing market might be near a bottom. ‘We might have been at the bottom except for the credit crisis,’ he said. ‘This is not a good time to be without financing.’”
From KOAA.com in Colorado. “The recent troubles in the mortgage industry could hurt some homeowners in Southern Colorado. The Colorado Springs housing market is currently considered a buyer’s market, meaning over-extended borrowers will have a harder time selling their homes. Adding to their troubles, lending companies have increased loan requirements making refinancing more difficult.”
“‘If you can’t afford your mortgage payment and you can’t refinance out of it, with the housing market what it is, you’re not going to have the ability to sell very quickly,’ says mortgage broker Rebecca Hinds.”
The Coloradoan. “Faced with a mountain of delinquent loans, Norlarco Credit Union - the eighth-largest credit union in Colorado - has been taken over by federal regulators while it sorts out its financial woes.”
“‘We had construction loans on the books from around the country,’ including Florida, said John Olienyk, chairman of the Norlarco board of directors from 1991 until the NCUA took over in May. When construction tanked in Florida, Norlarco felt the hit.”
“Olienyk also blamed the problem on the overall housing slump, including subprime mortgage loans, rising interest rates, decreasing demand and record-level foreclosures. ‘All of those things combined to depress housing prices, so we got the slump in real estate that we are witnessing.’”
The East Valley Tribune from Arizona. “Scottsdale-based 1st National Bank Holding Co. laid off 351 mortgage-related employees Tuesday and announced an additional 190 positions will be eliminated through attrition.”
“In the national wholesale mortgage business, 1st National salespeople bought loans originated by other brokers and sold them to Wall Street, said Greg Smith, chief operations officer.”
“‘We discontinued the wholesale operation because the market where we would sell these loans had dried up,’ he said. ‘The investors had gone away. The prices that the loans were sold for was no longer a viable business. We just felt at this juncture that the market was not likely to come back anytime soon.’”
“Some 5,873 Arizona foreclosure filings were reported last month. That’s a 189 percent spike from July 2006, according to RealtyTrac.”
“Anthem will reach 9,100 homes at buildout with more than 20,000 residents, according to the developer, Pulte Homes. Last August, Pulte officials said they expected to reach that buildout by 2016 but earlier, in May of this same year, they had forecast buildout by 2012.”
“The timeline has been moved back slowly and now Brandon Jones, director of operations for Pulte Homes, said ‘buildout depends on the market.’”
“Local real estate experts said more distant communities such as Florence and Maricopa are feeling the brunt of the slow housing market because of resale market competition.”
“On Sandi Campbell’s street there are only a couple of occupied homes and several are being built that haven’t yet been purchased. She said she’s noticed fewer people moving in and buying homes ‘but that goes with anyplace that is selling homes right now,’ she said.”
In Business Las Vegas reports from Nevada. “The wheels appear to be coming off the Las Vegas land market for now. The number of acres sold during the second quarter, excluding the Strip, was down 61 percent from the second quarter of 2006 and was down 49 percent from the first quarter of this year, Applied Analysis reported.”
“With that softened demand in the second quarter, the price per acre paid was $718,500, 11 percent lower than the second quarter of 2006. That’s 9.5 percent below the first quarter price of $793,700 per acre, the firm reported.”
“What’s happening in the marketplace today is continued softening demand and prices falling even further, said Craig Cherney, director of a private equity land acquisition group that buys raw land and entitles it.”
“Cherney, who until recently was in charge of land acquisitions for Pulte Del Webb in Las Vegas, said the sticker price today is $700,000 per acre and property owners are lucky if they get $650,000.”
“The reason: major public builders have stopped buying land given the housing slowdown and the large balance of lots they have, Cherney said. That’s bad news for land owners, especially for those who bought in late 2005 or 2006 and are carrying debt, Cherney said. Land loans generally don’t exceed three years, and the buyers were speculating on appreciation.”
“That hasn’t happened and many of those land owners are finding themselves in similar situations as homeowners as evidence by the high rate of foreclosures, Cherney said.”
“‘They are either going to have to cut their prices or give them back to the bank just like homeowners,’ Cherney said.”
“Many loans will expire by the end of 2007 and into 2008 and 2009. If the banks take them over, they will be aggressive in their pricing, Cherney said. With that in mind, he said he expects the price per acre to fall to the high $500,000s by the fourth quarter of 2008.”
The Review Journal from Nevada. “More than 60 bank-owned and privately owned homes valued from $200,000 to $1.5 million will be auctioned Saturday.”
“Home auctions are becoming more common in Nevada as the number of foreclosure filings increases to a rate three times the national average. The state had 5,116 filings in June, about one out of every 200 households, RealtyTrac reported.”
“A recent auction held by Dallas-based Hudson & Marshall in which some 90 foreclosed homes were auctioned drew criticism from local real estate agents.”
“Eric Young of Liberty Realty said he tracked the auctioned properties through the MLS and only one property showed a change in status from ‘available’ to ‘pending’ in the first week after the Aug. 5 auction.”
“The MLS status for 16 of the 83 homes sold at the auction suggests that the high bidder at the auction may have met the reserve requirement of the banks, Young said.”
“Andrew Pugh of SellFastLV.com said the Marshall & Hudson auction may be more ‘hollow’ than he thought. ‘It looks like the banks are asking for higher bids from anybody on 16 of the properties that were supposedly auctioned off,’ he said. ‘I wonder if the winning bidders backed out or the banks are just fishing for more money?’”
Did anyone see the mozillo interview this morning? That dude is scary looking. How about all the bloggers pitch in for some more tanning lotion cause he sure needs more.He is right about a recession though.
Well I just applied for an Intern position at minyanville
I am so desperate for work. I can’t afford to work for free, maybe they might have something for me at $10 hr?
Not to be rude, but can’t you flip burgers or wait tables or something until you find something else? Or work retail, or at a book store? There’s got to be something out there to tide you over.
I wish i knew how to dumb myself down, maybe i should stop reading this blog and buy a house.
then i know someone would hire me. Yes its that bad in America.
Yeah, just buy a house and then have the politicians bail you out…. Seems to be the ‘new’ way of thinking and the politicians are all to eager to ‘help’.
Got a new post up all about it!
SoCalMtgGuy
http://www.housingbubblecasualty.com
if youa re good in sales you can apply at T-Mobile. The mangers there are making 70k a year. Not bad for a start
THIS IS A DISGRACE & DISGUSTING TO EVEN READ!!!!
Who do the tax payers bail out next??? All the losers on the stock market bubble???? Is this a free market economy or what???
50% of all resale homes in Vegas are UNOCCUPIED!!!! Same in Phoenix, in Florida and in California!!! What “homeowners” is Mr. Gross talking about??? The speculators, the liars, the fraudsters, the criminals??? They belong in jail not in a bailout. The reason why this mess exists is because home prices are SKY HIGH AND UNAFFORDABLE on current salaries, and are there because of these liar, criminal flippers and speculators!!!! Foreclosures are the means to drive prices down so that the free market can do what it does best. And that is to make homes a value proposition again so people can afford them and to go and buy them. Sheesh….
Pimco’s Gross Urges Bush to Bail Out U.S. Homeowners (Update3)
http://www.bloomberg.com/apps/news?pid=20601087&sid=amVRExsd80cA&refer=home
I’ll set myself up for some flames — I didn’t think the interview was that bad. I thought Tangelo’s remarks were logical enough and also that it makes sense for BofA to get in bed with them. Of all the non-real-bank mortgage lenders out there, I’d think Countrywide the best candidate for survival, notwithstanding our past regular harpooning of its George Hamilton-ish leader’s cheerleading a market that was on life support. Not sure I would buy Countrywide stock, but neither would I dismiss the thought, out of hand.
His interview :
“The whole housing thing is a pile of crap that’s going to bury the economy in a recession! My company? Why, we smell like roses!”
He was half right, at least.
I honestly don’t think ANY “mortgage only” bank is going to survive. CFC MAY wind up becoming BoA Mortgage, but that’s about the best they can hope for.
“CFC MAY wind up becoming BoA Mortgage…”
Agreed — that’s what I think. The Revenge of the Banks. Heard awhile back that the banks also had set their sights on taking over the real estate sales business. Can’t be a real bankster if you ain’t a bank.
banks have been trying forever to get laws passed to get into the RE game.
Personally, I’d like to see it happen. I can envison the banks paying someone $10/hr to list/show homes and then have someone else take care of the closing work. It could be a much better model.
“Personally, I’d like to see it happen.”
That would be horrible, horrible, horrible. The banks already get all of our money, now you want to give them all the real estate?
Actually I agree with Chip and Penn. Better the age-old regulated-devil we know, than the new-age financial-alchemy devils we don’t.
Yeah but, if the banks get to get in then why not Wal Mart and Target ?? Banks already lobbied against Wal Mart getting into financials because they know they would lose a ton of business….
That’s a good point scdave. I forgot about that. If Walmart got into it, then it will probably even be better. Everyone thought it was crazy when Circuit City got into the used-car business by opening CarMax 12+ years ago. The model seems to be catching on.
Who needs a time machine when you can watch dinosaurs mating in the 21st century?
Don’t you think that was what BofA had in mind? They outplayed Buffett. BofA has access to lots of funds, and Countrywide will have the ability to make loans off those funds. By having Countrywide inhouse, there is more security in the quality of the loans.
I watched a stream of the interview. I agree with much of what Mozillo had to say, except that he didn’t mention the real elephant in the room, namely affordability.
“‘This is not good news,’ said Tom Clark, head of the Metro Denver Economic Development Corp. ‘The home-building industry, in particular, is a bellwether for where the economy is going.’”
- How odd, all the ‘experts’ declared that the employment picture was diversified and strong. How could housing ’suddenly’ become so important in the economic picture?
Bill gross has lost his mind. He must be scarred sh@tless about loseing money from all this mess.Maybe him and godzillo are talking behind closed doors?
Agreed, but you mis-spelled shitless…
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.
— Thomas Jefferson
But nobody could have seen this coming!
“T-h-o-m-a-s, my main man… Yeaaah”
Talk about foresight.
…until their children wake-up homeless on the continent their fathers conquered.
GULP!!!
Wow…never knew he said this, nor that he felt so strongly about it.
I have a new nickname for Thomas… Nostradamus.
Too bad so few people in this country know this quote.
Good quote but look at the source. TJ might have been quite the writer, but he was a deadbeat. He died broke from living high on the hog. Exspenisve wines from France, books from London, ect…He was a lot like today’s credit card junkies. No wonder he took a dim view of the banks. After his death his home was sold at a bankruptcy auction.
“He died broke from living high on the hog.”
Nick: “He went out with a bang, not a wimper”.
‘The Big Chill’
Maybe he’d have done better as a prophet?
I like this. More bad news about Colorado. Wow, foreclosures are now actually outpacing, by far, sales.
Yeah, and in 2005 I took a lot of flak for suggesting there was a bubble in Colorado.
‘The report by the Genesis Group shows there were 5,842 new-home sales in the metro area in the first six months, compared with 8,758 sales during the same period in 2006.’
‘The Denver metro area recorded 13,412 foreclosures in the first six months of 2007, up 40 percent from 9,574 in the first half of 2006.’
After reading Ben’s Colorado analyses in 2005, I tried to hint to a b-i-l, who owned a condo there and was transferring away, that it might be a great idea to dump it for whatever he could get. Nope. He still owns it, and the market value continues to decline. I tried, but not so much as to p*ss him off.
I had a freind that was renting a nice loft condo in Denver in ‘05-’06 for $1300/m and he was pretty sure the woman who owned it had a $2200/m mortgage not including the HOA’s.
I thought that this quote…
“The so-called subprime market drove the first wave of the collapsing mortgage industry. ‘Denver really should have taken this hit to housing in 2001,’ said Jeffrey Willis of Berkeley Homes.”
…may be the first thing I’ve seen published in the MSM that at least implies that the areas of the country that didn’t see much price inflation in the last few years were still a part of the bubble. Lots of places should have fallen a lot years ago but were propped up by bubble financing, maybe now they’re starting to see it.
Yeah, they built a lot of cheap houses in metro Denver, especially around Aurora. At least the builders our here have seen the light and have pretty much stopped building (not sure about the big Cali style developments in Aurora). I don’t think that there has been a single housing start in Loveland for months. I have also seen a few frames here and there that are clearly not being worked on.
this idiots = these idiots. Jeez, don’t even have the energy to proofread.
I have to admit that I was jealous of the hyper appreciation that othe rareas were getting, mostly because I would have sold our current place and rented. In the end I should be glad, because had it been so we would now have entire neighborhoods of empty houses a la Las Vegas.
Also sad is how so much commercial construction went ahead based on the the false prosperity created by the residential building boom. In the past two years they built so many chain restaurants in our town that there is never a wait, not even on Saturdays. I guess the now underemployed building subs and their employees are now chowing down on beenie-weenies at home. I have also noticed that the local cars dealers are overflowing with new big, supersized crew cab pickup trucks. I’ll bet there are plenty of repo’s to chose from as well.
“Yeah, and in 2005 I took a lot of flak for suggesting there was a bubble in Colorado.”
I know most have already moved on to newer threads, but, I have to throw this in. I know 2 (TWO!!) women, unbeknownst to one another, that think Denver and C Springs RE are still doing great! The C Springs argument has something to do with more military stuff coming in. Still, as most of you, I just can’t argue with this idiots any more. I just don’t have the energy. If they can’t see it now, they never, ever, will.
“I like this. More bad news about Colorado. Wow, foreclosures are now actually outpacing, by far, sales. “
Yup, sales are dropping to zero. Now that all those nice kids working at Best Buy can no longer get NINJA liar loans there is no one to sell to. Lenders should be glad that prices here didn’t double or triple like in other places. They’ll only lose 50K or so on those 200K houses (much better than losing 300K on a 600K house in Cali).
“Wow, foreclosures are now actually outpacing, by far, sales.”
The data provided are for new home sales, not all sales. If you include all sales, FCs may or may not exceed sales, but if so probably only marginally.
Beat me to the punch Home A Loan. My guess is all sales to the time frame of the article still signficantly outpace foreclosures. However, that won’t last long with the death of the Alt A and tight lending standards coupled with 10 % down payments.
Oops, yep, you’re right. I usually catch that stuff. Anyway, it is still promising for those looking to wait for a few years.
“This is the largest percentage drop in sales since the 1980s, when Denver suffered a housing depression following the collapse of energy prices…”
“This is not good news”, said Tom Clark.
[Colonel's lady friend lying unconscious on ground, bleeding from nose]
Young Stud: “I, I think she did too much coke.”
Colonel James: “Oh, you think so, doctor?”
Boogie Nights
–
The market wasn’t on the wheels in the first place; it was on a hot air balloon.
Jas
I thought it was a Souffle..
Looks like a CDOmelette…
Denver, in this instance~
Hash brown or home fries?
The hot air inside the balloon is cooling rapidly, and it is unfortunately located 5000 feet off the ground…
–
Above the Death Valley.
Jas
Some of the more savy posters may already know this, but I did not, and apparently J6P doesn’t either…sigh.
This was taken from the Federal Reserve page, which lead to a hud.pdf on one of the points of how to avoid foreclosure.
When your lender files a Partial Claim, the U.S.
Department of Housing and Urban Development will pay
your lender the amount necessary to bring your
mortgage current. You must execute a Promissory Note, and
a Lien will be placed on your property until the Promissory
Note is paid in full.
The Promissory Note is interest-free and is due when you
pay off the first mortgage or when you sell the property.
Humble pardons…this should precede:
Partial Claim. Your lender may be able to work with you
to obtain a one-time payment from the FHA-Insurance
fund to bring your mortgage current.
You may qualify if:
1. your loan is at least 4 months delinquent but no more
than 12 months delinquent;
2. you are able to begin making full mortgage payments.
With respect, doesn’t #2 effectively kill it for most people, these days? Seems like not a lot of people would incur the claim if they were able to make the full mortgage payment — nor would they be in a mood to, with values dropping. I suspect that this language was appropriate, if ever, for the times when houses appreciated at 3% per year and no major falloffs were anticipated.
“…nor would they be in a mood to carry on with full mortgage payments, with values dropping.”
This sounds like FHA. In which case, you have to have your mortgage FHA insured when you get it (actually, LENDERS apply for the FHA insurance). Only about 4 million households are presently FHA insured. I doubt that HUD/FHA will put any money toward a mortgage that is not FHA insured. (or VA…)
1. your loan is at least 4 months delinquent but no more
than 12 months delinquent;
2. you are able to begin making full mortgage payments.
All two borrowers that meet these conditions please stand up and identify yourselves.
I think there are a lot of number ones around, but why are they in arrears if they could pay? I do not believe there are more than one or two number 2’s.
I could see this happening to someone who was unemployed for an extended period, but has now found a decent job. But you are right that this is not the profile of 99% of FB’s.
I have to believe that it isn’t this simple. I have a feeling that the key word is “partial”. If I am not mistaken, when you go into default on a mtge, the mtge becomes due “in full”.
Can anyone confirm or add to that?
Thanks.
humble pardon…this should precede:
Partial Claim. Your lender may be able to work with you
to obtain a one-time payment from the FHA-Insurance
fund to bring your mortgage current.
You may qualify if:
1. your loan is at least 4 months delinquent but no more
than 12 months delinquent;
2. you are able to begin making full mortgage payments.
2. you are able to begin making full mortgage payments.
Well, that’s that! The problem is that the FBs can’t make the full payments. Let’s say that they can for a month or two, what happens when they fall behind again?
The way I see it, unless a HUGE amount of the principal is forgiven or the rate is dropped below 5%, then the FBs are still F’d. Also, how many were using proceeds from the refi to pay the monthly nut?
I still think a mass bailout is NOT in the cards. To be sure, some FBs will get bailed out, but I think there are too many for them all to be saved. I just can’t envision a program that would work. It seems that all approaches have the same undesired result, which is tightening of credit.
OT, don’t know if this posted already:
CashCall makes its own call for cash
“With Gary Coleman as its TV pitchman, CashCall promises money in a hurry to people who are low on cash.
“But now the Fountain Valley lender is in the same bind as its customers.
“The company stopped making loans this week and was scrambling to negotiate an infusion of capital so it can resume business, said Daniel Baren, the company’s general counsel. CashCall also laid off about 80 of its 1,200 employees, he said.”
“..His company makes emergency loans from $2,600 to $10,000 with a one-day turnaround.
But the interest rates range from 21% to 96%, Baren said. The high rates reflect the risk of the loans…”
I might be able to lend ‘em a few bucks.. However, I don’t think 96% interest will be high enough to interest me.
This comany is simply a bunch of loan sharks looking for greater fools.Poor gary coleman must be really hurting to step this low. Did willis rip him off?
Cash Call was Casey’s “lender” of choice. Bet they’re hot on his tail right now!
I wonder how much tool boy got for his blog? His rich dad is probably spanking him for being a sellout.
Supposedly ~30K
96% interest?! Son of a…
I thought we had usury laws to protect against loan sharking. Oh right, republicans harpooned that years ago.
oh please.. republicans? What law are you referring to? And tell me it happened during a GOP dominated congress.. Congress, btw, makes the laws, not some Pres.
Usury laws are State laws and differ state by state.. except for a few that regulate national bank limits.
Take Oregon for instance (hardly conservative) where “payday” loan rates as high as 2,551% interest has been recorded.
http://www.pliwatch.org/news_article_061121A.html
CashCall was founded in 2003 by John Paul Reddam, who also founded (and later sold) Costa Mesa mortgage lender DiTech Funding Corp. Reddam has said in past interviews that he had gotten the idea for CashCall at DiTech, where the company would make second mortgages not backed by the home’s equity.
LOL. We all know how well THAT worked out.
A guy with a mask decided that the paper work was too difficult so he bypassed the bs and made a direct withdrawal, over the counter, at a local CashCall office in SLO county yesterday. Shoved the cash into a paper sack that he claimed had a weapon in it and walked out. He didn’t even have to stand in line to get his money. Now that’s ingenuity.
Willis: “Cashcall might be going out of business.”
Arnold: “What you talkin’ bout Willis !”
I am glad to see more bad Denver news, too often when my wife and I go into the builders to check on how prices are going they all pretend that there is no issue here. My thought is that they are hoping for a fool who does not know better and will buy in at list prices. In fact one builder in southern Denver told us that they were selling like hotcakes and that is why they raised prices. Now these were very cheap units in the 150-190 range when we first looked at them and now they are asking 190-235. The sales hag piped in with see instant equity what a great deal to which my lovly wife explained to her how these houses were not worth that due to their poor designs and quallity.
For low 100 range maybe for working stiffs but not when you can go down the road and get 2-3 times the house for another 10% the cost or better yet wait a bit and get the better house for the same price.
“Home auctions are becoming more common in Nevada as the number of foreclosure filings increases to a rate three times the national average. The state had 5,116 filings in June, about one out of every 200 households, RealtyTrac reported.”
“A recent auction held by Dallas-based Hudson & Marshall in which some 90 foreclosed homes were auctioned drew criticism from local real estate agents.”
I went to the link Ben provided for this article and it did specify “what” critisisms the real estate agents leveled at the auction.
I need aspirin! More aspirin! LOL.
“I constantly read and hear of the tremendous migration to Las Vegas and surrounding areas of 7,000 persons, each month. Yet, the housing market is in a “free fall.” Can you explain just where the 7,000 persons moving there are housed? also, why isn’t the figure ever printed of the people moving out?”
From the Review Journal comments.
Las Vegas is a very transient type place. Just as many people move in as move out, they don’t ever mention that part. Vegas is great when you are single, but not so much when you have kids, especially girl kids.
From another post:
““If U.S. home prices fall by 10 percent, it would be the worst asset deflation in the U.S. since the Great Depression, according to Gross.””
So I searched for data on what the house deflation during GD was for comparison, never found it so far. What I did find was this:
http://econ161.berkeley.edu/TCEH/Slouch_Crash14.html
Some fascinating (to me) analysis of some of the policy decisions made during the great depression. What I particularly noticed was that Japan and Germany recovered much more quickly from the depression than most of the other major powers (and we know what they used their advantage for later on). The link/book attributes this to their decision to abandon the gold standard and therefore keep their population usefully employed. I’m wondering whether there might be more to it…for example are there any historians here who might know what the individual, corporate, and national debt levels were for those countries compared to everyone else during that time? I haven’t been able to find that so far, and I’m wondering whether debt issues similar to today might have contributed to why it was so difficult for us to get everyone employed prior to WWII and not so difficult for them? The book doesn’t do much to convince me that it was simply our gold-standard-inspired gov’t policies that caused the problem.
Gross and his PIMCO group want to get bailed out. They have bought a bunch of subprime paper and are gagging on it. Mr. Gross is mistaken re:declines over 10%. In SLO county, between 1990-96 the price decline was 34.9%. We have a long way to go.
You mean he might not be a billionaire anymore? Oh the tragedy!
The problem was we haven’t had a real gold standard since the creation of the FED. If they can “create gold” by fractional reserve lending then they are causing inflation and therefore the great depression.
If banks only served to manage the details of finding and qualifying lenders to borrow my savings at a reasonable rate then we would have SLOW, but steady, growth with increasing purchasing power of the your salary (even without a pay raise).
All debt-based currency is bound to fail. You can’t inflate your way out of this mess by issuing more debt. Perhaps by simply printing bills and spending them into circulation.
Gross is grossly misinformed. Home prices hardly changed during the depression. If you eyeball the NYT chart that has the Shiller data, it looks like real housing values ROSE from 70 to 80 during the depression - so it GAINED about 14% real vs. overall deflation in the market of ~18% during the depression. So the nominal change in home prices was apparenly something like -4%.
The big crash in home prices was in the late teens/early twenties when they dropped from 95 to 65 in real terms - about 30%!!!
Slightly OT, but Jumbo rates appear to be still climbing:
http://tinyurl.com/2mus6u
(graph of 30 year fixed conforming vs. jumbo).
Nationally, a 100 basis point difference in the national averages between 30 year fixed conforming and jumbo. If you want to get a jumbo loan (*cough* California *cough*), on average it will cost you an extra percent on the interest rate…and the spread looks like it could widen even further…
“…on average it will cost you an extra percent on the interest rate…”
… or an extra $5000 in interest each year on a 100%-financed loan to buy a $500,000 starter home.
Deals are falling out of bed at a rapid rate around here because of the spike in Jumbo’s…….
Just caught Gross in interview on Fox News Cavuto, anyway a fox reporter said she just bought a bunch of shoes on her credit card and was wondering if Gross would help pay her credit card bill. The other talking head was some wall street trader who said the bailout idea was immoral then Fox played clip of Bush saying “bailout ain’t going to happen”. Bottom line Gross at the end of the segment looked like he was going to vomit.
Ata boy Fox. Go get’em boy! Sick’em!
This would be the first time in my life I find myself on the side of Fox News.
Now I need to take a shower.
tee hee! ditto…
De-lousing would be more appropriate.
I like the East Valley Tribune article:
from the blog comments
Todd Stallion
“significant strategy shift”
A complete melt down in the financial system.
The PRIVATELY OWNED Federal Reserve is printing money to prop up the economy which will lead to hyper inflation very soon… Suggest removal of this comment
August 22, 2007
You don’t get it. The people in charge of these companies already made their money. And the Federal Reserve is printing massive amounts of money to keep it from collapsing, that means we are going to see massive inflation this year. That means anyone on a fix income is screwed. Suggest removal of this comment
August 22, 2007
Who do you think the Schmucks are? They are the Banks moron… Who does the Fed give the cash that you think they Magicaly “Free up” the BANKS…
“It is a great move by the fed ease cash flow without taking on the bad loans for itself. ”
You have ZERO idea of what you are talking about… The Federal Reserve doesn’t take bad loans… The Federal Government does… THEY ARE NOT THE SAME
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Even in staid Scottsdale, shopping mecca for many, there is a bitter dispute raging over the Federal Reserve actions.
This is funny - sorry if off track
No other banks go to discount window, Fed says
Fed data show discount window borrowing of $2 billion as of Wednesday
Has the US $ got to the stage that nobody wants it?
““‘We had construction loans on the books from around the country,’ including Florida, said John Olienyk, chairman of the Norlarco board of directors from 1991 until the NCUA took over in May. When construction tanked in Florida, Norlarco felt the hit.”
Huh?, I thought credit unions were only supposed to lend money to members? What the heck is a two bit Colorado Credit Union doing lending money to out of state builders?
Hey “In Colorado” - check out the MLS on Crested Butte! Lots are now down to $140K from $200K 1-year ago! However, they still do not appear to be moving. Also, those hotel rooms to be purchased - there is one listed at $152K - 1 year ago they were $190K and up. Things are getting interesting!
Yes, the softening is happening. Two houses on my street sold (after being on the market for THREE years) for 1999 prices.
1999 was the height of the bubble in CO. So, the buyers are foolish. Perhaps your new neighbors will be selling crack soon to counteract the decline in their home prices. You better get a pitbull.
Both are out of state equity refugees (Cali & Virginia). I wonder if they paid cash? Anyway, they thought that 285K for a 3000 sq ft house was a deal. One of them even splurged on new siding (when a pint job would have been fine).
Interesting thing is, no one else on our street is selling, except for a golf course facing house that is priced at around 470K, and its been on the market for over a year, sitting empty (the owners divorced). I think most of the neighbors have come to accept that now is a really bad time to sell. Of course, its been a bad time to sell since 2001, but now is really bad for our demographic. Sub 200K houses did sell thanks to sub prime loans, but now that party is over as well. The only stuff that is selling is the heavily discounted. The 285K house was originally listed at 375K 3 years ago. The neighbor next door wants 400K for his place (4000 sq ft + 1500 sq ft finished basement). He’s been trying off and on for the past two years and understands that he will need to discount heavily to unload it. Since he is not distressed in any way, he’s staying put.
“1999 was the height of the bubble in CO. So, the buyers are foolish.”
Well, that’s when the neighborhood was built (mostly) so everyone’ in that boat.
“You better get a pitbull.”
I already have a German Shepherd.
Perhaps your new neighbors will be selling crack soon to counteract the decline in their home prices.
Actually, I was wondering that about the sellers. Both were clearly distressed an in over their heads. One was a J6P (you know, he wore his name on his shirt) and his wife ran a day care in their house (clearly a zone violation, but no one complained). Their house needed TLC (fence, paint, landscaping). The new owner took care of all that within weeks. He said something about the house he sold in Virginia costing 3x what he paid here. I didn’t ask if he paid cash, but that was the implication. I also know some other Virginia transplants, and they aren’t too shy to admit that they paid cash for their house in Fort Collins with their Virginia equit.
I already have a German Shepherd.
Everybody should have one (or more)!
Do their jaws lock around small children, too?
Bush on housing, mortgage issues
An excerpt from his news conference:
“The word “bailout,” I’m not exactly sure what you mean. If you mean direct grants to homeowners, the answer would be no, I don’t support that. If you mean making sure that financial institutions like the FHA have got flexibility to help these folks refinance their homes, the answer is yes, I support that.
http://www.boston.com/realestate/news/blogs/renow/2007/08/bush_on_housing.html
Depends on the meaning of ‘flexibility.’
If he means that FHA removes the recently reinvoked lending standards (LTV, down payment, etc.) then NO WAY… that just gets us right back into the mess.
On the other hand, if not, then there’s no way the FHA can do anything.
And, of course there has been absolutely no mention of loans obtained using fraud, by borrowers, realtors, lenders or appraisers.
Jane Wells CNBC reporter stated that the housing slowdown is like having your laundry room gone but the rest of the house is intact, so it may not be so bad?
I’ll give you a different view Miss Wells, you have a small cancer and for two years you don’t do a thing about it, then all of a sudden that samll growth doubles in size but that doesn’t kill you the sread of the tumor does you in. Same with your laundry room scenairo, the longer this problem is ignored the more rooms you lose then you just lose the whole house so it is a crisis Jane that has to be dealt with now?
Are you suggesting that my laundry room could kill me?
Actually, I never doubted it for a minute. That damn laundry room.
Note to self: Invest in Laundromats.
Actually my laundry room lacks the killer instinct, and is a fine room. It’s where I brew beer, and sometimes wash clothes, but mostly brew beer. The ability to brew beer is a valuable one and one I urge everyone on this blog to aquire. If ARMageddon arrives, just think how valuable your knowledge will be as all your neighbors trade you their stuff: boats, canned sardines, their kids, just so they can drown their sorrows for a little while. Even if ARMageddon doesn’t arrive, hey! You can still make beer!
Excellent, Olympiagal!
Alcohol and toilet paper: depression-proof industries…
1) “Beer has food value–but food has no beer value”.
2) “Beer is proof that God loves us and wants us to be happy”. — Ben Franklin
Party on Garth!!
Party on, Wayne!
Hell, yeah. I hate doing laundry. This is great news.
Guys, can someone please help me out with one small “private bank” fed thing? From wikipedia:
The seven members of the board are appointed by the President and confirmed by the Senate.[20] Members are selected to terms of 14 years (unless removed by the President), with the ability to serve for no more than one term. However, if someone is appointed to serve the remainder of an uncompleted term of another member, they may be reappointed to serve one additional 14 year term.[16] A governor may serve the remainder of another governor’s term in addition to his or her own full term.
So everyone on the board is appointed and can be removed by the president. How do people claim this not a federal body, and is a private bank? Trust me, I don’t like the fed, but I don’t follow the “private bank theory”.
Because the fed is owned by its member banks. That the leadership is appointed is a formality.
The free market people are lining up for a bailout. I wonder how long Washington or the Fed can withstand the onslaught.
The problem is everyone involved in the pyramid scheme got nailed. The borrows. The brokers. The lenders. Everyone. And since they cannot pawn the losses off on someone else this time, it’s bailout time.
Time to pawn it off on the public.
I will be shocked if they DON’T get away with it.
Its just too big. Where will they get the money to bail out the millions of households? They would need trillions to pull it off.
Say 10,000,000 FB’s @ 100K each, that would be $1 trillion.
10,000 .. that number rings a bell.
oh yeah.. i remember..
That was the number of newly vacant homes in Vegas a couple months ago.
oops.. my bad. I misread 10M for 10K.
10 million seems a bit high.. 2 million forclosures are almost certain… i believe it’s already above one mill.
Well, who knows how many will eventually go under due to both direct and indirect economic effects..
I think there’s a total of near 110 million American households as of the last census..
Agreed. I have been fairly successful in life by finding simple solutions to so-called complex problems. Somebody needs to make sure Congress understands that most of the so-called “homeowners” never “owned” anything in the first place. They were renters. And renters they can remain.
As for the people who created this mess, “let them eat cake”.
The public will want some heads to roll. I bet the show-trials will be held for some some small-fry fringe-player mortgage originators and the sort. DaBoyz will live on as usual and go onto their next scams. And then we will call it a day.
With that softened demand in the second quarter, the price per acre paid was $718,500, 11 percent lower than the second quarter of 2006.
IT’S FRIGGIN’ DESERT, FOLKS! LV’s so overbuilt that the words “land” and “value” soon won’t be uttered in the same sentence.