Inventory Is Very High: NAR
Some housing bubble news from Wall Street and Washington. MarketWatch, “Inventories of unsold single-family homes increased 2.2% to 3.85 million in July, sending the inventory in relation to sales to the highest level in 16 years, the National Association of Realtors reported Monday. Sales were down 9% compared with a year earlier. The results were the slowest since November 2002.”
“Inventories of single-family unsold homes represented a 9.2-month supply at the July sales pace, the highest since October 1991. For all homes, the inventory rose 5.1% to a record 4.59 million, representing a 9.6-month supply. Condo inventories surged 20% to 742,000, an 11.9-month supply at the July sales pace.”
“Inventories typically fall in July, said Lawrence Yun, senior economist for the real estate trade group. The inventory figures are not seasonally adjusted. ‘The inventory is very high,’ Yun said, adding that rising foreclosures might be increasing levels of inventories by 5% to 7%.”
“‘These data reflect conditions prior to the financial market volatility of August,’ wrote John Ryding, chief U.S. economist for Bear Stearns.”
“Yun said the market is holding on despite temporary mortgage disruptions. ‘Home sales probably would be rising in the absence of the mortgage liquidity issues of the past two months,’ he said. ‘Some buyers with contracts have been scrambling when loan commitments did not materialize at the last moment, while other potential buyers are simply waiting for the mortgage market to stabilize.’”
From Bloomberg. “The median price of an existing home dropped 0.6 percent in July from a year ago to $228,900, the Realtors group said.”
“‘We continue to wrestle with the interrelated challenges of softer demand and excess housing supply in most markets,’ Toll Brothers Inc. CEO Robert Toll said on a conference call Aug. 22. ‘Traffic is pretty stinky out there.’”
The Associated Press. “Bad credit has supplanted terrorism as the gravest immediate risk threatening the economy, a key national research group reported Monday.”
“Borrowers’ withering ability to pay their bills and the subsequent fallout in the credit markets this summer topped the list of short-term risks on peoples’ minds, according to a survey of 258 members conducted by the National Association of Business Economics.”
“The tumult in the financial markets has led businesses to revisit their interpretation of the housing boom earlier this decade and the easy credit that fueled it, NABE said. The proportion of surveyed members who call it a ’serious national bubble’ more than doubled from two years ago to 29 percent, the group said.”
The New York Times. “On its way to becoming the nation’s largest mortgage lender, the Countrywide Financial Corporation encouraged its sales force to court customers over the telephone with a seductive pitch that seldom varied. ‘I want to be sure you are getting the best loan possible,’ the sales representatives would say.”
“But providing ‘the best loan possible’ to customers wasn’t always the bank’s main goal, say some former employees.”
“One document, for instance, shows that until last September the computer system in the company’s subprime unit excluded borrowers’ cash reserves, which had the effect of steering them away from lower-cost loans to those that were more expensive to homeowners and more profitable to Countrywide.”
“Other documents from the subprime unit also show that Countrywide was willing to underwrite loans that left little disposable income for borrowers’ food, clothing and other living expenses.”
“A different manual states that loans could be written for borrowers even if, in a family of four, they had just $1,000 in disposable income after paying their mortgage bill. A loan to a single borrower could be made even if the person had just $550 left each month to live on, the manual said.”
“‘In terms of being unresponsive to what was happening, to sticking it out the longest, and continuing to justify the garbage they were selling, Countrywide was the worst lender,’ said Ira Rheingold, executive director of the National Association of Consumer Advocates. ‘And anytime states tried to pass responsible lending laws, Countrywide was fighting it tooth and nail.’”
The Coloradoan. “Norlarco Credit Union stopped making construction loans on homes in Florida a year ago, but now faces numerous lawsuits alleging it made construction loans to members who couldn’t afford the payments and defrauded another credit union into sharing the risk.”
“At least six lawsuits in Florida and one in Colorado naming Norlarco as a defendant paint a picture of a credit union that ignored credit-worthiness when approving loans, many in Lehigh Acres on the western edge of the Everglades near Fort Myers, Fla.”
“Construction loans resulted in mounting delinquencies, which led federal regulators to seize control of Norlarco in July within weeks of the lawsuits hitting Florida courts.”
“With more than $212 million in deposits and $334 million in assets as of June, Norlarco is the largest credit union in Larimer County and eighth-largest in Colorado.”
“Norlarco CEO Bob Hamer told the Coloradoan on Thursday he stopped the Florida loan program about a year ago when he replaced former CEO Chuck Mabry, who retired. Mabry defended the loans as ‘a good risk, well-secured and very profitable for us.’ He said he ‘had absolutely no idea’ what went wrong.”
“In the lawsuits filed in Florida federal court, Norlarco is accused of making deals with builders and buyers that promised big returns on their investments but went bust when the Florida housing market tanked.”
The Brisbane Times. “Although financial markets have begun to stabilize after several turbulent weeks, experts say the subprime mortgage loan crisis will take time to resolve, and could drag down other sectors of the economy.”
“Gridlock in credit markets is putting more pressure on housing as lenders tighten standards in the face of rising delinquencies, say economists.”
“With a pullback in lending, ‘We now look for an even deeper housing recession,’ said Lehman Brothers economists Michelle Meyer and Ethan Harris in a briefing note to clients.”
“Goldman Sachs’ economist Jan Hatzius agreed, saying the bubble in housing has yet to be unwound. ‘Our working assumption has been that US home prices are about 15 percent overvalued,’ Hatzius said.”
“But because of changes in credit availability and mortgage rates, Hatzius said he sees ‘a more dire picture’ in which ‘cumulative nominal price declines of 15 to 30 percent are possible.’”
“Because so many bad loans were packaged into securities that were sold around the world, said Robert Brusca at FAO Economics, ‘This has created tremendous financial turmoil … it’s an Easter egg hunt trying to figure out who holds the bad ones.’”
“The median price of American homes is expected to fall this year for the first time since federal housing agencies began keeping statistics in 1950.”
“The reversal is particularly striking because many government officials and housing-industry executives had said that a nationwide decline would never happen, even though prices had fallen in some coastal areas as recently as the early 1990s.”
“A 2004 report jointly written by the top economists at five organizations, the industry groups for real estate agents, home builders and community bankers, as well as Fannie Mae and Freddie Mac, the large government-sponsored backers of home mortgages — was typical. It said that ‘there is little possibility of a widespread national decline since there is no national housing market.’”
“Alan Greenspan, the former Fed chairman, said the housing market was not susceptible to bubbles, in part because every local market is different.”
“In 2005, Ben S. Bernanke, then an adviser to President Bush and now the Fed chairman, said ’strong fundamentals’ were the main force behind the rise in prices. ‘We’ve never had a decline in housing prices on a nationwide basis,’ he added.”
“As interest rates fell and lending standards became looser, prices started rising rapidly in the late 1990s. The result was a ‘euphoric popular delusion’ that real estate was a can’t-miss investment, said Edward W. Gjertsen II, president of the Financial Planners Association of Illinois. ‘That’s just human nature.’”
“Dean Baker, an economist in Washington who has been arguing for the last five years that houses were overvalued, said the idea that house prices could go only up had fed the bubble.”
“It was very misleading,’ said Mr. Baker. There are a lot of people, he said, who bought ‘homes at hugely inflated prices who are going to take a hit. You also have a lot of people who borrowed against those inflated prices.’”
“Perhaps the most prominent housing booster was David Lereah, the chief economist at the National Association of Realtors until April. In 2005, he published a book titled, ‘Are You Missing the Real Estate Boom?’ In 2006, it was updated and rereleased as ‘Why the Real Estate Boom Will Not Bust.’ This year, Mr. Lereah published a new book, ‘All Real Estate Is Local.’”
“In an interview, Mr. Lereah acknowledged he had gotten it wrong, saying he did not fully realize how loose lending standards had become and how quickly they would tighten up again this summer.”
“But he argued that many of his critics have also been proved wrong, because they were bearish as early as 2002.”
“‘The bears were bears way too early, and the bulls were bulls too late,’ he said. ‘You need to know when you are straying from fundamentals. It’s hard, when you are in the middle of the storm, to know.’”
Mr. Learah, the bears may have been too early but they are not stuck with failed flips and pending foreclosures.
Indeed… It’s better to bail early on an illiquid bubble market, than to be holding the related specuvestment long after the pop. Unfortunately, millions of FBs will soon (in an historic scale of time, anyway) learn the tragic consequences of late timing.
“Indeed… It’s better to bail early on an illiquid bubble market, than to be holding the related specuvestment long after the pop.”
And the top of the market is only visible in hindsight. I bought in ‘96, sold in ‘04, missed the last year of the bubble. No regrets.
From Bloomberg. “The median price of an existing home dropped 0.6 percent in July from a year ago to $228,900, the Realtors group said.”
How can this be true? I just cannot see how the median is only down .6%.Where do they come up with this cr@p?
Median is only down 0.6%. But note the typical home transaction has 400 more square feet. So unless someone’s home magically sprouts a large bedroom and bathroom, their value went down far more.
But J6P can not figure out that math… give it time. A coworker argued with me why California prices will only go up today. Woo hoo! I told him cool, where are you buying?
Got popcorn?
Neil
Neil, have you (or anyone else) ever encountered a person who responded that the reason real estate in their area will only go up is because average/median salaries are going up? Not that jobs are secure - you can have security and not get raises, but that income is actually going up.
Just wondered if there ever was a rational answer to this question, even if it was wrong.
I have a great job and make over 6 figures but my raise last year witha agreat company was a paultry 2.9%. That being said how can we continue up up up as these RE people think this market should go. Who is paying?
I agree with most of these people on this site and think their insight to this market is great. I feel as most of you that the Fed. and the financial CNBC people are trying to let the air out slowly to reduce panic, but the ultimate destination of this housing market is 35% to 50% lower in the nex two years. It will not get there without some PAIN that will rock some of these greedy SOB’s. This is no different than Vegas. If you gambled as many did you will loose big time.
Speaking thereof, can anyone report on weather DL still owns his FL flip condos?
whether (weather = Freudian slip, related to FL hurricanes…)
Don’t know about Liareah but Bob Brinker is ass-deep in south Florida RE speculation which probably accounts for his denial of the RE bubble when I called into his radio show in late summer ‘05.
REALLY?? DETAILS????
He is drinving me nuts right now. He denied this whole bubble for so F’n long and would put people down who called his show about it. Now he “I told you so” - What a joke!
Not to mention his FBs who are still holding his QQQQ recommendation from 2000 at $50/share. Underwater 7 years now.
It was 2 years ago on a cell phone on my way to my project in Delaware. I don’t remember all the details.I had a similar conversation with Dave Ramsey around Summer 05. Their response to my contention that “the wheels will come off housing soon” was one of disbelief. It was almost as if these guys didn’t want to admit it and were very quick to change the subject. Both asked me “do you really think it’s that bad?”… And I’m thinking, ok… you asshats are the experts here and you’re asking a dumbassed caller if it’s “that bad”?
I sold mine at $90 in Feb00 never to return.
Dave Ramsey said that to you?? Dang. And he had been burned by being overextended before, if I recall his history correctly. That’s sad.
Ramsey is right on the spot with personal finance. He’s a bit of a idealogue at times with his “pull yourself up by your bootstraps” lie but as far as behavior relating to money, he’s spot on. He was one of our modern day McMillionares we all enjoy kicking around but that was back in the 80’s I think. He made some money in rental property but I think the bulk of his fortune is in his programs, tapes, radio etc.
Ramsey is right on the spot with personal finance. He’s a bit of a idealogue at times with his “pull yourself up by your bootstraps” nonsense but as far as behavior relating to money, he’s spot on. He was one of our modern day McMillionares we all enjoy kicking around but that was back in the 80’s I think. He made some money in rental property but I think the bulk of his fortune is in his programs, tapes, radio etc.
Isn’t he the same a$$hat who takes calls all day from people who are buried in credit card debt? Not sure why people like him (and that annoying Suze Orman) couldn’t see this coming a mile away.
I used to listen to Dave Ramsey when the local station carried him. Half the time I’d turn him off, because he seemed to have difficulty understanding that not everyone in his audience was a Born-again Christian. His advice on debt and responsibility was very good, though.
But I remember a year ago the calls coming in from very young people who were making lots of money, but were worried about their jobs. He always congratulated them on how much they were making, and never really explored why a 24 year old without any college was making over 100K a year. (Most of them were Southern, white, very Christian and working in the REIC)
And he seemed befuddled when people first started calling about their mortgage problems, although again — he gave good advice about staying away from ARMs, staying away from contract-for-deed, etc. But his bewilderment led me to believe that he was not looking beyond his own small world very far. As recently as 6 months ago, he was telling people that certain markets were good when they were not so good, and he was not questioning the really questionable values that people were putting on their property. People were calling in panic, and he was telling them everything was going to be ok if they just sold their home. He didn’t seem to cue in that they were not going to be able to sell it for what they were telling him it was worth.
txchick57, Brinkers long Q call was around $75 to $85 but he was going completely against the technicals. I listened to him in January 2000 but not in the fall.
“Comment by txchick57
2007-08-27 11:34:47
Not to mention his FBs who are still holding his QQQQ recommendation from 2000 at $50/share. Underwater 7 years now.”
In all fairness Brinker had everyone into cash Jan 2000 and back into the market March 2003.
Yup, Warren Buffett has made his fortune mostly by “selling too early” (and not being caught on the downslope of a deflating asset bubble).
http://tinyurl.com/yqn43t
Warren seems to be looking at some RE…hmmm.
http://www.usatoday.com/money/economy/housing/2007-08-26-peltier_N.htm?loc=interstitialskip
You put in the wrong link
“..In keeping with Buffett’s conservative approach, Peltier’s lending division, which accounts for about 15% of the company’s profits, avoided offering the kind of risky adjustable-rate loans that have burned many lenders….”
And rumors about Buffett buying CFC were rife. I think anytime there is a rumor that Mr. Buffett is buying, I will wait three days and short. (not really, but it has been very profitable for years to do that).
I love have Lereah has to go back to 2002 and nameless bears.
Better to be an early bear than a late bull.
Actually, it often results in the same outcome. Those who easily and quickly saw the dot com bubble (1996) could have made a fortune riding it instead of putting money into other areas. That’s why there’s a lot to index investing and dollar cost averaging. No temptation to outguess the masses so you guarantee an average outcome over time. Of course few can leave well enough alone and must speculate about the future. I don’t claim to avoid it myself, but keep my speculation down to 10%-20% of my investments.
No kidding. Wasn’t there a great quote from Warren Buffet about how he’d made most of his money selling too soon?
not sure but i do know he said ” i would rather be almost right than precisely wrong”.
maybe that is the quote you are talking about.
Bernard Baruch was once asked how he made a fortune in the stock market. He replied “I always sold too early.”
Touche, TxChick - many that read this blog are simply “stuck” with 5 or 6 figures in cash, rather than in the midst of losing a similar amount.
Better a year early than a day late!
Mr Lereah tried to tell the time on a clock with no hands with predictable results. The early bears saw that it was getting dark and they left the party before midnight when everything turned to pumpkins and mice.
Lerah is such an ass clown.
I hope these people are ridiculed forever in business circles and publications, maybe even have new catch phrases. Something like when all is lost and people have a smile on their face and a hand in your back pocket this is the “Lerah syndrome”….something like that.
How about we replace the term Ponzi with Lereah?
I had never heard of this Yun guy until I saw his name here, but what’s up with this guy?? Is he just another NAR shill??
He replaced DL some months back after DL ran out of lies!
Yun has a new supply of lipstick.
Yun and Lereah in a tree, k-i-s-s-i-n-g.
“In an interview, Mr. Lereah acknowledged he had gotten it wrong, saying he did not fully realize how loose lending standards had become and how quickly they would tighten up again this summer.”
That is a problem. I suppose NAR should have hired a professional economist to help them with that.
Good one.
How can he not realize loose lending standards.He is the head of the NAr for gods sake.Even joe six pack realtor knows what has been going on. He is a joke.
I don’t believe Learah even now. Heck, I knew zero about real estate until two years ago and even *I * was getting red flags. He MUST have known how loose things had gotten. Maybe he just wanted to squeeze out another paycheck or two. Then he could put on the contrite act to assuage his guilt.
All depends if you surround yourself with racists of a like race, you probably believe that everyone thinks like you. When you hear other people talking sane, you think they are crazy and they don’t think like you and everyone else you know. This is the same with him he surrounded himself with shills and they all were drinking from the same well, and had financial incentives to push the agenda as well.
Personally, I think he is just a big worthless shill and should never be considered for nothing other than fairy tales.
“…he did not fully realize how loose lending standards had become…”
Apparently he doesn’t own a calculator.
“…he did not fully realize how loose lending standards had become…”
Not to open a political debate, but this reminded me of a former President who once said “I did not have sexual relations with that woman.”
Uh…………., it’s David Lereah.
“You need to know when you are straying from fundamentals. It’s hard, when you are in the middle of the storm, to know.”
Uhhh, no, really it’s not. What part of housing prices reaching 10x annual income, 20% annual price increases with flat wage growth, and a negative savings rate seemed sustainable to him…or anyone for that reason?
Ben Bernanke said the housing prices were in line with fundamentals just a few months ago. He has a PhD. I wonder if these people are really that out of touch in their ivory towers or if they are just pathological liars. He should try taking up poker sometime
“I wonder if these people are really that out of touch in their ivory towers or if they are just pathological liars”
Are these really mutually exclusive? I’d say they are most definitely out-of-touch, pathological liars.
“Ben Bernanke said the housing prices were in line with fundamentals just a few months ago. He has a PhD.”
I wouldn’t expect him to say anything else. Think he’s going to admit in public that the only thing that has carried the U.S. economy since the 9/11 recession is nothing more than a big ponzi scheme?
Not under this admin. AG sure seemed to change his tune after that time frame….
Based on their objections to price to income fundamentals and the use of exotic loans rate schedules to lower monthly payments, the bears (such as Baker) were right out the outset of this bubble. Knowing when it would crash is fairly impossible - knowing that it would crash at some point in the future was a given. Lereah ignored the future while shilling the present, and now pleads ignorance of the past. He deserves his place in history.
we know how its spelled, just remember to pronounce it it “Liarrhea”
anybody have any idea if the nar takes into account any reo (on any other non-mls listings) in their calculations or reports. for instance in colorado right now trustee sales are outpacing open market sales, so the equation of inventory reported is extremely understated and the number are increasing on the reo side while mls sales are dropping like a stone. if you follow the local realtor stats here, all is well.
In California they count the Trustee sales in the sales #’s. This information was forwarded to several sources including the John L @ the OC Register - he ignored it.
I think the numbers are very distored by these figures not just for sales but median. How is the NOT calculated for sales price purpopses, based on the 2-3 loans per property! This inflates the median price - IMO.
NAR only uses MLS numbers.
Most people were not bearish in 2002, I googled housing bubble in Spring 2005 and found this site because I was growing concerend.
Before that I think only a small cadre of permabears was talking bubble - DL is trying to re write history to save his sorry ass!
Maybe three people on the planet were bearish in 2002 (and I am not 100% sure this was not early for them):
Kenneth Rosen
Robert Shiller
Ed Leamer
It is fairly natural for first-rate economists to be early, as they have a grasp of fundamental imbalances which enables them to intuitively perceive where the data are headed, while most observers only know what has gone down when the data confirm it. I don’t see how they could have foreseen the policy response which kept the bubble aloft for a few more years.
I was bearish in 1999 due to the beginning of home equity lending in Texas. Talk about early!
I had similar questions around that time when I saw condo prices take off in non-coastal areas of Richmond, CA, but kept my thoughts largely private…
Me too. Kept waiting for a pullback. Never arrived. So I just stayed put. Doug Noland and the credit bubble bulletin was writing about CDO toxic waste back in 2002 which is where I learned about the term.
I actually became bearish in 1997 when prices around La Jolla started jumping up for no apparent reason.
I was a little early in the dot com era by shorting Internet stocks - ouch still have scars from those days. I learned some important lessons back then mainly “The market can stay irrational longer than you can stay solvent”.
I also sold my house in So FL a little early back in April 2005 but I wouldn’t want to be trying to sell it now.
Real estate in San Francisco Bay Area especially San Fran, Marin and San Mateo counties still seem to be relatively strong - can’t wait for the crash to finally happen here.
Oops — forgot one…
“Dean Baker, an economist in Washington who has been arguing for the last five years that houses were overvalued, said the idea that house prices could go only up had fed the bubble.”
2002 Atlantic Monthly cover article,
Is it a bubble if it doesn’t pop?
Add to the list: John R. Talbott. He wrote “The coming crash in the housing market” in 2003.
The first pool of buyers dried up right about then. Then they let loose the easy money floodgates and it took off then.
I was a realtor in 2002 and we could see it building then, because we discussed it. Housing was the only thing keeping the economy afloat. Any realtor who didn’t see it is stupid or lying. However we did not have the subprime lending then, so it went much more crazy than even we expected it to. Anyway I got out in 2005 and even though real estate was steady in NE Ohio it never really bubbled. If you made 1-2% gain a year you were lucky. However with the liar loans, foreclosures are extremely high here.
Right. I’m on the internet quite a bit and try to keep up and I learned about the Housing Bubble in June of 2005 when my b-i-l suddenly owned two houses. I tried to explain to my other b-i-l, a doctor, over Christmas dinner that year, and finally got him to agree that maybe there was such a bubble (of course he may have been humoring me), though he said it wouldn’t affect him because we live in Florida.
I was thrilled to find this site last year, because for a while I thought I was the only one out there that thought there was a bubble. I’d mention it to people and they’d tell me they couldn’t see any problem. Thanks Ben, for keeping me sane.
I was a bear 02 but then Sacramento began it’s rapid run up in 98-99 with people pulling money out of tech options and buying RE in the valley.
I didn’t see it as a national trend and I didn’t see the credit market movements. I only saw it because I was accutely aware of how I was being priced out of the market while wages were flat and falling. I honestly though we’d reverse into a down market in 03-04 along with the crew of academics I worked with.
I heard a University of Arizona economist suggesting the possibility of a real estate bubble in March 2002. He was pointing out the gap that was opening up between the growth in house prices and job growth.
That guy wins the Economist of the Decade award… he looked at the disparity between ever rising home prices and stagnant income and drew a (gasp) logical conclusion.
I was late… It wasn’t until 4Q2005 that I fully became a bear. Then again, I was working so hard through 2004/2005 that I was in my own little isolated world.
My hat is tipped to those who saw this in 2003/2004. Well done.
Now to see how long it lasts…
Got popcorn?
Neil
Neil, what is your rental/ownership history timeline?
Interesting - maybe I am wrong and DL is correct?
I read Talbots book in the Fall of 2004
http://www.amazon.com/exec/obidos/ASIN/007142220X
and that confirmed some of my suspicions. Prices were out of control in 2004 with fundamentals where I live, however, they were ok in late 2002 and early 2003 (realtive to incomes).
I was bearish in 2002, because that is when I began looking for a new house nearer to my work in Pinellas County, Florida. I live in Tampa.
I found houses that were a little “over-priced” based on my recent sales history. While I was looking around, houses I had looked at that were new on the market were starting to sell in a week. Then, bid-wars started.
What kind of idiot would pay $20,000 more for a house priced at $120,000? I decided to quit looking until the market cooled down. That day has finally arrived, but the price of the $120,000 house is 240k-300k.
My wages have increased about 12%-15%. Mis-match.
The first time I realized was when I read a Fortune magazine article in early 2005. The cover page had a big warning. The article explained that a crash was imminent. That prompted me to search on the internet for more info and I found this blog.
The lightbulb went on for me was in December 2004 when a small business owner in our area came into our office and said he was off to Naples FL to stand in line to buy a number of houses in a new development - stating that by the time they were finished they would go up signifiantly in value. I remember turning to my boss and saying that when these houses were finished he’d better hope 4X the number of actual buyers appear or he’s screwed.
Local observation from NE mass.
Cruised a very wealty suburb Saturday. Minimum 2 acre lots. Guessing 800K-2Mil homes. 1st enclave of approximately 40 homes had 5 for sale. Anyone think that percenatge is quite high for that price range?
2nd enclave 1/4 mile away little more upscale maybe 1.2-3 Mil. There was a shell of a new McMansion. You could tell that construction had stopped as the nails in the plywood sheathing were showing rust drips. Plastic and cardboard for doors waving in the wind. Windows were in but no siding just the plywood. Couldn’t resist peaking inside. Walls were 2×4 studs only. This was going to be a circa 2Mil home.
Winter weather in the Northeast can be very nasty to be kind. Wondering what this place will look like should it endure a New England winter in this condition?
Ben, suggestion/question. There have been many times I thought an associated picture with a post might be great. Can this be easily done?
You can find one of the free image hosting sites online and upload your picture and then post a direct link to the picture. Image shack is one of them but there are a lot others. Some work better then others, some work better with different systems.
http://www.imageshack.us/
any Somalies diverting from ME to MA yet
you have that FREE-er healthcare now !
WantsOut: no damage so far, plywood can stay out in the rain for a couple of weeks, nails too. If they can get a roof on by winter, damage will be minimal however the fact that construction has stopped in the best weather is a bad sign.
Winter weather in the Northeast can be very nasty to be kind. Wondering what this place will look like should it endure a New England winter in this condition?
If the shell isn’t sufficiently roofed water from rain will satuate all the interior framing, which is breeding ground for mold and rot.
Then with all the freezing and thawing and exposure to elements all the glue will go bad in the plywood and the sheets will begin to delaminate.
If the foundation fills with water, you’ll get floor and wall cracking when freezing temp’s settle in.
So the subframe and possibly the foundation end up toast.
If the builder went bust, it’ll probably take a couple of years for the lender to liquidate.
Howver, vinyl siding can cover a lot.
I’m sure all the subs have been stiffed so the place is probably liened up the wazoo.
Buyer beware.
Ex-Treasury Secretary Summers warns of risks ‘greater than any since aftermath of 9/11′, reports Ambrose Evans-Pritchard
“It would be far too premature to judge this crisis over,” Mr Summers said. “I would say the risks of recession are now greater than they’ve been any time since the period in the aftermath of 9/11.”
Time for more market volalility. Lov this show.
“Existing home sales were the slowest in 5 years.”
This is a mystery to me. Let’s face it, 5 years ago nobody thought existing homes sales were terrible, it’s not like 2002 was the early ’90s. I’m counting on home prices coming down but obviously there are still a lot of people buying houses. Who are these buyers? Will we ever get to the point where existing home sales are the worst rate since the early ’90s?
“Will we ever get to the point where existing home sales are the worst rate since the early ’90s?”
Likely, yes, but patience will be required as the tragedy unfolds. The correction will take a while (and there will be plenty of false recoveries/suckers rallies along the way) due to the Bernanke-Paulson Sheeple Expectations Propping Circus, which will serve to keep J6P and his ilk comfortable in their cluelessness and denial until the current Administration walks out the door.
Well, that and the actions of my team’s ancient nemesis, the PPT. Darn them to heck!
The population is greater than it was in the 1990s, so a decline in existing home sales to 1990s levels would involve a more severe housing recession than the 1990s.
Which this one is/will be. Give it just a few months more. And beware the ides of October.
Truen but most of the population increase has been fueled bu illegals, few of which can afford expensive houses.
I’d bet we have more houses and condos per capita than the 90’s with all the overbuilding.
And beware the ides of October.
that is probably the breaking point. Thomas, I’m going to steal that line and use it. Maybe some of the sheeple will listen?
Got popcorn?
Neil
I think Oct is going to be ground zero.
Oct could be it, but if it hasn’t happened by then then it will by early January when Christmas season #’s are known. I think the credit card runnups will extend the timeframe past Oct when the Subprime resets peak. Enough people are getting the new mortgage payments that Christmas will be down. Once this is known by the MSM and the street, the debate (tongue in cheeck) about whether we will go into recession will end and the blood will be flowing. I just don’t know how the current administration can hide the fact until after the election.
“Will we ever get to the point where existing home sales are the worst rate since the early ’90s?”
Yes. Jumbo loans are now under fire, putting a further crimp in the move-up markets. Wait for the August numbers.
Which we will not have until October…..
What’s important is not the number of sales - but the number of sales relative to unsold inventory, and especially unoccupied inventory. Only when inventory goes back down to historic norms relative to population will prices resume their normal increases (slightly more than inflation). We’re a long way off from that.
Here’s an excellent graph showing at least recent history, of the ratio of sales to listings, for my county:
http://tinyurl.com/2dyvu9
Prices in the county began to flatten *exactly* when the “buyer intensity index” (sales / inventory) made a sharp cross into negative territory - in summer 2005. Sales for the county were still astronomically high historically speaking, and didn’t really start coming down until early/mid 2006. They’re still high compared with 20-year period - now down to about 2002 levels. Inventory is still high though so prices are flat, i.e. declining relative to inflation.
Yeah, I’m over the border in Fairfax county. What a lot of people here are banking on is that “BRAC” Base-Relignment and Closing, is going to bring tens of thousands of able-bodied military families to Ft Belvior, Ft Meade, and save the regions housing problems.
The main problem with Loudoun is the zoning, requiring that all new homes be on 3 acres, an apparently, at least 5000 square feet. So there are nothing but big vacant new homes in Loudoun.
The other thing we’re hoping for is a Metro in Reston. That’s the only way I’ll be able to sell my house without losing my 20% down, or more.
Question: Who in hell are the buyers right now??
Every opportunity I get I do my best to discourage people. Even my wife, who normally is not at all pushy or disrepectful calls out people in public. She did so yesterday at the county fair when someone dingbat said “it’s a great time to buy”. That’s all my wife needed to hear. She cut loose with all the reasons it is a horrible time to buy.
But I still ask, who are the dumb-asses keeping sales up?
But I still ask, who are the dumb-asses keeping sales up?
There is one born every minute per PT Barnum. Just get loan standards up high enough so that they’re protected from themselves.
Got popcorn?
Neil
A “sale” is a signed contract. Most RE contracts have contingencies, financing being one of them or sale of another house. Therefore, you can have thousands of “sales” without ever reducing inventory through closing. I had a friend that “sold” his house four times before it actually closed.
I believe you are incorrect on this… “new home sales” is a “signed contract”, that is why it is forward looking… Existing Home Sales are true “sales”, that is why it is concidered backward looking.
Your wife is an A-OK gal. Good on her!
I have family livin in the southwest - just bought a house. I don’t know the exact numbers but from what I heard here’s what they did.
Bank owned house = $800, 000 left on original loan
Current value of house = $700, 000
Bank sold and wrote new loan for 700, 000 took a 100, 000 hit to get rid of it
Questions:
- Will this keep the median home prices up / slow or stop price reductions?
- Is this reported anywhere?
how much down payment?
Don’t know
In North San Diego, about 80 of the people ar putting at least 20% down with only 1 sale that was no money down.
In Carlsbad, Encinitas, and Carmel Valley, there were 51 detached-home sales closed between Aug. 13-21:
Down Pmt. #
0 1
5% 2
10% 7
20% 16
30%+ 19
Cash 6
It seemed pretty impressive that 41 of 51 purchasers, about 80%, were putting down at least 20%.
numbers taken from bubbleinfo.com
“But I still ask, who are the dumb-asses keeping sales up?”
I think it comes down to jobs. As long as people have jobs, they’ll be buying houses and the unemployment rate is very low.
So those, including Ben, who predicted that the short-term bump in new home sales was just cannibalization of existing home sales due to builder incentives were right. As usual.
Yes, thanks for that. I used it this morning to explain to some eager co-workers.
“The median price of an existing home dropped 0.6 percent in July from a year ago to $228,900, the Realtors group said.”
BWAHAH HAHAHAHAHAHAHAHAHA
Tell these lies to f*-ed homedebtors in places like “bubble-proof” Encino, CA. (prime area north of Los Angeles).
“Starter” homes (800sqf, built in 1950s) that went for $575-595K in late 2005 are now going for $450-$475K, if they sell at all… that’s a 20% haircut BEFORE THE MELTDOWN earlier this month. I predict 45-50% off by this time next year.
I have friends there and they’re all saying the same thing: Things are bad, and starting to get worse. Inventory is just not moving…
Only a fool would believe what shill-realtwhores like Yun and Lereah are saying!!!
I’m thinking about calling a few realtors in Encino and making lowball offers. At least 40% off the asking price. I’ll report back over the weekend… It’ll be fun!
I have many friends telling me this, not paid-for shills like Lereah and Yun.
$450-$475K for Encino is bad, but not ridiculous-bad (by Klownifornian standards). Try ~$500K median price for South Central L.A. Now that’s comedy.
You think thats bad? 2 years ago I was called a loon right here on this blog for calling a 45-50% haircut nationally.
Interesting now that you’ve pointed out, because the same story it seems is repeated everywhere, yet NAR reports only tiny drops. Around my hood in San Jose, two years ago houses went for $800K, now our neighbors are trying to sell their house, dropped to $690K, still dead and no traffic. They lowered from the mid 700-s.
In Pacific Palisades a home that went for 2.6 in Fall ‘05 is now asking $2.5, down from $2.9 and isnt worth a dime more than 1.9! its gonna get nasty.
Hey David? At least I don’t have published books chronicling how stupid I am. You were, are, and always will be a flaming retard.
2000 buy stocks
2006 buy a house or 2 or 3
anyone have records for LIErahs fl condos ?
hope he has a shtload
“‘The bears were bears way too early, and the bulls were bulls too late,’ he said. ‘You need to know when you are straying from fundamentals. It’s hard, when you are in the middle of the storm, to know.’”
The bears would have been right on target with the timing of their prediction were it not for a certain former Fed chairman whose protracted pedal-to-the-metal negative FFR rate forestalled what housing market fundamentals would have dictated. It is rather difficult to predict such an extraordinary policy response.
Asset class bubbles are extraordinary periods of irrational behavior. During these periods, it is impossible to know how long or to what extent irrational behavior will occur. Prudent investors do not buy during these periods and only attempt to sell (as the getting is really good). As a result, my take is that “bears” were merely prudent investors watching from the sidelines and “bulls” were irrational investors who chase money until they get destroyed.
Yeah - kind of like jumping off the train when it loses it’s brakes going downhill but is still only going 50 mph. Sure the train didn’t run off the tracks until it hit 100 mph, and the hobo could have ridden it to 99 - but don’t call him a fool for not riding far enough! Sometimes it’s worth it to walk that last bit and catch up to the train *after* it wrecks.
“time of opportunity”
http://tinyurl.com/3xf3s5
disclosure: I own shares of this company
A five-fold increase in agents in 3 years. I don’t see that happening in the next 3 years.
“One document, for instance, shows that until last September the computer system in the company’s subprime unit excluded borrowers’ cash reserves, which had the effect of steering them away from lower-cost loans to those that were more expensive to homeowners and more profitable to Countrywide.”
It is so. My mortgage is with these jerks, fixed 30 year of course, but I had to get quite firm with those agents, who kept trying to put me in an ARM, just kept trying over and over, monkeying around in their greedy slobbering attempts. They just wanted that increased commission soooooooooooo baaaaaaaaaaaaaaaaaaaaad.
Asshats, all, and the Icky Orange Man is the biggest, brightest asshat of them all.
I would have walked out on them. When they kept trying to put you in an ARM when fixed rates are so low, I would have wondered what else was in their loan papers that was just the gray side of legal.
“‘These data reflect conditions prior to the financial market volatility of August,’ wrote John Ryding, chief U.S. economist for Bear Stearns.”
“With a pullback in lending, ‘We now look for an even deeper housing recession,’ said Lehman Brothers economists Michelle Meyer and Ethan Harris in a briefing note to clients.”
Goldman Sachs’ economist Jan Hatzius agreed, “But because of changes in credit availability and mortgage rates, Hatzius said he sees ‘a more dire picture’ in which ‘cumulative nominal price declines of 15 to 30 percent are possible.’”
The head winds of NAR’s 2008 rebound are picking up. Even 6 months ago the Big 3 were talking contained and no problem - but it seems now they are very cautious of be being caught short. Strikes me as a longer term credit availibilty problem - the past is now the future.
If only the brain people had been talking to the money people, they could have saved their stock from getting roached this year… tant pis.
TEST
“Yun said the market is holding on despite temporary mortgage disruptions. ‘Home sales probably would be rising in the absence of the mortgage liquidity issues of the past two months,’ he said.”
“Even more to the point, the Titanic probably would have made it to New York had it not hit that pesky iceberg,” Yun added, as he vigorously scratched at his 16 inch long nose.
Opps, got coffee all over the keyboard. Good ‘un.
I was just about to comment on that one but you beat me by several hours. If you would give every citizen $1 million in cash I am sure home prices would go up…along with everything else.
“Alan Greenspan, the former Fed chairman, said the housing market was not susceptible to bubbles, in part because every local market is different.”
Perhaps he meant that local end-user demand was not susceptible to
bubbles. Certainly he was not referring to credit conditions, as it is clear that deregulation (esp. relaxation of controls on international capital flows) and globalization greased the skids for creation of a global credit bubble which in turn set the stage for a monumental global credit bust.
I know from the Federal Reserve bank meetings that other members of the Federal Reserve were concerned about “asset bubble” formation and that Mr. Greenspan said in effect we will rebuild after the bubble collapses.
One of many reasons why the Riksbank and the BOJ are so upset with the US lack of financial responsibility. And this is especially true with regard to Asset Bubble formation.
US home resales lowest in nearly 5 years
By Eoin Callan in Washington
Published: August 27 2007 16:17 | Last updated: August 27 2007 16:17
The US housing downturn appeared to worsen last month as sales by Americans of their homes fell to the lowest level in nearly five years amid a crisis in the subprime mortgage market that has triggered a global credit crunch.
Purchases of existing homes were 9 per cent lower than a year ago as sales fell for the fifth straight month, with a drop of 0.2 per cent in July to an annual rate of 5.75m units, according to the National Association of Realtors.
The fall in sales and a rise in inventories of unsold homes adds to fears that recent signs of stabilisation in the housing market were temporary and that the sector will fall further amid tighter lending conditions.
Economists fear a vicious circle as rising defaults on high-risk subprime mortgages trigger a crisis of confidence in credit markets that will weigh on demand and make it more difficult for distressed homeowners to sell or refinance their property.
http://www.ft.com/cms/s/0/392b8b5a-54b0-11dc-890c-0000779fd2ac.html
Haven’t read through the post yet, but check this subtitle out from CNN:
“Sales slip but supply of homes on the market jumps to 9.6 months, pushing prices down for 12th straight month”
BUT? How about and AND you MSM lackey! What does incompetent mean? What does baffled mean?
Also, “”We are literally swimming in an ocean of homes for sale.” You mean “figuratively”, stupid. Mike Larson puts the “anal” in real estate analyst.
Sorry to be so grouchy. Just had an “it’s still different here” argument with my boss about Stanford/Palo Alto, CA RE.
Dude - lay off. Mike posts on here a lot and is a good guy. He’s making a correct and good point, and that kind of usage of “literally” is quite common (albeit incorrect as you mention).
You’re right, packman. I wouldn’t have called him an imbecile to his face, so I shouldn’t here on the world wide interweb. I told you that the morning argument upset me. So glad that I am on the sidelines…clearly I am raving!
My wife does it — uses literally to mean figuratively a lot. Sorry Mike and wife, but it drives me nuts. At this point I think she does it just to annoy me.
Packman’s right, Larson’s a good guy and I enjoy reading his blog, Interest Rate Roundup, from time to time.
Got it. See nearly immediate apology above.
Got it. See nearly immediate apology above.
“What does incompetent mean? What does baffled mean?”
Good movie.
RMTMB –
Really didn’t think that anyone would catch that one. I hope that you at least had to go to the warning track. One of my faves.
Even got the soundtrack; one of Queen’s best IMHO. This was the first DVD my wife and I bought, back in ‘98 when we were visiting Manhattan, of all places. Saw it on the shelf and had to have it, and then we had to get a DVD player.
Your wife likes that?? I have never met a woman who likes that filck! Are there any more like her back home?
“You have chosen…wisely”.
BTW — I’m always happy to see Clancy Brown working, I must admit.
Hey, I like Highlander. I didn’t get that particular quote without google, and the movie needed some more agressive editing in places, but just because you haven’t met us, doesn’t mean we aren’t out there.
And it still stuns me that anyone ever named a romantic heroine Brenda - even a scrappy one with an obsession for pointy things.
OMG, you can count me in on Highlander. Loved the movie and loved the t.v. series.
That was pretty obscure. But an old friend and I used to use it all the time. It’s kind of become part of my schtick, but I always love it when people catch on. Of course, you have to do it with the same accent as the hot dog vendor. OK, I am officially a dork.
SFBayAreaGal –
Where does your kind hang out?? I’m trapped on the south side of Bernal Heights — as suburban as the city can get.
Polly — I agree with the need for editing. But I am the type of nerd who has the director’s cut. Good grief!
I thunk Wall Street was oblivious to the business affairs of all the little people out there on Main Street?
Wall St falls on poor homes sales
By Hal Weitzman in New York
Published: August 27 2007 13:58 | Last updated: August 27 2007 17:44
Wall Street stocks were trading lower on Monday, after a report said sales of existing homes in the US dropped for a fifth consecutive month in July. That pushed sales down to their slowest pace in nearly five years, while house prices have fallen in every month of the past year.
http://www.ft.com/cms/s/0/048a5462-5497-11dc-890c-0000779fd2ac.html
Accurate and to the point: http://preview.tinyurl.com/jupmz
“capitalism without financial failure is not capitalism at all, but a kind of socialism for the rich.”
LOL good one.
The Greenspan-Bernanke put is the embodiment of this idea.
Heads — the stock market goes up.
Tails — the stock market does not go down, due to liquidity injections.
Isn’t that what the U.S. brand of capitalism is all about? Shifting tax burdens to the middleclass while cutting wages? Then when called out on this outrageous BS, they start yapping “communist” and “socialist”.
What a bunch of supply side liars.
Looks as though another bad news day is going to end in a soft landing for the headline indexes (yawn…):
http://www.marketwatch.com/tools/marketsummary/
Market goes up because:
bad homes sales are good
good home sales are good
low home inventory is good
high home inventory is good
good credit is good
bad credit is good
liquidity is good
lack of liquidity is good
rising interest rates are good
low interest rates are good
rising wages are good
stagnant wages are good
Everything is good for the market!
And besides that, any and all bad news that ever hits the MSM has already been reflected in prices of the all-seeing, all-knowing stock market.
My son was right when he said some stocks go up just because some monkey threw a dart at a dart board and hit the right spot.
That monkey is doing a better job than I am! I wonder if it’s available for a stock darting gig in western NY?
“Alan Greenspan, the former Fed chairman, said the housing market was not susceptible to bubbles, in part because every local market is different.”
Problem is, the financing was 100% the same, everywhere. And that enabled and fostered our “conundrum” as Greenspan coins.
Yes, and it’s the financing that just got reeeeeally tight, too, all of a sudden. I just can’t wait for the August numbers, I’m all in a fever of anticipation.
Housing hasn’t screeched to a halt here where I live in Thurston co, WA, yet, since it’s such a nice place and we’re more and more a bedroom community for Seattle, which seems to be lagging the nation somewhat in the bubble/credit popping, but ah, yes…the financing! Bye bye, financing! NOW let’s see how it goes!
“The reversal is particularly striking because many government officials and housing-industry executives had said that a nationwide decline would never happen, even though prices had fallen in some coastal areas as recently as the early 1990s.”
Black swan events have a way of never happening until they do.
David Learah’s writing a new book: “Space Aliens Are Buying Property.” This is to follow his latest book which is due to be published: “Buy Property Now - My Tin Foil Hat Is Giving Off Signals.”
/i David Learah’s writing a new book: “Space Aliens Are Buying Property.”/i
So sorry - meant to say this is just about the funniest statement I have read in a long time…
“Bad credit has supplanted terrorism as the gravest immediate risk threatening the economy, a key national research group reported Monday.”
“Borrowers’ withering ability to pay their bills and the subsequent fallout in the credit markets this summer topped the list of short-term risks on peoples’ minds, according to a survey of 258 members conducted by the National Association of Business Economics.”
Who’d've ever thunk abandonment of lending standards could pose a graver risk to the the U.S. economy than terrorism?
True story: On 9/11/01, a convention’s farewell breakfast was underway in the Marriott at the World Trade Center. From up far up above came a tremor that caused the chandeliers to shudder.
The conventioneers looked at each other and some of them wondered if an earthquake tremor just happened.
Then there was the BOOM! And someone shouted, “Bomb!” The conventioneers headed for the exits.
What they heard was the sound of the first plane hitting the North Tower of the WTC. They got to see the second plane after they were outside.
What was the convention to which I’m referring? It was the NABE convention. A local economist was there, and, from what I’m told, he is still quite traumatized by the events of that day.
Your anecdote considerably increases the significance of the NABE’s comparison.
I’d say that bad government is a worse risk than bad lending or terrorism. OBL can’t hold a candle to Mao, Stalin or Hitler.
This is the reason that the housing bubble doesn’t concern me nearly so much as the people/government’s reaction to said bubble. Bankruptcy or homelessness still beats the gulag or gas chamber.
Those jerks get hold of a nuke and see if this holds up. We are really close to WW3 out there.
Toll Brothers Inc. CEO Robert Toll said on a conference call Aug. 22. ‘Traffic is pretty stinky out there.’”
You said it Robert…
Let’ em rot.
I think Robert Toll’s time in jail will be “pretty stinky” for him, too.
Police Chief Grady: “Desperation is a stinky cologne”.
http://online.wsj.com/article/SB118821448140809625.html?mod=hpp_us_whats_news
“The market had a significant rally last week, and is just taking a breather for a bit,” said Art Hogan, chief market strategist at Jefferies & Co. Last week, the major indexes posted their strongest weekly gains in months.
How long will the “bit” be??? His presumption is that it will go higher, and soon??
My sister has a colleague who needs to move to the east coast for work. He lives in South Orange County - Ladera Ranch to be more specific. The TWO pesky foreclosures on his street are thwarting his efforts to sell at a “market” price. I’m sure he’s a nice guy so I don’t wish him ill - but it’s definitely a sign of the times.
Isn’t that the location that BMIT refers to as “Fraudera Ranch”?
Gotta love these RE agents, went to a open house (this property has been on the market 14 months) yesterday and the agent tells me wonder what that dumpster is doing on the driveway across the street, i said the place went to bank owned and the owners got mad and trashed it she said, “i didn’t think anybody in the area would be bank owned”?
The phrase “I don’t think” pretty well sums up how most real estate agents go through life.
The anger phase of the housing bubble stages of grief can be hell on comp values.
This is going to drag out a while longer. It will be a cruel winter in Califorina with all the resets putting people on the streets. Lots of bitter talk.
Then hostility to the lenders especially about the REO on the books. The numbers will be getting pretty big in Jan/Feb. Sherif will be busy in a good bit of that time posting defaults and will fall behind do to sheer number.
Then the REO will sit and sit and sit as the banks ask too high a price with few people with credit and few people can make a jumbo payment.
THen spring arives and its a long hot summer before the next wave of resets shows on the horizon. The rest of the economy tanking will also become apparent and overwhelm other concerns.
There’s roughly a six month gap between adjustments and foreclosures… so the real brunt of it will be around may->august depending on how many increased payments FB’s can make…
Good article on Mauldin’s site about the impact of the housing sector… “The Ongoing Impact of the Housing Sector”
http://www.investorsinsight.com
Got popcorn..lol
Time to toss around the R-word?
With 4.5 million unsold homes sitting on the market, could we be looking at a recession? Stacey Vanek-Smith talks to economists and takes a look into the markets.
TEXT OF STORY
Tess Vigeland: Sick of hearing about subprime? Eh, you’re not the only one. But don’t count on it going away anytime soon. A survey out today from the National Association of Business Economics may add some fuel to the fire.
The trade group’s members said defaults on subprime loans now pose a bigger threat to the U.S. economy than terrorism. And to top it all off, some pretty grim housing numbers today. Anybody want to start tossing around the R-word? Stacey Vanek-Smith takes a look.
Stacey Vanek-Smith: There are 4.5 million unsold homes sitting on the market, according to The National Association of Realtors.
David Lareah: This is starting to look like a typical housing recession.
Housing economist David Lereah says the real problem is that people can’t get the home loans they need.
Lereah: Too many homes and not enough buyers is basically what’s happening right now. There may be buyers out there, but they can’t obtain a mortgage.
http://marketplace.publicradio.org/shows/2007/08/27/PM200708271.html
I don’t seem to understand what all the surprise is about.
Everyone, as far as I can tell, from the mortgage originators to the banks to joe6pack knew that loans were being made with a wink, knowing full well that it was likely the individual with the loan could never, ever pay it back. They were all betting, know, requiring, that housing continue to go up 15-25% a year.
Then it doesn’t.
And everyone is acting all surprised that people who didn’t prove they had any income, with a history of not paying back their debt obligations, are suddenly not paying back their debt obligations.
Duh.
while other potential buyers are simply waiting for the mortgage market to stabilize.
This is an excellent example of the NAR just not getting it right again regarding the issues in the housing market. The real and major problem in the RE market is AFFORDABILITY. Housing costs have climed well beyond the affordability range of most buyers and has almost wipped out the first time home buyer. Until prices drop in almost all markets, specifically Florida, inventory will continue to climb and sales drop. Yen and the NAR just don’t get it and that has contributed to their continued downfall in credibility!
“A different manual states that loans could be written for borrowers even if, in a family of four, they had just $1,000 in disposable income after paying their mortgage bill. A loan to a single borrower could be made even if the person had just $550 left each month to live on, the manual said.”
If this was indeed the policy at Countrywide, it is clearly a recipe for disaster and failure! To me, it looks like greed overcame ethical principles driven by a mortgage company who clearly knew that these loans were going to be put into bonds and sold to unsuspecting investors who would bear the burden of risk. This type of business conduct needs further investigation and Countrywide should not be bailed out for their lack of ethical business conduct!
Now that the free money period is over, it all comes down to affordability on real terms. The problems you see on Wall Street are not liquidity, you can give the banks all the money you want to lend, but if the criteria to borrow now means having a job, a down payment, and being able to afford the house you’re buying, is it really that difficult to figure out that with affordability ratios under 10 percent in the Northeast and California that housing prices must come down in a very big way. The statistics you see poping up now that the NAR and some talking heads claim may be a “turn around” are nothing more than review mirror views……its going to get real bad for about 2 years or more - this should not have been a surprise to anyone and it does no one any good to candy coat what occured and what is coming.