Sometimes It’s Not The Right Time To Buy A House
The Chicago Tribune reports from Illinois. “Surrounded nationally by a residential real estate market in decline, some Chicago buyers and sellers seem so determined to get the price they want that they would rather not consummate a deal than give in. Dave Zebutis, who has been house-hunting for nearly a year, said he believes prices are going to fall significantly and that he is determined to wait it out.”
“‘The market drives me batty. They all feel overpriced,’ said Zebutis, who lives in Westmont and has been looking in several DuPage County communities. ‘It seems that nobody is really making a move, despite all the news.’”
“‘We’re waiting for prices to come down,’ he said. ‘It seems that people are trying to get as much as they can, and you can’t blame them. But prices seem ridiculously high for what I think are just regular houses.’”
“Deborah Gorman is trying to sell a home near Hobart, Ind., that she bought as an investment and remodeled. After 19 months on the market, five real estate agents and several price changes, she says she’s at her limit.”
“Originally listed for $145,000, it’s now priced at $130,000, she said. Buyers are unreasonably demanding, she said.” ‘One offered me $126,000, but they wanted me to pay everything…points and all their closing fees and home inspection,’ she said.”
“‘People tell me it’s the nicest one they looked at but they all say they don’t have the credit,’ she said. ‘One couple wanted to buy the house. He had two motorcycles sitting in the garage but they had no money in the bank. People spend their money on big-screen TVs and motorcycles and they don’t leave themselves enough cash for the down payment.’”
“Barbara Hibnick, an agent in Buffalo Grove, said she is skeptical that local prices, overall, are staying in positive territory.”
“‘I’m not seeing it, I’m sorry,’ said Hibnick. She said the inventory of houses for sale in her area has doubled since the beginning of the year.”
“‘I used to tell them they have two choices — either price it [lower] to sell it or get it in absolutely gorgeous condition,’ she said. ‘I tell them they have to do both now, unless they’re going to dump the house. Their first reaction is, ‘Are you crazy?.’”
The Herald News from Illinois. “Will County’s once red-hot housing boom has gone bust. The number of residential building permits has dropped significantly, leading municipal governments and businesses all over the county to revise revenue estimates.”
“‘All businesses go through cycles,’ said Will County Board member John Gerl, who is chief financial officer for Phoenix Developers in Joliet where home building is off by 50 percent. ‘This is a serious down cycle in the residential home building market.’”
“The downturn was caused by a ‘perfect storm’ of conditions, said Erik Doersching, an executive VP for a real estate consulting firm. Though the downturn is happening region wide, it’s more pronounced in Will County because Will County has been one of the fastest growing areas in the nation in recent years, he said.”
“Doersching’s firm projects total building permits in Will County will reach only 3,122 this year, compared to 5,882 in 2006 and highs of more than 8,000 a few years ago.”
“‘It’s a significant housing downturn,’ he said. ‘We’ll never get back to the same levels we saw nationwide or in Will County from 2003 to 2005.’”
The Star Press from Indiana. “The number of foreclosed homes in Delaware County each year has risen steadily from 223 in 2000 to 700 or more likely for this year, according to the Delaware County sheriff’s office.”
“Some in the local real estate business say tougher standards for home loans are a good thing. ‘It’s better that the requirements for loans are tighter now,’ said real estate agent Sharon Strahan. ‘We saw a lot of people who refinanced for more than their house was worth.’”
“Strahan recalls a would-be homeseller who owed $90,000 on his house and hoped to sell it. ‘I couldn’t get $30,000 for his house,’ she said. ‘He ended up filing for bankruptcy. That was an extreme example, but we do see that.’”
“‘I used to tell people sometimes it’s not the right time to buy a house,’ said Steve Jobe, area mortgage sales manager for Old National Bank. ‘Maybe in a year, they can pay down their debt and earn more. In today’s world, people want to own a home. But I want to sleep at night knowing someone won’t suffer from their mortgage, and that’s what happened in the subprime world.’”
From News Channel 18 in Indiana. “Over the last few years, foreclosures in Tippecanoe County have more than doubled according to the Tippecanoe County Sheriff’s Department. Lafayette Board of Realtors President Cheryl Butcher says the increasing number of foreclosures is hurting home owners and lenders.”
“‘Whoever has the title now, they’re taking big hits on those homes because they’re selling for a lot less, even if they’re in good quality people don’t want to pay normal market prices because they’ve been vacant for up to a year,’ said Butcher.”
“Broker Sherrie Cocanower says when homeowners can’t pay and lenders foreclose, it takes realtors more than a year to get a house back on the market.”
“‘Trying to deal with some of these lenders, you don’t always have the right phone number to call you can’t get the information you need, you can’t get people to call you back, sometimes it’s a nightmare,’ said Cocanower.
The Detroit Free Press from Michigan. “Brian Jurvis of Hazel Park wasn’t surprised when he was laid off late last week from Countrywide Financial Corp.’s subprime lending division. About 16 people worked there. He went back Tuesday and the office looked abandoned.”
“‘There is no subprime market anymore,’ said Jurvis. ‘I knew something was coming down.’”
“‘I’m not aware of a subprime lender with offices in Michigan,’ said Drew Sygit, a certified mortgage and equity planning specialist in Bloomfield Hills. ‘A lot of them will not lend in Michigan.’” “For five years, the nation’s housing market was booming and mortgage companies grew quickly, at times offering lucrative jobs to people who had little experience.”
“Jurvis, an account executive at Countrywide, worked in the mortgage business a little more than two years after several years of building and installing elevators around Michigan. He now plans to go back to school to get his teaching certificate.”
The Star Tribune from Minnesota. “No one needs to remind Danelle Hoeppner that the number of mortgage defaults is skyrocketing. Almost two months ago, she and her fiancé, Brad Cheney, made an offer on a Bloomington house that was in default, but they have yet to get a response from a California lender that holds the mortgage.”
“‘With all the houses on the market, don’t you think they’d want your money?’ Hoeppner said. ‘I guess that’s not how it works.’”
“Real estate agents and prospective buyers say that offers on many bank-owned houses go unanswered for weeks and that closings are sometimes abruptly canceled. Sales agents blame the delays on a growing backlog of listings and on ill-prepared mortgage companies that might be hundreds of miles away and grossly understaffed.”
“Some experts say that buyers themselves are contributing to the problem by making unrealistic offers in hopes of snagging a bargain.”
“‘It’s unbelievable, and I’m hearing this from every agent I talk to,’ said Jay Anderson, of Coldwell Banker Burnet in Minneapolis, who has been waiting six weeks for a response to an offer of his own on a foreclosure home that he plans to hold for investment.”
“Earlier this month, a Minnesota study based on sheriff’s sales said there were 11,207 foreclosures statewide in 2006, and a record pace has continued through 2007. In July alone there were 975 foreclosures in the 13-county Twin Cities metro area, up from 392 a year earlier, according to RealtyTrac.”
“Danielle Babb, a California-based real estate investor, said inquiries about bank-owned listings have increased 400 percent nationwide, but because a typical lender can process only 10 to 12 a day, the levels are becoming unmanageable.”
“‘And with layoffs [happening within the industry], banks are even more understaffed, so they’re not ramping up yet,’ said Babb.”
“Jim Miley, president of residential real estate for Bremer Bank in Minneapolis, said many lenders are losing big bucks on their listings because they financed them at the peak of the market or extended credit beyond the value of the property. ‘We’ve had some very zealous lending going on,’ he said.”
“Richard Bauer, the agent representing the anxious sellers of the house that Hoeppner and Cheney are trying to buy, said that, across the country, lenders are struggling to adapt to changing market conditions.”
“Bauer said that he has received four offers on the Bloomington house, but that none of the other buyers was willing to wait for the lender to process the offer, leaving the sellers closer to foreclosure.”
“‘You hear that and it doesn’t sound logical,’ said Bauer, an agent in Minneapolis. ‘But you ask: ‘Is this whole mess logical?’”
“‘People tell me it’s the nicest one they looked at but they all say they don’t have the credit,’ she said. ‘One couple wanted to buy the house. He had two motorcycles sitting in the garage but they had no money in the bank. People spend their money on big-screen TVs and motorcycles and they don’t leave themselves enough cash for the down payment.’”
I wonder why not? It couldn’t have anything to do with a historic period of credit standard debauchery, could it?
You have to wonder why a RE Agent would waste his/her time with unqualified buyers. I guess desperate times….
In my business, I qualify them as quickly as possible. Why? Because I don’t like to waste time on the unqualified people. But, then again, I’m not in real estate.
That and incredibly low interest rates on checking, savings, CD’s etc. Why save when inflation just eats up what you are trying to save ?
Testify Mo. If a nation’s government has no respect for its currency, why should its citizens?
Yes!. Greenspan et. al have systematically punished savers. Speculation was the only choice left to beat inflation.
“they don’t leave themselves enough cash for the down payment”
Hey, it was the “new economy” all over again. People were telling them that it was smart to spend, that they *could* have it all.
No, scratch that…they were told that they *deserved* to have it all.
Worse. They were told that they had “earned” it.
Apparently by fogging a mirror.
OT: According to History Channel emperor Nero set the fire to make more room for RE.
It’s amazing how history repeats itself.
“they don’t leave themselves enough cash for the down payment”
Who the heck needs a downpayment anyway - that’s soooo 1990’s.
And soon to be 2008’s as well….
I’ve been yelling at my friends for years to have a big down payment, AND low debt, AND cap themselves at 300% of their AVERAGE annual income for the maximum loan value. Guess how many listened? I’ve had SO MANY people ask me now (years too late) how much is “the right price”, so I created a website at http://www.truemortgagecalc.com so they can enter all their numbers and come up with the (really miniscule, likely) maximum house price they can afford. Each one of them that visited the site so far told me that the number that popped up is 1/10th of what they’ve already bought, or are looking for.
There is a LONG LONG LONG way to fall in prices. And a long way to rise in terms of common sense.
> Affordability based on debt/income ratio: NaN
LOL
(I entered debt as $0)
By the way, for those who don’t get the tribune, the house looks like a double-wide.
Is it just me, or is she really saying “If they hadn’t bought the bikes, they could afford to buy my overpriced POS house…….”
Depending on the bikes, and on the local price for gas, those bikes might pay for themselves in a couple of years, if you ride them on errands or to work, instead of driving a pickup or SUV.
How nice of the Trib to send reporters down to Hobart - probably to show their North Shore/ NW Exurban readers how the other half lives.
“Deborah Gorman is trying to sell a home near Hobart, Ind., that she bought as an investment and remodeled.
People spend their money on big-screen TVs and motorcycles and they don’t leave themselves enough cash for the down payment.’”
Oh, boo-f’in-hoo lady! Cry me gd river.”People spend all ther money on all these things that don’t directly benefit me.” Tell it to someone who cares.
“Some experts say that buyers themselves are contributing to the problem by making unrealistic offers in hopes of snagging a bargain.”
Ie. a house at a cost of three times their income or five times their downpayment.
I plan to keep contributing to this “problem” until I get the deal I want.
Deep thought…
If its a problem, its an easy one to ignore or politely differ: Just note that price is below what the seller will consider. That isn’t a problem.
Its only a “problem” when its the only offer.
or its the market price…
Bwaa haa ha!
Got popcorn?
Neil
That’s right! These damn buyers just need to get in lock step and start offering what it’s listed at.
Lets see..house price $300K..20% down..$60K
house price 200K..20% down..$40K..
And they want to know why buyers want a lower price..I think all the sellers, realtors and mortgage people need to have a heart to heart talk that prices are going to fall even faster and harder since lenders are now going back to requiring a 10-20% down on properties. They need to do the math on HOW MUCH MONEY that actually is to buy a home..
I stand by my prediction that 25% down payments will be typical in the darkest days of this downturn.
Got popcorn?
Neil
In the bay area where the prices are at 700K - 1Mil. 20 percent down is around $140K -200K. Tack on Jumbo Loans requirements with higher interest rates. # of Buyers=Zero. Investors/sellers are paying HUGE mortgages if they wait for their target price. I see an anvil falling from the sky.
If you lowball home sellers, the terrorists win!
LMFAO - a potential buyer looking out for her/his own best interest - is downright unpatriotic.
Now that’s an Elitist point of view.
I saw someone on Kudlow a few months ago when RE bubble was mentioned. He said “When Americans bet on the wrong horse they work harder to get it back, that’s what makes America so great”.
I have one statement for him “Ever heard of Internet leveling out the playing field of knowledge?”
Yepper, the only reason a CNBC hack would even have an inkling about what makes this nation’s people great - is because they spend so much time selling them BS.
“I have one statement for him “Ever heard of Internet leveling out the playing field of knowledge?””
Rentor — that’s an excellent point that is missed or underestimated by a huge number of shot-callers, even at the top of the food chain, IMO. It won’t last forever — we may well lose those rights or be so threatened or intimated, under the guise of some form of “security” or lawsuits, as for it to be a less effective grapevine than it is today, but for now, we have ‘em by the short ones and I truly believe that we can win big.
“buyers themselves are contributing to the problem”
Problem for WHO? I think that the buyers are *solving* the problem of too high (vs. wages) house prices.
Realtors complaining about people with no cash for down payments ?!
Until last month buyers did not NEED a down payment.
Realtors: always pointing their starbucks holding, gold bangles clanging, gaudy ring wearing, french manicured hands at someone else as the problem to why they cant get a huge commish.
hilarious, actually.
LMAO at the realtor description
WTF? If the only offers you are getting are “low-ball” offers than that is the current value of the freaking house!
“Some experts say that buyers themselves are contributing to the problem by making unrealistic offers in hopes of snagging a bargain.”
I’m indignent. The nerve of those buyers to think that they could pay market price. My commission is not acceptable at that lower rate.
You feel like you are walking through the cosmetic section of Neimann Marcus. The salespeople act like they are doing you a favor to wait on you and are not sure you are up to their standards. Their standards? They are a salesperson at a department store. They don’t have standards.
Fraud, deception, embezzlement and crimes against property will soar in the years ahead, although crimes of violence will decrease. There’s a little story that offers implications as far as the importance of insurance is concerned but this should not be treated as a recommendation of any kind.
It was during a bright sunny day in mid-July that Sol, on vacation in Atlantic City, meets his long-lost pal, Abe, strolling along the boardwalk.
“Abe! I haven’t seen you in years, what are you doing down here? On vacation?”
“Sol! Is it you? I live down here now. I’m retired. Remember the factory? Well, the furniture caught fire and the factory burned to the ground. The insurance company paid me five million dollars. I’d decided I’d had enough of the furniture business so I decided to come down here and retire. What about you Sol? How are you doing?”
“Oh, I’m still in the plastics business. I’m down here on vacation.”
The two friends part but the following year both meet at the same place at the same time again, this time Abe spots Sol first.
“Sol! It’s you again. So, you’ve decided to have another vacation in Atlantic City?”
“No, Abe. I decided to retire just like you. Remember the plastics factory? Well, last year we had a flood. The insurance company paid me six million dollars so I decided to retire too.”
Abe became pensive, hesitated, and then whispered gently into Sol’s ear, “Tell me, Sol, how do you start a flood?”
I know in many places the insurance company only pays enough to rebuild, which has nothing to do with the price of the loan.
I know that my townhouse in NOVA was only covered for $180K (estimated cost to rebuild) when my mortgage was $280K and I paid $350K for the place (2004).
Don’t worry I sold for $390K in 2006.
Some people who try things like that may get a real surprise when their rebuilt house still doesn’t cover their debt!
However, you can have your insurance reevalute your property each year to see what the replacement cost is. We had alot of people in Florida who had the same insurance company for years get sticker shock when they realized how underinsured they really were.
I don’t mean to be PC, but that joke is a little offensive. Those are anti-Semetic stereotypes.
I’m not suggesting that the person who told the joke is a closet Nazi or who wants to see the Holocaust resumed, or that anyone who laughed at it should be forcibly re-educated by the thought police. It’s just a joke, it’s not the end of the world. But it is tacky, and a little offensive, and I would hope that the next joke could omit the unnecessary references to Jews.
Lenders can not respond to offers on foreclosed property because the staff is not available to handle to paperwork.
Weeks go by. Offers collapse as buyers move on.
The process for liquidating the market is not available.
This is an additonal variable pressuring price.
My father told be about houses that were offered to folks for free during the depression if they would just pay the property tax.
No takers.
They could sell the houses if they wanted to. They simply don’t want to book the loss.
Thats the same conclusion I came up with a few months ago. The lenders are holding out in hopes the market will turn. It didn’t work for the homes previous owner and it won’t work for the lender either.
I’ll be rolling my pennies tonight and putting them aside for this type of deal.
I wonder about taking possession on a house that was bought at far less than the seller’s wishing price. You would almost have to do the closing right there in the living room, so that the angry sellers did not have the chance to dump concrete down the toilets or punch any holes in the drywall before they left.
Mabye there is a market for “on site real estate closing security services” over the next few years?
Drywall destruction I can stand…concrete in the pipes, not so much…especially if the house has a post-tension slab.
Arroyo — “Flawda” people have known the workaround for that, for many years. Copper pipe in the pad often would rot — the blame typically was put on soil that had previously been citrus orchards. Happened to my folks and to a house we owned after we had sold it. We put pvc pipe up through the attic. The bad news is that in summer, you’d best run the cold water a minute before sticking your hand under it, because it gets super-hot; and if you don’t run it along the soffit as far as possible, you risk leaks down into the house at the joints.
“said Jay Anderson, of Coldwell Banker Burnet in Minneapolis, who has been waiting six weeks for a response to an offer of his own on a foreclosure home that he plans to hold for investment.”
As noted, some houses are STILL not meant for people to live in, you still have idiots believing they will snag a house and hold as an investment. Listen, ‘investors’, if the house you plan on buying cannot pay for itself with a regular loan, you are not an ‘investor’, but a SPECULATOR.
Get it?
I have some friends who have gotten into the business of buying and fixing up foreclosured homes in south Florida. The other day they were saying that it was not going as well as planned. I am amazed how people can’t understand that we’re no ways near the bottom yet. How can you watch home prices fall each month by about 4 or 5% in Florida and think this is a good idea?
How can you watch home prices fall each month by about 4 or 5% in Florida and think this is a good idea?
Are they really falling that quick? I thought it was more like 2%/month. (NAR will only admit 20%/year) Why am I’m asking: for a market will reach rational prices really quick with 4%/month depreciation!
In two years that is buying 37 cents on the dollar! 
About right…
Got popcorn?
Neil
“‘With all the houses on the market, don’t you think they’d want your money?’ Hoeppner said. ‘I guess that’s not how it works.’”
“Real estate agents and prospective buyers say that offers on many bank-owned houses go unanswered for weeks and that closings are sometimes abruptly canceled. Sales agents blame the delays on a growing backlog of listings and on ill-prepared mortgage companies that might be hundreds of miles away and grossly understaffed.”
This ties in a bit with what I posted earlier about REO departments. They’re not in much of a hurry right now. My broker friend made an offer on a bank repo for her buyer (cash, no contingencies), and the gal at the bank said she’d get back to her “sometime after I get back from vacation in a couple weeks.” I think it was a month total before she heard back.
“Jurvis, an account executive at Countrywide, worked in the mortgage business a little more than two years after several years of building and installing elevators”
He was convinced that real estate would be a good career move…everyone in the business kept telling him…home prices… always go up…but now he’s seen the light…
“‘There is no subprime market anymore,’ said Jurvis. ‘I knew something was coming down.’”
It’s cyclical…with a few… up’s & down’s
He only installed elevators for dead Christian real estate agents. They only go up, just like real estate prices.
I believe my home state of Maryland is immune to the housing bubble crisis. This article explains why:
http://tinyurl.com/ysdemx
Can someone counter that?
You’re joking, right??
Are you insinuating that it’s NOT different in Maryland? Don’t you know EVERYONE wants to live in Maryland? Sheesh!
Lol, sorry, I didn’t know that…how silly of me.
You should know how different Maryland is. Why… it has all of the manners of the North and education of the South.
(He runs away).
As long as the military industrial complex is propped up by the war, I would think MD will do fine. I can’t believe the Reps are not going to find some way to prop up the economy until after the elections.
If housing prices are more than 3x median income, Maryland is in a bubble (they are more than that). If the average buyer in Maryland can not afford 10% down, and preferably 20% down, then Maryland is in a bubble (they can’t put that down).
I hate to tell you but nobody will be immune because we all use the same currency. We will all pay the price in some way or another. Our government should have done something long ago to prevent what is happening today but like always they are asleep at the wheel…..
No, they are stearing us into a New World Order with global currancy.
I hate to tell you but nobody will be immune because we all use the same currency. We will all pay the price in some way or another. Our government should have done something long ago to prevent what is happening today but like always they are asleep at the wheel…..
“Deborah Gorman is trying to sell a home near Hobart, Ind., that she bought as an investment and remodeled. After 19 months on the market, five real estate agents and several price changes, she says she’s at her limit.”
“Originally listed for $145,000, it’s now priced at $130,000, she said. Buyers are unreasonably demanding, she said.” ‘One offered me $126,000, but they wanted me to pay everything…points and all their closing fees and home inspection,’ she said.”
************
With that attitude our friend Debbie deserves all of the very not-so-nice things that are going to happen to her in this market.
I hope her renters (which she’ll resort to in a few months) will be the worst kind.
I laughed hard when reading this.
Now, a 6.5% mortgage is only $868/month for a $121k home. Why $121k? That is what I assume the net sales price, after points and other closing costs, pre RE commision, would be.
So for about $5k, this “investor” is willing to loose a sale. Indiana has a very weak market right now… Four months of carrying costs is easy to imagine. In fact, if they do not sell now, the next “selling season” is March… That could be six to seven months of carrying costs for the investor. OUCH!
Then we can have fun discussion mortgage options circa 2008.
Got popcorn?
Neil
“Indiana has a very weak market right now”
Understatement of the year. Especially in that area, which is on the eastern edge of Lake County. That’s the same county in which Gary is located, a city that regualrly fights it out with Detroit and Atlanta for the highest murder rate in the country. No one, I repeat no one, is going to pay any kind of premium to live in Hobart, even if it is 10 miles away from all the fun.
Don’t forget that RE selling is a verrrry seasonal enterprise in the Great Lakes states and things essentially lock up in winter. No one buys houses here in Dec, Jan, or Feb since you often have to climb over snowpiles or navigate slippery sidewalks and driveways just to get in and look.
Good news everyone! The consumer confidence index was down by the most in nearly two years, but the good news is that the decrease was LESS THAN EXPECTED!!!
http://tinyurl.com/39kkn3
Also, volatility seems to have left the stock market. Take a look at this nice smooth curve:
http://tinyurl.com/3c2e7w
See, it all depends on how you look at things!
Yeah, there was a guy interviewed by CNBC this morning who proclaimed something like “Well, a 10-point loss would be a disaster, but we’re still above 100, and it would take a hit of thirty to forty points to place us in the recession area.” I think I bothered my GF a bit when I started yelling at the radio “Well we had a six-point loss from 111 to 105, now, didn’t we? Isn’t that pretty significant? Sixty percent of a disaster? Hmm? Hmm?”
Of course the CNBC puffs didn’t ask that, or any other, hard questions.
Never thought I’d be cheering for a bear market
Buyers are to blame for making unrealistic offers!? Oh, boy. Now I’ve everything!
“Hi. I understand you want $600,000 for a house you bought 4 years ago for $275,00. I’m willing to pay you that $275,000 plus a realistic (NOT UNREALISTIC) year after year appreciation. My offer is $315,000 and as we are in a crashing market that’s a take it or leave it offer.”
I’m REALLY looking forward to seeing these realtors and brokers standing in line at the soup kitchen. Not much hope of that I suppose because they can go back to selling used cars and fake telemarketing gold mining shares for a mine in the Phillipines. Ooops! I forgot. Telemarketing is no good and cars are not selling either. Well, I suppose they can get a job at the airport with Homeland Security.
Door to door encyclopedias anyone? Yoy know those “baby genius” DVD’s just don’t work, studies say.
Mike — you’re generous — not sure I’d offer that much. I’d go back to 1997 prices and add 3% per year and even that may well be more than prices will be at the bottom, given the propensity to overshoot.
The sellers think that if they wait long enough, the prices will come back, but they forget completely about “comps.” And it’s the comps that are going to kill their pricing power completely. Whether tanking comps result from a few foreclosures or a few wise capitulations in their neighborhood/area, it’s coming and there is nothing at all they can do but sit and watch — or cut their price fast and get out of Dodge.
NO ONE deserves one red cent of profit. Why make an offer if the seller isn’t taking a bath.
Funny you mention 1997. I’ve found another Chandler, AZ house that I would probably buy, for the right price. The original owner bought in 1997 for $207k. Now asking $515k. That’s about 9.5% compounded. I figure at 5% compounded the house is worth about $333 right now (probably less due to correction overshoot).
How would I present this offer? “I will pay you what you paid, plus compounded appreciation greater than inflation over the 10 year period that you owned the property”?
Aug. 28, 2007
Final journal entry
Just read HBB Midwest news excerpts.
Feeling overwhelmingly depressed.
Schadenfreude inefficacious.
Tonight’s dinner: polly pocket au gratin.
Goodbye, cruel world.
Luv,
Jen
Tonight’s dinner: polly pocket au gratin.
Goodbye, cruel world.
Death by Chinese-made, lead-infested toys?
The Chinese are creating a kinder world order. They poison us in the following ways:
1) Contaminated pet food. Fido will die at the same time you do, No dawg pound.
2) Lead in toys. Your baby dies with you. No foster home 4 junior
3) Contaminated fish food. Kill u
4) Faulty tires - If all else fails - Adios
Tonight’s dinner stuffed cabbage and deep fried bass along with some Leinie’s Creamy Dark.
If I have to go from the cruel world at least it will be with a full stomach.
What happened to the stock market today? I thought last week’s rumored merger between ETrade and Ameritrade had injected new optimism into the hearts of investors everywhere. What am I missing?
They’re waiting for hints of a rate cut, demanding soon to follow….
Demanding has been hear for weeks!!!!! Listen to Kudlow… Bernanke is the biggest dolt ever….
Rate cut hope is stale and more bad news keeps coming out. The Fed has to feed the croc every week or it starts eating its’ young. This last rally was a great opportunity to get short the high-fliers. 93% down day. Booya!
“‘I used to tell them they have two choices — either price it [lower] to sell it or get it in absolutely gorgeous condition,’ she said. ‘I tell them they have to do both now, unless they’re going to dump the house. Their first reaction is, ‘Are you crazy?.’”
Everyone thought Noah was nuts too.
“I tell them they have to do both now, unless they’re going to dump the house. Their first reaction is, ‘Are you crazy?.’”
Just dump it. Getting it into absolutely gorgeous condition runs the risk of losing the full cost of effort plus pecuniary outlays to the downtrend in prices.
Except that Noah was a fictional character - like Santa and the tooth fairly. The real-estate collapse is VERY REAL!!!
But…but…It’s different here!
I haven’t heard that from anyone in the last 6 months or so–honestly, it seems like most of the Soma-less people have figured it out.
I’ve heard it in Chicago in the last month.
(shrug)
I’ve stopped trying to explain to most people.
I hear it almost daily. I’m with ET-chicago, its past explaining. Time for the look of pity.
Got popcorn?
Neil
It’s different — in Chicago?
Maybe they aren’t making any more land in the MIDWEST?
I just heard it on the radio news this morning, as stated by a spokesperson for the local realtor’s association.
Who am I gonna believe, those liars or my own eyes, when for sale and for rent signs are littering the landscape?
“Originally listed for $145,000, it’s now priced at $130,000, she said. Buyers are unreasonably demanding, she said.” ‘One offered me $126,000, but they wanted me to pay everything…points and all their closing fees and home inspection,’ she said.”
Ya know - that is not that far off. 3 point on 126,000 is about $3,700 and a home inpsection is $400. All in all, about 6% less than her asking price…
“Deborah Gorman is trying to sell a home near Hobart, Ind., that she bought as an investment and remodeled. After 19 months on the market, five real estate agents and several price changes, she says she’s at her limit.”
“Originally listed for $145,000, it’s now priced at $130,000, she said. Buyers are unreasonably demanding, she said.”
Ever think that Maybe it’s you who is unreasonably demanding?
I looked at other listings in her area. For the most part my impression is that houses in her price range are really old dumps with only 1 bathroom. Anything worth living in is back up in the $300K range. Even with a cheapo remodel she’d have a hard time attracting buyers with any money.
“‘We’re waiting for prices to come down,’ he said. ‘It seems that people are trying to get as much as they can, and you can’t blame them. But prices seem ridiculously high for what I think are just regular houses.’”
Why are people here on this blog in such a hurry to part with their money? Before buying you need to see what is left of a community before buying into. Think of someone who bought into the midwest only to find themselves underwater from the past several weeks of storm activity, possible water shortages, forrest fires, etc. Spend your time checking out all the positives and negatives so that in 2011 should the opportunity prevail you are ready to buy with confidence. As for me, I drive the 20 miles to the coast on both Sat and Sun to enjoy the scenery, fresh air and a standard of living that I don’t have to pay for; yeah baby, life is good. Last weekend I even had store owners offering me deep discount specials if I would buy that day; one offer was too good to pass up but it will be a birthday gift for my wife in Sept.
Not to mention California seismologists say the “big one” is 150 years overdue based on historical averages. Imagine what that would do to home prices? 50% haircut overnight. Bankrupt insurance companies, etc.
Yes, I believe the big one is coming but the truth is most of us in CA do not have earthquake insurance. It is just too expensive along with everything else in this state.
The big one will not happen in California, those are all puppy quakes. The big one will happen in the Midwest.
The New Madrid Fault is due to go.
New Madrid could happen, too, but I sure wouldn’t bet on that over a 7.5+ “puppy quake” in Cali.
Actually,
New Madrid has a higher probability last I looked than Cali.
New York/Connecticut is almost (not quite) as likely as LA. When I was in Connecticut, they had a “puppy quake.” I sat their enjoying my coffee while everyone freaked out. The other Californian and I were in the room going: 4.2, nah… 3.8… Our sense of humor was not appreciated.
Got popcorn?
Neil
Hoz — probably too late a post — but OK, I’m interested (and not facetious). If a New Madrid biggie occurred, what areas will be devastated, “IYHO”?
…or Neil?
Everything east of the Mississippi. On the East Coast, the effects of quakes travel much farther than the West due to geology. Plus, buildings are not designed for quakes. Lots of 80+ year old brick buildings. Plus, major infrastructure damage including many major bridges, interstate overpasses, natural gas pipelines, etc. etc. none of which are designed to be quake-resistant. Big steel structures would likely stay standing.
St Louis to New Orleans with damage extending East to Chicago and to Louisville. A shut down of the Mississippi river for months if not years. Broken windows as far East as Washington DC, probably the most serious natural disaster the US could have. There is little preparation for such a calamity. To understand the damage, it is necessary to understand the Mississippi river. This is the main artery of the US. If the river shuts down so do exports. It is not economically feasible to ship large quantities by rail. The river to be shut down just needs to have a minor course change that makes it unnavigable, the course change has happened before. The shipping was sporadic and not as vitally important as today ~1811/1812
from analysis of news account of the time
” Many houses were badly damaged and their chimneys thrown down in St. Louis (Louisiana Gazette, February 8, 1812). The town of New Madrid was completely destroyed. Whereas, formerly it was 25 ft above river level, it was only 12 ft above after the earthquake. Near it the river overflowed its banks, and the land was covered with sand blows 12 to 50 ft in diameter (Pennsylvania Gazette, March 18, 1812). From these and other similar accounts, it seems that the epicenter of the February 7 earthquake was close to New Madrid.
On a global scale, the only other seismic region which is notable for such anomalously large damage and felt areas is the subcontinent of India. For example, the three great Indian earthquakes of June 16, 1819, June 12, 1897 and January 15, 1934 had comparable damage and felt areas.”
Felt in New England, the Mid Atlantic and southern US with the fault currently crossing 5 unprepared states.
The recent bridge collapse in Minnesota is foreshadowing our nation’s poor infrastructure when any kind of earth changes takes place. The New Madrid earthquake of 1811 or 812 was felt over the entire United States, changes the direction the Mississippi River flowed, destroyed forests, created lakes. It didn’t cause too much damage because of the area was sparsely populated at the time. According to geologists, there is a good chance (90%) that a massive earthquake will hit either the New Madrid or California’s San Andreas fault by the year 2040. Matter of fact, most geologist believe we are overdue for a major quake. If it hits the New Madrid, it is likely that over 60% of Memphis will be devastated, and over $50 billion of damages will result. If it hits San Andreas fault in either the Los Angeles or San Francisco areas, you will see massive flooding due to broken levees, freeways down, burning buildings, and a mass exodus of people leaving over $100 Billion in damages in its quake. With FEMA at the helm, (New Orleans as the model) these areas will likely not be repaired for decades.
Hoz (and others) — thanks. Maker’s Mark and I will sleep well tonight, but without the former, I dunno…
Kat — fortunately, sort of, I will be on the other side of the grass by 2040. I don’t fear hurricanes at all and have been through several in my lifetime, and I might adjust to tornadoes, given our warning systems, but the possibility of earthquakes freaks me out. Once turned down a good job (Tokyo) because of that.
I’ve brought this up before, but didn’t receive an answer or rebuttal. Wouldn’t razing tons of homes in the SFBay just tighten supply an exacerbate the affordability issue (assuming that people didn’t just pack up the car N.O. style and never come back)?
Be warned. The CNBC Comedy Business Show is rallying and parading the, “Property prices are starting to stabalize” shills. Just heard one coming out with one of the usual NAR sound bite quotes. There are of course a lot of NAR sound bite quotes. A few are: “Interest rates are low”. “Now is a good time to buy,” “There are some great bargains to be had,” etc, etc. This quote was the, “We are seeing some upticks in some markets and prices seem to be levelling off.”
Here’s the truth. Prices are NOT coming down. We have months, which could turn into years, if inventory out there continues to grow with more property being built and a million or so foreclosures.
How can you tell when the bottom is in? When a lot of builders have actually gone bankrupt. Remember companies like Enron and look at CountryWide recently. Enron was still spouting the, “Blue skies as far as the eye can see right up until Kenneth Lay was being shackled for his perp walk. Mozilo of CountryWide was all smiles about CountryWide until a few weeks ago. We can expect a few nasty surprises from big builders and hedge funds in the coming months. When prices have hardly moved for a year we MIGHT be getting near the bottom. My guess (but that could be revised if we hit a recession) is 2010 to 2012. Any levelling off at the moment is simply a pause before the next drop. If you are thinking of buying….DON’T. The blade on this property boom and bust falling knife is far sharper than the blade on the tech bubble falling knife. If you buy a $500,000 sfh in many areas, that will fall to $300,000 before this is over.
“If you buy a $500,000 sfh in many areas, that will fall to $300,000 before this is over.”
I agree with that — renewed my long-term lease, to put my rent where my mouth is.
http://www.thestreet.com/s/bond-manager-says-dont-bail-out-subprime/funds/mutualfundinvesting/10376423.html
Is there a single word for the superlative of “cynical?”
The Star Press from Indiana. “The number of foreclosed homes in Delaware County each year has risen steadily from 223 in 2000 to 700 or more likely for this year, according to the Delaware County sheriff’s office.”
“Strahan recalls a would-be homeseller who owed $90,000 on his house and hoped to sell it. ‘I couldn’t get $30,000 for his house,’ she said. ‘He ended up filing for bankruptcy. That was an extreme example, but we do see that.’”
- I was born in Delaware County, I can say with all honesty that there are 30k homes there!
Indiana was the LAST PLACE that a housing bubble should of happened.
Muncie is different. Everyone wants to live there.
Sad, in a different way — Muncie shifters were good stuff on ’60s muscle cars, especially the Camaro. I think Hurst way outmaneuvered ‘em on the PR front, but still Muncie brings back great memories of a great era in automotive history, IMO.
Blight moves in after foreclosures
“Houses abandoned to foreclosure are beginning to breed trouble, adding neighbors to the growing ranks of victims.
“Stagnant swimming pools spawn mosquitoes, which can carry the potentially deadly West Nile virus. Empty rooms lure squatters and vandals. And brown lawns and dead vegetation are creating eyesores in well-tended neighborhoods….
“More than 100 houses a day are being foreclosed on in Southern California, up from 13 a day last year. That’s still a relative handful for such a populous area, but even the optimists predict that the problem will soon get much worse.”
It is amazing to watch Kudlow. After months and months and months of “Goldilocks” and “Greatest Story Never Told”… Suddenly, the Fed was asleep for months as all indicators showed a brewing storm!
Does he think that no one remembers his lies!!!
I’m so sick of the “supply side” lies. Rich get richer, poor eat crumbs, middle class goes away… ARGGGHHHHH!!!!!!!
All the talking heads on CNBC are trying to blame Bernake for the down turn. Truth is reducing the fed rate is not going to turn the housing market around.
I watched Cramer and he was blaming Berneke also, then he said that the best capitalists were the Chinese??? Yea, Cramer just keeps digging his hole and demonstating that he is more of an idiot and it would be better to use a chimpanzee to pick stocks.
What people here have been saying for years has started, when YOY#’s are bad, try MOM#. If that’s bad too, then in desperation go back multiple years. About 3PM EST, Pisani tried talking down the 3% drop in housing prices with this gem (paraphrased): “Yes housing is down 3%, but if you go back 3 years it’s still up 25%.”
I know I watch that garbage spew from his mouth to. Thing is we are still walking into the stadium after having parked the car and the game is just begining. When the first inning is over more than half of the stadium will be empty because the people will just not belive that a housing crash has hit them.
One of the guys on Kudlow mentioned that most people did not buy at the peak and that they will be OK. He forgot to mention how many of the cash out refi people were hearing the tolling of the bells.
OK — we can think of your sports metaphor soon, when we hear announcers bring up all sorts of odd statistics, courtesy of their nifty software: “That was the longest 67-yard runback, by a sophomore in his second year at Crumbach, since No-neck McDuff broke in front of the intended receiver to grab the kickoff right here at Crumbling McStadium in 1943!”
House Prices Suffer Worst Fall In Index History
http://tinyurl.com/2d9bxb
An index measuring U.S. house prices suffered its worst decline since its creation 20 years ago, and there is no sign of a bottom for the market, according to a report compiled by Standard and Poor’s and economist Robert Shiller.
How about…..any investment needs to be researched prior to purchase no matter stocks or houses…unbelievable.
How about this - Houses are never good investment. I am lazy right now to provide a link, but it was proven before with enough links and discussions here that houses are not good investment.
A good house could be a nice place to live though.
OT..
Robert Reich on Kudlow…
His about to spew about free market capitalism. Let’s see how long before he begs for a rate cut.
Reich doesn’t care. Why should he? He doesn’t work a “job” like most folks. The entire economy could go directly down the sewer and he’d still have his house and speaking gigs.
Super piece:
http://www.minyanville.com/articles/index.php?a=13898
http://itulip.com/forums/showthread.php?p=14658#poststop
Apologies if this has already been posted:
Shiller’s interview with MarketWatch:
http://tinyurl.com/26q8em
So much good stuff today:
http://www.minyanville.com/articles/Merrill+Lynch-MA-AXP-credit+card-debt/index/a/13893
Good stuff
“No one - and I mean no one - ever expected these conduits to move from off-balance sheet back on-balance sheet and I don’t think the market yet understands the earnings, capital and liquidity impact of this migration. If you figure you need anywhere from 6-8% capital per dollar of loans, then a move of $1.0 trln from off-balance sheet to on requires $60-80 bln in additional equity capital. I don’t know about you, but I don’t see this kind of free capital sitting around. ”
This would screw up a bank loan pricing model a tad because of capital allocation.
sorry posted meant to post reply to Tx’s first article.
Reich is saying get rid of corporate taxes - I’m going to go postal if one more supply sider tries to answer with trickle down is the answer to the whole problem
Seller’s don’t want a “good” offer, they simply want the highest price ever paid for a home in their city.
I put in an offer of 160 on a FSBO duplex. There were 12 almost identical units sold in the past year. Eight were in the 150’s, 2 were in the 160’s and two builder’s fully furnished models sold in the 180s.
They didn’t even consider my offer of 160. They are living out of State and paying two mortgages. The house has been empty for three months. They now have listed it at 187 with an agent.
I called them up a few weeks ago to let them know two homes closed in the 160s. I told them that the homes were appraising under 170 so even if they contracted in the 180s, it would fall through in financing. If they sold to me they would not have to pay commission.
They still wouldn’t take the offer because “they don’t want to lose money” and their agent said just to wait and they will get their price!
I’m still renting but I have been trying to buy a home at a reasonable price for over a year. Seller’s aren’t being reasonable, they don’t look at inventory or any sale that’s lower than their asking price. I’m so happy that banks are being stricter with the appraisals, hopefully that will force sellers to face reality.
Send them an even lower offer!
tell those idiots and their realtor to bite the big one!
Hey instead of multiple bidders how about “MULTIPLE LOW BIDDERS” hhahahahahahhahahahahah. What do the units rent for?
“‘One offered me $126,000, but they wanted me to pay everything…points and all their closing fees and home inspection,’ she said.”
Haha.
She better take what she can get or settle in and hold.
I have an associate in a similar position. She’s asking 187K for a condo in a development where equivalent units are 150K. The place is sitting because she won’t budge, feeling that the new floors, bathroom and kitchen are “worth it”. She could sell the place for anything down to 110 and still turn a tidy profit.
Greed kills.
I think I just fell upon something. Get a group of investers together, but separate, at least 5 total. The fist guy bids at .20 on the dollar, the secon .25, the third .30 the fourth .35 and the fith .40.
Slowly increase the bids from the different souce and see where they acutlly pick up at, then if they take at .35 - get that guy to back out and push the .30. See how far they are trully willing to decrease the price of the property.
If it worked when the prices were going up, then why not when prices are going down.
“‘I’m not aware of a subprime lender with offices in Michigan,’ said Drew Sygit, Now know as D.S. the guy that changes your oil at jiffy-lube. Formerly A certified mortgage and equity planning specialist in Bloomfield Hills.
Patrick and Briana Schiebout wondered if such a situation happened when they bought their split-entry house in Rosemount. The first-time buyers saw it, loved it and made a full-price offer in an effort to clinch the deal.
It took the bank seven weeks to respond, and then it countered with an offer slightly higher than the original list price.
The couple, who saw a foreclosure as a great opportunity to finally get into the market, were willing to pay the higher price because they just didn’t have the energy to go through the process all over again.
“We threw our hands up in the air,” Patrick said. “We didn’t want to wait another seven or eight weeks, so we accepted.”
I am speechless
People are smart.
qt, I hope you were joking. If you weren’t, consider how much house you can buy making $65K a year. It shouldn’t be more than $195,000. In reality, 30-year-old modest houses in Frederick County (not nearly as affluent as Montgomery County), where I live, are usually priced at least $400,000. So everyone in MD is immune from tightening credit, ARM resets, and stupid speculators?