People Generally Feel Real Estate Is Overpriced
The Ellsworth American reports from Maine. “Sales of single family houses in Hancock County dropped 19 percent for the first six months of this year compared to the same period last year, according to the Maine Real Estate Information System. ‘House sales are definitely off,’ said Danny Sargent, president of Sargent Real Estate. ‘I have more inventory now in this office than I can ever remember and a lot of listings still coming on the market. The listings just continue to come in. Price-wise you’ve got to be very competitive.’”
“Derek Hayes, VP of business banking for Bar Harbor Bank & Trust said, ‘It’s really a buyer’s market.’ The area saw ‘really rapid appreciation for a few years,’ but now prices are declining, said Hayes.”
The Concord Monitor from New Hampshire. “Al Wait’s Contoocook home has been sitting on the market for 10 of the last 15 months, and it hasn’t sold yet. He started listing the three-bedroom, 1,600-square-foot home on Park Avenue at $299,500, and has dropped the price by more than $20,000.”
“‘I’m trapped. I can’t afford to live here, but I can’t go away,’ Wait said.”
“Wait’s home is one of about 90 single-family homes in Hopkinton and Contoocook currently on the market, according to the MLS, a figure area Realtors say is unusually high. ‘We’ve had double to triple our normal inventory for the last 12 months,’ said Judy Hampe, broker in Concord.”
“‘People are hesitant about investing, and generally feel real estate is overpriced,’ said Hopkinton Realtor Mary French. ‘A lot of buyers are hoping real estate will come down. Nowhere is housing flying off the market.’”
The Nashau Telegraph from New Hampshire. “Foreclosures are on the rise in New Hampshire. And the percentage increases look scary: Hillsborough County is on track to nearly double last year’s numbers and quadruple the year before.”
“Home values dipped again this year and houses are staying on the market a bit longer, according to the latest statistics from the New Hampshire Association of Realtors.”
“There were 353 foreclosures in Hillsborough County through Aug. 14 of this year, according to Registrar of Deeds Judith MacDonald. If that pace keeps up, foreclosures in the county could reach an all-time high of 500 by year’s end.”
“By comparison, last year there were fewer than 300 – all year. In 2005, there were 101. In 2004, there were 73. ‘I’ve been here for 27 years and I’ve never seen it like this,’ MacDonald said. ‘The future, to say the least, is bleak.’”.
The Hartford Courant from Connecticut. “In the latest sign that the nationwide credit crunch is worsening, lenders are saying no to borrowers who want no-money-down mortgages. ‘If someone walks in today with an A-plus credit history and a $200,000 salary but no money for a down payment, I can’t help them anymore,’ said Michael Menatian, president of Sanborn Mortgage Corp. in West Hartford, Conn.”
“The company was notified by its lender earlier this month that the lender no longer will cover no-money-down loans.”
“‘There is a credit squeeze occurring,’ said Michael Sheahan, director of mortgage banking at Webster Bank, one of Connecticut’s largest banks. ‘There is less money available for less credit-worthy borrowers or those providing less documentation on their loan.’”
“‘Our industry is changing by the hour,’” said Dan Rosenfeld, VP of a mortgage company based in Avon, Conn. ‘My screen flashes all day long, ‘No longer available.’ Lenders are really tightening their standards.’”
“Katie and Allan Chipps locked into a no-money-down mortgage through Sanborn in mid-August, on the last day they were offered. Securing that loan allowed the couple to submit a competitive offer on a new house they are buying in West Hartford, they said, without having to add a contingency clause to sell their current home first.”
“Katie Chipps said once the couple sells their current house they will use the profit to pay down the second mortgage or to pay other bills.”
“‘We would not have been able to make a competitive offer on a home without this mortgage product,’ she said. ‘It gives us flexibility in pricing our home and in using the proceeds from that sale.’”
From Hartford Business in Connecticut. “Sales statistics compiled by The Warren Group show condominium sales in Hartford County dropping 16.4 percent for the first six months of 2007. For the month of June, sales dropped a staggering 21.1 percent.”
“‘What we were going through in 2005, during the height of the craziness, was a crazy, elevated, goofy market,’ said Beth DiLoreto, with Prudential Realty Connecticut’s Wethersfield office. ‘That wasn’t normal, this is normal. I believe this is just a correction and not a time to panic.’”
“One explanation for the odd trends is that there isn’t so much an onslaught of individual condos being put on the market, as there are former apartments being converted to condos, asserts Christina Brine, with ERA Broder Group Real Estate in West Hartford.”
“‘The problem is that we had a bunch of condo conversions that flooded the market,’ Brine said. Some of those former rental units are too small to be attractive as ownership units. So they sit unsold, and unreasonably depress the market statistics.”
“‘Sellers are going to eventually have to bite the bullet on some of these condominiums,’ said Brine. ‘The sellers are still stuck in a year or two ago.’”
“Brine noted that the hype surrounding the impending retirement of baby boomers contributed to the condominium explosion that has not yet come to its expected fruition.”
“‘There was all this talk and so many articles about the baby boomers retiring to the city and to condos to be near their grandchildren,’ said Brine. ‘There’s a lot on the verge of happening in the city but it just hasn’t happened yet.’”
The Boston Herald from Massachusetts. “The foreclosure epidemic shows no signs of peaking yet in Massachusetts, with the number of homeowners unable to make mortgage payments soaring again in July, a new report shows.”
“Petitions to foreclose filed by lenders in court shot up 66.5 percent in July compared to the same period last year, the 18th straight monthly increase, according to the Warren Group, publisher of Banker & Tradesman.”
“‘July held more of the same for Massachusetts homeowners,’ said Timothy Warren, CEO of the Warren Group, in a statement. ‘More people are having trouble paying their mortgages, likely because rates on many are resetting, and more of those people who get into trouble are having a hard time getting out.’”
The Gloucester Daily Times from Massachusetts. “Thirty-three condos at Pond View Village that couldn’t be sold at full price and were pulled from a crumbling market earlier this year will be discounted and offered for sale again this fall, the owner-developer and the representative of major private lenders said yesterday.”
“With the markdowns, Joseph Flatley, CEO of the investment corporation, said he expected the consortium, including Bank of America, ‘to take significant losses.’ ‘We’re going to take a hit on this and it’s going to be substantial,’ he said.”
“‘We’ve never had a loss in our 17 years - this is the first,’ he added.”
“Flatley’s company will decide the new, discounted price for the 33 units, whose sale was projected to provide much of the cash flow to repay the loans. The units were offered at an average price of $289,000 before they were pulled from the market.”
“Buyers will benefit from his consortium’s losses, Flatley said. ‘You sell it for what you can,’ he said. ‘We’ll have to reduce the prices significantly.’”
“Under the work-force concept promoted by Gov. Deval Patrick, employers help their workers buy homes. Tina Brooks, undersecretary of housing and economic development, who received Flatley’s bailout proposal in June, disagreed. She said the work-force proposal for Gloucester was vague.”
“Brooks also questioned the need for work-force housing on Cape Ann. ‘Gloucester is not exactly a high-cost market,’ she said. ‘I’m not sure what the hurdle is for workers.’”
“‘My take,’ said Sen. Bruce Tarr, ‘is it’s a terrific project caught in a market collapse. Now all parties are trying to make it fit into the requirements and get it sold.’”
But but but New England and upstate NY won’t see price drops because “we were never part of the bubble”.
Get Stucco/Professor Bear,
Flip flopping between names is creating a lot of work for me. Please pick one screen name and stick with it.
I like Prof G.S. Bearly
Sorry — my old name seems to have “GotStucco” in the name field of one of my computers. Any suggestion on how to permanently change it (versus having to manually type it in each time I post)?
Clear all your cookies; that should get rid of all the browser “remembering” your old usernames. You can also delete all your temp Internet files, although that probably is not necessary.
In IE:
Tools -> Internet Options
Depending on your version of IE, you may have to dig in this screen, if you are using IE7 it’s on the first screen, just click the delete button.
Clear the cookies associated with this site.
It could be cookies or it could be that your browser is remembering form field input. Check for both.
Hey Prof,
So you used to be GotStucco? Glad to know it’s the same person. I always enjoy reading your posts, and was starting to get a little worried that maybe you quit posting.
Ben,
Just out of curiousity, why does this create work? Do you compile all our comments by user name on the backend to do searches or for your archive?
I work in IT, I am just curious as to what you are doing based off user name; please excuse my curiousity.
It is probably anti-spam trigger that makes admin do manual approval.
Yep, tried to change my name to SoupyNorman but my comments stopped showing up.
Could someone co-opt someone else’s name?!
“Could someone co-opt someone else’s name?!”
That is the reason for why Professor Bear stopped posting and reincarnated himself as GetStucco a couple of years ago. Ben has subsequently taken measures to eliminate this problem.
P.S. Thx to all who suggested how to lay GetStucco’s name to rest…
Yep, but wouldn’t have email address, so wouldn’t correlate.
You know what, Ben, I would also like to know, out of curiosity. I don’t work in IT, but I use my computer aaalllll daaay looooooong, and am naturally curious. It’s a bad habit of mine.
The software I use for the comments throws things like multiple user names into moderation. So I have to go fish these out from hundreds of spams an hour.
Unemployment will be the real test for pricing in the next phase of the deflation. Jobless claims unexpectedly up this morning. I suspect this number to keep going in the wrong direction until next year. Prices may accelerate downwards. And who wants to catch a falling knife?
I am sure the numbers are alot worse with all the 1099’s and illegals no longer working
Unemployment up.
Freddie profits down.
H&R Block books a loss.
Walmart downgraded to “Sell”.
Stock indexes all rallying. It makes sense to me.
I wonder if we will have a post-bubble employment decrease such as the one in the South right after slavery was abolished. In the latter case, the former slaves stopped working so much (they were almost literally worked to death- to maximize profits they tended to be underfed for the amount of work they did, and had zero leisure time as they were worked almost all the time they weren’t sleeping or eating). Right now, desperate FBs are taking one overtime or second jobs, housewives/husbands are getting jobs to keep afloat. Once they turn in the jingle keys, much of the pressure really will be off. Along with their now lower monthly nut, they may be willing to cut back hours at work. Perhaps this is also why the economy is going great guns even as the bubble starts to unwind… the mass of FB are working like mad and have not yet given up hope.
RE: Perhaps this is also why the economy is going great guns even as the bubble starts to unwind… the mass of FB are working like mad and have not yet given up hope.
If you took out the spouse who works in some form for a municipal public education system, the entire US economy would collapse like a house of cards.
“If you took out the spouse who works in some form for a municipal public education system, the entire US economy would collapse like a house of cards.”
BINGO. EVERY person I know either is on municipal payroll or works on tax payer funded construction work, i.e, bridge/highway/water/wastewater or their spouse.
You guys are so right, it ain’t even funny. In the northern cities - thanks to thug public sector unions - the problem is especially bad. Might we see insolvent cities a la NYC in the 1970s - I think so.
I don’t see how the retirements these guys have can be sustained. My wife is a state worker and as with all state workers, they earn more in retirement than they do while on the job.
exeter- excellent question. I too am baffled by the idea that the current public pension system is sustainable. Many CA cities are going to be facing large numbers of retirees all at once as boomers start leaving en masse. Like Social Security, the system is a time bomb. Mr. Bernanke will need that B-52 that someone mentioned here or on another blog.
If you took out the spouse who works in some form for a municipal public education system, the entire US economy would collapse like a house of cards
Salem MA ran into a budget crisis last year and had to chop $5 million.
Every lay-off reported in the newspaper was a woman hired as a “special education aide”
It’s was like, WTF is this?
A make work program for unemployable females?
Boatloads of this public parasite empire building goin’ on.
What a great group to be workin’ with fooked up kids.
(they were almost literally worked to death- to maximize profits they tended to be underfed for the amount of work they did, and had zero leisure time as they were worked almost all the time they weren’t sleeping or eating).
That is the biggest lie I have ever heard.
Where did you ever get this “concept” of life in the Old South?
The standard line of taking Uncle Tom’s cabin multiply by 100 and voila! life in the old south as “told” by spinmeisters.
The slave was worked, yes too hard, but the slave was an “asset” to the plantation. If you worked them to death, who would pick the cotton? The slave as an asset had value that the “massuh” borrowed against, overworked slaves were worth less money. The slave was worked and treated like a mule (yes a disgusting thought) but in turn was cared for like the mule. They didn’t work the mule to death, so why would they work the slave to death?
And NO, DO NOT reply to this saying I support slavery.
So your point is…?
That people base their opinions of southeners on incorrect “facts”. As I often see here and on other sites that ALL souhteners are stupid, one toothed, that the Southern accent is “disgusting” etc etc.
HB Stowe wrote a “shockumentary” and every believes that that was the way it was on all plantations, all the time. She wanted to shock people into supporting abolition (a VERY good thing) so she embellished her story. In other words, she engaged in massive spin.
Again, slavery was bad. Also, remember that in the “old south” even Blacks owned slaves.
Definitely agree about the Southern stereotype thing (though more than a few real Southerners I’ve known seem to actively embrace/live up to it, either out of spite or pure rebel pride I guess). Ignorance and intolerance are not limited to so-called “red” states, and intelligence and open-mindedness is not the exclusive property of “blue” states, this is true.
“Katie and Allan Chipps locked into a no-money-down mortgage through Sanborn in mid-August, on the last day they were offered. Securing that loan allowed the couple to submit a competitive offer on a new house they are buying in West Hartford, they said, without having to add a contingency clause to sell their current home first.”
“Katie Chipps said once the couple sells their current house they will use the profit to pay down the second mortgage or to pay other bills.”
Ahem. Did it not occur to Mr. and Ms. Chips that the unavailability of no-money-down mortgages now faced by buyers will reduce the buyer pool, and thus the market price, for both the house they have just bought and the old house they are trying to sell?
They did it a$$-backwards. They should have sold while credit was easy, and bought after credit tightened up.
It’s magic. Before your very eyes, you will see equity disappear. You will be amazed. Watch closely…
Here we have a simple middle income family with equity in their house. Now… don’t blink…
PRESTO!
No equity!
Dark humor, but good dark humor. This is why I think that potential buyers who think the 20% down payment stuff will be a passing fantasy are wrong. The lenders know that owner’s equity is declining and will be for some time. They have to gauge that against the newly increased risk they face, particularly if they have to hold their own paper. Sure, family will help out in many cases, but I’d look for loan contract language proscribing any second mortgages (within a period of time or percentage of equity) that result in a lien on the property — hopefully with fraud as the interpretation for non-compliance.
Chip,
I think you hit the nail on the head with your comment: “particularly if they have to hold their own paper”.
That changes everything. Suddenly banks/lenders have to be responsible for the loans they make - responsible to shareholders. 20% equity can still evaoprate in today’s market.
Mortgage companies are toast. They didn’t supply anything except loans to the banks. Mostly they collected their commission checks, which by the way were way more than a bank would charge.
50% downpayment anyone? Once most mortgage companies go under, I think banks will require a minimum of 20%. Although, 50% may not be out of the question. Imagine a future where house price are so depress, people who save can actually pay with cash! Excess inventory and builders continuing to build on speculative land purchases. Remember even with large influx of illegals, the increas in the number of household in America is at is slowest pace in decades. I like to see a future where housing is a commodity. Wouldn’t this be wonderful for all of us?
I like the caveat they threw in there, ‘or to pay other bills’. Translated, this seems to mean that they are currently chock full of debt other than their existing mortgage, and will need any equity they get out of their current house to maintain their past and current lifestyle….would love to know what their debt to income ratio looks like on their current home loan application.
I see them walking away from the new house in a year, as they will be unable to sell their old house for enough money to temporarily tame short term debt.
Is that debt to income ratio assuming that home equity loans are income or debt? After all, “Debt is Wealth!” Hahahaha… It is funny watching people slowly learn that one cannot borrow one’s way to wealth and that loans have to be paid back.
They seem to think that selling their old house at a profit is as easy as taking it down to the home store to trade it in for a new one. I look forward to hearing the foreclosure story created by these financial geniuses. People are indeed smart.
My thoughts exactly.
People are smart.
People are smart. Glad to see that I’m not the only one who is both humored and disgusted by ditech’s latest commercials! Ummm, if people were truly smart they wouldn’t have taken those crappy ARMs and other time bombs that ditech, et al were pushing 2 years ago. The current state of our financial system is disgusting, supported by nothing more than dreams and b.s. hype. I’m enjoying watching this house of cards fall.
It’s an obvious psychological ploy to make people who made stupid mistakes think that they’re not stupid. But they are.
I bet the advertising team was sitting around a table trying to think up a tag line when they started making fun of stupid borrowers. Someone sarcastically remarked “people are smart”, and the new slogan was born.
LOL. It is probably an inside joke at ditech. Nothing like fleecing a bunch of fools! I can’t say I feel any sympathy for the FBs whatsoever.
If people were smart the concept of a mortgage would never have been needed.
Funny thing is, Di-Tech is one of the companies that got these people in the mess they’re in now. It’s like an existential “I won’t pull the chair from under you again when you go to sit down.” Classic.
So you’re saying Mortgage Brokers are Lucy with a football and FB’s are Charlie Brown? The problem is that now the football has joined the kite, stuck in the tree.
As soon as somebody gets it down I’m sure Lucy AND Charlie will be back in action…and it’ll be a whole new paradigm again.
“Katie and Allan Chipps locked into a no-money-down mortgage through Sanborn in mid-August, on the last day they were offered. Securing that loan allowed the couple to submit a competitive offer on a new house they are buying in West Hartford, they said, without having to add a contingency clause to sell their current home first.”
- I don’t think that Kate and Al are out of the woods yet. Now they need to find a fool who can qualify to purchase there existing home.
I think that they are headed for a lesson at the old ‘Wood Pile.’
I like how they still think they needed to go into extra debt to make a “competitive offer” didn’t anyone tell these dweebs the bidding wars were over ? I’m sure the builder was simply delighted that stupid buyers still exist to overpay for his homes.
I liked that “competitive offer” comment too, which of course means they paid too much for it. Unfortunately they won’t find that out until after they realize there’s no one to buy their other house.
Come on, guys! Give these people a break. They *had* to act fast `cause the builder was dropping his price $1000 a week until sold! D’ohhh!!
The “competitive offer” was most likely either a complete fabrication or straw buyer produced by “their” Realtwhore.
But, hey, they “won” the bidding war and that’s what counts, right?
“Katie and Allan Chipps locked into a no-money-down mortgage through Sanborn in mid-August, on the last day they were offered.
It said locked in, not closed. Wonder if Sanborn will back out of the no money down when it hits the underwriters.
My thoughts exactly.
(test)
GDP up 4% in 2nd quarter.
People wanting a Fed rate cut didn’t like that.
What is the Fed’s GDP growth speed limit these days? I thought 2.5% was considered sustainable, and anything above that suspect as a possible source of inflationary pressures. Do they need to tighten, just when all the bulls on Wall Street have threatened to cry to their mommies if BB don’t give them a FFR cut fix?
Oh, if only. Nothing would make me happier; this bubble may be over next year if the fed tightens a few more times. Like most things, if we just break the back of the bubble everything will return to earth faster; it’s the “rip off the bandaid” theory.
“Like most things, if we just break the back of the bubble everything will return to earth faster; it’s the “rip off the bandaid” theory.”
This works if the bandaid is covering an ‘owie’. If it is holding in your guts, that is another matter… I think that the U.S. economy has major systemic problems, and the housing bubble’s contribution was covering them up. I think that pain and nastiness will be just getting started when the bubble is done…
If you’re relying on a bandaid to hold your guts in you are toast anyways. Might as well get it over with and die a quick death rather than slowly become septic from your guts swimming in pus.
Isn’t government war spending part of GDP? From what I’ve studied, it is. So the more billions/trillions that get melted in Iraq, the higher our GDP grows, AFAIK.
People are hesitant about investing, and generally feel real estate is overpriced,’ said Hopkinton Realtor Mary French. ‘A lot of buyers are hoping real estate will come down. Nowhere is housing flying off the market.’”
I’m also seeing a good number of potential, but reluctant buyers in my market
This is a pretty profound statement. In any economic situation there is always a “baseline” of RE buyers. Interestingly, for the present market to return to normal it needs buyers but the market itself, i.e. the uncertainty of when we are going to hit bottom is keeping buyers away and is exacerbating the problem.
It’s the mirror image of what caused the bubble, buyers scrambling to get into the market because “prices will continue to go up so get in now before you are priced out”. That and the accommodating Al “ARM’s are a good thing, no, really!!” Greenspan and his cheap money.
This is where NAR and other market shills, Realtors etc. shoot themselves in the foot. Start telling the truth. If they had been, perhaps some of this pain could have been avoided.
Lets pretend that prices overnight bottomed and we all woke up tomorrow with median prices where they should be. Sales would go up. Not enough to offset the huge unpaid debt that someone (ultimately the US taxpayer) will have to absorb, but it would help the overall economy and speed up recover in the RE industry. It won’t help the already FB’s. They’re screwed anyway.
Not going to happen. Prices will eventually settle at an affordable level. Most likely they will fall below what would have been the normal appreciation rate due to the huge log jam of inventory that gets worse everyday as Sellers stubbornly stick to 2005 prices and foreclosures rise.
All economics is perception. If you think a $10 bill is worth $10, that’s only true if everyone else thinks so too. At this moment, everyone in the market has a different idea of RE prices. You have the Sellers who are living in 2005, the buyers and real investors looking for bargains, potential Buyers sitting on the sidelines not knowing what to think, the media saying it’s good ..no wait, it’s bad, etc. It’s “deer in the headlights” mental chaos. The whole market is paralyzed.
But there are those that would buy now if they were sure that the price of what they were buying would not go down. That’s a good sign but as this lingers one danger is that this group will be whittled away by job losses, etc. making the recovery longer.
Basically we have one huge problem because a significant segment of the population are greedy, dumbass’s who were sucked in by the herd mentality and who never even attempted to understand the dynamics of the market. And Greenspan gave them the financial tool by which they could self mutilate themselves to the max. Unfortunately, some of the crap will stick to the rest of us.
My basic point is that there remains an underlying potential strength in the RE market that is not being realized because of the market and in fact may be extinguished by the stubbornness of the market itself.
Not going to happen. Prices will eventually settle at an affordable level. Most likely they will fall below what would have been the normal appreciation rate due to the huge log jam of inventory that gets worse everyday as Sellers stubbornly stick to 2005 prices and foreclosures rise.
And as has always been the case, the longer something sits on the market, the lower the price when it eventually sells. I’ve seen it time and again. Everytime a seller holds out for more money and turns down offers, the house eventually sells for way less than the first few offers.
Ghost
If all the Sellers somehow could grasp that one concept we might have a “softer landing” than we will have.
The differance between freefalling from 10,000 feet or 20,000 feet with no parachute. At 10,000 feet at least your body parts would tend to be spread out over a smaller radius. I guess that would be a “softer landing”
Not to quibble, but gravity determines what is known as Terminal Velocity. There is a maximum speed that falling objects may reach that is independent of altitude.
The landing is of course unpleasant, but equally so from 10,000 or 20,000 feet.
Good point. But still, either way, your dead
And either way you’ve made a mess.
In a spread stable body position, whether from 10k or 20k–or even 2k, you’d hit terra firma at somewhere between 110mp and 130mph (terminal velocity). Splat—-dead.
As to your point, we used to have a saying in RE sales: “The first offer is usually the best offer.” Too bad the realtors aren’t telling their sellers that.
Gadfly
You said:
As to your point, we used to have a saying in RE sales: “The first offer is usually the best offer.” Too bad the realtors aren’t telling their sellers that.
The smart Realtors are but in now days “smart realtor” is an oxymoron.
At extremely high elevation the thin air allows free-fall to approach the speed of sound, only the denser air closer to the ground allows the ~120mph “soft landing” that we’re all looking forward to :-).
Important point from MBA: most foreclosures/delinquencies are sourced to investment properties.
http://www.marketwatch.com/news/story/investment-homes-make-up-major/story.aspx?guid=%7BA7BAF583%2DA2CD%2D46A9%2DA1D3%2D75CA367D7487%7D&dist=hplatest
I’m curious how retirement/2nd/vacation shacks play into all this.
I wonder how many of these “investment properties” are mortgaged as Owner Occupied.
“I wonder how many of these “investment properties” are mortgaged as Owner Occupied.”
I do, too — I’ll bet it is a huge amount. See it all the time here in Florida — see vacant house or condo, check tax records — presto — either the owner has another place in the area (claims homeowners on spec property for two years, then switches back and forgot they are screwed by higher valuation on former place), or the owner has one or more places in other states and is claiming homestead (owner-occupied) on many if not all.
Report them Chip! Just relocated from Florida…it’s a crime what is going on in that state (sigh).
The number is overwhelming, but I suppose just one or two would be a start. Paladin had a similar campaign going, last year, against mortgage fraudsters and I suspect that it took so much of his time (or generated threats on his life) that he might have given it up. Once the tax people realize they’ve been had, or if enough citizens demanded investigation into principal-residence fraud (and lenders jumped on, since they usually forfeited at least a quarter-point of interest), some headway could be made. Unfortunately, I think there is so much more “meat” in the outright mortgage-fraud arena that the owner-occupied scams will get little attention from anyone who can do anything about it, even if reported.
The injustice here is that a lot of fraud, i.e. loan/appraisel/real estate/loan application fraud by buyers will not be prosecuted. There simply are not enough investigators/police/jails and courts to handle all the cases.
Many of these investment properties not owned by speculators are 2nd homes paid for by mortgaging the primary residence. A lot of people need to sell the 2nd home because the mortgage on the primary residence is killing them. Even though the 2nd may not have a mortgage, many have to stay in the primary in another state because of their job. They may end up losing both.
Exactly Ghostwriter. There is a prevalence of that scenario in the northeast. Add to that the commuting costs to and from “vacation” house, taxes, heat and lights and you have a crushing burden.
There’s one right across the street from me. In our county assessor’s public records it’s listed as being partially owner-occupied, but that hasn’t been the case for almost a year.
I’ve been tempted to give the county assessor’s office a jingle, but there’s a lot of fixup activity happening across the street. That’s a pretty good sign that the owner is preparing to sell…
How is a property “partially” owner occupied??
The property was purchase for a college girl to live in. The idea was for her to rent out rooms to other students. This worked up until this past spring, when college girl moved out. I suspect she’s shacking up with a boyfriend who lives elsewhere in town.
In essence, her dad owns the property, and she was the “partial owner occupant.” Or something like that. Any-hoo, she’s not living there anymore, and it’s now 100% occupied by tenants.
Ok. I just couldn’t see how an owner could partially occupy a residence. Daddy ought to have fun trying to sell a house full of tenants at full price.
Daddy’s going to have quite a bit of fixup work to do in order to get the house back into the condition it was in before his daughter and tenants moved in during the summer of ‘04. In fact, I recently heard one longtime resident of this neighborhood call the place a slum.
You’re so old fashioned. You probably have an affordable fixed mortgage or currently rent. LOL
Actually, consider this, it wouldn’t even have to be fraudulently listed as owner occupied. All a FB has to do is get a HELOC on their first house and then just write a check (pay cash) for the second house. The first mortgage company doesn’t know a thing, the second doesn’t know and doesn’t care because they basically just handed the FB a checkbook, and not only that, the ‘owned’ second house that’s actually financed, could be underinsured because after all, it was paid for outright with cash via the HELOC, and in the process the bank is holding an ‘assest’ that’s may not even be insured. No way in hell you could do that with a primary mortgage, but you can with a HELOC and I personally know someone who’s doing just that.
So basically that HELOC gets sold of as an MBS that assumed to have a property as collateral and in reality, the friggin house itself could be blow away by a hurricane with no insurance coverage because the owner figured they’d save some money and only insure it for $30k instead of $150k, if they insured it at all.
What happens to these “investors”/gamblers after they default? Doesn’t the mortgage company put a lien on their primary home? They don’t just walk away and wash their hands of the mess they created, do they?
If an investor’s primary home and/or other assets weren’t pledged as collateral, then the lender would have to sue and obtain a judgment in order to put a lien on those assets.
The question then becomes “is it likely that lenders will pursue borrowers beyond pledged collateral”?
I hope so. At least for the borrowers that were out there gaming the system and claiming owner-occupancy in order to qualify for the loan or lower interest rate.
Some Lenders are short selling and forgiving the differance. That practice will escalate.
The question now is “What strategy can we employ so we will lose the least amount of money”
If you home is in Florida and your legal homestead it’s exempt from a civil suit unless it’s been pledged as colateral
Dont forget, the loss that bank takes on the short sale is considered taxable income by the IRS. There is no ‘walking’ away.
ryph
Didn’t Bush say something yesterday about making the loss un taxable to the homeowner. He had a few things to say about some ways the Gub’ment could ease the crises. I was in a noisy place and didn’t hear it all.
But as it stands you are correct.
In the rest of the country, non-owner occupied homes accounted for 13% of prime defaults and 11% of subprime defaults.
And they said it was contained to subprime only. We have way bigger problems than any of these idiots know or understand.
Investors causing the problem? How so? If 20% or so of bad mtg are investors, the OTHER 80% is owner occupant. So what’s the bigger problem? the 20% or the 80%? Why are you blaming the people who caused 20% of the problem and saying NOTHING about the people who caused 80%?
Jay
What we’re saying is a lot of foreclosures say owner occupied but were in fact 2nd homes or investor homes.
Some estimates put it over 50%. I don’t think anyone knows, but is is way more than is reported.
How many Casey Sarin’s are out there? I can tell you: lots. How many houses did he buy and say they were his primary residence? I lose track.
But you are correct in that houses that were indeed owner occupied are a huge component of the foreclosure mess.
I knew someone would mention that Serin clown.
ONE GUY defaults on what is it, 10 mtgs and all investors are suspect. It’s like 50% of marriages ending in divorce. OK now, throw in Liz Taylor and you got 10 couples who’ve been together for 50+ yrs
to compensate for her failures. See what I mean. You can have ten investors who are up front, honest, not in default, but one guy has enough mtgs to skew the data.
Casey defaulted on what? eight loans? That means there are 6, 7, 8 investors out there who are still good to go.
And a “keep up with the joneses” who bought a vacation home is NOT an investor. That’s a second home, a completely different category.
80% of defaults are $5/hr strawberry pickers, but no, no, we need to worry about the investor. Sorry, but that sounds like stupid math to me.
Jay;
No slam on “real” investors of which I am one.
There are tons of Casey Serins. If you bought RE in 2005 or 2006 you either stole it or you not a “real” inveator either. A lot of wanna be’s did.
The fact remains that no matter what you call it a lot of these foreclosures are from people who bought the house because they “knew” they could flip it in a couple years and make a profit. I would call them “investors” if they lived in it or not.
Ignroant and inexperienced, but “investors” non the less
It’s amazing to me how these fb’s and in some cases non-fb’s who have owned their homes, or at least paid the bank to live in the bank’s home, for 10, 15, 20 or more years, just fail to get what has happened and how the bursting of the property bubble is going to end up (very badly). All I see are newspaper quotes saying, “The house is worth $1 million and I’ve already reduced it by 56 cents but it still isn’t moving.” They would be very wise to cut the price by 20% NOW because by the time this is over that $1 million property is going to be worth $500,000. I can see more newspaper quotes coming down the line over the next 3 years on the order of, “My old neighbor reduced his price by 20% a couple of years ago and got out. I thought he made a dumb move but now wish I had done the same. Since then prices have dropped 30% and they are still dropping.” Come on fb’s! If nothing else lower your prices so that the poor realtors and brokers can afford to buy those half price damaged cans of food in the grocery store.
As we’ve already mention here many times, many of real-turds are also flippers. The exits shut on them and they’re trapped, hence the massive friction they interject in to the buy/sell equation. Markets are efficient at removing that friction and I think we’ll see a new model in the way RE is bought/sold. Look what happened to full service stock brokers. My uncle made a killing all his life skimming of the top of that model… Now they’re nothing more than dinosaurs.
“many of real-turds are also flippers.”
Or cash-out HELOC’ers. Those 10-15 year dwellers bought houses at an inflated price too, even if they never moved.
Exactly. And that is part of the reason why Wall street (and us) find this housing bust very unpredictable.
“With the markdowns, Joseph Flatley, CEO of the investment corporation, said he expected the consortium, including Bank of America, ‘to take significant losses.’ ‘We’re going to take a hit on this and it’s going to be substantial,’ he said.” “‘We’ve never had a loss in our 17 years - this is the first,’ he added.”
CONGRATULATIONS!. It was about time someone popped your cherry.
17 years= 1990
that was an educational year
There continue to be a lot of “first times” in this housing implosion. Cannot wait to read “as a result of unparalled greed during the housing bubble, this is the first time that so many CEOs of public companies have been sent to jail for SEC violations.”
Considering how Bank of America was offering credit cards and such to illegals, I can’t say that I feel any sorrow for seeing them suffer.
Isn’t that Banco des Amigos
“‘There was all this talk and so many articles about the baby boomers retiring to the city and to condos to be near their grandchildren,’ said Brine. ‘There’s a lot on the verge of happening in the city but it just hasn’t happened yet.’”
Sounds like Y2K hype from the MSM, how many other of the urban legends do we have going.
A lot of boomers worked all their lives in the city and that’s the last place they want to retire to. They want warmer weather, lakes, scenery, etc. They’re sick of fighting the traffic and the crowds. Goes to show how out of touch some people are.
Indeed. This belief that boomers want to relocate to “hip” urban lifestyles is nonsense. There is nothing new under the sun. When they retire, boomers will do what countless others have done before: stay put; downsize to a low-cost region (not cities); or move closer to family that is most likely in some suburban box. Greenspan opened the flood gate and there was so much easy money flowing through the system that lenders and builders would finance any project that they could dream up.
The media hangs out with the same people all the time. And a few of their “wine and cheese” crowd buddies said it would be nice to retire to a city condo and have the shops and nite life etc. And right away the MSM believes that “everyone” thinks this way.
Remember the old story of some NYT reporter who couldn’t figure out how Nixon won because they didn’t know anyone who voted for him (Nixon got what 85+% of the vote)
That’s how you end up with these stories that are way off base.
‘If someone walks in today with an A-plus credit history and a $200,000 salary but no money for a down payment, I can’t help them anymore,’ said Michael Menatian, president of Sanborn Mortgage Corp. in West Hartford, Conn.”
I’m starting to think it may not matter much if BB caves and lowers rates. If in fact banks are returning to more traditional standards for qualifying borrowers (purchase and refinance), a slightly lower interest rate won’t help.
And someone making $200K and with no savings for a downpayment has no business being a homeowner in the first place. This is how whacked standards got….10 years ago he would have been told to save for a downpayment and come back in a year. Period. Now it’s a big sob story.
10 years ago he would have been told to save for a downpayment and come back in a year. Period. Now it’s a big sob story.
Exactly. If you cannot save $30k (or more a year) on $200k gross, your priorities are just wrong. You should be told to go back and prove you can have the discipline to manage your money for a year and then you will be reviewed for a loan.
I expect to be raked over the coals for my mortgage. That’s how it should be. And I’m planning to put 30% or more down! Grrr…
Jeeves. Release the dogs, another idiot is on the lawn.
Got popcorn?
Neil
Agreed.
This statement is exagerration. If someone makes $200K, then they probably take home at least $12,500 per month. IFAIK FNMA/FHLMC still do 95% LTV with high FICO’s, so this mythical person should be able to come up with 5% ($30,000 on a $600K home) within 4 months or so, or borrow against / withdraw from IRA/401K. So this is just b.s. The truth is that mythical borrower is probably inflating income or has unstable (1099) / unprovable income (as based on tax returns). Or Mr. Menatian is just lying.
I am going to sit back and laugh if the Feds cut the rate and guess what, “Nothing Changes!” Why..becuase all this inventory of homes consist of 3 areas 1)new homes built for the easy money days. When if you had a pulse and were in a coma you could get a loan and 2)Homeowners who are upside down and want to get out and 3)Teaser rates now adjusting to reality.
So the answer is even if you cut the rate, the loans that were available to put homeownership in the reach of 89% of the American public is GONE. Rates no matter what, will not make any difference in stimulating a market that consists of all this chaos.
In addition, most of the ARM’S out there are based on the LIBOR rate not FED funds or T-Bills. A FED cut would not necessarily affect the LIBOR. The LIBOR hasn’t fallin much in the last month, even though T-Bills have. So a FED cut probaly won’t help the FB’s much.
Annette,
You are SO right. BB can cut rates all he wants. And the $417 cap can go to $817. There just are not enough willing buyers at this point in the Ponzi scheme.
I am already enjoying a piece of Schadenfreude. I can’t wait to hear the crying when the Fed realizes that a rate cut won’t work.
Unfortunately, I think the Fed is going to destroy the dollar to save their buds before this is all over.
I’m starting to think it may not matter much if BB caves and lowers rates. If in fact banks are returning to more traditional standards for qualifying borrowers (purchase and refinance), a slightly lower interest rate won’t help.
You are sooo right. Buyers are going to be few and far between. Wonder what that will do to house prices.
The rumor that OFHEO would show dropping prices was unfounded:
“U.S. HOUSE PRICES SLOW
OFHEO House Price Index Shows Smallest Quarterly Increase Since 1994
WASHINGTON, DC – U.S. home prices increased only slightly in the second quarter of 2007 according to the OFHEO House Price Index (HPI). The HPI, which is based on data from sales and refinance transactions, was 0.1 percent higher in the second quarter than in the first quarter of 2007. This is below the revised growth rate of 0.6 percent for the previous quarter and the lowest since the fourth quarter of 1994. Prices in the second quarter of 2007 were 3.2 percent higher than they were in the same quarter of 2006, the lowest annual price change since the 1996-97 period.”
OFHEO’s full PDF of report is at: http://www.ofheo.gov/media/pdf/2q07hpi.pdf.
OFHEO ignores jumbo loans, so ignores most of the houses in the most bubble markets.
In short, OFHEO says that home prices in fly-over country went up at the rate of household income growth.
Here is the CNN take on housing prices.
Articles like this just make sellers more determined to stand firm on their price and prolong the return of prices to a level that average people can afford. .
http://money.cnn.com/2007/08/30/real_estate/OFHEO_index_rises/index.htm?postversion=2007083011
Who needs a bailout when home prices are still “creeping up”?
And since all real estate is local, they (Dodd, BB, etc.) should leave any govt assistance to the local govt’s.
The WSJ is reporting that house prices are 3.2% higher than a year ago. Of course, they’re quoting the gov’t., but based on what I read here, how can this be??
“ ‘That wasn’t normal, this is normal. I believe this is just a correction and not a time to panic.’”
Of course no need to panic. Unless you’re a homedebtor who bought so far above your means that you must sell. In which case, it is time to panic.
And thus, if we buyers won’t panic, its time to sit back and think about the purchase. I’m so glad ZERO down is going away! The loons I would have had to bid against are soon to be out of the market. That doesn’t mean I’m buying for years. Nope… We all know the Credit Suisse chart. Its going to take a long time to flush this out of the system.
Got popcorn?
Neil
Even 10% down required in the really bubbly markets would be endgame for the housing bubble. I have long said that 20% down would cause an immediate crash of 50% in most bubble areas, I still stand by that statement. If people really had to bring in 100K of their own money to buy the median priced home in S. FL, that would be it; game over, start again with 50% of the orginial price (and even that might be too high).
Negative savings rate does not lend itself well to people bringing 10’s or 100’s of K to the table!
“Even 10% down required in the really bubbly markets would be endgame for the housing bubble. I have long said that 20% down would cause an immediate crash of 50% in most bubble areas, I still stand by that statement.”
Absolutely. I live in Marin County where a “starter”cottage is $700K in my neck of the woods. 10% down is $70K, plus now it’s much harder to qualify for jumbo financing.
It will take years for people to save for a downpayment. And save for what? A big mortgage payment and a shot at a depreciating asset? I think once skin in the game is required again, no exceptions, and it isn’t easy money any more, I think people are going to think twice about “investing” in RE.
“It’s cheaper to rent” will finally start to sink in.
Many people have “equity” from previous homes. With 1/3 of the homes owned outright, it doesn’t matter at what price they sell they would probably have 20%+ down for a new home.
Of course, I guess the market is driven by new buyers and not house swapping.
Tourism economy in northern New England, is dead.
Great to be mobile.
HDman…. give us a tourism update after the weekend. I’ll be heading back to VT/NH this weekend to visit family and will do the same.
“‘There was all this talk and so many articles about the baby boomers retiring to the city and to condos to be near their grandchildren,’ said Brine.
Maybe todays retiree has better things to do than give up their homes to provide free babysitting services in cramped condo.
“Maybe todays retiree has better things to do than give up their homes to provide free babysitting services in cramped condo.”
Yeah, like work at Wal-Mart as a greeter.
I would like to hear some of your comments on the increase in credit card delinquencies that is occurring. Here is the way I see it:
The spin is that the credit cards that are delinquent are those of subprime borrowers taking money out to save their mortgage. I don’t buy that. Subprime borrowers already have bad credit. If they are behind in their payments, they are likely to know from the “street” that they can generally live in a house about 6 months before being kicked out. I also think subprime borrowers are smarter than most people give them credit. They know when to cut and run. If jobs are still plentiful, a subprime borrower would stop mortgage payments and pay the credit card - they would have plenty of money for that. They also need the credit cards after this passes.
On the other hand, prime borrowers do not want to lose the house or their credit score. If I am a prime borrower facing mortgage trouble without cash reserves, I go the credit card to borrower cash to make mortgage payments. I need to keep up my appearance in the neighborhood (no existing friends would associate with me after I default and get kicked out). Being a little late on a credit card payment is nothing compared to losing the lifestyle I am accustomed to. A prime borrower uses credit to maintain their semblance of a normal life as long as possible believing that they can sell the house or refinance in a few months and everything will be okay. The subprime borrower is more likely to walk away and go on with life. They know what it feels like to have bad credit.
What do you think?
I agree. Image is everything to some people..What would the neighbors think? We can always make an excuse saying the lease is up on the BMW, we can explain doing our own landscaping(or call it Martha Stewart “Gardening”), we can explain our furniture is on order for our McMansion, but how do we explain the sheriff coming knocking on the door and our precious “credit card” purchased crap being tossed on the front lawn…
The Duisenberg Effect
Jboats and the Empire State bldg
always the big spend before the fall
“A prime borrower uses credit to maintain their semblance of a normal life as long as possible believing that they can sell the house or refinance in a few months and everything will be okay. The subprime borrower is more likely to walk away and go on with life. They know what it feels like to have bad credit.”
Very loosely here:
A ‘prime’ borrower uses credit to impress his poser friends and family. Losing a house to foreclosure would be the ultimate in humiliation.
Subprime borrowers have friends and family who are also losers - therefore no need to keep up the upper middle class facade - and no need to feel humiliated when you crash and burn.
Yup, in fact others here have already predicted losing multiple houses to foreclosure may even win you future bragging rights.
“Back in ‘07, I got foreclosed on SIX houses.”
“Oh yeah, well I lost TEN houses!”
Personal anecdote on the credit card delinquencies:
Friend of mine at my part time job was telling me about his Sister and his Husband. His brother-in-law is in construction and hasn’t had steady work. He also refuses to take work for less a certain amount per hour. The friend’s sister refuses to give up certain amenities(Cell Phones, digital cable, high-speed net access, etc) and was telling him that either food and rent or paying the credit card.
Could be the 1099 crowd running out of cash and what little they bring in goes directly to food instead of revolving debt.
Figure all the housing bubble inflators who are now SOL. (brokers, underwriters, realtwhores, etc) who used CC to maintain a lifestyle waiting for the turn around that ain’t coming round the mountain that is about to fall on them.
sounds about right. I agree.
I also think subprime borrowers are smarter than most people give them credit. They know when to cut and run.
They most certainly know when to cut and run, they’ve done it all their lives. They also know how to make themselves scarce and have unlisted numbers when bill collectors call. They are masters at this game and 30 years from now they’ll still be subprime borrowers. So let’s definitely bail them out so they can add one more free thing to their list that they didn’t have to work for. They’re counting on this.
I disagree.
The rise in “sub-prime” loans is not from poor people buying houses. The increase is from RICH PEOPLE buying houses with ZERO Down/ 125% LTV and Neg-am loans. These products become “sub-prime” because that don’t have traditional terms. This lending standards reduction allowed people to buy multiple houses to “flip”. They cannot make the payments.
They never intended to.
They are using their credit cards to “stretch” until they can get out from under all the debt they hope to “profit” from…………good luck with that.
If someone is rich (and supposedly has good credit), wouldn’t their loans generally be identified as Alt-A if some of the terms are not traditional. I also think that rich people would not be delinquent on credit cards as they would have cash reserves or assets (as defined by the term “rich”).
I think that anyone that buys a house using good credit, whatever the form of the loan, intends to make the payments. They wouldn’t have good credit if that wasn’t important to them. They just overstretched their credit, and now are using credit cards to buy themselves a little more time. Generally, these people would be middle or even upper-middle class based on income, but light on assets.
“I also think subprime borrowers are smarter than most people give them credit. They know when to cut and run. If jobs are still plentiful, a subprime borrower would stop mortgage payments and pay the credit card - they would have plenty of money for that. They also need the credit cards after this passes.
Hhhmmmm, maybe people really are smart? LOL
One last time….this is NOT a buyers market it is a stand back and get out of the way free fall market. I am so sick of these RE shills saying it is a buyers market, I wonder how many of these good deals they scooped up last month or this month? Can we please have a rule, you must slap any person who says this is a buyers market until the Summer of 08′ maybe early 09′??
“Al Wait’s Contoocook home has been sitting on the market for 10 of the last 15 months, and it hasn’t sold yet. He started … at $299,500, and has dropped the price by more than $20,000. The 72-year-old Wait lives on a fixed income and is eager to move to Tennessee, where property taxes are lower, winter is warmer and expensive heating oil is unnecessary … ‘I’m trapped. I can’t afford to live here, but I can’t go away,’ Wait said.”
Where do we start? In over a year, he dropped his price less than 7%. Presumably he does not read the newspapers and has no Internet access, since he is clueless about the declining market. If he’s 72 and living in New Hampshire, it’s likely he’s been there a long time, so it’s also likely he has a lot of equity, no matter what price he takes.
Conclusion: the house he wants in Tennessee is larger, much nicer and on a lake and he doesn’t want to finance any of it.
Emphasis on “wants,” not “needs.”
More than likely he took out LOANS from his house to pay for his retirement “lifestyle”. He can’t drop the price, as he owes lots of many on an ARM.
Yep, guess those folks in Tennessee are going to have to drop their price, too.
Or Mr. Wait couldn’t wait and has been living off HELOC money to finance his life style the last 3 years.
“‘I’m trapped. I can’t afford to live here, but I can’t go away,’ Wait said.”
The Housing Bubble Roach Trap, dumb buyers get in but they can’t get out !
Just noting this from the last few threads. We are still seeing properties getting moved well over comps. The cash back fraud is still going stong so we are still early in the game.
More early payment defaults should hit the books in the spring.
So many people throwing them out there it must still be a substantial number. I see that Contrywide is putting that 2 billion of investment money to good use. Lots of last minute crazy loans trying to push off the inevitable.
And of course this will get dumped on the taxpayers.
The cash back fraud is still going stong so we are still early in the game.
This didn’t used to be allowed and I would think banks will not allow it going forward.
When I was selling my townhouse the buyers wanted to do a 10K cash back at closing. (which my realtor didn’t have any problem with) I didn’t know that it was “fraud” at the time, but it only took me a few seconds to realize “hey… I am paying 5% commission on that 10K” and so I countered with taking 10K off of the sale price instead and saved $500 in commission fees.
My neighbors probably hated me hurting the comps in the neighborhood (most places were trying to sell for 400K+ and I sold for 390K)
Liar-eah admits he was wrong about housing….WOW..Funny how a group of rag-tag bloggers can get it right but a highly paid industry professional can’t…
http://tinyurl.com/2abajq
He was paid to not get it right.
I am not ‘rag-tag’. Speak for yourself.
There are lots of very very smart people on this blog and others like it. I’m not saying I’m one of them, but I am firmly not ‘rag-tag’. I’m wearing darling high heeled pink shoes with precious little silver buckles on them right this minute, ain’t I? So there you go. Proof. Not rag tag.
So you’re saying you’re a “classy blogger”?
But no diamonds and rolexes, I hope.
“Tourism economy in northern New England, is dead.
Great to be mobile. ”
I’m not saying tourism creates great paying jobs, but if you think it is dead in Maine, you have not driven North to Maine on 95 on a Thursday or Friday, South on a Sunday or tried to park in Portland any night of the week… It is bigger - and more annoying - than ever, and every day during my commute I still see out of state plates of recent transplants who just moved to Maine because it is so in, and relatively cheap compared to where they came from… And that is why prices are still unaffordable to most natives…
Portland isn’t Maine.
What’s the best part of Burlington (VT)? It’s located so close to Vermont…
I keep hearing the phrase “it’s a buyer’s market” and it doesn’t quite seem right to me. So, I’ve got an alternative to suggest. Let’s start using it and see if it ever shows up in the MSM.
“It’s a buyer-beware market.”
Knife-cather’s market
cather=catcher
What was it caveaut(sp) emptor. Buyer beware.
“I’m trapped. I can’t afford to live here, but I can’t go away.”
Wonder how many times we’re going to come across that statement in the next, say, ten years?
let’s just give that stupid 72 yr old a 30 year mortgage
‘If someone walks in today with an A-plus credit history and a $200,000 salary but no money for a down payment, I can’t help them anymore,’ said Michael Menatian, president of Sanborn Mortgage Corp. in West Hartford, Conn.”
why the frack would you want to? 200k a year and NO money to put a downpayment with?
doesn’t that tell you something…idiot.
Any NYC people out there?
Bloomberg is reporting that vials of nerve gas were found in a desk at the UN.
Be careful out there people.
this city will be it’s own disaster
a crumbling infrastructure and a building boom have done more damage than any terrorist attack- h eck when it rains everythimg goes to crap
this city iis a eurotrash-i banker-celeb playgound with serfs to do all the heavy lifiting
i cannot wait to leave
“this city iis a eurotrash-i banker-celeb playgound with serfs to do all the heavy lifiting”
Damn!!!! Well said! And the system has all the serfs petrified and scared out of their minds with the terrorism BS.
The water mains are more likely to blow than anything else. NYC - and many other older cities - are sitting on TRILLIONS of $ of infrastructure upgrades that must be made soon because they can’t be done overnight….
what’s wrong w this statement
U.S. economy grows at fastest pace in a year on investments>yahoo
Nothing.
/s/Orwell
At least someone in Tucson’s media is clued in:
http://www.tucsonweekly.com/gbase/Opinion/Content?oid=oid:99774
DING DING DING!!! Wow, the media finally wakes up to the fact that housing is….overpriced. I can’t see how anyone can afford housing in this country. Everywhere seems like the same overpriced stripmall spawn #*$(#hole. For the record, even your dead Rust belt areas are trying to pass themselves off as hip upbeat yuppie places. Ugh. I wish these people would take themselves and their redneck freinds elsewhere. I think it’s obvious that the whole REIC is self-serving; we have thousands of economists/BSers who work in state of the art facilities for the Feds and the financial lobbyests couldn’t figure anything out, yet someone like me who was barely in college in 2000 could figure out that housing was in a bubble.
OT, I find it hilarious that someone making six digit figures is living paycheck to paycheck. My close relatives make somewhere in the 120K - 150K range and they literally live paycheck to paycheck. They’re late on utilities, car payments, the house they live in is falling apart, the cars they buy are crap, they fight over money all the time, you name it. I don’t clip coupons; they do! They work in the typical “upper middle class” jobs (your management/sales jobs) and you would never think from looking at them that they have a net worth less than ME. I’m beginning to think a majority of America lives this way (if they didn’t then why do the majority of people fight over money all the time?) and I call BS on all the “wealthy baby boomers” or whatever coming to buy this overpriced housing stock. It’s not limited to people who work for others; I’ve seen a lot of self employed people who don’t have two nickels in their pocket (but they drive around in a Lexus SUV). Mind you, Gen Y and Gen X are worse. I know this because I’m one of Gen Y
. Don’t think that these two groups of people will come to the rescue too; I’ve heard where 25% of Gen Y has a high NEGATIVE net worth, and this may be awfully conservative.
Mind you, Gen Y and Gen X are worse. I know this because I’m one of Gen Y . Don’t think that these two groups of people will come to the rescue too; I’ve heard where 25% of Gen Y has a high NEGATIVE net worth, and this may be awfully conservative.
I do have a little sympathy on this point. Gen Y Negative net worth is in part because they’ve been asked to pay for their high school educations (known as college nowadays) by their elders. The rest is our own d**m fault.
“I do have a little sympathy on this point. Gen Y Negative net worth is in part because they’ve been asked to pay for their high school educations (known as college nowadays) by their elders. The rest is our own d**m fault.”
Considering I keep running into GenYers with like $100,000+ in school loans, how much money did these ‘tards think they were going to be making to be able to pay that back, and afford a house, and pay back the wife’s school loans after she retires early to raise kids or her entire paycheck goes to childcare. Were any of these people thinking. I’m GenX and I can tell you, I’m one of the few that knew that none of that sh!t added up.
I’m GenX, too. We were “lucky” - got away with school loans about the price of a car between my husband and I. I say lucky because I so clueless when I started and in around college. I might have signed away $100K of my life, too.
There’s too much pressure from the system. Everyone *has* to have a college degree or your life is ruined, blah, blah. And the best: student loans are “good debt”.
So by age 26 the unlucky have been imprisoned for most of their adult lives. Those loans can’t be washed away by bankrupcy, affects their ability to purchase stuff they really need, and limits career choices.
My view of college is extremely negative and I got off realtively well. It will be interesting to see how Gen. Y handles it.
Come on, college isn’t about money or jobs, it’s about “the experience”, “broadening horizons”, “expanding your mind” [networking with other rich kids that have connections]. Using college to try to qualify for a job is SO pathetically red-state working-class…
Education, the other bubble. I still have hope that when we can’t afford stuff from China that we’ll actually hire Americans to make stuff based on their ability to do the job, and we’ll recognize the current system for what it is…the method for reducing competition for the few real middle-class jobs. But that will mean someone up the chain will be making a lot less money…
““‘There was all this talk and so many articles about the baby boomers retiring to the city and to condos to be near their grandchildren,’ said Brine. ‘There’s a lot on the verge of happening in the city but it just hasn’t happened yet.’”
This idea always struck me as a little odd. Most of these grandchildren are living out in suburbia.
Also, I’ve heard so much about the “helicopter generation,” that is baby boomers being very, very involved in their children’s lives. For a lot of these people, including the ones who go on to have children of their own, breaking the old 3,500 sf homestead into a couple of apartments makes sense.
I had a co-worker who was considering doing a type of reverse mortgage with her daughter. Her daughter would take over paying for the house (my friend was in rather dire straights) and would own it outright someday.
Return to “All in The Family.” More like “Al in the Family” as in Alan Greenspan. LOL Yeah, Al’s now in the family in the form of a forever mortgage. The new American Dream will be to someday be able to make enough money to move into your own rental.
“Portland isn’t Maine. ”
Alrighty then: Go to Camden, Rockport, Belfast, Boothbay, Brunswick and even inland at Moosehead or Belgrade Lakes and take a look at how many in state vs. out of state plates there are and then tell me tourism is dead here.
Or that the influx of older wealthy people and the exodus of young college educated kids trying to make their wealth is not in full progress…
Ben- Troll alert.
I wonder if the fall of the US dollar against the Canadian dollar has something to do with it. A buddy of mine drove from Florida to “PEI” and those parts of Canada last month and was flattened by the prices. First night’s room quote, walk-in at an hour when no else was likely to show up: $300. So I’m wondering if folks who otherwise would be farther north during this summer’s vacation are settling for ME, VT and NH instead.
Maybe. It’s hard to imagine, though, if you really wanted to do Montreal or Quebec City that any place in New England would be okay instead.
“Comment by exeter
2007-08-30 11:27:50
Ben- Troll alert. ”
Ummm, OK. Why would that be? By commenting on how busy Maine tourism is, and how that is still continuing to contribute to the out of state influx of money from people who end up moving here after visiting, which is therefore propping up overvalued real estate?
This is real estate bubble blog, right?
“Home values dipped again this year and houses are staying on the market a bit longer, according to the latest statistics from the New Hampshire Association of Realtors.”
By “bit” I presume months or even years longer?
I am looking for a house w/acreage in Western, MA. I saw a listed property I liked. The realtor said the seller is motivated and has reduced her price to $230k. So I did some checking. She paid $73k in 1997. I figure prices in 1997 were on plant earth. So I assume 5% appreciation each year. So let’s say 150% of $73k = $110k is a reasonable price.
If historically, homes appreciate 3-5% annually, is it unfair to the home owner to only realize 5% appreciation anually? That’s a place to live for 10 years plus 5% (annually) on her “investment”
Why have home sellers abandon historical norms?
The sellers didn’t abandon anything - buyers did. Besides, ‘97 was about the bottom of the last bust in many places - don’t know about W. Mass, but I would go with the 2001 price and add 5% per year since. Houses can go below trend, too, which is what happened “last time.”
and unless he puts down big $, will be upside down in 4-5 years…. no thanks. I would not offer 110, however - esp if well taken care of …
I always appreciate the posts on New England.
[The Nashau Telegraph from New Hampshire. “Foreclosures are on the rise in New Hampshire. And the percentage increases look scary:
...
“By comparison, last year there were fewer than 300 – all year. In 2005, there were 101. In 2004, there were 73. ‘I’ve been here for 27 years and I’ve never seen it like this,’ MacDonald said. ‘The future, to say the least, is bleak.’”.]
Mr. MacDonald has a bad memory. It was much worse in the early 1990s. Housing prices were slashed in half. Perhaps the number of foreclosures wasn’t that high due to population growth in the intervening years but I saw foreclosures and front-step auctions and knew people that weren’t paying their mortgages or their heating bills (ouch) back then. There’s nothing like that in my neighborhood right now.
On October 10, 1991, seven banks failed in New Hampshire on top of other earlier failures of smaller banks. The bailout by the FDIC was the sixth-costliest in the history of the FDIC. That’s pretty remarkable when you consider how small NH is in population.
http://www.fdic.gov/bank/historical/managing/history2-10.pdf