A Much More Sophisticated Marketplace.
It’s Friday desk clearing time for this blogger. “Staten Island foreclosures doubled in July, making the borough the New York county with the highest rate of foreclosure activity statewide, according to Realtytrac. ‘Staten Island is the only place where you see [foreclosure] across the board,’ said state Sen. Diane Savino. ‘What makes it surprising is Staten Island has the highest median income in its totality. So one would think that they would be immune to this kind of predatory lending — and they weren’t.’”
“Massachusetts Mortgage brokerage firms are closing at a torrid pace as the real estate slowdown and recent credit crunch sweep away the excesses of the most recent housing boom. Those that remain face a drop-off of up to 50 percent in jumbo financing.”
“‘The bar to entry was set so low that people were going in to make a quick buck. Those days are over,’ said Kevin M. Cuff, executive director of the Massachusetts Mortgage Bankers Association. ‘The marketplace is going to be a much more sophisticated marketplace.’”
“For one Honolulu homebuyer, loan terms abruptly revised last month demanded the borrower come up with $120,000 cash, double the $60,000 already committed as a down payment to purchase a $600,000 Downtown condominium.”
“Agent Jonathan Ford, representing the buyer, said Countrywide, the largest residential lender in Hawai’i, needed either the extra $60,000 from his client or a $40,000 price reduction from the seller.”
“‘That wasn’t going to happen,’ he said. ‘I told the lender that’s ridiculous.’”
“Are there any potential homebuyers out there in Moffat County, Colorado? If there are, the advice from real estate agent Jerry Monger is to act now, because prices probably are not going to come down.”
“‘The pricing keeps going higher,’ said (builder) Mario Ayala . ‘Every year it keeps going up. If last year a house was around $125,000, now it’s $200,000. It’s ridiculous.’”
“Barbara Button, executive assistant at the Southern Utah Home Builders Association, said more than 1,000 people move into the Washington County area per month.”
“Button said the Southern Utah market is not as terrible as it seems. When compared to 2005, the home buying market now is getting back to a healthier status.”
“‘In 2005 you couldn’t find a house to buy,’ Button said. ‘If you put a house on the market and asked about $250,000 for it you’d probably have it sold in less than two hours with four or five offers to choose from.’”
“Despite growing concerns that a bubble in the condominium sector in Bangkok could soon burst, findings from Jones Lang LaSalle show that the market for new projects remained robust, with continued growth of new supply and demand.”
“‘Many observers are calling an oversupply in the condominium market. While our findings show the market has continued to enjoy strong demand, based on anecdotal evidence, a large proportion of condominium purchases in central Bangkok are made by investors buying and intending to put units up for rent,’ says Suphin Mechuchep, Managing Director of Jones Lang LaSalle.”
“The number of condominium units in central Bangkok now totals 54,280, including 3,630 units completed over the past six months. More than 20,000 units are currently under construction, with 20 new projects comprising 5,420 units launched in the first half of 2007.”
“Even more evidence of the housing boom occurring in Regina, in Saskatchewan, and most other areas of the country was provided by construction data released by Statistics Canada. That data indicated that $479 million was invested in residential construction in Saskatchewan during the second quarter of this year.”
“Meanwhile in Edmonton, area home prices fell almost $10,000 in August, the deepest drop in the city’s history. Single-family house prices fell an average of $13,393, to $403,757. During the month, 88 per cent of single-family home sales were below list prices, by an average of $13,200, the Realtors Association of Edmonton reported Wednesday.”
“In Calgary, the red-hot resale housing market cooled dramatically with average prices for single-family homes plunging by about $20,000 in August, according to a local realtor.”
“Calgary realtor Ted Greenhough said the month-end inventory of more than 9,000 residential properties for sale is the highest-ever recorded — ‘by a longshot actually.’”
“‘As far as I’m concerned, there’s going to be a market correction. I’ve been saying that for the last four months,’ said Greenhough. ‘I feel the prices have gone up in Calgary over the last 18 months and I feel they’ve gone up too high, too quickly.’”
“‘It’s supply and demand. That’s pure and simple. The supply is exceedingly high and the demand has fallen off substantially, he said.”
“‘Stuff is sitting and there are reductions (in list price) and lots of vacancies because a lot of people last year purchased on spec (speculation). All these long-term construction dates (for new homes) have caused all that. I’m getting a lot of that as well — vacant properties. Mainly from purchasers buying on spec,’ said Teresa Centanni, with Century 21 Bamber Realty.”
“During high-level economic discussions held at Jackson Hole, Wyo., Aug. 31 to Sept. 2, leading economists presented differing views of the current situation. But agreement emerged…that at least some blame can be attached to Fed policies under its former chairman, Alan Greenspan.”
“The symposium led to a broader sense that previous Fed policy had contributed to the housing market bubble. While no participants specifically named Greenspan, the criticism was clear in a number of papers.”
“The blame for the bubble will be attached to it two main contributors: the previous Federal Reserve board and its chairman, Alan Greenspan, for its expansionary stance, and the carelessness of investors who failed to monitor the sources of the shakedown in credit markets.”
“Martin Eakes (is) co-founder and CEO of a nonprofit community lender in Durham. He was one of the most vocal advocates in the 1990s of efforts to thwart predatory lenders in this state.”
“Q. Should the government have acted sooner? A. If I sold you a toaster and said that one in five purchasers who take this toaster home will burn their homes down, you’d ban the toaster from the marketplace The dominant subprime mortgage product of the last two or three years is basically corrupt.”
“It’s incredibly frustrating to me because any serious student of the mortgage market in the past two or three years would know this would happen. It was utterly predictable, and it’s tragic that the policy actions were not taken by the Federal Reserve to prevent this kind of disaster from happening.”
Sorry about the server problems earlier, folks. All in all, a great week for building housing bubble consensus. Please check back this weekend for news, your market observations and topics.
Countyrwide cuts 12,000 jobs http://biz.yahoo.com/ap/070907/countrywide_job_cuts.html?.v=8
Colorado has a problem getting all of its peach crop picked due to crackdowns on illegals. So, come on out, folks! Might want to lose that shirt and tie, though.
Yep, going to be lots looking for actual *real* work. someone asked in a previouse thread - we’ve been watching all our clients pull back, not just the loan\realty places. Their going out & closing up is adding quite a bit to the retail\office space too, so I think we’re going to start seeing those rents dropping (those realty\mortgage places took lots of office space that’s now empty..). Next collapse is going to be office\retail…
I hear there are some people in prison who have some time to spare. Get the ones who don’t have a violent record and put them to work on the farms. Give them the same pay that the illegals got. Put the money in a safe CD for them so they’ll have a nice little nest egg when they’re released.
Fantastic idea, jerry. I like it. Except I’d rebate half their pay to the taxpayer.
that’s already being done in E. Colo. The felons earn something like 10 cents/hour, and the farmers pay the high wages of the prison guards who watch them work.
I like Jerry’s idea, a lot. Pay them maybe half or a third the minimum wage, which should create competition for the slots. I think the quality of picking and packing would be a lot higher than when they’re offering 10 cents an hour. The forced-CD idea is excellent, too — show them their balances every quarter. Maybe give them 10% in cash, for their vices.
Good ideas in theory. Wish it would be done BUT the farmers would never stand for paying above slave wages for anyone other than illegals.
Been to a farmhouse lately? The always have brand new F-350 dualies, brand new equipment, they basically want for naught.
Then cry poverty when asked to pay a decent living wage to citizens. Just like McDoanld’s owners, building crews, etc.
American companies love cheap labor. Cheaper the better. Any wage increase has to come from somewhere & you can bet they will not give it up out of their profits willingly without a hellacious fight.
Hmmm, kinda like what the RE industry is doing right now .. .
I just got back from an extended vaca in North West Colorado up around Steamboat lake. Almost EVERY house/ranchette/ranch/resort/B&B is for sale! I would appreciate input on whether sellers are:
1. Long time owners trying to cash in and move on;
2. Front Rangers and out-of-state investors that can’t afford a second home;
3. FLippers desparately trying to find a chair since the music stopped. Appreciate it.
I would appreciate input on whether sellers are:
I’ll vote for the long time owner’s greed syndrome.
Bought for a song, and have now belately made the decision to cash out to finance a retirement in Mexico or Belize.
Recreational/tourism spots will be the first to die in this depression. Plus there is a paradigm change going on relative to the younger video game generations connection to the outdoors.
Most are too late to the game.
Didn’t CFC say they were going to hirer many of the people who were laid off from other lenders a month ago?
Primarily the former American Home Mortgage employees.
“Didn’t CFC say they were going to hirer many of the people who were laid off from other lenders a month ago?”
*****
This is a comical deja vu.
I don’t know how else to characterize this.
Exactly the kind of thing the VC’s here in the SF Bay (yeah, that venture idiot crowd) were saying throughout 2000 as their dogsh!t dotcom companies they were backing were going through the meltdown.
In fact, and I posted this on marinite’s Marin Housing Bubble blog probably some 18 months ago or so, Timothy Draper of DFJ said this very thing, along the lines of “who’s laying off? [How dare them?] We’ll hire them right away…”
A bunch of bullshi…
It was all away of trying to stem the psychological tide that was heading toward a determination that 99% of dotcoms were absolute crap.
Ah… this is just too much.
Bubble pop deja vu.
AT first I misread that as “Bubble poop deja vu”.
Got 10% down?
My source said there are still 10-12 thousand jobs still on the block.
Tom,
You called this correctly yesterday. Nice job.
I credit it to credible information from a credible source.
If your source says another 10 to 12 will go on the block… We’ll consider that good information. And its about the right downsizing for their origination volume reduction.
Just one thing… conforming mortgages simply do not pay as well as the old non-conforming. In other words, the majority of the commissioned people staying on will also take a pay cut. Ouch!
Neil
He/She said that it would be sometime in the next 2 weeks. Said this was critical and CW is in survival mode regardless of what is said in the media. With the 900 and the 10k, there could be up to 9,000-14,000 more let go here really soon.
The layoffs could also be preparing the Company to get bought out. Maybe a merger with a large bank like B of A?
Could Wells Fargo also be a contender? Yes, I know B of A did the $2 Billion deal, but Countrywide will go for quite a bit. So it would surprise me if no other bidder showed up.
Got popcorn?
Neil
A bit OT about this mortgage market.
Friend who owns own mortgage company and was used to making $250k a year for the last 5 years is hurting. She said she will be lucky to make $50k this year. Meanwhile, she is upside down on a few properties. She is also cashflow negative to the tine of $2500 - $3000 per month. I looked up her mortgages on her 7 properties and many of them are ARMs that reset at higher rates. When they reset, she will be losing more. She also put a deposit down on a place that was $600k. Her deposit was $20k. She cancelled the contract and tried to get her money back but will have to go to arbitration. In the contract it says if you lose arbitration then you are subject to arbitration fees and a 10% penalty on top of the $20k. That means she could lose another $60k plus the arbitration and lawyer fees. She said she just decided to walk away.
Folks, many of the realtors, lenders, brokers who fueled our economy with cheap cash that caused house prices to increase are now going broke. They are losing it all. Be thankful you have a job as it’s about to get a whole lot worse. All the dot com layoffs are being mimiced in the mortgage and lending sector.
Prediction, Wall Street will be having layoffs in the next 3 months. Especially Goldman Sachs and Bear Stearn. Merrill Lynch, Morgan Stanley, and Bank of America aren’t far behind. Kiss those Wall Street bonuses goodbye and sit back, grab some popcorn, because watching Manhattan real estate drop in price is going to be entertaining.
Yep, I know of two similar situations. Not owners, but reps. Anyway, I don’t think they saved a dime of the windfall earnings that they experienced during the boom.
Now the boom is falling on them.
why save a dime when “realty never goes down”??? They do drink their own cool-aide, I know a few & they asuredly are set for a major fall.
because watching Manhattan real estate drop in price is going to be entertaining.
Its amazing how quick this is going. Ok, its going to take another six months to finish the opening act, but the pyrotechnics are much more interesting than I expected.
Got popcorn?
Neil
Yes, things are going quick, but still I am looking on line properties on Realtor .com in Long Beach or Huntington Beach, properties for $700.000 or $ 800.000 I wouldn’t pay even 150000.00. It is amazing where human stupidity could create… . Those 50-70 years old houses for that mach money in a place where the only greatest architectural historic monument is Chinese Theatre (movie theatre) 50 miles away in Hollywood…
Tom,
and don’t forget Lehmen..once the ibanks start RIFing, they all do it at the same time. I’m betting on November to kick off the start of layoff season.
Let’s see which ones do the pink slip the second week in December. Then we will see some tellers and other employees with Glocks hunting their boss.
Tom — you’re on a roll. I think that everything you post is well worth reading.
Ditto.
Well if my “fans” ever want to message me, you can at MrHousingBubble on Aim : )
Wall Street always ends the same way. They fire them before the bonuses.
Every. Single. Time.
I wouldn’t want to be short for that reason. Q3 earnings will be OK for now. Then they will fire, and the stocks will go up. Q4 may or may not crap out.
This is an old, well-understood, well-played out game.
Folks, many of the realtors, lenders, brokers who fueled our economy with cheap cash that caused house prices to increase are now going broke. They are losing it all.
Saw it all in the ‘90/’91 bust.
Brokers, lawyers, engineers, developers…in no way were these stupid people.
All just kinda got caught up in the wave.
Sure glad I wasn’t one of them.
Wall Street will be having layoffs in the next 3 months. Especially Goldman Sachs and Bear Stearn. Merrill Lynch, Morgan Stanley, and Bank of America aren’t far behind. Kiss those Wall Street bonuses goodbye and sit back, grab some popcorn, because watching Manhattan real estate drop in price is going to be entertaining.
Man, them trophy Neiman-Marcus satchel carryin’ wives will be pissed!
Divorce city!
Think I’ll re-up my Match.com subscription!
They are already in the pipeline.
The unannounced ones have already occurred.
My neighbors are all lining up the trucks. Each weekend someone leaves. I haven’t seen anyone move in yet. This is on the UWS near Lincoln Center.
Good thing the big guy sold tons of his shares in recent months!
Well he was “diversifying” : )
LaSalle Bank is supposed to be anouncing as many as 10,000 job cuts within the next year here in Chicago.
Probably to merger news I thought?
Correct, but 10K jobs lost is 10K jobs lost.
Very true. It will definitely bite. As much of a bear that I am, I hate to see people lose their jobs. Lose homes they should have never had? eh, don’t feel sorry about that.
“Agent Jonathan Ford, representing the buyer, said Countrywide, the largest residential lender in Hawai’i, needed either the extra $60,000 from his client or a $40,000 price reduction from the seller.”
I’ve seen companies in their death throes before, and going from 0% down to demanding 20%, means Countrywide doesn’t want any more business, essentially.
Stick a fork in them.
Wasn’t 20% down pretty standard practice until the “new math” introduced by the bubble? I don’t think requiring buyers to have a little skin in the game is the same as saying “we don’t want any more business”. More like a long overdue return to sanity.
That said, I agree CFC is in very bad shape.
Harm,
Exactly! Demanding 20% down is simply risk mitigation. Countrywide is just making sure there is enough “meat in the game” to do the loan.
I liked the bit “or a $40,000 price reduction from the seller.”
This was almost a 7% price drop…
The buyer will feel lucky in a year. The seller… Oh well. The easy money boat is leaving port.
Got popcorn?
Neil
Neil, I could be wrong, but the way I am seeing this is, Countrywide can no longer securitize loans that don’t involve a 20% down, because there is just no market for them. What fraction of the notes it wrote did Countrywide ever hang onto? So, the wider public of actual lenders (i.e., bond buyers) are catching up with my LTV standards.
az_lender,
You are almost certainly correct. I think the bond buyers will remain skittish. Hence, why I think 25% down payments will be the norm in the darkest days of this downturn.
But we’re not there yet. It will take a long time.
I loved this bit of the quote:
“This is a shakeout,” James said. “In the long run, good things will be coming out of this.”
James and others said cutting off the flow of exotic risky loans should head off a potential wave of future foreclosures that could destabilize home prices.
“I think this is a good thing,” said Norman Banta, a real estate agent with Prudential Locations. “The pool of buyers will be much stronger with marginal buyers being knocked out of the market,” he said.
Ummm… too late. We’re going into foreclosure city. Could it have gotten worse? Not really.
Got popcorn?
Neil
Actually if you read the article it turns out that the buyer simply went to another company and got the loan. Newsflash: Oahu prices last month were up year on year, and so were the # of sales. Neighbor islands are getting hammered, but Oahu overall is doing remarkably well.
I’d love to know how the average % down has changed over the last 20-25 years, year over year.
We bought a home in 1984, I think it was ‘84. I don’t think we put much down. The house was a 1600 sq ft split level, that would now go for about 350k and we paid 63K (north of Seattle)I don’t think we even put 10% down, maybe 5%, but we had to document our income and my mom had to cosign and give them all of her financial information. Our income was about 28K a year. And our payments were about $700 a month. We had a negative amortization ARM, so that isn’t new, but our starting rate was over 12% and interest rates were coming down. If interest rates had gone up we would have been in trouble, but I don’t think our payments ever actually went up. We sold the house after 3 years for 76K, I think and came out with about what we put into it after selling costs, we had done some work on the house. I think the main difference was that we HAD to document income and interest rates were still very high and coming down instead of low and rising. Getting an ARM when interest rates are at an historical low just doesn’t make sense.
“Wasn’t 20% down pretty standard practice until the “new math” introduced by the bubble?”
We bought a home in 1984 with about 5% down, but we had to document income and have my mom cosign.
If I am the seller, I am giving them a $45,000 reduction just to make sure it is gone!!
When we were in HI last month everyone we talked to was still swimming in de-nial.
Don’t you know it’s different there?
Hawaii should be toast. If the economy drops into a recession (only has to be CC related) people just won’t be flying there as much. Meanwhile food costs are rising and most food products need to be imported. Aloha baby.
Most of the people who own in Hawaii are very rich. The rest own outright as the house was passed down from their parents and grandparents. Everyone else rents.
Or…they really really hate everybody! We’ve had clients we so detested we just kept raising our fees hoping to send them packing.
Downpayments? Good FICO? Stick a fork in our overpriced market!
‘What makes it surprising is Staten Island has the highest median income in its totality. So one would think that they would be immune to this kind of predatory lending — and they weren’t.’
Only Manhattan remains immune at this point — RIGHT?
Bwahahahahahaha.
Manhattan, Oh of course. They are immune. 1 bed & 1 bath for $600k. STILL a good buy! New York housing is just bullet proof!
Roidy
“Q. Should the government have acted sooner? A. If I sold you a toaster and said that one in five purchasers who take this toaster home will burn their homes down, you’d ban the toaster from the marketplace The dominant subprime mortgage product of the last two or three years is basically corrupt.”
Great analogy considering that the housing market it now “toast”.
This gentleman probably thinks the Fed is part of the government.
You mean they are not?
No, the Fed is a body of the member banks. The government appoints the chairman. Ironically, they can print money when constitutionally that is reserved for the govt.
Actually, the government doesn’t Constitutionally have the power to print money — they have the power to COIN money, meaning gold or silver.
You are so right! I never thought about it. The FED is actually Unconstitutional!
See:
Article. I. - The Legislative Branch
Section 8 - Powers of Congress
“To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;”
“… It was utterly predictable, and it’s tragic that the policy actions were not taken by the Federal Reserve to prevent this kind of disaster from happening.”
*******
I thought he meant “policy” with regard to higher rates?
“… It was utterly predictable, and it’s tragic that the policy actions were not taken by the Federal Reserve to prevent this kind of disaster from happening.”
I love this new “it was utterly predictable” bullsnot. I was the only one at my workplace that predicted this mess in the least. Most still don’t believe it is real. And I work at a finance related company.
This disaster was predicted by such a small minority that our numbers were insignificant. We were forced to meet in the dark places and shadows of the blogosphere and fight off all challenges. I think the Black Rose of the HBB did a fantastic job of sticking to their beliefs, even when laughter was the only sound ringing in our ears.
The looks I got initially tended to be ones either of sympathy (things must’ve gone bad) or amusement (I’m missing out). Now they seem much more like “You sly fox!” — though some of those also are tinged with resentment. Baffles me. I’m never unhappy when the other guy wins — good for him. But now I don’t feel true congratulations coming my way except from best friends.
hm, I think he might be saying that the Fed should have tightened lending restrictions on its daughter banks. What they really needed was to come out with an unambiguous message targeted at investors “We see an irrational exuberance among investors of mortgage backed securities, and believe that have gravely underestimated the risk of widespread default in the event of a housing downturn.”
Something like that a couple years ago might have put a kink in the hose and maybe precipitated a more orderly unwinding of the bubble.
Is 2008 the year when the average American finds out that the Fed does not act in their interest?
I wonder if the Fed is going to be an issue for voters.
no- j6p is too ignorant to connect the dots. easier to blame banks and realtwhores, etc.
Something tells me Joe6Pack and Janie SiliconImplants will have more basic concepts consuming their thoughts.
Of all the blessings of this blog, one of the best was somebody’s introducing me to the phrase “after-market bolt-ons” for fake boobs.
Maybe not the Fed specifically, but the earlier thread with ACORN marchers surounding a hedge fund office in Greenwich Ct.,may be a hint of the future. 2.2 million foreclosures in the pipeline…means everyone will know someone, be related to someone, work with someone or live on the street with someone who’s been foreclosed. These sob stories the press is using now will get old fast.
Wait til a teacher’s union figures out it’s investments are marked to fantasy MBS waste…or public service pensions including those of retired cops and firemen. I expect a rising tide of anger to change the political map before the prez election.
spike, from your lips to God’s ears. Frankly, I’m surprised we haven’t seen more angry pensioners already. I have one acquaintance whose 401K just lost over $30,000.00. I don’t know all the details, she mentioned it briefly but angrily in passing.
Palmetto, posted this for you late last night, hope you saw it.
This is for Palmetto, and his hatred of globalization. Luxury is now American-made, vs. the cheap, imported crap from China, per the NY Times…
“Made in the U.S.A.” used to be a label flaunted primarily by consumers in the Rust Belt and rural regions. Increasingly, it is a status symbol for cosmopolitan bobos, and it is being exploited by the marketers who cater to them.
For many the label represents a heightened concern for workplace and environmental issues, consumer safety and premium quality. “It involves people wanting to have guilt-free affluence,” Alex Steffen, who is the executive editor of http://www.worldchanging.com, a Web site devoted to sustainability issues, said in an e-mail message. “So you have not only the local food craze but things like American apparel, or Canadian diamonds instead of African ‘blood diamonds,’ or local-crafted toys.”
With so many mass-market goods made off-shore, American-made products, which are often more expensive, have come to connote luxury.”
http://www.nytimes.com/2007/09/06/fashion/06made.html
Kinda like Obama thinks Fed Funds are something that ought to be paid directly to FBs in order to help them avoid foreclosure.
I am watching the NewsHour right now. They are doing a feature on the “bust” in the Inland Empire. They are hitting on every HBB point. They discussed the health problem with “green” pools. They discussed the problems of brown lawns and squatters in neighborhoods with a lot of vacant homes. They just interviewed the owner of a local Chrysler dealership. Guess what? He said that business is bad. A “Realtor” just said that some homes in the IE are already down 25%. The Englishman interviewing her almost choked. They are discussing the huge amount of foreclosures. Some place named “Hemet” was the town that was featured.
They are now listing the winners in this situation. They said bargain hunters are doing well. The makers of manufactured homes are seeing a boom. They talked about people down-sizing to trailer parks. And get this, renters are now also the big winners. Rents are going “down”.
But not to worry. The last sentence of the piece stated that the downturn would be short lived. NYCityBoy says, “bwahahahaha” to that. It’s time to go have dinner on Stone Street, right near Wall Street. Let’s see how happy those scumbags look.
“Some place named “Hemet” was the town that was featured. ”
LMAO!!!! Hemet makes Bakersfield look great!
Hemet is a rural area of orange groves and cows over the mountains and west of the desert. They built a bunch of McMansions and golf course type homes - then the homeowners who bought next to dairy farms started bitching about the smell! Glad to hear about Riverside - Ex boss in 2006 talked of buying $1M house in Riverside (& $200K in renovation costs). When I suggested it wasnt a good time and he was new to the area, he asked if I was a realtor. When I said no - he quipped he had no reason to listen to me - bwa ha ha bwa ha ha.
Cars in H-ville sometimes sport bumper stickers that say:
“Pray for me, I drive in Hemet”
Lots of senior driving moments, apparently.
Don’t worry about Chrysler. Robert Nardelli will cut costs, jobs, and customer service and quality will suffer. In a few years they fire him with a golden parachute worth hundreds of millions of dollars. The only difference is it will all be with Private Equity money.
RE: It’s time to go have dinner on Stone Street, right near Wall Street. Let’s see how happy those scumbags look.
LMAO…NYCB, you fookin’ slay me!
From 8/28/2007 to 9/4/2007, there were 1 homes sold in ZIP code 90274 for an average price of $1,825,000.
1) $1,825,000 on Noya Pl
90274 is Palos Verdes Peninsula, CA . That large mountain or hill you see out of left side of plane just before you land at LAX
Only 1 is a very lonely number.
and how much will noya place be worth this time next month?
So only 1 home sells in 7 days? How many home usually sell in 7 days?
week before this last one there were 14 sold.
Ahum.
PV is “The hill.” Please make sure you have proper posture while saying that.
One sale at this time of year is painful. There are 57 homes on the market in PVE per ziprealty. 37 single family homes with 3 bathroom and more, 2,500 ft/sqft or more.
Sales should be more than one a week. I’m thinking with the shrinking jumbo mortgage market we’ll have many a week with zero sales.
Got popcorn?
Neil
A Much More Sophisticated Marketplace.
Does that mean we won’t be seeing anymore guys with mullets and wife-beater tanktops trying to flip million dollar houses?
No, “million dollar houses” is the new burger at Wendy’s.
sorry cant resist (I usually hav eto have a couple of drinks before I really get going, but its slow at work) here goes:
“You want fries with that million dollar house?”
“Q. Should the government have acted sooner? A. If I sold you a toaster and said that one in five purchasers who take this toaster home will burn their homes down, you’d ban the toaster from the marketplace The dominant subprime mortgage product of the last two or three years is basically corrupt.”
“It’s incredibly frustrating to me because any serious student of the mortgage market in the past two or three years would know this would happen. It was utterly predictable, and it’s tragic that the policy actions were not taken by the Federal Reserve to prevent this kind of disaster from happening.”
********
For me, perhaps the money quote of the summer.
You didn’t even need to be a “serious student.” Just paying attention is all it required.
“For one Honolulu homebuyer, loan terms abruptly revised last month demanded the borrower come up with $120,000 cash, double the $60,000 already committed as a down payment to purchase a $600,000 Downtown condominium.”
“‘That wasn’t going to happen,’ he said. ‘I told the lender that’s ridiculous.’”
As usual, we are not told the borrows income. The agent left out important details and just claims it’s ridiculous. The lender may just making sure the borrower can repay the loan. Isn’t that what their supposed to do? The agent is just pissed that it blew his deal. He’s wasn’t concerned about the borrowers ability to repay the loan. All he’s thinking about is getting a commission.
Nothing to explain really about requiring 20% down. This used to be standard, and in a rapidly falling market it still might not protect the lender from receiving jingle mail in a couple of years.
“…in a rapidly falling market it still might not protect the lender from receiving jingle mail in a couple of years.”
That’s the KEY point, and why people who think that serious down payments are a passing delusion are in for a shock.
“The marketplace is going to be a much more sophisticated marketplace.’”
this is the country where common sense equates sophistication
“‘The pricing keeps going higher,’ said (builder) Mario Ayala . ‘Every year it keeps going up. If last year a house was around $125,000, now it’s $200,000. It’s ridiculous.’”
I had to recheck the date of that article. I was sure that it was pulled from the 2005 archives.
They seem to have a few morons in Craig, CO.
They do. I went through Craig in the early 1980s. Back then, it was a boomtown. (I think that oil shale mining — if you can call it that — was being done nearby.)
Truth be told, Craig is way out in the middle of nowhere. My impression was that there wasn’t much to do except eat, sleep, and go to work or school.
No reproduction!
Oops. Left that part out. But this is a family blog, after all…
“shale oil”
I thought the same thing?! I asked my husband “I wonder what year this was written in.”
Ok, remove that stupid question mark. This thing really needs an “edit” feature.
Nah — from time to time we get some really funny typos and double entendres. No one picks on errors unless they make the post incomprehensible.
In the early days, Ben’s blog was much rougher to navigate because it was flooded by troll posts and a lot of annoying “anonymous” stuff (IMO). Now it’s easy to post and I think easy to follow. Sort of like XP — I don’t need Vista and the blog software works plenty well enough for my needs. Sorry — don’t mean this as a bash, but rather a polite “on the other hand.”
Craig used to be an OK farming/ag center kind of town, but the energy boom has thrashed it. It’s also become a bedroom community for the ski town of Steamboat Springs. The latter has affected the prices maybe even more than the energy boom. I don’t think that builder was being particularly moronic, prices there have historically been very low and also very stable. These people aren’t used to all this change - it used to be the kind of place you never locked your doors or even your car. Craig is close to some nice canyon country and actually has some fairly decent people.
Slowest August since 1998 here in Southern Oregon:
“Just 160 single-family residences exchanged hands last month as the stagnant real estate market produced the fewest sales this year since February — a month of winter sales doldrums rarely mentioned in the same breath as August in real estate figures.”
“For the four or five years before this, the sellers determined the price. Now the buyers have the hammer and they’re popping it over the sellers’ heads.”
http://www.mailtribune.com/apps/pbcs.dll/article?AID=/20070907/NEWS/709070329
You bet. And in 18 to 24 months, sellers are going to be asking to get popped with that hammer.
Thank you, sir. May I have another.
There you go — I clicked on the link and smack dab in the right sidebar is a job offer for soon-to-be-former mortgage brokers: “Line Cooks Wanted.”
‘What makes it surprising is Staten Island has the highest median income in its totality. So one would think that they would be immune to this kind of predatory lending — and they weren’t.’”
Let me re-phrase this…they weren’t immune to the greed. Nothing to do with “predatory lending”, I’d be willing to wager.
“Massachusetts Mortgage brokerage firms are closing at a torrid pace as the real estate slowdown and recent credit crunch sweep away the excesses of the most recent housing boom. Those that remain face a drop-off of up to 50 percent in jumbo financing.”
I wonder if the torrid pace is anything like the pace at which they made loans?….
Torrid as in getting naked and loosing it all
Torrid as in getting naked and losing it all
If the torrid pace of closures would extend to those morons who originated my mortgage, I wouldn’t shed a tear.
AP is reporting that Countrywide will cut 12,000 jobs. We’ve heard hints about this over the last week or so, but it’s now official.
And I work with one of the many “you’re too negative” crowd that kept telling me Countrywide was in great shape because they were still hiring. Oops. Time for my co-worker to find his next ridiculous, stupid, blind, dumb, foolish, nearsighted, myopic, bonehead argument to justify his empty beliefs.
Sadly, your co-worker will find a new argument. Probably provided by the NAR.
I’ve lost my patience. What do I respond? “I hope I’m wrong.”
Walk away, giving them a sad look. To one really persistent one, its “Why haven’t you bought your San Diego Condo?”
Got popcorn?
Neil
“‘The bar to entry was set so low that people were going in to make a quick buck. Those days are over,’ said Kevin M. Cuff, executive director of the Massachusetts Mortgage Bankers Association. ‘The marketplace is going to be a much more sophisticated marketplace.’”
Hmm..that’s strange..
When I discussed different loans products with a mtge guy here in MA, I was called unsophisticated, because I only wanted a 30 yr fixed. He said that I/Os, ARMs, etc. were much better products.
The market does not need to be sophisticated. It just needs to be rational and reasonable.
“‘The marketplace is going to be a much more sophisticated marketplace.’”
Okay, here goes (the clean version): A Realtor approaches a homeowner who’s just planted a “FSBO” sign in his front lawn.
REALTOR:
We’re a husband-and-wife real-estate brokerage firm, and I’m confident that we can sell your house for $1.2 million.
HOMEOWNER:
Sorry, that price is too high; besides, I don’t want to pay a commission. I’d rather lower the price a bit and pocket the difference.
REALTOR:
But, our firm’s approach is quite creative and special.
HOMEOWNER:
Okay, describe it.
REALTOR:
Well, it’s all about staging. During your open house, my wife will pole dance on the front banister while I watch intently. After enough potential buyers show up, two of our younger female agents will join in. Of course, we’ll set up some couches in the front yard — facing the porch — and we’ll serve barbecue and Bud.
HOMEOWNER:
I’ve heard plenty. That should surely attract potential buyers and fetch top dollar. I’ll contact you on Monday. What’s the name of your brokerage firm, by the way?
REALTOR:
Sophisticates Realty.
regarding staging and this post…
In a strip club DJ’s voice with a little AC/DC playing in the background, …”ok, gentle…coming from San Bernadino, let’s..welcome Brandi to the stage”…
ROFL — the low, husky voice every guy who’s been to a decent [sic -- or self-sic] bachelor’s party remembers.
you owe me a keyboard.
It seems to be working : )
If they could make those spinning banners a lot smaller, I just thought of somewhere they could put them, two per agent.
Timely notice: Lehrer says the 3rd segment of tonight’s News Hour will cover the spillover effects of California’s subprime mortgage mess.
spillover..
what happened to containment?
The containment proved to be contagious, which produced spillover. However, the underlying economy is strong, unemployment is low and lying Hank Paulson annnounced this very day that he expects “growth” in the second quarter. Did not howver, say what sort of growth. Perhaps he expects the spillover to continue to grow, due to the underlying strength of the contagious containment.
Just saw the segment. Starts with a Health Dept worker in Hemet whose workload has doubled because the mosquito-infested pools at abandoned homes. We see a dry-waller whose monthly income has fallen in half. We see a real estate agent who admits that 25% price reductions aren’t solving the problem because there aren’t enough buyers, period. Beneficiaries of the situation are mentioned: people getting houses cheaper. Thank you, News Hour, it’s an ill wind that blows nobody good!
“Timely notice: Lehrer says the 3rd segment of tonight’s News Hour will cover the spillover effects of California’s subprime mortgage mess.”
I just watched this segment…it was a thing of beauty…all our HBB talking points were covered….county health inspectors fretting over the West Nile threat from swimming pools in abandoned back yards…car dealership owner saying used cars are now selling better than new…neighbors complaining about vagrants in empty houses & backyards…realtors looking very scared….an escrow officer saying she’s afraid for all the young couples signing up for big housing payments….
Blew the roof off, in short.
HBB is a must read for any journalist who writes about this mess. You could spend 20 minutes a day for a few days and know most of everything you needed to know about the bubble.
I’ll bet there are a bunch of MSM types who read here.
Hi, guys!
az_Lender-
You catch Horizon tonight? comedy… “it’s all gonna be better next year” was the basic trend.
“Calgary realtor Ted Greenhough said the month-end inventory of more than 9,000 residential properties for sale is the highest-ever recorded — ‘by a longshot actually.’”
“‘As far as I’m concerned, there’s going to be a market correction. I’ve been saying that for the last four months,’ said Greenhough. ‘I feel the prices have gone up in Calgary over the last 18 months and I feel they’ve gone up too high, too quickly.’”
“‘It’s supply and demand. That’s pure and simple. The supply is exceedingly high and the demand has fallen off substantially, he said.”
Talk to most Canadians, and they will tell you that Canada is “bubble-proof”, that “it’s different than in America” and whatnot.
Living in the epicentre of the Canadian RE bubble, Calgary (40% appreciation per year for 3 years), I can tell you the only difference here is the timing, our bubble started in 2004 and is only peaking now.
Here are the similarities:
1. Unsustainable rise in prices fueled by cheap credit, speculators, and the “common knowledge” that Real estate NEVER goes down in value
2. Lots of house flipping. Tons of condos and single family homes built on spec.
3. Undying belief that “it’s different here”
4. Buildable farmland as far as the eye can see in all directions
5. In-migration starting to give way to out-migration due to high cost of living/ high housing costs
I wonder what will happen next?
Regina, Saskatchewan is in my backyard, and the article from there which Ben referenced was printed in my newspaper yesterday.
I’m glad the run-up here has only lasted a year and a half. Some of it is due to recent good economical fundamentals, but I am betting a good part of it is due to speculation as well. I feel that houses are overpriced now and am holding off on buying. Too bad I couldn’t have bought three years ago, but I didn’t have the money then. Now I guess I’ll wait a couple years and save up a nice downpayment.
Also, I just want to agree that Canada is not immune to housing bubbles. The Canadian lifestyle is not fundamentally different from the United States. People are frequently spending more than they can afford to. We may save a little more money on average than Americans, but not very much more. Also the five or six main Canadian banks may be a bit more conservative in their lending practices, but they are by no means the only lenders around.
If there’s one thing which strikes me as being a bit odd, it’s the posts I read from Americans which say that people should start saving 10% or 20% down before buying a property. Here in Canada, a conventional mortgage requires 25% down, I believe. Also I am sure there are plenty of people in Southern California who will laugh at me for thinking a $180,000 house is unaffordable. Well, that all depends on how much money you’re making!
One last thing: I enjoy this blog because of the many and various reports and anecdotes from places in the United States where I have gone on vacation in the last few years. Places like SoCal, AZ, ID, MT, MN, MA, NH, FL, GA and SC. I remember going to Minneapolis, having my eyes bug out at the mind-boggling prices at a new golf course development, and saying “these houses CAN’T possibly be worth this much!”
Wacko — thanks for your interesting on-the-ground observations.
We may save a little more money on average than Americans, but not very much more.
If you save anything, you’re saving more than the Americans! Keep in mind, the savings rate in the USA is negative.
Haaa…. try Vancouver’s bubble fest, we lead Canada in stupidity! -5% savings rate, 40 to 50 year amortization, 105% mortgages. Same $hit different pile.
I CAN’T BELIEVE IT!!!
PIGS ARE FLYING OUTSIDE MY WINDOW AND HELL HAS INDEED FROZEN OVER!!!
Larry Kudlow was just screaming the virtues of Barney Frank and Robert Reich in their calling for massive rate cuts and injections of massive amounts of liqudity into the system to reinflate the housing bubble.
Kudlow is normally aligned with the right. He is pissing off a lot of his usually allies doing what he just did.
Holy crap!
Even the CNBC anchorette called him out on that.
My jaw is still on the floor.
One thing to remember is that they could give a crap about, me, you or the FBs. They just want the bad paper sold or absorbed.
Unbelievable.
Someone on this blog trolled to Ben that there are more of “them”, them being FBs who want a bailout than those who are against it. Ben quickly corrected the troll with facts and figures.
Pigs are really flying tonight because I NEVER thought I would see in my life an issue that crosses political lines and cause political people to defy the usual lines but this is it.
I don’t know what skin Frank and Reich have in the game other than pandering maybe there is more but this is truly remarkable. It’s obvious where Kudlow’s loyalties are.
I’m stunned.
Hovnanian Enterprises Inc., a luxury homebuilder that reported its fourth consecutive quarterly loss this week, is taking an unusal approach: It’s slashing prices for three days beginning Sept. 14 in each of its 449 communities nationwide to trim excess inventory.
Do they call this their Hack- A- Hov…..Just how much are they going to cut. Bet it is not enough to to move their market. I hope no one shows up….They need to cut 25% minimum. These upgrades they throw in are only worth about .40 cents on the dollar and is inflated. ETC.. $50,000 in landscape upgrades. What a joke.
All the upgrades possible, don’t move the prices towards being affordable. If nothing else, they just exacerbate the problem.
Not that long ago, this jackass what telling the other homebuilders NOT to cut prices. That they all needed to stick to their guns, together (collusion!) to show the sheeple that the houses were worth what they were charging.
My how times change.
what = was
Man, today is just not my day for typing.
Don’t shed a tear for Mr. Hovananian. He’s been buying and investing in hard money loans out here on the central coast.Getting 12%-13%. Beats a sharp stick in the eye.
LOS ANGELES –Struggling lender Countrywide Financial Corp. said Friday it will cut as many as 12,000 jobs as it struggles to deal with challenging conditions in the mortgage industry. The company said the cuts, amounting to as much as 20 percent of its work force, are needed because it expects new mortgages to fall about 25 percent in 2008 from this year’s levels.
If new mtges fall 25% at Countrywide, I have to believe that is the equivalent of saying, “no housing market recovery in 2008″.
no?
Wonder if this has anything to do with it…
http://www.azstarnet.com/sn/firstmagnus/198989
These idiots were not only making horribly bad loans, they were loaning money they borrowed to ANOTHER group of idiots to make bad loans? Was their own underwriting not suspect enough, so they had to get some REAL knuckleheads writing loans for them?
Builders ’round here were building for, say 130~ (land & materials), getting appraisals for 200~ (prior to selling what they had just built, of course…), ATM’ing the difference out (most likely in ARM’s – ‘cause you know, they were about to sell after all) to start more projects…
You’d be surprised what greed will lead people to do…
The crash ought to be rather spectacular I think…
Who likes FAST MONEY on CNBC? I kinda like the show. It’s on now!
I like mackey, but only for the cue ball hair cut (and he writes for the ‘ville’)
“Are there any potential homebuyers out there in Moffat County, Colorado? If there are, the advice from real estate agent Jerry Monger is to act now, because prices probably are not going to come down.”
“‘The pricing keeps going higher,’ said (builder) Mario Ayala . ‘Every year it keeps going up. If last year a house was around $125,000, now it’s $200,000. It’s ridiculous.’”
These clowns are a little behind the times, aren’t they? Sooo 2005. BORING!
Light the big stink bomb with the 12K layoffs to get the measly little rate cut.
Thats my take on todays Friday night follies.
This is from my Sister up in Folsom in response to that Sacramento Business Article, Brother in Law is a RE agent up there:
——–
This is exactly what I was saying…the banks will not deal and are holding onto their prices, which makes it so that there are no deals - then people end up paying more for something (foreclosures are a mess, they have been vacant with angry people living in them before that) than a regular sale, just because it says ‘foreclosure’ on it. Stupid.
This has been going on for over a year now. Bill had a short sale for 8 months that finally got foreclosed on and it still hasn’t sold (4 months later) as a foreclosure because the bank is asking just as much now as they were asking during the short sale. But now the house is a mess. During the short sale the owner was keeping it up so as to sell it - a short sale is better for your credit than a foreclosure - and Bill only got ONE offer during that time. It was right at the comps, but the bank, who was in Detroit, wanted more.
I am sure the banks are just now starting to actually take notice that this is serious, but the way they do things is so backward and part of it is due to the fact that in some cases, foreclosures are better on their books than actually selling it. Bill had one of the banks flat out tell him this.
And, as the article says, that is one of the parts of the market that is moving (not much in this area) - because people are so stupid! Like Bill always tells people, if there were deals out there, realtors would be buying them, so you wouldn’t get a chance at this point anyway. But there are no real deals…and buyers won’t buy because they think they should be in charge, but like I told you the other day, sellers won’t lower their prices.
‘foreclosures are better on their books than actually selling it. Bill had one of the banks flat out tell him this.’
This is absolutely true, and it’s due to the mark to market accounting. If they sell one, all the others they own in the area get a similar reduced valuation. Many banks could and will fail if this happens.
“Many banks could and will fail if this happens.”
“If” or “when?”
Then what happens when j6pk gets fed up and dumps his house at a big discount? Won’t the comps drop?
It’s scary to think some neighborhoods are only one or two sales from having their whole price structure totaled. How precarious is that?
dude wrote due to the mark to market accounting
I think you meant “mark to model” accounting. If it was “mark to market,” then they won’t be holding them (i.e., sold and off the books)…
Bush is in Australia for an APEC meeting today. So, in his speech,he thanks his hosts, calling them Austrians, and refers to the get-together as a meeting of OPEC.
He also said the US economy is strong. And you can take that to the bank.
http://rawstory.com//news/2007/ I…en_in_0907.html
What happens when banks are overwhelmed with foreclosures then they will have no choice, but to slash the prices and hope the properties sell. All the banks are doing is prolonging this collaspe by holding onto these properties that are falling in value every single day.
What do you think?
They will play lots of little tricks to keep this off their books. Like the REIT pool that was suggested yesterday. Use another play from the Enron playbook.
I think I need more popcorn.
Is WAMU next???:
http://forum.brokeroutpost.com/loans/forum/2/162845.htm
Peter Schiff’s piece today is equally scary:
http://www.financialsense.com/fsu/editorials/schiff/2007/0907.html
I can’t read Schiff’s piece. Too depressing
I finally closed my account at WAMU a couple of weeks ago after stalling for about 3 years. I did move most of our money to a safe bank about 4 years ago, but kept the WAMU account for everyday checking because the other bank is half an hour away.
When I closed my account the teller asked me why and I said that it didn’t have a high safety rating (with Weiss ratings), and she said that it was rated the best bank by some magazine, I can’t remember which, and how they had gotten out of all their sub-prime loans a couple of years ago. I just smiled and went ahead and closed it. They just announced that they were cutting back on SOME sub-prime loans in July, but were still committed to offering sub-prime, so I don’t know how she could say they got out of them 2 years ago. I expect that they will be having serious trouble sooner or later. Maybe they will fail so early in the game that the FDIC will still be available.
I love just how surreal our nation has become:
- The horror of the lack of illegals to pick fruit. Wait, didn’t any of these bozos get the message that illegals end up costing us money instead of saving money while at the same time preventing actual citizens from getting jobs by taking their place and keeping wages below the living wage level? Duh!
- The idiots realtor in Colorado who is looking for “anyone” to buy a house, yet at the same time is loudly proclaiming that “prices won’t go down” because a house you bought last year for $125,000 is now “worth” $200,000. Are these people really that stupid? Are they actually unable to make the connection between runaway price increases (far beyond what anyone can afford to actually buy), tighter lending standards, and the sudden lack of buyers? Do they really think that prices can continue to skyrocket without anyone buying anything? If so, why not just make up numbers for the housing prices (and our salaries, too!) Oh, wait - we already did that the past few years in the Bubble!
Madness! And they wonder why America is losing its edge… looks more like we’ve lost our minds.
Friend who owns own mortgage company and was used to making $250k a year for the last 5 years is hurting. She said she will be lucky to make $50k this year. Meanwhile, she is upside down on a few properties. She is also cashflow negative to the tine of $2500 - $3000 per month. I looked up her mortgages on her 7 properties and many of them are ARMs that reset at higher rates. When they reset, she will be losing more
WIth that kind of money, she should be set for life if she had been prudent. Hogs get fat, pigs get slaughtered.
I thought it was hogs get fed, pigs get slaughtered….
eww
Bulls make money. Bears make money. Pigs get slaughtered.
“Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we.” —George Bush, Washington, D.C., Aug. 5, 2004