A Lot Of Californians Have Concluded It Pays To Wait
The Sacramento Bee reports from California. “DataQuick reported Thursday that 2,467 new and existing homes changed hands in October in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. That’s more than 1,000 fewer than the same time last year. Sacramento County’s October median sales price fell to $299,500. That’s the first dip below $300,000 as the price slump continues and the lowest median price since April 2004. Sales prices have now fallen 22.6 percent from their August 2005 peak of $387,000, DataQuick reported.”
“Placer County registered an October median sales price of $402,500. That’s 23.4 percent off a December 2005 peak of $525,500.”
“The Bay Area and Southern California reported the lowest number of October sales since 1988 when DataQuick began tracking statistics.”
The Recordnet. “Pending home sales in Stockton are still down countywide from a year ago, according to the latest Coldwell Banker Grupe-TrendGraphix monthly sales report. Home prices continued to slide…in a brutal sales year characterized primarily by a growing mass of foreclosed homes throughout San Joaquin County.”
“Dave Thurman of Dave Thurman Real Estate in Stockton said the market still hasn’t stabilized, because buyers feel they can buy only below market value. There is the positive news, he said, in that it’s a great time for a first-time buyer to buy a home with prices between $100,000 and $150,000 less than two years ago.”
“According to TrendGraphix, the median selling price in San Joaquin County slipped from $325,000 in September to $319,000 last month. That was down almost 25 percent from a high of $425,000 in July 2006.”
The Daily Press. “In Victorville, 1,366 homes are in pre-foreclosure, indicating the owner has received a notice of default. There are 314 homes on the auction block and 659 owned by the bank as of Monday. By contrast, 442 homes were listed for sale in Victorville.”
“In Hesperia, 975 properties are in pre-foreclosure, while 225 were listed at auction and 471 were owned by the bank. By contrast, 198 were listed for sale.”
“Apple Valley had 729 properties in pre-foreclosure, 191 at auction, and 349 owned by the bank, while Adelanto had 488 in pre-foreclosure, 127 at auction and 211 owned by the bank.”
“‘This is the time to sit still if you can,’ said economist John Husing. ‘This is not a time to be selling your house unless you absolutely have to. This will get over. But it’s about another year and a half out and some significant difficulties in the meantime.’”
“More foreclosures are likely to arise, for about the next year and a half, Husing said. ‘There’s a lot of folks out there that know they’re looking at a cliff,’ he said.”
The Press Enterprise. ” It was the worst October for home sales since 1996 in Riverside County and the worst October since a tracking service started for San Bernardino County. In Riverside County the median home price fell to a three-year low.”
“News was also bad for foreclosure activity with the Inland region ranking No. 3 in the nation.”
“Andrew LePage, an analyst for DataQuick, said in the past two years, buyer psychology has reversed. ‘People were rushing to buy before they got priced out, and now we believe a lot of people have concluded it pays to wait,’ LePage said.”
The Orange County Register. “A decline in jumbo home loans continued to gum up sales for Orange County’s priciest residences last month, driving price averages down and cutting transactions to their second-lowest level in at least two decades, DataQuick reported.”
“The median selling price of an Orange County home was $573,750 last month…down 8.2 percent from a year ago, effectively erasing 2 ½ years of price gains. Just 1,700 home sales closed in October, down 42 percent from the same month a year ago. October became the 25th consecutive month in which sales fell below levels from the year before.”
“‘It was dramatically more expensive to finance properties in Orange County in October than it was in June or July,’ said Michael LaCour-Little, a finance professor at Cal State Fullerton. ‘You’re seeing fewer high-priced homes selling. That’s going to drive down the median.’”
“Jumbo loans declined 61 percent in Orange County since the credit crunch, compared to a 6.4 percent drop for conventional loans, DataQuick reported. As a result, sales fell by more than 50 percent for homes selling for $600,000 and above.”
“Anthony Glenn suspects that buyer reluctance is hurting his chances to sell his ocean-view home in Laguna Beach, even though he’s dropped the price by more than $200,000.”
“His current price of $1,699,000 is only slightly more than the home’s appraised price when he bought it two years ago. But after 51 days on the market, he’s had just three buyers come by to look at it.”
“‘The buyers are there, and people have money. People have trust funds,’ said Glenn, an unemployed high-tech salesman who is selling to take a new job in Santa Barbara. ‘I think the reason people aren’t acting … is they read the paper. They read the news, and it’s all bad news.’”
“Banks foreclosed on 530 homes in Orange County in October, the highest monthly total in more than a decade, DataQuick figures show. The total was up 410 percent from a year ago and 19 percent from September.”
“On Nov. 1, short sales and REOs totaled 3,059, or roughly 17.5 percent of all properties for sale, according to Steve Thomas at Re/Max Real Estate Services in Aliso Viejo. (Thomas just starting tracking this statistic, so he doesn’t have historical data.)”
“‘It’s going to take the better part of 2008 to digest all these short sales and foreclosures,’ he said.”
“Paul Scheper, a VP with (a) mortgage company in Aliso Viejo, said a credit crunch that accelerated in August is leaving some struggling owners without options. Perhaps as many as 40 percent of struggling owners want to refinance and keep fighting for their homes, but just can’t find a loan, Scheper said.”
The North County Times. “San Diego County home prices fell to a 3 1/2-year low in October. The overall median for October stood at $460,000, 6.1 percent lower than October 2006’s $490,000, according to DataQuick. The latest figure represented an 11.1 percent decline from the peak of $517,500 reached in November 2005.”
“October sales totaled 2,327, the Union-Tribune reported. October sales figures were 32.5 percent lower than year-ago levels and marked the 41st consecutive month of year-over-year declines.”
The Union Tribune. “There was a turnaround of sorts in other data for San Diego County released yesterday by DataQuick. The number of defaults in the county for October totaled 2,119, up from 1,858 in September. But the 106.7 percent jump from October 2006 was the lowest year-over-year increase since June 2006.”
“The 831 foreclosures last month were up from 691 in September and 228 in October 2006. But the year-over-year 264.5 percent change was the lowest since September 2005, when there was a 50 percent increase.”
“However, analysts caution against drawing any conclusions based on just one month’s data.”
From KPBS. “Thousands of people living in San Diego are losing their homes because they can’t afford to make their mortgage payment. Many more are months behind on their payments. Chances are if it’s not you, it’s probably one of your neighbors.”
“We take a tour of some foreclosure properties with a realtor who now specializes in them. They range anywhere from the one bedroom condo to the million dollar mansion.”
“This little condo in south bay was someone’s American dream. When these apartments were converted into condos, many of the renters bought in. Now, so many are trying to get out. This is one of Eric Weichelt’s listings. He has 500 listings – all foreclosed homes in San Diego County. He’s selling this one-bedroom for under $100,000. Less than half what the original owner paid.”
“Weichelt: ‘If your intent is to not move, who cares if it goes down to $100,000, you still need a roof over your head. If you can afford it, that’s the thing, whoever purchased this could they afford it, I don’t know, but apparently not.’”
“Weicheldt says some homeowners used their equity to buy rental properties as investments. But if they got in too late, their investment became a huge liability.”
“Weicheldt: ‘When your double-digiting appreciating for five years you can’t sustain it, so the tail end of the purchasers who may have gone in over their head, and started feeling the crunch and then all of sudden they said we can’t handle this.’”
“This house looks pretty good right now, it’s clean, a new paint job, even carpet. But it didn’t look this way when Weicheldt inspected it just after the foreclosure. The previous owner spray painted ‘civil matter’ all over the walls.”
“Weicheldt: ‘We don’t get the full story, we only hear parts of it, but we knew they were foreclosed on another home.’”
“Like so many homes that sold a couple years ago, this house was 100 percent financed. The buyers paid no down payment. Most of the loans that went into default last quarter originated between July 2005 and September 2006. And the loans median age before default was just 18 months.”
“As soon as you walk into this stately home in Chula Vista, you notice something unusual. There are no doorknobs, no light fixtures. Weicheldt: ‘They took all the fixtures and they took all the knobs, they took the doorknobs, they took the queen palms that are outside, it’s like what you do. Not clear – at least on paper.’”
“Weicheldt says he’s seen this before. The previous homeowners were either so mad at the bank, they took what they could or so desperate to hang on to what little they had left.”
“Weicheldt: ‘You see some sad stuff you really do, but the one thing, if anything can be looked at in appositive light, at the end of the day, this house was probably a burden on this person and their family, you know what, start fresh, get your stuff, don’t take stuff, that’s yesterday news.’”
“Anthony Glenn suspects that buyer reluctance is hurting his chances to sell his ocean-view home in Laguna Beach, even though he’s dropped the price by more than $200,000.”
“His current price of $1,699,000 is only slightly more than the home’s appraised price when he bought it two years ago. But after 51 days on the market, he’s had just three buyers come by to look at it.”
“‘The buyers are there, and people have money. People have trust funds,’ said Glenn, an unemployed high-tech salesman who is selling to take a new job in Santa Barbara. ‘I think the reason people aren’t acting … is they read the paper. They read the news, and it’s all bad news.’”
Oh my gosh, people are reading…the paper! The news!
When will this madness stop! It’s just making trust funders reluctant!
Criminy, Ben. Do you ever stop laughing???
‘He took the Who-pudding! He took the roast beast! He cleaned out that icebox as quick as a flash. Why, that borrower even took the last can of Who-hash!’
I got tears in my eyes over this one!
Who-ha!
Had to read that out loud to hubby.
We’re eye leaking laughter here at the computers!
Thanks for the great threads today!
Leigh
Check out the follow up below.
“In Victorville, 1,366 homes are in pre-foreclosure, indicating the owner has received a notice of default. There are 314 homes on the auction block and 659 owned by the bank as of Monday. By contrast, 442 homes were listed for sale in Victorville……In Hesperia, 975 properties are in pre-foreclosure, while 225 were listed at auction and 471 were owned by the bank. By contrast, 198 were listed for sale….Apple Valley had 729 properties in pre-foreclosure, 191 at auction, and 349 owned by the bank, while Adelanto had 488 in pre-foreclosure, 127 at auction and 211 owned by the bank.”
REO’s/bank owned/auctions are running 2/1 or 3/1 ahead of listed sales. and this is not counting the pre-foreclosures. The entire Victor Valley is having a magitude 8.5 foreclosure quake.
Another juicy topic: foreclosure-rampant hoods becoming havens for crime;
http://www.msnbc.msn.com/id/21773482/?ref=patrick.net
Funny but LA Inner hoods are not getting the MSM bad press for out-of control foreclosures and attendent rampant criminal activity as i have read about in Altanta and Cleveland . There are hoods in the LA inner areas as bad as any in America.
Quote from the article:
“Historically the most affected areas were lower-income and were prone to subprime and predatory lending, irresponsible house flipping and mortgage fraud, Immergluck said.”
This decribes to a tee a lot of older Central LA areas and communities. I have seen speculators and owners/landlords literally rip apart and trash entire hoods while putting up cheap,quick and crappy sfunits/multi-units, teardowns/ remodels : cramming cheap Condos: literally making a former older quiet sfh hood into a derelict, gang- ridden, section 8 tenant- intested hood. Also the amt of predatory lending and subprimes in the inner LA hoods has to be almost as bad as what Cleveland and Altanta is going thru.
LA inner areas will have Cleveland-like Epidemic Foreclosures/abandonments and attendant rampant crime by 2008 . LA is just getting started with this foreclosure mess and the worst is ahead.
About 3-4 months ago I said there would be people pitching tents and fighting for campsites beside the RR tracks under the Victorville Narrows like these folks.
It’s going to get rough in the High Desert.
http://www.roamingphotos.com/us/ca/victorville/mojavenarrows/
But McDonald, who has lived in the community for three years and is president of the residents’ association, jokes that they make better neighbors than some.
“The pot growers, they mow their lawns, they take out their garbage,” said McDonald, an executive at a local bank.
/ROFL
Ok, who’s going to mail the Joshua tree to Anthony, along with the HB “get a clue” instruction manual (a link to this site)?
You don’t mail ‘em. They’re all “special delivery”, if you know what I mean.
He could always climb up on his coffee table and sit on his glass sculpture, and think on it…
Help him prepare for that high-desert tree ride…
Help him prepare for that high-desert tree ride…
ROTFLMAO
Oh, that one was good! Can I borrow it?
When do these people ever admit they were greedy and stupid? Sigh…
Got popcorn?
Neil
“Oh, that one was good! Can I borrow it?”
As long as you pass the popcorn
As the Subslime Subprime BLOB oozes towards Tony Glenn’s Magical Castle by the Sea, he calls out for a Trustfund Baby on a white horse to “RESCUE ME!”
Personally, I think he’d be better off cultivating a loving relationship with a sleazy realtor, a crooked broker and a very large family of highly paid Strawberry Pickers
Trustfund Baby - we call them lucky sperm club around here. Although they wouldn’t be that lucky if they bought Glenn’s castle/
Not good time to have post work out glass of wine!
Couldn’t be that someone might actually decide that homes in general, and your $1.6 million dollar gem in particular, are too expensive. Nah, as Anthony said, everyone has a trust fund!
Maaaa!! Where did you put the keys to my previously undisclosed trust fund??
I will make some effort to investigate the statistics, but I venture a guess that the majority of all trust funds in the US are smaller than the price of his house anyway. Some, of course, are in the 8 and 9 digits, but a lot of people leaving only $100K feel that somehow it needs to be in a trust fund.
I’d love to know how much trust fund money is out there, since that’s been the conventional wisdom as to how families could afford the uber homes in my area.
my response to that BS is that people who truly have large sums of money in trust funds the majority already own, or inherited one. there is simply not enough trust fund babies to buy all these million dollar mcPOS homes.
also, foreigner are not all dumb to buy into a falling market with declining dollars, and lastly aliens if they found their way to earth must be a little smarter than buying declining realestate.
Maybe telling people you bought your mcPOS with “family money” sounds more impressive than revealing your friggin’ stupid piggy-back jumbo loans. Yeah, and I’ve got a bank account in Ethiopia.
I read somewhere that in 2004, only 6 million Americans had financial assets (not including real estate) of $1 million or more.
These FBs sound stupider than an Appalachian hick retailer. How is this qualitatively any different from:
“Lookee here, I’m selling these here purdy ear-rangs for $16.99, an’ I just lowered the price from $18.99, and I still hain’t sold ‘em. I know they’se worth the money, cause my cousin Jeannie done bought her the same ‘zack par for twenny dollars last year. Golddang it, I know people’s got money, they got paychecks and all, it just ain’t far, must be ever’body’s got the devil in ‘em!”
must be ever’body’s got the devil in ‘em!’
let’s blame this whole debacle on the devil! make’s sense.8O
lol. I think this is my new mantra: “must be ever’body’s got the devil in ‘em!”
Anthony doesn’t appear to be quite telling the truth. per public records, he bought the house in 11/05 for $1,350,000, putting $50,000 down and getting a loan for $1,300,000.
he refinanced through Washington Mutual Feb 2007 and got a loan for $1,440,000.
The house was listed for sale Sept 2007 for $1.9 mil. current price is $1.699 mil.
orange county average prices are currently approx. 9.2% BELOW current average prices. his current listing doesn’t say he rehabbed the place, so why is worth $350,000 more than 2 years ago?????
Anthony Feng Shui’d several Joshua Trees through his palace for maximum value.
ws: where do you get this sale and debt information? I’m trying to find out what is going on with a FB in my area and would love love love to find out what debt they have on their ricketly little home.
Laguna Beach median was $1.6 million three months ago in August 2007. Then it was $1.3 million in Sept. Then it was $1.1 million in Oct. … You get the picture.
“People have trust funds,’ said Glenn”
Yes some do and hopefully they have someone looking over their shoulder before they invest (throw away) their money in your property. Imagine someone with a two mill trust buying his house, they wouldn’t be able to make the tax, lawn maintenence, etc for long even if they put 1 mill down. Anyone check to see what he paid for the property?
I have RE related friends who are now in the shock and awe phase of this new reality in housing. After all those years of sipping expensive wine and bragging about how much money they were making now they look like someone who just got their wallet stolen on the subway.
This is the part that i dont get about real-estate and wall street. Seems like the folks making a killing never remember to save $s for a rainy day.
Yet the millionaire next doors, save money, drive regular cars and are generally happier.
Earned money has a higher value than easy money. That’s because earned money has two values: The first value is the price in time and labor paid to get it; The second value is what the money can buy.
Easy money only has one value: What it can buy.
Thus the phrase “Easy come, easy go”.
My attitude has been that earned/saved money buys only one valuable thing: freedom. Worth foregoing all kinds of other gizmos and vanities.
az_lender you got my number. Many people who know me think I don’t live well. But if I wanted to quick my job tomorrow, no fuss no muss. That’s my idea of luxury.
quick= quit.
millionaire next doors, save money, drive regular cars and are generally happier.
Right on! Also the millionaire next door does not have 3 homes and a vacation home, but most likely one primary house and mostly stock mutual funds, which are valued much more than his primary residence. If he makes money off or real estate, it’s through rentals, but only when bought when the rent is higher than PITIM (principle + insurance+taxes+interest+maintenance). Personal finance 101 says the fastest way to wealth is through stock mutual funds, not through buying real estate.
Personal finance 101 says the fastest way to wealth is through stock mutual funds, not through buying real estate.
Personal finance 101 as taught by stock brokers, maybe.
key word being “fastest.” not necessarily “most reliable.”
Techno, show me a 23 year period in America’s history where the big stock indices finished lower at the end than at the beginning.
Or a 5 year period in recent history.
Of course, if a stock index doesn’t at least DOUBLE in 23 years, you actually lose money, even assuming relatively benign inflation at 3.5%.
OT - but please offer your comments/thoughts..I say that ther eis no way this ruling holds up.
http://www.lowelldeeds.com/blog/index.php/2007/11/15/amazing-foreclosure-decision/
I have a feeling they’re gonna find those notes. It may take them a few months, but with this decision on the books, lenders will start looking for the notes upon the first missed payment. These borrowers got lucky for now.
There will probably be some small percent (0.001%) where the note is never cleared up, and the judge will rule against foreclosure. Then the person just lives there with no payments until they decide to move, but will have to clear the title themselves someday.
Or just keep it forever and rent it out. That’s what I’d do.
While it may be unclear who exactly has the right to repossess the house, the one thing that seems open-and-shut clear to me is that the deadbeat borrower is the one with the least claim to the title.
A Non-event. The ruling is valid, but the interpretation by the blog is wrong. “Without prejudice” allows the bank to refile, the ruling is to the accurate chain of transfer and the bank fudged it. The bank will refile as soon as the chain is corrected. End of story.
ok, good point, the ruling might be valid, but the eventual outcome will be a foreclosure.
I agree. There have been times when I personally lost track of notes/deeds in which nobody but me has any ownership interest. I am a solo practitioner and am often disorganized. Of course the borrowers don’t KNOW I can’t find the note or deed, and I don’t tell them. However, the mortgage deeds are recorded with the county, so there’s no way the so-called owner could actually sell the property without clearing the title, i.e., paying me off. One of my tricks when I lose track of a note or deed is, I unilaterally offer the borrower a tiny reduction in his interest rate on the basis of his/her good performance. Of course they say yes. I then compose and new note and deed and refile the deed which is prominently marked as a replacement, and I try to put the note in the right envelope. Are we all happy? Yes! Is this any way to run a bank? Hey, I’m doing better than Chuck Prince, aren’t I?
Hi AZ,
Seeing that you are less than well organized, please send me the deeds, all of your bank contact info, account numbers and any applicable passwords and be sure to include your social security number and birth date. I will then send you a nice completely organized file. Don’t let the Cayman return address frighten you, I’ll just be visiting there to make a deposit.
LOL. The only part of these data that is actually memorable is the first three digits of my SSN, which is “double oh seven.”
Started off in Maine, eh AZ?
Eventually? when is Eventually?
and how long will Eventually allow folks to get free rent?
yep - as soon as the find that chef that used the ginzo knives to slice and dice that mortgage into bits and figure out how to reassemble that loan from it’s current chopped salad form. There will be some serious chain yanking.
ah ha!
Without predudice!
Nice little tandem!
Hi Hoz!
Leigh
is the blog “the angry mob?”
it is so: bacause I say it is so.
This goes a little bit OT, but is it possible to split the two parts they talk about into separate entities and sell them off? For instance party A lends the $$$ to buy a property and holds both the mortgage (financial instrument) and the right to foreclose. Can Party A sell just the mortgage to Party B? Obviously the discount would be substantial, but could it be done? If the payments stop, Party B has no recourse, but they would have known this up front and presumably paid a fair price that compensated them for this risk.
This seems similar to how one can strip the interest payment from the principle redemption on bonds into a separate product (called STRIPS, unsurprisingly). Or how land-leases are done in NY City with one person owning the land and the selling a 99-year lease to the person who puts up the building — the ownership of the property and the use of the property are distinct and each has a value.
Random thoughts…..
I’m not sure, but AZ Lender mentioned a while back that there are laws against certain tacticts known as “loan to own tacticts”, where the lender really just wants the property. I’m thinking that if I have the right to foreclose on a property, but not the right to receive payments on it, then the only thing I really have to look forward to is getting it in foreclosure. But if there are laws against that sort of thing, then why do it? Interesting question, though. I wonder if anyone else has any ideas about it.
““Without prejudice” allows the bank to refile”
I’ve been assuming that it’s pretty much a non-event in non-judicial foreclosures. No filing a complaint, miss some payments, trustee sells your house from under you, then the courts can get involved when various parties claim the proceeds as the true “owners” of the notes.
This type of case was reported about 4 months ago. Perhaps the same case early on. I can’t see how that will help them in the long run. Better to cut you losses now and move on.
It will hold.
Deutsche was prety stupid about it. They can’t prove that there are owners of the loan who are owed money and that they are handlng the administration of the loan for them.
Basic rule = gotta prove that either you are the one owed the money or you are acting for the one who is owed the money and that they told you to collect it.
Problem is that these loans were sliced into so many pieces that the servicer really doesn’t know who the owners are. Way careless on the recordkeeping and wat stupid.
US Ct of Appeals 6th Ciruit will NOT overturn this decision. they are sticklers for making sure that all affected parties are in the case and that the person suing has the right to sue on the claim.
Deutsche can’t even prove they have the right to act for the owners…..duh.
We learned those basic concepts in the first couple months of law school.
“Problem is that these loans were sliced into so many pieces that the servicer doesn’t really know who the owners are.”
Correct me if I am wrong, but doesn’t the pool that finally ends up with the loans keep these loans and merely tranch up the risk and rewards of the pool and sell off these tranches?
If so, won’t the loan doc be easy to find just by going to the pool that the loans servicers forward the FB’s monthly payments to?
–
“‘The buyers are there, and people have money. People have trust funds,’ said Glenn, an unemployed high-tech salesman who is selling to take a new job in Santa Barbara. ‘I think the reason people aren’t acting … is they read the paper. They read the news, and it’s all bad news.’”
And it is bad news for you too because you will get less than a mil if you get lucky and sell within the next six months. Get real if you have to sell. There is money out there doesn’t mean you will get your price. People with money know how to squeeze a desperate seller!
Jas
Earth to Glenn: Prices are also going down in Santa Barbara, so lower your price and SELL. Then rent a nice little condo on East Beach and wait for the bottom.
He might be under water if he lowered the price, so the big question is - take a little bath now, or a big bath later?
He wants 1.6 million for a pad in Laguna beach? Hoa! Those are now the median selling prices for Elite hi-end Westside /hollywood hills areas favored by the hollywood elite such as Brentwood, Bel-aire, Pacific Palisades,SM north of Montana, Malibu, and yes , beverly Hills.
Laguna is a decent coastal community but homes there aren’t worth 1.6 pr 1.3 mil or whatever. Laguna Beach is best decribed as laid-back prosperous middle class with maybe a tiny % of wealthy. No way any homes should be priced at 1.6 mil-the economic base simply not there. LB RE is if anything a carbon copy of Santa Barbara’s market.
Just letting you guys know that I have reserved our table (for 10) for the Bay Area HBB party:
Chevy’s Fresh Mex
2907 El Camino Real
Redwood City, CA
Saturday, November 17th @ 6 PM
If anyone would like to add their name to the list, please let me know so that I can call ahead and warn Chevy’s.
“People are screwed.”
-Big V
PS
They’re charging us an automatic 18% gratuity. Rip-off, I know, but I didn’t want to change the location on y’all at the last minute. Also, it might be a good idea for everyone to write down exactly what they ordered so we can compare the bill with our own notes. Restaurants and bars tend to exagerrate the bill when people come in groups. I’ll try to remember to bring a notepad and pens, but if someone else remembers too, then that will be good. The other thing is that people should bring cameras so that if one of us turns out to be a murderer, then we’ll have a record of who was there. Yeah, paranoia, I know.
exaggerate
Also, it might be a good idea for everyone to write down exactly what they ordered so we can compare the bill with our own notes….
Is this a “FB” party? Is everybody cheap up north? The last party you guys were trying to have somebody kept squalking about bringing potato salad.
Yo, desmo, that was me. I was trying to have a frisbee-throwing picnic, dude. The weather was nice.
Do you make a habit of paying for drinks you didn’t order? If so, then why don’t you come to the party and put the whole thing on your credit card? I’ll just throw down my part on the middle of the table.
I don’t know where my post went, so here’s another one:
Take a burn, desmo.
Anyone over the age of 21 knows that waiters/waitresses are trained to add extra drinks to the tabs of large groups. They do it because they know that people tend to forget how many drinks they ordered, and there’s usually one person who puts it on their credit card, while the rest pay in cash.
Numbers written on restaurant bills within the confines of restaurants do not follow the same mathematical laws as numbers written on any other pieces of paper in any other parts of the Universe.
Heart of Gold
Ooops, I mean Bistromath…I sometimes get those ship names confused.
jerk
Hope that you got me in for dinner. Looking fwd to it.
My order will be a carnitas burrito (not platter) and one margarita (rocks and salt).
MrBubble
“A decline in jumbo home loans continued to gum up sales for Orange County’s priciest residences last month, driving price averages down and cutting transactions to their second-lowest level in at least two decades”
BS on that. Jumbo loans are available to full doc buyers with down payments. Prices are being driven down by sellers anxious to get out of their property. Sellers are not yet desperate.
This gets right to the heart of the issue of why BB and Schumer have a meeting of the mind on guaranteeing GSE-securitized loans up to $1m. It has nothing to do with saving anyone facing foreclosure, and everything to do with propping up expensive home prices at bubble valuation levels in order to keep banks from losing their shirts on devalued REO. IT’S ALL ABOUT THE BANKS’ BOTTOM LINES!
Almost there PB - it’s all about preserving the banks bottom lines, so that they can continue to contribute to Schumer’s reelection funds. If Shmucky found another source he’d let the banks drown.
Realistically, who is buying homes valued at over $1m in this falling knife market? Only a handful of Richistan residents would benefit from this taxpayer-provided guarantee of Supersized McMansions.
I don’t see how these guys think the plan is politically tenable? Or now that BB has sprinkled on the Fed’s holy water, should we expect to see some surprise announcement that Congress passed a new law to implement the $1m Jumbo loan guarantees with little or no advance media fanfare? That is my guess — look for an announcement that Congress has passed a new “save our homes measure” with no mention that only the very rich can afford homes backed by $1m GSE-securitized taxpayer-guaranteed loans.
Bernanke sets out jumbo mortgage plan
By Krishna Guha in Washington
Published: November 8 2007 15:36 | Last updated: November 8 2007 15:36
Ben Bernanke, Federal Reserve chairman, on Thursday put forward a plan to help revive the secondary market for jumbo (large denomination) mortgages that would involve Fannie Mae and Freddie Mac, as well as credit guarantees from the federal government.
Mr Bernanke told Congress he would support raising the limit on the size of the individual loans eligible for securitisation by the government-sponsored mortgage finance entities from $417,000 to $1m (€680,000, £475,000) on a temporary basis.
He suggested that Fannie and Freddie could pay insurance premiums on these loans to the federal government, which would “act as guarantor” by taking on some of the credit risk.
Charles Schumer, the Democratic chairman of the Joint Economic Committee, enthusiastically welcomed the idea and said he would try to insert it into legislation already before Congress.
http://www.ft.com/cms/s/0/d0d9639a-8e0e-11dc-8591-0000779fd2ac.html
That bill must be defeated because its a bail out for current bad paper . Putting insurance on a loan that is already bad or making Jumbo loans in a declining market with insurance on it is still a bad loan .
Wish we could bring this up as a “sticky” topic & try to find ways to squash this bill (or anything like it) right from the start.
Can we sue the Fed?
Of course they are going to do this. Like I said many times, the idea is to figure out how to stick the public with all the bad loans. Once this passes, credit standards will plunge, people will refinance, bailing out all the speculators, and the Wall Street Gangsters. The bubble will begin to inflate.
I might as well just party it up with my savings. Their value is being shredded anyways.
There is plenty of Jumbo loan money available, and at very good rates. I know because my bank does them. However, there is no money available for 100% financing or for over-stating income with bad credit and no assets.
Regarding increasing loan limits to jumbo or super-jumbo levels, this is a very bad idea. The high cost areas of the country already get more than their share of FNMA and FHLMC money. In some past years, 40% of the dollar volume was from California alone. (I do not know the current level.) Increasing the limit will increase this state’s share to a very high level. Worse, it will help make prices permanently un-affordable.
(The California bank where I work never did 100% or option-ARMs, and keeps its loans. Foreclosure losses are almost zero this year.)
Also, the $1,000,000 loans for Freddie and Fannie will have one primary beneficiary: Countrywide.
That’s exactly what I said to Dianne Feinstein in a letter that I wrote. I think we should all write similar letters to our Senators because I think they truly do not know.
Countrywide Funding needs this jumbo money and I have said that in other posts .
“BS on that. Jumbo loans are available to full doc buyers with down payments”
He meant to say “easy to get, easy to pay” jumbo loans…
You can still get jumbos at only 60 basis points higher than for the same 30 year fixed conforming…as Hoz says, they are not an extinct species.
“Chances are if it’s not you, it’s probably one of your neighbors.”
Chances are also if you are throwing away your money on rent, it’s not you.
Love it. Most of the time I am throwing money away on not one rent but two — wherever I am living, and wherever my furniture is living. Occasionally three, like, last winter when I was renting 2BR in Morro Bay AND 1BR in Pasadena and my furniture was renting a 3BR house in Maine (partly subsidized by a housemate). I think this makes me triply safe from foreclosure. When a friend razzed me about paying three rents, I said Hey! it’s cheaper than owning three houses!
“His current price of $1,699,000 is only slightly more than the home’s appraised price when he bought it two years ago…‘The buyers are there, and people have money. People have trust funds,’ said Glenn, an unemployed high-tech salesman”
So, Glenn, out of work salesman, did you use a trust fund to buy your current house? Or was it an “exotic loan product” that got you into that house? Hmmmm, I wonder what there was more of in The OC, rich trust fund babies, or people using “exotic loan products”…
(Side note: I’ve known only three people with trust funds/UGMA funds…they were all in the $100K to $200K range. I don’t think that having $200K in a trust fund means that a trust fund baby can afford a $1,699,000 price tag…unless they are really pulling down the bucks. How are those $300K a year mortgage brokers doing now-a-days?)
He blames the media.
SO did the media foreclose on all these people in Orange COunty?
Yes, some people have trust funds. Some people with trust funds want to buy a house. However, the number of houses for sale is far higher than the number of people with large trust funds who want to buy a house. The “trust-fund” argument is just a stupid as the “Google employees” argument. Get back to me when the median house-hunter has a bank account somewhere with at least $500,000 in it.
As someone mentioned above, most “trust fund babies” already have homes in the trust. If they want to sell one, that’s one more to add to supply. Net effect to demand = zero.
Not only that, but people with trust funds usually are more familiar with finances (one hopes) and is not quite as likely to throw money away on a depreciating asset.
OK, when the trunstfunders don’t show up to save the day, how about the
Canadians with their supercharged Loonie-bucks?
They can bail everyone out.
Anthony Glenn suspects that buyer reluctance is hurting his chances to sell…
as any salesman knows, nothin sucks more than informed, cautious buyers.
Wow, this guy should be a detective!! How did he ever figure out that it takes a non reluctant buyer to sell his house?
Not to mention that those with seriously big trust funds either 1) already own a house, 2) cannot sell their own house, or 3) have restrictions to reduce the chance of squandering money.
In a year it’ll be first time buyers who control the market, as all the flame-outs won’t qualify for loans and all short-term owners will be trapped.
Not only that, trust funds can’t have possibly have grown as fast as house prices. Even a trust fund has finite funds.
“Even a trust fund has finite funds.”
Not in the magical world of “everyone wants to buy here”. In that world, there are boatloads of rich people with infinite funds that want to live right next to *you* (wherever that may be).
At this point, I wonder why people are even bringing up the “unknown rich people will prop up the market here” defense. Why not go straight to “Martians will invade and force us to keep prices high”, or “God will intervene and make sure prices will stay high”.
Shhh. The NAR may take these as talking points, and we don’t need to hear about how Suzanne not only researched it, but that God said it was right to buy the house at a ridiculous price.
my response to that BS is that people who truly have large sums of money in trust funds the majority already own, or inherited one. there is simply not enough trust fund babies to buy all these million dollar mcPOS homes.
also, foreigner are not all dumb to buy into a falling market with declining dollars, and lastly aliens if they found their way to earth must be a little smarter than buying declining realestate.
So much to pick from:
“Perhaps as many as 40 percent of struggling owners want to refinance and keep fighting for their homes, but just can’t find a loan, Scheper said.”
Refinance into WHAT exactly? When these people weren’t even paying full PITI, what conventional loan option do they have available that will give them affordable payments? Regardless of the interest rate.
I mean, when they are finally ‘forced’ to pay some amount of loan principal, or even full interest, the payments required may be too much payment shock.
What I got from that is that 40% of struggling want to fight for their homes, the other 60% are saying “F this! We’re outta here”. In another 6 months reality will set in for the remaining 40%, and they too will join the “F this!” crowd. We haven’t even come close to peak foreclosures yet.
Are we up to the ‘Denial’ phase yet? Next is ‘Fear’. Between the two is a normal ‘Bull Trap’.
I’ve been blogging fear.
We had some bull traps here and there, but the dissolution of credit has helped skip the dead cat bounces.
Fear is mostly denial while crying themselves to sleep. I’ll update my real estate emotions on my blog next week.
Got popcorn?
Neil
That was what I thought when I read that, too - 60% aren’t even trying to save “their” home. It’s still pretty early in this bust, and 60% are throwing in the towel - that percentage will only rise as more people realize just how screwed they are. We may see the percentage of NODs resulting in foreclosure rise to over 80% (we’re around 55% now, IIRC). Huge price declines are coming to the OC.
Does anyone know what percentage of ALL homeowners that would be trying to sell? If all this misery is only tied to say 20% of homes, the it could take longer for the prices to get back down to reality.
What about those who CAN make their payments, but find the loss of hundreds of thousands of equity unbearable?
Would it not make financial sense in some circumstances to walk away and take the financial hit? Regardless of whether they can make the payments?
Prices are determined by those who sell. The morons who like to grow “for sale” signs in their front yard have no bearing on prices.
I read it as 40% of people have to ‘fight for their homes’ meaning they are in serious financial straits. This in and of itself is truly an alarming statistic!
Even if this is true, the other 60% of ‘healthy’ borrowers are about to have their house values decline markedly.
I think the faster that these dopes walk the better. Not just because I want to pay a realistic price for a home that I will live in. But because I don’t want these people burning up whatever assets they have left (like a 401k). It’s great to have some schedenfreude regarding their past cant-lose smugness, but if they completely deplete themselves, they become nothing but a social liability. Or worse, they gun down family/co-workers…
“As soon as you walk into this stately home in Chula Vista, you notice something unusual. There are no doorknobs, no light fixtures. Weicheldt: ‘They took all the fixtures and they took all the knobs, they took the doorknobs, they took the queen palms that are outside
He took the Who-pudding! He took the roast beast! He cleaned out that icebox as quick as a flash. Why, that borrower even took the last can of Who-hash!
They took out Who-homeloans, they paid the Who-price, and now they’re upset cause the payments ain’t nice!. So they moved out of Whos-ville all together en-masse, to avoid paying Who-dues right thru their ass.
OMG!
Hmm, The Christmas stories are starting early this year……..
LMWDAO (Laugh my Who-dues A$$ off)
Stop it! My coworkers are starting to look at me funny.
ROFL!!!
Replacement doorknobs and cheap lighting fixtures: $700
Declining Coastal CA property: $1,699,000
Reducing the entire situation to a Dr. Suess morality play: PRICELESS
Kudos to Not missing it for starting the Suessation.
ROTFL.
I am sure Theodor Seuss Geisel is rolling on the floor in whatever world he has moved on to…
LMAO. Nice work, Dan.
And that right there is worth every minute I’ve spent on the HBB, LOL!
Hahahaha. On another note, that Eric Weicheldt is a babbling idiot.
‘You see some sad stuff you really do, but the one thing, if anything can be looked at in appositive light, at the end of the day, this house was probably a burden on this person and their family, you know what, start fresh, get your stuff, don’t take stuff, that’s yesterday news.’
WTF
“The median selling price of an Orange County home was $573,750 last month…”
Wake me up when they drop to $250,000 …OR DON’T WAKE ME UP AT ALL.
I remember an old trick from the last dump which was to take some tuna fish or something smelly and stuff it behind the switchplates. In a few days it starts to stink like hell and they can’t figure out where it’s coming from.
On a tv show..the soon to be Ex wife Happily agreed to move out so the schmuck and his teenage trophy wife could move in. The new couple moved out in 3 days. They had hired anyone and everyone they could think of to fumigate etc..
The Ex wife moved back in and put a Ladder up and took down the Curtain rods that were filled with rotting fish etc.
Now she lives happily ever after.
Reminds me of the story… divorcing guy says to wife..sell the ferrari and send me half.. so she Advertises for $1.00 and sends him the .50 cents. Happily. And the guy who bought the car lives happily very happily.
“People have trust funds,’ said Glenn”
Good thing Thanksgiving is next week so I can ask my parents about my trust fund. I mean doesn’t *everyone* have one ?
But do they want to put their trust funds into truss funds?
Good grief! My parents haven’t told me about mine either!! Geesh, you’d think that they’d love me more than that. What’s the world coming to?
I think mine was used to subsidize the business my father started after he quit his last fulltime job. The business eventually stood up on its own two feet, but, dang, that TF money would have been nice.
You don’t have a trust fund either? For a minute there, Glenn had me thinking I was the only American who was not a trust fund baby.
I knew a lot of “trustafarians” when we lived in Bozeman, MT. The vast bulk of these folks were getting at most $2k/mo. It was a good supplementary source of income and allowed them to take low paying jobs and ski. Multi-million dollar trust funds are few and far between.
Perhaps this guy should knock out all of his own teeth and ask the tooth fairy for $100k each?
“Dear Tooth Fairy, I am feeling sad because I only get one dollar. Will you give me something besides a dollar?”
– a letter found under the pillow of my 6-year-old one month ago, while I was taking a tooth and leaving a dollar.
LOL!
Tooth fairy, meet inflation!
Had a fat one from grandparents, but parents talked us into letting them break it up to pay for their house when they were going to lose it in 84. Bought in 60 for 52K and by 84 owed $400K. Said they would use house as basis for new TF for us. Later when brother asked about house, dad said FU prove it. Begged them to sell in 89 when it was worth over $1M, but nooooooooo. When he died in 90 they owed over $600K again and in 92 when she sold, only got $750K. TF’s don’t always come through. It’s only your money when it’s cash in your hand. And that’s my bedtime story for tonight kiddies.
I don’t believe it. Real estate ALWAYS goes up! (sarcasm)
(sorry to hear about your TF, ATC)
“Thousands of people living in San Diego are losing their homes because they can’t afford to make their mortgage payment. Many more are months behind on their payments. Chances are if it’s not you, it’s probably one of your neighbors.”
Chances are your chances are, pretty good.
awfully, good.
“That’s the first dip below $300,000 as the price slump continues and the lowest median price since April 2004. Sales prices have now fallen 22.6 percent from their August 2005 peak of $387,000, DataQuick reported.””
Damn it. So close, yet so far away. It’s be terrific if some of those lower Sac prices would migrate our way over here in the Bay Area, where the news is usual is that sales are down, prices are still pretty much unchanged.
Hey Jetson Boy,
Prices are up in the minority of zipcodes. Everywhere else, prices are down. Obviously, that can’t continue. People will not pay an extra million bucks to buy an equivalent house in a “posh” neighborhood. Besides, the only real reason why median prices are up in some zip codes is because only the higher end is selling (lateral moves). Real prices are down across the board.
Then inflation adjust it. OUCH!
WaMu correspondent lending is done…
I got this message from someone at my bank…
xx xx, from WaMu, advised me this morning WaMu will no longer accept correspondence commercial loan files after this year. And they are no longer accepted new files, it appears.
Since I do commercial, I wasn’t surprised (but felt bad for the guy) when my commercial rep from WaMu called me to tell me the bad news.
It’s not all contained he told me :(.
“It’s not all contained he told me”
LOL. No it is not. Bernanke and Paulson tried, but failed!
WaMu, NoMo?
From 11/6/2007 to 11/13/2007, there were 7 homes sold in ZIP code 90274 for an average price of $1,278,429.
1) $704,000 on Aspen Way
2) $1,802,000 on Clear Vista Dr
3) $895,000 on Dunwood Rd
4) $2,825,000 on Palos Verdes W Dr
5) $720,000 on Palos Verdes W Dr
6) $1,395,000 on Via Olivera
7) $608,000 on W Estates Ln
they are still buying in 90274 which is located on hill you see from pilot side of plane flying from east to west landing at LAX.
7 people are “still buying”. If they are merely lateral moves, that won’t help. Can we have median price, please, or price per square foot? Can you please compare to last year? Also, how many houses went on market from 11/6/2007 to 11/13/2007? More than 7? What are the stats for the entire month (one week is not a good indicator)?
If it does turn out that prices haven’t started declining yet in this multi-million dollar neighborhood, then what is your prediction for when the prices will peak? Do you have information on the type of financing that has been used to purchase houses in this zip code over the past 6 years?
Thanks,
Big V
90274/90275 were screaming in 1993 that they were immune to the downturn.
In 1996 they were down 40%.
History is about to repeat itself.
Which will drop harder? The Southbay or the Westside? Hey, we have a weekend topic!
Got popcorn?
Neil
Neil
I hope you are correct.
Big V.
I can’t answer all your questions. All I see are 7 buys.
LOL
90xxx… essentially all ZIPs from about Western Ave to the ocean are screaming this now, and listing homes at prices to match this belief… Predictions for when it really cracks?
We were just up in Beverly Hills this week & there are tons of homes for sale in the canyons (Hollywood Hills). Also, saw a number of “for rent” & “vacancy” signs in the BH & Westwood areas (apartments).
Additionally, if you check out Zillow for the 90210 & nearby areas, you’ll likely see higher prices on the sold homes & lower on the new listings. Of course, these are custom homes & not as easy to determine comparable values, but it looks like the cracks are beginning to show.
Also, over the hill in Sherman Oaks, am definitely seeing cracks — so the upper end is just beginning to understand that they are not immune.
As anyone from LA knows, the entertainment industry is key to most of the money there, if things like the writer’s strike & outsourcing continue, LA will hurt.
I have lived in Orange County near Woodbridge and say my property drop 35% from 1989 to 1996.
“Which will drop harder? The Southbay or the Westside? Hey, we have a weekend topic! ”
I will take a shot! Problem is the definitions and the boundaries of both SB and WS are subject to dispute . If you include a narrowly defined area of the WS West of the 405 and north of the 10 fwy , then the SB will fall harder. There are 10 times more millionaires and mega miilionares in this narrowpart of the WS than in the SB.
The SB is 80-85% average middle or lower working class .About 10-15% of SB are impoverished class. Less than 5 % Of SB population is in the hi-middle class or wealthy class, mostly in PV, Hermosa and Manhatten Beach. IF you expand the SB to include the rot zones of Hathorne, gardena, carson, Wilmington, Lomita, Lawndale then the SB overall will fall faster and harder than the WS.
If you only go west of 405 you leave out beverly hills, coldwater and mullhuland, holmby hills, westwood and bel air. South Bay isn’t even close even if you leave out the low end parts.
“If you only go west of 405 you leave out beverly hills, coldwater and mullhuland, holmby hills, westwood and bel air. South Bay isn’t even close even if you leave out the low end par”
If i expanded the westside to include Everything west of La Cienega/La brea which would include al the areas you mention above and expanded the south boundary all way to the 90 fwy to include CulverCity, Venice, Mar Vista, Marina Del rey,South Santa Monica , then the Westside would have 20 times more millionares than the South bay. The area just north of UCLA campus ( actually north of sunset)and just east of the 405 which i believe to be Brentwood has some of the most expensive estates in Scal.
Crammer just ripped the PE guys a new one on his show. PB you would have liked him tonite. Im impressed.
Hey did anybody notice that their water bill went up?
Todays numbers were just great, nothing was up except medical expenses.
Truthfully as much as I have stashed away, I am totally stressed from all these cost of living increases.
Rant ongoing
I was deep in the heart of the Central Valley yesterday, and noticed a failed Starbucks, not something I see that often.
That is rare. As much as some rant about Starbucks, they are a well managed corporation (numbers run). Even Palmcaster can support several… so to see a failed one…
Take photos! Blog it and let me know about it please.
Got popcorn?
Neil
Ooh, I gotta take issue with that one. I’d say they’re pretty poorly run. The quality of product, service, cleanliness, and most everything about the place has been on a steady decline for many years, and I’d say it’s a direct result of myopic management decisions that have been focused solely on breakneck growth, and are now in the process of badly damaging the franchise and putting a big hurt on shareholders.
“As much as some rant about Starbucks”
Problem with starbucks is oversupply of stores/franchisee’s. They now seem to be on every corner strip mall on every street corner everywhere i go as well as in the major malls and downtowns. This over supply of stores means that franchisees compete with each other for a smaller market segment. Smaller because as the recession hits the market will dminish for overpriced gourmet take-out coffee and folks will cut back. The competing franchisee operator’s are in effect cutting each others throats in a down market, and expect to see many starbucks stores shut down over next several years.
Starbucks is not franchised. It is all cmpany owned. Only Magic Johnson has a 135 franchises in urban markets where he has changed the menu a bit to cater to the lcal taste
“‘This is the time to sit still if you can,’ said economist John Husing. ‘This is not a time to be selling your house unless you absolutely have to. This will get over. But it’s about another year and a half out and some significant difficulties in the meantime.’”
So Husing thinks real estate will be higher a year and a half out from now? Has he seen Ivy Zelman’s reset chart? Has he noticed that California prices in many coastal areas dropped pretty much throughout the period from 1990 through 1996? What is the basis for his outlandish conjecture that prices will soon be higher when they are currently dropping?
P.S. This is, however the time for buyers to sit still if they can, though. Let sellers enjoy holding on to their falling knives for a year and a half and test Husing’s advice if they trust him.
“What is the basis for his outlandish conjecture that prices will soon be higher when they are currently dropping?”
Crack and Weed!
I would think it would be more along the lines of LSD or some other hallucinogen.
“What is the basis for his outlandish conjecture that prices will soon be higher when they are currently dropping”
He heard the “British are coming” to buy up second homes.
I spent the weekend in Vegas with a couple of friends from the UK. It’s getting just as bad over there in the UK. I doubt they will be buying anything soon…..
Prof.: I agree with your criticisms of Husing, but this is a pretty significant turn for him. He has been wearing rose-colored glasses for a long time; now he’s saying the next year and a half will before the pain ends. He’s not right about the 18 months, but at least he now sees (or admits) that RE is in trouble. About the only holdouts left for a quick turn around are the NAR yahoos, and I doubt they’ll ever tell the truth because it would hurt their members in the short term (and the NAR needs the dues from its members). I’ll take this as a sign of progress.
“What is the basis for his outlandish conjecture that prices will soon be higher”
If he keeps saying it once every six months, sooner or later he will be right.
My bets are on 2010 for that “year and a half statement” to finally be true.
The problem is that Husing and the other voices out there are really calling for a BOTTOM in 1.5 years or 6 months or whatever. But prices will be LOWER at the bottom, so whether they are correct about the timing of the bottom (or more likely NOT), it still makes sense to sell NOW before prices fall even more.
But Groundhogday,
That requires knowing how to chart. Definately wait as a buyer. The YOY charts for inventory speak volumes. More so when plotted in months of inventory.
Got popcorn?
Neil
Husing is such a shill bonehead. Him and LAY need to mate so they can produce a future CAR president during the next housing bubble - circa 2050. Dat dude blows all smoke and hot air.
Husing is a rock star. In my world he puts Lieareah and Yun to shame. Seriously, anyone who can portray the Inland Empire as the financial and cultural center of the universe must be free-basing the best mixture of prozac and LSD on the planet.
In checking to see my post, I realized that the same joke had been made above by WaitinginOC and I subconsciously repeated it. Oh well, imitation is the sincerest form of flattery. (My wife accuses me of doing this all of the time to her so this is a recurring problem.)
Schumer: Hudson Valley has $14.8 billion in risky subprime loans
http://www.poughkeepsiejournal.com/apps/pbcs.dll/article?AID=/20071115/BUSINESS/71115017
In the third quarter, the average loan was 118 per cent of the property value, according to Moody’s, which includes expectations of properties incomes over several years in their calculations. That level of leverage is “really kind of creepy” says Sally Gordon head of commercial property research at Moody’s.
So the lunacy we saw in res was also in commercial. guess it isn’t long until commercial makes news when comm re starts falling. so what does supersmart Lisa think about all this?
“However, real estate professionals scoff at the idea that commercial real estate might be about to experience a “subprime moment”. They argue that the fundamentals remain positive, with employment and consumer spending still strong, and rents are rising.
Meanwhile, speculative building has been more limited than in previous booms, limiting the prospect for gluts of space should the US economy take a turn for the worse.
“Everyone wants to tie commercial real estate into the subprime market - that’s an extreme leap of faith,” says Lisa Pendergast, a managing director at RBS Greenwich Capital. “No one is projecting a significant rise in CMBS losses.”
If the fundamentals are so great, why is residential RE crashing? how are rents going to go up as realtors, lenders, hedge funds and other money manager/financial planners go bust? when the consumer slows, why would commercial rents go up?
how can smart people in the business be so stupid?
http://www.ft.com/cms/s/0/ab0c89ca-918e-11dc-9590-0000779fd2ac.html?nclick_check=1
“In the third quarter, the average loan was 118 per cent of the property value, according to Moody’s, which includes expectations of properties incomes over several years in their calculations. That level of leverage is “really kind of creepy” says Sally Gordon head of commercial property research at Moody’s.”
Is this the same Moodys that said they weren’t sure how to rate many of the CDOs, so they just slapped AAA on them?…
“Everyone wants to tie commercial real estate into the subprime market - that’s an extreme leap of faith,” says Lisa Pendergast, a managing director at RBS Greenwich Capital. “No one is projecting a significant rise in CMBS losses.”
Hey Lisa, here is the tie-in..all that commercial property is for mortgage company office, title company offices, real estate brokerages, car dealers, home improvment stores, builder/developer offices, furniture stores/mfr/warehouse, retail stores, small food businesses, etc., etc., etc.
Why do these people have so much trouble making these connections?
“No one is projecting a significant rise in CMBS losses.”
And how many (other than those here) were projecting a significant rise in RMBS losses? How long until we hear that they were building “unintentional” speculative commercial properties? And how long until we hear how it was so unexpected and no one could have foreseen the losses? Commercial real estate will follow the same path as residential real estate; it has in the past, and it will again.
“Commercial real estate will follow the same path as residential real estate; it has in the past, and it will again”.
I wonder if the fed knows this is coming and thats why everything is in such turmoil. Does BB know?
“They argue that the fundamentals remain positive, with employment and consumer spending still strong, and rents are rising.
Meanwhile, speculative building has been more limited than in previous booms, limiting the prospect for gluts of space should the US economy take a turn for the worse.”
———————
Isn’t this the very same song they were singing about residential RE just a couple of years ago?
hmmm…
No doubt that commercial will take the same beating. Why? Too many yahoos couldn’t build enough strip malls. Second, when the US consumer finally has no mo’ credit to tap into, it is bye-bye nail and tats parlors and easy check cash joints. Oh, the pain. The pain.
bye-bye to all those stupid stamp stores/tanning salons/worthless trinket stores.
Strip malls, the bane of civilization.
“No doubt that commercial will take the same beating. Why? Too many yahoos couldn’t build enough strip malls.”
I am stilll seeing those pestilent-urban eyesores called stripmalls going up even in face of a near certain recession and RE/consumer spending meltdown. Long beach Bixby area is hammering up one (del amo and carson, 90807 zip.)
The reason these urban eyesores proliferate like rabbits is simple. Economically they are the cheapet thing a builder/investor can put up. basically An empty building with the most expensive add-on being the required toilet. Then the cost to pave the parking lot. Probablty 10 time easier and cheaper to put up than a stand-alone SHF. The tenant would be responsible for the costs to add the fixtures necessary to run the business so the builder/ landlord invests nothing but the land cost and the 4 walls.
“Dave Thurman of Dave Thurman Real Estate in Stockton said the market still hasn’t stabilized, because buyers feel they can buy only below MARKET VALUE.
“You keep using that word. I do not think it means what you think it means” Inigo Montoya; Princess Bride
“Dave Thurman of Dave Thurman Real Estate in Stockton said the market still hasn’t stabilized, because buyers feel they can buy only below MARKET VALUE.”
“You keep using that word. I do not think it means what you think it means.” Inigo Montoya; Princess Bride
I don’t see this posted, so in case anyone missed it:
Fortune Piece
“The millions of Americans who believed yesterday’s happy talk about housing are now paying the price…”
“But once the fervor fades, prices must fall to restore their normal, long-term relationship with rents. Rents exercise a kind of inevitable gravitational pull on prices. The ratio of prices to rents “behaves much like price/earnings ratios for stocks,” says Yale economist Robert Shiller. “Like P/Es, price-to-rent ratios are mean-reverting.”"
SM_L, what’s the market like over there?
Rental market is good, vacancy rate is low to negligible for apartments. Housing (SFH) market is pretty much frozen up except for some sales at the high end. SFH rentals are starting to appear where there have been none available for the last five or more years. However, most SFH rentals have extremely high asking prices and do not seem to be finding any takers. It is not unusual to see SFHs around here asking rents in the $7K-$12K range. Per Month.
Tiny headline on Yahoo news:
“House gets tough on mortgage lenders as foreclosures skyrocket”.
The avalanche has started.
It’s an incredible feeling - to know what’s coming. And the vast majority of the U.S. does not. Oh they probably have an inkling - a general sense that something is terribly wrong. But - for those who have not been reading for example this blog -
- they just can’t fathom it.
“It’s an incredible feeling - to know what’s coming.”
After living through the seventies I find the feeling rather sickening. And before RE bottoms out the boomer’s entitlements are going to prevent any recovery for many more years. The bailout is simply too big this time, IMHO.
Area house prices jump:
http://www.mercurynews.com/breakingnews/ci_7475262
“People have held back thinking prices will go down, but median price is going up,” said Winsness, president of the Santa Clara County Association of Realtors.” Ah, the old “Median Price” scam, does it ever get old ?
And, as we saw yesterday, there is a way of calculating the price change across the board. They did it in LA to show that the price drop is less than the median betrays, so why don’t they do it in Santa Clara to show that the price rise is actually BS?
Perhaps npw may be a good time to invest in the stock of whatever the company is that manufactures that “civil matter” cause it’s about to hit the fam
The Asian markets don’t look happy today. Tommorow will be an interesting open for the US markets:
Hang Seng 27,671.48 10:44PM ET -1,079.73 (3.76%)
Jakarta Composite 2,652.00 10:58PM ET -53.82 (1.99%)
Nikkei 225 15,069.04 10:39PM ET -327.26 (2.13%)
Straits Times 3,410.65 10:59PM ET -66.94 (1.92%)
Seoul Composite 1,899.08 10:59PM ET -48.66 (2.50%)
Taiwan Weighted 8,709.14 10:59PM ET -196.27 (2.20%)
Yen up, Nikkei down 300plus
Nov. 16 (Bloomberg) — Asian stocks fell for a second day, led by Toyota Motor Corp. and Canon Inc., after Bank of Japan Deputy Governor Toshiro Muto said growth could be threatened if the U.S. housing slump spreads.
Mizuho Financial Group Inc. and HSBC Holdings Plc dropped on concern banks may report widening losses from U.S. home loans to borrowers with poor credit after Wells Fargo & Co. said yesterday it’s the worst housing market since the Great Depression.
“You just don’t see an end to the subprime housing-loan problem,” said Soichiro Monji, who helps oversee $47 billion at Daiwa SB Investments Ltd. in Tokyo. “Unless we see some light at the end of the tunnel, we can’t expect the market to rise.”
Didn’t have time to read the posts today, so if someone already posted this, sorry.
There was a news clip on on local tv station about Stockton CA having so many foreclosures, that now they use buses to take buyers around to tour all the foreclosures on the market. They interviewed a buyer couple on the bus, who said they think it’s a great time to buy. Guess they don’t read this blog.
Ben
I say you do a special post that will allow your followers to make their predictions. Perhaps they get 1 day to predict 12 months out. After that day you can cut it off and then 12 months after repost the predictions. My guess is that after you cut-out the few that think housing is 100% over priced and the few that think that were turning the corner you would have a pretty good representation of what will happen.
California home sales fall 41 percent in October; values decline
By ALEX VEIGA, AP Business Writer
Thursday, November 15, 2007
(11-15) 14:36 PST Los Angeles (AP) –
Reluctant buyers and tightened mortgage lending combined to drag down California home sales last month to the lowest level for October in more than 20 years, a real estate research firm said Thursday.
A total of 24,832 homes were sold in October, down 40.9 percent from 43,720 in the year-ago month, according to DataQuick Information Systems.
The drop marks the 25th consecutive month that statewide sales have fallen from the previous year.
Sales rose 5.6 percent from September’s total.
“We’re on the downslope in the housing cycle,” said John Karevoll, a DataQuick analyst. “Much of the decline we’re seeing is part of the cycle, in addition to that, we have the jumbo (loan) issue.”
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2007/11/14/financial/f095441S55.DTL
It’s kaboom badaboom!!!!
Dwindling mortgage options leaves Bay Area home sales mired in misery
Kelly Zito, Chronicle Staff Writer
Thursday, November 15, 2007
Although it was the 33rd month in a row of year-to-year sales declines, the market has been slammed in recent months by a tightening in the mortgage market, which is making home loans harder to come by and more expensive.
Of particular concern in the high-priced Bay Area housing market is that the number of jumbo loans, or those over $417,000, has slowed to a trickle. This summer, after higher defaults in the subprime sector - where mortgages were given to people with iffy credit - investors stopped buying jumbo mortgages, leading buyers to walk away from deals or avoid the market altogether.
“We don’t have liquidity in the marketplace, and that’s creating a drop in market value because people can’t close on a purchase,” said San Francisco mortgage broker Leon Huntting.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/11/15/BUH8TCG24.DTL
When housing prices get reasonable for us and we are ready to become first time home buyers, this will be the first thing I plant in my front yard:
http://hegel.lewiscenter.org/users/mhuffine/subprojects/Mojave%20Natives/mn_growJT.htm
Already there…not in time frame to buy a house, but in land already having joshua trees. (and in the town of, no less).
This could be the big break for those homeowners that are in process of losing their homes. They can keep their homes if lenders could not provide a proper notes for the bundled securitized loans.
http://www.nytimes.com/2007/11/15/business/15lend.html?_r=1&oref=slogin
“They can keep their homes”
Nope…see discussion earlier in the thread.