The Problem Is That People Aren’t Thinking Ahead
The Rutland Herald reports from Vermont. “Lee Roberge already has trouble paying the monthly mortgage bills. When his adjustable-rate mortgage increases next year, the Cambridge resident will join the rising number of Vermont homeowners at risk of losing homes to foreclosure. ‘It could jump 1 percent or even 1-1/2 percent,’ Roberge said of his anticipated rate increase. ‘It’s just going to be another needle into me.’”
“Roberge’s situation mirrors that of many Vermonters. Unable to secure a traditional mortgage, the truck driver opted for an adjustable-rate mortgage, or ARM, to purchase his Cambridge home about four years ago. ‘My credit wasn’t good to begin with, so I couldn’t get a good 30-year fixed rate,’ he said.”
“Roberge is optimistic he’ll be able to keep his home, even if it means some lifestyle changes such as renting out a room in his house. ‘It’s like I can see a light at the end of the tunnel now,’ he said.”
The Concord Monitor from New Hampshire. “After a boom several years ago, the real estate market in Franklin has cooled. The trend is worrying real estate agents and potential sellers, especially as more foreclosures continue to soften the market.”
“‘It’s scary,’ said Doug Embree, owner of Twin Rivers Realty, with offices in Tilton and Laconia.” “In Franklin, 39 percent fewer homes, condominiums and multifamily buildings sold in the first 10 months of 2007, compared with 2005.”
“Locally, defaults have produced a spike in foreclosure listings, from 33 in the year ending Sept. 30, 2006, to 50 the next year. The past month and a has have seen at least nine foreclosures. Foreclosures deflate the market, said Embree, because banks auction off homes in a hurry to recoup as much of their investment as possible.”
“‘Now we have all these properties on the market that have been foreclosed upon,’ he said. ‘The seller has to compete with those.’”
“In 2005, when real estate prices peaked across the country, more houses were sold for higher prices than ever before, said David Liberatore, of The Masiello Group. Franklin was no exception.”
“At the same time, subprime lenders conducting business online targeted people with poor credit and little cash. Some mortgages came with interest rates as high as 16 percent, said Liberatore.”
“‘Three years ago, if somebody was breathing, they would get a loan,’ he said. ‘A lot of these people were not qualified to buy these homes, and they bought them anyway. So now they are having a tough time holding them.’”
“Real estate agents in the Franklin area said that a slowdown in the market could have its blessings, as well. ‘Hopefully, this recession will clean out a lot of the bad lenders,’ said Embree.”
“It may clean out a lot of inexperienced real estate agents, as well.”
“‘The market is not what it was like in 2005,’ said Liberatore, who said that most sellers in his area had lowered their prices by 10 percent to 15 percent. ‘You have a lot of agents that have only been in the market two or three years, and are very confused by what’s going on in the market right now.’”
“‘It’s not the norm for houses to go up 20 to 25 percent a year,’ said Liberatore. ‘It’s normal for houses to go up 3 to 5 percent a year.’”
The Boston Herald from Massachusetts. “The number of Massachusetts homes falling into foreclosure is topping a stunning 3,000 a month for the first time since the 1990s real estate bust, new figures show.”
“The Warren Group yesterday reported that lenders initiated foreclosure proceedings against 3,115 Bay State homes in August. That’s the highest monthly total since the 1990s downturn.”
“‘Foreclosures are getting so high that I worry they’re becoming like Mount Washington: Making their own weather,’ Warren said, theorizing that the state’s foreclosure crisis has become bad enough to hurt the overall housing market. ‘Potential buyers figure: ‘There must be lots of distressed properties around. Maybe we should wait to buy.’”
“All told, August filings rose 75.5 percent from year-earlier levels, as well as 25.3 percent from July 2007 - and problems show no signs of abating.”
The Boston Globe. “Foreclosure deeds, which are the final step in the foreclosure process, rose 143.8 percent in September from 276 in the same month a year ago to 673, but that number was a decline from August 2007 when the number of foreclosure deeds was 1,018.”
“‘It’s interesting that foreclosure deeds are falling off slightly, given the ever increasing number of petitions to foreclose we’ve been seeing,’ Warren said in a statement. ‘It could be that lenders are holding off on letting the ax fall.’”
“Warren added of lenders, ‘Or they could be heeding Governor Deval Patrick’s plea to slow down the process. Whatever the reason is, we can be sure more foreclosures are coming down the pike, as petitions don’t seem to be letting up.’”
“There were 3,115 petitions to foreclose filed in Land Court in August, the highest number of petitions filed in one month since the Warren Group began collecting foreclosure data in January 2005, the firm said.”
“Eight states including Massachusetts have pledged almost $900 million this year to help borrowers replace unaffordable mortgages, but the states collectively have refinanced fewer than 100 people, a Globe survey found.”
“A leading advocacy group said the programs simply aren’t able to help most borrowers. ‘They’re very well intentioned,’ said David Berenbaum of the National Community Reinvestment Coalition, ‘but these new products aren’t fitting the needs of the consumers we see.’”
“The vast majority of the applicants aren’t eligible for refinancing. They have either fallen too far behind on their payments, have badly damaged credit, or simply owe more on their loans than the value of their homes, making refinancing effectively impossible.”
“In Massachusetts, more than 3,500 people have called seeking help, but only about 30 passed two stages of screening and were referred to lenders to begin the actual refinancing process. None have received a loan as yet.”
“The programs primarily were designed to help only a portion of the population with problem mortgages: those who can make their payments now, but are facing unaffordable rate increases.”
“‘It was a great program for somebody who was thinking ahead,’ said Tonna Phelps, director of Single Family Housing at the Maryland Department of Housing and Community Development. ‘The problem is that people aren’t thinking ahead, so now we have to go back to the drawing board.’”
“The stalled state efforts highlight the general difficulty of helping homeowners avoid foreclosure: Officials have only a short time frame to act before borrowers fall too far behind to be helped. Yet the circumstances of each loan are unique and complex - ‘Like snowflakes,’ said one official - making it is impossible to process cases routinely.”
“Moreover, lenders often must be persuaded to accept a financial loss to make the refinancing possible.”
“More than 6,200 properties were foreclosed in Massachusetts during the first 10 months of this year, according to data released yesterday by Warren Group. That is more than three times the number of foreclosures during the same period last year.”
From Metro New York. “The wave of foreclosures crashing over the rest of the country in the wake of the subprime mortgage crisis hasn’t hit New York. Yet.”
“The foreclosure rate has remained fairly constant over the last few years, but housing Commissioner Shaun Donovan presented some sobering stats yesterday to the City Council. They showed a dramatic rise in pre-foreclosure filings.”
“‘We expect in the neighborhood of 14,000 [pre-]foreclosure filings in the five boroughs this year,’ Donovan said. That’s more than double the roughly 6,870 filings in 2004 and in 2005.”
“‘I think it’s likely we’ll see a jump in foreclosures next year,’ he said. ‘We do think the scale of this problem is really still growing.’”
The New York Magazine. “What the hell is happening in Red Hook? Ivy Pochoda remembers having that thought, and she remembers she wasn’t alone. It was about a year ago, Brooklyn was booming, a Fairway grocery store had just opened in Red Hook, and Pochoda was thinking about moving away.”
“She’d outrun gentrification for a while, but now it seemed to have caught up with her. ‘Red Hook was changing so quickly. ‘People were saying this is changing, that’s changing. They’re closing the Pioneer bar. The Fairway had opened. Ikea was coming. There was even a rumor they were opening a Marriott hotel,’ she said.”
“Gentrification in New York has gone from an implausible economic rejuvenation to an unstoppable social juggernaut to a widely held article of faith. We’ve come to assume, based on all available evidence, that we’re in the midst of a continuous viral cycle.”
“What if gentrification isn’t self-sustaining after all? What if, in fact, it’s exactly the opposite: a self-extinguishing phenomenon? What if it’s less a flood than a forest fire—wild, yes, out of control, absolutely, but destined to consume itself by burning through the fuel it needs to survive?”
“‘Frontier town’ and ‘Wild West’ and ‘run-down fishing village’ are all phrases you encounter again and again while talking to people in Red Hook. Ben Schneider, who runs the Good Fork with his wife, described falling in love with the neighborhood while visiting a friend several years ago.”
“‘I just loved this mix of light industry, quiet streets, and vacant lots,’ he said. I pointed out to him that ‘vacant lots’ is not an amenity you often hear counted as a neighborhood attraction. ‘It’s true,’ he said, then smiles. ‘It’s definitely not for everyone.’”
“Brokers and boosters like to describe Van Brunt as a ‘twenty-minute walk from the subway,’ but they don’t often tell you what this journey entails: From the Smith Street–Ninth Street F-train stop, you travel by foot over, under, and around the tangle of the BQE and the entrance to the Battery Tunnel, then cross an uninviting wasteland of warehouses and Dumpster-storage yards guarded by barbed wire and the occasional unfriendly dog.”
“The housing stock is in short supply, and what does come up for sale is unsightly or, in the blunt words of one resident, ’shit.’”
“Also, there’s a really bad termite problem. Oh, and the basements routinely flood. And the part of Red Hook that people talk about when they talk about gentrification…was once so rough that a local elementary school was renamed for Patrick Daly, a principal who was shot to death in 1992 by drug dealers in the projects.”
“If there’s such a thing as a New New New Red Hook, it’s embodied by Rachel Shapiro, a 23-year-old real-estate agent (she’s not yet a fully licensed broker).”
“As we left Shapiro’s storefront, a guy standing at her window was checking out the listings in the dollhouse while talking on his cell phone; he looked at one and sputtered, ‘That’s absurd!’”
“When I asked her about it, Shapiro just shrugged. ‘I have people come and say, ‘I want to list my house at $1.5 million, but I’m willing to accept $1 million,’ she says. ‘I’ll say, ‘Then you should list it at 1.1, not 1.5.’ But they say, ‘Let’s try it.’ Which is fine. I’m not in a position to turn down a listing. It just means I have people standing in front of my window saying that prices are absurd.’”
“‘A lot of developers in Red Hook have gotten ahead of themselves by charging gentrified prices without providing any of the services that gentrifiers expect,’ says Winifred Curran, a geography professor at DePaul. ‘People who can afford to spend a million dollars on an apartment want to be able to get to work in less than an hour and a half. They want a supermarket. They want a bank. And in my opinion, a lot of the redevelopment in Red Hook is not actually very nice.’”
‘The number of Massachusetts homes falling into foreclosure is topping a stunning 3,000 a month for the first time since the 1990s real estate bust, new figures show.’
‘More than 6,200 properties were foreclosed in Massachusetts during the first 10 months of this year, according to data released yesterday by Warren Group. That is more than three times the number of foreclosures during the same period last year.’
‘In Massachusetts, more than 3,500 people have called seeking help, but only about 30 passed two stages of screening and were referred to lenders to begin the actual refinancing process. None have received a loan as yet.’
Long time readers will recall that last year was terrible for defaults in Massachusetts, so the slide is really on.
Hmm..if 6,200 foreclosures took place in the first 10 months and now we are hitting 3,000 per month, that means in last two months of the year, we’ll exceed the first ten months, that works out to a five fold increase per month. OUCH!…
The 3,470 people that called for help but couldn’t be helped, imagine what their finances must look like. If a MA state gov program can’t help you, then you must be truly be an FB.
As far as the slide being “really on”…you bet it is…. and not only in the housing market. Judging by the amount of Christmas advertising going on, the retailers are very afraid. Judging by the car advertising, the dealers are very scared.
MA is a relatively wealthy state (I believe) and it seems to me, if things are getting bad here, then other places must really be getting hit hard.
Got Inflation? ….let me tell you, everyone I talk to is bitchin’ about the cost of everything (food, energy, health care, personal hygiene items, EVERYTHING). Virtually everyone I know makes at least $75k - $100k per year. While $that kind of money ain’t what it used to be, it is still somewhat decent money. If these folks are feeling the sting of higher prices, then those below must really be getting stung.
MA is a wealthy state, but I believe the biggest boom also faces the biggest bust. People in the boom areas tend to spend every penny they have and more because they think the good times will last forever.
Wow, a VT story takes the lead. Cambridge is our old stomping grounds. 4 years ago is about when housing prices started to hit insanity levels and then got worse.
It also would not surprise me if a little research revealed that he’s having trouble keeping up on a mobile home payment. Houses were already starting to be out of reach for below professional level incomes.
“‘It’s like I can see a light at the end of the tunnel now,’ he said.”
That’s the train coming, not the end of the tunnel.
He’s a truck driver. I’m sure that industry won’t be hit hard by a recession or rising gas prices….
He’s looking to rent out a room in his house, as vacancy rates skyrocket across the nation.
Light at the end of the tunnel???
Oh, but he has a ‘housing counselor’ now!
‘Tom Candon, deputy commissioner of banking for the Vermont Department of Banking, Insurance, Securities & Health Care Administration, released figures showing there have been 994 foreclosure filings through October of 2007, representing an approximately 30 percent jump over 2006.’
“It’s like I can see a light at the end of the tunnel now,’ he said.”\
It’s the tip of a lightning bolt from the ARM reset god. And also a train…
I strike you down like cobra!
Yeah, I loved that part of the article where VT is setting up a hotline. $50,000 worth of grants to tell people to rent out a room, quit buying stupid stuff, and “you’re screwed”.
Of course, people like him are the direct reason that we couldn’t afford houses despsite years of saving, spotless credit, and steady (and rising income.) I was quite literally competing with (presumably) single truck drivers who couldn’t pay his electric bill.
too much stupid money ( borrowed ) chasing too few houses for sale. You couldn’t save enough real dollars to keep up with the banks and brokerages ability to print virtual dollars out of Mortgage Debt. And now all thoses dollars will go to money heaven and the FED will fret and print and inflate trying to replace money ( liquidity ) that in my opinion should never have been made up to loan out in the first place. War on savers part 2, will the US now copy Japan? Dropping interest rates to zero? Probably yes in my mind they will try to inflate again. Will it work? No I don’t even think the FED believes it will work, but will lower rates again and again as the old saying goes” the squeeky wheel gets the oil”. But now instead of squeeky wheels we have hysterical banker billionares who might end up only millionares. And the savers of dollars will trade out of dollars into other currencies or commodities right behind the bailed out bankers. And the folks who can’t afford thier Mortgage readjusting will now be unable to pay for 4.00 gasoline to make the long drive to work. How else can it end? too much debt, industry moved overseas, politically pressured FED, costly war, and giant population of retiring workers who vote. And by voting I mean will vote themselves benefits that can’t be paid for. Do you think the Japanese will loan us more money now ? As far as I can see the YEN Carry trade was the liquidity for the housing bubble it sure didn’t get funded by domestic savings. Well its over now and good riddance.
The politicos may be dumb enough to lower rates toward 0, in thinking they will dupe suckers, er, buyers into the mortgage slavery trap. But it could buy the responsible savers a lot of time to buy more gold. Buy bullion regularly, buy often.
Right, and it’s a four engine locomotive running with a full head of steam. What in the world is wrong with these people? The gotta have a house at all costs brainwashing has really done it’s job.
Brainwashing… that is EXACTLY what it is. We’re nation of TV watchers, and TV is nothing but ad after ad intended to brainwash you into believing that unless you’re overconsuming, you can’t possibly be happy.
Look deep into my eyes… You are getting sleepy…. Now, go buy this. Go buy that. Come to us for your next loan.
You must have a bigger house. you must have a fancier car. You must have the cell phone with the most features. You must have the biggest tv, the best sound system, the newest computer… You must go buy the latest fashions… Your kids must have the best. If you don’t pay $10 to go see this movie, you’ll be the office geek.
If you don’t spend, then you’ll be a geek, no one will love you, and you’ll never have sex again.
If you do spend, you’ll be the life of the party, everyone will want to be you, and sex will flow to you like water to the sea.
The parades on right now and they’ve reminded me why we don’t have cable or watch TV much. *yuck*
There are moments when I feel “out of it” because we don’t watch TV, especially with my family. They are uncomfortable but do not surpass the total waste of time/surrealist feeling I get when I watch what passes for content on the major networks. It’s weird to like the Dick Van Dyke show better than anything I can find in CBS’s current lineup.
And if you can find the right spouse/mate, lack of TV watching leaves a lot more time and energy for the activity advertisers try to sell you on.
“If you do spend, you’ll be the life of the party, everyone will want to be you, and sex will flow to you like water to the sea. ”
Quick—where are the car keys? I gotta get to the mall, the Mercedes dealer, the travel agent…
I resent the diamond ads. Male gives female an ugly diamond CF pendant and ipso facto they’re in love. Maybe some women are diamond hos but this girl doesn’t need bling to know her man loves her. (We must be dense, my husband & I finally figured out what “Every kiss begins with Kay” means.” )
He’s looking to rent out a room in his house, as vacancy rates skyrocket across the nation.
I forgot to mention - I visit Cambridge often. There have been “for rent” signs up on some properties for months. A local builder has been busy building rental properties for the last 5 years. He might get a room mate but there’s no housing shortage there, either.
“‘It’s like I can see a light at the end of the tunnel now.’”
Of course, General Westmoreland said the same thing!
Trucking is already down. About a month ago our local TV station ran a story on how hard the transportation industry has been hit. As people buy less, less needs transported. I also have a nephew that was in logistics, scheduling shipments with independent truckers and his business was way off, so he has since switched to something else.
The light at the end of the tunnel ? Oh..THAT light !
That’s just old Casey Jones highballing his southbound freight train into your dumb ass at at 8 notches full bore.
beep beep
“Lee Roberge already has trouble paying the monthly mortgage bills. When his adjustable-rate mortgage increases next year, the Cambridge resident will join the rising number of Vermont homeowners at risk of losing homes to foreclosure. ‘It could jump 1 percent or even 1-1/2 percent,’ Roberge said of his anticipated rate increase. ‘It’s just going to be another needle into me.’”
Forever Young, Neil…
I saw the sheriff knockin’
At your front door
A foreclosure notice
House ain’t yours, anymore
Ooh, ooh, the damage done
It hit the city
A foreclosure band
I watched the needle
take another man
Gone, gone, the damage done.
I sing the song
because I dread the ‘man
I know that some
of you don’t understand
Milk-blood
to keep from running out.
I’ve seen the needle
and the damage done
A little part of it in everyone
But every adjustable-rate’s
like a settin’ sun.
http://www.youtube.com/watch?v=3-6AME4iSzY
One of the first thing Neil did with is music money was buy a farm…probably paid cash.
Old song…new lyrics:
Let’s impeach the “Dickey Boy” Cheney
Well gee Lee, maybe you should have taken their clue, and stayed a renter? But you went for it, got off the fence, got rid of your commitment phobia, threw caution to the wind, gambled your life on a 100 to 1 chance of being a homeowner….and now you found out you lost.
———————
‘My credit wasn’t good to begin with, so I couldn’t get a good 30-year fixed rate,’ he said.”
‘My credit wasn’t good to begin with, so I couldn’t get a good 30-year fixed rate,’ he said.”
I’m so sick of hearing this line, I could just throw up. These idiots don’t get that not only couldn’t they get a good rate because of their credit, they shouldn’t have gotten any rate at all.
YEAH like not walking home from a subway through the ghetto housing projects at night. Good luck …. Red Hook should stay ghetto housing since they will never build another subway line to service that area for maybe 50 years.
—————————-
‘A lot of developers in Red Hook have gotten ahead of themselves by charging gentrified prices without providing any of the services that gentrifiers expect,
‘Gentrification in New York has gone from an implausible economic rejuvenation to an unstoppable social juggernaut to a widely held article of faith. We’ve come to assume, based on all available evidence, that we’re in the midst of a continuous viral cycle.’
Sounds like another HB by-product to me.
Oh, you should read the rosy threads/comments on this blog…
http://www.brownstoner.com/
Gentrification has been a factor of changing city residents’ perceptions of life in new york. When I first moved to my neighborhood 24 years ago, I had to walk 14 blocks to get to a bank, and there were no large chain stores for drugs, food, clothing or electronics, and no health clubs. If you wanted to purchase a tv or a phone, you had to be prepared to negotiate asking prices down. For food you might go into a ‘bodega’ where the prices were high and in some cases arbitrary. Now national retail services exist in my neighborhood. People no longer automatically leave the city when they have children. Gentrification has been real and powerful.
Having said that, banking on those forces to continue so late in the cycle, particularly in neighborhoods like Red Hook in Brooklyn is pure folly. The New York magazine article is a good one. Is that the one where they refer to it as “Dead Hook” or was that from a New York Sun article?
‘You have a lot of agents that have only been in the market two or three years, and are very confused by what’s going on in the market right now.’”
I know it should will never happen, as NAR has an interest in keeping realtors uniformed and happy, but this site should be required reading for all Realtors. This brings home a point that most ppl forget. Realtors are not experts or advisors on real estate. In most states, they dont even need a college degree and just take a few weeks of classes. Most are just uneducated ppl that feel they are too good to work in fast food or in the janitorial world, and are attracted to a life of plastic surgeries and fancy cars. I have never met one that deserved more than 30k a year. I have been unfair because sometimes I bash them and call them unethical for saying real estate never goes down, this area is special, I know a guy that can help you get in the door with an ARM, I think this is a great investment, etc. The fact of the matter is most are truly ignorant and many believe the crap that comes out of their mouths. Many of them not only told this nonsense to their clients, but also bought at the peak with ARMs. Forgive me if I smile as commissions dry up, and they lose that McMansion, however. At least they can sleep in that fancy car until it is repo’ed. I cant bear to hear another story of a Realtor making over 100k with no understanding of real estate. I always think of all the families they helped destroy as their homes are foreclosed by their incompetent cheerleading and pushing.
Realtors are overpaid sales people.
What bothers me is they are allowed to call themselves buyers agents, and often ask buyers to sign exclusive contracts with them. The kicker is that when you really get down to it and ask what kind of fiduciary duty they have to be informed and educate their clients, the answer that usually comes back either directly or indirectly is “none.” I know of no other such “profession.”
RE agents and their bandit financial friends are no better than circus carnies looking for the next easy mark. They just dress a little better and usually have fancier wheels.
The ONLY “Professional” rule in this scam is that they DON’T openly over embarrass the mark or never admit to the CON in front of OUTSIDERS.
Most of the marks have no idea how badly the game is rigged.
End of story
Sales people are all they are and ever will be. Nothing wrong with that, however they would have us believe that they are more than that… Lifestyle guru’s that are there on your behalf to help “improve” you and your children’s life’s. The NAR as spent years and untold billions of dollars to create this myth, and have done a heck of a job. Unfortunately there are to many of us that are incapable of thinking for our self’s and want to be told what to do. In my life I have bought three homes and not once did I use a realtore.
” … this site should be required reading for all Realtors.”
True but good luck with that.
Realtors, as all successful salespeople, must believe in their product. This belief would be destroyed if a realtor were to give a serious and open minded read of this blog thus ending the realtors career.
I don’t know about that. I spent a good number of years in sales and I found I was the best salesperson when I knew the good and the bad of what I was selling. I can’t help but think that a Realtor who was a vicious bear could make some decent cash right now getting short sales, foreclosures, and other bargains for buyers looking for bargains.
“…This brings home a point that most ppl forget. Realtors are not experts or advisors on real estate. In most states, they dont even need a college degree and just take a few weeks of classes. Most are just uneducated ppl that feel they are too good to work in fast food or in the janitorial world, and are attracted to a life of plastic surgeries and fancy cars. I have never met one that deserved more than 30k a year…”
I agree 100%. I go to open houses every weekend just to learn more about the housing stock in this area (because I have a vulture fund ready in anticipation of a major, major crash in prices) and I find the RE agents are there only to stand around. They seem to know very little about the house.
Last weekend there was this 20-something woman who looked every bit like a fashion model. My wife and I asked a few questions about the house, she didn’t know anything! All that she told us was that ‘this is the best time to buy a house.’ We told her the prices are going to come down another 40%-50%, she just smiled.
You are right, she must have taken up the RE agent job because retail counter jobs must beneath her. She could have tried for Playboy Playmate!
“You are right, she must have taken up the RE agent job because retail counter jobs must beneath her. She could have tried for Playboy Playmate!”
I’m sure Ben and other long time readers will remember this HBB classic (note her ambitions)
http://www.playboy.com/girls/playmates/directory/200505.html
“TURNOFFS:
LIARS, jealousy, fakes and laziness.”
Let me guess,… by now she’s a “mistress-wanna-be-a-wife” to some boys on Wall Street.
Often the listing agent does not sit on the open house. Rather new agents looking for buyers will sit on the house. But you’re right. You would think now that there are no longer 10 fools lined up to overbid, that the newbie agent would make a bit more effort.
In most states, they dont even need a college degree and just take a few weeks of classes.
Since I used to have a license I can tell you in our office probably half had college degrees. But here’s the reason why most are terrible agents. They jump in whenever there’s a boom from every imaginable occupation and stay until they start losing their shirts, because the only way to be good at real estate is to have years of experience. But most, like some long time agents included are nothing but greedy sleezes with dollar signs in their eyes. They want to make a fast buck and have no clue that you can’t make a living at it without building good honest relationships and not screwing someone for a buck. In the down times, the only ones that survive are the honest ones with a good client referral base. These idiots screw over everyone and never have a return client or a referral, because they are so dishonest. Every boom they jump in, and then return to their former occupations at the bust, and every boom a new batch of unethical idiots try to make their fortune. Another reason I got out. It’s like the people who jump in and chase the stock market down.
“If there’s such a thing as a New New New Red Hook, it’s embodied by Rachel Shapiro, a 23-year-old real-estate agent (she’s not yet a fully licensed broker).”
Hey Rachel…New New New Redhook is about to meet… the Real Real Real world of Affordability…you just entered: the new new new financial twilght zone.
“Roberge’s situation mirrors that of many Vermonters. Unable to secure a traditional mortgage, the truck driver opted for an adjustable-rate mortgage, or ARM, to purchase his Cambridge home about four years ago. ‘My credit wasn’t good to begin with, so I couldn’t get a good 30-year fixed rate,’ he said.”
Something about Roberge’s description leads me to suspect he missed that WSJ article a couple of years ago detailing how option ARM payments could double when the loans recast. If he did read it, perhaps it did not seem important, as real estate still always went up four years ago.
PB - He probably has just a plain old ARM with a teaser rate. I need to dig up the chart showing it but option ARMS were extremely rare here in VT.
The banking rules in VT are also relatively pro-consumer (strong privacy laws, no pre-payment penalties allowed for any mortgage), so it’s possible that the banking commission had a hand in keeping some of the exotic mortgages out. The culture may have also had something to do with - a good friend of mind is somewhat embarrassed to own flashy new things.
What he was probably told was that when it reset he could refinance later with better credit - which of course didn’t improve and neither did the interest rates.
He was also probably told he could always sell the home later on at a higher price after the teaser rate period ended.
‘It could jump 1 percent or even 1-1/2 percent,’ Roberge said of his anticipated rate increase. ‘It’s just going to be another needle into me.’”
People amaze me. Who wouldnt get a fixed rate when rates were the lowest they have been in recent history. To me it just makes common sense that if a fixed rate is 6.5%, and the variable rate is 5%, or even worse, at 1% teaser, that the loan will contain prepayment penalities and set rate increases which will be designed to get the lender more than 6.5% over the life of the loan. Even if you didnt read or understand the documents, how could anyone not know this as a matter of common sense. The mortgage industry is competetive. There are no great rates, and no broker is your friend. There is simply no magic involved. If you cant afford the fixed rate, you cant afford their loan. All other rates are designed over time to get the lender more than the fixed rate based on assumed rate changes. DUH. Same goes for ppl that pay more than twice what someone else paid for a house a few years ago and think its a sound investment. Is the Bush Administration putting something in the water? I seem detached from the rest of society, and it is beginning to scare me. I no longer understand my fellow man.
The mortgage industry is competetive. There are no great rates, and no broker is your friend.
Absoultely wonderful observation. It’s like this myth of “100K below market price” that the devlopers are trying to push. That’s IMPOSSIBLE, just as a below market rate loan is impossible (unless you get it from someone other then a bank) for the masses.
These people are out ot make money (which is fine, btw, I have no problem with that) on your back. Wake up and realize that, and we will all be better off!
MTG rates are SUCH easy math; I just don’t understand why so many people have problems with it. It’s not like we are trying to do a partial integration here people, it’s just a function of points, principal and interest payments. Couldn’t get much easier then that!
Yes. There are market and below market rates. Period. Points, origination fees, prepayment penalties and rate resets are just hide the ball games. Remember, the ball is always there.
“It was a great program for somebody who was thinking ahead,’ said Tonna Phelps, director of Single Family Housing at the Maryland Department of Housing and Community Development. ‘The problem is that people aren’t thinking ahead, so now we have to go back to the drawing board.”
Bingo, thats is the problem. Nobody thinks about consequences, its all reward without any risk. People dont read, they dont know anything about mortgages, they have nobody to blame but themselves.
I know I’m sick of competing with no brained individuals, I’m content renting, sure I’d like to own but I also like to save, go on vacation and have some sort of quality of life. All these people care about is being indebted to a bank. Boy does that make me furious.
It was a great program for somebody who was thinking ahead,’ said Tonna Phelps, director of Single Family Housing at the Maryland Department of Housing and Community Development. ‘The problem is that people aren’t thinking ahead, so now we have to go back to the drawing board
Bingo, people dont think ahead, they only think of the now, instant gratification. There are no consequences, because there isnt any risk, its all reward.
I dont feel bad for people losing their homes, I have to rent, because they were greedy. Theres nothing wrong with renting, sure I’d like to own but I also believe in quality of life. Owning is just a glamorous way of saying I’m renting from the bank, but overpaying for the rent.
Life is to short, enjoy what little time you have. Not worrying about paying your master. Freedom is being able to move on a moments notice.
“People who can afford to spend a million dollars on an apartment want to be able to get to work in less than an hour and a half. They want a supermarket. They want a bank.”
Wow…. just wow.
WOW! I spend a couple thousand a month on an apartment in one of San Diego’s most expensive zipcodes and have bank(s) and supermarket(s) nearby. Work is a 20 minute average commute. If I am not mistaken total payments on a 500K one would be $4000 a month!
It gets worse. Red Hook has some decent rowhouses built in the 1900s for longshoremen. On the same street are truck and bus depots. The air pollution is heavy. The waterfront is nice, but weedy. The place has a multi-building project where a school principal was shot to death in broad daylight by dealers. You have to pass the project to trudge to the highway underpass to get to a subway stop (which is going to be closed for renovations for a couple of years).
Perhaps NYC-area gentrification has finally jumped the shark.
It’s not an inevitable process. It can go into reverse, as anyone who lived in the city from 1960-1990 can attest, and can have very nasty effects on your lifestyle and finances when it does.
VT had a boom ?
I thought that was illegal there
I was thinking of a job change that would have resulted in me moving to Vermont in the Burlington area. After searching the MLS for an idea of what type of housing they had I gave up on that idea. Nothing but tiny old crummy run down houses at sky high prices or overpriced new construction that was built like a beehive to maximize profits for the developers. And this in a “Rural” state.
‘Potential buyers figure: ‘There must be lots of distressed properties around. Maybe we should wait to buy.’”
Potential buyers are right, apparently.
The Boston Herald from Massachusetts. “The number of Massachusetts homes falling into foreclosure is topping a stunning 3,000 a month for the first time since the 1990s real estate bust, new figures show.”
“The Warren Group yesterday reported that lenders initiated foreclosure proceedings against 3,115 Bay State homes in August. That’s the highest monthly total since the 1990s downturn.”
“‘Foreclosures are getting so high that I worry they’re becoming like Mount Washington: Making their own weather,’ Warren said, theorizing that the state’s foreclosure crisis has become bad enough to hurt the overall housing market. ‘Potential buyers figure: ‘There must be lots of distressed properties around. Maybe we should wait to buy.’”
1 - Just wait until these buyers buy a distressed property and then find out that it wasn’t just the mortgage that was distressed. Wait until they find out how abused the property is.
2 - I really like the comment about the foreclosures making their own weather. Yep..the perfect storm. The housing ship is continuing to take on water in a sea of defaults, foreclosures, falling values with winds of economic change blowing, as the storm clouds begin to thicken and the layers of ice are getting thicker on the hull, ARM adjustment icebergs dead ahead.
3 - Even if the 3k per month foreclosure filing rate was to fall to a third, 1k per month sustained is a lot of foreclosures for a small state like MA.
“…The housing ship is continuing to take on water in a sea of defaults, foreclosures, falling values with winds of economic change blowing, as the storm clouds begin to thicken and the layers of ice are getting thicker on the hull, ARM adjustment icebergs dead ahead.
USN “Good-Ship-Lollipop”
Gentrification…. give me an F’in break..
Why/how do people convince themselves that these area truly “change”? It seems to me that no matter what, they still retain many of the elements that wanted this “supposed” gentrification in the first place (crime, drugs, blight, trash on the side walks/gutters, etc.)
You can’t make a silk purse from a sow’s ear.
“You can’t make a silk purse from a sow’s ear”
They can in China.
Just came across a chart showing the actual value drops for San Diego California condominiums from 2005 to 2007.
This is a real eye opener! View at:
http://www.brokerforyou.com/brokerforyou
Great article, and the one below it. Prices expected to drop for the next 5 years, maybe even 10. Got T-bills? Series I-bonds? Gold?
“Men have to do some awfully mean things to keep up their respectability.”
George Bernard Shaw
“The stalled state efforts highlight the general difficulty of helping homeowners avoid foreclosure: … Yet the circumstances of each loan are unique and complex - ‘Like snowflakes,’ said one official - making it is impossible to process cases routinely.”
Snowflakes? Yeeeees. Like snowflakes in HELL. Goodbye, goodbye, little snowflakes.
http://tinyurl.com/2a35gy
Here’s a thread I found pretty interesting on truliadotcom in response to a question posted asking when sellers were going to capitulate on their outrageous pricing.
There are a lot of realtor comments here and it sounds like they are attempting to educate sellers who overall remain stubborn. Some are proposing refusing listings that will only waste realtor advertising dollars anyway.
BTW, Happy Thanksgiving Day, to Ben, your personal family who shares you with us on days such as this, and all the HBB family.!
Hilarious!
This one was particularly amusing:
Can I trash my former gutless agents? I interviewed 3 groups of agents in March before the rehab was finished. One GOOD agent did two CMAs, one for “if it were last year” that had a range from $899k-$975k and another “the truth today” with a range from $875k-$899k. I didn’t go with her because she didn’t have high-end sales experience. Another GOOD agent said $875k-$899k but even though he lives in Oak Park, he works in Chicago. The agents I chose, drove me around to the competition and asked me what I thought we should price it at. The houses were: $969k beautiful but no a/c, no garage or updated mechanicals; $829k smaller, updated 15 years ago; $775k only 1.1 bath compared to my 3.1 brand new baths and plumbing; $840k in need of $300k worth of rehabbing. None of the houses were the same size and condition as mine. Five $1+mil. homes similar to mine and 3 listed between $875k-$950k
went under contract that week. So we decided $925k and they go through their marketing plan, statistics and CMA. Four hours later as I’m leaving, they tell me I can’t take what they presented to me home until after I have signed the listing agreement.
The house is almost finished in May and I sign the listing agreement two weeks in advance. We have a brokers’ tour and everyone says the same three things: “Beautiful”, “I don’t have anyone right now” and “Good Luck!” I immediately drop the price to $899k. I leave the country for 2 weeks and no action while I was gone. They tell me the home is over priced. I ask about marketing and for a copy of the listing, contract and presentation that they still haven’t given to me. The listing doesn’t mention anything about the $300,000 worth of improvement such as new: windows, plumbing, electric, master suite, 2nd fl laundry, etc. Aside from SS appl and granite counters, it looks like the same listing as a year ago. We fix the marketing and give it two weeks. Still nothing. I then look through the CMA and see their original recommendation was $850k. I’m upset but I lower the price to $850k. Too late, the damage was already done. I go to my own open house as a consumer and none of the marketing material is there. I ask, “How long has it been on the market?” The guest agent says, “A looong time.” She then flips through her paper work and says 180 days last year priced at $525k. “What?!” “Oh wait, then it sold. It didn’t look like this before, they painted it all the fashionable neutral colors.” I fired them.
I then dropped the price to $799k (our breakeven after negotiations and commission) through a flat rate broker. We had 5 interested groups but no written offers. We just dropped the price to $700k. There are too many gutless agents telling sellers what they want to hear. I said from the beginning, I want to price it to sell.
Ruth
Wed Sep 19 2007, 23:55
Web Reference: http://www.oak-park-il.com
That is the whiner’s FSBO webpage. I know that area - she is in lala land. Looks like she bought it 6 months or so before she listed it. Wants her money back for doing routine maintenance and decorating.Wah-Wah-Wah….
It is at:
http://www.trulia.com/voices/Market_Conditions/What_will_it_take_for_home_owners_to_realize_its_a-9292–
“When I asked her about it, Shapiro just shrugged. ‘I have people come and say, ‘I want to list my house at $1.5 million, but I’m willing to accept $1 million,’ she says. ‘I’ll say, ‘Then you should list it at 1.1, not 1.5.’ But they say, ‘Let’s try it.’ Which is fine. I’m not in a position to turn down a listing. It just means I have people standing in front of my window saying that prices are absurd.’”
————
Ah, the logic of marketing.
“Eight states including Massachusetts have pledged almost $900 million this year to help borrowers replace unaffordable mortgages, but the states collectively have refinanced fewer than 100 people, a Globe survey found.”
The problem with all these schemes to help out deadbeats (oh! I’m sorry! Poor Borrowers in trouble!) is that most of them couldn’t have afforded a normal, 30-years-at 6% fixed mortgage in the first place! So refinancing them into one of those simply won’t help.
It doesn’t surprise me that in 8 states, they’ve only been able to find 200 people total that they could help.
And even if they do get these people into fixed mortgages, if they have to move, they’ll be on the hook for $100K, 200K or whatever the difference between what they can sell and what they paid is.
(And, of course, our government is confiscating more of *my* income by not collecting the taxes on this debt, if the bank forgives it.)
anecdotal evidence: I just had zero problem reserving a hotel room in Manhatan 4 days before xmas. rates *very* reasonable. Usually the out-of-towners are swarming the place before xmas. not this year obviously.
Neat blog! Is your theme custom made or did you download it from somewhere? A design like yours with a few simple adjustements would really make my blog jump out. Please let me know where you got your theme. Many thanks