A Pyramid Of Little Golden Crumbs
Fox 23 reports from Oklahoma. “If you’re thinking about buying a home, right now might be the time. Realtors say we’re in a buyer’s market. But just as fast as homes are being sold here in Tulsa, they’re also being foreclosed. For a lot of people owning a home is an American dream, but realtors say many new homebuyers jump into it without knowing everything they need to know.”
“They say many people buy more than they can afford and don’t realize it until it’s too late. ‘For almost every homebuyer, that first home ought to be a fixed rate loan.’ said realtor Dennis Becker, and he says while the interest rate may start out lower on an adjustable loan, in a few years it could triple the amount of fixed loan. ‘Buy less than you can afford.’”
“If you think you’re not affected because you’re not buying a home now, think again. ‘Then credit companies and mortgage companies start tightening up their credit requirements,’ Dennis says.”
“The foreclosure rate is actually up here in Green Country. In September, more than 1,600 homes were foreclosed on, pushing the year to date number to more than 12,000 foreclosed homes.”
From KTEN News in Oklahoma. “For Durant real estate broker, Renea Roberts, selling houses comes easy. She’s helped at least 75 percent of homeowners in a Durant addition find a place to live in what she says is a good time to invest.”
“‘This is one of the things that is bringing people to Durant,’ says Broker, Renea Roberts, ‘because they can buy an affordable home like this one and put some money in the bank.’”
“Nationally, home prices are dipping, with the worst slump in California. That’s why realtors are seeing many move to Durant from all over the country.”
“‘It was just amazing that what we would get for it here, they come here, bought a nice, big home and still had money left,’ says Terry Brooks, realty sales associate.”
“‘You also have some of the baby boomers, who are getting ready to retire from the East Coast, West Coast and up north that have been up there, making a larger income,’ says Brooks. ‘And they’re coming up here to retire, and they’re able to pick up property for cheaper and live better.’”
The Norman Transcript from Oklahoma. “Norman Board of Realtors President Jayme McLaughlin said while the national media has been reporting a terrible real estate market, the local market is doing just fine.”
“‘While we may be feeling the ripple effect from the media coverage of the markets that are having a tough time, we are not having the same problems as California, Arizona or Georgia,’ McLaughlin said.”
“‘This is a CNN phenomenon that Norman and Oklahoma are getting caught up in,’ said Jonathan Leavey, executive VP of American-First Abstract Co. in Norman. ‘We should be conservative, but not panicked. To me, if you look at the national media, they are crying fire down the block but saying the fire is here, as well, and they are panicking people.’”
“McAuliffe said people are seeing the national reports and are afraid. ‘We are not crumbling in Norman, Okla.,’ he said.”
“McLaughlin said homes are sitting on the market longer, but buyers are not feeling any pressure to hurry their decisions. ‘But homes that are priced at or just a tad below market value are moving from ‘just listed’ to ’sold’ in about 45 to 60 days,’ she said.”
“She said homes priced at more than $250,000 are taking six months to two years to sell. The median range for Norman sales is $157,000.”
“McLaughlin said there is always an ebb and flow to the market. ‘The last couple of years were incredible and so we now find ourselves in a more normalized market,’ McLaughlin said.”
“Dee Taylor, past president of the Norman Board of Realtors, said there is a slowed investors market because the home equity market has slowed down. But even though the market may be a little slower now, Taylor said owning a home is a smart move.”
“‘It’s still one of the wisest investments people can make,’ Taylor said.”
“With the market slowing down, some buyers may have unrealistic expectations. ‘I think buyers are hoping to snag the deal of the century,’ said McLaughlin. ‘They want cheap prices when they buy and high prices when they sell.’”
The Denver Post from Colorado. “The mansion at 801 Race St. has stood empty for a year. The Denver landmark was acquired two years ago by a licensed real-estate agent, remodeled and offered for $2.25 million. It didn’t sell. The price dropped to $2.15 million. It didn’t sell.”
“Then a real-estate speculator stepped in, and the house sold for a reported $3 million in 2006. Michael Campbell, a flamboyant real-estate buyer who carried a teacup poodle to house closings, died of an alcohol overdose this year. At the time of his death, he was being pursued by federal and state fraud investigators.”
“As a speculative buyer, Campbell, like many others, repeatedly took advantage of the easy-loan era that collapsed this year into the subprime-lending crisis. From 2004 to 2006, he purchased at least 12 houses in Colorado in his name for a total of $8.2 million.”
“Campbell signed deeds promising that at least nine of these houses would serve as his principal residence, enabling him to qualify for lower interest rates than an investor. He also had a knack for taking cash from the closing table instead of putting money down by inflating sale prices to boost loan amounts.”
“Real-estate listing records show he bought one house for $350,000 above the original asking price and another for $251,000 above the original asking price. Nine of the 12 houses were soon foreclosed. Two others were foreclosed after he sold them to another investor.”
“In February 2006, a financial statement Campbell sent to a mortgage broker…showed he owned 11 houses, a Jaguar and a Chevrolet Tahoe, held $250,000 in bank accounts and boasted a net worth of $2.7 million.”
“Nine months later, in (a) lawsuit, Campbell said he hadn’t filed income-tax returns in two years, was making no money from his properties.”
“The day before he said that, he had his hands in the $3 million purchase of the mansion at 801 Race St. The house had sold for $1.3 million in December 2005 to Jeffrey Hammerberg, a licensed real- estate agent who remodeled it and tried to resell it four months later for $2.25 million.”
“When it didn’t sell, Hammerberg lowered the price by $100,000. It still didn’t sell. Yet in August 2006, real-estate listing records show, Hammerberg raised the price to $3.1 million. The house sold for a reported $3 million in November 2006.”
“Raising the price from $2.15 million to $3 million made it possible to borrow more money. Eighty percent of a purchase price is a typical loan amount. New Century Mortgage, a leading subprime lender that went bankrupt this year, provided $2.4 million, which was 80 percent of the reported sale price.”
“Ronald Low, a spokesman for New Century, said the company uses various measures to guard against mortgage fraud, including examining borrower qualifications and verifying appraisal values on a representative sample of its loans. New Century would not discuss details of the 801 Race St. loan.”
“Housing-industry experts say there is plenty of blame to go around. Everyone collected fees, creating what Jonathan Tiemann, a California investment adviser, describes as a pyramid of little golden crumbs.”
“‘The machinery had been set up so the mortgage would be sold to other parties. At every step of the way, somebody got a fee and then figured they would be able to pass the risk on to someone else,’ he said. ‘Greed was a very important factor. All the players were pursuing an opportunity to profit from an ever-increasing volume of transactions. The game just had to keep going.’”
“A decade ago, these lenders occupied a tiny corner of the mortgage market. Jim Spray, a veteran Colorado mortgage broker, remembers that the first emissaries of this new industry showed up about 1995, seeking his rejects.”
“‘You don’t need to throw those loans in the trash can anymore,’ they advised. ‘Send them over to us. We’ll get them approved and funded.’”
“As the subprime business mushroomed, the loan quality ‘just got worse, progressively worse, until it imploded,’ Spray said. ‘I should have tried to get my cat a mortgage. I’m sure I could have.’”
“In 2000, subprime mortgages represented 2.4 percent, or $115 billion, of the $4.8 trillion in residential mortgages outstanding in the U.S. By mid-2007, they accounted for 14 percent, or $1.5 trillion, of a $10.75 trillion market.”
“Starting in the early 1980s, mortgages were increasingly combined and sold as bonds backed by house payments, said Sue Allon, founder of Denver-based credit-risk manager Murrayhill Co. A financial innovation in the early 1990s — structured finance — changed everything, Allon said.”
“Wall Street ingenuity repackaged subprime loans to attract investors by slicing them into securities with different levels of risk. The genius of this strategy was that it opened a giant cash box to the mortgage market by allowing mutual funds, pension funds, insurance companies and university endowments to buy the highest-rated bonds.”
“‘Securitization became a driver for new mortgage-product development, which increased homeownership and home prices,’ said Joseph Mason, an associate professor of finance at Drexel University who has studied risk in mortgage markets.”
“The subprime models, however, didn’t account for the day when home prices would stall and then fall, leaving subprime borrowers trapped with rising payments, said Sam Khater, a senior economist with First American CoreLogic.”
“‘The environment has always been very strong price appreciation. They never had the test of a tough market,’ Khater said.”
“For one lender that went out of business, ‘we were doing 100 percent loans for a wage earner with a 600 (credit) score and stated income,’ said Account executive Susan Mann, whose last employer was Option One.”
The Greeley Tribune from Colorado. “Bruce Disselkoen, past president of the Weld County Apartment Association, said many property managers have noticed a recent downturn in the market and are at least partially blaming the high number of foreclosures in Greeley.”
“He said that people who can’t sell their houses are temporarily renting them out until they build some more equity. Also, there has been an increase in the activity of investors who are buying cheap foreclosure properties and turning them into rentals until the market improves and they can be sold for a profit.”
“‘There’s a flood of more stuff on the markets,’ Disselkoen said.”
“That glut of properties is driving down prices and also luring people out of apartment buildings — because they can now afford to rent an entire house for the same price they were paying for an apartment, he said.”
The Aspen Times from Colorado. “The credit crunch that’s caused a slump in the national real estate market might be having an indirect effect in Pitkin County. Then again, local sales might be experiencing an inevitable cooling after a super-heated first half of the year, according to local real estate agents.”
“Whatever the reason, the dollar volume of sales in Pitkin County fell nearly 37 percent in October, a new report by Land Title Guarantee Co.”
“Michael Russo, managing partner at Aspen Sotheby’s International Realty…said some would-be buyers in Aspen might have wanted to wait to see if prices of real estate would be affected by national conditions. ‘They wonder if they can buy more for less,’ he said.”
The Daily Sentinel from Colorado. “A sizzling Grand Junction housing market that posted a 65 percent gain in home prices in the last five years could be giving back a large portion of those gains in 2008.”
“That’s because the median price of a home in the region is projected to decrease 9.9 percent next year, according to a housing forecast laid out in the December issue of Money magazine.”
“There are some within the industry who think Grand Junction housing prices are headed lower. ‘I think you are going to see real estate housing prices soften, primarily in existing houses,’ said Denny Granum, president of Monument Homes in Grand Junction. ‘I can’t see a huge decline in new home prices because costs are what they are unless, for whatever reason, those costs soften.’”
“Granum, whose company specializes in building high-end homes priced upward of $550,000, said would-be buyers seem to be willing to ’sit back and wait and see what happens with the national economy’ before laying out their cash.”
“‘They are saying, ‘I think I’m going to give it a little time,’ he said.”
“‘My best guess is we are going to have some sort of price correction,’ said Ron Sechrist, a longtime area real agent and a broker associate in Grand Junction. ‘How long it is going to last or how much it will be … I can’t say … But there are a lot of people out there just waiting.’”
‘A decade ago, these lenders occupied a tiny corner of the mortgage market. Jim Spray, a veteran Colorado mortgage broker, remembers that the first emissaries of this new industry showed up about 1995, seeking his rejects. ‘You don’t need to throw those loans in the trash can anymore,’ they advised. ‘Send them over to us. We’ll get them approved and funded.’
This is a good example of what I mean when I say the housing bubble has been building much longer than most realize.
No bubble in Oklahoma?
‘The Edmond housing market remains largely unaffected by the nation’s market downturns, according to information released recently by the Edmond Economic Development Authority and Brian Preston, Realtor with RE/MAX Associates.’
‘It’s still showing that we’re on our way to a record year,’ Preston said. ‘Our inventory right now is mainly coming from new homes — we could do a self-correction entirely if we could get builders to quit building specs for a couple of months.’
‘Preston said there is currently an increase in listings in the $400,000 to $500,000 price range, mostly because of newly built houses.’
No bubble in Oklahoma - because most Oklahoma realtors don’t recognize what’s going on. Although, the one (Dennis Becker) who noted that, “Then credit companies and mortgage companies start tightening up their credit requirements,” might just understand what comes his way.
Ben, realtors who have not recognized sharp price increases in their area don’t understand the bubble, therefore they have a hard time recognizing what will happen to them as prices decline nationally.
Had to laugh about the one that claims people are coming in from both coasts… to Durant, no less. Yep, population doubled in a month, from two to four people.
Oklahoma is the one place I can think of that makes Dallas look good.
You got that right
Having “done time” (gone to grad school) in Oklahoma, I agree! Dallas is one place you go to escape from Oklahoma.
Lived in TUL 1989-1990. It was OK’s centennial year - their proudest moment - even then reading the local press made it clear to me they wanted to be TX. It was a little sad actually.
You laugh, but I have friends who moved from CA (Chico) to Tulsa.
It’s true the realtors in non-bubbly areas don’t get it. They still think that because houses are cheaper here (midwest) than in the bubbly areas, everyone will move here. But, they all think that whether they are in Tulsa, or Durant, or Springfield, or Branson or Fayetteville or whereever.
I remember a friend who also moved to Tulsa. He swears its one of the best cities he’s lived in. This was over a year ago, but I looked out of curiosity and there were some houses, albeit falling apart, but some for 10k and UNDER. Absolutely no jobs in my field though.
From Wiki:
The median income for a household in the city was $25,328, and the median income for a family was $32,988. Males had a median income of $26,574 versus $19,676 for females. The per capita income for the city was $13,849. About 17.2% of families and 22.1% of the population were below the poverty line, including 24.8% of those under age 18 and 17.6% of those age 65 or over.
What is there to not like?
BTW, I had an email conversation with a Louisville realtor… he couldn’t see what the fuss was all about until I asked him how many of his last year’s sales had very good credit, documented income at least one-third of mortgage price, and a downpayment. The light went on.
–
On CNBC there was a talk of tax-free bond issue to finance the HOPE NOW program. Did anyone else hear anything about it?
Jas
Here ya go Jas:
http://money.cnn.com/2007/12/03/real_estate/Paulson_on_housing/?postversion=2007120313
My apologies for not using the tinyurl format–it’s not performing very well.
From the article:
The Treasury Department is proposing that state and local governments be granted a temporary broadening of their tax-exempt bond programs to include mortgage refinancings. That will reduce the cost of innovative mortgage programs, Paulson said, and allow these programs to reach more struggling homeowners.
This fall, the Department of Housing and Urban Development initiated “FHASecure” to give the Federal Housing Authority the flexibility to help more families stay in their homes, even those who have good credit but may not have made all of their mortgage payments on time. Paulson estimated that 240,000 families can keep their homes by refinancing under FHASecure.
Leigh
RE: Department of Housing and Urban Development
These worthless chucks couldn’t manage a bag lunch.
The FHA/HUD ‘90/’91 take-backs literally put them on the ropes.
I saw foreclosured houses sit vacant for years and literally rot away.
Not really surpriseing given the housing swill they underwrite
Any involvement of this crowd in this debacle bodes poorly for taxpayers.
OK. It’s official.
Hank Paulson *is* a moron.
“We are working aggressively and quickly, utilizing available tools and creating new ones, to help financially responsible but struggling homeowners…”
As to Jas’ question:
“The Treasury Department is proposing that state and local governments be granted a temporary broadening of their tax-exempt bond programs to include mortgage refinancings. That will reduce the cost of innovative mortgage programs, Paulson said, and allow these programs to reach more struggling homeowners.”
********
Paulson: Subprime help on the way
Treasury secretary says the government is working harder than ever to help troubled homeowners.
By Les Christie, CNNMoney.com staff writer
December 3 2007: 2:30 PM EST
NEW YORK (CNNMoney.com) — The U.S. government is working hard to give relief to struggling mortgage holders, Treasury Secretary Henry Paulson said Monday.
“We are working aggressively and quickly, utilizing available tools and creating new ones, to help financially responsible but struggling homeowners,” he said in a speech at a housing conference sponsored by the Office of Thrift Supervision.
Paulson outlined the latest government and industry efforts to help struggling home owners keep their homes. The plan included reaching more struggling borrowers and finding affordable mortgage solutions.
http://money.cnn.com/2007/12/03/real_estate/Paulson_on_housing/?postversion=2007120313
“Hank Paulson *is* a moron.”
Please don’t give him the benefit of the doubt. He is part of the criminal financial “Gangs of New York” (a move about 1860s that was replaying this weekend on one of my DISH channels).
Nazis were not morons; they knew what they were doing. They were criminals. And their criminal acts were legal!
Jas
Anyone else see a Michael Moore movie here?
already been done. http://www.freedomtofascism.com
That’s what Paulson said. He wants state and local government to have permission to issue bonds to bail out sub-primers. I don’t know where that money will go, or what they will use for collateral, or what public benefit it will serve. Sounds like a bailout to me. Government issues bonds, and uses the proceeds to pay the banks so they let people refinance. Taxpayers pay the bondholders. Am I missing anything?
Am I missing anything?
Yes you are….He also proposed that refi over basis be tax free….Kind of like hitting the small lotto…
Correct me if I’m wrong, but won’t a bond issue of that size need to come up for a vote in each state? If so, it’s dead in the water. The 90% of homeowners, who aren’t benefitting from this, are pissed as hell.
Yes, this as the direct transfer of the bank crisis to the municipalities (or to the residents of the municipalities). The half baked plan is for cities to authorize municipal bonds to refi the deadbeats. Thus getting the banks off the hook. The cities can afford the losses. Embrassez mon âne
Yes siree Hoz - like the city coffers aren’t going to dry up with lack of property and sales tax revenue. And forget infrastructure, parks or anything that would benefit the city as a whole - lets just make sure we take care of the idiots that cheated their way into houses or refied into stupid loans. Let’s throw in a little taxpayer money to the banks and everone can party on.
I don’t know much about municipal finance, but wouldn’t it be highly unusual to issue public bonds to send money to private banks? Unprecedented? Would we as the public have a vote on this?
Here ya go Jas:
http://money.cnn.com/2007/12/03/real_estate/Paulson_on_housing/?postversion=2007120313
From the article:
The Treasury Department is proposing that state and local governments be granted a temporary broadening of their tax-exempt bond programs to include mortgage refinancings. That will reduce the cost of innovative mortgage programs, Paulson said, and allow these programs to reach more struggling homeowners.
This fall, the Department of Housing and Urban Development initiated “FHASecure” to give the Federal Housing Authority the flexibility to help more families stay in their homes, even those who have good credit but may not have made all of their mortgage payments on time. Paulson estimated that 240,000 families can keep their homes by refinancing under FHASecure.
Leigh
Jas,
Tried to get a link to you twice now, but the spamminator ate them both.
CNN link is posted on Goggle News. From the article:
The Treasury Department is proposing that state and local governments be granted a temporary broadening of their tax-exempt bond programs to include mortgage refinancings. That will reduce the cost of innovative mortgage programs, Paulson said, and allow these programs to reach more struggling homeowners.
My aplogies if this turns out to be a tripple post.
Leigh
HOPELESS NOW.
“On CNBC there was a talk of tax-free bond issue to finance the HOPE NOW program.”
“She said homes priced at more than $250,000 are taking six months to two years to sell. The median range for Norman sales is $157,000.”
So these houses went on the market when things were still selling and still sat for up to two years? If they go on the market today they will sit for…how long?
“McAuliffe said people are seeing the national reports and are afraid. ‘We are not crumbling in Norman, Okla.,’ he said.”
If sitting for two years isn’t “crumbling” then what is it? Could it be “crashing”?
–
“Realtors say we’re in a buyer’s market.”
I say, we’re in a suckers’ market.
Jas
how about “we are in a knife catchers market?”
We have been in a renters’ market for at least 5 years now.
Grand Junction, CO. How any house there is worth more than $80k is beyond me.
I have heard the fixed-cost argument before. In my Town, a $200k building permit was issued on a basic two-bedroom house, no basement. This doesn’t include any land costs, of course. The house isn’t that special and would probably rent for $800/month.
“Granum, whose company specializes in building high-end homes priced upward of $550,000, said would-be buyers seem to be willing to ’sit back and wait and see what happens with the national economy’ before laying out their cash.”
Who can afford a 500K house in Grand Junction? There can’t be more than a couple hundred households with the required income.
Occasionally I’ll say something to a friend along the lines of, “we might buy, someday, if I see houses that cost less than 200x rent.” Said friend usually says, “you’ll have to move to Junction if you ever want that!”
But yeah, Junction is totally a service-sector economy, folks from the interstate and all that. Sort of like Sheridan, Wyoming. Nothing real substantial to support more than a couple dozen 500k+ houses.
Maybe Sheridan will rise again if coal gets expensive :-).
The story from the old days is that coal was basically free, you just took a Saturday and dug a wagonload out of the hillside by hand when you started running low. Probably still could if you knew where to look…I wouldn’t mind being there if TSHTF.
Do you think it’s possible to move a bunch of IT people there and form a sort of inland India? We could all pretend on the phone that we had Indian accents to fool the east & west coast people into thinking that we were “offshore resources”. And once a month we could pretend the power went out for monsoon season.
Grand Junction is in the throes of a natural gas boom. It is also undergoing a housing boom as well. We are at the confluence of two booms rather than one. Whether the local economy can survive the bust of one boom, or the other, is truly the million dollar question. We had a similar double barreled bubble in the early 1980s with oil shale and housing. When it popped, the area was on it’s back for over a decade. I cannot help but see history repeating itself yet again…perhaps as tragicomedy!
Guess I don’t know how to use the quote feature yet, here is what I meant to quote:
“‘This is a CNN phenomenon that Norman and Oklahoma are getting caught up in,’ said Jonathan Leavey, executive VP of American-First Abstract Co. in Norman.
“but realtors say many new homebuyers jump into it without knowing everything they need to know.”
NEWS FLASH!!
Is it not the realtors responsibility to INFORM the homebuyer of their options???!!!
Nice way of shifting the blame, moron.
A buyers’ agent would never encourage a buyer to spend more than he or she could afford using prudent qualification ratios. It is part of their ethical code.
LOL. Every realtor I have ever used tried to get me to move up my limit, with a promise they know some mortgage broker with some great programs that could easily get me into the home. Realtors are PsOS and should be cut out of any real estate transaction to the greatest extent possible.
“For a lot of people owning a home is an American dream, but realtors say many new homebuyers jump into it without knowing everything they need to know.”
I have foaming at the mouth part of my face.
This infuriates me. So, you asshats, just how did you earn that 6%? I agree with Tim…no realtors and free the damn MLS.
If it wasnt for realtors, who would unlock the doors. Huh? Answer me that one. That’s worth at least 5%.
Found out, thanks to Zillow, that the realtor who ‘helped’ me purchase a home in 1994, ‘allowed’ me to overpay by at least $15K. I was a first time buyer, 22 years old, and assumed that I was NOT going to get the house.
To top it off, the realtor was someone my father knew. And still he screwed me for $900 more in commission.
I have no trust in the industry, because no one has an interest in the buyer purchasing for less.
They should have flat fees.
the fruadsters will become a victim class
like drunks,doppers and gamblers
and the STATE will sell them their fix
I would never depend on a realtor to inform me of anything substantial. In fact, last time we looked, we took a list of for sale homes in the are to a realtor and said these are the houses we are considering. If I’m going on the hook for hundreds of thousands, I best be doing some independent research that is easily available now. The internet removes the excuse of ignorance.
You dont know how many times I’ve warned family members and friends of the housing bubble starting in 2000, and yet they have decided to go with the “advice” of the realtors and mortgage brokers instead. You can say it a million times, but most ppl just dont get it. Realtors are never on your side. They want you to close fast and collect their commission. Period. Their smiles and silicone breasts hide the monsters within.
Ask the tough questions:
How long you’ve been in the business? 6years or less, Walk away.
What was your occupation before you became a Realtor? Your discretion.
Did you graduate from College?
Can you explain to me this Mortgage Loan line by line? You’ll see their face turning red….
Funny story: Got an e-mail from a local Realtor on Friday. Both of us used to do business with a fellow who died last year. She was wondering if I’d found a replacement for him.
Well, I said that I interviewed three people to serve as possible replacements. I recommended two companies, one of which is co-owned by a husband and wife team, and the other is owned and operated by a single fellow. (Three people, right?) I provided links to both companies’ websites, just so the Realtor can check up on them.
The Realtor e-mailed back and asked who the three people were.
Slim, I run into the same thing with on-line auction listings. It’s amazing how many people will ask for the same information I’ve already put in the listing.
“For Durant real estate broker, Renea Roberts, selling houses comes easy. She’s helped at least 75 percent of homeowners in a Durant addition find a place to live in what she says is a good time to invest.”
I love the buzz words used by these REALTORS. “Good time to invest.”
If my broker called and said, “I’ve got a great investment for you, It’ll probably lose 15-25% in the next year and a half, but then it’s good a good cahnce to go up.” I just might decide to put my money in T-bills or the like and wait a while….
Oh, I forgot…®
“That glut of properties is driving down prices and also luring people out of apartment buildings — because they can now afford to rent an entire house for the same price they were paying for an apartment, he said.”
So much for the theory that rents always go up…
Yep, as I reported this weekend from Pullman, WA: this is the worst year in decades for property management firms. A glut of rentals has sent vacancies up and rents down.
Excess inventory drives down housing costs: buying AND renting.
I predicted this development on this blog well over a year ago.
But you have to admit that rents in the better areas in SD are absolutely up since 2003/2004.
Just isolated to the Pullman area ?? I have read that the Seattle & Portland rental markets were very strong…Is that not so ??
That is a good question, and I don’t have an answer. But as recently as a year ago, the Pullman rental market was very strong. In December of 2006 there was almost NOTHING available for rent, certainly less than 1% vacancy rate. The transition has been dramatic. So the official statistics which take a long time to collect and process might be behind the curve on the rental situation.
This is good:
http://www.minyanville.com/articles/GS-C-UBS-LM/index/a/15080
Very good read. I kept hitting the “Click here to enlarge” link. I thought maybe I’d be redirected to another website.
They sure are acting like they are in Kansas, though — right in the middle of a tornado warning.
Tornado Warnings in Kansas are just the signal for everyone to go out in the front yard with the video camera…..:)
It is good, his math is wrong - if I find time ,I’ll correct - it should not make much of a difference.
“…How would I act each day if every mistake were “made whole” by some outside source with unlimited capital? Yep, you guessed it. I would take risk—lots of risk. What if we all operated in this manner? We would have an unlimited amount of risk outstanding and a ‘put option’ beneath our every move. This is the moral hazard card at play. Truly a dangerous card…”
Does starting a War in Iraq qualify as taking a “risk”?… Does having your “family members” being “handed” a job at Carlyle group qualify as having a “put option” card?
“They say many people buy more than they can afford and don’t realize it until it’s too late. ‘For almost every homebuyer, that first home ought to be a fixed rate loan.’ said realtor Dennis Becker, and he says while the interest rate may start out lower on an adjustable loan, in a few years it could triple the amount of fixed loan. ‘Buy less than you can afford.’”
This from a SHILL Realtor ™.
These were the same Asshats that got everybody to buy more than they could afford to get on the property ladder and gain maximum “appreciation”.
These people were supposed to act in a fiduciary manner, in the buyers interest, and FAILED.
What a change of tune.
I would never take advice from any of them.
McLaughlin said homes are sitting on the market longer, but buyers are not feeling any pressure to hurry their decisions. ‘But homes that are priced at or just a tad below market value are moving from ‘just listed’ to ’sold’ in about 45 to 60 days,’ she said.”
did anybody catch how many but(t)s were in that??????
conjunction junction what’s your (mal)function
crush
I see how part of the scam with the inflation of the sales price works - a P&S is signed and deed passed for 3 million. The HUD statement should say that seller gets 3 million (less any mortgage payoffs, broker fees, transfer taxes, any seller recording fees). But… unless there is a huge kickback to the buyer I don’t see how it can work. A few thousand dollars (usually for a repair credit) is all that is typically allowed to be shown on a HUD statement - and even then closing attorneys are wary. Seller and buyer either have to have a side arrangement (meaning seller hands buyer a check for the difference outside of the closing - which is illegal) or the closing attorneys and the banks are in on the scam.
It is illegal, Jill.
Usually it involves two sets of closing documents.
One for the lender, and one for the title agency, an agency that is many times involved.
One says the seller gets the money, the other says some 3rd party gets a “fee” for xxx dollars from the proceeds.
Yes. That is how it works. We inflate the price, split the inflated amount, and let the house go into foreclosure. The real estate agent that engaged in the “sale” is a felon. It’s like a “write-off.” No one is really harmed except nameless big companies (I say in jest). This has been rampant, and artifically inflated the “price per square foot” that realtors love to quote. Not to mention we all pay for bank losses in one way or the other.
The story makes no mention of how the appraisal got thru.
If the appraisal were legit, it would have note the previous sales and renovation history. With the lack of any appreciation factor the deal should have been DOA.
So the appraisal cooked the numbers.
No financial risk models for out of the box crooked appraisers.
and tulsa and grandjunction are uruuuuuurp
nat gas areas
Looks like this gay cavalier drank himself to death, with all his new “found” wealth.
“Then a real-estate speculator stepped in, and the house sold for a reported $3 million in 2006. Michael Campbell, a flamboyant real-estate buyer who carried a teacup poodle to house closings, died of an alcohol overdose this year. At the time of his death, he was being pursued by federal and state fraud investigators.”
I don’t knwo anythign about this story. but,
there are stories of people fakign their own deaths to escape will ill gotten gains….
jus sayin’
I wonder what fraud hell is like? (not really)
I suppose it wouldnt be so awful if it was some pot bellied guy in his favorite football jersey carrying a case of Milwaulkees best. Comments like this are exactly why ppl dont want to move to Oklahoma. Enough with the What Would Jesus do BS.
Speaking of inflation,
Has anyone else noted that the premiums for gold coins have shot up the past month? It used to be you could get Krugers for about $5-10 over spot, now dealers are charging $20/oz over spot…and some are charging $30 more for Canadian Maple Leafs.
Woah, and I’m whinning for $3 over spot!
Well, shut my whinning lips!
8)Leigh
Leigh,
Where is your broker? Anybody know of anyone online that will keep prices at or below $10/oz over spot?
Milwaukee
Where do you find out spot price of gold?
http://www.kitco.com/
the smart money on gold was in at 2003. the smart money on gold is most likely leaving and people who are buying it are paying a premium for it. trend chasing is silly.
Just found door hanger on front door from Countrywide advertising CDs at 5.50% - heavy slick multi colored oversized hanger.
That’s waaay over market rate . . . they must be desperate for deposits. Plus if you are reading anything these days, you would guess rates are going down. More short-term solutions for long-term problems. Net interest margin getting squeezed some more - maybe they hope to make it up on volume??
You can say that again. Just checked CD rates at a local financial institution. They’re in the 4.25% range on the 3- and 4-month CDs. Lower on the longer term.
They’ll freeze the rate on their junk loans at, say 3.5%, and pay 5.5% for retail deposits. Do they plan to make up the difference on volume?
By the way, without a lot of fee income banks usually need a spread of 200 basis points to break even. That’s a positive spread between asset yields and liability costs.
Maria is interviewing Henry Paulson on CNBC right now.
“There is no silver bullet.” Paulson says he is the silver bullet.
He wants to save the middle borrower.
“Complexity is the problem.” Supposedly a huge number of resets next year. Hopes to announce a program later this week.
Wants to do something industry wide. Good for the homeowner, industry and economy.
He stutters a lot !
“Fannie and Freddie have an important role to play.” Need to stay well capitalized. Says they need to raise capital. Need reform legislation and an independent regulator. Talking about a temporary increase in loan limits to jumpstart the loan process to allow people to rewrite their loans.
Superfund: will be up and going by year end. Need to keep markets “orderly”.
Paulson is an idiot ! Maria asks him about becoming the CEO of Citigroup. Doesn’t anyone see a conflict of interest here ? Hmmm… put together a package to save the banks and then become the CEO of a bank ? WTF ?
“Paulson says he is the silver bullet.”
Correct. That azz is going to do a lot of damage.
The government had absolutely no responsibility in preventing the bubble or slowing it down, but they do have a huge responsibility for bailing ppl out. WTF!
Countrywide is running ads during all this. Countrywide wants people to refinance to 30 year fixed loans. “Lock in the rates.”
Angilo Mozilo from Countrywide.
“Home retention initiative.” Locking interest rates. Have done 50K so far, will do 70K of them this year. “Bleeding into prime.”
Wants Freddie and Fannie to raise loan limits. “To a relevant amount”. Mentions $825K.
Wants Freddie and Fannie to be able to put loans on the balance sheet. Want Fed to lower rates (discount and overnight)
Says Countrywide has enough capital. Forecasts $1.5 to $1.8T of business in 2008. Versus $3.8T a few years ago. Cannot rule out bankruptcy but says now “strong and viable.”
Sold $130M in stock… Maria puts the screws to him. Been around for 39 years. Stock has gone up 25000%. More than Microsoft or Berkshire Hathaway.
Maria is going on and on with various guests. She is now interviewing the CDO of Freddie Mac. Richard Syron. “No magic bullet.” Spouting the rhetoric that $417K is too low. “As an economist, we should be looking at the ratio of housing prices and median incomes.” WTF ? What would that ratio be ? 6:1 ? 10:1 ?
“National need” for housing help. “Important to start doing something.”
Syron thinks we are at the bottom of the 3rd in a baseball analogy.
Spread in Jumbo market (> 417K) has blow out again.
100K loans will reset each month over the next two years. 2.4 Million resets to come.
Countrywide guy is up next.
“The cause of the housing market downturn is a lack of liquidity.” Apparently if the lending institutions hadn’t run out of money the whole market would be fine.
Watching it too. Everything that these guys suggested involves moving crappy loans (present and future) over to somebody else. If you want to know who that somebody is, go look in the mirror.
SFC. Moving crappy loan paper to the taxpayers . You notice they never talk about making loans to banks to get them through these times to just remain in business after their losses ,its always how to pass the junk paper to someone else ,namely the public .
I’m not in favor of bail-outs and if the lenders are going to do it ,do these bail outs on their own dime ,or take out a big loan with big interest and payyyyyyyyyyyyyyyyyyyyyyy for your folly ,you damn lenders .The public needs to attack this Paulson for his “silver bullet” conflict of interest .
Paulson says 5 year rate freeze ?
http://www.bloomberg.com/apps/news?pid=20601087&sid=aD6EwTYqLIu4&refer=home
Would someone please explain to me what happens to the people that hold the MBS’s behind these mortgages !
Things don’t happen in a vacuum. Paulson announces a bailout plan and the banks correct in Japan. Guess who is on the other side of those MBSes ?
http://www.bloomberg.com/apps/news?pid=20601087&sid=aBe6Jf.SZsEw&refer=home
If this rescue plan goes foward and gets approved I think you will see more of the prime loan folks walking away. I know I would and I`m not kind of person.
Regards,
Lane
RE: “Housing-industry experts say there is plenty of blame to go around. Everyone collected fees, creating what Jonathan Tiemann, a California investment adviser, describes as a pyramid of little golden crumbs.”
Geez, how do you establish a rating agency risk factor for a system based on “pyramids of little golden crumbs”.