This Thing Has Just Barely Started In California
The Press Enterprise reports from California. “Unable or unwilling to sell their homes at declining prices, homeowners in Riverside and San Bernardino counties are converting them to rentals, glutting the market and causing rents to fall for the first time in years, according to Inland property managers. There are so many Inland homes for sale, that even if no more come on the market, it will take more than two years to sell the houses available, according to the California Association of Realtors.”
“John Denver, owner of Perris-based John Denver Realty, said most will take a financial loss as landlords, because the monthly mortgage payments are greater than the rent they can get. Bill Santoro, owner of a rental management company with properties throughout most of Riverside County, said the monthly shortfall averages $500. Denver said he is seeing some landlords taking monthly losses of as much as $1,000.”
“‘It is a good time to be a renter and a lousy time to become a landlord,’ said Denver.”
“Denver said today a $300,000 house purchased with a 7 percent down payment would likely require a monthly mortgage payment of $2,500. The same house, he said, can be rented for $1,300 a month, ‘and the owner has to do the repairs.’”
“Rob Dunn, a commercial construction manager, said that a year ago he noticed construction work was slowing in California and took a job in Denver. He and his wife put up for sale the five-bedroom, 3,600-square-foot house that they had bought four years earlier in the Victoria Grove community of Riverside.”
“He said they initially priced the house at $50,000 below market and between December and June they dropped their asking price from $700,000 to $620,000. There were no takers.”
“‘It wasn’t a matter of what your price was. Nobody was looking,’ Dunn said. Finally, in June, they got their first offer. But it was contingent on the buyers selling their own house in Orange County, which didn’t happen.”
“So 11 months after putting the Riverside house up for sale, the Dunns, who have already moved to Colorado, found tenants to rent their Riverside house for $1,975 a month, or about $500 a month less than the mortgage payment.”
“The Dunns’ real estate agent said a year ago the same house would have leased for $2,100 a month.”
“Dunn said the cost of keeping the Riverside house has put the family in a financial bind. They have bought a much smaller house in Denver, rarely eat out and have no money for golf, skiing or health club memberships.”
“‘We haven’t been to a movie since January,’ he said, and his wife worked over the Thanksgiving holiday to help make ends meet.”
“Kevin O’Neill, director of property management for ReMax All Stars Realty in Riverside, said that office lowered rents by 5 percent to 10 percent in the last 90 days to be more competitive.”
“Rich Merlin, owner of Inland Empire Property Management, which handles rental houses in Riverside and San Bernardino counties, said he has begun to offer a half month of free rent on his listings.”
“He said the rental market typically follows the for-sale market in down cycles. He recalled that during the recession of the mid-1990s landlords similarly were forced to use incentives.”
“The dying landscapes are sprinkled across every neighborhood in Murrieta. Some of the backyards have stagnant pools. Others have shattered windows.”
“‘These foreclosures have created a phenomenon,’ said Mayor Doug McAllister. ‘They always created an issue, but this time it’s worse. We don’t want these dead lawns and stagnant pools creating even bigger problems.’”
“Murrieta is joining a growing list of Inland-area municipalities trying to deal with foreclosed homes by targeting the banks or financial institutions that take over the properties. The city of Riverside passed a blight ordinance last week.”
“‘Banks need to maintain property just like everyone else,’ said Riverside Councilman Frank Schiavone. ‘They can’t just sit vacant and go to hell and let the neighborhood go to hell.’”
“‘The need for new legislation often arises from poor moral choices,’ Murrieta Councilwoman Kelly Bennett said. ‘This is the result of irresponsible homeowners, including lenders, who weren’t paying attention to what their choices can do to a community.’”
“Doug Leeper, Chula Vista code enforcement manager, said this cycle of foreclosures is different from those in the 1990s. He said this time people are moving out before lenders actually foreclose on a home. In the past, authorities usually had to force out the homeowners.”
“Chula Vista has 800 lender-owner properties in foreclosure. Some are marked by dead lawns. Others, often with million-dollar price tags, have stagnant pools and wide-open doors.”
“Leeper said most banks have worked with the city. But some national lenders have balked or even threatened lawsuits. ‘They think we are overstepping our boundaries,’ he said. ‘I just tell them, ‘OK you have your lawyers, we have ours.’”
“A lot of homes had lenders that flipped loans, so the names on the title reports are often outdated.”
“‘We call the lender and they tell us they sold it to another mortgage company,’ he said. ‘You finally reach that company and they tell you they sold it two weeks ago. They aren’t required to record that with the county recorder. Some of these loans have been sold four times.’”
The Bakersfield Californian. “The east Bakersfield streets bordering Martin Luther King Jr. Park are the metro area’s ground zero for subprime lending between 2004 and 2006. In 2006, 40 percent of home loan dollars that originated in Kern carried high interest rates.”
“Homeowner Isabel Shaff lives across the street from an empty, bank-owned home. Her area is already poor and rundown, she said. She worries that more foreclosures could make things worse.”
“‘I know this thing has just barely started,’ Shaff said.”
“At a recent foreclosure-prevention seminar organized by the credit union, Randy Petersen, VP of Kern Schools Federal Credit Union, was struck by sky-high rates some borrowers paid on home mortgages.”
“As prices escalated during the real estate boom, he said, many bought out of fear they might be unable to afford a home later. ‘There were lenders that made it possible to get in with little or nothing down,’ Petersen said. ‘And they charged the points or interest rates commensurate with that risk.’”
The Modesto Bee. “Like a great white shark lurking beyond a sunny, sandy beach, the first installment of this year’s property taxes looms amid the holiday decorating and shopping. The deadline is Dec. 10.”
“The deadline is a nonevent for renters and those homeowners who have an escrow account for the tax. Less than half of the property taxes in the county come from escrow accounts held by mortgage companies, said Stanislaus County Treasurer and Tax Collector Gordon Ford. And those who handle their own tax bills are getting some extra nudging from mortgage holders this year.”
“With the high level of home foreclosures in the past year, lenders are finding themselves stuck with delinquent property tax bills when they repossess a home.”
“‘One of the bigger changes we are seeing is lenders squeezing people to make sure they are current on the property tax,’ Ford said. ‘Mortgage companies don’t want to be caught behind on taxes.’”
“About 6.6 percent of the county’s property owners were delinquent at the end of the last fiscal year, Ford said. That’s higher than it has been in past years, probably because of the high number of home foreclosures, he said.”
“In 2003, at the height of the real estate boom, the delinquency rate was 1.7 percent, according to Ford. It was around 2.5 percent in 2004 and 2005, rose to 3.4 percent in 2006 and nearly doubled for 2007.”
“Stanislaus County doesn’t foreclose on properties for delinquent taxes until they are five years in arrears, Ford said. ‘If they are a year or two late, it doesn’t disturb us,’ he said. ‘We collect with interest later.’ And penalties.”
The San Mateo Daily Journal. “Home prices in San Mateo County have dropped slightly from an average of $975,000 to a little more than $900,000. ‘We’ve seen some slowdown. We are watching [transfer tax] on a monthly basis. If we find it goes down consecutively for a few months then we’ll be concerned,’ said Hossein Golestan, finance director for the city of San Mateo.”
“Foreclosures are up 28 percent and the volume of homes on the market is down 30 to 35 percent, said Jeff Craighead, president of the San Mateo County Association of Realtors. ‘There is still plenty of money out there, you just have to qualify for it,’ Craighead said.”
“Meanwhile, homes are becoming harder to sell.”
“The county Assessor’s Office usually releases preliminary assessed property values at the end of January. Any downward adjustment in assessed property values could signal to finance directors that it is time to tighten the city’s budget. ‘It’s wait-and-see,’ said Redwood City Finance Director Brian Ponty ‘We’re not seeing the robust increases we’ve seen in the past.’.”
The County Sun. “The Inland Empire is ground zero for the housing meltdown. But you’d never know it by looking at a new federal program that seems to slight California homeowners.”
“Figures provided by the Federal Housing Administration show that California homeowners make up only 3 percent of total loans offered nationwide under a new bailout program designed to help them avoid foreclosures.”
“Inland Empire borrowers make up just under 1 percent, in an area that reports the third-biggest number of foreclosures in the nation. Experts say California’s higher- than-average loan amounts confound the issue.”
“‘We have people calling, but when you look at what their real income is and what their debts are, it doesn’t pencil out,’ said Will Herring, a local mortgage broker and board member of the California Association of Mortgage Brokers, Inland Empire Chapter. ‘They don’t conform to FHA guidelines.’”
“So far, 290 subprime borrowers - 13 of them in default - throughout San Bernardino, Riverside and Orange counties have secured refinancing through the program.”
“Herring said one of the program’s guidelines recommends borrowers have a debt-to-income ratio no higher than 43 percent, which is shutting the door on several consumers. Most inquiries he receives are by homeowners who originally stated they had a 50 or 60 percent debt-to-income ratio when they applied for their subprime mortgages.”
“Jerry Mayer, program support director at the FHA’s field office in Santa Ana, said that number couldn’t be broken down by county because of computer glitches. ‘If I had to make an educated guess, then I’d say that 80 percent are in the Inland Empire,’ he said.”
The Daily Breeze. “Its figurative hat in hand, California went to the feds hoping for some help in coping with the worsening housing market.”
“And Tuesday, the feds brushed that request aside. James B. Lockhart, director of the Office of Federal Housing Enterprise Oversight, said the conforming loan limit for the continental U.S. will remain at $417,000 in 2008 - the level it’s been since 2006.”
“Despite falling prices, the Realtors association reported that just 24 percent of households could afford to buy an entry-level home in California during the third quarter, unchanged from a year ago.”
“In California, an ‘entry-level’ home costs $482,910, the association said. A family would need an annual income of $99,590 to buy it with 10 percent down, and an adjustable interest rate loan of 6.56 percent.”
“The High Desert, which includes the Antelope Valley and is being hit hard by foreclosure, is also the most affordable area in the state. Here, 48 percent of households could afford the entry level house, 10 percentage points better than a year ago.”
“And in Los Angeles County, where foreclosures are spiking but prices remain high, just 20 percent of households could afford an entry-level home.”
“‘It’s definitely not going to help our market,’ said Leslie Appleton-Young, chief economist at the California Association of Realtors. ‘We’ve been pushing for a long time to get California into the high-cost category. It would be very helpful.’, referring to higher conforming loan limits.”
Crisp mansion repossesed:
http://www.bakersfield.com/hourly_news/story/300936.html
Be sure to watch the video.
Did you pick that handle (crispy&cole) before they got in trouble? I’ve seen you on here for a loooong time!!!
Yes.
I have been on here for so long I am like a bad house guest.
What’s with the 6,666 square footage?
The number of the beast. And then some.
crispy&cole has been predicting this moment for a long time. It’s OK to gloat loudly.
Congress must act in housing crisis
http://www.mercurynews.com/opinion/ci_7622055
This area has some of the most expensive housing in the nation and we need a handout ?
From the article:
“A few key guidelines should be followed. Mortgage payments should not be allowed to increase by more than 7.5 percent a year, and mortgage interest rates on subprime loans should be reset no more than 1 percent higher than the current prime mortgage rate. If a homeowner’s mortgage is higher than the value of his or her home, the difference should be forgiven and the loss passed on to the investor who owns the loan. Moreover, all prepayment and late charges on mortgages should be forgiven.”
Well, what the hey. If your aim is to destroy banking, lending, savings, and the intelligent use of money then by all means shoot for the moon, SJMN. The alternative is just not compassionate enough.
If you want to have rate and payment increases limited for future loans via regulation, then go for it. After the fact, this is just silly.
If a house went up in value, should investors who purchased the loan be intitled to the appreciation gains?
It’s easy for me to be hard-nosed, since (as I post almost daily) none of my borrowers is in default. My attitude is, it was up to me to do due diligence and not lend money that was unlikely to be repaid. Just now I may very well have some borrowers who might be underwater in a practical sense: I am not sure they would be able to clear their debt by selling. However they are NOT selling, i.e., not trying to sell, and their debt is amortizing continuously. Of course I wasn’t dumb enough to write any time-bomb notes. Prepayment charges are illegal in AZ, although I know various lenders find ways to label the prepayment penalty as something else and charge it anyway. I will be delighted w/ any prepayments I may receive. Just pump the money into foreign currency.
Prepayment charges are illegal in AZ, although I know various lenders find ways to label the prepayment penalty as something else and charge it anyway.
Sure, I believe it’s called “points,” isn’t it? The effect is that any acceleration in payments ends up with a higher effective interest rate.
“Of course I wasn’t dumb enough to write any time-bomb notes.”
No! One of the good ones…worth your weight in gold!
Equity is necessity. Principled gentleman.
Best,
Leigh
Yeah - this seems real F*ing fair. Why not just write off the entire loan while they’re at it. If that’s the way it’s going to be, I want my fixed rate lowered and get that cabana boy to serve me my pina colada while we’re at it.
Translation: we should validate and reward fools and gamblers (if there are so many of them that we need their votes in the next election).
This is all a slick scam to have the taxpayers pay the price for fools and con-men. The guy writing this article knows it too.
“Second, Congress should appoint a Mortgage Refinance Board that includes the secretary of Treasury, the chairman of Fed and a newly appointed mortgage czar.”
Oh sure, more foreign agents!
I guess I’m a moron. In a declining value market, I dont see the benefit for renting at a loss, and then selling for 10-50% cheaper in a few years. What am I missing?
I would find the current market (not the peak price, which realtors often confuse as FMV) and undercut it 5% to sell this month, but I’m just an over educated economist.
What are you missing ? Stupid Pride and The hope and outright need that prices will skyrocket again thanks to the continuing claims from the NAR that real estate is always a great investment. People still think this is the road to riches as they “invest” their way to poverty.
Some of these folks can bleed xx /per month for a long time, but they can’t cut a check for the amount they’re already under water.
The pain they endure, and the stories they tell, well have at least one positive outcome. It should be awhile before part-time investors enter the market again. Given this mindset, the stricter lending standards and the recession we are about to endure, they never have a hope that prices will increase before they bleed to death.
I know someone who has been financing the monthly payment on 3 homes using a credit card. I don’t suppose you can charge the deficiency when you sell your home at a loss, though
Yeah and this person will be able to get the freeze because the high credit card debt means they can’t make the payment. Deficiency - makes no difference no IRS penalty, banks probably won’t be allowed to go after your friend - it’s all good.
The saddest part of this fiasco is the false hope presented to the mopes. Many that were planning on bailing after the holidays will stay for another few months and go through the anguish anew.
Ha Sir Hoz!
Hope floats?
Good to see you, my friend.
Simple simon on math (not really), purchase a dwelling and rent it out for a loss of income?
And…er…live in car, because the said FB wants to maintain the status quo?
Sigh. Do the math people! (er…not you).
Ya just can’t make this stuff up!
Are people really this stupid—OMG yes?!
Flip this off already! Please!
Rant off,
Best,
Leigh
Alas MLEC goes down the tubes in flames and Mr. Henry Paulson is not bringing in the “Silver Bullets”. Citigroup sells its NYC headquarters to raise additional funds to survive (~1.6B - gotta pay them shareholders their dividend). $110B in additional CDOs lowered ratings - whooops. Beer is going up as fast as chocolate, my favorite food groups.
People are not stupid, they have misplaced trust in the government. The ‘butter and guns’ economy is broke.
When cars and trucks start improving the gas mileage, how much are road use taxes going to increase?
Make up lost revenue now, get your city to finance mortgage debt to the poor home owners that were victims of the heartless banks. Tax Free municipal mortgages coming your way soon.
All whiners welcome.
The cheese is binding. The cheese will sweat with temperature swings and the rind is destroyed and becomes unclean.
Lawd! Sir Hoz! You’re good! (Excellent)!
“Alas MLEC goes down the tubes in flames and Mr. Henry Paulson is not bringing in the “Silver Bullets”.
I believe our cow bet extends out…until…Jan 30, 08?
Hope floats darlin’!
“When cars and trucks start improving the gas mileage, how much are road use taxes going to increase? ”
Come here, my gentleman, rest your head upon my shoulders. (I feel a song coming on…).
The road taxes will increase…er…decrease…as us devils gun the motor through the tolls and dare them to chase us!
“Tax Free municipal mortgages coming your way soon.”
Yeah, that will happen! Lip service, my good Sir.
Ahem…not enough time, money, capable ones to acomplish said task. Bonds without a purpose–where do I sign?! (Ya know I’m pulling your toes!)
Sir, can’t wait to meet you.
~Curtsey~
Leigh
oops…forgot the…”The cheese is binding. The cheese will sweat with temperature swings and the rind is destroyed and becomes unclean.”
Dang, it’s hard to concentrate with “Sitting in the back seat, kissing and hugging on Fred” playing in the backround…
Rhind, sweat, unclean–where were we?
Oh, favorite food groups.
Hubby, love him so! Chocoholic!
Weeeeeeeeeeeeee!
Leigh
“Beer is going up as fast as chocolate, my favorite food groups.”
You’re in luck. Samuel Adams is selling Chocolate Bock:
http://www.realbeer.com/news/articles/news-002115.php
By staying a few months (and maybe a few more months after that,… and a few more after that…) they will be supplying much needed liquidity to the market.
It is vital that the markets remain liquid so assets can be repriced in an orderly manner.
Perfect Hoz. As usual.
‘I just tell them, ‘OK you have your lawyers, we have ours.’
Uh Huh, and after 6-8 months of lawyers sending registered letters to each other still nothing will have been done.
Good. These 6-8 months of delay will slow the decline and help keep it from turning into a crash.
It delays the property being taken care of, not the crash.
“In California, an ‘entry-level’ home costs $482,910, the association said. A family would need an annual income of $99,590 to buy it with 10 percent down, and an adjustable interest rate loan of 6.56 percent.”
I’d guess a tiny percentage of Californians would even qualify for a loan, the likes of that…
“Despite falling prices, the Realtors association reported that just 24 percent of households could afford to buy an entry-level home in California during the third quarter, unchanged from a year ago.”
This is such a moronic figure. The percentage of California households with $48,000 in the bank is so low as to be laughable. My guess is that without the toxic loans of 2003-2006 vintage, less than 10% COULD buy, and far less than that would CONSIDER buying.
“A family would need an annual income of $99,590 ..with 10 percent down..adjustable interest rate loan of 6.56 percent.”
Shouldn’t affordability be calculated with a FIXED rate loan?
Come to think of it, don’t I remember that the CAR been “adjusting” the definition of “affordability” in recent years?
There’s no way 5x income was considered affordable 10 years ago.
Yes, I remembered correctly about the change in the affordability index. (Scroll down)
(I guess when I post late in the day I can expect to be redundant, with this bunch! )
I don’t knowwhat income debt ratio the C(crazy)A(asshats)R(realtorwhores) is using but I sure don’t come up with a $99,950 income!
10% down = $48,300
Mortgage at 30 year fixed 6.28% (and a jumbo is going to be closer to 8%) = $2,684
Add another 1% of price for taxes a year ($401/mo) and $50/$100000 ofvalue for insurance every month ($241/mo) = $642
Total for mortgage, taxes and insurance= $3326
With a $99,950 income that is 39.93% of gross going to the house! And then the credit card bills, and car payments and ….total debt/income ratio would have to be nearly 50%!
At 28% of gross, the necessary income is $142,542
That is 1,535,577 households in CA or 12.63% of households.
At 33% of gross, the necessary income is $120,945
That is 2,283,945 households in CA or 18.79% of households.
58.45% of housing in CA is owner-occupied. What happenned to the other 38.66 - 45.82% of those who bought in the past butcould not afford even a “starter” home now.
“Starter” home - a stupid expression. Sounds like a bike with training wheels or that everyone in life is supposed to want to, and actually do, move up to a 10,000 sq ft McMansion.
Don’t bother to restore normal housing prices, its all about voodoo financing and instant gratification.
“just 24 percent of households could afford to buy an entry-level home in California”
Means 24% of the top income people (including all the millionaires) can afford an entry level home.
OK I make just about that, have more then the 10% and would never in eighty bagillion years consider a loan for 480k. But then I’d never consider an adjustable either. The terms on their ARM sample must be really egregious.
Gwynster, you are not really my friend Bill Gehring are you? Our idea of “a big number” has always started with an 8, and I think “bajillion” is one of our favorite denominations, perhaps alternatively spelled “bagillion.”
LOL no it was from a national lender commerical where a woman is calling for rates and she keeps getting kids answering the phone. It had a lot of airtime out here and really seemed to sum up the childish lack of restraint in the industry for me.
If the Governator wants to do something postive for the people of Kalifornia, he should outlaw ARMs to everyday people. It should only be available to financially savvy people, say a certain amount of liquid cash in the bank or some such measure.
Then I want the CAR to go back to calculating affordability in California with the only financing available, 30 or 40 year loans. Prices will get right in line with what the workers in California can actually pay and businesses could actually attract more qualified employees from around the nation.
Does the math even work out? I wonder what debt to income they are using for this estimate. I’m thinking that with 99k under the classic standards, one would qualify for about 350k.
“I’m thinking that with 99k under the classic standards, one would qualify for about 350k.”
Try $275K to $300K. Seriously, when I bought in 1996, the banks really didn’t want you buying at more than 3x gross income. AND you had to have a down payment, cash reserves, no credit card debt, etc.
350K is less than 3x gross if you have 20% down payment with 99K income.
“350K is less than 3x gross if you have 20% down payment with 99K income.”
Traditional standards were based on the purchase price of the home, not the amount you financed…because banks considered the fact that a home costs a whole lot more than just the mortgage payment….it’s also property taxes and insurance and utilities and repairs.
“An ‘entry-level’ home costs $482,910, the association said. A family would need an annual income of $99,590 to buy it with 10 percent down, and an adjustable interest rate loan of 6.56 percent.”
Bingo. This is why prices need to be allowed to fall, and fall big. The example above is buying at 5x gross income, which is a stretch, as anyone who has owned a home can tell you.
We were making more than that when we took on a $245,000 mortgage in 2003. I had to wear Depends for the first two f—ing weeks because I couldn’t believe what we had done.
Disclosure: I was not forced or cajoled by my wife but I was still scared witless (rhymes with _______ ).
Silly!
We had 25% down in ‘93 on about 130ish? (pool, maybe 140ish?)
Something like that. When I original typed it on the blog, we were setting up our office, and the paperwork was handy. It’s across the room now, and I’m not getting up off my lazy buttocks to look it up! Har!
Anywho, ah yes, depends!
Scared me witless too! Big monies! Thank heavens, strong savings, and a good decision (as in HOME) made it easy to sleep at night. (Always pay bills ontime!)
Thanks for the visual, you depends leaking one!
Belly laughter,
Leigh
Amen. Prices will drop 50 % more before “real” buyers start returning. It’s just that simple. Wishing and wanting things the way they “use” too be are over. Reality has spoken!
And why this family choose an adjustable rate mortgage?
“A family would need an annual income of $99,590 to buy it with 10 percent down, and an adjustable interest rate loan of 6.56 percent.”
aladinsane,
Perhaps this bit of history will help shed some light on the situation: CAR’s new “affordability metric” is a complete fabrication –cooked up when the old one they had been using >20 years was in real danger of going to single digits in 2006.
Read about it here: Lies, Damned Lies, and the C.A.R.
That’s probably if they have no other debt - like you’ll find so many that don’t have student loans, car payments, credit cards. But on the other hand - why not take an adjustable rate - someone will come along and freeze the rate anyway.
Governator: “If I can come to this vounderfull country with nozzings and make more than your tiny 99,590 in just two days……why can’t you lazy Calyfornyahoos do the same??”
Oh shut up governator!
“‘Banks need to maintain property just like everyone else,’ said Riverside Councilman Frank Schiavone. ‘They can’t just sit vacant and go to hell and let the neighborhood go to hell.’”
Did the banks let their REO decay and blight neighborhoods in past RE busts? I thought their best strategy was to unload REO as quickly as possible, but apparently it’s different this time.
Back east when they weren’t able to sell properties they had to “Winterize” the properties or suffer burst pipes and water damage during winter. Of course this was way back when banks knew where their properties were.
I guess with 17m+ vacant homes, it gets hard to keep track of all those various locations…
How many of us haven’t misplaced our house at one time or another? There was this time in 1998 when I was at a bachelor’s party and we were doing shots of tequila. Oh man, I woke up the next morning stripped naked, painted blue and didn’t have a clue where my house was. So, you see, the lender’s have an excuse for not knowing where their properties are. Maybe they just had too much tequila.
Koolaid NYCityboy … they been drinking their own recipe of Kooooolaid.
You guys are aware that the loan originator sells off the loan and it can be resold even after that right ? My own dwelling has had three places servicing it in the past 7 years.
What ever happened to the legal decision re: ownership and chain of title when judge wouldn’t let a lender or lenders foreclose back east ???
My wife was talking to a friend. An REO across the street burst a pipe in the upper story (2 story with basement). Now the whole house is moldy. And it’s only November and it hasn’t gotten all that cold yet (teens).
Well, the banks are not going to give them away!
haha
Generally, the neighborhood doesn’t “go to hell” without help. Sure property requires some maintenance, but “going to hell” usually has help from vandals, crack heads and other misfits. Any neighborhood with a lot of these folks is already hell and the foreclosures are just another symptom.
‘Sure property requires some maintenance, but “going to hell” usually has help from vandals, crack heads and other misfits.’
Banks holding properties vacant hoping for their wishing prices to return would also appear to be a problem. Vacant housing is a magnet for all kinds of vermin, including those you mentioned.
And owner occupants feel an incentive to maintain the value of their property which some banks apparently do not share. Don’t they realize the value of a property declines quickly when it is not properly maintained?
“Don’t they realize the value of a property declines quickly when it is not properly maintained?”
The problem is you are dealing with a hide bound bureaucracy that in large is non local and doesn’t really care that much unless of course they are somehow rewarded beyond a basic paycheck to preserve the house and get top dollar for it. You’re not dealing with individuals here and you’re certainly not dealing with a small case load by any means.
You seem to have described a good case for fire sale auctions. Why would a lending institution want to ride a plane in a tailspin all the way to the hard ground below? Makes no sense to me…
If they are located on Martin Luther King Blvd, you know there is some violence going down!
respect to Chris Rock
“He said they initially priced the house at $50,000 below market and between December and June they dropped their asking price from $700,000 to $620,000. There were no takers.”
Ummm. It is an oxymoron to say the house was priced below market and there were no takers. It scares me that ppl with so little knowledge about finance or real estate were buying $700k+ properties.
“It scares me that ppl with so little knowledge about finance or real estate were buying $700k+ properties.”
It scares me that lenders were handing ppl with so little knowledge about finance or real estate the money to buy $700k+ properties.
“It scares me that lenders were handing … the money to buy $700k+ properties.”
The lenders were not at risk from the loan. The lenders sliced and diced and sold this toxic sludge to the world. The lenders have come to insolvency because they believed their own lies and bought the worst of the mess because of the 0.5% higher yield. The financial investment divisions never appeared to talk to the MBS sales staff. (Fortune: The reluctant chairman tells Fortune’s Carol Loomis why Citi didn’t see the subprime mess coming.)
“The lenders were not at risk from the loan. The lenders sliced and diced and sold this toxic sludge to the world.”
Exactly, it was a SCAM. This is INTENTIONAL.
it just scares me! everything!
“So 11 months after putting the Riverside house up for sale, the Dunns, who have already moved to Colorado, found tenants to rent their Riverside house for $1,975 a month, or about $500 a month less than the mortgage payment.”
OK, his mortgage payment was about $2475, which means that his mortgage was under $400K (400K @6.5%=2500+).
Remember, he’d had the house for 4 years, so he bought it around 2003 when prices were a lot lower.
He would have been just fine if he’d dumped the house a year ago. Instead, he got greedy… he wouldn’t give it away, you know.
The homes in Victoria grove sold new in 2002/2003 for mid 300’s. I bet he’s feeling sad he could not double his money in 4 years. Last year nearly every one was listing from high 500s to low 700s in there. He’s gonna flip his wig when he see’s what Victoria Grove homes are selling for now. I noticed quite a few in the tract listed UNDER $400K! Like this one, Most are between 400 and 500k now.
http://www.redfin.com/stingray/do/printable-listing?listing-id=867702
Holy Hollywood Hills Batman!
Cheaper to buy in Kalee?
Dayaaaaaaaaaam! The sky IS falling Chicken Little!
“The Inland Empire is ground zero for the housing meltdown.”
Exactly how many ground zeros does the housing meltdown have? I lost count long ago.
Ground Zero
Ground Zero Zero
The Roulette Wheel is spinning…
I think the Inland Empire has gone plaid!
ref. spaceballs, the movie…….
PB, I still like PB County (FL) for “ground zero,” and the IE for an aftershock locus.
I kinda like the idea of Disney World as ground zero just cuz we are in a Goldilocks economy. I love fairy tales.
“Inland Empire borrowers make up just under 1 percent, in an area that reports the third-biggest number of foreclosures in the nation. Experts say California’s higher- than-average loan amounts confound the issue.”
“‘We have people calling, but when you look at what their real income is and what their debts are, it doesn’t pencil out….
- Please don’t get tired of reading about the Inland Empire as it will soon lead the entire nation in foreclosures. It is also ground zero for illegals getting the American Dream home for nada.
“‘We have people calling, but when you look at what their real income is and what their debts are, it doesn’t pencil out,’ said Will Herring, a local mortgage broker and board member of the California Association of Mortgage Brokers, Inland Empire Chapter. ‘They don’t conform to FHA guidelines.’”
“Herring said one of the program’s guidelines recommends borrowers have a debt-to-income ratio no higher than 43 percent, which is shutting the door on several consumers. Most inquiries he receives are by homeowners who originally stated they had a 50 or 60 percent debt-to-income ratio when they applied for their subprime mortgages.”
Ummmm, to all you bail-out worriers sweatin’ it out a couple of months ago about the FHA changes, I hate to say I told you so, but here it goes anyway - I told you so.
err…me too!
Told ya so. Dang, that sounds so pretentious…but, I did…
Told ya so. Ya just can’t make this stuff up!
Leigh
There’s an FHA program that always D:I of 43%?!? You’ve got to be kidding me.
35% should be the upper limit. And even that’s pushing the envelop on a financially irresponsible borrower.
i can’t imagine living with a D:I of 43%. i find it shocking that some people are above this.
my D:I ratio is 20% if you count rent as debt. Otherwise, it is about 8% since I have a nice satellite TV package and Student Loans.
Here it come Bay Area - guess you’re not immune from the flu afterall!
Although I’m personally watching San Pedro down here in the South Bay…I won’t be satisfied until Bay Area gets a big hurt put on it. Those self-righteous snots need to be knocked down a peg.
“‘The need for new legislation often arises from poor moral choices,’ Murrieta Councilwoman Kelly Bennett said. ‘This is the result of irresponsible homeowners, including lenders, who weren’t paying attention to what their choices can do to a community.’”
Why, for cryin’ out loud? What about the responsible ones? The ones who made the better choice and thought about the consequences of buying a house they couldn’t ever afford. Where’s the legislation for “good” moral choice? Per usual, the government wants to jump in this backasswards, a day late, and a dollar short.
Didn’t Hank Paulson say he’s the “silver bullet”? Good Lord, these gov’t asshats are really over the top.
The wheels are coming off. Fast.
When asked about this the president stated “Mr. Paulson said ‘This is no silver bullet, its a lite.’ I assumed he was referring to Coor’s beer raising prices by 15% on Coor’s Silver Bullet and recommending Lite which is holding prices for another month”, said Mr. Bush decantingly.
When this administration speaks, all I hear is “BOHICA”.
I thought he said he would ‘take a bullet’
Are we talking about Larry Craig here?
Bohica? meaning?
help.
Military term: Bend Over Here It Comes Again
“Foreclosure rescue: No help for you
…The plan would be most geared toward those who can afford the mortgage now but won’t be able to after the adjustment.
The other three groups are largely left out: Borrowers who can afford an adjustment; those who are already behind on their payments; and those who can refinance into a fixed-rate loan …
…The group that will be helped represents just a narrow slice of the subprime borrowers in trouble … ”
http://money.cnn.com/2007/12/03/real_estate/left_out.moneymag/index.htm?postversion=2007120318
Sorry Paulie ,the werewolf was wearing a bullet proof vest .
What about council members like Kelly Bennett who approve endless crappy developments without any regard to the impact those choices have on their communities?
“Despite falling prices, the Realtors association reported that just 24 percent of households could afford to buy an entry-level home in California during the third quarter, unchanged from a year ago.”
This affordability calculation is a statistical lie if there ever was one. It computes the share of *all* Californians who can “afford” an entry-level home, not just the share of young families with “entry-level” incomes. And it ignores the very high cost of catching a falling knife.
“In California, an ‘entry-level’ home costs $482,910, the association said. A family would need an annual income of $99,590 to buy it with 10 percent down, and an adjustable interest rate loan of 6.56 percent.”
How many “new entrants” to the housing market have family incomes of $99,590? Not to mention a downpayment of $48,291 available?
…
“‘It’s definitely not going to help our market,’ said Leslie Appleton-Young, chief economist at the California Association of Realtors. ‘We’ve been pushing for a long time to get California into the high-cost category. It would be very helpful.’, referring to higher conforming loan limits.”
Why does she think it would be helpful to get more California households into homes they cannot afford? Isn’t the foreclosure crisis bad enough for her just yet?
Sing it Bear!
CAR also altered their affordability methodology when the numbers got too low for their liking. And as you point out, the real issue here is that house prices are too darned high in relation to income and rents. Of course, CAR dare not say that, which is why their pronouncements are essentially useless.
It’s worse than that, Bear. CAR’s new “affordability metric” is a complete fabrication –cooked up when the old one they had been using >20 years was in real danger of going to single digits in 2006.
Read about it here: Lies, Damned Lies, and the C.A.R.
“affordability metric”
More like a fantasy metric, as it describes a class of buyers who are largely absent from the CA landscape — those who can actually afford to make a 10 percent down payment.
My question is: when you see the CAR or Datquick comparing 2007 affordability to 1989 affordability, are they using the 20% down, fixed rate guideline of 1989 vs. the new 10% adj guideline now being used; this would really be a misrepresentation of where things are today in terms of affordability. I wouldn’t put it past them of course.
Yeah. I think about 23 of those 24% of households that can “afford the entry-level home” already have one. So that would suggest maybe 1-2% of those who don’t own a home can afford an entry level home.
realtors are one of the lowest grades of lying filth on the planet. Serious scum from the bottom of a settling pond.
I wonder if someone dropped a joshua tree at CAR headquaters if they would “get it”.
What that statistic also fails to capture is that those who CAN afford that entry-level price don’t live anywhere near houses priced that low. Your $100k earners live in the Bay Area and SoCal, not in Bakersfield. If they looked at how many can afford to buy an “entry-level” house within commuting distance of heir jobs, I bet the number is far, far, far lower.
” … the monthly shortfall averages $500.”
Ah, it is the efficient parasite that keeps its host alive.
A $500 per month bleed is should not be fatal to one’s finances, just a bit painful. This slow bleed will keep the FB host alive while he feeds his liquidity into the System and helps keep the System alive.
“John Denver, owner of Perris-based John Denver Realty, said most will take a financial loss as landlords, because the monthly mortgage payments are greater than the rent they can get.
But then the landlords are part of the ownership society and building up equity, while the renters are throwing their money away!
If I were an FB in the IE all you would hear from me is, “I”m a leavin’ on a jet plane. Don’t know if I’ll be back again.”
The IE is one big sprawling mess.
Listen closely kids..I was a child …Ontario was vineyards, Riverside was Orange orchards, Temecula was still a teensy town we drove to on Sunday after church stopping in the middle of the road to look at rattlers/diamondbacks. and no other cars driving by, Rancho California had just been named and a big sign on the 395 fwy was put up to Introduce Rancho California. Went to school with the Domenigonis’, if you know Domenigoni pass and GRANDMA Domenigoni sold to CA -now you see that damn DAM.
Hemet was a tiny hick town with a good football team year after year, and lots of Citrus ranches, dairy farms, potato farms, thoroghbred horse farms. Banning and Beaumont were a spot in the road despite their history.
Grew up with some of the biggest Indian names today.
Palm Springs was closed down for the summer, period.
Ice rink in town. One movie theatre. Easter break.. yahooo.
Corona was just a cow town and the trip to OC was a long long trip past nothing. Now it is just a long long trip sitting on the fwy.
What the heck happened to this beautiful area?
60 Second Song for a Bank
John Denver
Oh I love the changing seasons
Green and growing all around
Smiling faces laughing children
Making such a joyful sound
In my dreams I see tomorrow
Time and children of my own
Someone who will stand beside me
Helping me to make ourselves a home
If your eyes can see tomorrow
Though it might seem far away
If you have some dreams to build on
May we help you today?
Pretty good blog about drought related news in California…
http://aquafornia.com/
I don’t know about y’all, but these articles that Ben keeps harvesting every day seem to be getting gloomier - not just from our jaded HBB perspective, but from the real life, in your face, Joe Sixpack perspective. People are hurting more and more, yet the real crunch has not even begun yet. How bad could all of this really get? I’m starting to think REAL BAD, as in nothing is going to be same again. Like they say about nuclear war - “the survivors will envy the dead”. We joke amongst ourselves about the awesome deals we are waiting to scoop up - and I know they are coming - but with those deals might come the end of the American economy as we know it.
Yes. This f’k up has become too big to avoid one of, if not the, biggest economic downturns of our lifetime. Even many of us who knew what was coming could not stop it, and will likely lose their jobs in the process. Hopefully, we will have the cash reserves to carry through the hard times. I have lots of wall street contacts and can assure you we have not seen anything yet. The problems are much bigger than the media or general public can comprehend. Those with inside information are the gloomiest. Soft landing? WTF? Destroy and rebuild is the only possible outcome.
I too have noted that November was the first month in which the general public realized they were screwed and were in trouble. They just dont realize how much yet.
The US has never seen real estate drops in excess of 40% and its effects will be devasting and widespread. God help us all.
Even worse problem: The government keeps trying to put band-aids on the problem, rather than face the consequences and begin preparing the country for it.
Even Bernanke got up in front of Congress last month and mentioned his hope that housing will stablize.
These guys are going to lead us into the great depression. It’s no joke anymore…
Is that you Jim Kunstler?
My husband doesn’t believe me when I share info discussed on HBB; he thinks I’ve been touched. But I’ve been watching/reading the MSM carefully and you guys/gals have been spot on about things you’ve predicted two weeks, two months, two years ago. It’s like a super-computer of curious minds! Because of all that’s going down I have a sum of money parked in a savings account because I can’t decide where to put it. Someone advised a money market but I’m not so sure. Any suggestions? Needs to be somewhat liquid and not prone to being frozen by runs on the bank.
Having cash in hand (safe), strengthens your financial health.
Take out X cash from the bank, ATM, every week/month.
Only one way, of many, to shore up a semi-safe walk through uncertainty.
Best,
Leigh
If it is a little money, cash.
If a lot, US Treasury bills.
That’s assuming you aren’t worried about a dollar collapse too.
“I have lots of wall street contacts and can assure you we have not seen anything yet. The problems are much bigger than the media or general public can comprehend. Those with inside information are the gloomiest.”
Ditto. I know a very highly placed trading manager in Livermore, CA, and he says the leverage is beyond comprehension.
I say again, look for 7-8 quarters of negative economic growth. The New Depression.
In 2015 the revised numbers for 2009-2010 will show your negative growth.
Considering that mortgage is but one part of the credit bubble, it could get ugly indeed.
Here’s a positive thought - the sharpest US recession took place in 1921 after the Fed raised the rates it had lowered for WWI.
That recession lasted about 36 months … because Harding did nothing and let the market adjust itself. The “roaring 20’s” - also fueld by low credit rates - followed.
The problem with the Great Depression of 1929/30 - 1942 was that both Hoovers and, in a much worse matter, FDR tried to “do something”. That’s what took the whole decade and then some.
As we can see from Paulson’s action, everyone in DC is in a “doing something” mode.
And that’s definitely not good news.
When I read your post, Dan, I thought, “What the H does he mean ‘both’ Hoovers?” Herb was Prez of course, but I had the mistaken impression that John Edgar did not join the govt until my own times. Wrong (I was), J Edgar started as FBI chief in 1924. Jeez, wow. But I still don’t get what he tried to “do” about the Depression. If those are the “both” Hoovers you meant.
Maybe the Hoover vaccuum cleaner tried to clean up the mess
I believe he was refering to both presidents; Hoover and Roosevelt.
Oh .. hehe .. typo .. should read “both Hoover and FDR” …
Herbert raised taxes (top rate from 30% to 60%, IIRC) when lowering them would have done far more good. But he was too occupied with the burgeoning federal deficits and thought that a humongous tax hike would be a “responsible” thing to do.
Simultaneously, Smoot-Hawley was passed by Congress and signed by HH and that set off a trade war.
The Fed kept pushing the rate down but it didn’t help because so many were already too leveraged.
FDR’s misdeeds are too numerous to account. The economy rebounded a couple of times, most notably when New Deal was initially declared unconstitutional but, when eventually it was put into law, the economy took another dive which lasted until the US entry into WWII.
“The problem with the Great Depression of 1929/30 - 1942 was that both Hoovers and, in a much worse matter, FDR tried to “do something”. That’s what took the whole decade and then some.”
This is partially correct, but problems just don’t happen because of politicians. the imbalances had and excesses had built up and a depression or recession was most likely going to happen. the government didn’t help, but the economy was ripe for a hard fall.
If by “REAL BAD” you mean we won’t all be driving around leased luxury SUVs and sitting on bland new furniture while a maid scrubs our granite countertops, well that’s fine by me. When I think of “real” I think of people living within their means, keeping furniture for years if not decades, driving used cars and enjoying life rather than stressing out to repay debt they could never in a million years repay.
Gosh, what’s that sound? It could be the smugness draining out of LA…Naa, not yet, must have just been some gas escaping from Playa Vista.
LA is still as smug as ever. This is gonna be something when it really hits home here. It’s still just a simmering undercurrent though ‘cuz, ya know… it’s *different* here… :-/
OMG - I remember some smug friend-of-a-friend who lives in a crappy little 2 br in Mar Vista was telling me how she “couldn’t believe” her house was worth more than $900k. I didn’t say a thing - I hope she HELOCed double what she owes on the place.
“Despite falling prices, the Realtors association reported that just 24 percent of households could afford to buy an entry-level home in California during the third quarter, unchanged from a year ago.”
So 24% of households can actually afford a starter home. Of that 24%, 12% probably already own and say 10% cannot afford the loan b/c they don’t have savings or bad credit. That leaves…uh…2% of California households that can *really* afford a starter home.
Well…there’s always EUROPEAN households! Seriously - some serious house price falling has gotta happen.
LOL
That lowers CPI (rents are included but not house prices).
75 bps rate cut. Inflation is controlled.
Seatme, I’m tempted to argue that of the 24%, probably 18% already own and say 5.8% don’t have savings, or they have bad credit. Leaving 0.2% that can “really” afford a starter home.
You were on the right track, anyway. Does anyone actually know whether the CA “homeownership” rate is higher or lower than the national 68%?
Per the US Census Bureau, the homeownership rate in California in 2006 was 60.2% (and 68.8% for the U.S.).
http://tinyurl.com/2xdttc
thx!
“Well…there’s always EUROPEAN households!”
Europeans better start &$%#ing because we need more and more of them if they are to snatch up all of this real estate. We better start sending them large shipments of Barry White CDs and “Girls Gone Wild” DVDs.
“Kevin O’Neill, director of property management for ReMax All Stars Realty in Riverside, said that office lowered rents by 5 percent to 10 percent in the last 90 days to be more competitive.”
Ben has been hammering home this point today: Rental vacancies up, rents are heading down…
So much for “buy now or face rising rents.”
“buy now or face rising rents.”
I have to assume this really is local, in Sacramento rents are rising as people find a new place to live before they declare BK. Same for Phoenix area but to lesser degree.
Mo, are you sure the PHX phenomenon is about BK? as opposed to a seasonal phenom?
I don’t rent for less than 1 year lease and rents are firming up after 3 years of intense competition from accidental landlords.
rents may be rising but are still what % of mortgage payments on the current appraised value of a house?
Mo,
I’m not sure they are rising around Sac. I see lots of wishing on CL and watch these people adjust their prices down as the vacancies rack up. The contraction was really slow and then something happened in Sept 07 and everyone got really nervous.
I’m watching MFRs hitting the MLS in Davis at a steady clip. This place used to be a sacred cash cow for Landies. Why? because vacancy rates are up and expected to stay that way. The small investor is getting out while the building might still produce a ROI and let the next guy take the heat.
I like Davis a lot, as an avid biker I really enjoy being able to ride around town on all those paths and get sloshed at sedwerks.
Where are the home builder BK annoucements? What is keeping them afloat?
If there is anyway that the Federal Reserve can spike the punch, it is worth while for the banks to work with the builders instead of foreclosing. Every aspect of our derelict economy relies upon a tipsy/turvy banking system that the Federal Reserve and Treasury department do not understand.
Hope springs eternal…
I know of one public builder that pulled out of building for 2 years right before I went on vacation 2 weeks ago. They kept 4 people and are on a skeleton crew. From what I understand they just abandoned all their projects and stopped. I go back to work tomorrow and am very curious whats going on. This is in the LA area. I assume its their entire SoCal division.
For the ones who didn’t pay way to much on land options, I think they’ll be fine. Their profit margins were huge and they can slash prices a lot and still swing a profit. I suspect that labor and material costs are declining as well….
Of course they will have to scale back but how many permanent employees do they use anyway?
“Herring said one of the program’s guidelines recommends borrowers have a debt-to-income ratio no higher than 43 percent, which is shutting the door on several consumers. Most inquiries he receives are by homeowners who originally stated they had a 50 or 60 percent debt-to-income ratio when they applied for their subprime mortgages.”
Did they forget to mention, no stated?
You actually only get one home as your primary residence?
And forget eating out…
Not to mention $90/bbl oil is probably stinging.
How many banks can survive 6 more months of this? A year?
This is goign to slow sales tremendously. What are the predictions for SAAR? I think we’ll drop and ‘kiss’ 4.0 million. But not until mid-2008. For 2009? Scary.
I’m going to make the reservation tonight. Any last dinner guests?
Got popcorn?
Neil
I have switched to “Palmetto’s Silver Bullet Popcorn!” If I am walking by midnight I am going back to my “Big Butt” brand.
‘We call the lender and they tell us they sold it to another mortgage company,’ he said. ‘You finally reach that company and they tell you they sold it two weeks ago. They aren’t required to record that with the county recorder. Some of these loans have been sold four times.’”
Can all of these mortgages have been sold before the FBs got into trouble? I read this as a statement that there may be a market in distressed mortgages… mortgage holders are selling their paper? Is this right?
The secondary securitization market is frozen. CDOs are not trading at the moment, and no one knows the market price of their certificates. But they do have a wishing price for them.
Cinch
Mortgages have been sold as quickly as three months in my experience.
The rest of the PE article also talks about how rents could go up because there’s more demand for rentals from all those folks foreclosed. Then some lovely quotes from property management companies that aren’t going to hesitate to rent to the losers as long as the housing payment was the only debt they went AWOL on. Everyone feels so sorry for the foreclosed upon that they’re going to do cartwheels to help them out while all the responsible folks get totally screwed. I feel like any minute I’m going to go exorcist with my head spinning around I’m so disgusted.
I know what you mean. In Humboldt county, there was an article in the paper from the Humboldt Association of Realtors a few weeks ago talking about how housing may drop 40% in Redding, Sacramento, or San Francisco, but housing will not drop in Eureka {surprisingly, they’re right so far, as prices have continued to hover around the 2005 highs and stuff is still selling, while inventory is down 30% from summer}.
Then, the REALTORS said that rents would go well up to correct for the imbalance of rent versus housing prices. I haven’t seen this. But it is amazing that in this whole housing fiasco, no one will lay blame on REALTORS for encouraging bad behavior (”Buy now or be priced out forever!”) plus all their untruths spoken to Congress over the bubble years.
Instead, it is always the lenders fault and the borrowers are the victims!
I’m thinking the flood gate is about to open with even more legislation to help FBs: perhaps price controls on declining house values. Paulson on CNBC was essentially saying that these bailout provisions will benefit “everyone” by keeping neighborhood values up.
This coming from the guy a few weeks ago who said everything was contained.
We used to live there so we know what you mean about the “it’s different here” Humboldt mantra. I looked at the Humboldt MLS and prices do seem to be slightly down in some areas but still at 2005 highs in the most desired neighborhoods. Amazing .. and what is the average income and unemployment rate there now?
I really hope all these bailout proposals don’t slow down the decline in housing. Prices have barely budged here on the north coast of California, but looking elsewhere in the state, it is just beginning to look interesting.
It seems like every day there is a new bailout proposal; it almost seems like a chicken dancing around with its head cut off: stammering and covulsing to try and find any solution to the current perceived problem.
I could see this evolving to a mass bailout: prime and subprime, speculator and owner-occupied. And who doesn’t benefit? Renters and those who’ve paid off their mortgage.
“…rarely eat out and have no money for golf, skiing or health club memberships.”
Damn, this is almost too difficult to read, my heart goes out to these poor people. No golf, wow tough break, nobody should be made to endure such trials.
This tale makes me think of the Joads in “Grapes of Wrath”.
Maybe they can dust off the Le Creuset bean pot and make some chili!
Skiing?
YOu have got to be kidding me.
boohoo.
Woweeee. Take a look at my place!
‘Rain, mudslides batter PNW.’
http://tinyurl.com/3eycf8
I just took a whole bunch of photos of stormwater retention ponds that *gasp* did not in fact ‘absorb potential excess capacity’. Not even close. Not even close to being close.
Pretty.
And now I’m home and I must get a whole bunch of firewood in, and dig out my extra blankets and candles because by the sound of the trees creaking out there this will be an exciting night! I like wind and rain a lot. I think. Hmmm.
Take care Oly gal. I do miss living in the mountains or AK where I always was the fire keeper.
Be safe sweetie. Dang hurricane force winds in Oly land…wiskey tango foxtrot?
Safe!
Leigh
I hear ya, next thing they will do is throw out the credit scoring system cause these FB’s will be the majority with single digit credit scores…We already get punished for saving, why not having a good credit score too?
Vote Ron Paul. enough of this BS
The criminals and deadbeats have us outnumbered and they have Wall St and the media on their side. Jesse Jackson is leading a march on December 10 to save the stupid, lazy, dimwitted, bankers and gamblers.
Hell all the criminals and deabeats are IN office or just got Out of office.
Shed tears over losing a credit score that “means something”? In an industry where consumers who don’t carry balances are “deadbeats”? Add ID theft/fraud and general incompetence and there is seriously not much worth missing here.
In whatever form credit scoring survives, suspect it will be weighted much more heavily on the very-recent-history side. I expect what’s left of this decade to see the a new wave of White Collar job loss in the US, this time not to be replaced by outsourcing in the main so much as just evaporate, a lot of general insecurity and a big bump up in the “don’t borrow if you don’t have to” mindset, even for the traditional exceptions, like cars. If lenders still lend, don’t see how they’ll be able to afford to have particularly long memories.
Credit scores have become another Pavlovian tool, just like SATs. We keep running the rat maze chasing these scores and never ask ourselves why and what for. When there’s a whole industry devoted to helping people “boost” their scores you know the jig is up.
Just a few months ago someone with a bad credit score could “rent” a good score from someone else.
slorenter, glad to see someone will appreciate my (Ron Paul) bumper sticker when I arrive in SLO county next month. It’s getting pretty cold here in SE PA.
I see dead people - um, I mean ghost towns. All over the south west and Florida.
What about, I see debt people. Thought about putting this on my truck bumper, but I fear for my safety.
Cinch
I’m with you. Try taking I-75 down from Tampa and pull over on some of the state highway exits. You will see many ENTIRE STRIP malls with NO TENANTS. None! For lease signs, available, and whatnot, but all empty!
These reminded me of ghost towns. Frankly I’d never seen anything like that before. I suppose if I venture out into the IE I might see a few of these. In FL, it looked pretty pathetic.
Oh, and did I mention I saw many of these empty brand new strip malls?
Three of my co-workers in 2005 bought houses in Inland Empire (one for residence and two for investments). At the time they were in such a hurry to buy as if there was a “Gold Rush”. They asked me how come I was not buying investment properties. I tried to explain the reason and only I receive laughter and ridicule from them mixed with some snobbishness.
At the time I started to short HBs, and guess who is laughing now.
Oh, I forgot, all of them got options ARM negative amortization and they are very shy of my to complain about their fiasco. I look at their property info in Riverside county tax records to find out that all of them have not paid previous year’s tax bill and this year’s bill is due too. In average each of them has about $18000 on back taxes.
$18k would pay my taxes for 12 years.
In Riverside County, tax rate is close to 2%. I think they paid about $450K-$500K for each house.
18K in back taxes along with 100K in losses easy. What a great investment.
$18k would pay my rent for 45 years.
Oops. 45 mos.
There were so many nobodies in Riverside that thought they were such hot stuff with all their real estate mumbo jumbo. There were so many that thought they were so much better because they were buying, looking down their noses. I only hope they are all getting what they deserve. Anyone that thought they were hot s*it in Riverside is a bozo to begin with.
They came to destroy wealth in the hedge funds, but I didn’t care, as I didn’t have any…
They came to destroy wealth in the bond funds, but I didn’t care, as I didn’t have any…
They came to destroy wealth in the S.T.I.P. funds, but I didn’t care, as didn’t have any…
They came to destroy the dollar, and I care because I have some and I live here and have to spend them. My ARCO gas station still doesn’t take gold, silver, or EUROs. At least not YET!
Unfortunately, there are so few left who care about the dollar.
OCD, chill! You’ve gotta buy some other currencies instead of driving yourself crazy.
I have some Brazilian Reales to sell ya…
I care about the dollar. I care so much that I want all of the dollars I can get.
Notice that it is dollars that will solve the problems of the FBs, dollars that used to be easy to get but are now hard to get.
Dollars are in demand and the demand for dollars will increase as the economy continues to tank.
Dollars, destined to become man’s best friend.
Your best post ever.
Well, that didn’t last long: $US goes back above parity with $Can.
http://www.bloomberg.com/markets/currencies/americas_currencies.html
Paulson mentioned “new financial tools” in his speech today. WTF. It sounds like code for “creative financing”. Isn’t that what got us into this mess. The bottom line is that someones got to pay for these bad loans. It’s either the lenders or the borrowers. It looks like their trying to put the burden on borrowers, with creative financing. Borrowers will pay now or later. In the meantime, it looks like the goal is to keep those FB’s paying something like serfs to the lord of the manor.
“Paulson mentioned “new financial tools” in his speech today.”
Don’t drop the soap anyone.
I heard somewhere that homes/townhouses for around $200 - $300K are selling; it’s the higher-priced properties (upward of $300K) and condos that are sitting on the market. Is there any truth to this?
(The market specifically is DC /Baltimore suburbs)
I think there are some folks out there who are desperate to buy anything they can remotely afford. We have a piece of land with a trailer on it listed at $140k and it has people talking who just really want to own something…anything. Looking at traditional rent/affordability for my Town, the actual value of the trailer/land is maybe $75k
Housing Execs Warn the Worst Is Coming………….
Mark Zandi, chief economist at Moody’s Economy.com, predicted that, if the economy slips into recession or if efforts to modify loans don’t pick up substantially, the housing market downturn could last through the end of the decade.
“This is the most serious housing downturn since the Great Depression,” Zandi said.
http://ap.google.com/article/ALeqM5jxGCigGQ6TWCC02SIu-7SO4AhqDgD8TA8TI80
“…foreclosures will peak in the third quarter of next year and won’t drop back to more normal levels until 2011, said a Banc of America Securities report out last month. The report also estimated the median U.S. home price would fall 15 percent over the next four years and not rebound until 2012….”
what an understatement
If memory serves the US median price peaked at 230K in 2006. A 15% drop would drop the price to 195K. That price doesn’t sound out of line.
I’m predicting that the Paulson plan will result in more bad deals for the FB’s. The lenders are trying to save their own skin and will make the terms to their advantage. At one point the FB’s will realize that it’s in their best interest to just walk away. That’s what will draw out the foreclosure mess for years longer.
“That’s what will draw out the foreclosure mess for years longer.”
Good. I’m all for it. Time is what is needed, time to allow the market to reprice the extravagances and excesses.
“In California, an ‘entry-level’ home costs $482,910, the association said. A family would need an annual income of $99,590 to buy it with 10 percent down, and an adjustable interest rate loan of 6.56 percent.”
California is in so much $h.T. I could not guess where to start. We still need much lower housing prices if Calif. is to compete in the economic arena. I see infrastructure falling apart every day while the politicians continue to tax and spend as if we were endless tax ATM’s. We all could do with very little assistance in the political arena and a lot lower property taxes! Who can afford them!
I sold my home two years ago and rent and I am proud of it. If Calif. does not learn to live with in their means it will become the largest third world state in the union.
Well, the banks are not going to give them away!
Like hell they aren’t!!!! When you have any asset and it deteriorates in value, be it a car, a high value piece of art or what have you , if it is damaged and no one puts a high value on it , it will sell for what someone is willing to pay for it. Banks bought too much STUPID during this run up and now they have to sell it at deep discounts or they own it and have to write it off some day!
If governmnet interferes with market forces it will create a dual market. One for new buyers and one for FBs. FBs will have reduced payments on bloated price for a few years while new buyers will have higher payments on drastically reduced prices.
If I am a FB I would walk away wait for this madness to be over and try again.
27444 Sunnyridge, Palos Verdes Peninsula, 90725
Status: ACT MLS#: P955705 $1,600,000*
List Dt: 10/01/2007 PType: SFR-A Orig Price: $1,980,000
I was going to buy this last week. Good thing I didn’t. Should I now feel I saved 380K big ones or was original listing price too high?
No need to answer.
90275 right there on hill as you land at LAX to south from pilot side of plane
Take all that money you “saved” and buy a “starter home” …
True story:
In 2005, house is listed for $929,000 and plenty of people including myself viewed it.
It sold for $1,110,000.
They put it up for sale for $1,199,000 in 11-2007-No action I guess.
They lowered the price to $995,000 and I guess still no action because
today they lowered the price to $795,000.00.
Duuno if there will be action.
No problem here, move on.
“Rich Merlin, owner of Inland Empire Property Management, which handles rental houses in Riverside and San Bernardino counties, said he has begun to offer a half month of free rent on his listings.”
Half a month? Give me a break. In 1995, it was very common to see landlords in SoCal offering three months’ free rent. We’re nowhere near the bottom yet.
“He said they initially priced the house at $50,000 below market and between December and June they dropped their asking price from $700,000 to $620,000. There were no takers.”
Seriously…WHO IN THE HELL would be dumb enough to pay $620K for a house in RIVERSIDE? You couldn’t pay me to live there let alone me pay them. Wow….just wow.
Do you hear that sound its the sound of foreiners drawing their money out of this country. When you get up in front of the world and float this ignorent idea of freezing interest rates on a legal contract you are setting precedence. We just jumped on a bullet train to the ninth circle of hell. Enjoy the ride because the FED is about to have to monetize the current account deficit.
“Dunn said the cost of keeping the Riverside house has put the family in a financial bind. They have bought a much smaller house in Denver, rarely eat out and have no money for golf, skiing or health club memberships.”
AWWWWWWWWWWWWW…..let me bust out the smallest violin in the world…..I’m am truly saddened that they can’t go golfing, skiing, and be healthclub members off the backs of others….truly a sad sad situation for them.
Off with bold!
I have a friend that lives in Corona CA that has had to move 4 times in 1 1/2 years because all his landlords are losing their homes. My friend makes LOTS of money and isn’t stupid enough to buy a home in this market so he rents “million dollar homes” for around $3000-4000 a month.
On his last move his landlord’s house payment of $2800 was going up to $3400, he offered to PAY the different because he was tired of moving, he spent days telling the landlord she would get to keep the house and he has no problem paying the difference the landlord wouldn’t do it! How dumb is that, the landlord WANTED to go into foreclosure, it was 1 of 3 of their houses, some dumb people out there.
Gets better, before he moved out someone broke into his rental and stole all sorts of stuff, the police said it had to have been his landlord because no forced entry and very sophisticated security system only an owner would know. What filth, these landlords are stealing from their tennants.
Corona has tons of stucco boxes for rent, the only problem is the “owners” are dropping like flies, if you are willing to move every few monthes you can live in some nice places (too bad its still Corona).
Why would someone pay $3000-$4000 per month to live in CORONA? You can live very well even in Newport Beach for that rent.
Hear that sucking sound it is the sound of foreign capital leaving the USA. You don’t threaten to change legal binding contracts mid stream and expect people to invest in your country anymore.
The potential financial losses for the financial lending sector of the economy must be so huge if the powers that be want to freeze the loss potential . Clinton want to freeze foreclosures . The history books will call this the “Deep Freeze” .
A long time ago I thought that if the lenders could somehow get the real effective rate down into the 3% type range they could drag out the crash in real estate for years .Now they have come up with freezing teaser rates .Now the next step is to lower the fed rate as low as BB can go .
But what about new loans and prices that are beyond affordable and all that excess inventory of new and used homes that need to be sold ?
I give up because it appears that major decisions are being made by the people in power to avoid a total meltdown of the financial institutions .
Mortgage restructuring
Group therapy
Nov 29th 2007 | NEW YORK
From The Economist print edition
As defaults soar, America seeks to modify mortgages en masse
THE statistics are chilling. As many as 2m adjustable-rate subprime mortgages, worth $350 billion, are due to reset to higher interest rates in America over the next 18 months. Resets on Alt-A (or near-prime) loans will continue to climb until late 2010. House prices are tumbling (see article). What can be done to avoid a bloodbath of defaults?
Enter the Gubernator. Galvanised by the fact that a quarter of all resets will come in his state, Arnold Schwarzenegger, California’s governor, has struck an innovative deal with four big loan servicers. This will see the companies extend by several years the period for which thousands of borrowers can stay at the initial “teaser” rate. Crucially, the four have agreed to “fast-track” their procedures to make it easier to include whole swathes of struggling but not hopeless borrowers.
http://economist.com/finance/displaystory.cfm?story_id=10223613
Can anyone say what bright economist came up with the teaser freezer concept? And is it something old, something new, something borrowed or something blue?
LOL ……..Right PB ,I was trying to think of anytime in history where a freeze took place in mortgages . I remember reading that lenders would freeze mortgages during the Great Depression and charge rent instead in a lot of cases rather than foreclose on property they couldn’t sell because people didn’t have money .
Stupid ought to be painful and expensive.