A Cycle That Won’t Stop
Hoboken Now reports from New Jersey. “Hoboken-based Metro Homes has shut down a 224-unit high-rise project in Asbury Park, citing the impact of the subprime mortgage collapse and real estate slump, the Asbury Park Press reported. Dean Geibel, the company’s president, told the newspaper it has halted construction and sales on the Esperanza ‘until such time market conditions allow us to move forward.’”
“The project was built on the site of a failed condo project that remained an unfinished steel skeleton for 17 years until Geibel’s company blew it up in 2006.”
The Express Times from Pennsylvania. “Homes sales in the Lehigh Valley plummeted in November compared to last year, according to an industry group. According to the Lehigh Valley Association of Realtors, 410 homes sold in the region in November, down 30.4 percent from 589 sales in November 2006.”
“Last month’s figure is also down 25.6 percent from 551 sales recorded in October. “Bethlehem-based economist Kamran Afshar said the latest trend ‘looks like a crash, but it’s just a correction.’ It is not clear when the current dip will end, he said.”
“‘It will be some time until it stabilizes,’ said Afshar. ‘I don’t think we have seen the bottoming of this process, probably not until next summer.’”
The Times on New York. “Only now is the slump in America’s residential property market reaching the very top of the tree – Manhattan.”
“Finally, almost belatedly, the few square miles of upmarket central New York real estate is beginning to suffer the impact of this summer’s credit crisis. Wall Street bankers are delaying the purchase of new apartments, keenly aware that the country sits on the brink of recession, and boom in the Big Apple is showing signs of abating.”
“According to one of the leading experts on the Manhattan real estate market - Gregory Hymes, chief economist at the property company Brown Harris Stevens – although residential property prices hit a record high in the third quarter of the year, estate agents are beginning to see a slowdown in activity as Wall Street bankers guard their bonuses.”
“Mr Hymes said: ‘People do not like to buy in uncertain times. Some of the problems arising from the stock market turbulence in the summer will be resolved shortly. But some of the problems will take years to unravel.’”
From Reuters on New York. “Bonuses affect the sales volume and prices for the entire market by setting the tone of buyer sentiment. ‘It primes the pump, so to speak,’ said Jonathan Miller, director of research at Radar Logic. ‘A net decline in payouts are very likely to first impact transaction levels.’”
“Looming layoffs could exacerbate the pain. Last year, the securities brokerage firms accounted for 177,000 jobs, according to Moody’s Economy.com. The overall financial sector accounts for 7.5 per cent of Manhattan jobs but 28 per cent of the overall income, the research firm said.”
“Marisa DiNatale, senior economist at Moody’s Economy.com expects the financial sector to shed 10,000 jobs across the greater metropolitan area of New York City’s five boroughs, northern New Jersey, and three counties north of the city.”
“‘Probably about 70 per cent would be in New York City. Most of them would be in Manhattan,’ she said.”
The Times Record Herald from New York. “Normally at this time of year, homeowners place holiday decorations on their lawns. This year, many in the area are putting up foreclosure signs instead.”
“‘From all the people that I know who’ve been in the real estate industry for years, they’re trying to stay optimistic,’ said Yvette Rooney, a real estate agent in Middletown. ‘What’s different in this environment, though, is how bad the mortgage industry has positioned people. It’s making a cycle that won’t stop.’”
“The influx by New York City home buyers over the past decade means a lot of variable-rate mortgages are now due for a rate increase. The region’s ever-increasing home prices means many have been priced out of the market, yet were given subprime mortgages anyway.”
“‘They’re creeping up,’ Rooney said of local foreclosures. ‘They’ll be more visible in the new year, because a lot of adjustable rates are set to balloon up.’”
“Rooney also blames adjustable mortgage rates for the current crisis, saying that less than 10 years ago, the number of people with adjustable mortgages was 3 percent. Since 2005-2006, that number has increased to 33 percent.”
“‘A lot of people from the city came to Orange County and it started getting pricey; it started getting like another Rockland or Westchester County,’ she said. ‘What happened is that a lot of brokers gave what clients wanted — the lower rate — and this is because people are not educated on what ‘rate’ really is, because everyone, including the brokers, tell people that rate is the most important thing. It’s not.’”
“‘You can have a great low rate but a horrible mortgage,’ she said. ‘Since adjustable rates in most cases were lower than fixed rates, that’s what people thought they should get, not knowing that it’s a bomb waiting to explode.’”
“Home sales and prices fell across the region in November, according to data reported by county boards of Realtors. The decline across Orange, Ulster and Sullivan counties mirrors the slump playing out across large swaths of the country.”
“Paula Meloi, owner of ERA Meloi Realty in Port Jervis, whose firm does business in New York, New Jersey and Pennsylvania, said her business has been doing a lot of foreclosure work lately.”
“In another sign of the slowing market, homes are taking longer to sell. There are a lot of expired listings. People are jumping from Realtor to Realtor looking for answers,’ said Meloi. “The answer really is price.’”
The Advocate from Connecticut. “Potential bargains abound for home buyers in Stamford as the median price of a single-family house dropped in October to $610,750, its lowest October level since 2003.” “The median October price in Stamford reached a peak of $660,000 in 2005, up from $622,500 in 2004, the Warren Group said.”
“Many sellers in Stamford were seeking prices the market could not support, said June Rosenthal, owner of Juner Properties residential real estate in Stamford, and the subprime lending fiasco has hampered real estate markets nationwide.”
“‘Connecticut’s housing market has fared better than those of its neighbors throughout most of 2007, but July’s credit crisis hit New England hard,’ said Timothy Warren Jr., CEO of the Warren Group. ‘It didn’t spare the Nutmeg State this time. Those effects have spilled over from September, when they first became evident, and sales continued to plunge in October.’”
“The median October price of a single-family house in Greenwich was $1.45 million two months ago, compared with $1.15 million a year ago and $1.675 million in 2005, which was an all-time high, the Warren Group said.”
The Providence Business News from Rhode Island. “The median price for single-family homes sold in Rhode Island fell to $236,000 during October, the lowest since at least January 2005, according t The Warren Group. The October price is a 10-percent drop from the October 2006 price and a 4-percent drop from the $246,000 median price the state registered in September 2007.”
“CEO Warren said the October numbers are a further effect of the July credit crisis, which started affecting median prices during September.”
“‘And we’re not just seeing this trend in Rhode Island; Sales and prices in Massachusetts and Connecticut also started to plummet in September and have continued declining in October, so I think this is part of a bigger trend,’ Warren said. ‘Foreclosures also play a part in keeping prices down, even as they flood the market with more homes for sale.’”
The Worchester Business Journal from Massachusetts. “At a glance, things in the Central Massachusetts home loan industry look dismal. Many mortgage brokers have gone out of business, and many of those that remain have slashed their staff numbers by well over 50 percent. But some in the business say the current situation is more silver lining than black cloud.”
“‘I’m actually kind of happy,’ said Christopher Tremblay, CEO of Mortgage Dreams LLC in Worcester, which has reduced its staff from about 50 down to 15.”
“Tremblay and other mortgage executives say it has been obvious for years that many brokers and lenders were acting unethically, with strong support from banks and other lenders. They said both increased caution on the part of lenders and regulations now being passed at the federal and state level should help deal with that problem.”
“‘What I hope we can do is keep the undesirable people from coming in and out of our industry,’ said Jim Picciotto, president of Framingham-based Patriot Funding, which has laid off about two-thirds of its employees in the past two years.”
“Tremblay said the number of mortgage brokers across the country ballooned since the 1990s, from 100,000 to 500,000, due in part to people looking for easy money. Massachusetts began licensing mortgage lenders and brokers in 1992 and saw the number of licensed companies go from 540 in 1997 to more than 2,000 today.”
“‘You could have put a monkey behind a desk and they could have got somebody financed,’ he said.”
The Eagle Tribune from Massachusetts. “A growing number of homeowners across the Merrimack Valley and Southern New Hampshire are in danger of losing their homes - or have already lost them - because they can no longer afford their mortgages, according to statistics.”
“The culprit? Adjustable-rate mortgages with low ‘teaser rates’ offered by unscrupulous brokers to people who really couldn’t afford the homes they were buying in the first place. The result? Hundreds of homes in Lawrence, Methuen and Haverhill, dozens more in Andover and North Andover, and scores more in New Hampshire are being foreclosed on at record rates.”
“In New Hampshire, staff members from the Banking Department are holding workshops across the state to reach out to homeowners who may be facing foreclosure. ‘Some of those folks we have helped,’ said N.H. Banking Department Commissioner Peter Hildreth. ‘Unfortunately, a lot of them are in houses they simply can’t afford.’”
“‘It’s created a perfect storm,’ said Tom Farmer, spokesman for the Massachusetts Housing Finance Agency. ‘In many cases the house is worth less than the loan. So if you owe $150,000 but the house is only worth $120,000 now, you need to get the mortgage company to eat the $30,000.’”
“From September 2005 to September 2006, 276 foreclosure petitions were introduced in Lawrence. That number jumped to 704 from September 2006 to September 2007. While Lawrence led the pack during that period, Haverhill came in second, with 206 filings in 2005-2006 rising to 398 in 2006-2007.”
“In New Hampshire, meanwhile, Hildreth, the banking commissioner, said 2,000 to 3,000 homes could be foreclosed on by the end of 2008. He said the problem is particularly pronounced in the more populated parts of the state and along the border with Massachusetts.”
“‘Rockingham County and Southern Hillsborough County will feel the brunt of it,’ he said. ‘That’s where housing prices were high to start with. People had to really stretch to afford some of those homes.’”
“Terence Egan, editor in chief at The Warren Group, said…as people fall behind in their payments, they normally would sell their homes to get out from under the loan. But declining home prices are making that impossible.”
“‘Home values going down has exposed a lot of problems,’ Egan said.”
The Telegraph from New Hampshire. “The foreclosure situation in New Hampshire will get worse before it gets better, with around 6,000 state families facing the possibility of losing their home this year and about that many in the same boat in 2008.”
“The current inventory of houses on the market is at about 13 months, meaning it would take more than a year to sell them all at current rates, even if no new homes were put up for sale.”
“‘That is the highest (rate) we had seen in well over 10 years,’ said Dean Christon, executive director of the New Hampshire Housing Financing Authority. On average, prices have declined less than 5 percent from last year’s peak through this past summer.”
“New Hampshire has a lot of adjustable-rate subprime loans, where much of the problem lies. ‘The only surprise is that the subprime piece was significantly larger than some may have realized,’ Christon said.”
“In the second quarter of this year, 6 percent of all loans in the state were subprime adjustable – meaning they were loans given with relatively few checks on income or credit and had low interest rates that would increase sharply after a couple of years. That category of loan did not even exist during the last housing crunch.”
“They account for a whopping 49 percent of all foreclosures in the state.”
“As happened in the rest of the country, the popularity of these loans has skyrocketed in New Hampshire. In 2004, 10 percent of new loans were subprime, either fixed rate or adjustable; in 2006, that tally had risen to 22 percent.”
“The more rural counties had more suspect mortgages – in Coos County, for example, 38 percent of loans were subprime – which seems to cast doubt on the commonly expressed theory that many such loans were taken out by first-time homeowners moving over the border from Massachusetts in search of lower taxes.”
“‘A lot (of subprime loans) did get used for refinancing,’ Christon said.”
“Only now is the slump in America’s residential property market reaching the very top of the tree – Manhattan.”
The would-be Trumps on Curbed aren’t going to like that one.
Wow, that website … wow …
Now I understand why the Street was totally blindsided by the credit crunch.
Good stuff
http://www.minyanville.com/articles/index/a/15181
..that Mortgage Rate Reset chart is kinda like looking through a powerful telescope at the huge meteor headed straight for Earth..
Wow….just, wow.
Look at all the Option ARM’s in 2010/11. Any turnaround before 2012 seems impossible.
“Bonuses affect the sales volume and prices for the entire market by setting the tone of buyer sentiment. ‘It primes the pump, so to speak,’ said Jonathan Miller, director of research at Radar Logic. ‘A net decline in payouts are very likely to first impact transaction levels.’”
“Looming layoffs could exacerbate the pain. Last year, the securities brokerage firms accounted for 177,000 jobs, according to Moody’s Economy.com. The overall financial sector accounts for 7.5 per cent of Manhattan jobs but 28 per cent of the overall income, the research firm said.”
So the real problem is reduced bonuses, which “set the tone of buyer sentiment,” whatever that means. Oh, and by the way, layoffs might exacerbate the “buyer sentiment” problem. Is this just silly analysis, or is it just me?
The overall financial sector accounts for 7.5 per cent of Manhattan jobs but 28 per cent of the overall income, the research firm said.”
wow.. that seems like a lot. Is the cup 1/3 empty or 2/3s full?
NYC residents are much less dependent on finance for jobs than they were in the mid-1980s, before all the back office work was automated or outsourced. There used to be legions of clerks and secretaries with middle income jobs. Now there aren’t.
The problem is that the city and state governments are dependent on Wall Street for tax revenues.
To give you an idea, excluding the health and social services sector, which is primarily government funded, Manhattan accounts for 50% of all the private-sector earnings in New York State. Not the city. Not the downstate region. The whole state, from Montauk on the eastern end of Long Island to Buffalo on the Great Lakes.
Add on the private activity elsewhere in the city and Downstate generated by the purchases of Manhattan businesses and their employees who live elsewhere, and all the Upstate jobs suppored by the transfer of state tax revenues, and you might have 75% of the state’s economy.
Because the rest of the U.S. drains tax $ out of NYC and state, despite a high poverty rate here, Manhattan must support the fiscal needs of the (still significantly poor) city, poor areas of Upstate, the greedy suburbs, and other parts of the country.
In other words, the transmission of the pain of the financial crisis to the quality of life of New Yorkers is likely to occur through the public sector.
Right on WT. Any NY state resident NOT in NYC doesn’t have a clue as to how the economic tentacles extend out to the furthest points from the boroughs. Considering Bloomy rang the bell about the projected fall in NYC revenues how many times now should be a warning to all of NY state. The gravy train of inflated housing prices and careless spending by McMillionares is over. The suburban and rural folks just don’t get it… yet.
unusual, as most burbs subsidize cities- urban renewal,welfare,public trans , you name it
That is urban legend Flat.
Most cities are urban dead zones, while NYC has Manhattan.
As for welfare, the Upstate and suburban kind is more expensive. NYC local government employment is down 20,000 over 15 years, while in the rest of the state it is up 108,000 (despite stagnant population). Those folks earn more than the welfare recipients NYC used to have, and they get pensions that the rest of the state will be unable to pay for.
tier 1 = full pay
NY is doomed
Tier 2 is too. Tier 3 is 75%. Tier 4 got boosted to 75% and no contributions for those in the system longer than 12 years. My wife and I will have a very very comfortable retirement.
Sorry but you can’t get in on it. lmao.
Hope your pension fund managers didn’t invest in CDO’s.
WT-
You’d get quite a kick to hear the successionist statements made at least by many in this neck of the woods (monied Syracuse burb) They are quite sure all our tax dollars go down to NYC to support the city’s welfare state and comment how much better off we’d be if we just separated from the whole urban sector. I will admit if I was dropping $10-30k a year on property taxes, I’d have to aim the anger at someone too. Not sure why the local pols, school districts get off scott free on that one, though.
When I first started hearing these arguments, I had tried to question why NYC needed our money considering the sheer amount of industry (in dollar terms) in NYC but got tired of getting the knee jerk rants aimed at me for being so stupid.
Carrie, I hear that warped illness all the time. “I’m tired of having to send all my money to those NYC welfare cases”. It’s an insane type of thinking…. really just plain ignorant.
Well, some big cities are welfare cases … like DC.
Of course, it’s not really the Black crack addicts living on M Street who are costing all that money … it’s the stuffed suits in the Federal Triangle.
I’m not anti-government per se, but it is annoying to compare, say, Medicaid or a la carte expenses with the health care plan offered to members of congress… Heckuva job, Nancy.
“7.5 per cent of Manhattan jobs ”
WTEconomist may have the stat, but those fianancial sector jobs create x number of jobs in services and support. Financial jobs are the lifeblood of Manhattan. Pandit, now chief of Citibank, announced yesterday, that he’s going to be doing serious cost-cutting. Given the layoffs already announced, that means more out-sourcing to come. My bet is what’s left of the research dept. will be
sent to India.
“is likely to occur through the public sector.”
I think it will hit both public and private sectors. So much can now be done more cheaply overseas…from reading x-rays, marketing and design, financial analysis, advertising, et.al. Other mainstay industries are in permanent contraction-think of publishing, once a big employer here. And yes, public services will be cut.
Upstate used to have heavy industry and manufacturing to provide a tax base. With those jobs gone, property taxes are sky high, and so are sales taxes, while employment prospects are limited.
They’ve been in a downturn for a couple of decades…there just is not much reason to be optimistic.
“They’ve been in a downturn for a couple of decades…there just is not much reason to be optimistic.”
Then how does one account for the wacked out clueless jibberish out of the mouth of upstaters?
One word: HOUSING
These guys are still convinced that the millionares are coming. Upstate was given a brief reprieve from the long decline in manufacturing due to the run for the hills mentality of 9/11. There’s an element upstate who hopes and prays for another 9/11 event in NYC just to keep the charade going. Spike, I watch $30k houses turn into 150k in the matter of 2-3 years. Without a continuation of the run for the hills lunacy, I see a resumption of the economic decline everywhere in upstate NY and New England for that matter.
(These guys are still convinced that the millionares are coming.)
Well, in the long run and given how jammed Manhattan is, one way for it to expand is to an “telecommuter” zone where people just come in for meetings. But you have to have a reasonable rail ride to be in that zone, especially with a long run increase in the cost of driving.
Perhaps not millionaires, but middle class telecommuters might live in the Catskills and Hudson Valley, in the second home area. This won’t help Buffalo. And it won’t happen in a recessions/housing bust.
The southern parts of the Hudson Valley are merely an extension of NYC. At least to me. I was specifically talking about areas that aren’t commutable. Also, a Mcmillionare is a matter of relativity. When an upstater was earning 20k in 1980 and is earning 25k today, that is an real wage cut of 50-60%. In light of that, anyone from anywhere near NYC that has two dimes to rub together would seem like a wealthy person to a 25k/yr wage earner upstate.
Is this true for the Albany area? An attorney I know who lives there swears that his home is still increasing in value. I find it hard to believe.
It’s hard to believe an attorney could be so clueless. Yeah. Alb/Schen/Troy is skeleton of what it was 25 years ago. Plenty of urban decay, few decent jobs etc etc.
I telecomute from Seneca Lake to Philly. One meeting per month.
Good luck with that…
Not that it will help much, as most of the best and brightes Indians are here… There is a misconception that all Indians are bright engineers, when in fact the people we see here are the top 1% of the top 1% of their population.
They will get the same response as when you call tech support in India… Cluelessnes.
Is there any way to short Citi on a long period of time if they do this?
‘Is there any way to short Citi on a long period of time if they do this?’
I think SKF has worked for some folks here.
Vikram Pandit, when he was at Morgan Stanley, always talked up India and outsourcing. Now that he’s at Citi, and looking for ways to cut, you can bet that India, especially his pals at Wipro, will be doing ok.
Well considering @hitibank’s American Employees wrote all those sub prime junk loans It might be a big plus for the bank to do it.
————————————————————-
My bet is what’s left of the research dept. will be sent to India.
“Hoboken-based Metro Homes has shut down a 224-unit high-rise project in Asbury Park, citing the impact of the subprime mortgage collapse and real estate slump, the Asbury Park Press reported. Dean Geibel, the company’s president, told the newspaper it has halted construction and sales on the Esperanza ‘until such time market conditions allow us to move forward.’”
“The project was built on the site of a failed condo project that remained an unfinished steel skeleton for 17 years until Geibel’s company blew it up in 2006.”
http://www.youtube.com/watch?v=MF6W6w61p4Q
Sounds like a great place for a major government project. That way when it is never finished and over budget they can say it’s traditional practices.
I love this one: you didn’t get it the first time. You lose.
This is like where I live: the tallest building in town was a white elephant from the Florida land boom. Now they are trying to build another one. When do these dumbasses ever learn? Btw, you will love this Ed in Texas: this time the city government is giving mucho tax breaks to encourage the stupidity.
“In another sign of the slowing market, homes are taking longer to sell. There are a lot of expired listings. People are jumping from Realtor to Realtor looking for answers,’ said Meloi. “The answer really is price.’
Yup. I can confirm that on this side of the Hudson. Reminds of the churning of tech stocks back in 2000-01. FSBO sign down, Real-Turd sign up, swap out a different Real-Turd sign 60 days later, back to FSBO.
By the way, Orange County is commutable to NYC just like Dutchess/Putnam. It’s an insane commute but people do it. You’d have to be completely desperate to commute from Sullivan and Ulster counties which were discussed in the article.
http://cityroom.blogs.nytimes.com/2007/12/11/the-lending-crisis-as-crack-epidemic/
Brooklyn DA says the mortgage problem is the worst the country has faced since the crack epidemic.
Wow, worse than crack. What’s next, AIDs?
One thing I have noticed about the poor, is that nothing is ever their fault. First they were attacked by crack, then they were attacked by people who wanted to loan them money.
Axiom of assigned responsibility: The more separated from you someone is, the lower the standard they are held to.
Nobody cuts deadbeat crackhead cousin Billy Bob any slack, but some faceless bum staggering down W. 14th St.- no problem, not their fault.
Wait–that’s not illegal, just bad business practice, for a servicer to refuse payment and then foreclose?
Wha—-?
I thought turning down FRN’s was a breach of contract (”all debts public and private”)?
Well, the lender’s f@cked any way you look at it. Sue? Geez.
ONE MORE REASON I WILL PAY CASH FOR A HOUSE. PERIOD.
What happened to so-called “balloon” mortgages where you pay PI on a portion of a loan, interest accruing on the rest, and then you owe a lump sum as final payment?
Is it possible that ten year balloons might keep FBs enslaved?
The industry insiders knew all along that the toxic mortgages they were spewing out were unsustainable and would eventually create problems. The bubble ran for so long because they were able to keep that knowledge from the investors buying their garbage, let alone the population as a whole.
Things have now changed - I think more and more common people are beginning to scratch their head and say, “Wait a minute…”. And you can bet the investor pipeline for this crap is shut off for generations.
So to answer your question, a few might remain hooked with a balloon, but I have to think people will begin to realize that it will solve nothing and will result in a much larger problem down the road.
If the investors can figure it out now, they could have figured it out awhile ago. They just didn’t want to. Same for homeowners…..if they are now complaining about the terms of the mortgage and they now understand it, they could have understood it when they signed. Again, they just didn’t want to.
Excellent !!
Yes, there are definitely a lot of speculators that knew they were betting, but hoped to win big and just didn’t care about the risks. After all, it wasn’t their money, right?
But there were another set of people, just regular J6P who only wanted a house to live in. Some sophisticated, more not who didn’t really understand what they were getting into. Not saying they shouldn’t have done more due dilligence, but there is definitely a difference between scam betters and people who just want a home to live in.
But now the word is out and the just want a home to live in group knows the brokers/banks/financial institutions are just looking to take them for a ride. And I think the stigma about renting just changed overnight from “poor (insert color here) trash” to “you sure are smart not to buy a house”.
I forgot one:
‘Residential housing prices on Long Island and in Queens continued to reflect a weakening market in November, with the biggest declines in Queens, according the latest report from the Multiple Listing Service of Long Island.’
‘Nassau’s median closing price fell 4.8 percent to $461,500 in November, from a year ago. The median closing price in Suffolk dropped 2 percent to $387,300. Queens’ median closing price dropped 17.2 percent to $417,800.’
‘Audrey Livingstone, broker-owner of Century 21 Annettes Real Estate Inc. in Uniondale, said the upheaval in the subprime mortgage markets has made both lenders and buyers jittery. Banks are even having second thoughts about lending to people with good credit, she said.’
‘We get to the closing table and they are pulling the loans, ‘ Livingstone said.’
So she and her agents spend extra time counseling buyers that if their credit is good “you’re not going to fall into the same trap.”
I can imagine that.. the Used House Salesman puts his arm around my shoulder and says “Now don’t worry, little feller.. everything’s gonna be OK”.
The project was built on the site of a failed condo project that remained an unfinished steel skeleton for 17 years until Geibel’s company blew it up in 2006.
Hopefully, seventeen years later they’ll blow this one up also.
Okay, folks, time to start tracking another economic indicator. Let’s keep our collective eyes on…
…the demolition contractors.
I think they’re going to be pretty busy in the coming years.
So the same project failed in two consecutive housing busts after two consecutive housing bubbles. Cute.
“The answer really is price.”
Enough said.
i remember that new “rusting” project. I think that piece of land is cursed. I did hear on the news that people will have to go to court to get their deposits back. what a sham and a shame.
The bearded Devil / is forced / to dwell / in the only place / where they don’t sell / (Burma-Shave)
Got to love these experts, this morning when asked what it will take for the housing crisis to show life everybody had all kinds of ideas but not one said that the prices need to come down to a afforable index, looks like they still want people to get in trouble buying overinflated property and nobody with any brains is falling for that line of nonsense anymore?
The affordability answer is too obvious to be understood.
The baby fish asked grandpa fish “What’s the Sea?” Grandpa says “The Sea is everywhere.. it’s above and below.. It’s within you and all around you..”
Kinda like the way everyone has a “solution” for high oil prices but none of them involve driving less.
However, that’s precisely what happened during the post-Katrina gas price spike. People drove less, and gas prices came down.
Just wait until January. Happy MLK Day.
Ok, I just saw a blurb about some new Fed plan to coordinate with other central banks, but I can’t get to the article. Anyone care to explain what’s going on??
It would seem things are much worse than we we told and now its a global credit crunch. Wall Street Rejoices !
“‘It’s created a perfect storm,’ said Tom Farmer, spokesman for the Massachusetts Housing Finance Agency. ‘In many cases the house is worth less than the loan. So if you owe $150,000 but the house is only worth $120,000 now, you need to get the mortgage company to eat the $30,000.’”
We keep hearing “Perfect Storm”, in reference to people living beyond their means and suffering the consequences.
We used to call it The American Dream…
he’ll get a raise
more of these folks to be hired
Tom Farmer, spokesman for the Massachusetts Housing Finance Agency.
…So I just got back from a week of vacation to find two almost incredibly stupid stories in the news.
A: Mr Bush has a plan to bailout all those ‘poor’ homeowners who might lose their homes. On the other hand, those who bought and can either barely afford their payments or simply just make the payments because they actually had good credit to start with WILL NOT qualify.
B: The Fed is working on some sort of mysterious plan that involves auctions or something that will ‘help alleviate the credit crisis’.
What sort of moronic country are we living in? Seriously- how could anybody with half a brain think that any of these ideas are completely stupid? I swear I’m so sick of the BS. So much for having anything that remotely resembles free trade economics.
Japan-style recession here we come.
“Seriously- how could anybody with half a brain think that any of these ideas are completely stupid?”
Actually, someone with half a brain came up with the nit-witted idea.
“Seriously- how could anybody with half a brain think that any of these ideas are completely stupid?”
How about if someone had, say, 5/8ths of a brain, more than a half, but less that a whole, and then they had some thoughts! And then those thoughts were only 2/3 ‘completely stupid’, because of the extra neurons employed. That’d be good, right!
Hey…where’d my shoe go, and why am I wearing a funny hat?
get ready for 09
less free trade mo free healthcare
I’m looking forward to it.
Healthcare is expensive now….imagine what it will cost you when it is free.
“Healthcare is expensive now….imagine what it will cost you when it is free.”
lmao…
Milton F , is that you ?
already 50% gov in healthcare, we’re doomed
I’m not. Wifes NYS system provides full healthcare to both of us upon her retirement. No cost to us.
That’ll do it, until the great nationwide taxpayer revolt of 2012.
Good luck with that one.
Exeter,
my oldest brother and sil are counting on the same thing.
I hope it works for them, but watching Florida and Cali and the muni blow-ups scheduled for the near future, I wonder.
When the SHTF, there are contractual promises that will be adjusted, downsized, or reneged upon. The fireworks are gonna be something.
Gubmint sucks ’til it comes to free health care, then they’re angels. Sheesh.
Gubmint is in healthcare because of blood sucking lawyers (Edwards) and parasite lobbyists (Thompson)
Just a link for Blano: http://www.bloomberg.com/apps/news?pid=20601087&sid=aGUHdsmRbkas&refer=home
Fed, ECB, Central Banks Work to Ease Credit Crunch
Can someone get on the horn and tell the AARP that the Federal Reserve wants millions on fixed incomes to eat cat food, already?
I don’t have a degree in economics, so I don’t understand how a home can be more affordable if I can’t heat or cool it, or afford any of life’s other little necessities while occupying it. So long as I can borrow for a house and a maybe a flat panel TV tho , I’ll be fine, I guess?
The FED and all the others are going to inject 40 billion into the system. They can inject all they want to, however the only way to get out into the main stream is to lend it. With credit tightening fewer are able to borrow so “pushing on a string” comes into play. The FED can NOT make people borrow. It is starting to get very interesting.
Indeed, even with all the happy-go-lucky bailout news, the cheapest home for sale on my block in the East Bay, SF is 450k, which by area standards is actually…. “more affordable”. Anyhow, it sat for weeks and weeks before this sort of young yuppie couple in a Volvo starting looking at it. The sale pending sign went up… and it came right back down again.
The writing is on the wall, which is that even with all the government help, handouts, and bailouts, this does nothing to address the real problem, which is still the painfully simple problem of housing being too expensive. Even for people making good incomes.
By ‘injecting’ 40 billion, doesn’t that simply mean they are all colluding to create 40 billion in debt out of thin air?
Thank you!!
‘What happened is that a lot of brokers gave what clients wanted — the lower rate — and this is because people are not educated on what ‘rate’ really is, because everyone, including the brokers, tell people that rate is the most important thing. It’s not.’”
Now if he had just taken it one little step further, and said the most important thing is that magic word…..PRICE….
Price is important but its not just price…Its also about psychology…..Take Detroit for example…I understand in some area’s its more expensive to buy a car than a house….
I’m not sure I’d call it psychological issues for not buying houses in areas where the police won’t go at night. I’d call it self preservation.
All true, but the real questions are how do we get what we want (reasonable price house) and make money on the current/pending recession?
“‘It will be some time until it stabilizes,’ said Afshar. ‘I don’t think we have seen the bottoming of this process, probably not until next summer.’”
I don’t think sales will bottom next summer until sellers start dropping their prices significantly and quickly enough that buyers are comfortable with the mortgage payments that they will have to be paying if they were to buy a house next summer. There is no safety net of rapid appreciation that caused people to accept dangerous mortgages in the past couple of years. Such mortgages are what propped prices up so high in the past. Take those away, and prices need to fall quite a bit before people start buying. The amount that they need to fall in the Allentown area is still less than the amount that prices need to fall in the DC area (where I live), but it’s still a significant amount that prices need to drop (anywhere from 20% to 50%) before a bottom is reached.
Agreed. This is why these predictions such as “we will bottom next blah” are founded on thin air. Things will bottom as soon as afforability returns to the market, be it through lower prices, increased wages or easier credit. Good luck on the last one.
“‘You could have put a monkey behind a desk and they could have got somebody financed,’ he said.”
But the monkey would through feces at whom ever was sitting across form them. The mortgage broker wouldn’t …never mind!
Ahhh… AND he assumes that the “undesirable” people were the ones let go. I’m inclined to think it was the pushiest folks who did the best job arse-kissing who got to stay.
“‘I’m actually kind of happy,’ said Christopher Tremblay, CEO of Mortgage Dreams LLC in Worcester, which has reduced its staff from about 50 down to 15.”… “Tremblay and other mortgage executives say it has been obvious for years that many brokers and lenders were acting unethically, with strong support from banks and other lenders…. ‘What I hope we can do is keep the undesirable people from coming in and out of our industry,’
When I see them saying that the mortgage brokers could get anyone financed ,my first thought is… why could they get anyone financed ?
Fraudulent loans ,fraudulent rise in real estate demand that raised prices ,and than natural crash in prices because of fraud in lending during a mania bubble .
Ben posts articles all the time about the type of lending the bulk of lenders were doing and you can’t change that it was a false price market in most markets ,because of the lending .
The RE prices in a couple of years went to something that would usually take 15 years to achieve ,given normal inflation .Without the fraudulent low down lending ,there is no way that this baby isn’t going down big time, which means huge huge huge losses for the bag-holders .
It does not make sense to continue to make fraudulent high risk loans .The demand goes down to nothing based on borrower really qualifying and the supply still remains high .
What do the lenders want ,the Feds to lower the discount rate to 1% against the junk paper they hold so they can borrow cheaply when the banks really need to get a long term loan at a punitive interest rate to stay solvent as they write down their losses ? The lenders need to either sell assets or take out long term loans as they spread out their losses . What other choice do the institutions have other than some loan modifications that might save some foreclosures .
I guess I don’t understand why the Feds (at the discount window )are making short term loans against bad paper . We have a tight money market because there is great risk in lending in a falling market ,even if the people do actually qualify for the loan .
The industry needs to establish where any given market should be at price wise based on true demand and true qualifying with reasonable down payments ,given the risk . If your basing market recovery on how many loan modifications you can do, or how many bail out plans you can come up with ,or how many greater fools you can find to bail out FB’s , or how many bad loans can be pass off to the tax payers ,or how low you can take the Fed discount rate to ,than aren’t they just trying to make bad loans good in a attempt to find different bag-holders ?Lets face it ,other than a few dumb investors or greater fools , isn’t the only option the taxpayers in the minds of the people that created this mess or allowed this mess to happen ?
It seems to me that the powers are trying to share the losses in that 1/3 goes to the loan investors ,1/3 goes to the lending institutions ,and 1/3 goes to the taxpayers by bail out government backed loans and Fed money infusions .Is that Justice ?
Mortgage applications rose a seasonally adjusted 2.5% last week, as mortgage rates headed up, according to the Mortgage Bankers Association’s weekly survey, released on Wednesday.
Applications were up 14.2% compared with the same week in 2006.
Mortgage applications to refinance an existing loan increased 4.3% last week compared with the previous week, and purchase loans increased a seasonally adjusted 1.7%.
One thing they don’t tell us (which would be valuable to know) is what is the %age of applications that are declined this year vs. last. My guess is it is a much larger number of declines, so the increase in applications might be meaningless. The number of deals being done has got to be waaaaay down - that is the real measure of the health of the market.
Spring resets trying to refi early…
“Hoboken-based Metro Homes has shut down a 224-unit high-rise project in Asbury Park…The project was built on the site of a failed condo project that remained an unfinished steel skeleton for 17 years until Geibel’s company blew it up in 2006.”
Hey! I believe that this could be one of them there ‘irony’ thingies I heard about in college literature class.
Sounds like something Bruce Springsteen should be writing a song about… or maybe he already has.
I’m suprised it took someone this long to say that. That was the first thing I thought.
He did. “My City’s in Ruins” was written about Asbury Park.
OT… Looks like Sallie is getting screwed!
http://biz.yahoo.com/ap/071212/sallie_mae_buyout.html
Good. What a terrible organization, but I’m finally starting to see ex-students see the light about what a scam Federally-guaranteed loans are of any sort, especially student loans.
Maybe once people see that SLM’s easy money made college more expensive than the value you get out of it, they’ll also see the fraud involved in programs such as the Pell Grant and all the other Federal-guarantees for student loans, all which only guarantee that colleges will continue to raise tuitions to be just a little more than the guaranteed amounts given.
Housing prices go up too fast, why? Government gave out new money to buy homes. Typical.
Stock market prices went up too fast, why? Government provided new money that was used to buy stocks. Typical.
Health care prices went up too fast, why? Government provided new money to provide for health care.
Student tuition prices wen tup too fast, why?
Everyone, together now…
bingo
gov “help”
“. . .starting to see ex-students see the light about what a scam Federally-guaranteed loans are of any sort, especially student loans.”
As the costs go up and the benefits go down men, at least, are responding - not sure about women. It is clear that men have a higher opportunity cost of going to college than women because of their greater average size and strength, making them more suitable for well-paying, non-degree-requiring physical occupations such as the military, heavy construction, and the like.
What about the non-federally guaranteed loans?
Check out First Marblehead…3rd largest non-fed student loan.
Rising default rates, stock price slide, can’t securitize loans, oh my.
In the Denver where the market has been in the pits for years now they continue with hope springs eternal. Houses went up for 1.1 to 1.4 millon recently and these are not palaces by any stretch, the on site builder when asked aren’t you a little scared to commit to these prices and his responce,” look if i can’t sell them so i go under i been behind the eight ball before?”
I think that is a problem in this country now, people are not scared to go bankrupt like years ago they think it is the cost of doing business i can always find credit?
Now that Denver’s been officially labelled a “declining” market, lenders will require higher down payments. I can’t wait to see sales numbers and prices next summer.
Didn’t see any NH responses. Is the Nashua area poster still around?
I checked Portsmouth, and Rye /Rye Beach and Newington (Seacoast/Rockingham county) I couldn’t believe prices on the listings I pulled up were already reduced. They looked more like peak to me. That’s my childhood home so I can only shake my head.