The Workout Doesn’t Work Anymore
The Denver Post reports from Colorado. “More Colorado homeowners have gone into foreclosure in the first nine months of this year than in all of 2006, which was a record year. And in a sign of how tough times are, about two of every three Colorado homeowners who enter foreclosure are losing their homes at auction, compared with about one of every two last year. ‘We don’t think we have bottomed out yet,’ said Kathi Williams, director of the Colorado Division of Real Estate.”
“Public trustees in the state reported 28,960 foreclosures from January through September, versus 28,509 through all of last year. The state recorded 19,025 foreclosure sales at auction through the first nine months versus 15,112 in all of last year, according to the report.”
“‘We had 28 foreclosure sales today (Wednesday), and they all went back to the lender,’ said Debby Morgan, public trustee for Larimer County.”
“Mortgage lenders and servicers, buried under a rising mountain of delinquent loans, are taking three weeks to a month to approve ‘workout’ plans designed to keep borrowers in their homes or allow them to arrange a voluntary sale. ‘We were driving more people to the hotline. And those counselors weren’t able to get answers out of lenders,’ Wil liams said. ‘The value of the property continues to deteriorate, so the workout doesn’t work anymore.’”
The Rocky Mountain News from Colorado. “‘Last year, we had a small-city worth of foreclosures,’ said Zach Urban, who runs the Colorado Foreclosure Hotline. ‘It’s a crisis without end, it seems like.’”
“On Thursday, ForeclosureS.com reported that in the first 11 months of the year, Colorado had 16.3 real estate owned, or REO, filings per 1,000 households, down more than 22 percent from the same period in 2006.”
“But if that number is correct, it is because lenders are so swamped with foreclosures they can’t process them in a timely manner, said Urban and other experts.”
“‘I don’t think any dip in those numbers indicates a relief of the crisis,’ Urban said. ‘It’s an indication of how bad the crisis is. The scariest part is that if the mortgage lenders were more efficient, we would have even more people losing their homes.’”
The Coloradoan. “‘I don’t think anyone is prepared for what’s to come in the next year,’ said Urban. ‘This is something that’s a slow moving storm; it’s taking a lot of time to see the damage uncovered.’”
From Arizona State University. “In an environment of heightened economic uncertainty and continuous financial issues, the local resale housing market remained anemic at 3,280 sales, in comparison to 3,610 recorded sales in October 2007 and last year’s 5,040 sales.”
“The month of November brought the year-to-date total to 47,690 sales, which is well below the 62,415 for 2006 year to date and 104,360 sales for 2005 year to date.”
“‘Although there is a large inventory of available homes, buyers appear reluctant to take advantage of the market,’ said Jay Q. Butler, director of Realty Studies. ‘Many of the vacant homes are in submarkets that current buyers do not want…Thus, the 2007 resale housing market continues to show signs of increasing weaknesses that are well below the expectations of even a few months ago.’”
“The Scottsdale resale home market declined from 400 to 240 recorded sales, the median sales price decreased from last year’s $630,000 to $544,645. Glendale decreased from 350 to 235 sales, and the median sales price decreased from $247,000 to $215,000.”
The Arizona Republic. “Median prices fell to their lowest level in 2½ years as the number of housing resales slowed to a crawl in November.”
“The median price in the Phoenix area fell 7 percent to $240,000 in November, compared with $259,000 a year earlier. That’s the lowest median since $235,000 in May 2005, according to ASU.”
“‘When there is a lot of uncertainty, people become reluctant to make major commitments,’ said Butler. Would-be buyers fear they can’t sell their homes. They are waiting for prices to drop or can’t get financing, he said.”
“One bright spot is that homes continue to get more affordable, and the market for houses priced at $200,000 continues to increase. The percentage of homes sold at $200,000 or less increased from last year’s 16 percent to 29 percent in November.”
“Not under the Christmas tree this year for Southeast Valley homeowners: a deal to sell their homes.”
“November resale numbers show…sale prices also continued to fall throughout the Southeast Valley, except south Tempe. December is expected to be equally slow.”
“Butler said he wasn’t surprised by the ongoing market weakness but that most economists had thought that 2007 would be a better year at its outset. ‘It’s continuing to be a lot lower than we thought at the beginning of the year,’ he said. ‘We thought the year would end up a little bit better than it is.’”
“‘It’s the growing economic uncertainty, all the talk about ‘Are we in a recession or aren’t we in recession?’ Butler said.”
“Hub Blanchette saw this coming in July. Blanchette, Chronic Car Audio’s CFO, was walking out of an East Valley box store in the middle of the morning this summer and noticed the parking lot was deserted, save the employees’ cars.”
“It was a sign to Blanchette that the state’s surging economy was about to hit the skids. ‘The next day, we cut payroll by $100,000,’ Blanchette said. ‘If we hadn’t done that, we’d be under right now.’”
“The company has cut payroll twice since then, and plans another 25 percent payroll cut before the end of the month, Blanchette said. ‘If you don’t cut costs, you’re not going to have a job anyway,’ Blanchette said. ‘That’s the reality of the situation right now.’”
“It’s a reality born out each month in Mesa, as the city releases statistics that show sales tax revenue continuing to slip.”
“‘It started out with the housing mortgage thing,’ Blanchette said of the off-cited root of Arizona’s economic problems. ‘With the pay cuts and a lot of the ‘re-fis,’ their payments are up.’”
The Havasu Sun News from Arizona. “The already grim housing market suffered yet another setback Tuesday as officials announced that home construction plunged even further last month, sinking to its lowest level in nearly three decades. Officials says the downturn in building activity has begun to seep into other parts of the economy.”
“The latest snapshot of the city’s building activity, released Tuesday by the Development Services Department, showed that only three single-family building permits were issued in November, the lowest monthly total in at least 27 years.”
“Officials said city permit records only stretch back to 1980, making it difficult to pinpoint the last time construction was this stagnant.”
“‘I don’t even need to say anything,’ said Bud Schulz, executive director of the Colorado River Building Industry Association. ‘The numbers speak for themselves.’”
“Nonresidential construction, the lone bright spot for builders the past several months, fell dramatically in November. Commercial projects totaled about $1.4 million last month, down from $12 million in October.”
“Home construction has been in a tailspin since 2006, with single-family building permits hitting a 25-year low this past fiscal year. Those figures have tumbled even more in recent months, falling from 17 to 7 to 3 since September.”
“‘If this trend continues, then it will affect the entire economy of the city,’ Schulz said.”
In Business Las Vegas. “It was not a happy day. Mark Stark, CEO of Prudential Americana Group, one of the largest real estate brokerages in Las Vegas, said he was discouraged when he realized he had no alternative but to file Chapter 11 bankruptcy if he wanted to save his firm, which continues to operate while it reorganizes it debt.”
“‘I was bummed,’ Stark said. ‘I was bummed.’”
“When he took over 100 percent of the ownership of the brokerage in 2004 from his 25 percent stake, Stark said he never envisioned the Las Vegas housing market tanking like it did and making it impossible to make payments on one of the two loans totaling $22.5 million he took out to buy out his partners.”
“That’s quite a contrast from three years ago when Prudential Americana had an offer from Warren Buffett’s HomeServices of America to buy the firm. Stark matched the offer.”
“‘I would have gotten a huge check and with bonuses — it would have been $12 million to $15 million at the time,’ Stark said. ‘I said no, and the reason being is I had a belief as I do today. That is why we have done well in a tough environment, and we have hung in there.’”
“When he acquired the firm, Stark said he had a plan that if the market adjusted 30 percent, the brokerage would still be fine.”
“‘The market adjusted more dramatically than we anticipated,’ Stark said. ‘If you would have told me, this market would have gotten hit 67 percent in two years, I would have said you have no idea of what you’re saying. No one expected two-thirds of the market to go away.’”
“‘I don’t see what if anything we could have done differently to protect the company,’ Stark said. ‘We didn’t add a lot of bricks and mortar. We didn’t waste dollars. We were healthy. We were very profitable until the market went away.’”
“‘We have a core economy that is healthy, but we now have a timing issue,’ Stark said. ‘We have to work through this slop that has created challenges. This inventory will be eaten up because we have a core economy. This is not Detroit, Michigan.’”
“The No. 1 problem to deal with is perception, Stark said. There are great deals to be had in the market, but the perception of many is that prices will keep falling.”
“‘If you are waiting until the market gets better, then sellers have the idea of things getting better and they can hold more firm,’ Stark said. ‘Today, you can go out there and sellers aren’t so sure. If you wait, you are going to pay higher prices.’”
‘ Some homeowners in St. George (UT) with adjustable-rate mortgages should brace for a hard winter and tough new year. An average of three notices of default are served every day in Washington County, compared to just one notice a day last year, said Todd Gorishek, president of the nonprofit organization Housing and Opportunity through Positive Empowerment.’
‘Some, Gorishek said, will have to sell. ‘Some people are living in homes they can’t afford and never will afford,’ he said.’
‘…the nonprofit organization Housing and Opportunity through Positive Empowerment.’
I think that could be the dorkiest name I’ve ever heard for a non-profit.
Why don’t they call it the ‘Office of Joy-Joy Happy Bunnies With Cute Little Bows by Their Darling Bunny Ears’?
‘Cause that’s even more positive and fuzzy-like, and makes EXACTLY as much sense.
Because the acronym - OOJJHBWCLBTDBE - doesn’t have the same ring as HOPE.
Just so ya know.
Oh. Well, then.
Oh, no NOT well then–that’s still stupid! Positive Empowerment?! What a forced verbal reach, all for a stupid acronym.
The group Iiiiiiiiii work for has a long name and I believe the acronym is ‘GNNA KIK YER ASS’.
Now THAT is an acronym. Not some stupid ‘Hope’ blather.
if you pay taxes , you’re kickin in
Too much inventory dragon on, slayed St. George…
A sign of desperation:
“K. Hovnanian Homes has increased the commission up to 10% for any contract written by December 31st, 2007 and closed by January 30th, 2008. Take advantage of this incredible holiday season offer today before it’s too late. If you have a serious buyer that you are currently working with, then you can’t afford to let this opportunity pass you by.”
This is for projects located throughout SoCal. In the past it was rare for a builder to offer ANY commission to an outside agent. Now they have had to up it to 10%! What’s it gonna be this summer….20%…30%???
How about drop the friggin’ price? Geez.
December 14, 2007 — Peter Schiff
More Gasoline on the Fire
This week’s announcement by the Fed that it will create a new mechanism to provide funding for credit challenged banks has been lauded by Wall Street as an innovative approach to solving the credit crisis. In truth, it is really just the same response the Fed has had for all problems great and small: crank up the printing presses, shower money on the problem, and hope that financial pain can be obscured by the balm of inflation. Both the Fed and Washington politicians are completely clueless regarding the ill effects of the plan, and are simply acting in desperation to keep a ticking time bomb from exploding before the next election.
The Fed and other foreign central banks will provide this liquidity by auctioning low interest rate loans to holders of U.S. mortgaged-backed securities. The loans will be made under the same terms currently in use at the Fed’s “discount window”, with the added benefits of even lower interest rates and anonymity (borrowers wish to avoid the public stigma that comes from utilizing the discount window). Since the loans can be collateralized by mortgage-backed securities, the Fed will be on the hook should these loans not be repaid. In other words, the losses will simply be monetized, or more precisely socialized, as they are passed to the public in the form of inflation.
To get a sense of the losses that potentially await the public, in a recent transaction, E-Trade Financial liquidated its entire portfolio of subprime mortgaged-backed securities for a mere 27 cents on the dollar!
The hope that this additional credit will somehow alleviate the problems in the U.S. housing market is extremely naïve. Virtually none of this newly created credit will find its way back into the domestic mortgage market. With our real estate prices still too high, the gathering potential for lenders to be forced to assume liability for “unsophisticated” borrowers, the added uncertainty regarding mortgage terms, and the persistent weakness in the U.S. dollar, such loans will be far too risky for most foreign lenders to consider. Instead, these banks will take this cheap Fed money and invest it in higher yielding assets overseas. Off-loading risky U.S. mortgages to the Fed in exchange for cheap loans that can be used to finance better yielding foreign investments could well develop into the next carry-trade of choice.
The real losers will be ordinary Americans, who do not get the benefit of the newly created money, but merely suffer the consequences of rising domestic prices and a falling standard of living. With this new plan, the Fed is laying its cards on the table and its hand is a loser. If mortgage losses are socialized through inflation, this new cure will be even worse for the economy than the “housing bubble disease” the Fed infected us with in the first place.
Now that the Fed has upped the inflation ante it’s time to press our bets on gold. About two weeks ago Goldman Sachs predicted that shorting gold will be the best trade of 2008. Call me cynical, but knowing Goldman Sachs, my hunch is this shrewd investment bank, recently criticized for shorting the very subprime loans it was touting to its customers, may be perusing a similar strategy with gold. Perhaps Goldman has a current short position it needs to cover or wants to buy a lot more gold, but needs to convince others to sell it to them.
Maybe Goldman will be right after all. Shorting gold could turn out to be the best trade of 2008, but not for those who short it, but for Goldman Sachs as it takes the other side of the trades. Recent moves by Paulson and Bernanke virtually guarantee that gold will rise. It’s good to be the king.
OK mojo, I’ll stick with Aussie dollars (a gold play). AUD has been sickly for a month, but I think your advice is better than Goldman Sachs’s.
When Gambino Sachs tells you to take one side of the trade you can bet that they are on the other.
And to think there are people on this blog who have been predicting we’re headed toward a deflationary period! The helicopters are in the air, and more are in the process of being fueled and loaded.
To think indeed. And with those treasury rates at the wildly deflationary levels of today, you could make a fortune betting for vastly higher rates. Let us know how you do.
The Fed will always save the banking system, and the Fed will always use their one weapon. (Although they’ll pretend they have others). Inflation hasn’t even begun yet.
Deflation must of course, come at the end game of any credit bubble. But the Fed will unload all their ammo before the end game comes. They’ll succumb (every time) to the arguments that a weaker dollar is preferable to widespread bank collapse.
“‘The market adjusted more dramatically than we anticipated,’ Stark said. ‘If you would have told me, this market would have gotten hit 67 percent in two years, I would have said you have no idea of what you’re saying. No one expected two-thirds of the market to go away.’”
I’m getting real tired of these “no one expect” - “no one anticipated” - “no one could have known” - “no one predicted.”
When are these jacka$$es going to admit their greedy blinded them to reality and that anyone with common sense could and DID easily predict the $hitstorm we’re in today?
“Stark said he never envisioned the Las Vegas housing market tanking like it did”
Then you’re an f-n moron. I’m not even gonna give him the blinded by greed credit. Even greedy people have foresight. Nah, he’s just an idiot.
He starts out with.. I could not have seen this…
And ends with… people that wait to buy will end up paying more.
The dude admits he is as dense as lead, then wnats us to beleive his call of “buy now or be priced out forever”.
What a moron… All he does is convince us waiting is the right thing to do!
No matter how many of these stories that I read, it never ceases to amaze me the power that this mania continues to have over people. Here is a guy who has gone bankrupt, who lost millions of dollars and still refuses to see the situation for what it is.
In years to come this mania will be used as a case study in the power of herd behavior.
Allow me to re-post his pearls of wisdom:
“‘If you are waiting until the market gets better, then sellers have the idea of things getting better and they can hold more firm,’ Stark said. ‘Today, you can go out there and sellers aren’t so sure. If you wait, you are going to pay higher prices.’”
When I read this, I understood how this guy was able to snatch defeat out of the jaws of victory.
Yeah, and the guy could have walked away from it all a multi-millionaire and never worked a day again in his life, had he decided to sell his part of the company instead of (borrowing lots more $$$ and) buying the whole thing!
Coulda, woulda, shoulda, 20-20 hindsight, and all that . . .
Ya think those 2 guys he bought out are having a chuckle or 2?
Never bid against Warren Buffet.
“‘If you are waiting until the market gets better, then sellers have the idea of things getting better and they can hold more firm,’ Stark said. ‘Today, you can go out there and sellers aren’t so sure. If you wait, you are going to pay higher prices.’”
Dear Mr. Stark, if home prices are dropping in a “good economy”, then what do you think will happen when the economy goes in to an official recession? One thing people need to learn - everything returns to the mean.
Like anyone would listen to his bankrupt a$$. I mean really this RE big shot screws his business into the ground because he is just riding a wave like the rest in RE. Next stop wipe out! Now is best time to buy spewing out of his robot azz.
The only logical reason to buy RE is that it’s cheaper than renting. Sometimes. Now is not one of those times.
“‘Although there is a large inventory of available homes, buyers appear reluctant to take advantage of the market,’ said Jay Q. Butler, director of Realty Studies. ‘Many of the vacant homes are in submarkets that current buyers do not want…Thus, the 2007 resale housing market continues to show signs of increasing weaknesses that are well below the expectations of even a few months ago.’”
“Submarkets”???? Jay, you are really really not paying attention, are you? It’s not just Maricopa, Queen Creek, and Surprise and triple-wides in Buckeye…it’s DC Ranch, Greyhawk, North Scottsdale in general, half of Prescott, Sedona, Flagstaff, etc. You know, those 500K+ granite counter top filled stucco wonderhouses with Hummers in the driveways…THAT’s the new “submarket”.
One of the fascinating aspects for me of this whole thing are the diametrically different interpretations of a “better market”.
Sellers holding on for a “better market”, meaning the appraised value of their property going back up and (non FB) Buyers holding out hoping for a “better market” of lower prices.
Awesome
And the used house sales people are waiting for “better market” which to them just means a market with a normal amount of transactions regardless of price.
Looks like we’ll be at 10K resale (house + condo) transactions this 4th qtr for PHX metro. That is the slowest year, by a LONG shot, of the data I can find. Even the mid 90s, when population was 25-30% lower, we were breaking 12K transactions for the 4th qtr.
I just find it amusing that when the over-leveraged and clueless talk about a “better market” they are not talking about affordable housing.
Oh yeah, there’s going to be a “better market”, but it will not consist of a return to eternally escalating prices.
Where can I get information on Fulton Ranch (Chandler)? Anyone in AZ have any ideas? I made a bet that those $600,000 and up custom home lots will come waaaay down in price.
http://www.azcentral.com/realestate/homes.php
zip 85248?
Be careful with transaction prices because tehy show up at the price the contract was signed for.. so prices from last few months may actually be price from a year ago.
“‘Although there is a large inventory of available homes, buyers appear reluctant to take advantage of the market,’ said Jay Q. Butler, director of Realty Studies.
Listen, Jay. Q. Butthole, we’re not relunctant to buy a house, we’re reluctant to take a financial bullet for a retard who walked in front of the firing squad.
‘Many of the vacant homes are in submarkets that current buyers do not want…
You mean the vacant homes are priced such that current buyers can’t or won’t buy them. Drop the price low enough and you’ll find a buyer.
Thus, the 2007 resale housing market continues to show signs of increasing weaknesses that are well below the expectations of even a few months ago.’”
It’s the PRICE! IT’S THE FRIGGIN’ PRICE, BUTTHOLE!
No question about it, the prices will cure all the housing problems i see it everyday. Plenty of people go in and out of empty brand new houses and i always stay close and ask did you like it yes we did but the price is very high for today’s market.
I say , why don’t you offer on it a couple told me we made three offers the builder won’t budge now is that the fault of the buyers or seller. When i confronted the builder i ask i understand that couple offer on the house his reply we are 13k apart they can either take it or leave it, this attitude is killing the sales but many a sellers continue with this total nonsense.
Sounds like the guy doesn’t really need the sale yet.
I think he is dead you can quit shooting him. I agree he is an absolute moron.
inflation/rates are up. now what do the sellers do? the steve miller band had a song for this one…
Fly like an eagle?
Abracadabra?
Woo hoo hoo!!! Come on, take the money and run…..aaooooooo dog!!!
Everyday bings more great news, yesterday it was steroids and baseball, today it is inflation rising and tommorow who knows one thing i can tell you, it won’t be any good news such as the housing crisis is getting better?
Here’s some good news . . .
Data from ForSaleByOwner.com shows that real-estate agents and brokers will collect $55 billion in commissions during 2007. The figure is down substantially from last year’s commissions, when they raked in $65 billion, and 2005, when they collected $68 billion.
The average commission on a home in 2007 was $13,900, according the listings Web site. Due to a challenging real-estate market and a general unwillingness to part with that extra cash, the group expects more people to sell homes on their own next year.
A 20% drop in income seem surprisingly small, I would have expected a larger drop from the media accounts of Realtors and real estate companies going under.
you cannot be surprised by the baseball story?!
Allow me to add to this most joyous vitriol.
‘I don’t see what if anything we could have done differently to protect the company,’
You could have realized that selling houses to people who couldn’t afford them was probably not a sustainable business.
cocaine tends to blur the lines between reality and well, outright euphoric grandiosity.
Who needs drugs to make you happy?
My daily dose is from this blog. The witty and sarcastic posts keep me laughing.
“This inventory will be eaten up because we have a core economy. This is not Detroit, Michigan.’””
Yep, Las Vegas has a Reeeeal stable economic base. Not that an economic downturn would affect it or anything… (I wonder what fraction of money gambled over the last few years in LV came out of HELOCs?)
Wow, between this guy, and that guy from Palatine, IL in an earlier thread, we’ve seen new levels of “it’s different here” today.
Gee, I wonder if these guys ever stopped to consider why their Fed is looking for global cooperation to fix “local” problems?
…to help the “frothy” areas…?
Well, yeah, and Chernobyl had a core reactor.
And Detroit still has a core economy. Somehow ‘its different here’ doesn’t work during a national credit crunch.
Got popcorn?
Neil
Neil: someone left one of those gift cans of popcorn in our breakroom. I’m noshing on some right now.
Lol!
Coworkers don’t understand why when they say ‘prices could go back up’ I note ‘then I don’t lose.’ They give me a really confused look… then I note all of our competitors whom are moving employees out of bubble markets and the recent press releases by our company. They go ‘but you’ll be forced to move.’ My reply is ‘yes, but I’ll enjoy the pay raise.’
There is always more than one solution. Houston, we have a problem…
note: I know prices are coming down, but some people just won’t see what’s in from of their eyes.
Got popcorn?
Neil
I’m reminded of a joke back when there was an effort to legalize marajuana in Las Vegas…
“Pot…. because gambling and prostitution wasn’t enough sin.”
Gambling and prostitution… yeah, that is a stable core economy.
A core economy of low paying service jobs that is. A few years from now when prices drop enough so average Joe card-dealer can buy he’ll finally be right. Just not for the foreseeable future.
“‘I would have gotten a huge check and with bonuses — it would have been $12 million to $15 million at the time,’ Stark said. ‘I said no, and the reason being is I had a belief as I do today. That is why we have done well in a tough environment, and we have hung in there.’”
You would think that anyone who has been in the business at least 10+ years would have seen this coming. I bet he’s kicking himself in the ass daily for not taking that check. What a moron.
Just can’t understand people in general, about 4 months ago a flipper house recieve a offer about 100k under listing price but still left the investor after all cost about a 89k profit of course he thumb his nose at it???
As i type the guy has now lowered the price to where he will now lose 20k, what is it with these people i really think 90% are on mind altering drugs and have no idea what right or left is. One thing i do know, i have no quams if this guy goes bellyup.
I’m dealing with something like that with a client of mine now…I have been trying to get him out of a building he has owned for a short period of time. The tenants are running him through the ringer. Last year when the building was worth 125k a door, he dragged his heels and eventurally dismissed a deal where he would have made a significant profit. Now the building is worth about 100k a door, the tenants have turned up their terror campaign to a new level, he’ll still turn a profit because he bought in at around 60k, but a significantly smaller profit. Now he whines he doesn’t want to give it away. Yet he calls me daily to bitch and moan about the tenants and how much money he is losing. Some people just enjoy pain.
‘Some people just enjoy pain.’
And those people should be given more pain. In fact, it’s almost a cosmic mandate to do so.
The masochist desperately begs and pleads for more and more pain from the sadist.
The sadist refuses to give it.
Just curious, but what exactly are the tenants doing?
Non-payment, property damage, calling housing authority after creating said damage, dragging him through L.A.’s draconian eviction courts.
If it wasn’t so sad it would be funny. He’s made a comedy of errors…which I won’t go into.
Looks like Buffet missed getting screwed. Success is 90% luck!
Fooled by Randomness…
There’s a great deal of luck in it, yes. Then again, I think you have to have a healthy amount of fear to balance your greed, if you want to weather periods such as the one we’re in now.
Success 90% luck>>>Ain’t that the truth!
Luck is preparation meets opportunity. Hopefully not preparation H.
“we have hung in there.” All the way to bankruptcy.
Yeah in hung in there to the bitter end and is still in denial.
Once in a lifetime opportunity of cheap and sleazy credit to become an idiot millionaire. I talk to fomer millionaires all the time who think this RE boom will return any day now. Keep hope alive…
“I bet he’s kicking himself in the ass daily for not taking that check”. What a moron.
You know he is, of course greed got in the way and he felt like he was king of the hill, a real big time play-a. Why he beat Warren Buffet out! You just know he bragged big-time at cocktail parties.
Belief? Go to Utah. This was about taking out the ruler and laying it on the desk with Warren Buffett and… err… measuring the offer, y’know? Buffett must be laughing hard now.
Not a moron. Just greed. And sometimes it just doesn’t work out.
His partners, it seems, didn’t share his optimism. Who’s the smart one in this transaction?
OT: I’m off to a huge holiday party where I will pretend I had no idea this was all going to happen. That is, of course, if I do not consume too much egg nog.
The thing is, I really, really like egg nog.
With a little rum added
Is there any other kind?
“Mortgage lenders and servicers, buried under a rising mountain of delinquent loans, are taking three weeks to a month to approve ‘workout’ plans designed to keep borrowers in their homes or allow them to arrange a voluntary sale. ‘We were driving more people to the hotline. And those counselors weren’t able to get answers out of lenders,’ Wil liams said. ‘The value of the property continues to deteriorate, so the workout doesn’t work anymore.’”
It’s only taking three to four weeks in Colorado?
I found that it took about two months with Countrywide this fall.
It’s interesting that things are deteriorating so rapidly that 3-4 weeks is too long for a workout to go through without the circumstances behind the workout changing. That really doesn’t mesh with the forecasts of the shills for a recovery in 2008. Housing has to level off before going back up and instead it appears to be falling even faster.
“No one expected two-thirds of the market to go away.’”
**raises hand**
I did, and some of us here did!
This is what you do:
Say your normal year 2000 sales were 13,000 houses. Then the numbers do this: (all SWAG)
2000 - 13,000
2001 - 15,000
2002 - 20,000
2003 - 30,000
2004 - 40,000
2005 - 50,000
2006 - 45,000
2007 - 35,000
Notice something?
That is called returning to the mean. In other words, the market is going DOWN to where it should normally be. You will not pull off sales that weren’t meant to be there in the first place, and you adjust accordingly.
And if you had been satisfied with a ‘mere’ 12 million, instead of reaching for at least 40 million, you wouldn’t be in trouble.
Why is it so hard to remember that if it sound too good to be true, it probably is?
SMF,
You have the right idea. But by your extrapolation, they could expect sales at 75% of the bubble years… except that they stole ~ 5 years of sales away. So don’t expect to see ‘reversion to the mean’ sales until 2011 in Las Vegas. Between now and then? We’re below. In other words, sales will continue to slow.
Got popcorn?
Neil
I didn’t bother to get the actual numbers, but the idea is that realtors are saying that people are ’sitting on the fence’ waiting for the market to shake out.
My point is that the current sales number are STILL overinflated compared to the normal sales range expected.
Hence, sales are NOT coming back up, and people are NOT sitting on the fence waiting for prices.
If a market has numbers that still look good compared to 2000/2001, they have not reached normal levels.
(p.s. eating way too much popcorn lately)
Hence, sales are NOT coming back up, and people are NOT sitting on the fence waiting for prices.
You’re right. We aren’t ’sitting on the fence’ about to jump off. We’re in our rented dig’s living room. Comfy. Furnace going… enjoying ourselves.
Got popcorn?
Neil
5 years? Try 20. Outside of tourism housing *was* the economy.
Try PHX:
Reslaes (house + condo) for 4th qtr if year:
1995: 11,750
1996: 12,250
1997: 13,775
1998: 15,835
1999: 15,675
2000: 16,020
2001: 16,770
2002: 19,095
2003: 21,915
2004: 31,145
2005: 26,800
2006: 17,355
2007: 10,000-ish
3600 in Oct. 3200 in Nov. With Dec on pace to be in-line with Nov.
Oh, and population is something like 30-35% higher now than ‘95.
I can’t find quarterly sales pre-1995, but ASU has annual sales back to 1988.
Go back to 1990… pit of the last crash… 40K sales for the year. But, the population was something like 1.7 million. We are said to have 4 million now. 235% the population. So, take the 40K transactions from 1990 and adjust for population and we should be at 94K transactions a year at the rate of the pit of the last crash.
Oh… but 4th qtr isn’t the best qtr. True. Since ‘95, 4qtr has only been 23% of annual sales. So, if we take the 10K transactions and extrapolate but multiplying by 4.35 (100/23) we find we are on pase to hit 43,500 sales.
Less than 10% higher transaction rate than 1990 but we have 235% the population as we had then.
Thanks for compiling that Darrell - it will be printed out and added to my “negotiation folder” for whenever I start to actually consider making offers again.
Some may remember that I was actively looking a few months ago to upgrade into a bigger house - for actual living in / enjoyment purposes. Despite the reality of credit, sales, etc, the sellers are still in 2005 dreamland around here. A reduction of 5% is considered “giving the house away”. When AZ finally wakes up, it may be pretty bad.
Foreclosureville, Colorado, USA
Elevation 5280, Population????
Ben, thanks for the Colorado thread. The RE industry’s advertising check’s to the newspapers must have finally started not clearing. Seems like they have been on lockdown about the entire subject for a while.
–
“The Workout Doesn’t Work Anymore”
That is why we have fat people, I mean house-fat people. 80% over weight?
Jas
“Those figures have tumbled even more in recent months, felling from 17 to 7 to 3 since September. ‘If this trend continues, it will affect the entire economy of the city,’ Schulz said.”
No schet, Scherlock Schulz. But what trend are we talking about? If it’s the simplest polynomial (a parabola), there will be 5 permits in Dec and 13 in January. Not likely. If it’s an exponential decay (also a reasonable fit), there will be 1 permit in December and none thereafter…forever. Hmm. I propose that HBBer’s get together and make a bid to bail out Havasu City by buying London Bridge, which we can rename Housing Bubble Bridge or David Lereah Bridge, or whatever you think appropriate. Whaddaya think. Charge people $1000 each to have a commemorative brick inscribed with their individual names.
‘We thought the year would end up a little bit better than it is.’” - I sure in the hell wouldn’t wanna know anyone that makes up this “we”! Gotta be a collection of complete numbskulls!
“‘I would have gotten a huge check and with bonuses — it would have been $12 million to $15 million at the time,’ Stark said. ‘I said no, and the reason being is I had a belief as I do today. That is why we have done well in a tough environment, and we have hung in there.’”
But you HAVEN’T done well in a tough environment, Mr. Stark. Your brokerage firm, one of the largest in Las Vegas, is declaring Chapter 11 bankruptcy, right? And this caused you to become ‘bummed’, correct? Very bummed. So what sort of belief are you talking about?
‘“The No. 1 problem to deal with is perception…If you wait, you are going to pay higher prices.’”
Ohhhhhhhhhh—THAT belief.
You know what, HBBers, I just microwaved and ate a can of soup that was smarter than this man. And it was even a can of cheap soup, from the Grocery Outlet over on Harrison Ave. Just think how much smarter a can of Del Monte soup from Safeways would be, compared to this poor man. It almost makes me hungry again, and wish I had some crackers.
If you wait, you are going to pay higher prices.’
Its amazing how they’re trying to drive that fear into place. However, with most of the people that would work with… the ‘potential FB’s’ do not qualify anymore. Not at today’s prices. Not for years (as they haven’t saved a down payment).
And yes, I saw the FHA announcement about them going to $417k. So what! You have to document for a FHA loan.
I still think 25% down payments are going to be the norm. Ok, for many this new FHA deal will help them. For most… too little, too late. But at least this will allow a lot of FB’s to refinance out of subprime. Assuming they didn’t fudge the ol’ income. 
A guy on Bloomberg is noting 75% of the mortgage loans in 2005/2006 didn’t have escrow account set up (might be just talking about sub-prime). I loved his next quote (missed his name) “the vast majority of Americans can easily document their income. There is no excuse for the lack of due diligence.” Chuckle.
Got popcorn?
Neil
The new FHA requirement is 1.5% down. Condos inculded, too. Another taxpayer bailout.
‘If you wait, you are going to pay higher prices.’
THAT PHRASE IS SOOOOOO 2005……..
SOMEBODY FORGOT TO TELL MR. BUBBLEHEAD WHAT YEAR IT CURRENTLY IS….
“America The Land Of Scams”. I just got a call from Citibank fraud department asking me if I had used my card for drawing gas in Brooklyn, NY. I replied, “No, last time I was in NY was nearly 40 years ago. I live in California.” They then told me that a further charge of $870 had been put on the card in WalMart, Ct. Obviously, it isn’t my problem. Citi gets to eat the charge.
3 weeks ago, I was notified by a stock market tracking company (which I haven’t used for 2 years) that their security had been breached and thousands of credit card numbers and i.d’s had been stolen. I’m checking to find out if my number was one of them but, the point of this post is, between the realtors, mortgage brokers, other brokers, government agencies, phishers hitting one’s e-mail, phone scams, bank charges (which are nil in my case because I don’t use them except for check purposes) it’s like walking through a damn financial mine field in the US. What the hell has happened in the last 10 years?
“What the hell has happened in the last 10 years?”
Whew, loaded question, Mike, and one I’ve been asking myself for a while now, especially when I hear reports of identity theft. I get very pissed off about it, because credit cards send out checks so casually that anyone just about could rip them off, it seems. What’s happened? Here are some of my thoughts:
1) The technology advanced beyond regulators’ abilities to keep up.
2) Computer technology is not all that secure
3) Corporations couldn’t give a crap about their customers’ security and there’s no penalty for them if security is compromised, but there is plenty of penalty for the person who has to straighten out an identity theft.
4) Globalization, where the naive population of the US has NO IDEA how much they are sitting ducks for the types of criminality that come from other countries. I’m not saying the US doesn’t have its own crime and criminals. But that doesn’t mean we should also embrace the crime and criminals of other countries. Also add to this the fact that the US seems to want to make itself “more equal” by doing so. We should be straightening out our own house, first. But maybe that’s what we get for interfering globally. We have had no idea what’s been done in our name. Now we’re finding out.
5) A general overall theme of less and less responsiblity. Use to be, people and even corporations took responsibility. Now, they don’t. Because the gov (which is us, like it or not) lets them off the hook and aids the irresponsibility.
I’ve been laughed at because I refuse to take or pay by Paypal, because I don’t do banking or pay bills on line and I don’t like to use any website that requires registration, except for a couple.
Every time you swipe a card, supermarket, debit, credit card, make a phone call, use Google to search for something, you make an entry in a data file somewhere. I’m sure Google, youtube, yahoo, amazon, etc keep a nifty data file with your IP address, and the search you just did. I *think* they can actually get your MAC address too, which is the built in identifier for your computer, which, in general you cannot change. Just the databases the phone and cell phone companies have is mindblowing, let alone govt access to all your bank information.
I use my credit card online, but only because I can get a “virtual account number”, Citibank, yes, the evil empire. The virtual account number is good once, and only once, with a dollar limit.
I use cash for everything, guess I’m showing my age. You might also want to freeze your credit reports, $30 is a bargain to pay to keep your credit information somewhat private.
The next “John Galt” will be the person who brings down the databases. I’m just old enough to remember when banks started relying on computers. I was just emerging from puppage. I went into my bank to make a withdrawal to get some cash for the weekend and the teller just shrugged and said the computers were down and she couldn’t help me. Was I ever pissed!!!! I remember thinking “Won’t THAT become a convenient excuse!”.
MAC addresses are quite easy to change. MAC addresses are the built-in identifiers for NIC’s, network interface cards. From Wiki: “Every computer on an Ethernet network must have a card with a unique MAC address. No two cards ever manufactured share the same address.” The cards may be built into the motherboard of a computer, but they do not have to be used, as external NIC’s can be added easily to most computers. I have 5-8 external NIC’s laying around my house in addition to the NIC’s built in to my computers. I suppose there are other ways to change a MAC address.
Does freezing your credit report make it harder to open a new bank account?
“What the hell has happened in the last 10 years?”
Ten years ago the feeling was that crime did not pay.
Why don’t credit cards have you punch in a PIN # to charge things?
This would be A VERY SIMPLE solution to credit card fraud…
NO PIN = NO CHARGE TO CARD
Very simple… yet effective. You don’t forget the PIN to your ATM card…..
A bit OT, but a buddy forwarded this to me, where the GDPs of various states are compared to those of individual countries. Dunno what this means for the potential of different states. At first, I was somewhat taken aback to see my state compared to South Korea, but according to the breakdown, we’re number three behind Cali and Texas. Weird. But I just wonder how much of this includes housing and housing related industry.
http://strangemaps.wordpress.com/2007/06/10/131-us-states-renamed-for-countries-with-similar-gdps/
I don’t get this housing market at all. Here in Arizona my brothers house rose 3% in value this past month while mine fell 2% in the same time frame. My home is three years old, his house is twelve years old. He’s in Phoenix, I’m in the Verde Valley (North/Central Arizona). I thought most houses were dropping in value here in Arizona? Perhaps because Phoenix has jobs/job growth houses are holding/increasing in value in some areas?
I doubt prices are rising anywhere in Arizona, right now.
Whereabouts in the VV?
The only way to truly know if his house “rose” in value would be to find a willing buyer. Lots of FBs have the opinion that their home continues to rise in value, but until you sell, you don’t really know. If you’re in for the long haul, don’t sweat it . . . it’s not really a contest is it?
Are you relying on Zillow for your facts? . . . Be careful with that!
You going by Zillow?? It does strange things with our value too. Neighbor’s shows little or no change, while we’re down 27% for same type house, same vintage.
Lol @ Zillow.
I sold my house June 2006. Since then it’s gone up 1K invalue to 564K.
The house across the street which has 400 sq ft more is showing at 513K. This house if forsale at 500K.
“You got Zilllow’d” will soon be a catchphrase I’m sure.
Who says it went up 3% in value? Compared to when - last year or last month?
Getting one of those “You’re preapproved for this HELOC amount” letters does not make for an accurate valuation.
Loan Aerobics Workout
Now 2 more, now 1 more, now no more.
Feel the burn!
“It was a sign to Blanchette that the state’s surging economy was about to hit the skids. ‘The next day, we cut payroll by $100,000,’ Blanchette said. ‘If we hadn’t done that, we’d be under right now.’”
They didn’t cut “payroll” or “headcount”. They cut people, who have bills to pay and in most cases, families to support. I really hate all these euphemisms for what’s going on in this country.
http://put2.elpasoco.com/foreclosure/detail.aspx?pkg=3344
Wells Fargo gets a Red Cross haircut - lends $785K on a house in Colorado Springs that goes into foreclosure, sells at auction for $461K - what’s that, a 41% scalping?!!! Bet the neighbors will just LOVE that comp!
RE: 41% scalping?!!!
Whoa, a $325k deficiency judgement!
BK city!
I’ll bet Linda will be leaving shortly.
“I doubt prices are rising anywhere in Arizona, right now.
Whereabouts in the VV?”
I have a house in Clarkdale that I rent out (I live elsewhere in VV) while I wait out this housing slump.My brothers home is in Ahwatukee (in a tract home development) - n-o-t in the Ahwatukee foothills.
p.s. people: I’m aware Zillow is no gold standard.
I’m curious to know what the rent is versus valuation. And have you noticed any effects from that monsterous development going on?
A little background. I would have stayed in lower NYS even with the atrocious winter heating oil increases, the NYS taxes (increasing every year), and the six months of cold and wet for my 1.70 acres of forested property and 1950’s center hall colonial just outside Woodstock, NY. It was a beautiful area. My wife got cancer and passed on Sept. 2001 (yes, same month and year as 9/11, and we had just left Sloan-Kettering in NYC a week before the attacks). I had a aged/disabled parent in AZ in need of attention. After some time passed in NYS for me to mentally prepare for the move, I came to AZ and bought right before the big run-up. I rented my place after living in it for about a year and moved in to an extra bedroom to help care take with my disabled parent. I don’t pay my parent for my room space (obviously), and receive the $950 monthly income stream from my 1775 SF rental which I deposit into a high-yielding, short-term fixed investment. I know there are other boomer’s in my situation, I’m not looking for sympathy. I have friends in Sedona area with a one and three quarter million dollar home with gorgeous open beam vaulted ceilings and Spanish tile/bamboo floors in Oak Creek Canyon who seem to have it all, but are really quite miserable. I have a another acquaintance (from my book club) in Page Springs who has acreage and a million+dollar place who is the biggest complainer I think I’ve ever known in my life (but he does have redeeming qualities). I find the Verde Valley/Sedona/Prescott/PV/Flagstaff to have changed much just since my arrival, and most change is through rapid growth of housing stock and traffic. I suppose it’s relative though, my brohter comes up from Phoenix with the kids and they think it’s “Green Acres” or something. It ain’t, but they can think what they like. As for Clarkdale, there is much angst among some about the development at Mountain Gate (Empire) and the Highlands. Newcomers welcome the cookie cutter houses with granite topped counters, raised ceiling and underground utility lines. Quite a few who have arrived in the last four years (or so) exhibit the proverbial “close the door now that I’ve got mine” attitude. It seems that “roundabouts” have become the latest attempt at mitigating traffic flows. I think it’s a temporary fix at best - hoards more are coming to the Valley. Some transplants may think it’s just dandy here, but the sameness, the two hulking pickups in every driveway, the white elephant of an RV parked up against most homes, the non-stop barking mini-dogs, etc. are far from the peace/solitude of where I came from. I have no answers for people who ask me if they’ll like life here when they inquire from some other snow belt state. I suggest they keep their old place and come and rent awhile before moving. Nobody gets through this life unscathed, regardless of income or net worth.
I lived in Sedona of and on for five years and just left in the past year. I have good friends there but the area bores the heck out of me. How much hiking can one do?
If you are getting 950, that’s pretty good. I took some photos of Mountaingate long ago and they are in the gallery somewhere. Way too close together, IMO. Plus, I don’t see the jobs to support the prices. The local RE people will go on about retirees, etc, but I don’t buy it.
Also, I happen to know there are a bunch of foreclosures in the VV, especially Cottonwood. And in Sedona, I think the years of sales in raw lots is almost infinite.
Thanks for taking the time to reply, and I hope you return often!
“And in Sedona, I think the years of sales in raw lots is almost infinite.”
Do you mean “finite”? I thought the build-out in Sedona can only go so far. Spoke to a gal and her husband on Friday who moved from Michigan to finally build on a piece of property they bought in 2002 in “Back ‘O Beyond”. There home is just about finished. This is their dream home and the only property they own, but I had to snicker when she said her new neighbors asked her where there other home was. Sounds like Sedona, or as the locals say, “another day in paradise”. Ha!