Bits Bucket And Craigslist Finds For February 13, 2008
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Stymied…. Does anyone doubt that the FED will cut again? Looks like the smartest guys in the room can’t figure out what’s going on.
http://www.bloomberg.com/apps/news?pid=20601103&sid=a_c9_tQiZOLo&refer=news
Its called greed & desperation. The banks are hungry for every penny they can get, so they’ve kept their lending rates the same or actually raised them to get more money (In polite economist speak “Yield spread” has increased). The most conspicuously greedy example of this is on credit card accounts that have such high balances the banks know the person cannot pay it off in 30 days, so they jack up the rate, exercising that clause in the agreement and say its because the person has been reevaluated for risk and thus the rate increase is justified. Hell everyone is at greater risk of default during a recession, so maybe just maybe do you think that maybe the bank just sees easy money because the borrower just will not be able to avoid the new rate?
Here’s an interesting take on the situation.
http://www.informationclearinghouse.info/article19307.htm
This works short term but is countereffective because it increases the incentive to walk.
Somehow, I don’t think that’s built into their models.
Exactly, People do things based upon INCENTIVES!! If the incentive is low interest rates and increasing prices like homes were. The sheeple have an incentive to buy. When prices are dropping and getting a loan is harder they no longer have the INCENTIVE and thus the false demand goes away until there is an incentive to buy again. People are so short sighted that they do not see the secondary and tertiary effects of their actions. The banks incentive is to raise cash so they raise rates in order to meet their short term need for cash. The peoples incentive is to either switch companies or to pay down their CC’s as quick as possible. This creates the incentive of NOT SPENDING, thus further continues the credit crunch / recessionary cycle. It also makes those least able to afford the increase that much further in debt quickening the process so it does have some good depending on ones point of view. The quicker we can unwind this mess the better as long as the unwinding is orderly and not too chaotic America will come out the other end in good shape to start again.
Just when you thought there was light at the end of the tunnel as you try to pay off that CC, the banks pull this one. From indentured servant to debt slave in less than a week!
“…the smartest guys in the room…”
Thought that referred to the likes of Lay and Skilling?
A poster yesterday was missing the trolls. Here’s one from last night; the tone is different from 2005.
‘You people on this site are so very unforgiving, uncompassionette and evil. Alot of people made what they thought was the right decision at the time. Calling them dumbasses and such does not make you sound smart. Im sure you have made mistakes in your life. These people will hopefully learm from their mistates. Hell, some of the so called smartest, weathiest people on this earth are the product of mentoring by people who made mistakes. So stop sounding like a loser and have something enlightening that can lift people up, and not tear down. thank you.’
‘You people on this site are so very unforgiving, uncompassionette and evil’.
Right and you ‘home buyers’ /flippers/RE moguls where fast to call those of us wise enough to see what was happening DA left behind losers destined to be lowlife renters forever. Evil? I don’t think so, although I am beaming with happiness to watch you specu-vestors swing in the wind!
“uncompassionette and evil”
I kinda of like “uncompassionette”…something that Olygal could appreciate fully. And yes, “evil” oh my yes. Pointing out the greed and fraud that drove the participants in a mania…yes, it’s true, we revile greed and fraud, also unwonted arrogance and gross stupidity. But “unforgiving”…not at all. We merely are enjoying the biblical spectacle of those driven by greed being undone by greed. It’s so very educational.
Ah yes. He speaks compassion of convenience. It’s now time for us to display compassion to all the poor FB’s but he conveniently disregards his very absence of compassion when he and his ilk turned a basic human need into a speculative investment.
Does anyone else find hypocrisy running rampant these days?
Amen exeter.
I’m sure these same folks can’t wait to invest in a water futures market!
Yup…. we’re running out of water in addition to houses, oil, food and gold. lmao….
ROTFL!
Here in Tucson, our water rates are going up because we’re such good conservers.
Personally don’t want to see anyone suffer, yet, this and so many manias are so unbalanced and never during the money glory days does anyone put aside $ and no one takes care of past debt such as paying back the Social Security by our gov.
There is never a balance during the glory days. So, with that in mind, the ones who really need a lesson are the PTB and those numskulls that it was their Right to have this money and to become inconsiderate.
IMHO.Graciousness was sorely lacking and the PTB and gov sycophants/banks will surely reap the rewards, not the ones who didn’t read the fine print With a calculator at hand.
Sounds like your typical MLM, Rich Dad wannabe. Too bad this clown doesn’t feel “compassionette” toward the eyes of those reading his dreck.
and these days, it takes some pretty heavy equipment to “lift [most] people up.”
Got Rope?
Got Fork Lift?
They don’t need lifting! They are already hoist by their own petard. (emphasis on ‘tard’) LOL, Shadenfreude gives me a nice warm fuzzy feeling.
My thought exactly:
some of the so called smartest, weathiest people on this earth are the product of mentoring by people who made mistakes.
Sounds like something right out of one of those books, especially the use of “mentoring”.
Which he actually spelled correctly. The rest of the letter suggests a high school dropout and Trump[ette] in-the-making.
MLM = mid level mrg? excuse my ignorance.
multi-level marketing — where sales growth and profit are dependent on constantly expanding your network of associates/salespeople/marks below you. Can run the gamut from fairly legit (amway, tupperware, Mary Kay) to scammy (pyramid schemes, Primerica insurance).
Thank you. I value thxchicks’ posts and now it makes sense.
“Amway–fairly legit”?
As an Amway escapee (15 years back), I can testify that they will bankrupt you with all of their “training materials” and quarterly meeting–not mention the big ANNUAL hoohah. ["Sell your TV! Sell your motorcycleI! Invest in yourself! BE THERE!!"] If you balk, you are accused of “stinkin’ thinkin’” and all the other shame-inducing, brainwashing gimmicks in their arsenal.
Their products are way overpriced, yet you are pressured to fill your house with their crap to prove how “committed” you are to your success.
A ponzi scheme by any other name . . . wonder how many friends/families/marriages have been destroyed.
FYI: If anyone approaches you and tells you that you seem like a “sharp” so-and-so . . . RUN LIKE HELL! They will flatter you and tell you what you want to hear until you are broke and estranged from everyone who cared for.
A few colleagues at work about 18 years ago banded together and joined that Amway scheme. They trick you into going to a house for a meeting to get you in their pyramid. The rest of us who did not joined called it “ScAmway.”
Did you see Rich Dad on Larry King the other night? He couldn’t stop himself from blathering on about Houses are ON SALE, and Stocks are ON SALE. Which smacks of a used car salesman on Saturday tv commercials. Oh what was his name, with the camels, elephants and tigers, in Cerritos, I think. Growing up it was always SALE SALE SALE come on down get yer whiz bang auto from me and, oh CAL. That was his name.
Here’s Cal Worthington and his dog Spot.
Big part of my childhood TV watching too.
Yup - Cal’s Corrall, every Sunday. Those ol’ boys in the band really looked hungover too.
“unforgiving”
The important point that is missed here is that no matter how forgiving a person may be, the natural laws of justice will inevitably prevail. Gravity is not negotiable.
Funny when the only thing that will uplift is a bottom.
Evil?
Cool…I’ve never been called evil before.
Compassionate, now, THAT I’ve been called before but it also never prevented me from calling a person on their BS….it’s the kind thing to do.
“Evil?
Cool…I’ve never been called evil before.”
The first couple times it stings a little bit. By about the 500th time you get used to it. You always need to focus on who is doing the name calling.
Can you be an evil compassionatism?
I guess by his metrics I will have to consider myself “evil” for not taking a spot in front of him at the breadlines that will result from the inaction, ineptitiude and ignnorance of others like him.
These nanny-state matriarchs will be the death of us. Go read up on Darwin and Austrian economics.
/rant off
I’ve seen nothing but reasonable decent and enlightened posting activity here in general, with some light/flippant sarcasm on a regular basis. Some posts are very direct, but nothing truly mean spirited at its core. However, I’ve seen a lot of very nasty posts from RE cheerleaders who did not like blogs like this pulling the curtain back to reveal the truth and reality of this nasty mess. I guess now that all the world knows the truth about this house of cards these RE cheerleaders are taking a different tack/tone but still cannot bring themselves to fully reconcile the fact that they were duped and/or lying to themselves when simultaneously there was a group of people providing a tenable counterpoint which they chose to ignore.
Sorry, you’ve made your bed, now lay in it and do not expect me to bail you out. You are all mature adults and I have no sympathy what so ever as you have ruined the US economy and tarnished our nation.
Lets see about those right decisions…
Buyer’s income is $50K buys $800K house 100%(liar loan) financing with the expectation they will be able to refi their 1% teaser rate, knowing that they will be moving into interest rates of 7% in two years…
Buyer making $50K buys $2 Million in real estate 100% financing with expectations of selling them to the next idiot
Buyer making $50K decided that he wants to feel what it is like to be a millionaire(he isn’t dying or sick neither is his spouse) so he take the $200K out equity that took YEARS to get and buys a new BMW to park infront of the trailer, a harley, hair club for men and his wife fake boobs.
Your right I am just evil…get mini me..I am going to take over the world buy offering idiots the opportunity to go into debt and be FB forever..BHAAABBWAHAAA!
Number 1: Sorry Doctor Evil someone has already done that!
(sorrry guys coffee’s brewing and had a rough morning)
(In Dr. Evil voice)
I’ll sell you my house for……
ONE MILLION DOLLARS!!!
not compassionette
I like your post Joe. It is sad that fools see peole that have a grip on reality and call them “negative”. They see people that hope for justice and call them “cruel”. Expecting people to pay for their own mistakes is not evil, it is fair. There are so many confused minds out there. I have made a lot of mistakes in my life. And never once did I act like a victim because of my own mistakes. I have always found that people that own up to their own mistakes are the people most likely to be treated well.
But that is not what we have seen with FBs. They didn’t understand the transactions they were entering into ,or in many cases they did (fraud). They mocked the people that didn’t buy. And now that things have turned bad they are victims. The trolls spew misguided posts because they are misguided people.
Good point. I’ve seen plenty of contrite posts on this board - folks admitting their FB status - and I’ve never seen them attacked. Often they are given advice and encouragement by posters here.
It’s the FB’s bloviating about how they aren’t making more land, RE never goes down, I/O mortgages help the poor, etc. that gets people here cheesed off.
I may have partaken in evil last night when I read a certain labor union in merger talks weren’t happy with their proposed package. It seems a few Abercrombie wearing preteens that have been terrorizing girls in our district for not measuring up may be finding out soon neither do they.
The family already refinanced last year. Mom bought new furniture with the excess.
Oh, forgive me, father, for my schadenfreude.
“Blessed are those who hunger and thirst for Justice, for they shall have their fill.”
And hopefully, when it comest to the end of the housnig Bubble, those of us who have waited for Justice shall have our fill. Affordable houses for all who saved - and nothing for the greedy!
“Sorry, you’ve made your bed, now lay in it and do not expect me to bail you out. You are all mature adults and I have no sympathy what so ever as you have ruined the US economy and tarnished our nation.”
Well said!
I agree with the poster. Prudent renters that refused to pay unreasonable prices and are now delighted with the hopes that affordable housing will return in the United States sometime are purely evil. Those that risked their savings to screw ppl in the real estate game hoping the line for greater fools was always long so that they could brag about all their appreciation and show off their fancy new toys purchased with HELOCs are the salt of the earth. Don’t bother to tell me that anyone who purchased a home in the last 5 years was not banking on 10% or more per year appreciation (i.e., hoping to benefit by screwing other families). If they weren’t, they would have rented because the numbers didnt work otherwise.
I love you Natalia;)
Well, I did buy a brand new house in Dec 2004 for 178K and paid cash for it in Lake County, Fl. I was reading Ben’s posts then, as well as other sources, and knew there was a bubble, in fact, I had just sold in Coral Gables, Fl.
I sold this house in Jan 2007 and still made a profit! I lived rent free (well, not really, the 178K could have been invested elsewhere and there was the $700 yearly hurricane insurance, yeap, that’s all, and a whole whopping $1800 in taxes) but I made 22K on the house when I sold it in Jan 2007. My neighbors were upset because I was “giving my house away.” I was the last person to sell in my neighborhood. Could have sold earlier, and should have, but there was the issue of the IRS so I lived two years in the house.
I was not greedy, that was the difference. I did not buy a 300K house, I was the exception to the rule.
Actually, I did buy in early 2004 knowing abubble existed, I purchased KNOWING I paid too much for the house. I ran the numbers and knew sort term it was a mistake. Long term it would pay off due to tax rates capped (California), inflation etc. I do not regret buying because I bought a home I could have paid for in cash so it was not a stretch. I am now getting ready to rent it since I will need to move this summer (to Japan) and I have fixed costs and paid down enough to be cash flow positive 4 years later. I plan on keeping it another 10 years minimum so this cycle will hit bottom and be back up again before I even consider selling. I have friends with half my income who purchased twice the house. They are the ones who gambled and are losing.
Im sure you have made mistakes in your life. These people will hopefully learm from their mistates.
Mistakes…this isn’t like making a wrong turn off the freeway. These were multi-hundred $K transactions that people flippantly signed without doing the slightest research. That’s what down payments were for — to prevent mistakes. Ask a buyer to put down some hard-earned, suddenly they start thinking.
And I’m sure they’d learn from their mistakes — if the government would let them. But no-oo, they get a teaser-freezer false bailout.
“These people will hopefully learm from their mistates.”
learm from their mis states. Kinda says it all….
Here’s the extent of my compassion for the REtrolls….
Read it and weep dumbasses.
http://efinancedirectory.com/articles/Rent_vs_Buy_Myths_That_Ruined_the_Housing_Market.html
How do they expect to learn from their mistakes when they try to silence anyone who points them out?????
We had a new employee join the group.
Can’t sell his old home.
Realtor told him he was going to have to bite 100,000 loss to sell it.
The guy had no idea why the market was down. It was like an act of GOD with nothing he could understand.
I got evil on him by explaining it to him.
You evil doer.
“Calling them dumbasses and such does not make you sound smart.”
really don’t care how smart I sound. In a few years I can buy a house at a price I can afford because some dumbass can’t borrow cheap money anymore.
“Calling them dumbasses and such does not make you sound smart.”
yeah, that was the line that made me laugh the most. It is in fact because I am very comfortable with my stupidity that I didn’t purchase in 04-05. Everyone around me was telling me what large amounts of money you make from buying a house. When I couldn’t figure out why, I froze and kept working on the problem until I had an answer.
“So stop sounding like a loser and have something enlightening that can lift people up, and not tear down.”
I guess we are still nothing but a bunch of priced out renters in this gentleman’s small mind.
Stupid stucco specuvestors sound like sore losers to my ears.
“have something enlightening that can lift people up”
OK, how’s this. All efforts “to lift you up” are continuing to fail, and this is only the second inning. We’ve got years to go with this…you remember the bible, ‘compassionette one”–seven lean years to go. It should be educational for you.
The Era of the Great Unwinding from Over Leveraged Debt Collapse.
2007-2014
EGUOLDC? Wow.
“have something enlightening that can lift people up”
The poster could try a Joshua tree.
At least he/she spelled “loser” correctly.
“So stop sounding like a loser and have something enlightening that can lift people up, and not tear down.”
If you want to be uplifted, try prayer. Or therapy. Or drugs. Possibly all three, at least you’ll be keeping busy. Don’t depend on other people to make you feel good.
Just trying to do my part to be a more compassionette person, having given up being Evil for Lent.
“So stop sounding like a loser and have something enlightening that can lift people up, and not tear down.”
Ok…I can try to humor them. Stop paying your mortgage. Live mortgage and rent free for a few months. You may not have to worry about paying taxes on the forgiven amount lost. Save money by renting and buy a better and cheaper house in 7 year. What more could you want?
“You people on this site are so very unforgiving, uncompassionette and evil.”
We give away a lot of money to charity. We try to target it to those who have less materially than we do. Not those who feel entitled to more.
I’m pissed at the troll for trying to make me feel quilty .I have observed in my life this sort of attempt to reverse the guilt to innocent parties when it’s simply a refusal to “take your medicine like a man/women.”
Of course all these flipper/speculators/gamblers want the world to forgive their greed that knew no limits . When millions of borrowers commit some form of fraud to obtain a investment ,than it’s a “crime wave” ,and they were uncompassinonette and evil to want to pass their ill gotten gain to a greater fool .
It’s like a little kid who steals money and he gets caught and doesn’t want the punishment . These borrowers are lucky they won’t go to jail for their crimes in most cases . I want a little more compassion and quilt from these evil greedy FB’s ,and I want them all to turn themselves in and ask what they can do to make amends to the Society they dared to harm .
While some of the borrowers made the maistake of buying real estate in a fake market during a crime wave ,if they were honest on their loan application and they were just victims of the other fraudulent borrowers ,than I might have some compassion for those borrowers ,especially the ones that put up saved money to own a home .I might have some compassion for people who are innocent who have lost their job because these FB borrowers dared to gamble and mess up the forces of economic stability .
Greed will blind a person no doubt ,but a person should of learned that lesson in kindergarden ,these FB’s are adults and they won’t learn without some pain and suffering .
All I got to say to these FB’s is ,”Your mommy and daddy didn’t raise you right,and I can’t stand how evil you are ,you damn brats .”
Imagine what this person would do to the “evil” child that pointed out that the emperor had no clothes. The story would have ended with the stoning of the child if they had written it.
My favorite troll post from yesterday:
Comment by Darrell_in _PHX
2008-02-12 14:18:00
Schilling and Zandi did not issue $0 down, no doc loans for elevated values. Schilling and Zandi did not cause prices to detach from fundamentals, allowing sales prices to rise to the point that payments to buy were much higher than rents. They did not allow prices to get out of line with normal affordable levels.
The run up, not bad news, is causing prices to fall here.
AND, I have heard stories about how this is global. The cheap money was global. The loose lending standards were global. The bubble mania was global.
Is the U.S. the worst? Nope. We’re just the largest. Others will tumble harder and further.
And, how does that help us?
Of course they were trying to say Shiller.
Blah ha ha…
Opps. Evil laugh slipped out.
‘So stop sounding like a loser and have something enlightening that can lift people up, and not tear down. thank you.’
Tell it to the MSM. BTW, what were you telling your friends a year ago about your RE smarts that now have you smarting.
You shouldn’t yank all the trolls - it’s a hoot!!
troll:‘So stop sounding like a loser and have something enlightening that can lift people up, and not tear down. thank you.’
Jack: “Sell crazy somewhere else, we’re all booked up here.”
Life is tough, It is even tougher when you are stupid!!
John Wayne?
Retail sales… What in the heck do declining house values have to do with shopping. The value of my property has never curtailed any shopping I wanted to do. Oh wait, these DA’s were borrowing against the house to shop!
http://www.bloomberg.com/apps/news?pid=20601103&sid=a4e3cg7qh.NE&refer=news
Don’t worry - very soon the banks will begin to offer automobile equity loans. Then retail sales will rebound!!!!
We need some REIC folks to join in. Someone needs to remind us that vehicle values always go up, especially that big spike right after you drive it off the lot.
On the elevator ride up this morning I saw that car dealers are now starting 84 month loans. How sweet is that? I am so glad that I own neither a car nor a house.
we just got TV in our elevators here in Chicago too. what’s the deal with that? do we not have enough of the brain wash device everywhere else (gas pumps, grocery store checkout lines)?
so now when I get on the elevator, I stand by the door and face the back and smile at everyone. freaks them out no end.
I gotta try that sometime…sounds like a hoot.
Now, that is true “evil” genius. Gonna try it too.
To top it off you could ask if anyone needs a hug.
Need a HUG? very funny picture of their faces.
Lots of high-line car dealers have always offered 84 month loans. But for toyota to do it….yikes.
Cool beans, seven years to pay off a Yaris.
Can’t raise wages - but they sure can steal your time (life).
I can’t help but think of how much our present/future seems to have in common with dystopic views of the future presented in various grim sci-fi/cyber-punk stories. Aside from the usual corporations owning everything, private armies, etc. I recall how in the dark futures presented, nobody ever “owned” anything since everthing was bought on credit and nobody could pay anything off. So, the companies basically owned everything and everyone. Nice!
And in my favorite of the genre, Bladerunner, corporations could manufacture slaves.
i own my 6 old car outright and it cost me very little to own
and woudl not think of purchasing a new one
i drive maybe 5k mile a year and i am also glad i do not own a home right now
but i am not happy i am stuck in jury duty in the ny civil court. hey maybe i can pick up a foreclosure they do the auctions up the block
civil court this should be interesting when they hear my views on debt
Everyone who thinks a car is important should tour foreign countries where most people are happy to have ANY car. Its amazing too how 5-6 people will cram into a car the size of a Ford Pinto and not think anything about it, yet in the US here it’s more like 1-2 people in a Suburban.
I’m somewhat embarassed by our society’s waste.
We need 30-year loans on cars… oh, wait - I already saw that when some local housing company was offering LEASES on HUMMERS instead of lowering the price. So, in effect, that amounts to a 30-year loan on a Hummer instead of a lower price. Nice!
Toyota announced that it will start making 84 month loans. Rent to own.
At least Toyotas have a chance of outlasting the loan. GM and Ford, on the other hand…
But yeah, they are really pushing the long loans. When I bought my car, they didn’t tell me what loan they were setting up — I had to ask. They answered 60 months. I said, No, you go back and get 36 months. (I could have paid cash, but didn’t wanted to deplete the cash, and wanted to keep up my FICO for the when I do buy a house.)
If I was a line worker @ GM and got offered $140k to go away, it’d be awfully tempting…
Fast forward to a cold Febraury day in 2015 - you’re just about to mail in the last payment on your seven year old road salt encrusted, bald tired, third battery, second muffler….Buick!
Mmmmm, savor the sweet pride of ownership!
People already want way too much for used cars. Everyone is financing them so they somehow think the value of the car has something to do with how much they owe.
Debt is wealth.
This should be carved onto the government buildings in 1984 just like War is Peace, Ignorance is Strength, and Freedom is Slavery.
The more I owe, the wealthier I am. Madness… just pure madness…
If the current trend lines continue, it won’t be long before you will be able to buy a nice house for less than a 3-series BMW/low-end Mercedes/drive-it-four-years-then-it-falls-apart Audi
The German carmakers are toast…..especially Porsche (majority of their worldwide sales are in the U.S., and the majority of U.S. sales are in California and Florida.
The bigger european makers will be able to supplant the unit volume losses here in the long run. Even Porsche can survive. But the boutique buidlers are toast because the scale of production to serve the market of uber rich oil-arabs on other global elites needs an equal number of debt ridden over-leveraged americans. No more Ferraris, Lambos, Astons, McClarens, and the like.
If you have your hearts set on US-built german or japanese SUV/car get them now. When the dollar goes comatose, they won’t waste their time selling them here.
Porsche is actually part of VW now (as is Audi), and they will still be around. Those Mercedes sedans are cabs in Europe, so that market’s still there. (Daimler’s already pretty beat down from having multiple years of suckage.) The Bavarian Motor Works Company will be a nice short for German investors very soon, though. Their US sales are probably tanking already, and it’s only going to get worse. (Why buy new when you can get a gently used repo from an FB or Realtwhore?)
We are currently looking for a car. I think I’ve settled on a Ford Focus, paying cash. We don’t need something that is fast or stylish, just cheap and gets good gas mileage. This will be important when gas hits $6-7 a gallon and SUV drivers are crying for help.
I’ve been hopin’ & prayin’ for one of those 2L turbo diesel engines, in a Ford Focus size body, all the rage in Europe. None available in the USA. They would get 50 mpg easy.
don’t they already have auto title loans, at the places that do payday loans?
yeah, and you can pawn your vehicle too
I think the pawnshops here caught on, though–dudes weren’t coming back to claim their vehicles.
Here’s the latest update on that. Retail sales were actually up. Weird. Ah well, jobless claims tomorrow should be interesting.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aBiAY.C8TVEo&refer=news
“Retail sales were actually up. Weird.”
Over what time period? One month? After a December retail bust? Not impressed.
Hey the charged stuff at the retail stores and are waiting for their rebate check to pay it off…
Sales excluding automobiles and gasoline were unchanged. Today’s report showed sales at automobile dealerships and parts stores rose 0.6 percent after a decline of 1.1 percent in December.
That contrasts with industry figures that showed cars and light trucks sold last month at a 15.2 million annual pace, down 6.7 percent from December. Auto industry sales this year are forecast to drop to the lowest level since 1998.
So excluding a dead cat bounce in autosales, and inflation in gas sales were flat. Doesn’t sound that great to me.
Yeah I was expecting a tick down though. With banks tightening down on credit cards and HELOCs going away, where else are they getting the money? I guess the tightening on consumer credit cards hasn’t really worked its way through yet. Also, the gift card thing could be smoothing out sales that would’ve occurred in Dec into Jan.
I think 14.5 million is a more appropriate number. At this rate of sales, we can kiss Mitsubishi and Chrysler goodbye.
I thought this uptick could be the result of all those gift cards that they sold in Nov and Dec ‘07. Isn’t the accounting method to count the sales only after the cards are used?
i think it might be because they are not making the house payments anymore. that is alot of extra cash to spend if you dont have to pay for housing.
This is more like it. I was still expecting downside surprise though. Oh well, that’ll have to wait till tomorrow.
http://blogs.wsj.com/economics/2008/02/13/economists-react-no-reason-for-optimism/?mod=homeblogmod_economicsblog
It appears the lenders are finally getting overwhelmed with their own toxic loans they have a new strategy: String along the FB’s and keep the houses occupied. I see many more FB’s in default but the lenders are not filing public NODs and NOTs.
The strategy today is like building sand castles on the nice broad beach where the water is receding. Unfortunately, no one realizes the receding water may just be a precursor to the incoming tsunami. I see this in personal observations of my co-workers, friends, and relatives and then see it on the national news. It sure seems unsettling.
If you aim to make a profit, it is best to recognize and cut your losses as early as possible. if the bank isn’t willing to take the collateral, it might be their motive to delay their own day of reckoning.
I’ve been pointing out on a loan work out blog that the lenders are just as desperate as the borrowers. Loan modifications are definitely good for the lenders, but maybe not for the borrower. I’m not sure how much impact my suggestions are making, as it seems many are more interested in making the same mistake twice (making a major financial decision without considering it fully). I’ve even put forward the idea of haggling with the threat of jingle mail.
Given the costs of letting the house sit empty, it makes sense to encourage “ex-owners” to remain in them. Renogating the loan into something like 50% of the origional morgtage may be cheaper than trying to sell the house to someone else for 30%. Numbers will depend greatly on the particular home and locality, but there would seem to be room for gains to both sides here.
They’ve realized that a flood of highly-motivated to desparate to REO inventory will hurt them worse than a degree of debt forgiveness or other financial modification.
It’s a holding action - and a sensible effort on their part. I’m not sure it’ll make a big difference in the long run, but, really, it’s the most prudent thing they could do in terms of their own self interest. Some combination of slowing down the crush of desperate inventory and pawning their crap off to GSE’s is the strategy — highly predictable, bad for the country in the long run, and not likely to make a huge difference to most still-f’d buyers (although they will trumpet their success in forestalling 15-20% of forclusures in the near term as a huge success).
It’s crap and I hate it.
It also has the important effect of punishing savers and responsible people who want to buy a reasonably priced house: housing prices stay high for longer AND we get to eat the losses as taxpayers in the end. Such a world!
“Power corrupts, but lack of power corrupts absolutely.”
Adlai E. Stevenson, Jr.
Too much money corrupts, but way too much easy money corrupts absolutely. Unfortunately, too little money seems to breed corruption also (see most third world nations). Yay for the middle class. Unfortunately, it’s on the way out.
All power corrupts, but we need the electricity.
“CasaTostada” What a great name.
For those who may not have the translation = The house is toast, similar to burnt toast.
I hope Paulson doesn’t play poker much…
He gave away his hand last night.
He’s got one of a kind, seven times.
Poker is a good analogy.
Everyone has their chips on the table, but at the end of the game when you go to cash out, it turns out the bank has no money to cash out with. But you still have chips, that would be worth money, if there was money.
Here’s Paulson’s hand…
2 of Hearts, 3 of Clovers, 4 of Spades, 5 of Hearts, 7 of Diamonds, 8 of Spades and 9 of Spades.
Yes, but was he playing lowball?
If he was, he’s holding a full house.
Soon to be an empty house in foreclosure.
Saw part of movie that had civil war guys playing poker and 2 guys were out of money, so they put scalps on the table for $.
It may get to be like that. Guess banks/lenders are looking aghast the same way at the jingle mail.
shaking up rentals:
For many Americans, as property values sink and mortgage interest payments rise, the dream of homeownership has turned into a nightmare. In the past, however, one group of people who have tended to ride out real estate downturns are landlords, who can raise rents while potential buyers sit on the sidelines waiting for conditions to settle. But not this year. Rent growth in 2007 actually went flat in some metro areas hardest hit by the housing meltdown.
http://tinyurl.com/2jbftf
uncle Sugar will save you:
NEW YORK (Reuters) - Fear that a hobbled banking sector may set off another Great Depression could force the U.S. government and Federal Reserve to take the unprecedented step of buying a broad range of assets, including stocks, according to one of the most bearish market analysts.
http://www.reuters.com/article/ousiv/idUSGOR27660220080212
Saw a survery this a.m. saying that 19 percent of people will spend the rebate. Why was this even done instead of extending unemployment benefits where I guarantee 100% would have been spent. What political objective was achieved?
Did you read Scott Burns’ tongue-in-cheek proposal the other day?
Unemployment benefit does not work for self-employed. And this country has awfully a lot of people who are self-employed.
Small business employers I’ve spoken to have been pretty open that they need to hire “contractors” to avoid paying healthcare costs for “employees” here in Mass.
“Unemployment benefit does not work for self-employed. And this country has awfully a lot of people who are self-employed.”
Unemployment benefits wouldn’t help those who don’t pay taxes, and some of ‘em are going to see a check too. How can someone get a tax rebate if they didn’t pay taxes in the first place?
From each according to his ability, to each according to his need.
But anyway… so is this check an advance against 2008 tax bill? If so, there is nothing technically prevents giving advance to anyone whose tax liability is projected to be zero. It simply increases their tax liability by the amount of refund.
“How can someone get a tax rebate if they didn’t pay taxes in the first place?”
Congressional decree…been living here very long?
What political objective was achieved? GWB, wants you to vote republican this year don’t ya know. It’s like the sheeple are being bribed to vote republican in this election year.
The Democrats voted for this, too, and co-wrote the legislation, so it isn’t a party thing. It’s a put-on to make the public think Washington cares.
Even more to the point, why not instead spend the money on public works projects that put people to work building infrastructure and other things that benefit society, ala WPA projects in the 1930s?
Lord knows, our infrastructure is crumbling. Simply handing people cash to spend on a vacation or big screen TV is borderline criminal, IMO
The money to do all of those WPA projects in the 1930’s, came from us having trade surpluses with other countries, and despite the fact that everybody was broke, our government still was relatively well off.
Compare and contrast, to today.
Al, the one thing it did do, the WPA, was when ‘you’/ all the Americans that worked on these projects, was to instill pride of ownership in our country.
We will never ever see that pride again. There is Pride, but not of taking care of things, not creating roads,national parks,art, you name it.
That is one thing for sure this administration has pissed away post 9/11, the chance to get all americans responsible for our country,small towns, roads, big cities etc.
Al,get it with the contrast though.
There is really no pride because there is no single culture in America. When I hear Rap music blaring out of cars at traffic lights and making my ribs vibrate I don’t call that feeling pride. When health care costs go up and socialist politicians call for nationalization while hospital waiting rooms are jammed with illegals I don’t feel pride.
I buy precious metal bullion.
I have concluded the stimulus package, however it shakes out, is just a back door effort to get money to big corporations, whether by spending or paying down debt.
So 81% of the recipeints are going to save their refund or pay down debt? What country was surveyed there? When did Americans last save anything out of their income? I would suggest that they read the survey question wrong and 19% SAY will save the refund.
The other take I would have on this is that only those that CARE about what’s going on would bother responding to the survey. Since most of America is at the mall, watching American Idol, WWE, Dancing w/ the has-been celeb..oops, meant stars, whatever, I would put that number @ less than 10% of the pop.
Gladiators, don’t forget them. I am sure someone on the couch is watching them.
“saying that 19 percent of people will spend the rebate”
I don’t believe it one bit. People all around me are spending everything that comes their way. The question will be just what it’s spent on: big screen tv’s, food, junk foods, pay bills, etc. It would be nice to hear from someone in the banking (teller) field when the checks arrive to see how many are going into savings accounts vs checking accounts vs cash out.
From Bloomberg: Consumers are increasingly limiting expenses to those they can’t avoid. The amount Americans must spend each month on debt service, housing, medical costs, and food and energy bills rose to 66.9 percent of their total spending in December, the highest since records began in 1980, according to Bloomberg figures.
Walmart gets Bush Gift of rebate checks spent.
Depression! Boy this fellow didn’t get the memo, it is verboten to use the ‘D’ word. It might cause undo consternation amongst the masses!
The Fed creates the money, buys all the slime, poof, problem goes away. Problem is, the FB’s still can’t pay. If this plan goes through, and of course it will, the US govt is going to get all the foreclosed houses and real estate. That should work out well. Sarcasm off, too early in the am.
Ah, but once the government controls housing, they’ll make SURE it “only goes up!” Now, your salaries, well… that’s a different story. See, we have a bunch of illegals who’ll do the same work for less…. so… well… see yah!
“…to take the unprecedented step of buying a broad range of assets, including stocks,…”
I can hardly wait for conclusive evidence to eventually emerge on this little detail…
Washington = one GIANT credit card.
Apparently the plan for the U.S. Government is to simply borrow, and borrow, and borrow, until one day they tell everyone “Sorry no more money left to pay you back. Our bad!”. Financial armageddon.
rust belt, sun belt:
NEW YORK (CNNMoney.com) — Rust Belt and Sun Belt cities led the nation in metro-area foreclosure rates for 2007, according to a new report released Wednesday.
Detroit led the list with nearly 5% of its households entering some stage of foreclosures, which is 4.8 times the national average, according RealtyTrac, an online marketplace for foreclosure properties.
Of the 100 largest U.S. cities surveyed by RealtyTrac, 86 reported higher foreclosure rates.
http://tinyurl.com/2qy4m4
Maryland suburbs top % change in increasing foreclosures. Click on the “%Change from 2006″ and in the top four are Bethesda/Frederick at 1288% increase (wow!!), D.C./Arlington/Alexandria at 574%, and Baltimore at 544%. Way to go! (with both meanings …)
20%!
Feb. 13 (Bloomberg) — A wave of bonds sold by U.S. municipal borrowers with rates set through periodic auctions failed to attract enough buyers in recent days as banks including Goldman Sachs Group Inc. and Citigroup Inc. that run the bidding wouldn’t commit their own capital to the debt.
Rates on $100 million of bonds sold by the Port Authority of New York and New Jersey, with bidding run by Goldman, soared to 20 percent yesterday from 4.3 percent a week ago, according to data compiled by Bloomberg.
http://tinyurl.com/32hqkn
I don’t understand why Warren Buffet doesn’t just set up his own muni-bond insurance company as quickly as possible and bypass the buyout of muni inventory from the insurers who are in trouble. It is in the interest of the government to make the red tape (surely there must be red tape) minimal.
Buffet is no fool. He’s buying the nonperishable inventory at a discount.
Agreed. But the insurance companies are balking - at least until their directors are replaced. Meanwhile, there seems to be a lot of new business that he could pick off — bonds not yet marketed.
Why wouldn’t they balk? That is the only debt they own that is worth anything (at least, relative to their other debt.) He is offering to put them out of business so they can be worth pennies on the dollar.
“…banks including Goldman Sachs Group Inc. and Citigroup Inc. that run the bidding wouldn’t commit their own capital to the debt.”
Homeowner circa 2007: “I could not afford to buy my own home.”
Bankers circa 2008: “We cannot commit to buy our own bonds.”
Umm.. they are not buying their own bonds.
As underwriters of bonds issued by the Port Authority of NY & NJ, they said that they would not commit to buying whatever bonds were left unsold. (This is reasonably standard practice for underwriters.)
I don’t think you understand finance very well.
Thanks for enlightening me, oh great financial pussycat.
You’re welcome, good sir.
I don’t recall having ever laid claim to any specialized knowledge of finance. However, I do believe I have a pretty good crap detector. I guess that is why, unlike many supposed finance experts, I am not at all surprised to see real estate prices down by “larger than expected” amounts in major cities all across America. Too much specialized knowledge can lead to hubristic tunnel vision, something I try to avoid by remaining humble.
My suspicion is that he just got lots of free press for his new insurance branch.
As predicted here years ago, the LaTimes on the “Shadow Victims of the Mortgage Crisis: Renters”
What happens to renters when their landlords stop paying…a big mess in Cali…so, where’s that troll’s “compassion” now??
http://www.latimes.com/business/la-fi-lazarus13feb13,0,753124.column
I know most people can’t do this but if someone tried to evict me because the house had been foreclosed, if I didn’t want to leave, I’d tie them up in court so long they’d grow a 4′ beard before they got me out.
There might be a market for a “how-to” book on that.
What steps would you take to do this?
I’d love some more information on this process. Possible weekend topic?
Where oh where was due diligence?, as this and every newspaper in the land was on life-support systems the past 7 years, real estate related advertising keeping their boats from sinking into the nether reaches of nevermore…
I’m glad this article didn’t mention the truly forgotten victims in all this. That poor cat.
mixing my thoughts, should read:
did mention or didn’t forget
The said cat, from the look on its face, either doesn’t understand or doesn’t care.
Not clear to me what a forcloser gets from this evicting a renter. Aren’t most being taken over by the banks themselves? Aren’t there leases involved? This all seems very strange.
I’m not sure I understand all the legal jargon from the following link. But, does the last paragraph of that article convey that we should be recordings our rental agreements as insurance against possible foreclosure?
http://tinyurl.com/2zhkt5
coffeeflation:
In a sign of rapidly rising foods prices, Kraft Foods said Tuesday it’s raising coffee prices for the second time in four months.
Northfield-based Kraft said the retail price of its Maxwell House and Yuban coffees were boosted Tuesday by roughly 4 percent. The reason: soaring prices for green coffee, said Bridget MacConnell, a Kraft spokeswoman.
http://www.chicagotribune.com/business/chi-080212-coffee,0,2029151.story
Wow — I may need to give up my luxury consumption of coffee if this trend continues. Too bad for SBUX …
http://tinyurl.com/2valrw
Darn, I like Yuban . I bought 10 - cans during a sale around Christmas time . Should of bought more but I’m still not clear if the packaging will keep it fresh for long periods of time ,(I hate stale coffee ) .
Lately we are getting alot of annoccements that food companies have no choice but to raise prices .This is my compaint about Corporations ,they raise prices ,but what do they do for their employees regarding inflation ,(doesn’t seem like much these days )? I went to the Bank the other day and the teller told me they were short staffed ,(no doubt from cutting jobs ) .Another by-product of the real estate meltdown is that people are suppose to put up with under staffed service now because Banks are hurting .This fake housing boom is going to affect every corner of business ,yet I’m suppose to have compassion for the “evil stupid people “that created this mess .I hope that the evil renters that held out and were not willing to buy something they couldn’t afford will be rewarded by getting a nice house real cheap if they want one.
My Colombian LL used to keep her coffee in the freezer. Worked like a charm.
Guess Jim Rogers was right about a secular commodities bull market. Oh well, not dumb enough to chase a trade.
It’ll come to an end eventually … probably two years after I think it should. ;D
My Hellmann’s quart jar of mayo just shrank down to 30 oz. from 32 oz.
Trivia I learned from my Monday morning bike ride to Seal beach:
A small coffee shop/bakery on Main St. changed owners. The asking price was $500,000; It sold for $75,000; The owner just wanted out.
One of the Seal Beach guys who has a lot of apartments told me monthly rents are dropping $200 to $300.
There are ten empty oil tankers anchored offshore that I can see. There may be lots more anchored that are out of my line of sight. Apparantly these tankers come into port, unload, then just sit there awaiting orders to go get some more oil. These orders aren’t coming because the U.S. demand for oil has declined. (This observation was substantiated by an article in Monday’s WSJ.)
combotechie = Alan Greenspan?
I can confirm the tanker fact. Except they’re sitting loaded just outside international waters on the east coast.
I looked up data the last time this was mentioned. Single hull tankers are prohibited in the US starting in either 2011 or 2012 (IIRC) and 2015 in other parts of the world. At some point, they are going to be surplus. You think they would sail them to the end, but I imagine it is like air planes. You want to be on the new production list in good time to start over. Maybe some are being parked for good.
The dates have so far been extended when they come close, (there has been a tight market for ships since 2000). Most single hulls are 20+ years old, so they won’t be a factor for too much longer.
They’re by and large being converted, some are being converted to grain/food oil bulkers, others to drilling and similar.
Be careful on your assumption that they don’t have orders, there’s more congestion on the unloading facitlities than anywhere else, so it’s not uncommon for refiners to have ships lined up (it’s not cheap but cheaper than running out of oil).
Rates aren’t low enough to just park em yet.
http://www.braemarseascope.com/market_information/
They’ll start to think about parking/scraping at WS 25 or less.
Oh and they sit empty at the load point not the unload point.
“Trivia I learned from my Monday morning bike ride to Seal beach:”
I tooled around Long beach dwtn on my 10 speed racer taking in almost entire shorefront from naples to dwtn harbor /pike amusement zone. Seems like a neutron bomb went off in dwtn shoreline village-pike area-almost zero pedestrain activity and this on a balmy 70% crisp clear lincoln holiday. There were several for lease signs on empty bldgs in hi-end second st.
Cherry ave park and cherry beach area packed with idle unemployed illegals and assorted LB riffraf , in keeping wth the general trend of central LB decling into a third world cesspool.
BTW the entire stretch of beach- front condos built into the bluffs tretching from just east of dwtn eastward to belmont pier area have some really ragged decaying units plunked down and facing a nasty stretch of beach reeking with port pollution , impoverished riffraf and views of oil platforms and idle wallowing cargo ships.
LB is one of LA regions worst RE meldown zones and prices are 20-30% off peak for virtually entire city. Very soon a condo can be had for under $200,000 though it might be in a marginal area. LB dwtn & north central areas are major crime zones with daily shootings ,beatings ,assaults , gang shootouts so common they don’t even merit several lines in the LB press telegram criminal activities section.
“in keeping wth the general trend of central LB decling into a third world cesspool.”
The older central area of LB which forms a 4-5 mile radius ringing dwtn has become a sort of black hole which sucks in the poorest most impoverished riffraf from all over LB and surrounding communities. A minature version of the much larger LA third- world hovels ringing Dwtn LA
From the Monday WSJ article (page A3):
Refiners Cut Back, but Pump Prices May Keep Falling
Some excerpts:
“Battered by high oil prices and weakening demand, some U.S gasoline frefiners are cutting back on production to fend off collapsing profits. But the move likely won’t be enough to halt a slide in prices at the pump, industry observers say.
Refiners over the past month have scaled back production rates to 84.3% of their capacity, the lowest level recorded for this time of year since 2003, according to data released Wednesday by the U.S. Energy Information Administration. Since the beginning of the year, operating rates dropped by 8% compared to an average 4% decline in the same period during each of the fast five years.”
“Recession fears and high gasoline prices are combining to put a dent into the nations’s gasoline consumption. Year-ago comparisons show demand falling in the past three weeks, according to EIA data.”
FWIW.
I could have told “you” this six months ago - that despite $100 oil gas prices would fall hard due to falling demand. Gas inventories are at 15 year highs, I read somewhere, and demand is acutally down in Jan 2008 vs. 2007, instead of the expected and normal +1%.
As for my area - Phoenix - there is a very noticeable reduction in the numbers of contractor/builder vehicles driving around during the day - these guys don’t drive the 8mpg dually unless they absolutely have to - and only to a paying job site. No job sites - no reason to drive. In Phoenix I’d estimate that about 25% of gas/diesel demand was for construction alone over the past few years.
I’d expect to see sub - $2 gas within six months. Just filled up for $2.65, after filling the other car for $2.75 on Saturday at the same station.
Completely wrong. Gas prices are rising, not falling.
WASHINGTON (Reuters) - Sales at retailers rose 0.3 percent in January, which was an unexpected pickup that partly reflected stronger sales of new cars and gasoline, according to a Commerce Department report on Wednesday.
Local cheap gas place was $3.01 all last week. Now it’s $3.05.
Dunno what that means, but we’re also have a nice little sucker rally in the stock market. It’s weird, but the retail gas and the market seem to go up in tandem. Maybe it’s all those snowbirds living off investments. They’ve been driving around A LOT this week. “The bear market’s over, Marjory–let’s party!”
az_owner I can confirm. Diesel, thus fuel oil, took 3 price drops in just the last 2 weeks.
bailout criticism:
A Bush administration plan to delay foreclosures for some troubled homeowners met a cool reaction on Tuesday from politicians and investors who questioned its ability to stave off what could be a long and painful string of mortgage defaults.
http://www.nytimes.com/2008/02/13/business/13lend.html?ref=business
All Bush cares about is delaying long enough until his Republican successor can blame him for the problem.
This is unlikely. For related cases, try to find some evidence that BB is laying blame on AG, or that GF blamed RMN thirty years ago.
Professor, Quirk made a typo. “Republican” s/h/b “Democratic”. There ya go. No way in hell a Repug wins this go round.
I have been a reader for a long time… I want to tell my story of the last few months.. I have been trying to buy a house, first and REO, got laughed at my offer of 135k on a house with very significant condition problems on the inside (no floors, no kitchen, a huge mess) (BTW this is 33065 coral springs FL) I quickly realized banks are in la la land as much as regular sellers, I got a counter offer of 294k. I would now offer 85k for that house, assuming it doesnt smell like mold yet. Fast forward, stopped checking REOs, they dont make a lick of sense, moved to auctions… I warmed up to a house in unincorporated Boca Raton… ok house, significant condition problems, with cables hanging in the kitchen and all that, but better overall.. I was afraid of this one, glad I lost it… I stopped bidding at 160k, lost it for 176k. Dont know what became of it. I went to what I now know its a fake “Auction” from REDC, I will NEVER go to an “auction” event that is huge unless they say ABSOLUTE auction NEVER again, I lost and entire day of my life watching this showmen fake this prices up and have banks and investor beat regular buyers… now I went to another house for Auction, this one was it… almost ok condition, just dirt and lack of appliances, I can really make this one my home. So I put my best foot forward, plunked 200k in a bid and won (I believe It will drop in price to 2002-2003 prices which is 170k but this is to live here for as long as future allows, and I could make the payments with the insurance, tax, and all, so I dont really care because ill outlive the price drop) Now, @ 200k I was sure I will get it!! I was happy… but time passed, 7 working days passed (they broke the contract) I started contacting… “no, we dont have an answer”… then finally, a counter offer for 250k, as if I can just hit the fun button and get more money, I said no, (this is awful mind you, the wait) then final answer, “NO”. the bankssss just said no to a good 200k on a house that sold for 170k in a normal market (and will propably sell for less than 170k soon), an amount of money that can only be paid by a person earning significantly above-average money (and that as job to begin with). Im tired, and yes, upset.. I might just been lucky, but one thing is assured, Im not touching this market in a while more, at least 8mos, maybe more… do bankssss actually think they will be able to sustain prices? I dont think so… florida is going down the tubes, very fast.
I have a strong feeling you are lucky you didn’t get that house. Only time will tell.
I have had similar experiences. The banks are filled with insane staff, IMO. A typical example from my many experiences (Southshore MA): A house owned by a bank comes on sale last August. They start at 335K (Zillow says it is worth ~ 400 K). Every month they drop the price. Because of the weather here, the house had to be winterized (additional cost to bank). Finally in January they are at 285K. So we offer 220K thinking that we can probably get it for 250K, put in about 50K and make it a good place to live in. Bank counters with 280K! We counter with 250K. The bank comes back with 275K. It is february now and we think this economy is going to tank for sure, so we don’t respond. Our agent called on Monday to say that the bank will accept 260K. We say no. Not even 250K anymore.
We will wait. Banks will be hit hard because, as I say, they have insane people working for them.
NeilT and Uvaman,
Curious, were you dealing with a Big National Bank? Regional Bank? Local?
I really didn’t ask about the bank’s identity although I was told by agent that it was a local bank. We dealt with an RE agency that apparently specializes in lender repossessed homes. I think it was called New England Services Group. We’f give an offer and they will come back after 2 - 3 days with a counter-offer from the insane bankers.
the one I offered 135k was GRP financial serivices I think its a sally-mae subsidiary… this last one for 200k its ” BANK OF NEW YORK TRUST CO NA
%FIDELITY HOMECOMINGS FINAN NET” whatever that is… yeah I agree, I dont think reality has worked its way to the halls of these banks.
Thanks Uvaman and Neil. I that you shared your experiences.
The insane banks are holding on till Paulson or Bush come up with a plan or till they push the Federal Reserve to start buying up assets.
It’s insane. I thought Banks already took their biggest writedowns? Maybe Merrill and Citi are waiting on the CDO market to improve.
Managers at big banks can afford to be knifecatchers, as they will at worst pocket $100m+ golden parachutes.
Just as with stocks you dont recognize the loss until you sell, although with a house you can maintain a false mark-to-market in the meantime making a fire sale even less attractive because it allows banks to hide some losses while they carry the property. Banks are suffering right now. Why would they want to recognize a significant loss? Especially since it could be used against them in later negotations and cause prices in high foreclosure areas in which they have big portfolios to fall even more. Better for them to sweep it under the rug and show up to work with a smile on their face. You were lucky hun and should count your blessings. They will accept less than your initial offer in 2 years. Why chase deals when they will chase you soon?
Don’t give up on your search for a REO. As time goes on and their inventory increases, banks/lenders will have to become more flexible. It sounds like you’re doing your homework in terms of getting an inspection before submitting an offer. Best of luck.
Uvaman,
Just chalk the experience up as a seminar that didn’t cost you much other than time. You will eventually look back and be thankful you didn’t get the house. Banks are still in denial, even around Detroit here. Auctions are still a joke.
You may have to look at a bunch more before the right one shows up. Just be patient and keep your powder dry, and consider this a time of learning.
Guess the trolls want us to feel sorry for people like the fellow in this article, who re-fi’d to pay for his daughter’s college education:
http://www.iht.com/articles/2008/02/12/business/mortgage.php
I was reaching for the Kleenex when I read, “‘The whole plan was to get out’ before his rate reset, he said.” This, on his $750,000 mortgage. Gimme a break. How about (a) *working* for the money - if you didn’t earn it then it is not there to spend, or (b) picking a less expensive college, or (c) sending her to junior college for the first couple of years, or (d) telling her to work or borrow to pay for a chunk of her own education?
(e) telling her to study hard & get super grades to earn some merit shcolarship money
(f)
(f) all of the above.
“If you want to get laid, go to college. If you want an education, go to the library.” - Frank Zappa
Is there some sort of question as to what most people (including myself) would do? Yeah, we would not go to the library.
Brenda Harris is standing in front of “her” home; a home I know I could not have afforded until my mid-forties and well after my children were long gone. What happened to the modest middle-class home of the 70s-80s? I suppose I was just never “entitled” at any level.
“The whole plan” = “the whole scam”
I think it’s pretty lame to blame this on his daughter. He sucked $475k of the equity out of his home. How much of that went to his daughter’s schooling?
This guy’s income is in the 6 figures. We are putting 2 daughter’s through college on much less than that.
Probably the only way to get out from under loans for higher education; pay tuition or loans for tuition off with HELOC then file for bankruptcy. He wont get any tears from me. Every dime of my kids’ tuition has or will be paid for by hard earned, after tax, rust belt wages.
How 4% of bad home loans will bring down 64% of the housing market.
http://www.oftwominds.com/blogaug07/pareto-housing2.html
WBBR Bloomberg reported this morning that 39% of fools who bought in 2005 owe more than their house is worth. My thought was this; How high will that number go…. say next year…. 50? 60? 75 or better? I’ll forecast that the trend is not their friend in this case.
I don’t see how it cannot go higher, especially as mortgages keep resetting. Personally, I can’t even believe people got mortgages that reset every six months, 3 months, sometimes monthly!!!
Seems like over 50% is almost a given.
And as far as 2006/2007 buyers, why would it be any different??
And 2004, 2003 borrowers for that matter. I still contend we’ll go back to pre-bubble pricing +3,5%per year inflation. Say that in front of an RE mobster and watched them come unglued like a cheap chair. lmao.
Pre-bubble as in, say mid to late 90’s??
Pick your year and add in the 3.5% per and you’ll come up with roughly the same number which happens to be anywhere from 25-75% off of current fantasy prices.
House in Palm Springs 2000 -240k
2005- 995k
What is reality price? I say under 240, and that was high to me.
With companies laying off, you will see this go higher for sure. Buckle up, we are about to hit a very rough patch.
The lending freeze up keeps spreading:
Credit Woes Hit Funding For Loans to Students
The credit crunch that has so far caused more than $100 billion of losses for big Wall Street investment firms now extends to students in Michigan, and it could soon hit many other borrowers, ranging from California museums to the prestigious Deerfield Academy prep school in Massachusetts.
In the past few days, problems have mounted for many borrowers as an obscure — but important — corner of the credit market called auction-rate securities has gone into a deep freeze.
The problems in the market have caught many investors off guard. In the past, the Wall Street firms that conduct the auctions and underwrite the securities have often acted as a buyer of last resort. But with their own balance sheets already bloated with other assets they don’t want to hold, Citigroup, Goldman and others are limiting their support for the market.
As one banker in the market said, they are not obligated to be “liquidity providers.”
“It is like a multicar pileup,” said one auction-rate securities trader. The trader says that investors saw last week’s failures, and “people are nervous because they want to have a liquid product.”
http://online.wsj.com/article/SB120287550746064755.html?mod=hpp_us_whats_news
From the Michigan website:
“Due to the current and unprecedented capital markets disruption, there is not sufficient available capital to continue making MI-LOANs. After considerable analysis and significant efforts to secure sufficient MI-LOAN capital to make new MI-LOANS, the difficult decision to temporarily suspend MI-LOANs had to be made. Therefore, the MI-LOAN Program will be temporarily suspended at the close of business on Friday, February 15, 2008. When conditions warrant and funds become available, the MI-LOAN Program will be reinstated.”
Wow!
“The most dangerous man to any government is the man who is able to think things out for himself, without regard to the prevailing superstitions and taboos.”
H.L. Mencken
Too bad H.L. Mencken’s time on the planet predated the blog era, as there is a reasonable case that he would have been at least a lurker if not a poster here if he were still among the quick.
“If you find so much that is unworthy of reverence in the United States, then why do you live here?” Mencken asked himself.
He answered his own question, “Why do men go to zoos?”
From Only Yesterday: An Informal History of the 1920’s by Frederick Lewis Allen
“No Soup For You!”
The National Association of Home Builders said they were going to stop bribing congress until congress passes legislation to keep houses expensive!
http://biz.yahoo.com/ap/080212/homebuilders_campaign.html?.v=2
I think the CONgress should pass a law that stipulates that a house cannot be sold for a price less than the previous sale price (minus any repair costs as certified by the local govt appointed inspector). This will take care of sellers’ & NAR’s woes without costing the govt a penny.
The new legislation may be called “House Price Control Act of 2007″.
“More needs to be done to jump-start housing and ensure the economy does not fall into a recession.”
It’s a fact that a $50k/yr income can’t afford more than a $180k home, and I can’t understand why members of congress have such a difficult time understanding it.
I think what really happened is that the homebuilders ran out of money and are no longer able to make contributions — this is just a way to save face.-
MGIC Swings to $1.5B Loss in 4Q
The biggest X factor in this debacle, remains to be seen…
How does a society used to wretched excess, make do with considerably less?
Like a drunk in a bar?
http://www.atimes.com/atimes/Global_Economy/JB13Dj04.html
Like crackheads in rehab . . . not pretty.
Like an FB with a credit line.
link:
http://biz.yahoo.com/ap/080213/earns_mgic.html
Vote on world’s next megabubble
http://tinyurl.com/2nvyhh
P.S. The comments are a great read too!
Leigh
Another subtle and stealthy admission as to the state of the market by NAR:
Go to realtor.com and go to the “advanced search” function.
Scroll down to the bottom of the advance search GUI.
Under financial options they now include the following:
Lease Option (i.e. rent to own); and
Trade considered.
They still refuse to update the # of homes they are searching from “over 3 million” to “over 4 million” (at least it no longer “over 2 million”) but it looks like the market trends are still forcing them to make some adjustments.
I think someone at NAR has a brain and realized that by saying over 3 million it would include any number over 3 million to include a # over 4 million so they decided there was no need to continue to change that little blurb when you initiated their search engine.
John McCain funded by Soros since 2001
Candidate’s Reform Institute also accepted funds from Teresa Kerry
http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=56177
As Sen. John McCain assumes the GOP front-runner mantle, his long-standing, but little-noticed association with left-wing donors such as George Soros and Teresa Heinz Kerry is receiving new attention among his Republican critics.
kc:
Much as Herbert Hoover doomed the republican party to 20 years in the wilderness, so will ’ssshrubery.
It doesn’t make any difference who gets to lose, bring on the McCains, or Alf Landon or Wendell Wilkie or Thomas Dewey, they’re all destined to be footnotes in history, not much more than that.
I like Geo Soros.
KC, Aladinsane,
Isn’t politics great? Will it be McCain, Obama, or Hillary? I wouldn’t be surprised if Soros has supported all of them. There are still so many variables that we don’t know what’s going to happen in Nov.
But the conservative side of the Republican party will not disappear for long. This year our vote was split year by Romney and Hucc, allowing McCain to be the apparent nominee. Some will sit this election out, some will vote Dem, others for McCain, but we won’t quit planning for the future.
Peace all.
Neither Huc nor Romney are conservative. Not by a long shot (unless you consider BIble-thumpin’ == conservative).
There really is no consensus on what is considered “conservative” anymore. Huc lost me when he started proclaiming himself the True Christian. OK fantastic, the Lord loves you best, but many of us are not here to elect the head of Liberty U. or Pope even. We’re voting for POTUS. Methinks a lot of folks are getting the Kingdom of G-0-d confused with kingdoms on this spinning ball of dirt. And on this plane of existence, pragmatism rules.
McCain accepted $$$ from Soros? And Mother Teresa took donations from some of the world’s premier scumbags. That’s what makes the world turn, Pink Floyd even wrote a song about it.
Would that be Book Of Mormon thumpin’ in Romney’s case?
NovaWatcher,
Agreed, neither Romney or Hucc, nor even W was conservative enough for me. I think W’s low approval #’s include people like me who wished he’d actually be as conservative (ie “mean and nasty”) as he gets accused of all the time, here and in the MSM.
Whatever, the future seems to be more government involvement in our everyday lives, more intrusions, more taxes, and more of everything related to the “nanny state” politics that our esteemed opponents like to enact.
Libs beware, you’ll likely have your opportunity to run things in total, and the results will be yours as well.
Peace to all.
Lip, the results will be from the past 7 yrs.
That is what results mean, not like doing sit ups for one day and poof you expect 6packsabs. The Results that someone will inherit is just that inherited problems from before that the new guys have to fix, or not.
The author of this article was one of the “Swift-Boaters”.
That makes him a lying sack of crap in my book and not worth reading.
I rank World Net Daily right up there with that Moonie paper the Washington Times. It does print some hilarious stuff, like the Soy is Making Kids Gay article.
I just dumped all my soy milk down the drain! :-}
“The author of this article was one of the “Swift-Boaters”. That makes him a lying sack of crap in my book and not worth reading.”
But dummies post the link anyways…….sad.
My father, who was totally disinclined to believe me even 6 months ago that housing prices would go down by even 10-15% is now paralyzed by the thought that housing prices are going down 30% or more in his area: bubblicious PWC in Northern VA. I showed him four houses in his neighborhood, each price reduced at least twice, all four for “$100K under assessment which is pushing that 30% border.
He is concerned about the terms of his most recent re-fi, which was used to pay off the initial note, the HELOC, and cash-equity out being used to pay for a 600sq foot addition and 1200sq foot enclosed porch, and a kitchen remodel. Massive projects. The concern is that to do all of this, he kept only 30% equity in the house, based on the (at the time, I felt fair) assessment of the house.
The addition adds real value, and the 30% equity kept should be enough to weather the worst of it, but he is concerned that at least for a short time comps might go low enough that he’ll be inverted on his loan. That prospect itself isn’t so bad, they’re planning on staying there until they die, and they can afford the new note into perpetuity. He’s concerned that if his equity is drained, the bank will impose new terms on the loan; such as raising his rate or insisting he bring a large chunk of new equity to the table.
I told him this was unlikely because so long as he’s current on the note, the bank’s probably not even looking at it. But I’d like some confirmation and/or advice/ideas from people who know more about this kind of situation.
Dad is getting a dose of hard reality from son/daughter. You’ve made more progress than I have.
PWC is ground zero for the crash in prices in the greater D.C. area. Friends of ours sold the 4/3 ranch they owned for many years in FFX to buy a small 2/2 “patio home” in a 55+ community in PWC. They paid MORE for the 2/2 than they got for their 4/3! That shoulda been a red flag. Based on recent resales on their street, they have already seen a 40% drop from what they paid for the 2/2 in 2005.
It is, and it’s where I live too, comfortably renting, so I get to see it collapsing around me. I did the math over and over and over again between 2001 and 2005 and it never made any sense.
I just wish that being mathematically vindicated didn’t hurt so much.
How did it “hurt”?
You are in a better position than most people. You actually saved money. You did the right thing by not sacrificing your future.
So you took a few “psychic” lumps. Bitter renter, priced-out forever, etc. There’s plenty of time for a lot of payback.
Oh my god, you live in that hellhole? Good luck to you. Not sure why you would want to buy a house there. (For a while I lived in Alexandria and commuted to PWC on the MetroDirect, but I guess it depends where you work … I worked for PRTC!)
PWC is a beautiful place turned ugly by sprawl. Place just kills your soul, day by day.
What really kills me about the PWC bubble is that when I first came there (about 2000), PWC was a place people settled because they couldn’t afford MD, Alex, Arl. or DC! Gack!!
Yahoo lists 1171 foreclosures (or pre-foreclosures) in Mansassas alone.
X,
If they can afford their monthly nut as you say they can (fixed I assume) and they don’t need to sell or refinance, they should be fine. Technically, there may be a default provision in the mortgage that would be triggered by a drop in value, however, from a practical standpoint, the bank/lender in this case most likely has much bigger fish to fry.
We’ve seen reports of HELOC amounts being reduced or frozen based on reduced appraisals, but not cash calls. It would be like credit card issuers suddenly demanding (and then expecting) payment in full when a FICO score drops. Just ain’t gonna happen. The bank will gladly accept their monthly payments.
Thanks, that’s what I figured.
Anecdotal story on local governments:
I was with the family at a public beach near Dana Point. My parking was about to expire. When I arrived, the traffic cop had already written out my ticket and was standing by my car (still had a minute left). I avoided a ticket literally in the nick of time. You should have seen the look on her face when I slapped the renewed time on my dashboard. City governments are visibly hurting.
In DC, they will put the ticket on your car before the meter has expired. Fortunately, all cell phones have cameras, so we were able to get it removed. I wish I could have had the meter maid fired for that strategy though.
I was parked in DC one day a couple years ago - and had a ticket that was in error — the reader had misinterpreted the sign in some way. (it was kind of complicated) — I was steamed, but then saw the meter-reader down the street, and she came back to my car, and amazingly enough, agreed that the ticket was invalid, and saus she would void it. I was so happy for this little victory.
Of course - a few months later, I got a notice from DC that I handn’t paid the ticket and my fine was now doubled. Sooooooooo angry - but I realized there was no way to fight it. Moral of story - don’t believe the meter-maid.
wait-wait–
they aren’t meter maids, they’re police service technicians
there, now doesn’t that make you feel better?
–not a gator, your
bus drivertransit operatorOh yeah? Here in Tampa this guy got a ticket for evading because he passed his drug test. Basically he is a quadriplegic and they said he looked like he was on something. Well, his license ended up getting suspended and they came to his house and took him to jail. The lady at the jail ordered him to stand up. When he couldn’t, she just dumped him on the floor (it was all caught on camera) while supervisors laughed. He was in jail for 5 days and at one point he defecated himself and they let him sit in it for 4 hours.
Needless to say he is suing. Here is the link to the story.
http://www2.tbo.com/content/2008/feb/13/na-toss-from-wheelchair-brings-jail-suspensions/?news-breaking
The video is all over Youtube.
Yep, I got a moving violation because on the way back from my father’s death bed (shook up and tired), my headlights went out on the fwy (yep, both). I was at my exit.The a-hole cop wrote me a moving violation. $162-, when it should have been a fix it ticket. Welcome to the totalitarian state.
Yet another “It’s not our fault” approach. Very creative.
http://articles.moneycentral.msn.com/Banking/HomeFinancing/DidTerroristsCauseTheHousingMess.aspx
Wake up, Al.
Sure there are people around the world who dislike the U.S., but they are not the “terrorists” who pulled off 9/11.
I urge (no, dare) you and everyone else on this blog who believes the official story to watch this short 10 minute film:
Twin Towers Demolished for Effect
When was the last time you saw a bldg implode?
When was the last time you saw a bldg tip over?
yea yea, Leaning tower of pisa,
I firmly believe that these towers were imploded, cause steel doesn’t melt or weaken from the bottom up to the high flrs where the aircraft impacted.
This is just too far fetched even with a tin foil hat.
So much for Warren Buffett saving us from ourselves…
Why do markets with “strong underpinnings” swoon like a Beatles’ fan on the words/plans of a single person? We are expected to believe housing is too small a part of this economy to bring on recession - yet at the same time - that a single man is big enough to save it.
Warren Buffett is one of the last businessmen of integrity, in our country.
Hope has to ride something…
Buffett only looks out for #1, but he talks a good line. His “bailout” plan is pretty similar to Potter’s.
He is actually trying to profit and prevent a bailout. If these companies are bailed out then that is an advantage he does not have. The cry for a bailout is because of the municipal bond business. The banks really want the CDO’s to be bailed out too.
So what does Buffet do to quash the cries for a bailout? Offer to buy the Municipal Bond business. If they don’t get bailed out then they will have to sell the Municipal Bonds and probably at even more attractive terms than Buffet was demanding. A win/win for him.
He doesn’t want a bail out because he’s entering the business, but he’d take it off their hands for a song. The banks will bail them out (because they are on the hook for a whole lot more losses if a downgrade occurs) but they’ll play chicken with the government first.
Nothing but business for Buffet. Methinks this economy is alot more fragile that we think.
Somewhere, in a little cupboard at the back of the news room, is a little man. Every so often somebody he looks at the chart, looks at the recent headlines, and picks the one that seems to best match the direction. If you’re very lucky, somebody has given him some dice to help make that decision.
Was this discussed yesterday?
http://biz.yahoo.com/ap/080212/venezuela_us_oil.html?.v=2
Venezuela’s State Oil Company Halts Oil Sales to Exxon Mobil
CARACAS, Venezuela (AP) — “Venezuela’s state oil company said Tuesday that it has stopped selling crude to Exxon Mobil Corp. in response to the U.S. oil company’s drive to use the courts to seize billions of dollars in Venezuelan assets.”
I have not overcome my amazement at how the DJIA could manage a positive finish yesterday in the face of news that GM had just posted its largest ($38.7 bn) annual loss in automotive history, and that they are laying plans to cut 74,000 jobs. I guess once again, all the bad news has been fully priced in?
http://www.marketwatch.com/tools/marketsummary/
I am no more amazed then seeing the FEDs report that car sales were up. I have come to the conclusion that the system is being manipulated in more ways than one.
Most of that loss was from a tax asset writeoff in the 3rd quarter, so it’s “old news” so to speak.
Also, they’re not cutting 74,000 jobs, they’re offering buyouts of one kind or another to all 74,000 of their hourly employees .
I guess you are pretty much saying the automotive slump has bottomed out. Are you buying GM shares today to celebrate the bottom?
No, my good man, I’m not saying that at all. On the contrary. I won’t touch GM/Ford with the proverbial 10 foot pole.
I was just trying to provide accurate or relevant info, especially re: the 74,000. Not trying to offend anybody either.
Thanks for the clarification, and sorry I was sloppy about the meaning of the 74,000 number. Do you have any sense of what share of that number will actually take the buyout offer?
What I found interesting about the GM news is not the layoffs of 74,000, but the fact that they claim that they will replace those people with lower paid employees. A rational business decision, but probably the most concrete evidence of the corporations continuing to crush the middle class. And for those who say manufacturing employees are overpaid at 80k/year, you should look first at the corporate heads getting $80 million severance for running companies into the ground.
GM’s problem is that they bet the farm on big, low mpg trucks and SUVs. Cutting worker’s pay won’t help sell anymore of those behemoths.
The UAW agreed to replacements getting lower wages, in return for some hopefully higher amount later.
And yes, re: the middle class, here’s another up to 74,000 people being taken out of the homebuyer pool, unless prices come way, way down. Who can afford to buy a house making $16 an hour??
“they are not cutting …jobs, they are offering buyouts” in order to reduce hourly pay to $14.00 hr.
I am not cutting my hair, I am allowing for more neck airing.
GM’s entire market cap is only 12.7 Billion. Their entire value has already been discounted.
Make sure not to look any farther back than 1998 when seeking a reference year…otherwise the vibe may not be very good.
BULLETIN DOW INDUSTRIALS UP 100 POINTS
TODD HARRISON
Bottoms up
Commentary: Practice discipline over conviction in this tricky market
By Todd Harrison
Last update: 12:01 a.m. EST Feb. 13, 2008
“You should see the toast, I couldn’t even get it through the door!” — Uncle Buck
NEW YORK (MarketWatch) — The abundance of information in the marketplace is a lot to swallow. By chewing through inputs one at a time, the process becomes much easier to digest.
Four primary metrics shape the tape. When viewed in isolation, they’re inherently flawed. When assimilated properly, they serve as legs under the trading table that balance an approach.
Last week we discussed whether or current juncture was akin to 1998 or 2001. That destination remains to be seen but the journey is where the path to profitability resides. It is in that vein that we scribe today’s vibe.
http://www.marketwatch.com/news/story/practice-discipline-over-conviction-navigating/story.aspx?guid=%7BA16AAE58%2DD653%2D4608%2D91EE%2D95E1097D0C37%7D
It’s 2001 IMO.
What would be the one thing you would show someone trying to convince them not to buy right now in the OC?
Good Lord…….you dealing with another knife catcher???
I try to point out the ability of the masses to attain the type of mortgage products that are needed to “afford” a $500K + house. If you consider that those products are no longer available unless you have excellent credit ratings, then the overall trend will be lower prices for many years to come.
I used this tact when talking to two business associates last week. One just moved from San Diego and he wants to buy a house now. I told him the prices weren’t affordable to most since the toxic mortgage products are hard to attain and that I thought prices would continue to decline for years. One, with excellent credit, just got an interest only loan on a new house in Scottsdale (can you say “catch a falling knife?”). The guy from SD just shook his head and said his credit was bad. IMO he got the idea that prices would be coming down and I think many people in SoCal have credit ratings that make it hard to to get a toxic mortgage, making it impossible for SoCal to sustain these prices in the future.
I think 2001 is about right.
Its neither. In terms of debt, this is a generational crisis the likes of which America has never seen. I think all comparisons to past markets will prove specious. Market wise, I think its a good time to average in on small caps. Small caps outperform all other domestic indicies over the long haul. As as PB says, stocks only go up.
Buffett’s Ambulance Svc
http://www.stockmania.com/?q=node/2231
you made Russ Winters “Winter Watch”…good on ya.
Buffett’s offer to aid bonds has catch
Reinsurance proposal excludes mortgages
By Vikas Bajaj
NEW YORK TIMES NEWS SERVICE
February 13, 2008
Warren Buffett volunteered yesterday to rescue Wall Street from its latest looming crisis.
But Buffett, the billionaire investor known as the Oracle of Omaha, made clear that his offer would not come cheap. Even then, jittery investors were unsure that his plan would work.
http://www.signonsandiego.com/uniontrib/20080213/news_1b13market.html
Hey all -
I am looking for some good advice/emotional support here. I’m 30 years old, single and likely to stay that way, and I’ve moved four times in five years - and I’m exhausted by moving. I will have to move in August, as the person I’m living with has a lease that’s ending in September, and she is determined not to renew.
I really don’t think I have more than one more move in me for at least five years. It’s exhausting and absorbs three months everytime I do it between packing, and dealing with the utilities and the landlords. I finally make enough that I can afford a place in an area I like. Credit card debt free, paying down my car loan as aggressively as possible, and determined to only have a mortgage and student loan for debt - my student loan interest rate is less than 2%, so I’m in no hurry to pay it off.
I’m living in DC, and while I know the market is going to probably decline further over the next year, I want to buy a place that I could die in fifty to sixty years from now - my grandmother didn’t leave the second house they bought until she moved to assisted living, and my parents lived in their place for 35 years (until they finally divorced).
What’s the best way to figure out timing and how to do an offer? I finally found a good real estate agent, and while I’ve seen a couple of places that could work (and my agent is willing to play hardball on offers!), I’m convinced that the market is going to go down further over the next three months, by which time, I’ll have saved enough for all my closing costs and part of my downpayment (the rest is an equity share with my father - he’ll either get the money back and profit when I sell, or I will start paying him back as my income increases). Should I note the ones I like now, and see if they stay on the market, or not even begin to look until June? Also, for anyone who lives in DC - how far should I go under the price on my first offer? Does anyone have any neighborhoods they think as a single woman I should stay away from?
Also, am I nuts, considering all my factors -I’m prepared to stay in a place for 20 years, I’ve got a stable job etc - to even be considering buying now? Is the market that bad in DC that I should rent for another year or two?
my agent is willing to play hardball on offers!
No. Your agent is willing to TELL you that he/she will play hardball. And is that person compensated by a percentage? If so, their real interest is in having you pay the HIGHEST amount that you’ll go for.
They will then brag to their buddies about how much they stiffed you for.
Also, am I nuts, considering all my factors … to even be considering buying now?
IMHO, yes.
Here is another strategy. Pay for somebody to pack up and move you. (Should be about $2K.) Throw that into the comparison of buy vs rent. My guess is that you will come out with many more $$ in your pocket for renting.
Here’s another strategy.
Tell your agent you want to test their ability to play hardball for when you buy in a year. Choose an apartment, and see how low they can get the $$/month.
If the agent is smart, they’ll strut their stuff to show you how much they can save in renting. They’ll have you as a client next year. (or two years or whenever.)
Hi -
You say you’re likely to remain single, I don’t know if you can count on that. Love and marriage happen.
About your agent: just be advised, RE agents are panicking and hungry right now, and the agent who tells you s/he is willing to play hardball with sellers will turn on a dime and tell you that you can’t insult the seller with your lowball offer.
Merrill Lynch forecasted that RE will decline 15% next year. On the conservative end. They then adjusted the forecast to 25% I believe. Your fellow DC posters will be able to fill in the specifics of your question, but as to the generalities, here you are.
Good luck!
Janie - I already own in Alexandria, and it’s worked out ok. (bought in 2002).
But, if I was a non-owner, I’d spend a lot of time monitoring prices and inventory — I’d check every week (heck, I still do) — think of the basic characteristics of a house you can afford — maybe it’s a 2 bdr townhouse within the beltway — and search the new listings for those every week. As long as you see the inventory rising and prices dropping — keep holding out (of course, inventory will drop some in November and not pick up until mid January or Feb — but just compare with year-before inventory).
I think you’ll continue to see prices tumble over the next year or two — and the 500k towhouse you thought you might not be able to afford may well be a 400k option (or less) a year or two from now.
Watch the inventory - watch the prices. I use the cbmove.com site - but I’m sure other choices will work well.
I really think patience will earn you a less expensive house and a better standard of living in the future.
Thanks zeropointzero, phillygal, JP, I really appreciate it. This is probably going to be the biggest single purchase of my life, and I don’t want to mess it up. I will continue to monitor the websites for inventory and prices year over year, and make my moves based on that. Worst comes to worst, I rent for a couple of years.
I do trust my real estate agent - we went into a place that needed an insane amount of work and he said flat out - “good location, but I wouldn’t recommend it - it would take too much money to make it nice. If you’re in love with it, we’d start out at least $125,000 under asking and not move unless they did some of the work.”
How did you come to know this agent?
Also, keep in mind that many of us who post are current or former homeowners. I too am sick of being a gypsy and I would like to settle down. But then reality hits and I must consider that I will be responsible 100% for the upkeep and maintenance on my house. So you know, a single woman finding a stable rental and just biding time is not such a bad idea right now.
I actually met him randomly - he was listing an apartment in the building I currently live in, and I walked in to see what they wanted for it. When he realized that I wasn’t in the market for that type of unit, we started talking, and he offered to take me around to some places to get a sense of what the market was. He took me to a variety of places, and made sure to point out how long each had been on the market. Then again, I did ask him if some of the more recent units had been relisted, so maybe he knew I was better educated than some buyers.
He has a ton of listings and customers, and I get the sense that he likes the game of negotiating as well as the money. I think he’s going with higher volume, lower commissions. He knew a ton about all the inventory in the neighborhood, ot the point where I randomly pointed out a house that was under contract, and he was able to tell me about it. Still he works off of commission, which I have to be cautious about.
And you’re right about the maintenance/upkeep. When I do own, I know that i will be a house slave for a very long time. Still a lot of the ads I read on Craig’s list for rentals seem nuttier than the ads for sale. The guys who want to rent out their units have fantasies that they’re going to cover their entire mortgage payment for the whole house on renting out their English basement (usually a full apartment in DC in the basement).
he said flat out - “good location, but I wouldn’t recommend it
Please beware of the strategy: Say a few things that are correct in order to gain trust.
I do trust my real estate agent
This is a mistake. You should never “trust” anybody who is about to make $10K-$30K off of you. That person is an information source, but they need to eat.
Remember that the scummiest biz people are often ones that seem affable and trustworthy, so you should always be verifying and never let your guard down. (Naturally, you can do this in an affable way too.)
Good advice JP - I will keep it in mind. I probably tend to trust professionals and self-employed indidivuals a little too much, as my grandfather owned a gas station and was one of the most honest people I know. Also, before she retired, my mother was a real estate agent in Manhatten, and was the only person I knew who had people come back to her for twenty years everytime they move. She also could brag she never lost anyone money - the worst anyone did over a twenty-year period was break even - and NYC had some deep drops in the early 90’s late 80s. I forget that not all real estate agents are like she was. This guy may never expect to see me again, and has no reason to deal straight up, unlike my mother and grandfather, who acted like everyone was going to be a repeat customer for the next 30 years.
The recent housing boom era has brought many charlatans into the RE biz. I hope for the day when people like your mom dominate the industry once again (ie, people with 20 year horizons.) It’ll take a while I’m afraid.
Anyway, good luck with your hunt.
I should clarify - even if they had to sell quickly in a down market, the worst anyone did over her twenty year career was break even after fees and commissions were paid.
I had my ‘Boarding House” dream again last night.
This time it had a ocean view.
Pretty but crowded.
If you’re really planning to stay for 20-40 years, why stress about what your house price does? You’re trading a large amount of flexibility, for fixing your housing costs. Before you decide you should be able to answer why you haven’t just rented a 1/2 bedroom apartment that meets your needs.
Expect to look for a pretty long time before you find a seller desparate enough to take your offer, check REO pages and be ready to bid on lots of houses. Your realtor is going to earn their commission so you might try to minimize their leg work with internet research.
Find something that you can afford with 30 yr fixed rate pmt and plenty for taxes, hoa/condo fees, insurance and utilities (expect those to collectively add 0.1%-0.25% of the house’s value to each monthly pmt ($300,000 townhome=$350-$750/mo costs above P&I) and buy it, then never look at comps until you’re ready for retirement. Lean away from condos, because it’s likely that if many of your neighbors are in foreclosure pay, condo fees will rise dramaticaly. Plus they have a tendency to switch to section 8 apartments when vacancies rise.
Keep your eye on good schools and neighborhood/demographic trends, the wrong 20 year time horizon (1960-1980) took Anacostia from a decent working class neighborhood to a really scary ghetto. Don’t get too far out, and look for neighborhoods that didn’t see large increases in volume of their housing stock.
We’re number 9 - woo!
http://www.azstarnet.com/sn/biz-topheadlines/224824.php
Assessment lowered again - property tax assessment in my town (Alexandria, Va. - a DC suburb) were posted on website today. Following a 3% decline last year - a 2.35% drop this year. I was hoping for more - and surely prices are sinking further. I appealed a few years ago and got about 8% knocked off then. May be time to try that again.
the Fed chief said that “they have their eye on inflation and price stability, and if the credit crunch didn’t ease, obviously they are going to have to do something about it.”
Yea! Like they can force the consumer and the home buyer to buy now because it is the right thing to do to save their ass!
While depositing a bag of coins, which irritated the teller who had to take them to another room to put them in a coin counter (go figure - I thought that was her job), I had the time to read the 8×10″ Citibank advertisement placed in front of me:
“Do that renovation!
Get some tuition!
Have a celebration!
On your home!
Talk to us about….”
As fast as my tax dollars can be sucked up to clean up the HELOC, subprime, malinvestment mess, is as fast as Citibank creates more mess.
(Yes, I should remove my money from Citibank and yes, I have already. But I keep some deposits there because they offer some international services that other banks can’t match.)
The bad players continue to game the system - privatizing gains, socializing losses.
I’m so tired of it.
Can these banks operate on anything close to the profit model of the past decade without selling toxic waste of one sort or another? The financial system has sucked consumers dry and now must figure out where to go from here.
I guess I’m not the only one sick and tired of the plutocrats gaming the system at the expense of my kids’ future as well as my future.
Ron Paul calls for a march on Washington.
http://www.dailypaul.com/node/37582
via http://www.bullnotbull.com/bull/
Sorry if I missed this from Feb 9th:
“Is Everything we Know About Subprime Wrong?”
http://economistsview.typepad.com/economistsview/2008/02/is-everything-w.html
I’m not sure what I think about it yet. (I just read the blog summary - didn’t have time to read the source article over lunch.)
In some ways it seems to be wasting time arguing over the chicken vs. the egg (which came first, the falling prices or the defaults? “Falling house prices lead to defaults more than defaults lead to falling house prices.”)
I’m not sure you can prove this usefully by overlaying plots of prices and default rates. And to me, whether it is the Tsunami crest or the trough that causes the most damage is academic. (of course, this is an academic blog
The blog comments are interesting as always, including a long comment that discusses the housing architectural impact of the great depression - how neighborhods still show style demarcations between the boom 1920s and bust 1930’s. (Speculative 20’s neighborhoods with interspersed simpler designs built later after the speculators cratered.) This is part of the larger comment about depression causes from housing financing (1920’s era balloon mortgages couldn’t be refinanced in the depression as previously expected, how banks repossessed but still failed, etc. Supiciously reminiscent of neg-ams, ARMs, and today) , and FDR banking restrictions to “fix” the system, that were only recently removed.
It isn’t hard to have deja vu about the 20’s and present Florida land speculations, but there is a lot more deja vu than I had expected inlearning more of the details of the pre and early depression era finances.
What was absolutely terrifying (if one could really connect all the dots so simply) how QUICKLY the banking system can crater itself after a major regulatory reduction. 1980’s S&L loosening => BAM, crashed within a decade. Glass-Stegall Act => WHAM.
Remove the governors => practicioners start using negative feedback => “Evolution in Action”
“Falling house prices lead to defaults more than defaults lead to falling house prices.”
Plenty of tail-chasing conundrums are associated with bubbles.
For two examples:
1) Rising house prices lead to foolish borrowing and lending decisions, which lead to rising house prices.
2) Falling house prices lead to tightening lending conditions and hesitant borrowers not willing to catch a falling knife; both effects lead to falling house prices.
I was reading the el lay times, whilst dining in a empire eatery…
A 1,000 pound Copper 80+ year old miner 49′r statue was stolen yesterday in the city of angles, the particular angle being, to sell it for $3 a pound.
Ancient Rome had similar problems late in their empire, the statuary itself not being valued too highly, but the metal in the eyes and the base were “recycled” and sold for just Dupondius on the Aureus, compared to what they cost to make.
S.P.Q.A.
They chipped into the blocks of the colisum to get out the iron bars that ware used to hold the blocks together. They stripped the marble from the royal boxes. Sold off the statues.
The entire forum became a garbage dumb and a pasture for hearding goats.
In Naples, same thing. The forum was slowly filled with dirt. The oldest Christin Church in Europe was built over the ruins. Now they have built a steel support structure under the church to support it, and have excivated out the old forum. I must say, I found the excivation MUCH more interesting than “yet another church”.
Senate Peoples’ of(Q in latin) American
wrong. Q = and
What’s the Statue of Liberty made out of? How many $ is the metal worth?
Well, here it is. I posted a long time ago about my niece and her family buying an overpriced POS in Colorado Springs using an ARM. They originally had a nice split-level house that housed them just fine, reasonable payment, bought before the bubble. They’ve bought into the “you are what you own” game for years, always trying to be richer than they really are. She works in the heath-care industry (technician) and her husband is an ex-farmer who now sells cars. I knew they would end up having financial problems, it was in the cards.
She’s flying to Hawaii today to work for her brother (my nephew) for a few weeks to try to make some money, he has a business there. He’s asking her to work for a week for free to pay off the ticket. She quit her job (high stress) and her husband isn’t making anything. She’s hoping for another job soon, but in the meantime, no groceries.
She won’t talk about it. My family is very practical, we’ve wondered for years when all the debt would catch up to them. They travel a lot, buy the kids anything they want, etc. They’ve already had problems with their teenager who dropped out of school to be a rapper. This is not a junket, this is an eat crow trip as her brother has been questioning her for years on her lifestyle. Talked to him last night and told him to be prepared to be hit up for a loan. He loves her dearly and isn’t too happy.
Steve Liesman of CNBC has been reading my posts!!!! That, or has independantly come to the same conclusion I have.
A week or 2 ago he came back from the mortgage bankers meeting in Las Vegas appearing if he had an Oh Sh it! moment.
Well, today he is cutting to the core problem. Wehave doubled debt in the last 6 years. Based on interest rate drops, that is $4 trillion too much. Based on interest rate drops and wage increases, it is…. drum roll…. $2 trillion too much debt.
His assertion is the debt has to go away. He has gotten several guests to talk about it today. One admited it had to “go away” but said it wouldn’t all be defaults. Some of the “go away” would be work outs. Doesn’t matter, it is still a loss to the lender.
So, they just had a chat about the stimulus. One guest said that if the money just goes to pay down debt, then it is just transferring the debt to the government.
Steve Liesman POUNCED… YEAH… TRANSFER the debt to the nation to dig out from under this problem.
Hello…. I figured this out like 6 months ago.
The core porbem is the debt to income ratio. We are NOT going to get wage inflation in this slowing economy. Therefore, we HAVE to attack the debt. We can let people default, make the lenders isolvant, then print whatever money is needed to stop the financial system collapsing like 1929… Result = printing $2 trillion.
OR, we can be pro-active and just print the $2 trillion and hand it out to people (everyone, whether they are in debt or not) to pay down their debts or conpensate savers for loss in purchasing power in the inflation that is coming.
Do this, along with major reform to bring back lending regulation, usuary laws, and break up the big banks into smaller ones again, AND mass cuts to federal spending including military cuts and major rework of Socail Security.
“…AND mass cuts to federal spending including military cuts and major rework of Socail Security.”
Darrell — if Ron Paul doesn’t win, who is going to make a serious run at accomplishing this?
Ben, could we please have an California Bubble and Bits?
Ouro, we ALREADY have a California bubble! LOL
Better book a seat on the Tucson Foreclosures Bus Tour:
http://www.azstarnet.com/allheadlines/224828
Arizona Daily Star readers’ comments include:
Most if not all the foreclosures are not good deals. The properties have been foreclosed on because they had no equity. Now the banks are trying to recoup their investment. There is no margin. You are better off buying something that is on the market with a motivated seller.
I just looked again at my dream home in the Catalina Foothills that was for sale last year at $450,000. I knew someone bought it for $405,000 at the beginning of Fall. On Zillow now, the house is valued at $370,000. I figured the real value of that place should be $250,000. I think the house will be up for sale for a huge loss in 2009 and will sell in 2010.
January 2008 sales report out for Long Island, posted on the MLS website, but I don’t think the spreadsheet is public. Wait for Newsday to write a misleading story, but until then, this is what I have for Suffolk County:
– 588 closings represents a 36% drop compared to 920 last January.
– Median price down 6%, to $373,500, from $397,500.
– Inventory is up 21%, to 13,479 houses for sale, versus 11,112 last year.
– Months of inventory is 20.1, up from 11.5 months last year. This is a 75% increase.
Thanks for the info Frank. Can you break the Nassua and Suffolk numbers apart?
I’ve been keeping my eye on the Sunset district here in San Francisco for signs that the housing tide is finally turning. The area is middle to upper-middle class all the way, but the 2-3 bedroom houses have been running for $800K to a million. It’s one of the more livable areas, especially for raising kids, but the houses are still crammed right next to each other because it is the city. Anyway, spotted this obvious failed flip, now a short sale:
http://sfbay.craigslist.org/sfc/rfs/569891374.html
These prices have a long way to go, so I’m glad I’m not actually looking to buy in that area. I have lived over there and would consider it if the prices were sane. The sad thing is that this place might still sell, but at least it will drive down the comps.
The Sunset District never was and was never intended to be upper-middle class - the fact that prices have “made it that way” just shows how fracked-up the whole situation is, and why S.F. is finally going to get whacked this time around. Little attached SFHs with tiny yards are little attached SFHs with tiny yards, whether in Baltimore or S.F. They’re middle class at best.
The iron gate in front of the front door that is flush with the face of the house is an indicator of the culture in SF. Even leaving a little space in the entryway would invite bums to sleep there.
Basically houses there are like arab villas - one has to hide all of their belongings behind a walled fortress.
My realtor just sent me this:
JP Morgan Chase is having a “Rent vs Buy” Seminar in February. I am not affiliated with this seminar, so if you do
attend, please let me know your thoughts!
“Rent Vs Buy” Seminar
sponsored by
JP Morgan Chase Bank
Corner of 86th Street and 2nd Avenue
Weds, February 20th
6:30pm - 8:30pm
RSVP to Chase:
212.789.5014
Taking a small position in some puts.