Removing The Excess Boom From The Market
The Hartford Courant reports from Connecticut. “More than 1,000 homeowners have flooded the Connecticut Housing Finance Authority with calls as they sought to qualify for the new loans, which were announced in November and funded by $50 million in state bond money. The loans are intended to help people refinance adjustable-rate mortgages at fixed rates.”
“But so far, eight weeks into the program, only 25 loans have been approved. At one of the three mortgage lenders participating, more than 300 inquiries resulted in just three loan approvals.”
“The problem is that homeowners seeking help typically don’t qualify for the program because they have tarnished credit, their incomes are too low or they don’t have enough equity in their homes.”
“‘I thought this was set up to help people like me, said Lorraine Bedus of Newington, who bought her home for $215,000 in October 2005 with two adjustable-rate loans that rolled over to higher fixed rates in 2007. ‘Why set it up if it’s not going to work for the majority?’”
“Gov. M. Jodi Rell’s office and state housing officials, however, say CT Families was never intended to rescue the thousands of homeowners struggling to make mortgage payments. Rather, the program was aimed at first-time home buyers with adjustable-rate, subprime mortgages who may not have understood that their monthly payments could rise rapidly after the first two or three years.”
“In Connecticut, there are an estimated 71,000 subprime mortgages worth about $15 billion, with as many as 8 percent of loans seriously delinquent. About 21,000 are adjustable-rate loans that will continue to reset to higher rates. Of those, about 3,000 financed first-time home purchases.”
“Kate McCue, the program manager for the CT Families program in New Britain, said…some of the people are stretched beyond their means where the amount of housing payments are equal to their complete income.”
“‘When you go to refinance those people, it is still too much for their income to make it an acceptable loan,’ she said. ‘I don’t think the guidelines are too strict. You just have to find the people who do qualify. This is not a bailout program for people who didn’t pay their bills for whatever reason. The cause of the delinquency has to be because of the mortgage going up.’”
The Boston Globe from Massachusetts. “Boston is moving to buy or seize several foreclosed condominiums in Dorchester in a significant expansion of the city’s efforts to prevent abandoned buildings from blighting fragile neighborhoods.”
“Mayor Thomas M. Menino plans to disclose today the city’s intention to acquire the properties, the first such effort in recent memory. He also will propose a new ordinance that would impose fines on owners of abandoned buildings.”
“The growing focus on foreclosed properties reflects a new reality. Officials so far have failed in most cases to prevent foreclosures.”
“The Globe reported yesterday that Providence Mayor David Cicilline is seeking an ordinance that would fine the owners of vacant buildings 10 percent of a building’s value if it remains vacant a year after receiving a warning from the city. The massive fine is intended to encourage quick sales by making it cheaper to sell at a loss than to wait for better times.”
“Menino’s office said yesterday the mayor would use the Providence ordinance as a model for one he will soon propose.”
The Enterprise from Massachusetts. “Realtor Coleen Polillio is riding through the slow housing market on a bus and she’s taking her clients with her. The party bus leaves Century 21 C& S Properties offices at 9 a.m. in what may be the first bus tour of foreclosed property in the area.”
“‘Nothing surprises me,’ said Eric Berman, spokesman for the Massachusetts Association of Realtors.”
“In Massachusetts, the number of foreclosures shot up 148 percent, from 3,086 in 2006 to 7,653 in 2007, according to the Warren Group. And, there were seven times more foreclosures in the state in 2007 than 2005, the South Boston-based real estate data provider reported.”
“‘There’s so many, we haven’t picked them out yet,’ Polillio said as she prepares to make a list of 15 foreclosed properties to visit on the three-hour bus ride.”
The Boston Herald from Massachusetts. “Younger home buyers are sitting out the Bay State’s real estate downturn, with a dramatic drop in activity among buyers from 25 to 34 years old, a new survey found.”
“While younger buyers made up 60 percent of first-time buyers back in 2006, that number declined to 49 percent in 2007, according to an annual survey of trends in the local real estate market by the Massachusetts Association of Realtors.”
“‘The drop in the number of buyers in the 25- to 34-year-old age group is further evidence of the exodus of this educated age group from our state and the continued need for the development of starter homes,’ said Susan Renfrew, MAR’s president.”
“A new report released by the Federal Reserve Bank of Boston’s New England Public Policy Center, authored by Fed analyst Heather Brome, questions whether colleged-educated ‘young professionals’ - between the ages of 25 and 39 - are really leaving the area in droves due to stubbornly high housing prices in Massachusetts and the rest of New England.”
“The report says that the number of young professional ’severely burdened’ by housing costs - or those who pay out roughly 50 percent of their household income to cover housing expenses - is roughly the same here as the rest of the country.”
“‘Trying to link housing costs and out-migration (of young professionals), there’s just not a lot of evidence to prove that,’ said Brome.”
“Not everyone agrees with Brome’s conclusions. Geraldine Aine, a 27-year-old attorney now renting in Boston, said she’s thinking of one day moving back to New Jersey because she can’t find affordable housing here that would allow her to both pay off a mortgage and save at the same time.”
“‘I’ve been trying to buy a condo for some time, but it’s ridiculous what they’re asking for’ in some neighborhoods, said Aine, whose parents live in Florida.”
“Though 22-year-old Erika Zysman doesn’t fit into the exact age bracket that Brome studied, she said she’s already thinking of moving out of Massachusetts.”
“‘When I was younger,’ said Zysman, a Seton Hall graduate born locally, ‘I would have said, ‘Yes, I want to stay in Massachusetts when I get older.’ But now when you come back here (after graduating from college) and see the prices, it’s absurd.’”
“Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies, said…there’s ‘absolutely’ a connection between housing prices and decisions by all workers about whether to move or stay in an area.”
“‘People vote with their feet,’ said Retsinas, noting the state’s decline in population in past years.”
From Newsday in New York. “Housing prices on Long Island and in Queens slid further last month, to their lowest level in almost three years, a real estate cooperative reported Monday. One thing did go up, though, in the latest report from the MLS of Long Island: the inventory of unsold homes, which rose by 23 percent to 33,453.”
“The service said the median closing price for a home in the three counties was $417,500, down 4.6 percent from a year earlier. ‘The last time Long Island reported a median [closing] home price lower than $417,500 was in April of 2005 when it was $415,000,’ the service said.”
“In Suffolk, the decline was 6 percent, to $373,500. Queens was hardest hit, with the median price falling by 9.8 percent in January from a year earlier, to $438,000.”
“The service’s CEO, Joseph Mottola, attributed the larger declines in Queens and Suffolk to relatively higher percentages of subprime mortgages…and to homeowners having difficulty paying them.”
“‘When people perceive that they may get into trouble,’ said Mottola, ‘there may be a greater sense of urgency to sell and that will be reflected in the pricing.’”
The Times Herald Record from New York. “January’s local housing numbers, like those of the month before and the month before that, are pretty grim. Compared with a year ago, single-family home sales are down dramatically in Orange, Ulster and Sullivan counties, according to local boards of Realtors.”
“A recent study by Moody’s Economy.com predicted that home prices in Orange and Dutchess counties will have slipped about 12 percent by the time they bottom out in 2009. Some sellers have already adjusted their prices accordingly, making their homes a relative bargain by today’s standards.”
“‘We’ve come down, as an average, 12 to 14 percent on new construction prices,’ said local builder Lewis Donnelly.”
“One of Donnelly’s projects, a string of seven homes in Circleville, could be illustrative of where Orange County’s market is headed. He bought the land a year ago for $90,000 a lot, after two deals in the $140,000 range fell through. Recognizing the softening market, Donnelly prepriced the homes at about $400,000, some $10,000 to $20,000 below the market.”
“He dropped the prices again as construction, and the housing downturn, progressed. Now, he’s listing the homes for about $370,000.”
“‘A year ago, this house would have been $419,000,’ said Donnelly, pointing to a 2,750-square-foot, center-hall colonial with four bedrooms, 2.5 baths and a host of amenities.”
“A cursory review of local home listings suggests some builders have been slower to drop their prices. Elsewhere in the Town of Wallkill, there are new colonials similar to Donnelly’s listed for $429,900, and even a few smaller ranches priced around what Donnelly is asking.”
“‘It’s not like they’re trying to make a lot of money, but they’re stuck,’ Donnelly said of the other builders. ‘Guys can’t get out, because they paid $140,000 per lot. Those guys are in trouble.’”
The Democrat and Chronicle from New York. “Talk of a pending recession spurred by a housing slump is greatly exaggerated by national media and could spur a self-fulfilling prophecy as the negative news is emphasized, the chief economist for the National Association of Realtors told local real estate agents today.”
“Yun told the Greater Rochester Association of Realtors that the national news outlets tend to cherry pick data and expert interviews to perpetuate the story that the economy is heading into recession as housing prices fall and foreclosure rates rise.”
“‘If the news organizations have an agenda, they will call somebody and they’ll get the information they want,’ he said.”
“He said short-term losses have actually brought the markets back to healthy levels, which is often ignored in the national storyline. They give more play to economic experts who support those stories, he said.”
The Buffalo News from New York. “Lawrence Yun says all real estate is local, and he uses the Buffalo area’s experience to make his point.”
“‘Even though we are seeing a large sales decline in many parts of the country, it’s showing up [in] the national data, locally the sales data are actually vibrant and picking up,’ said Yun, chief economist at the National Association of Realtors.”
“‘Certainly things are turning for the better here in Buffalo,’ he added.”
“Yun acknowledged that last year was a bad one for national home sales, fueled by the subprime mortgage meltdown. In 2007, national home prices declined for the first time probably since the Great Depression, but he said that 1.5 percent drop should be put into context.”
“‘The proper perspective is, well, we did have a housing market boom, we had better than a 50 percent runup in home prices, and now we’re giving back 1.5 percent from a nationwide point of view,’ he said.”
“Yun said he believes there is pent-up demand for home purchases. But he argued that the national media have a ‘bias’ toward stressing negative news about real estate, making potential buyers unjustifiably hesitant.”
“‘There seems to be excessive pessimism among potential home buyers in not wanting to make a purchase, despite the fact they have a huge capacity financially,’ he said. ‘With this fear in place, it can lead to a self-fulfilling prophecy.’”
“Some high-priced parts of the country are going through a necessary transition since their markets accelerated too quickly, he said.”
“Yun said the national market has retreated to the pre-boom level, after removing the ‘excess boom’ from the market. He cited examples in markets like Florida and Nevada, where a buyer would purchase 10 homes in one neighborhood solely to ‘flip’ them.”
“Mayor Byron W. Brown said the Buffalo area’s low real estate prices are attracting attention. Each week, he said, investors, investment groups and business leaders from places like Boston, New York City, Ohio and California make inquiries.”
“‘We have seen investors that are expressing tremendous interest and confidence in the city, and that only bodes well for the future of Buffalo and Western New York,’ Brown said.”
“More than 1,000 homeowners have flooded the Connecticut Housing Finance Authority with calls as they sought to qualify for the new loans, which were announced in November and funded by $50 million in state bond money. The loans are intended to help people refinance adjustable-rate mortgages at fixed rates.”
“But so far, eight weeks into the program, only 25 loans have been approved. At one of the three mortgage lenders participating, more than 300 inquiries resulted in just three loan approvals.”
Failure: Perfected.
This was as predictable as about anything in life. The fundamentals of these loans rather than their terms is the problem. FB’s borrowed far more money than they could repay and now of course…
The term “Miserable Failure” comes back into vogue ?
Naah, naah, naah.
It’s the Audacity of Hope!
Whew! So I can breath a sign of relief! The bailout isn’t going to save 98% of the FB’s anyway
“more than 300 inquiries resulted in just three loan approvals.”
FBs hoping for a life preserver only got a kickboard.
One thing did go up, though, in the latest report from the MLS of Long Island: the inventory of unsold homes, which rose by 23 percent to 33,453.”
Holy Cannoli, Batman - that’s a huge jump in inventory!
well i better buy now
Buy now before there are too many homes to choose from!
The price plunge will stop on the day that you by. Isn`t that what it says in the “Suckers Almanac”?
And that is only MLS, now add in the rentals, for sale by owner and the foreclosures and the number jumps much higher.
I have been tracking this using the mlsli.com website. This is about 3,000 LESS than the Oct. 07 high. Wait until the spring flood comes in.
I noticed this as well.
But I’ve also noticed the growing amount of houses on craigslist that were houses that were once for sale but are now for rent. The funny thing is they’re asking for 2300 to 2800 for these houses. Wht would I pay that much?
Why would you pay that much? Because if you don’t, your landlord will lose the house! Are you saying you don’t want to pay above market value to help out a poor victim of circumstance?
That’s just a futile attempt to get someone else to share the carrying costs. Even at that elevated rent they will still bleed.
While quoting the inventory numbers, the Newsday story neglected to include the “months of inventory” stat, which is 18.9 months for the three county region.
This is up from 11.5 months a year ago. In other words, it will take 64% longer to sell you house, Mr. and Mrs. FB.
Also, the article neglects to mention that the number of houses sold dropped 30% compared to last year. [1,753 in Jan. '08 vs. 2,497 in Jan. '07.]
And we all know what the combination of ballooning inventory and dropping sales numbers means.
The biggest problem I have with the way Newsday reports the numbers is they look at the combined data from Queens, Nassau, Suffolk, which is apples, oranges, pears. They are three different markets, and if any of you saw the spreadsheet from which the article is written, you would see how easy it is to break the numbers out. For example, Suffolk has 20.1 months of inventory, Queens has 20.9, while Nassau has 15.6.
For those of you who really care about inside baseball type stuff, though, notice the writer is Tom Incantalupo, who is normally assigned to the automotive beat. So I think he did a good job considering he was asked to write a story outside his usual field. I’ve worked in newsrooms and can just imagine the way it went down, “Hey Tom, write up this story on housing numbers, ‘k?”
Newsday has had several writers working on real estate stories, and I don’t know how the recently [yesterday] announced jobs cuts at Tribune-owned newspapers is going to affect their coverage. What I would like to see is Randi Marshall, who’s done some recent in-depth work that was linked here, be assigned to do all the future stories, so the readership could get the best info possible.
Thanks for posting this, I was wondering about the months of inventory figure. Anyone in the house selling biz that objectively considers this must have a cold chill running down their spine.
Yun has truly lost his mind. Now he is using Buffalo as an example of a good market. I have a friend who has family who have lived in that area for years. I was discussing Buffalo with my friend’s uncle and he described it as follows, “Nobody under the age 30 stays here, they all leave. There is no place to work, all of the major employers have gone under, and the weather is hideous. Other than that it is a great place to live”.
I grew up in Buffalo, and still have family there. The weather is far better than the upper Midwest, Minn. or Wisconsin for example, but weather is not the issue. High property taxes to support nearly a third of the city on some sort of gov’t program is crippling Buffalo and the rest of upstate. The state and city need to get tough and slash benefits enough to drive the welfare crowd to lower-cost areas…Alabama, Arkansas or Mexico come to mind. You can’t maintain non-productive people in high cost areas, and expect anyone to invest in the area. Outsourcing welfare cases to Mexico is really the best option.
My mother was born and raised in Buffalo. She hasn’t been back there in many, many, MANY years.
You might want to suggest that solution to the entire state of Maine as well.
Throw in Cali also…The only difference is our welfare comes in the form of Goverment & Muni jobs…
I used to live in Upstate NY, and what is unique about the state is that the cost of welfare programs is shared between the state and the local counties. Each county pays something like 25% of the cost of the welfare programs for its county, with the state picking up 75% of the cost.
The county portion of the cost of welfare is paid for directly from local property taxes.
So what you get in a place like Buffalo (or Utica, or Plattsburg, et) is that as the employers leave and people go on some sort of government assistance, it’s the local homeowners of that particular county (since there are no corporations to pay taxes) who must shoulder a significant portion of the financial bill.
Yep, my sister lives in upstate NY and her property taxes are more than the mortgage payment. And public services aren’t particularly good.
Imagine how the welfare rolls would drop if welfare recipients were forced to wear orange overalls with SOCIAL PARASITE stenciled on the back in big white letters.
How cruel, but I’m still laughing.
The South already has enough problems dealing with snowbirds, carpet baggers, equity locusts, and others moving in ‘cuz’ it’s cheap” down here. Buffalo can keep them all to themselves.
Add to the problems lack of a sufficient water supply. We don’t need more people each sucking up 100 gallons a day. (Back in the 1950s or 1960s per capita residential use was only 50 gallons a day. If we went back to being more sensible there wouldn’t be a water problem in AL, TN, NC, and GA.)
OK, we’ll send them with water. Deal?
“Outsourcing welfare cases to Mexico is really the best option.”
Oooooh! I really like that as I always thought those jobs that illegals took because supposedly no American would do them really should have been taken by the welfare crowd (at least those that were physically viable anyway.) Then instead of watching the US $ sent outside, the country would be reducing spending and taxes.
double bingo- wages might even rise slightly if folks HAD TO WORK !
My wife’s relatives in Buffalo are only still there, because a rich uncle would disown them and cut off the inheritance coming to them, if they left the confines of the city limits.
Misery loves company.
I have a friend in SC KY who is in his early 30’s and still living at home with his retired parents. His financial plan is waiting on his parents to kick the bucket so he can get the house. It’s a small house in a nice middle class neighborhood, might be worth maybe $125k.
He is a HS substitute teacher. Not gonna bother getting accredited to be a HS teacher, he would rather piss his time away playing tennis while he waits on his “payoff”.
How many people in America have their life on hold while they wait on a “payoff” that isn’t all that big to begin with?
OK- so here’s a situation where I wouldn’t begrudge the owners for HELOC’ing all the equity out of the place to fund some vacations / depreciating toys / etc.
There is a strong possibility that his mom will die a slow and expensive death. (She is almost as big as the house and is an income stream for about a dozen pharmaceutical outfits.) Her last month of life could easily cost $100k. Also, his mom can go on living for ‘nuther 20 years, or more.
george costanza???
Typical southern Redneck thinking………but he will NEVER pony up the money to pay a Lawyer to get the house signed over into his name before his parents get sick, and run up big hospital bills…. and the only asset they have is a paid off house.
Why the “southern Redneck” crack? Are northern rednecks any different? What is it with you guys in New York anyway? If you come from the South, you immediately take on the affectations of the North, speaking disdainfully of your shameful past, and if you originate in the North, you continue with a form of prejudice and bigotry based on nothing more than local folklore.
Given a choice between the North and South, I’ll take South, whose rednecks are no more plentiful or ignorant than those of upstate New York, Pennsylvania, Ohio, Kentucky, or the rest. If the South is so ghastly, why does everyone in these states move here?
I list Kentucky among Northern states because most citizens fought for the North during the Civil War. The state was officially neutral.
I had two brothers that did that after they lost their jobs. They waited a long time.
“Boston is moving to buy or seize several foreclosed condominiums in Dorchester in a significant expansion of the city’s efforts to prevent abandoned buildings from blighting fragile neighborhoods.”
Section 8.
Stainless Steel and Granite for the poor people! Yeah!! Power to the people!!
That was an interesting comment, but this one droppedd my jaw:
“The growing focus on foreclosed properties reflects a new reality. Officials so far have failed in most cases to prevent foreclosures.”
When did it become the responsibility of the government to prevent forclosures?? Gee, if you pay the bills you agreed to pay, then forclosure will be prevented.
I just can’t get past this entitlement mentality.
It’s no wonder Americans are voting for more parasites who steal more of our money for fellow parasites.
There was an article posted a few weeks ago about an affordable housing non-profit in Boston. The director was torn between helping people avoid foreclosure and letting people be foreclosed on so that housing prices would be driven down.
I’d like to see more spin from the other side. “The Mayor is perpetuating the problem”, “He’s taking housing away from hardworking families who make good choices”…
Preventing foreclosures is such an easy sob story.
I never imagined ever coming to Menino’s defence, but unless I am misremembering, the article has a surprisingly encouraging tone:
1. It implies the foreclosure-avoidance-plans have enough sensibility built in that is preventing most FB’s from participating — so its not the blanket bailout we all feared.
2. It implies the city will not let “investors” hold on to abandoned properties, waiting for the next boom in 30 years, but instead the city would put pressure to sell these properties, thus accelerating the drop in prices.
Am I missing something, is this not a refreshing change in approach?
“‘I thought this was set up to help people like me, said Lorraine Bedus of Newington, who bought her home for $215,000 in October 2005 with two adjustable-rate loans that rolled over to higher fixed rates in 2007. ‘Why set it up if it’s not going to work for the majority?’”
This woman would have been very happy in the old Soviet Union, when the Government simply assigned you a place to live.
How dare the Unites States of America deny her right to a house! It’s right there in the Declaration of Independence: Life, Liberty, and a McMansion!
DNC says housing,healthcare are “RIGHTS”
GOP says we are weak shts and will go along…….sorta
It will be interesting to see how this plays out politically. I suspect there are many formerly “small government” folks that all of the sudden want the government to step in with bailouts and regulations.
http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html?nav=rss_opinion/columns
Repeated from bits bucket but I thought it was apropos. When you consider that state gov’s have been trying to prevent this train wreck for years it does put their latest actions in perspective.
They haven’t been preventing this for years, it was state governments who were pushing harder than the feds to increase lending to poorer borrowers. They’re just making hay since the feds overrulled them (and saved them from looking foolish now).
Yup. Two big wild fires in SD County and all the rich folks who wanted to live the rural life on their Ranchonettes and vote down paying more for fire protection in their district scream and cry about meagre services and demand the city folk bail them out. And they’re often uber GOPs who don’t bat on eye hiring illegals when they need their brush cleared.
‘Why set it up if it’s not going to work for the majority?’”
I don’t follow this line of reasoning. All I can come up with is this must be the result of self-esteem based education. It seems like so many FBs we read about have a really limited and self-centered view of how the world works.
These FBs looking for the next vine to cling to, like Tarzan swinging from tree to tree, seldom blame themselves when there isn’t another vine waiting for them to continue on their lofty way in the tree tops. We have seen example after example of people that have been swinging from vine to vine for a decade or more. They just naturally assumed that there would always be another vine waiting for them, allowing them to continue to borrow and spend away.
When there isn’t another vine, they aren’t mad at themselves for putting themselves in such a precarious position. Oh, No! They are mad at everybody else for not putting that next vine out there in front of them, without ever considering that a vine can only handle so much dead weight before it breaks, and vines can only grow so high as trees don’t grow to the sun.
Hard lessons for many people to learn, because often by the time the lesson is learned they are tumbling back to Earth with all of their financed belongings ready to crush them and their families shortly after touchdown.
“Grab the the vine, Jane, the vine!”
(How Tarzan got his yell.)
“These FBs looking for the next vine to cling to, like Tarzan… ”
Not Tarzan, more like George of the Jungle. Watch out for that tree (house)!
What a great metaphor.
Exactly. I was listening to the radio and this old fart who’s been on the Fed board of governors said that we HAD to fix the credit issue because that’s how the US economy worked.
translation: ” We need to continue the US Debt machine or else people won’t be able to buy more than they can afford”
or- as you mentioned, provide another vine to swing on.
As I remember it:
“The vine, the vine, not mine “.
Ken, Excellent !!
‘Why set it up if it’s not going to work for the majority?’
FBs do not make up the “majority” of the Connecticut citizenry. By Ms. Bedus’s own reasoning, this wasteful taxpayer-subsidized program ($50MM in state bonds to help only 25 families) should not have been initiated at all.
This is the basis of the modern American “democracy”. The “majority” should benefit almost always at the cost of the “minority”.
It seems like so many FBs we read about have a really limited and self-centered view of how the world works.
Kinda like the guy in the White House?
not just him. all of them.
The full story had more details:
“Bedus, the frustrated Newington homeowner, said she had no trouble paying her two mortgage payments, of $1,100 and $416, until she lost her job in March 2006.
It was then she fell behind on her bills, including mortgage payments for her three-bedroom, 1,500-square-foot ranch-style house.
Though she is now employed at a law firm, with an annual salary of $70,000, she did not qualify for the CT Families loan program, she said.
She said she is struggling to make her new payments, which reset to more than $2,000 a month”
________
Yes she IS over her head on that house. The debt to income limits for a loan are not just the mortgage but the mortgage, taxes and insurance. Her old payments for the mortgage alone were $1516 not including taxes and insurance. Her absolute max for mortgage, taxes and insurance is 28-31% of gross or $1633-1808.
And I’ll wager that she has Zero equity and money to put up 3% of the current value - which is probably less than she paid for the place. If it dropped even 3% and she had a 100% loan, that means she has to put up the difference between what she paid and what it is worth plus another 3% - say around $12,900.
I’m on the board of the agency in my county that handles loans through the state housing authority. We see this al the time. Can’t help someone who (a) has no equity and no cash or (b) bought more than traditional lending standards would approve in a debt to income ratio.
She can go negotiate with her lender or sell.
BTW, state housing agencies that do those loan or fund subsidized housing do NOT spend one thin dime of taxpayer money. They raise funds by selling bonds to Wall St.
“BTW, state housing agencies that do those loan or fund subsidized housing do NOT spend one thin dime of taxpayer money. They raise funds by selling bonds to Wall St.”
Bonds just represent interests in loans, and, in the case of muni’s, usually tax-exempt loans. The issue is how is the Agency is paying debt service thereon, assuming it is not just serving as a conduit. Are we talking general obligation or pledged revenue bonds, in which case it is ofen tax collections, or something else such as conduit bonds where the obligor is some third party (eg, the Borrower under the loan from the Agency to a Borrower, which loan is then assigned to a Trustee for the benefit of the Bondholders)? I dont know the answer as I normally work on developer conduit deals on the multifamily side, or in connection with GO Bonds, but who is on the hook for debt service in these transactions and what is the collateral?
Non-commercial side of operations is different from the subisdized projects with private developers. The state agency has to issue and sell the bonds to raise the money. The general assembly (state legislature) does not put in one penny - one of the legislature’s favorite past times is authorizing the state housing agency to issue more bonds so the legislators can trot home and say they voted to help low and middle income families get into homes or housing - and still be able to say they they didn’t vote to increase taxes or spending.
The housing authorities in most states are a curious hybrid of public and NGO which do not rely upon taxpayer monies to operate. They apply for grants from HUD for a large part of their operating expenses and those of the local agencies (usually again that quasi-public/private hybrid who depend on grants from the state agency or other sources.) The state agency (through the local county or county-affliated NGOs) deals with 2 types of home loans:
(1) FHA or VA or Rural Development (USDA)- which means sheparding the buyers through the normal loan process for those Federally-backed loans through local banks; or
(2) some loans directly from the agency under HUD guidelines. There are strict income caps on the loans meaning the household can not make above a certain amount which is relatively low and based upon the state median income. The state median income here is pretty much right in the middle of the US - that $48000+/-. Income caps are typically around $65,000 for all parts of a county except the county seats which are around $74,000.
There are price caps as well - typically $195,000 with the county seat going to $224,000. (Not real helpful in my county for a buyer just going out and finding a house when the median house has been $400,000 the past few years; but quite useful for the subsidized SFR projects, and with prices falling, it should be of more use.)
Then all the lending guidelines kick in - LTV, credit score, DTI, PMI, documented income and assets….. Counseling (in person here) is required.
The loans are processed by the local banks and the borrower has to qualify through them.
The collateral are the houses which secure the mortgage. The state agency pays the debt service on the bonds, as the money raised through bond sales is what funds the loans, and uses the interest collected on the loans to pay it. Right now the interest on such loans is running around 5- 5.375%
There are also special programs for recent college grads in a handful of locations in the state (8 to be precise) which carry a lower intrest rate on the mortgage. Right now those are around 3.75 -4.125
It operates pretty much like any bond issued by, say, a village or city, to raise money for projects which then the local government pays off the bond and interest out of revenues. For the non-commercial side of housing agencies, the revenues are the income from the mortgages it made.
The basic idea was that the housing authority would be self-funding, and self-contained so as not to utilize general revenues or require funding out of tax income.
Other projects by the local housing agencies are funded by grants. We do a lot of subsidized developments of SFR. Typically we buy the land (or sometimes get lucky and have it donated) and then build the SFR or townhouses. The buyers are retricted to those who make less than a certain amount and live in the property full-time but meet all the lending criteria. Future transfers of the property by the buyers is restricted by covenants running with the land to only buyers who qualify on income, residency and lending criteria.
holy CRAP, that looks like a good idea but got out of control in a sea of red tape. just jumping through all the hoops to get any relief for a home in yer area, Ann, must require a lot of time, gas money, & personal gumption. or a monthly bus pass. not to mention a good supply of ball point pens.
the amount of hassle to receive any type of financial aid from govt agencies always makes those with a job/life/motivation look elswhere as it requires an enormous amount of paperchasing. I suppose thats the intended purpose of those managing the “programs” cause they just wont hand it out to ANYONE ya know! unfortunatley those people that can really use a legitimate helping hand once in a while are overrun by the perpetual welfare scam artists, who have nothing but time & friends to help them cheat the system.
(sidenote: I remember as a young man in the early 80’s in Sacramento driving by Crocker bank on certain days observing a long, long line snaking out of the bank lobby around the building. a friend told me that these were welfare recipients waiting to cash their check at the state issued/approved bank. the line got so long that eventually regular customers were blocked from conducting business. eventually an armored truck was parked out in front of the bank to handle these customer, like a roach coach, complete with window ledge on the side of the truck. nowadays I think its all ATM style debit card but there is nothing like actually seeing the type of people (massive viet immigrants) that receive public benefits to drive home the situation. said immigrants will happily live 20 people to an apt while lying on applications for govt aid. same thing going on today, just different ethnicity. how do you suppose all the nail shops got startup cash? and taquerias on every corner? and auto body shops? they pool resources, legal & otherwise.
now this is not intended as immigrant rant, just adding local observation to New York welfare situation. and I want to also add, in all fariness, that at least the majority of asians got off welfare pretty quickly and didn’t use it for endless infinite entitled support for generation after generation.)
rant off - for now
Thank you for the explanation Ann. I see how it is not local taxpayer money payer being used as might be the case in a tax based pledged revenue bond. It does appear to be a vehicle, however, to get them refinanced though various programs and obtaining access to tax-exempt financing. When I have time I would like to think how it all works as in my mind whenever someone is offered a better than market deal those paying market are harmed. Exactly how you measure the harm could be complicated.
Did you see the article about the MI-LOAN program coming to a grinding halt??
I heard something briefly about that. Isn’t that the student loan program?
Yes - the state loan program just for students attending colleges in Michigan.
Apparently the credit markets do not consider the state of Michigan a good risk. Probably with good cause. They can’t find enough money to keep the State Police out on the roads (last summer they were restricted to not more than 60 miles of patrol per vehicle per shift including call-outs on accidents and crimes) but the Republican sate senate keeps howling in unison ‘no taxes, cut taxes…..’ as their darling ex-candidate for governor Devores (sp?) ships manufacturing jobs out of state.
I wouldn’t lend them money either.
but the Republican sate senate keeps howling in unison ‘no taxes, cut taxes…..’ as their darling ex-candidate for governor Devores (sp?) ships manufacturing jobs out of state.
The state’s problem is that it prioritizes subsidizing those that don’t want to work and scares companies away.
My employer would love the PR for setting up shop in the ‘rust belt.’ Only Penn is willing to give enough concessions to make it more worthwhile than moving jobs to CO or TX. Note: These jobs need to be near a major airport, so Buffalo is out of the question.
Got Popcorn?
Neil
I would think most states would be able to see through the “business subsidy race to the bottom” by now: tons of tax abatements and incentives in exchange for 100 $8 an hour/no benefit jobs, that will all be promptly eliminated in 2-5 years once the business is “scared away” to China, taking all their tax goodies with them. Pennsylvania will go the same way as Michigan if they fall for that old scam . . .
But it goes on…at the conclusion of any clueless local government “conversation” about housing, jobs etc, some idiot will spout the old mantra that “we just need to find ways to attract good-paying jobs..” like it’s never been tried before.
Shelter is not a constitutional right, otherwise why are there homeless people?
There weren’t any until Reagonomics……………:-)
Umm, joking, right? Like, because they were called bums in the 1800s and hobos in the 1930s?
I was wondering how many of us have ever toured the homes of American statesmen like Jefferson and Wahington, and found them to be suprisingly non-majestic. Don’t get me wrong; they qualify as mansions in every right, but there are houses in my neighborhood that vie for square footage with both Monticello and Mt. Vernon (without the views). We visited John Wesley’s house in London last year… the rooms are tiny; he lived a very simple life as did many of the great men and women we remember. I wonder what they would have to say about our excesses and our entitlement mentality.
Keep reading, Lorraine. There’s nothing they can do for those who are already bleeding to death. This money is earmarked for recruiting the fresh meat who still have money to give, not for the basket cases who’ve already given their all.
“Gov. M. Jodi Rell’s office and state housing officials, however, say CT Families was never intended to rescue the thousands of homeowners struggling to make mortgage payments. Rather, the program was aimed at first-time home buyers with adjustable-rate, subprime mortgages who may not have understood that their monthly payments could rise rapidly after the first two or three years.”
sorry ben, i have breaking news out of miami. then end is now!
http://www.bizjournals.com/southflorida/stories/2008/02/11/daily22.html
Wednesday, February 13, 2008 - 3:59 PM EST
BankUnited blacklists 191 condo projects
South Florida Business Journal - by Brian Bandell and Oscar Pedro Musibay
Interested buyers looking for mortgages to buy units in Miami’s Opera Tower, Everglades on the Bay or Four Ambassadors shouldn’t bother approaching BankUnited. The Miami-based bank has included them on a list of 191 condo projects it won’t write loans for.
Ok, that is redlining by that bank . . . a big no-no. I smell a lawsuit or an adjustment to their statement.
Why lawsuit? It’s legal to refuse to do business. It’s like someone suing me because I refused to sell them apples.
No Flatlander, you must be consistent , if the bank for example says 65% must be owner occupied and its not, then its not redlining and just a business decision.
When its arbitrary, then a lawsuit could be close by.
Agreed.
Except… its legal to redline out states. e.g., no loans on condos in Florida. Expect at the first lawsuit to have BankUnited stop condo loans across the board.
I’m surprised there hasn’t been more of this. I recall Indymac redlined all condos in Florida (that’s legal). Anyone else?
Got popcorn?
Neil
Hey Bye FL, in lending there are laws with pretty substantial penalties for non-compliance: “The Fair Housing Act of 1968 was passed to fight the practice. It prohibited redlining when the criteria for redlining are based on race, religion, gender, familial status, disability, or ethnic origin. The Community Reinvestment Act of 1977 further required banks to apply the same lending criteria in all communities.
The example listed above is definitely not applying the same lending criteria in ALL communities. In our litigious society, all I’m saying, is don’t be surprised.
Redlining is a term commonly associated with discrimination allegations. It grew out of practice of refusing to make loans in certain areas regardless of other facts (e.g., carving out minority areas). Has it ever been applied to make it unlawful to apply sound financial guidelines in making the decision to make a loan that has no link or connection to discrimination against a protected group and does not carve out a particular neighborhood, but instead is aimed as classes of housing?
How is it discriminatory that a lender chooses to not make a bad business decision detrimental to the interest of the stock holders of the bank ???
“The banks don’t like to lend to the end buyers of a project they feel might not have significant occupancy,” Harralson said. “Mainly, there is a fear that homeowners association dues would be very high on the few people who would be in there.”
This is why you don’t want to buy one of these distressed condos, even at a low price. You need to buy the whole building so you can control what happens in it.
This was reported yesterday, though I love reading news like this over and over again.
“Lawrence Yun says all real estate is local, and he uses the Buffalo area’s experience to make his point.”
“‘Even though we are seeing a large sales decline in many parts of the country, it’s showing up [in] the national data, locally the sales data are actually vibrant and picking up,’ said Yun, chief economist at the National Association of Realtors.”
“‘Certainly things are turning for the better here in Buffalo,’ he added.”
So Rustbelt Larry goes to Buffalo, and finds a real estate market that isn’t in a downward spiral, because it crashed and burned already, decades ago.
Next stop: Cleveland
Look more closely at the comments:
“Mayor Byron W. Brown said the Buffalo area’s low real estate prices are attracting attention. Each week, he said, investors, investment groups and business leaders from places like Boston, New York City, Ohio and California make inquiries.”
“‘We have seen investors that are expressing tremendous interest
I’ll bet you’ve seen more interest. We’ve had Millions of TV ad investors roaming the country-side for 5 years buying up every house under $100k they could find, so they could re-list it at a $50k-100k profit and “FLIP it”.
They are out of business, but they are profit-junkies.
They need a fix. I think they are scouring every neighborhood in America looking for the next gravy train. He says “INVESTORS”. Yes, not homeowners.
INVESTORS, looking for bargains. The same one’s that came here from New York, New Jersey and California and said, “Gee, the properties here are undervalued!!”.
Next stop: Detroit.
They’re already here.
They are going to just walk away in a few years when it’s obvious no one wants to pay $150k in Buffalo when houses elsewhere, even in south FL fall to $150k.
Houses in American Siberia are closer to $15k, than $150k.
accroding to what diogenes (Tampa) said regarding Buffalo, it looks far more expensive than $15k due to all the speculation. Any $15k house in Buffalo right now, you wouldn’t touch with a 10 foot pole.
A decent house in Buffalo is $40-50k
But you should touch your tongue to the pole in winter there.
“A decent house in Buffalo is $40-50k ”
No, and if you see one on realtor.com at that price, you can bet the neighborhood is trouble. But 75-80k is very possible, with decent neighborhood schools in older suburbs. However, the property taxes and utilities are sky high.
Spike is correct. ~$75k will get you something habitable. $125k-$150K will get you a solid middle to upper middle income area with a taxload of about $3k/yr.
$250k-$300k will get you about $6k-$10k/yr taxload in a cookie cutter subdivision. Personally, I wouldn’t spend this much in this area. You’ll never get it back if you sell.
The last of the good paying middle class jobs will leave with the UAW shortly. General labor in this town pays $10-12/hr.
My thoughts exactly.
well Armando Montelongo, having driven off his brother who actually had morals, is pushing his books/tapes/CDs big time lately. (hell no I havent & wont buy ‘em).
bet he saw the end of his buy low - sell high flipping empire crashing and tried to diversify by sharing his endless wisdom in another income stream.
maybe we should all skip the intro & flip (hehe) on thru to section 8, where he doles out advice on how to scream at contractors who are desperate minorities & cant fight back, or naive’ interns hoping for a break, to the section on how to paint the lawn green. (ever notice he doesnt open his pie hole to anyone his size, especially the white trash subs who would flatten his azz in 2 seconds if he started his shyt. ie; he’s just a cowardly bully)
Hell, the green paint lawn scheme is catching on: Armando shoulda patented that one. Bet he is screaming at his hoochy wife about missing that income stream.
So Larry plays to friendly crowds of blue hairs in the Rust Belt. Most of the audience probably owns their homes outright and/or are landlords - so Larry’s reassurances soothe their nerves and don’t anger up their blood.
Great entertainment to accompany a luncheon of Chicken Kiev and green bean salad.
I’d suspect the fare was more like Buffalo hot wings, and beef on weck.
That’s fantastic, maybe the blue hairs can explain to us what Larry meant by the “excess boom being removed”.
The boom was lowered, sort of.
I’m not sure where to post this, but this cannot be a good sign for the cap. markets: http://www.bloomberg.com/apps/news?pid=20601109&sid=ap.PLy5Zkgz8&refer=home
20% returns, tax free? What’s not to like?
Sorry, it is not tax free in this case. 20% still nothing to sneeze at.
Because now the city of NY will pay 5x normal interest for the auction period.
Why is it mortgages are still available under 10% when PANYNJ cannot even get funding under 20%. Also, does this mean that Goldman is out of cash to cover the auction?
These are an odd type of bond, created to solve a problem in muni bonds. Cities want long term bonds, muni investors (largely retired people) want short term bonds. As a result there is a very steep yield curve in munis (when the treasury and swap curves were inverted the 2/10 spread on munis was over 1%.
These were created to give both groups what they wanted stability of refinancing for the cities, but with the short term rates. They set their rates through an auction process where every week to month the bonds are auctioned and that sets the interest rate for the next period.
However, since they were issued, AMBAC and MBIA look likely to be downgraded, so lots of investors don’t want to own anything that isn’t AAA (remember these are very conservative investors). No one is bidding except taxfree investors who will low ball for an absolute return, and you get 10-20% yields.
Mortgages are cheap because they are secured, heavily insured, and historically have exceedingly low defaults, it doesn’t hurt that for most mortgages two great big institutions absorb the credit risk.
Mortgages are cheap because they are secured
Secured with what? Houses that are really worth 1/2 of the current price? Insured by whom? Monolines whose actual cash is a mere 10-20 bln? Low defaults?
They must be bonds that can be called or paid off at any time once they can get a lower rate.
When cities and counties see their sales tax revenues decline 10-20% per year (in Ca) and interest costs increase, this will end badly for them
CA is already getting hit hard. The East Bay city I live in got over 4 million slashed from the school budget. This happens to be a more upscale neighborhood with more costly homes mainly because it is more whitewashed and the schools are( were) better. Now that the budget has been slashed, you can imagine the panic that this is causing. I also have no doubt that this is also having a few of them a tad sorry that they paid the extra dough for a house because of the schools.
I’m usually not very popular when I tell them that if I ever had kids, I’d be packing and leaving the area because frankly, this is a crappy place to raise kids.
“The soured auctions in recent weeks are the first since September, when about $6 billion of auction debt failed on investor concerns that bond insurers may lose their AAA ratings, Roever said in a Feb. 8 report. The latest wave began as recently as Jan. 22, when auctions run by Lehman Brothers Holdings Inc. for Georgetown University and Nevada Power failed.”
Lehman Brothers. Investors are learning not to play drop the soap with them.
Wow… so the bond business is subprime.
Sorry Cleveland, but you’re subprime… that will be 30+% interest please.
If that the re-pricing of risk that we have heard about it may be a indication that the wheels are coming off….
http://www.nytimes.com/2008/02/14/business/worldbusiness/14cnd-bank.html?ref=worldbusiness
Adding to the misery…. UBS gets an ennema!
suping up soup lines
Fast Food, Recession-Style: Hungry Chains Supersize Meal Deals- AP
Want to stretch your dollar without shrinking your appetite? You’re in luck. Fast food companies, looking for a way to attract recession-weary customers and keep them spending, are increasingly offering more food for less money…
wow i can save $$ and be a fat bastard
awesome
how thoughtful of these companies
“wow i can save $$ and be a fat bastard”
Lmao…. and give new meaning to “FB”.
McD’s has 2 for $3 again… Woo hoo..
egads…. Think I’ll pass though.
Cool, that’s about 2000 grams of fat?
“Think I’ll pass though…”
…fast. That’s what McD’s food says to me.
When my son was younger and wanted to go to McD’s, I would just order one of the meals, supersize it and then split it with him. 2 straws, we were golden.
EggMan, you mean you didn’t get the egg McMuffin?
“Mayor Byron W. Brown said the Buffalo area’s low real estate prices are attracting attention. Each week, he said, investors, investment groups and business leaders from places like Boston, New York City, Ohio and California make inquiries.”
“‘We have seen investors that are expressing tremendous interest and confidence in the city, and that only bodes well for the future of Buffalo and Western New York,’ Brown said.”
Hep places like New York City or San Francisco place all of their faith in foreign buyers, to get them out from under… while Buffalo places their faith in buyers that aren’t buying anything in NYC or SF.
After Detroit, Yun’s next stop will be Flint, Michigan (where “Roger and Me” was filmed).
inquiries, interest, confidence…
Read between the lines: no actual purchases.
@postman,
Could you link to the article from BizJ “Meltdown hits deep impact stage” Dated 02/01/08 ?
thnx
http://tinyurl.com/27ujan
“South Florida had 6,233 REOs in 2007, UP SHARPLY from 450 in 2006″
Uh, “up sharply”? I think your Thesaurus is broken.
Probably because there’s no word that would fit this situation besides “AaaaaAAAAAHhhhOHMIGAWDOHMIGODaaaaaHH.”
“she’s thinking of one day moving back to New Jersey because she can’t find affordable housing here that would allow her to both pay off a mortgage and save at the same time”
Doesn’t she know that housing is all of the investment she will ever need? What is this “save” thing she is talking about?
Boy, she must not be financially savvy…
Someone should tell her that NJ is not a bargain either. Everyone’s leaving that state
yeah, and she is in for a rude awakening when she decides to come back to NJ. Unless she shacks up with family.
I wonder what happens to this country when there’s no place left for people to run to . . . .
I look at it as more of a separation of the generations. The Northeast and West Coast. I’ve lived in both, and they both had larger populations of older people who bought ” when it was cheaper”.
If you look at where people who are younger tend to go, these are some of the youngest cities in the country. The avg age in Atlanta, for example, is 35 year old.
Woody Guthrie time, babie!!!!
I wonder what happens to this country when there’s no place left for people to run to . . . .
It’s already HAPPENED. You CAN RUN ..but there’s nowhere to HIDE from good ole US Capitalism run AMOCK
“Talk of a pending recession spurred by a housing slump is greatly exaggerated by national media and could spur a self-fulfilling prophecy as the negative news is emphasized, the chief economist for the National Association of Realtors told local real estate agents today.”
No Yun, the media is simply tired of you providing false and incorrect information and are now using more credible sources! Try blaming it on some other source Yun!
‘I liked it much better when the media solely focused on the NAR POV, providing exhaggerations that spurred my predecessor’s paycheck through the roof, and fomented a self-fulfilling prophecy of ever-increasing home prices until reality knocked at the door,” Yun said.
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. Presbyterian Healthcare in Albuquerque and New York state’s Metropolitan Transportation Authority also experienced failures, officials said.
I bet you that there are plenty of GREEDY investors that will retire on this kind of interest reates. Bonds the next bubble!!!!
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. Presbyterian Healthcare in Albuquerque and New York state’s Metropolitan Transportation Authority also experienced failures, officials said.
I bet you that there are plenty of GREEDY investors that will retire on this kind of interest rates. Bonds the next bubble!!!!
Massive Financial Capacity? Americans have nearly 1 trillion dollars in revolving credit (credit cards, lines of credit, etc…) Real Estate Agents won’t be happy until every last person is a mortgage slave.
How Detroit of you, Boston…
“Boston is moving to buy or seize several foreclosed condominiums in Dorchester in a significant expansion of the city’s efforts to prevent abandoned buildings from blighting fragile neighborhoods.”
“Mayor Thomas M. Menino plans to disclose today the city’s intention to acquire the properties, the first such effort in recent memory. He also will propose a new ordinance that would impose fines on owners of abandoned buildings.”
“The growing focus on foreclosed properties reflects a new reality. Officials so far have failed in most cases to prevent foreclosures.”
A significant portion of Boston resembles a war-zone now. Lots of crime and crumbling infrastructure.
Boston truly outclasses the world in spinning itself, however. Most people who have not been to Boston think that it is a lovely city, blah, blah. It’s fine, but clearly on a downward slide.
According to this blog:
http://www.boston-condos-for-sale.com/2008/02/14/boston-real-estate-market-talking-points/
Houses have retained their value and condos continue to appreciate, although by only 4.5%. I don’t believe what I keep reading about this market.
Did Paulson just say, “Subprime is just the spark and the debt markets are the over-gown dried out forest ready to go up in flames?”
WOW!
The Buffalo News from New York….
“‘locally the sales data are actually vibrant and picking up,’ said Yun….”
Yeah, we know how vibrant things are in Buffalo.
Even if you do get your paycheck it may take time for it to clear when the trust issue regarding banks completely goes south.
This delay, if multiplied throughout the land, will cause a slowdown in transactions, a slowing of money velocity. This will have the same effect as a reduction in the money supply.
Another reason cash is king.
As far as I remember, aren’t there limits on times a transaction can take? I.E. 24 hours for a check to be deposited, and credited to your account? I know that they can reverse the transaction afterwards, but as far as I know most banks need to follow the transaction rules pretty closely, even if they suspect the counterparty. That is how a lot of the I send you a check scams work.
Nah, what will end up happening, is that some big banks go into FDIC receivership, and are resold at a bargain sometime down the line, at a massive cost to the taxpayer. Nobody gets bailed out, and the only winners are those who gamed the system before hand, or are first in line to buy the depreciated assets, just before the next leg of inflation kicks off.
All this has happened before, and it will happen again, i n pretty much the same fashion, after all those who fail to study history are condemned to repeat it, and I guess history is not a major subject in the harvard MBA program.
Two days ago I tried depositing a check for $9.9k into my checking account but the teller told me there will be a 5 day hold on $9.8K.
She looked extremely worried. To ease her, I told her that this is a 6 mos 0.0% loan from a CC bank, and I am gonna use it to offset my margin balance on a brokerage account. Then I asked her if she heard (true story) about the lady in town who lost over $1/4 million to a Russian check scam. She said she did not, but she did mention that they get people in their bank all of the time trying to deposit $5k - $10k checks that the bank knows is a scam. She said most of these checks are “from the internet” (whatever that means).
So the pigeon drop is alive and well in America.
A five-day hold. Imagine the chaos if all deposited checks had a five-day hold.
One of the reasons I stay tuned to this blog is for the tidbits of good advice such as that offered by your post: namely, do not try to cash checks from the internet.
Use direct deposit if you can. One of the best things invented IMO.
From CNNMoney:
The least expensive single-family-home market in the nation got even cheaper, as prices in Youngstown, Ohio, dropped 9.3% to $72,600. The most expensive market, San Jose, Calif., got dearer, with prices up 11.2% to $845,300.
I’d love an explanation of that. Salaries haven’t gone up!
They’re not making any more land in San Jose.
Really. There’s infill, but that’s it.
Its a flat out lie by the NAR is what it is.
2 years ago, there was nothing under $400k — zip, nada. Check the listings these days though.
Only REALLY REALLY expensive homes are selling, thus skewing the numbers. What it truly says is that the median priced homes are sitting, and sitting, and festering. We see this here in Kootenai County, ID. Gazzilion-aires are buying lake homes, but there is not much else happening, so prices are going up, what they don’t tell you is over all sales are dropping like lead baloons. But ballons don’t pop, right?
Well, actually, lead balloons don’t pop…
Never mind. I answered my own question. Results were reported by the NAR. Says it all.
stories- I have been in lending and real estate for 20 years.. bought in san diego in 97 “considered nuts” sold in 9/04 “considered really nuts”.. talking as many friends and family off the ledge.. but recently after spending a month in Australia with a engineer buddy of mine that he is even nuts to consider buying.. He came back to minnesota and went to a auction and purchased a 3/2 townhome at a builder auction for 125k and did not tell me. Now a mutually buddie told me that he went to the property for the first time and it is missing a bedroom.. what the Fcuk! very funny.. still want call me on it. This sucks for me as another friend will come up short on the bar tab, trip tab or golf tab as he will join the crew of I left my wallet.. credit card or they don’t take his diners card.. How many more of these sucks with excellent advice from someone who cares will it take.. I want to ask him tell me what it looks like 3,5 and 10 years from now with this property.. I’m pissed as more and more of these people I hang with are in trouble and wait till the tab comes to tell me oops I forget my wallet story or the you have money I don’t resentment.. come on people it’s call planning, education and understanding risk.. it’s not luck.
How much down did he put? He can walk away and write those losses off his tax. No need to bleed monthly.
5k.. but your dealing with EGO.. not smarts
oh $5k is a cheap lesson in economics. Those putting down 20% which will be required in the near future won’t be so fortunate unless they buy at the bottom.
Is he going to simply walk away *now* or does he want to rent it out and lose money every month only to walk away anyway in the future?
“He came back to minnesota and went to a auction and purchased a 3/2 townhome at a builder auction for 125k and did not tell me. Now a mutually buddie told me that he went to the property for the first time and it is missing a bedroom.. ”
Lawsuit time. Sounds like it’s also time for you to find another crowd, preferably sovent, to “hang with”.
whoops- solvent.
While prices are definitely lower here in Queens, they are still way to high. Starter homes asking $500,000 in Bayside. 2-3 family Teardowns asking $650,000 in Astoria. Prices still at 8x median income and 30x annual rent.
Still a long way down.
My new rule of thumb is houses in Queens should be 100x their annual tax. o a $700,000 house with taxes at $3200 is really worth $320,000.
In L.I. it’s probably 40x.
“Yun said he believes there is pent-up demand for home purchases. But he argued that the national media have a ‘bias’ toward stressing negative news about real estate”
I have a bias against Yun. He seems to live in an economic fantasyland where house prices should climb to sky, where no one could afford them, stay there, and things would be great. I wonder if someone can bronze Yun like they do with baby shoes, and stick him in a park somewhere near Buffalo. That way he could permanently serve to remind everyone of the frozen in place mentality of the Realtwhore Republik, circa 2008. And he would always remain the same color as his alter-ego; Tanzilla.
Just a thought
I have a bias against Yun.
So do most people who haven’t been adjudicated legally insane.
If Yun were bronzed, somebody would heist the statue and sell it for scrap value.
I’d prefer him tarred and feathered…
What the hockey sticks is pent up demand?
My wife and I have pent up demand for a 1900 sqft house on 7 acres overlooking the ocean at $225k. Also at $175k.
It’s eating us up inside.
Just a quick look from the ground. I have been a broker in the NE for 19 years. Spent the last downturn (89-94) selling foreclosures. I feel that 08 is the eqivalent of 1990. As I look at the first round of foreclosed multi-family properties I am struck by the fact that the numbers still don’t work and that they need to go down in price at least 20% for these properties to be attractive for any kind of knowledgeable investor. Yes, I understand that the same 3 unit investment property that sold for $330,000 in 04 and was foreclosed on is a better value at $220, 000. The problem is that rents are down 8% since 04 and the expenses (RE taxes, ins., w & s, maint.) are up an average of 35% . Therefore if the property would net $15,000 it is really worth $150,000 at best right now. This points to lower and lower prices for the next two to three years.
Good point, Crash.
And more bad news for investors: Foreclosed houses are competing with many other SFRs that are being offered for rent because they didn’t sell.
recrash06,
We have been looking at 3-4 unit places for about a year, more hovering really, outside Boston. The asking price still barely covers the mortgage and taxes. The prevailing formula for multifamilies seems to be:
# of units X Condo Price = Price of building
Until Condo prices come down, I don’t see how we’re going to get to some rational prices for investment properties. Any thoughts on how it happened in the early 90’s crash…?
Until Condo prices come down, I don’t see how we’re going to get to some rational prices for investment properties.
Any seller holding out for condo conversion prices is crazy. That shouldn’t stop you from making offers at levels that work for you. Besides, if you’re seriously considering a multi, I would recommend getting out there and physically looking at the inventory, locations, etc. Buying a profitable multi is more than just rate of return calculations in excel… you need to take into consideration the amount of deferred maintenance that will eat into your cashflow, vacancy trends, demographics of the neighborhood, crime, schools, etc.
Bottom line, start doing the research now so you are ready to pull the trigger in neighborhoods which meet your criteria when you see an opportunity.
I thought this was set up to help people like me, said Lorraine Bedus of Newington, who bought her home for $215,000 in October 2005 with two adjustable-rate loans that rolled over to higher fixed rates in 2007. ‘Why set it up if it’s not going to work for the majority?’
Lorraine, this wasn’t set up to bail people out of dumbass moves like you did. Board it up. Walk away. And rent, and don’t procreate either. We don’t need more dumbasses in the world. There are enough already. This whole mess is proof of that.
Buffalo? The next hot spot? First, it is freezing A$$ cold there. Second, didn’t we have a story about some bozo in Colorado that bought a house for $3K with his credit card in Buffalo and had to file BK due to being stuck with teardown costs, etc for over $30K. So what dumbasses from out of the area are buying in this rustbelt place? Crackheads?
He could have walked away from that $3k house instead of paying $30k to demolish it!
I know someone who bought a vacent lot for $500. Waste of $500.
Why would Buffalo be a hotspot? The crime would keep me away.
NW Pennsylvania is a much better location with less speculators
“He could have walked away from that $3k house instead of paying $30k to demolish it!”
Or… just gotten a bunch of rowdy teenagers to live in it for a few weeks. Free demolition.
“The problem is that homeowners seeking help typically don’t qualify for the program because they have tarnished credit, their incomes are too low or they don’t have enough equity in their homes.”
Or all of the above.
The statement should be expanded to read “….and should not have been given mortgages in the first place”
“A new report released by the Federal Reserve Bank of Boston’s New England Public Policy Center, authored by Fed analyst Heather Brome, questions whether colleged-educated ‘young professionals’ - between the ages of 25 and 39 - are really leaving the area in droves due to stubbornly high housing prices in Massachusetts and the rest of New England.”
I think there’s got to be more to this. Syracuse has a problem w/unfilled job vacancies and yet despite cheap housing we’re losing that same demographic in droves too.
Perhaps local job quality/pay quality/fast track potential all contributing issues? In Syr, education and experience often not a match up for openings.
The Short (Sale) Bus…
“Realtor Coleen Polillio is riding through the slow housing market on a bus and she’s taking her clients with her. The party bus leaves Century 21 C& S Properties offices at 9 a.m. in what may be the first bus tour of foreclosed property in the area.”
“Yun acknowledged that last year was a bad one for national home sales, fueled by the subprime mortgage meltdown. In 2007, national home prices declined for the first time probably since the Great Depression, but he said that 1.5 percent drop should be put into context.”
“‘The proper perspective is, well, we did have a housing market boom, we had better than a 50 percent runup in home prices, and now we’re giving back 1.5 percent from a nationwide point of view,’ he said.”
Yun has a complete lack of ability to think critically. What he fails to realize is that the huge run-up of prices, followed by a slight decline, has left housing unaffordable to the masses. He just doesn’t get it! People cannot afford the still-inflated prices, as the price/income ratio is still way above the historic mean.
Is Yun missing part of his brain?
“‘There’s so many, we haven’t picked them out yet,’ Polillio said as she prepares to make a list of 15 foreclosed properties to visit on the three-hour bus ride.”
Maybe they’re moving here?
http://www.nouvelleatnatick.com/
Only $1.5 million (the penthouse) to live upstairs in a shopping mall. I guess weirder things have happened than this place being popular, but I just can’t get my brain around $449K for a condominium on the Natick/Framingham line. And that’s the cheapest. Last I heard the units were about 10% sold.
“‘We have seen investors that are expressing tremendous interest and confidence in the city, and that only bodes well for the future of Buffalo and Western New York,’ Brown said.”
Famous last words
Like the farmer who said:
“We have seen swarms of locusts expressing tremendous interest in our crops, and that only bodes well for the future of our farm”
Yun is too busy having ‘fun’. Fun Yun can not think.
i dont know if you guys just noticed but YUN is trying to point the finger at the “negatives” in creating a self fulfilling prophecy..be careful..they may be coming at us full force now.
“Yun said he believes there is pent-up demand for home purchases. But he argued that the national media have a ‘bias’ toward stressing negative news about real estate, making potential buyers unjustifiably hesitant.”
“‘There seems to be excessive pessimism among potential home buyers in not wanting to make a purchase, despite the fact they have a huge capacity financially,’ he said. ‘With this fear in place, it can lead to a self-fulfilling prophecy.
Could it be that the refund is really an attempt to get everyone to file their taxes? I mean, all those people working off the books that don’t file… nah, what would be the motive?