Oversupply And Unaffordability In California
The Sacramento Bee reports from California. “Just as springtime stories start popping up about busy real estate agents and multiple offers on Sacramento-area homes, here’s the Mortgage Bankers Association with a cold splash of water. No one in California will see signs of a housing market ‘bottom’ until the pace of rising foreclosure activity begins to slow, according to MBA chief economist Doug Duncan. And the newest numbers show that activity gained speed in the last quarter of 2007.”
“Thanks to Florida and parts of California, the nation’s rate of foreclosure starts and the percentage of loans in the process of foreclosure were the highest in the survey’s 38-year history. California and Florida alone accounted for 30 percent of all U.S. foreclosure starts during the last quarter of 2007. California is home to 20 percent of all U.S. subprime loans.”
“According to the latest data from the MBA, nearly 8 percent of households nationally with a current home loan were behind on payments, as of Dec. 31. The good news, he noted, is that ‘92 percent of people with a mortgage are paying on time.’”
“Forty percent of the mortgage loans in California and Florida and half of their dollar volume are in riskier adjustable-rate mortgages. Loan defaults and foreclosures probably won’t peak in California until middle or late 2008, said MBA’s Duncan. As long as home prices fall because of oversupply and unaffordability, foreclosures will keep rising.”
The Marin Independent Journal. “Last year, a record 133 foreclosures were reported in Marin, up from 29 in 2006, according to DataQuick . The number of default notices issued - the beginning of the foreclosure process - climbed in 2007 to 632. In 1992, a record 645 notices were issued.”
“Currently, records list 64 foreclosures and 459 pre-foreclosures in the works.”
“There is a ray of light for home buyers in Marin County after the federal government this week increased the amount of mortgage money that Fannie Mae and Freddie Mac can purchase.”
“Robert Thorson, chief financial officer at San Rafael-based Westamerica Bank does not think the real estate market will recover anytime soon, saying economic forecasts project it will take a year to four years.”
“‘I have seen national studies where the prices of houses have to come down further to be consistent with the average household income,’ Thorson said. ‘There is a lot of inventory - and with the foreclosure rates rising, companies that lend money for mortgages are charging more.’”
The Santa Cruz Sentinel. “Home sales plummeted in January, according to statistics kept by the Santa Cruz Association of Realtors, and February sales have not rebounded back to normal.”
“Tai Boutell of Santa Cruz Home Finance said he expects interest rates on so-called jumbo conforming loans up to $729,750 will be much lower than they have been. He mentioned one borrower he expects will be able to restructure his loan and save $160 a month.”
“Interest rates for a standard jumbo loan over $417,000 have been hovering between 8.5 percent and 9.5 percent, said Boutell. He expects the jumbo loan rates to drop by March 17 to 6.25 percent, which has been the rate for loans under $417,000.”
“‘That’s huge,’ he said. ‘There will be some success stories. I’m not sure how many.’”
“Not everyone will qualify for the bigger loans. Many local borrowers took out two mortgages because the homes they bought cost more than $417,000. But the guidelines won’t allow borrowers to consolidate a first mortgage and a second mortgage.”
“Another restriction: Borrowers can’t take cash out when refinancing their home. ‘With a cash-out refi, there’s more risk,’ Boutell said, adding that combining a first and second mortgage was viewed similarly.”
“To qualify for the larger loans, borrowers must present ‘full documentation,’ which means two years of tax returns, W2 forms and bank statements.”
“In addition, there will be more scrutiny of applications. Applications for the larger jumbo conforming loans won’t be reviewed by an automated system, which had been used to review most loans.”
“‘An underwriter has to physically look at the file,’ Boutell said.”
The Reporter. “Solano County Realtors learned Thursday…the mortgage limits for loans guaranteed by the Federal Housing Administration here is being raised from $417,000 to $557,500.”
“‘Practically speaking in Solano County, the $417,000 limit meant that the homes available were primarily foreclosures, distressed mortgage homes and age-restricted homes,’ explained Realtor Kathleen Ramos.”
“FHA loans are not simple to get, noted Glen Beddow of Adobe Mortgage in Vacaville. ‘You have to qualify, and have to validate income and only a certain percent of income can go toward overall debt,’ Beddow said. And that is a far cry from what was happening at the height of the subprime mortgage trend.”
“‘I think what we saw happening was a lot of people were getting into the market and using it as a commodity to make money,’ he said. ‘This may help us start to get back to a time when it was all about working hard and saving and achieving the American dream.’”
The North County. Times. “About 75 agents attended a conference at Cal State San Marcos, and all who spoke offered a positive outlook for North County’s housing market in 2008. They said they are starting to see multiple offers on homes and packed open house events, which they said point to a housing market recovery that is under way.”
“Real estate agents said that the region’s sagging housing market has started to bounce back and blamed the media and banks for delaying the recovery.”
“The last portion of the conference, a question-and-answer session, admonished the media for depressing consumer confidence by focusing on only the negative aspects of housing data. Agents also accused banks of delaying a market recovery by not responding in a timely fashion to short sale requests.”
“‘Trying to get through to the lending institution is nearly impossible,’ said Jim Aldredge, owner of JTA Realty in San Marcos. ‘It’s like they say, ‘Today’s red ink day, and you’ve sent it in blue ink.’ It’s that asinine.’”
“George Chamberlin, a panelist at the event and columnist for the North County Times, said that some news reporters biased their reports because they are jealous of homeowners.”
“Most real estate agents who spoke at the conference seemed to agree, with one agent suggesting that agents and builders pull all advertising from newspapers until positive articles are printed.”
“‘People think the market is down and the market will still go down. That’s not the truth. The market is down, but it’s not going down anymore,’ said John Tuccillo, former chief economist for the National Association of Realtors.”
“San Diego County is among the nation’s leaders in home price decline, losing 19 percent in value from a peak in 2005, according to Standard & Poor’s Case-Shiller Home Price Index. January sales in North County fell almost 50 percent from 2005, according to a report by the North San Diego County Association of Realtors.”
From KGTV. “For the first time in a long time, unemployment in San Diego is higher than the national average. Additionally, the economic picture for San Diego County is not a pretty one.”
“It’s the word no one likes to hear, but it has to be asked. Is San Diego in a recession?”
“‘Right now, we may not technically be in a recession, but job growth has slowed to a crawl. To a lot of people, it may feel like a recession,’ said Alan Gin, an economics professor at the University of San Diego.”
“The major culprit in a weak economy is, Gin said, ‘The biggest problem is the housing market. Prices are falling, sales are down and there are more foreclosures.’”
“One home price you might not believe is a Logan Heights house selling for $65,000. It may not be anyone’s dream home. It’s about 528 sq. ft. with what are described as some structural issues. It is a foreclosure, reduced from a previous price of $181,000.”
The Desert Sun. “The state’s seasonally adjusted sales figures are improving ‘ever so slightly,’ the California Association of Realtors’ deputy chief economist said Friday.”
“‘I even hesitate to use the word rebound,’ state economist Robert Kleinhenz said of the California housing market. ‘Maybe the operative word should be ’stabilize.’”
“Coachella Valley housing sales in January were down 15.3 percent from the previous year, according to the association’s latest figures. Kleinhenz doesn’t expect any ’significant recovery’ in the next year.”
“‘It’s not like we’re seeing things shoot back up,’ he said of sales trends. ‘But we’re hoping it will improve as we go forth.’”
“The desert chapter of the Building Industry Association is branching out to home showcases in an effort to increase buyers’ interest and sell more new homes. It comes at a critical time for local builders, stung by the slumping real estate market.”
“January’s figures show new construction home sales were down 64 percent from last year. And while a few developers are choosing auctions as a way to sell off inventory, new construction is grinding to a halt because of the slowdown.”
“‘Builders have stopped building for the time being,’ chapter executive director Fred Bell said.”
“Developers are ‘offering special discounted prices and a host of attractive incentives,’ officials said in a release.”
“The local chapter is the first BIA in Southern California to host a homes showcase like this, Bell said. ‘We were thinking it would be a 2009 program,’ Bell said. But given the current market conditions, ‘We moved it up.’”
The Desert Dispatch. “Ambitious plans to build a 25,000 home development south of Barstow have slowed as the developer faces financial troubles in a slowing housing market.”
“Representatives of SunCal Companies, which plans to triple Barstow’s population with its Waterman Junction development, say that the company fully intends to complete its plans, but say less than expected housing demand has caused delays.”
“‘We received assurances that the project is moving forward but at a much slower pace,’ said city spokesman John Rader.”
“The six-county region that includes San Bernardino County will require more than 700,000 new housing units in the next seven years. Jeff Lustgarten, spokesman for the Southern California Association of Governments…said that a lack of homes, especially in the bigger cities, is driving up prices which could encourage homebuyers to relocate to Barstow and nearby areas.”
“‘I know it’s a little bit slower, but I think it will kick back into gear,’ said Council member Julie Hackbarth-McIntyre. Hackbarth-McIntyre doesn’t expect slow demand for homes to last for long.”
“‘Once housing starts to pick up down the hill it will still be just as pricey and just as crowded,’ she said. ‘The High Desert is still the next place for economic growth.’”
‘People think the market is down and the market will still go down. That’s not the truth. The market is down, but it’s not going down anymore,’ said John Tuccillo, former chief economist for the National Association of Realtors.’
What a piece of work this guy is. Check this out:
‘Pressed on Realtors’ possible responsibility for market problems at his own news conference, Yun noted that there are 1.36 million Realtors. ‘Certainly some are guilty,’ he said, adding that Realtors do have a responsibility to advise their clients against paying too much or getting in over their heads.’
‘John Tuccillo, a former Realtors’ chief economist, was considerably harsher. ‘The system stinks because on the front end of the market are people who close the loans and walk away with no responsibility and pocket their checks,’ he told an audience of Realtors during a presentation, drawing a round of applause.”
‘Why are you clapping?’ he asked. ‘I’m including you.’
It’s pretty obvious the CA REIC has redrawn the line in sand and plans to side-step the affordability thing yet again. Load the cannons!
“it’s not going down anymore”
Does John want to put up some cash on that to back up his claims ? Thats one bet I feel very comfortable with.
“Most real estate agents who spoke at the conference seemed to agree, with one agent suggesting that agents and builders pull all advertising from newspapers until positive articles are printed.”
Like a 3-year-old throwing a temper tantrum by holding his/her breath. The kid just needs a few whacks on the rear end. The realtors need a few JT applications.
That’s all right, if they pull newspaper ads. I have stopped my subscriptions to the “Daily Bulletin” and the “LA Times”. Are these clowns serious? Where will showcase their homes to the general public, if not through newspaper ads?
As a group, they are “cutting off their nose to spite their face”.
I love it when I see these groups (realtors) self-destruct!
You know things are “bad” when the building assoc. threatens to cut off political contributions and RE associations threaten to cut off advertising in newspapers!
Hey, between the builders ceasing to bribe congress and the realtors boycotting newspapers, we could get a two-fer out of the housing crash… Our representative democracy AND a free press back.
Maybe some of the real estate agencies are just trying to do a little bit of spin. Quite possibly some of the more marginal real estate agencies WILL STOP advertising with newspapers. Not by choice, but because they are SHUT-OFF until they pay their past due advertising bills.
It just sounds better whenever you say that YOU WILL STOP Spending money on additional ads, rather than you CAN’T PLACE ANY ADDITIONAL ADS until you pay your past due bills. Those ads aren’t cheap and they only get paid whenever they sell homes. I would have to imagine there are a ton of past due notices getting mailed every month to real estate agencies, but due to the huge volume of ads they run, they probably have a pretty long rope with which to hang themselves.
So true. Another aspect most peeps wouldn’t have thought of independently. Advertising is expensive!
What’s more, you should NEVER subscribe to newspapers. Don’t give them even a dime, EVER.
Hey it works around here, the realtors have Montana’s newspapers by the balls. You don’t see negative stories about the housing market. Of course the papers have a credibility problem, but they have their advertising revenue.
It’s also old tradition in Montana going back to the days when the Anaconda Company ran the state. The Anaconda Company bought all the major newspapers so they would stop printing critical stories about the company.
They rarely print them in the Virginia Pilot for the Hampton Roads area, either. And oddly enough, the median home price is barely moving downward. I believe the mindset is “if we don’t talk about how awful the housing crisis has become, it won’t ever get here.” The problem is, the median income for this area is around 62K and the median home price is 325K. And that will get you an aging 50’s ranch or colonial, a poorly built vinyl sided shack built in the 80’s or perhaps a condo.
I thought when they took the liar loans out of the equation, people wouldn’t be bidding on pieces o’ crap any longer and prices would return to where they were more in line with the median income. But here we sit in our little military hamlet, and the sellers aren’t budging. I know the houses aren’t worth the money people are paying and I know the incomes can’t sustain them. It befuddles me. Perhaps the Virginia Pilot knows what they’re doing by not printing housing related articles.
The median price is up here, too, but that’s because the low-end stuff’s not moving. The city’s talking about an affordable housing levy but no one wants to be heard talking down the free market housing.
This just might be a bounce up. due to hyper inflation. It should go back down again in a few months. My advice is to only purchase 70% below asking price, around there. Never pay more because you will lose eventually.
There’s a plethora of useless studies done today — lets add one more — the average IQ of current realtors.
Realtors sure didn’t seem to mind when MSM was all telling us to drink the RE Koolaid… Perhaps they want the Fox News version of “Fair and Balanced” news…
Fox biz news said that the lenders don’t know who they lent money to because they already sold it off.
Nobody knows where to go to rework the loans.
How big of a problem is that?
I don’t get it. If a borrower skips a payment, doesn’t someone get in touch with him/her to say Pay Up? If that someone is a paid “loan servicer,” doesn’t the servicer know who is paying him/her to do the servicing, and who receives (from the servicer) the actual money left after the servicing fee is paid?
I do not use a loan servicer, I have a little book (that’s right, a physical book) in which I record people’s payments. Also have a duplicate book in case of fire etc. I get in touch pretty fast if someone’s check does not reach my ML account within a week or two of the due date.
It’s one thing to get a hold of the people that can tell you where and when to make a payment, and entirely different thing to get a hold of the people that actually have the ability to modify a note and deed of trust.
Ex, could that slow down this whole bail out to save the homeowner?
It seems like it’s a three stooges episode.
If they want to keep these high prices they better find the effin paperwork.
xnnv, I’m sure you’re right, but mustn’t the servicers know who the note-owners are? Unless someone is trying to obfuscate. The servicers must pay the proceeds to someone who pays the proceeds to someone etc.; how many phone calls can it take to find the end of the chain?
I would like to introduce you to Microsoft Excel someday.
Are you losing billions of dollars and then giving yourself million dollar bonuses afterwards? No? Then obviously you have no grasp of modern business procedure . . . .
Get with the times, man!
/snicker
‘Pressed on Realtors’ possible responsibility for market problems at his own news conference, Yun noted that there are 1.36 million Realtors. ‘Certainly some are guilty,’ he said, adding that Realtors do have a responsibility to advise their clients against paying too much or getting in over their heads.’
Would you need more than a small room for the portion of the 1.36 million Realtors that lived up to their “responsibility” during the bubble years? A few might have, but most did not. Don’t keep telling me there were only a few bad apples when the entire barrel was rotten.
So…can we call this a “permanently low plateau”?
At what point does the class action lawsuit against the NAR take place? There really can’t be more evidence against them. They have (very) publicly and consistently deceived the public about the risks, potential returns and current state of the market. They very clearly have a conflict of interest, and they very clearly operate in a manner at odds with their charter (which is to operate in the interest and protection of buyers during real estate transactions).
At the end of the dot-com boom, securities firms were brought to trial for recommending the same equities which they underwrote. They were publicly flogged for their overt conflicts of interest.
Where is the same treatment for Realtors(tm) who did worse things to those spending non-risk capital?
Why is there never mention of class action?
‘People think the market is down and the market will still go down. That’s not the truth. The market is down, but it’s not going down anymore,’ said John Tuccillo, former chief economist for the National Association of Realtors.’
Are the economists who work for Used Home Sales People really as dumb as a board, or is it just that the lies they tell make them appear that way?
captian she’s going down!
“The KoolAid crystals canna take the strain”
Age-restricted homes? Stop ageism!
“Stop ageism” ?? - that would imply doing away with Soc Sec and Medicare, and would bring about a lot of outrage.
“George Chamberlin, a panelist at the event and columnist for the North County Times, said that some news reporters biased their reports because they are jealous of homeowners.”
Did anybody else here bruise an internal organ from laughing at this comment?
Yes… That has to be about the funniest things I’ve read in a long time.
Interesting point; continuing their reasoned critique, I wonder what percentage of RE and Financial reporters own real estate while reporting on it?
Could that explain why for years they confidently assured prospective buyers on the health of the RE market, favorably compared Owning to Renting, projected unrealistic appreciation rates, obscured affordability issues, down-played bubble sentiment and relied almost exclusively on up-beat REIC priciples to “inform” their readers. Could it be their conflict of interest….Na! It’s probably just the AD money.
Bitter reporters !!!
Hah !
Just another renter bitter because I’m not a couple hundred thousand dollars underwater and facing foreclosure.
Thanks for posting. I’m in the same mini-bandwagon. We’ve avoided the 100 to 200 THOUSAND dollar surplus.
Didn’t Rich Toscano go toe-to-toe with this knob on the radio a few times?
Probably. George Chamberlein is a tool. He has this radio show on Sunday mornings here in San Diego and is a total housing shill.
George Chamberlain is our local version of Kudlow
I’m sure jealous of homeowners who are rich enough to afford losing 20 pct of the value of a $600,000 home (= $120,000) and not even flinch. Luckily for them, real estate always goes up, in the long run.
You mean reporters are forbidden to own homes here in San Diego county?
I did not know that…
“Most real estate agents who spoke at the conference seemed to agree, with one agent suggesting that agents and builders pull all advertising from newspapers until positive articles are printed.”
Oh PLEASE Please Pull your ads jackasses ! You think you’re lonely and business is slow now you just go ahead and stamp your little feet and pull those ads !
And stop paying your NAR dues until they come out with some better statistics!
Can they afford to pay for either anyway? Might as well get some free press since they cannot pay the bills anyway.
Money for real estate advertising is down. Car sales are down, but not recently enough for a cut in the ad budget. So are beer ads enough to keep up the revenue? I saw the 4Q07 TV ad revenue, and it wasn’t great (but neither was it horrid). What’s it going to be like by 3Q08? I’m thinking a good 20% cut in ad revenue…
Got Popcorn?
Neil
Didn’t the NAR threaten to stop donating to Congress a couple of months ago, too.
These threats are pretty dumb. They may as well send out a press release saying: we are dishonest and trying to rig the system.
(I meant giving campaign donations throught their lobby)
Now isn’t this just how the appraisers were threatened and blackmailed by real estate sales people and mortgage agents into hitting the mark on appraisals . We have had a lot of discussion on this blog about how the MSM and local newspapers weren’t challenging the rah rah cheer-leading and the financial
myths by the the NAR and real estate sales people and related industries during the boom .
Can you believe how self-serving the real estate people are when they think that journalism/news should close their eyes to the state of the economy and lie to the public so the sales people can continue to lie to people to make sales . A huge percentage of real estate sales people are a spoiled bunch of blackmailing crooks . These a–holes need to be purged from the system and taken somewhere and muzzled for about 10 years until they realize what free speech and opinion is all about . Oh to bad that information is getting out that keeps them from brainwashing the public. These commissioned sales people went to far and they should really be ashamed of how they aided and abetted the “crooked real estate deal ” with their buddy mortgage agents .
I don’t see any remorse from this group ,just bitching because they can’t make a dishonest buck as easy anymore .
“‘Once housing starts to pick up down the hill it will still be just as pricey and just as crowded,’ she said. ‘The High Desert is still the next place for economic growth.’”
I’ve never read so much hopeless delusional bullsh*t at one time !
A major part of the problem is nit-wit politicians like Julie Hackbarth-Mclntyre. Everything if fine, the problems are just a hick-up, they will go away soon.
Mean while the worlds financial system is in meltdown. But there is no real problem.
To a politician the the bubble economy is ideal, and can not ever end.
That’s my hood, my people.
I am not playing that charade.
Go back to 2000 and homes will sell.
I promise.
Jealousy is rampant in San Diego.
Envy this George!
The High Desert is still the next place for economic growth.’”
We’ve gone full circle back to JT country. O how many must die for crapshacks?
The High Desert is still the next place for failed speculation.
Maybe some day the High Desert will amount to something. But having watched what has happened there since the 1960s, it looks like at least several more generations will pass before it happens. I can’t imagine it ever gentrifying. Although it has a certain kind of scenic beauty, I can’t imagine actually living there. Even if the sea level rose 100 feet, it would still be a barren desert with nasty winds and no water. There are just so many better places to live, unless you *really* like JTs.
Meanwhile, it’s another perfect day here at the beach.
–
“Maybe some day the High Desert will amount to something. But having watched what has happened there since the 1960s, it looks like at least several more generations will pass before it happens.”
It will never amount to anything more than high desert. Will it survive and do so-so? Probably.
Could someone who is spokesperson for an area tell us that his, or her, areas is going to have low, or poor, growth and home prices will continue to decline? That would be such a relief for many. I am sure that lot of people in Detroit and Cleveland would have appreciated such candor ten years ago.
Jas
What’s going on in the beautiful community of ‘ZZYZX’ ?
There are probably more FB’s and GF’S in the High Desert in forclosure than adult sidewinder rattlesnakes.
The snake estimate includes RE agents and Suzanne
“‘We received assurances that the project is moving forward but at a much slower pace,’ said city spokesman John Rader.”
Absolute BS unless the city got a performance bond w/ a sunset clause. I think cities will soon require them for approval to ensure safety and to protect neighboring communities (they sure as sh^t should). Doing that will just be another nail in the coffin, which should help with the massive inventory.
Zillow and realtors want to think happy thoughts.
“Homes are selling. The market for the S. Area is not the same as other areas. We can not compare our market to Stockton or Sacramento. We never have and never will.”
Zillow:
02/15/2008: $220,500 *
12/08/2004: $236,500
08/14/2001: $109,000
* This transaction was not used in computing the Zestimate for this house due to anomalies we detected with this transaction. These anomalies can include unusual document or transaction types, sales between possibly related parties, unusually high or low transaction prices…
“One home price you might not believe is a Logan Heights house selling for $65,000. It may not be anyone’s dream home….”
I can’t believe it is selling for 65K. A house with ’structural issues’ is priceless!
“Structural issues”
This is what happens when the refrigerator is hastily removed from the carton. The structural integrity of the cardboard townhome is compromised.
The only thing that would stop me from going with that sort of project is if the neighborhood doesn’t qualify.. assuming all the number$$ work out. Sweat equity is the best kind, imo. But then i’ve worked on a few disaster properties.. part of the house moved in a mud slide.. fire damage.. It aint for everyone.
But its Logan Heights, worth 65k just for the land, the Realtor will even throw in some chalk to outline your body.
“Tai Boutell of Santa Cruz Home Finance said he expects interest rates on so-called jumbo conforming loans up to $729,750 will be much lower than they have been. He mentioned one borrower he expects will be able to restructure his loan and save $160 a month.”
Sometimes the level of stupidity or ignorance is so incredible (and I really do mean that it strains the bounds of credulity) that I go into shock and just stare at the computer screen for a couple of minutes.
You’re buying a home that is “worth” almost a quarter-of-a-million dollars and 160 bucks monthly is going to make a difference?!?!?
Well, I’ve got friends in Seattle (who, of course, bought at the top) who claim that (1) “if a recession comes” then as far as the NW is concerned, “only Portland will be affected, not Seattle.”
As Ben and others have been screaming since 2004, it’s all about psychology. These bitter fools have to create little victories in their mind to make the reality go away and to justify their bad decisions. Unfortunately for them, those victories are coming a lot less frequently.
And I have yet to hear an answer to a question I always pose to my FB friends: “What’s wrong with affordable housing (that doesn’t come from gov’t programs?)”
you meant 3/4 of a mil, right?
Must have been adjusting for
deinflation.“‘Trying to get through to the lending institution is nearly impossible,’ said Jim Aldredge, owner of JTA Realty in San Marcos. ‘It’s like they say, ‘Today’s red ink day, and you’ve sent it in blue ink.’ It’s that asinine.’”
I’ve got an idea for you Jim: if lending hundreds of thousands of dollars to those whom you would put into homes (for a nice 6% commission for yourself, way the by) was such a good bet, then open up your own bank. After all real estate only ever goes up and you could make even more money by offering HELOCs to these people in a couple of years…
Lending low end is a good deal indeed. Not lending 100s of 1000s of dollars to anyone. Occasionally lending more than 100,000 but usually less. Perhaps that is the overriding reason for the absence of delinquencies in my biz. And it’s not unconnected with the fact that fewer than 1/5 of the transactions involve a RE agent. Sometimes it involves Francie the Finder who takes 1% and doesn’t pretend to have a license.
“One home price you might not believe is a Logan Heights house selling for $65,000. It may not be anyone’s dream home. It’s about 528 sq. ft. with what are described as some structural issues. It is a foreclosure, reduced from a previous price of $181,000.”
I would not live in Logan Heights even if you paid me 65,000.
Are the bars on the windows the only thing holding it together?
you would not live along if you did………..
Unless they change the name of the area to Logan Hills or Logan Cove or Logan’s Turtle Point or Logan’s Eagle Peak or……….
and then they can get $700, 000 easy for it!
“To qualify for the larger loans, borrowers must present ‘full documentation,’ which means two years of tax returns, W2 forms and bank statements.”
How dare they take away our liar loans! What is this country coming to? Next thing they will want to do is pull a FICO score.
…or worse yet - they’ll expect to get paid back!
I like to harp on one string. The key is not documentation. The key to forestalling foreclosure is big down payments.
There are already complaints about the Fannie Mae requirement that at least 5% of the house price has to be paid out of the borrower’s own funds.
The key to forestalling foreclosure is big down payments.
At the rate people are defaulting, 40% is gonna be the new 20%.
“…The good news, he noted, is that ‘92 percent of people with a mortgage are paying on time.’”
____________________________
I remember about a month ago when that knob Dennis Kneale was boasting about 96% of the people paying on time. I wish CNBC would send him his paycheck 92% of the time and see him whine like a female dog about the injustice of it all.
I think I may have a new barometer for measuring this mess. When will the percentage of people not paying their loans exceed the affordability percentage for median priced homes in California? Take that good news to the bank.
“…The good news, he noted, is that ‘92 percent of people with a mortgage are paying on time.’”
Isn’t that the lowest on record? That’s supposed to be good news?
And in other news, 92 percent of our troups in Iraq are coming home with all of their limbs. Some people will stop at nothing to put a positive spin on the most dire news. I’d consider it closer to propaganda than spin because the intent is clearly to mislead.
I think you have a 92% chance of living past this weekend.
“oh, hold a minute Sparky, lets not get personal”
Orwell would be impressed by Mr. Duncan. Seriously, there must be an opportunity for great satire here, perhaps a sitcom along the lines of “The Office” - maybe, “SubPrime” or “Reel Estate”
Dennis Kneale is the biggest idiot on CNBC, and that is saying something.
He’s the moron the smart money is selling to. he completely believes buy and hold. he just may be bill in maryland/phoenix!
I am glad to be an idiot. I was called an idiot in 1991’s recession when I was fully into stocks during that recession. Also in 2001 and 2002 when my 401k and IRA were fully into stocks and mutual funds. You are partly wrong. I don’t buy and hold, I buy, buy, buy, buy, buy, buy,….. because I dollar cost average.
“There is a ray of light for home buyers in Marin County after the federal government this week increased the amount of mortgage money that Fannie Mae and Freddie Mac can purchase.”
Buyers? More like another straw for sellers to grasp at.
I actually like some parts of Marin, having lived there for a while in the 1980s. But I’ve never understood the people who live there and commute into “The City” (San Francisco). Traffic over the bridge is horrible, the ferrys are miserable (Larkspur Landing had no place to get out of the rain while waiting for a ferry), and of course there is no BART due to Marin’s isolationism.
Marin would be a nice place to retire if one could afford it. And that might get easier as time passes.
In my younger days I was in Marin. There are a couple places in San Rafael that I still dream of to this date. For some reason that place seemed special to me. That was a long time ago. I have no idea what it is like now.
Boy and SM, those cool people that were there in the 70’s and 80’s turned into the major flippers. I lived there in the 80’s and partied in the 70’s. It is ground zero for the multiple flipping because a typical ranch is worth 900 to 1 mill.
On the downside, the GG bridge toll is $5 - with $6 under consideration. On the other hand, prices have come down faster and further in Marin than in SF.
Ray of light?
So what this is saying is that the federal government is trying to subsidize the mortgages of those in the wealthiest county (by median income) in the United States of America.
Way to go Feds - let’s keep the party going!
“FHA loans are not simple to get, noted Glen Beddow of Adobe Mortgage in Vacaville. ‘You have to qualify, and have to validate income and only a certain percent of income can go toward overall debt,’ Beddow said.
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You have got to be kidding me. Where is that Joshua Tree when you need it? I’d like to stick that thing so far up his @$$ it becomes one with him. Then after a few months of watering he becomes a Human Chia Pet.
What’s this world coming to when a person is expected to qualify for a loan and verify income? I thought you just tell them how much you want to borrow and they hand you the check.
Is Fannie Mae the Next Government Bailout?
Barrons. (Quote)
But, if the truth be known, a considerable portion of Fannie’s losses also came from speculative forays into higher-yielding but riskier mortgage products like subprime, Alt-A (a category between subprime and prime in credit quality) and dicey mortgages requiring monthly payments of interest only or less. For example, Fannie’s $314 billion of Alt-A — often called liar loans because borrowers provide little documentation — accounted for 31.4% of the company’s credit losses while making up just 11.9% of its $2.5 trillion single-family-home credit book. Fannie was clearly looking for love — and market share — in some of the wrong places.
Likewise, Barron’s has found other areas that may bode ill for Fannie’s prospects. Its balance sheet is larded with soft assets and understated liabilities that would leave the company ill-equipped to weather a serious financial crisis. And spiraling mortgage defaults and falling home prices could bring a tsunami of credit losses over the next two years that will severely test Fannie’s solvency.
In any event, continued deterioration since year end in indexes like the ABX triple-A index indicate that Fannie, based on the different vintages it owns, should conservatively take another $14 billion charge, according to Barron’s estimates. Fannie Mae says that since it’s a long-term investor, it should incur no permanent decrease in asset value beyond what it has recognized.
Of course there will be a government bail out! Around October I suspect when the idiot in the White House has to admit his “stimulus package” didn’t work and the property market is now heading into winter and STILL not getting any better. Expect Godfather Paulson to come up with some plan to rescue his criminal “familes” on Wall Street - via good ‘ol dumb Joe Sixpack and taxes or his cohorts at he Fed or both. You might lose money - I might lose money but there’s a 100% garantee that Wall Street and the big bankers will NEVER lose. The “rescue” will arrive just a few weeks away from November and the election which will be a massive landslide in favor of the Democrats. Why they want to win I have no idea because the mess the US is in at the moment is so incredibly vast that I wouldn’t want to wish trying to solve it on my worst enemy.
$14 billion dollar charge - lmfao! try $100 billion!
All this time the media and government keep telling us that conforming loans require full documentation and do not offer ARMs.
If the Feds gin up a government bailout that involves wiping out Fannie and Freddie’s shareholders, you have to wonder what’s gonna happen to the major money center banks like Bank of America, Citigroup, Wells Fargo, and so on. My impression is that Freddie and Fannie are way more important to the economy and the credit markets than any individual money center bank.
“‘Right now, we may not technically be in a recession, but job growth has slowed to a crawl. To a lot of people, it may feel like a recession,’ said Alan Gin, an economics professor at the University of San Diego.”
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When I punch you in the face Alan, it may not technically be a broken nose, but it is going to feel like a broken nose you numbnut.
If he’d been around in the 1930’s, it would only have been a “prolonged slowdown”. He might have also touted the possible benefits of a topsoil redistribution program for the Great Plains.
Does he finally make an announcement in Q3 ‘08 that we might have a recession, but that it will be shallow and brief, not lasting for more than two quarters (after the economy has already been in recession for two quarters with the recession continuing to deepen)?
“One home price you might not believe is a Logan Heights house selling for $65,000. It may not be anyone’s dream home. It’s about 528 sq. ft. with what are described as some structural issues. It is a foreclosure, reduced from a previous price of $181,000.”
No, what totally blows my mind is that someone actually paid $181,000 for a 528 sq ft shack in the hood. 342 a sq ft, damn, that’s nuts!!
…what totally blows my mind is that someone actually paid $181,000 for a 528 sq ft shack in the hood. 342 a sq ft, damn, that’s nuts!!
Haven’t you heard, San Diego is different!
yep, they are not making anymore slums!
How much do BULLETPROOF windows cost?
If you think Logan Heights is bad now… just wait until the full-blown recession hits!!
Krapschax in Morro Bay holding steady at $400/s.f. The inventory is undergoing its typical seasonal rise. Maybe the inventory will rise further this year. Yawn twiddle twiddle twiddle twiddle
Interesting times. As Spring arrives and the propaganda machines start cranking up, it’s difficult to decide who are the biggest liars and crooks - the NAR shills, like Lawrence Yun and the realtors themselves, or the current crop of politicians (Republican and Democrat) who are hoping to become President. A plague on both their houses as far as I’m concerned.
“The six-county region that includes San Bernardino County will require more than 700,000 new housing units in the next seven years. Jeff Lustgarten, spokesman for the Southern California Association of Governments…said that a lack of homes, especially in the bigger cities, is driving up prices which could encourage homebuyers to relocate to Barstow and nearby areas.”
700,000 new housing units in SB county! Relocate to Barstow! Sir, are you insane or did someone just bash your skull in with a hammer?
“Just as springtime stories start popping up about starving real estate agents and multiple low-ball offers on Sacramento-area homes,”
Fixed that for truthfulness……….
“They said they are starting to see multiple offers on homes and packed open house events, which they said point to a housing market recovery that is under way.”
Recovery? Last time I looked Escondido was in North San Diego County.Check the area of 92025 and it will show more preforclosures than bank owned by about 200 or more.Its getting worse there.
Thats pathetic.
If there are any offers they are probably lowballs or way under market.Anyone going to open houses are just out for a nice day or looking for those cupcakes and cookies.
Re: the Jumbo-conforming loans of over 417,000 to 729, 750. FNMA lost $3.55B and FHLMC lost $2.5B in the last quarter. In the last year FNMA lost 57% , FHLMC lost 67% of their stocks value. The GAO just said that the agencies “pose potentially significant risks” to the US Taxpayer. Is it reasonable to question how they are going to help?
It has been established that these loans will be segregated into their own mortgage backed securities (MBS) and pricing will be worse than the real conforming loans under 417,000. The reasons include over-concentration of jumbo loans in troubled markets such as California, propensity of jumbo borrowers to prepay early (ruining yields), and the uncertain liquidity of these new jumbo-conforming MBS.
Last week we saw the spread over treasures for these agency MBS go to the highest level in over 20 years. FNMA’s net yield to purchase 30 year fixed loans increased 1/2% from last Monday to Friday, while treasury yields dropped. No one wants to buy any type of MBS, especially these new riskier ones.
So, what we have is a number of wealthy homeowners of above average priced homes, with good income, big equity and good credit, refinancing to lower their rate. This “Bail out” will give them a few basis points of rate savings and $50 more to spend per month. Of course the current investor of their mortgage will have $50 less income to spend per month….
You see rates dropping to the point I’ll be able to refi a 30 year fixed now at 5.625% ?
That rate is too high. I’m holding out for 3.5%-4% on a 30 year fixed. Primarily because I (and all my fellow citizens) deserve it. With that rate a given I think I’ll look at new cars tomorrow.
It’s almost a certainty after the next rate cut March 18th. I’d be surprised if you didn’t find 5.25% by july.
You guys have the spirit. Its also a great time to buy a home. Prices never drop, remember?
In reality, if things keep moving in this direction, we will have 30 year conforming loans under 10% by mid year. You can quote me on that…..
“It’s almost a certainty after the next rate cut March 18th. I’d be surprised if you didn’t find 5.25% by july.”
Uh, no. What all the panicked Fed short-term rate cutting (thus increasing the money supply) is doing is convincing the market that we are about to see a resurgence of inflation, which needs to be priced into a 30 year loan. If the Fed wants to lower long-term rates, it would be well advised to take a breather from further short-term cuts - the market might conclude that the Fed might actually show some discipline in the future.
“…- the market might conclude that the Fed might actually show some discipline in the future.”
If the market you reference is the stock market, this conclusion could add a big drop to the one that has already occurred. Rate cuts for the foreseeable time horizon are already priced in.
What’s neat is that they can only do six more 0.5% rate cuts before they run out of ammo.
In my comment several up, 3rd paragraph, mortgage rates are increasing relative to Treasury yields. So while treasury yields dropped, mortgage rates increased. It will be more expensive to get a loan in the future. I really can see 7%+ soon for conforming. No one wants to buy mortgages/mortgage securities. Would you invest in a 30 year mortgage/mortgage security and accept under 5%? I would not. So why do you expect others to do so?
This is a mortgage crisis affecting rates much more than inflation or the state of the economy.
“The last portion of the conference, a question-and-answer session, admonished the media for depressing consumer confidence by focusing on only the negative aspects of housing data.”
Here is some positive news to offset all that negative media coverage: California home prices have dropped by 20 pct or so since the bubble popped, and affordability is steadily improving by the day.
Interesting Barron’s article on Buffett, who has been on a buying binge since 2007 despite what he may have been saying in his increasingly regular public appearances, coming as they have especially since he has seemingly “taken a shine” to B. Quick.
Will link the article, but it may be subscriber only so here’s an excerpt:
“In the equity-derivatives market, Berkshire has taken in $4.5 billion in premiums for selling at-the-money puts on the S&P 500 and three foreign equity indexes, with original terms of 15 to 20 years and distant expiration dates between 2019 to 2027. With this bullish bet, Berkshire will pocket the entire premium, plus investment income on the $4.5 billion, if the relevant equity indexes are above where they stood when the company sold the options.”
The gist: These short puts cover $35 billion in stock indexes and are already underwater to the tune of a billion dollars, according to the article, moneys that have to be realized on BRKS’s income statement, “even though Charlie Munger and myself don’t really consider it losses.” (This from the derivatives hater.)
Furthermore, BRKA has now risen to 1.7 X book value. Although Berkshire is not quite a closed-end fund, it is getting more like that every day - would you pay a 70% premium for a closed-end fund?
BRKA is a way-overvalued stock. Buffett has fallen in love with his big optimistic bets, but - not saying this because I dislike him or want to be mean - (mark my words) he is going to end up being cursed in his grave by a lot of investors.
http://online.barrons.com/article/SB120493983011321249.html?mod=barrons_most_viewed_day
I don’t believe Mr. Buffet is making “big optimistic bets”; rather big inflation bets.
Good point. In the short run, increasing inflation is bad for stocks, but in the long run stock market tracks inflation, and these bets qualify as long run.
California house prices need to go down much more. I know in some areas, it’s down 20%, but I now believe that even that reduction isn’t enough. Buyers are afraid of the weak dollar value and that they would lose money as soon as the purchase is complete. It looks to me that it’s posslbe that a 40% reduction could be very real. Remember how they said that gasoline wouldn’t go over $3.00? Well, gasoline prices are on their way to being $4 !
I also see more people moving out of California then ever before, no only is the house prices unaffordable, the cost of living (gasoline, sales taxes) are too high and there are jobs that don’t pay well. State of California is not inviting enough to live in anymore.
Down 20% (in some areas) and we haven’t even really started the recession yet. Based on fundamentals, I see no reason why prices won’t drop at least 50% from their peaks statewide. They’ll still be quite high even then.
50% is an economic requirement, not just a prediction. The home price/income ratio is still 10x. Now we are heading into a recession, which means wage deflation. On the other side food and energy prices are exploding. California has been a dream for many , but now it is a nightmare for people living here. In the SF Bay Area a family needs 80k income only for surviving. A house costs 800k - just out of range for most people.
NYT today: “The median household earned $48,201 in 2006, down from $49,244 in 1999, according to the Census Bureau. It now looks as if a full decade may pass before most Americans receive a raise.”
Based on fundamentals, then, one would expect that house values should retreat to their 1999 levels, or slightly lower. This doesn’t take into account the tendency for bubbles to overcorrect on the way down when they burst.
Based on Friday’s exchange rate, we are currently paying $US5:10 per US gallon here in Canberra, Australia.
My UK cousins are paying about $8:00.
You guys need to realise that by developed world standards
motor fuel in the US is still cheap.
True. But then you have to realize that due to lower gas prices, the US consumer has more disposable cash to spend in other areas of the economy - notably, the retail sector. And that provides for all the jobs in China and India.
On top of AR’s comment, households stateside also live further away from their place of work, not to mention shopping. Cheap gasoline has led to zoning restrictions that keep commercial establishments a good distance away from even mid-scale neighborhoods. $4 a gallon gas using an SUV that gets 10 mpg means that a grocery shopping trip to a grocery store 10 miles away could cost $8 (round trip). That’s on top of $24 per day round trip for the commute to work 30 miles away.
10 miles from the nearest grocery store? Where does this actually occur in America, other than in rural places where almost no one lives anymore? The job commute is probably the main offender for most Americans.