It May Not Be A Buyer’s Market Yet, But It Will Be
It’s Friday desk clearing time for this blogger. “From the streets lined with for sale signs to the stacks of foreclosure files, Brevard County’s clerk of courts is seeing twice as many foreclosures per month as home sales. ‘Florida has been in a recession for a year,’ Brevard County Clerk of Courts Scott Ellis said. ‘Anytime you have a very unnatural boom, you will always end in a very hard bust.’”
“‘The banks took all their lending standards and threw them out the window,’ Ellis said. ‘And literally, just anybody that wanted to borrow money for a house could borrow pretty much whatever they wanted and buy whatever they wanted. And that is purely insane.’”
“Ellis said banks may have to slash prices on homes to get them to sell. He said it may not be a buyer’s market yet, but it will be.”
“The median closing prices for homes in the region slid further last month as inventory rose more than 11 percent from a year ago, according to the MLS of Long Island…the lowest in almost three years. Broker Tina Loffredo said she has no doubt the median will slip under $400,000 this year.”
“‘The numbers are coming down drastically, said Loffredo, whose company has offices in North Babylon and Kings Park. With the closings I’m having and the offers, I can’t see it being more than what it was in 2005.’”
“South Londonderry Twp. is feeling the pain as the housing bubble deflates and the economy sags, the supervisors were told Tuesday night. Only two or three houses were sold in February, generating $4,000 in realty transfer tax receipts instead of the expected $16,000 per month, or a drop of 75 percent, township manager Tom Ernharth said.”
“‘Building permits have pretty much dried up and died’ in what had been the fastest-growing municipality in the county for several years, Ernharth said.”
“Boston taxpayers spent $10,120 last year maintaining a derelict condominium building on Hendry Street. The three-bedroom condominium deeded to Morgan Stanley is on the market for $54,900.”
“The unit, located in an area known as Meeting House Hill, sold for $299,000 two years ago, according to public records.”
“After some delay, the high-rise tower Emerald by the Sea, a forerunner in the skyline-altering island condominium boom, is scheduled for completion by month’s end. The Emerald comes on line while demand for condominiums along the Texas coast remains strong.”
“Mary Jo Naschke, a spokeswoman for the project, said it wasn’t unusual for some early investors, who were hoping to resell quickly for a profit, to change their minds.”
“‘People invest thinking they’ll make a quick sale and return for their money and they really have no intention in living in the place,’ Naschke said. ‘If time is not on their side and they can’t hold out, they tend to get angry because they panic.’”
“‘People who are looking to buy condos are going to have to understand that the free and easy money of the last three and four years is not free and easy any more,’ said Jim Gaines, research economist for the Real Estate Center at Texas A&M University.”
“Talk of a Dubai real estate bubble could not be further off the mark, says Wahid Attalla, CEO of Spectrum Consultants. Real estate prices are still cheap compared to other parts of the world, he says. What’s more, the investment return in Dubai is amongst the highest in the region – between 100 and 250 per cent.”
“‘Let me make clear something important – there is no such a thing as a bubble in Dubai’s real estate market, whether now or at any time in the future,’ Attalla said. ‘Real estate prices started low and continued to rise and they will not stabilise in the foreseeable future, not for at least another five years. The price of real estate has seen corrections – but upwards.’”
“While some real estate agents are idle due to the housing market, Julie Ferenzi is active in selling ‘pre-foreclosure’ homes. Sheila Pearson-Smith and her husband owned two properties—an investment property in Chicago and a house in Montgomery, Ill.,—that were already on sale for about a year before meeting Ferenzi in July 2007.”
“They were successful in accomplishing a short sale for the other house. Pearson-Smith owed about $247,000 on the mortgage, but they negotiated a short sale at $205,000. The bank netted $181,000 after paying several fees and taxes. Under the Federal Housing Authority’s regulations, the least a bank can accept for a short sale is a net of 82 percent of the property’s appraised value.”
“‘She did a great job,’ Pearson-Smith said. ‘She’s very efficient and very polite.’”
“The collapse of the subprime mortgage market will lead to record losses for insurance companies, overtaking Hurricane Katrina, the worst natural disaster in U.S. history.”
“The amount of asset writedowns and credit losses reported by the industry has reached at least $38 billion, just short of the $41.1 billion in claims from Katrina, which killed more than 1,500 people and left more than half of New Orleans homeless in 2005, data compiled by Bloomberg show.”
“Twenty-eight new condominiums on the Bremerton waterfront will go on the auction block next month — with the starting bid on the cheapest unit reduced in price by 58 percent. Bidding for the smallest condos, one bedroom, one bathroom units with about 577 square feet, will start at $109,000, down from $259,000.”
“At the high end, a 1,729-square-foot, two-bedroom two-bathroom condo originally priced at $919,000 will start at $500,000 less.”
“‘These are tough times for folks, especially this market,’ said Mark Goldberg, developer and former owner, noting that the condos are owned by the Santa Barbara, Calif.-based Chester Group, which bought the development before the condos were built.”
“Put two economists in the same room and you’re sure to get at least three different opinions, Portland Cement Association Chief Economist Ed Sullivan said Wednesday in Las Vegas. And to support his argument, Sullivan offered a glum assessment of the economy that contrasted with another more optimistic viewpoint.”
“Ken Simonson, chief economist of Associated General Contractors, said he doesn’t want to downplay the dismal housing situation and credit market. ‘I don’t think we’re in a recession or going into recession, but it’s a close call,’ the AGC economist said. ‘We’re at the bottom.’”
“‘It seems like I’m walking through the desert with this mirage of a housing turnaround being 12 months out. Every time I look again, it’s 12 months out,’ Simonson said.”
“The hottest ticket these days isn’t for the Cirque de Soleil extravaganza at the MGM Grand or the Elton John show at Caesar’s Palace.”
“It’s for a window seat on the ‘Vegas Foreclosure Express,’ a four-hour tour of repossessed homes whose former owners bet the U.S. property bubble would never pop — and lost it all.”
“In January more homes were repossessed than sold. Michele Johnson, the head of Consumer Credit Counseling Service of Nevada, said the reason is simple. ‘The median price of a home has depreciated so dramatically that the majority of homeowners owe more than their homes are worth,’ Johnson explained.”
“Keith Schwer, an economist at the University of Nevada, Las Vegas, estimates that the city’s excess supply of housing is now ’somewhere around 24,000 to 25,000 vacant housing units’ - an overhang that will take years to burn off.”
“The five-bedroom, four-bath home on Bohemian Forest Avenue, which was built in 2004, originally sold for $526,000. Two years later, it was resold for $842,000. In early 2007, a comparable home in the area sold for $1.1 million. Today, the bank is willing to take $578,000 — maybe less — to get it off its books.”
“Over on Serena Veneda Lane, the Zuckers, who began offering the tours of bank-owned properties last month, took their tour into a three-bedroom, two-bath recently repossessed home. The last owner’s business cards — he was a mortgage broker — were scattered on the floor of the bedroom closet, along with socks, shoes and a receipt.”
“‘Look,’ said Marshall Zucker, picking up a leather billfold, ‘He even left his wallet.’”
“In many cases the homes the Zuckers focus on are being offered by the banks at prices well below the sale price of the last comparable home — a sign the market hasn’t hit bottom. In an area called Monterossa, a six-bedroom, three-bath home is offered for $534,900 — nearly $200,000 below the last sale in the neighborhood recorded just a week ago.”
“But Roger Duarte, a 77-year-old retired telephone worker who sold his home for $1.5 million and was looking for a new one, didn’t think the sale price made the property a compelling deal. He thinks prices still have plenty of room to fall.”
“‘They probably had a cellophane wrapper around their heads,’ he said of the recent buyer. ‘Back when I was growing up, we called them suckers.’”
This is moving fast! My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics.
having read this blog for years now I’ve gotten used to the idea of a real ‘crash’ being some slow, distant trend. As someone who’s been practically screaming to friends and family about the coming crisis, I have to admit to being a little suprised (and freaked out) at the speed and severit of what’s happening. Again, many thanks to Ben and the always impressive wisdom of others here.
UBS is the next to go down:
http://messages.finance.yahoo.com/mb/UBS
Down big AH’s
Captain Contagion strikes again. Don’t worry, folks. SuperB is on the way. He’ll use his SuperB liquidity powers and wash away the losses.
Check out the Lehman after-hours story.
Borrowed $2B from 40 banks. Say they have “no liquidity problems”.
They’re my top bet for going t*ts up after Shittibank!
HAHAHAHAHAHHAHAHHHHHHHHHHHHHH!!!
At some point SuperB will get the message loud and clear……”NO MAS”
No, he won’t. He’s an academic. He’s not trained to see the bigger picture.
He’s trained so that if you can’t prove it “statistically”, there’s no truth to it. Oh, the humanity!
holy crap. I’ve been on vacation. Just pulled up the Dow report. What in the hell happened? Bear Stearns? Anyhow, while I sort of figured that the whole ” Fed coming to the rescue” stunt wouldn’t last all that long. But -200 so soon afterwards? Man…
“‘They probably had a cellophane wrapper around their heads,’ he said of the recent buyer. ‘Back when I was growing up, we called them suckers.’”
PRICELESS!
ROTFLMAO
“Look for the holes in the head, he’s not firing on all cylinders.”
Now to clean the partially chewed cashews off my screen…
Got Popcorn?
Neil
Cashews????
While you’ve been promoting popcorn for half of forever.
Talk about a pump-n-dump…
“‘Let me make clear something important – there is no such a thing as a bubble in Dubai’s real estate market, whether now or at any time in the future,’ Attalla said. ‘Real estate prices started low and continued to rise and they will not stabilise in the foreseeable future, not for at least another five years. The price of real estate has seen corrections – but upwards.’”
I thought they ran the Huns out of Dubai?
Dubai is going to have one hell of a “hard landing”.
Have prices peaked yet? If not, they should very “soon” then crash hard!
from what i have read and seen dubai looks like florida or vegas as far as new condo development goes
new condos in the middle east how can that go wrong?
I’ve been to Dubai a couple of times in the last few years. Miami and Vegas have NOTHING on it. Crane city!
I spent one day in Dubai 3 years ago (unscheduled ’stopover’ due to a problem with the plane’s flaps).
The airline landed us a Dubai because of their accomodative visa policy, and many passengers including myself went on a bus tour they offered while we were there.
One statistic from the tour guide was that 70% of the ENTIRE population of Dubai at the time were construction workers, overwhelmingly semi-skilled Pakistani labourers. (I found out back in Australia that these workers have zero rights, dreadful living conditions, and are very poorly paid.)
The rulers of Dubai are taking one of the biggest financial gambles the world has ever seen; they hope to establish their city as the Gulf equivalent of Singapore, but Abu Dhabi and Sharjah (not to mention the MUCH longer established Bahrain) are aiming for the same space.
While the oil revenue flows, this all works. But if the price of oil drops or the fields in that area run down, IMHO there is going to be an APPALLING crash in one or more of these cities.
Someone should frame the guy from Dubai’s words. What would happen to the middle east, if say, the job market got so bad in the US that no one had to leave their home anymore for anything other than groceries ?
It’s different in Dubai. Everybody wants to live there.
“Everybody wants to live there.”
Especially people that don’t understand erosion.
My post on Dubai was eaten.
Dubai is important to me as it was one of the bubble markets SMF had to show me the logic of why it was a bubble (the city is growing amazingly quickly). So its one of those milestones that helped me understand the global scope of this bubble.
Not quite as scary as Northwest Arkansas… but still one of the “mother of all bubbles.”
Dubai is interesting in another area. It is becoming, possibly has become, the sex tourism capital of the world. Don’t worry, I’m a loyal hubby. Some of my coworkers… a few too many wink wink, nudge, nudges as they routed their trips through Dubai during the Christmas break. (These guys are single and for the sake of the species should remain that way.)
Got Popcorn?
Neil
Diseases, physical, emotional, psychological damages will weed those perverts out of the gene pool for their risky, immoral behavors.
It’s not like they are realtors or mortgage brokers.
hit a nerve there, bye fl?
Lol, my thoughts exactly…
I find Dubai interesting too. The city of Dubai just bought the Cruise ship, QE2 to make it a hotel/casino. To my understanding, the city has some of the wealthiest people in the world. In the middle of a desert. With some o the craziest skyscrapers.
not quite as scary as Northwest Arkansas… but still one of the “mother of all bubbles.”
Northwest ARKANSAS?
Seriously, no. I thought the bubble we’ve got building in Saskatoon was improbable, but Arkansaw?
Dubai has a heavy reliance on equity locusts from Europe. That well has dried up. Oops.
We’ve gone from “it’s all contained” to a “slow down” then 1 in 3 chance of a recession and now this………….”A soft depression”
Here’s John Bogle (founder of Vanguard) take on this.
http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vKrkZVHeXFmQ.asf
dude (or dudette), much as I like Ol’ Mr. Bogle, he and I are going to disagree about this. This is not some “been there done that” thing.
In any case, what’s a “soft depression”?
Bad times but no soup kitchens? People are too fat anyway!
Just posting what I find……….think of soft landing and relate it to soft depression. Then of course there’s hard landing and hard depression.
I like Ol’ Mr. Bogle. He was a force of good. A mover and shaker, and a real mensch, if you will.
He’s wrong in this specific case but even genuinely good people can be wrong sometimes.
I’ll just respectfully disagree with him very very strongly.
OK…..no probs.
It’s probably anyones guess where this mess ends up.
Heard a strong rumour that we may get a shock and awe event from the worlds CB’s early next week…..we’ll see
Whatever.
Like shock and awe can change insolvency into solvency.
I keep hearing the banks and Wall Street refering to Bernanke as “Kristen” - can someone explain this for me?
It is in reference to Spitzer and Kristen.
Gotta admire their truth-telling ability in this case. Ben looks more and more like their ho with each passing day.
Glad he doesn’t cost us $2K an hour.
Costs the taxpayers more like $2M an hour.
LOL. That’s funny.
Bernanke vs. “Kristen”. One is a cheap whore, and the other works for the Emperor’s Club.
Boston taxpayers spent $10,120 last year maintaining a derelict condominium building on Hendry Street. The three-bedroom condominium deeded to Morgan Stanley is on the market for $54,900.”
“The unit, located in an area known as Meeting House Hill, sold for $299,000 two years ago, according to public records.”
Its hard to believe than anything on Meeting House Hill sold for 299K. It’s a scruffy part of Dorchester, that has been trying to rise up for over 30 years. It’s where “This Old House” got its start with a house at the top of the hill.
There is a lot of crime in the area, amenities are few. There was a tremendous amount of hype about Dorchester for a few years, but that died quickly. Dorchester used to be white Irish Catholic until the late 1960’s early 70’s. The last major RE crisis left it pretty much destroyed. Since then, various immigrant groups moved in. There have been tons of social service agencies in the area. I worked there in the 70’s. The bubble of 2003-2006 or so saw a lot of rehab and escalating prices. The crime didn’t leave, and its a large reason why folks have walked away from their pricey condos. I took a drive around the area about 3 years ago at the height of the boom and was dumb-struck at the fancy condos in really doggy areas. I saw one building, right off the X-way, no view, going for about 250K. Neighboring buildings were boarded up and covered with graffiti. 54,900 is too high for that area, in my opinion.
Lugg-zhury home developer meets its Waterloo at the Biosphere:
http://www.azstarnet.com/sn/biz-topheadlines/229684
Minnesota-based Tucson Copper Hill Estates LLC has about $7.6 million in liabilities and about $11.2 million in assets — mainly the land, which is located near Biosphere 2, according to court documents filed on Thursday.
Lol. In other words, if they sold the land at today’s firesale prices, they might get $3 million to pay off that $7.6 million in debt. Great business plan there…
Got Popcorn?
Neil
As in W$ore
Here’s another candidate…………….
Lehman Brothers Obtains $2 Billion Bank Credit Line (Update2)
By Andrew Frye
March 14 (Bloomberg) — Lehman Brothers Holdings Inc. obtained a $2 billion credit line as the investment bank tried to blunt the stock’s worst drop in almost eight years and assure investors the firm isn’t short on cash.
The unsecured, three-year facility from 40 banks replaces an existing credit line, New York-based Lehman said today in a statement. JPMorgan Chase & Co. and Citigroup Inc., also based in New York, led the effort, the firm said.
Lehman announced the financing hours after Bear Stearns Cos. said it agreed to an emergency bailout by JPMorgan Chase and the New York Federal Reserve. Bear Stearns, which fell 47 percent in New York trading, said its cash position had “significantly deteriorated” in the past 24 hours, raising concern among investors that more financial firms may face a liquidity shortage.
“Nothing speaks like cash in a crisis, and they have the cash,” said James Ellman, president of San Francisco-based Seacliff Capital LLC, which has about $150 million under management. “In these financial markets, locking in three-year money is long-term. Usually we call it medium-term, but now that’s very long-term.”
Lehman fell $6.73, or 15 percent, to $39.26 at 4:15 p.m. in New York Stock Exchange composite trading, the most since April 2000, leaving the stock down 40 percent this year.
“We are extremely pleased with the success of the syndicated facility and view this as a strong signal from the market and our key bank relationships,” said Paolo Tonucci, Lehman’s global treasurer, in the statement.
To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net
Last Updated: March 14, 2008 16:50 EDT
If there aren’t any insurance companies left, who are people going to sue, in the usual wreckless style they’ve become accustomed to?
The hoi polloi doesn’t have any money…
“The collapse of the subprime mortgage market will lead to record losses for insurance companies, overtaking Hurricane Katrina, the worst natural disaster in U.S. history.”
“The amount of asset writedowns and credit losses reported by the industry has reached at least $38 billion, just short of the $41.1 billion in claims from Katrina, which killed more than 1,500 people and left more than half of New Orleans homeless in 2005, data compiled by Bloomberg show.”
Now this is funny………………..
CARLYLE SAYS FED MOVE PROMPTING ASSET SEIZURE
By Martin Arnold
Friday Mar 14 2008 17:45
This week’s emergency credit market intervention by the US Federal Reserve was supposed to ease the liquidity crisis for struggling financial groups such as Carlyle Capital Corporation.
But David Rubenstein, co-founder of the Carlyle Group, said it only accelerated the demise of his group’s mortgage-backed securities fund, which is being liquidated by its banks for defaulting on more than $16bn of debts only eight months after listing on Euronext Amsterdam.
In response to the credit woes ripping through the financial system, the Fed this week unveiled a new $200bn securities lending facility that will allow dealers to swap hard-to-finance mortgage securities, such as the $21.7bn held by CCC, for Treasuries.
The Fed intervention was designed to help, but in the case of CCC it had the reverse effect, said Mr Rubenstein in an interview with the Financial Times only hours after walking away from frantic, last-minute talks with banks this week.
He said that the banks realised that because of the Fed’s intervention, the underlying assets of CCC were worth more, which only made them more determined to seize its assets quickly and crystallise that value by selling some.
That someone with the stature of Mr Rubenstein at a group as influential as Carlyle - once termed the ex-presidents’ club for employing political heavyweights such as James Baker and John Major - could not persuade banks that CCC was worth saving shows just how dire the crisis has become.
Yet Mr Rubenstein played down suggestions of tension with lenders, describing the implosion of Carlyle’s ill-judged adventure into mortgage securities as a hiccough in relations with banks. He pointed out that the bankers with whom he was trying to reason to save CCC were different to the leveraged finance bankers that Carlyle is used to dealing with.
Unlike their leveraged finance colleagues, who are relationship bankers looking to build strong links with big clients such as Carlyle, the people he faced across the negotiating table this week were from the repurchase or “repo” teams of the banks, with a much more short-term focus.
“We normally deal with the leveraged buy-out people at the banks who we know well, but this time we were dealing with the trading desks who look at things minute by minute,” he said.
As such, Mr Rubenstein said he was unable to persuade the bankers to accept a “standstill agreement” under which they would pledge not to push the fund into default for a year in return for Carlyle injecting about $700m of fresh capital into its troubled fund. Mr Rubenstein said he remains confident that the triple-A rated securities issued by Fannie Mae (NYSE:FNM) and Freddie Mac, the US government sponsored agencies, will not default.
The banks liquidating CCC’s assets had so far redeemed all their capital, suggesting their fears that it was undercapitalised were overblown.
However, the Carlyle co-founder, who together with other partners owned 15 per cent of CCC shares and extended it a $150m subordinated loan, said it was understandable that banks were eager to redeem capital in today’s difficult market conditions.
“When the leveraged buyout phenomenon was at its peak, the private equity sponsors could take their pick of the best offer from many banks,” said Mr Rubenstein. “Now there is no leverage so it is completely different.”
Speaking at a conference in Munich only days before CCC started to implode, Mr Rubenstein said that if 2007 was private equity’s golden era, then 2008 marked the start of a new “purgatory age”. He added: “We must atone for our sins.” Even he, however, could not have expected to be proved right quite so soon.
CCC thrown under the bus!
I’d be careful taking exception to what a cement shoe economist says…
“Put two economists in the same room and you’re sure to get at least three different opinions, Portland Cement Association Chief Economist Ed Sullivan said Wednesday in Las Vegas. And to support his argument, Sullivan offered a glum assessment of the economy that contrasted with another more optimistic viewpoint.”
Does he have a “really big shoe?”
Heard it in on a loan blog, can’t be wrong…
“‘Look,’ said Marshall Zucker, picking up a leather billfold, ‘He even left his wallet.’”
Florida leads the nation in mortgage fraud
http://www.huffingtonpost.com/2008/03/14/florida-leads-nation-in-m_n_91644.html
A sunny place for shady people!
Flatlantis can’t happen soon enough…
Come on climate change, do your thing!
RE: Florida leads the nation in mortgage fraud
Not surprising…
All the penny-stock, boiler-room hucksters and con men simply moved to a different game because the scam and money was easier.
Didn’t Jeb Bush, the Pres’s brother run this state and wasn’t that Katherine wazzernamerboobjob who “verified” the election results..Gosh, you wouldn’t have guessed that there was crooks in that state, now would ya.
MamaBush gave $$$ to Katrina victims but had to be spent on her son’s school software program.
THAT florida?
Nevada is still close behind, as evidenced by the following story. I chat with the guy’s ex who lives in California, and she sent me the Dept. of Justice press release which goes into more detail. Needless to say, her sons are pretty upset:
http://www.cnbc.com/id/23631883/for/cnbc
“Brower says Mazzarella is being sought.”
She’s being “sought” because she’s in Mexico, and was supposed to return today. The Feds called her in Mexico and told her she’d be arrested at the airport when she flew back in. That’s got to be a sick feeling.
I will demand that fraudulent borrowers return all their HELOC’d toys when the financial execs of fallen or unprofitable companies return their bonuses.
Oh no… I say they get to keep their toys. They’re going right in after the Joshua tree.
heh heh !
“‘Let me make clear something important – there is no such a thing as a bubble in Dubai’s real estate market, whether now or at any time in the future,’ Attalla said. ‘Real estate prices started low and continued to rise and they will not stabilise in the foreseeable future, not for at least another five years. The price of real estate has seen corrections – but upwards.’”
To me this is important. Why? SMF and I disagreed about Dubai being in a bubble. To say the least, SMF convinced me it wasn’t just a bubble but one of many “mother of all bubbles.”
Why does that matter? I’ve learned a tremendous amount over the years in the housing bubble community. I think we all have. Heck, look at my early predictions… too fast of a time scale. Now? I think that my understanding has improved. A lot!
But until Dubai releases the HUGE fraction of the world’s cranes for more immediate needs… We know this bubble downturn still has legs.
Got Popcorn?
Neil
B.F.E. or V.F.E.?
same-same
“It’s for a window seat on the ‘Vegas Foreclosure Express,’ a four-hour tour of repossessed homes whose former owners bet the U.S. property bubble would never pop — and lost it all.”
Did anyone catch the PSL developer story last night on NBC news? I barfed. It was how he was turning undeveloped land over to the feds to save eagles.
What a nice guy.
Yeah I saw that. What’s his game? Can’t get financing to develop anyway?
“Your Future lies in Florida, the fair white goddess of states.” 1920’s Florida RE boom slogan.
Oh, that is too funny!
Especially because white natives of South Florida all have orange alligator skin from the UV damage! You may not bleed Orange&Blue but you’re going to look it.
test > new name
nyc boy is that you?
client 9 has taken on a whole new meaning
another crazy week gone by
looks like some of the big boys are going to fall
can uncle ben save em all? doubt it
my wife went with her boss to a meeting at bear stearns (yes bsc)
today and had cocktails after work with the gang over at bsc
she invited me and her boss was dissapointed i did not show up
when my wife sobers up in the morning i will tell her i did not go because i would not have been able to hold back on the bsc boys
on the brink of ch. 11 and still livin la vida loca
“Anybody that wanted to borrow money for a house could borrow pretty much whatever they wanted and buy whatever they wanted. And that is purely insane.’”
Let’s play a game (fill in the blanks):
Anybody that wanted _________ for a _______ could ________ pretty much whatever they wanted and ______ whatever they wanted. And that is purely insane.
Anybody that wanted A GOOFY SUIT for an OUTFIT could TEACH pretty much whatever they wanted and SOUFFLE whatever they wanted. And that is purely insane.
Anybody = Sean Snaith?
Inventor of the term “housing souffle”.
********
http://www.floridahomeloan.com/2007/06/florida-housing-market-headed-for-recession.html
Sean Snaith, Director of the University of Central Florida’s Institute for Economic Competitiveness
Snaith, a member of advisory panels with both the Federal Reserve Bank of Philadelphia and USA Today, specializes in economic forecasting.
He’s a critic of the “housing bubble” school, preferring the term “housing souffle.” Real ingredients, not just speculation, fed Florida’s boom. But now the souffle has partly deflated.
Here are their comments:
Q: How serious have the bad credit Florida mortgage loan troubles been for the state’s housing?
Hatzius: The subprime mortgage market developed during a period of excess in the market. And now that the excess is coming to an end, the financially vulnerable borrowers are getting hurt. But it’s not that the subprime market collapsed and is causing the housing weakness. That mixes cause and effect.
Snaith: Subprime Florida mortgage borrowers, by definition, are people who have poorer credit and therefore have higher defaults. A lot of people were trying to make this into something more apocalyptic, like it was a contagion that would spread to the rest of the market. I don’t think that’s been true. But it adds to the malaise in the housing sector. It adds to the inventory of houses in foreclosure.”
and to think people like us hbb’ers possibly bidding against these turds playing with house money
makes renting for the last few years seem like a wise choice
Anybody that wanted a crappy R&B singer for a night could do pretty much whatever they wanted and pay whatever they wanted. And that is purely insane.
Anybody that wanted to call themselves an economist for a day could say pretty much whatever they wanted and publish whatever they wanted. And that is purely insane.
Saw the sheriff in action this morning on the way to work. A most annoyed Cook County sheriff’s deputy (Chicago) was serving papers near Senn High School and blocking traffic on Ridge. Clad in Kevlar he stood outside an SFH that was curiously draped in the same red/yellow/blue/white flags one sees at a used car dealership.
Galveston condo mania. Those people are insane.
Two Projects in Default Dog Big Home Builders
Two massive housing developments in Las Vegas, involving several of the nation’s largest home builders, have received default notices on about $765 million in debt, according to one of the partners in the projects.
John Ritter, chief executive of Las Vegas-based Focus Property Group, says that two joint ventures — involving Focus as well as builders Toll Brothers Inc., KB Home and Lennar Corp. among others — have each missed an interest payment in recent weeks and are in negotiations with lenders.
http://online.wsj.com/article/SB120553684871238089.html?mod=hps_us_whats_news
“‘It seems like I’m walking through the desert with this mirage of a housing turnaround being 12 months out. Every time I look again, it’s 12 months out,’ Simonson said.”
A mirage is the perfect metaphor for a bottom that awaits somewhere out there in the unforeseeable, unknowable, indefinite future.
Just had a nice dinner of the HBB official food.
It’s very liberating to eat Top Ramen because you LIKE it!
Very funny, yes, it is pretty good noodles.
Mrs. Voz and I splurged on DQ.
it was still 20 bucks, but we have 2 kids, 2 dogs, a cat, and a monster house, grandma lives in the basement.
Splurge a little TX, Dallas has some great Pho places for about $5.50 a bowl.
Locally, I’m still of the mind that in 2011, when someone estimates “12 months out”, they’ll begin to be near the mark.
pasted from cnn - who is this guy Dean Baker?
(I dont know him but I like him a lot from this one quote - can we get this guy heard more??)
Inflation isn’t the only worry on the minds of Fed critics. Dean Baker, co-director of the Center for Economic and Policy Research in Washington, says the Term Securities Lending Facility and moves like it amount to a government bailout of corporate executives who made reckless bets - and who should be made to pay the tab with their jobs.
“The Fed’s actions are keeping banks from having to write down large losses and quite likely go into bankruptcy,” he writes on his blog at the American Prospect. “The result is that the bank executives, whose inept management pushed them into bankruptcy, get to keep their jobs and their salaries, which run into the tens of millions a year.” Meanwhile, homeowners facing foreclosure - not to mention ordinary savers who are watching inflation erode the value of their nest eggs - remain quite unbailed-out.
Predatory Lenders’ Partner in Crime
How the Bush Administration Stopped the States From Stepping In to Help Consumers
http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html?nav=hcmodule
Pretty ironic that Democrat Spitzer is the key quote.
Predatory Lenders’ Partner in Crime
How the Bush Administration Stopped the States From Stepping In to Help Consumers
By Eliot Spitzer
Thursday, February 14, 2008; Page A25
Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers’ ability to repay, making loans with deceptive “teaser” rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.
So ,why is it that Mr. Spitzer was just writing about this in February of 2008 ,(way after the damage was done ) if state attorney generals and consumer protection people knew about it several years before ?
In fact ,you hear so many people after the fact say they knew about it or they were concerned about it ,but nobody in power like Spitzer acted on that knowledge of that widespread corruption in the loan industry . Now the power are saying they are going to enact new laws to take care of this ,but the laws are already on the books about loan fraud and bad faith business practice ,so what is this BS about not making arrests on current law /
In other words ,make the public feel you are enacting new laws ,so you don’t need to address the widespread crime wave and violation of current law .
Maybe “Kristen” inspired him to do it. He was with her the night before this was published.
WFTV Channel 9 News online (Orlando) has a piece about an auction of condos that “will be sold to the highest bidder regardless of the amount of the winning bid” in an absolute auction, about two weeks from now. Sounds OK, so far.
Then the auction director says that “if the final bid for a 722-square-foot, 1-bedroom unit is $150,000, that’s the sales price.” Plus a 10% buyer’s “premium” (for those who chafe at a 6% realtor commission).
$200/sq.ft. for a condo in bloated SW Orlando is a good deal??? Tell you what, chickadee, if you want to sell one of those big 770s.f. units for $50K and the condo fees are less than $200/mo and it doesn’t have major traffic noise or other obnoxious characteristics, give me a call. 634-5789.
Just watched Jim Cramer rerun on CNBC. God he makes me sick.
Some guy asked when the market would turn?
Jim said when the FED buys the mortgage paper, they lower interest rates, and the Gov’t gets FHA to guarantee loans for 30 year fixed.
God, he wants everyone to bailout risky behavior. I wish Jim Cramer would lose his a@@! Oh wait, he already does. He underperforms the market then wants a bailout.
Booo Hooo Hoo ya..
boo hoo
““Ellis said banks may have to slash prices on homes to get them to sell.”
“may” ????
How about they “ARE” in some areas and areas they have not they will be “forced too”, given the amounts that are growing by the day.
Ben,
love the blog.
changed my perspective on life and technolgy.
sorry for the highjack this morning on all things BEARISH.
not to mention Spitzer Swallowing the Sword.
heres the deal folks, rates are gonna witness the lows on Monday/Tuesday, Mr Market may continue to sell off, but the bottom of the financials is in. Primary dealer goin down the rathole is a signal.
Houses now get cheaper, but rates are going up, along with tighter lending standards.
In a nutshell, we are on the other side of the storm, the eye has passed….summer rally is at hand. Check back occasionally, to notice when the sell thingy happens after the Olymipics.
Fruit trees are budding nicely, the raised beds are tilled and ready, seeds in the ground….swimmin in the river is just around the corner.
This a joke? You make some pretty strong claims without any real theory/evidence to back it up.
“Primary dealer goin down the rathole is a signal.”
Single that it is all over?!
Did the Japanese in ww2 winning one battle (PH) signal that it is all over?
You must be jesting.
This is just another big chunk of the dam failing, the whole dam may hold for another year, 2 years, 3 years, maybe even 5 years. But just a matter of time. Global, fundamental economic changes are underway. The USA no longer is the desire of the world, we don’t produce or export anything, and we reached “Peak Consumption”.
“not to mention Spitzer Swallowing the Sword.”
Other way around, I think it was his sword that was………..
They say that house prices are dropping, but not enough here in southern California. I have been following online and you see a little here and there. A seller drops $5M or $7M, that’s nothing, doesn’t make a dent in the house price. But I have seen drops of $25M which makes more sense and is a good stepping stone. Sellers are not willing to part with their inflated asking price, but it’s a new world of real estate — your house will not sell. So seller need to get realistic and make big drops and move the market. Buyers are on to the game — they’re waiting and willing to wait a long time, but sellers with foreclosure nipping at them can’t afford to wait. What’s sad is that the house price you pay in So California you can buy a mansion elsewhere and have better quality of life.
There’s no more “California dreaming” here … illegals are invading and dragging the state down. California has to face the fact that the state can no longer “support” illegals , there are not enough taxpayers or companies to pay the taxes for the free programs. Companies again are moving out of the state. I don’t know what the California govt is thinking, but the state is going to end up with very rich people living behind gates and illegals elsewhere.