There’s No Need To Rush
Some housing bubble news from Wall Street and Washington. “Comstock Homebuilding Companies, Inc. announced that in connection with their unqualified opinion regarding the Company’s 2007 audit, the Company’s independent registered public accounting firm, PricewaterhouseCoopers, indicated their belief that declining market conditions and the significant amount of the Company’s debt which matures in 2008 creates substantial doubt that the Company would continue operating as a going concern.”
“Comstock builds and markets single-family homes, townhouses, mid-rise condominiums, high-rise condominiums, mixed-use urban communities and active adult communities. The company currently markets its products under the Comstock Homes brand in the Washington, DC; Raleigh, North Carolina; and Atlanta, Georgia metropolitan areas.”
The Associated Press. “Centex Homes, a unit of homebuilder Centex Corp. sold 27 properties to a joint venture for about $161 million as it looks to minimize its land supply. The book value of the properties sold was approximately $528 million.”
From MarketWatch. “The agreement encompasses a group of 27 projects and about 8,500 residential lots in 11 states, with most of the properties located in California and Nevada.”
From Realty Check. “The book value, according to Centex, was $528 million at the time of sale, but analysts say that was already after significant writedowns. They say the land was worth $900 million originally.”
“Pali Research analyst Stephen East notes, ‘Given the well-known weakness in the markets, we are surprised that CTX had not been more realistic in its mark down of land in its impairment process the prior quarter. Did they really think three months ago this land was worth more than 3X what it was sold for?’”
“Construction spending fell again in February as home building tumbled for a record 24th straight month…the Commerce Department reported Tuesday. Residential activity has fallen every month since March 2006, a record period of declines.”
“Analysts believe that housing will keep falling until a record glut of unsold homes is reduced. That effort is being hindered by the fact that mortgage defaults have soared to record levels, reflecting the abuses that occurred in lending activity at the height of the housing boom.”
From The Age. “Switzerland’s biggest bank UBS unveiled massive new writedowns Tuesday and turned to its shareholders to prop up its capital base, as it became the bank worst-hit by the US subprime mortgage crisis.”
“The latest writedown — 19 billion US dollars (12 billion euros) — was the biggest single subprime hit so far worldwide and came on top of 18.4 billion US dollars the bank had written down in 2007.”
“Overal writedowns at UBS, now totalling 37.4 billion US dollars, are far greater than those of American banks Citigroup (21.1 billion US dollars in 2007) and Merrill Lynch, which has booked 19.4 billion US dollars in writedowns.”
“Deutsche Bank AG, Germany’s largest bank, said Tuesday that it expects first-quarter write-downs of $4 billion due to market conditions triggered by the U.S. subprime collapse.”
“‘Conditions have become significantly more challenging during the last few weeks,’ the bank said.”
From Reuters. “U.S. issuance of asset-backed securities tumbled 83 percent in this year’s first quarter as investors fled the risky subprime mortgage segment that fueled a global credit crisis in 2007.”
“ABS issuance slumped to $54.7 billion in this year’s first quarter compared with the $323.3 billion sold in the year-ago quarter, Thomson Financial said.”
“‘It’s hard to issue new securities when the buyers are effectively on strike. Why should you buy a new issue when everything in the secondary market is on sale, much of it at distressed prices too?’ said one portfolio manager.”
“‘I don’t see anything in the residential space in the next six months,’ said one investor. ‘Most of the home loans that are being made are agency-backed.’ ‘None of the loans being made have come from non-agency land,’ said one bond investor.”
“Issuance fell 30 percent to $863.6 billion last year from $1.25 trillion in 2006. The overall decline was led by a 61.9 percent drop in home equity ABS..also known as residential subprime mortgages.”
The Wall Street Journal. “As the falling real-estate and stock markets erode their savings, many aging Americans are delaying retirement, electing labor over leisure in uncertain times. With their homes worth less, fewer people feel confident enough to retire, even if they plan to continue living in them.”
“The giant gray wave is still an inevitability. But it has run into a breakwall. Investment advisers and retirement planners at more than a dozen firms say they are seeing large numbers of older workers put off retirement as the housing and stock-market troubles have deepened.”
“A three-decade veteran at IBM, Dick Boice had planned to sell his house, pack up and move to Arizona with his wife, Lauren, to take early retirement. But two months after the January date he set to exit the work world, Mr. Boice, who is 59 years old, is still on the job. He figures he’ll stay put for another couple of years.”
“The Boices had counted on proceeds from the house sale to boost their retirement income. After a year on the market, the roomy colonial in Blue Springs, Mo., didn’t move, forcing the couple to cut the asking price by $40,000 to around $250,000.”
“The house remains unsold. Meanwhile, Mr. Boice has watched the value of his 401(k) and individual retirement accounts fall by roughly 20% so far this year.”
“‘Everything is just heading south,’ says Mr. Boice. ‘You can’t hardly make any kinds of plans because you don’t know what you can count on.’”
The Boston Globe. “Note to young renters: It’s a very good time to start thinking about buying your first house. Sure, the housing market is in the dumper, and houses are still expensive - up almost a third from their prices at the start of the decade, with some markets considerably higher than that.”
“Right now, the housing glut means sellers are motivated and prices are falling. There’s no need to rush, suggests Walt Molony of the National Association of Realtors. Nobody, not even the usually optimistic agents’ group, is predicting increasing prices.”
The Whittlesea Leader from Australia. “Banks are repossessing Whittlesea homes at a rate of one every four days as families struggle to pay their mortgages, Supreme Court records show. Welfare workers say growing numbers of families with mortgages are crying for help.”
“North East Housing Service manager Cheryle Avent said the situation was likely to worsen unless there was drastic government action, with many Whittlesea residents ‘mortgaged to the hilt.’”
“Steve Chesterton, of Chesterton & Co Real Estate, said first-home buyers had ‘missed the boat’ and some were postponing having children because of high prices. ‘I feel painfully sorry for the first home buyer it would be extremely difficult with a young family.’”
The News Limited. “Australians should resign themselves to the fact that housing will never be affordable, a housing report from the Reserve Bank says. The report said ‘it is no doubt the case that housing will never be as ‘affordable’ as we might like, and the cost of housing has been the subject of concern for at least several decades.’”
“The increase in housing prices had been ‘a mixed blessing’ for Australians, the RBA said. ‘At one level, rising housing prices have made many people feel wealthier and have contributed to higher levels of consumer spending than might otherwise have occurred. But they have also resulted in concerns about housing affordability.’”
“The RBA said governments had an important role to play in making housing more affordable. ‘In particular, policy initiatives to address any structural factors that encourage excessive demand for housing … will reduce ‘average’ house prices over future cycles and could provide enduring affordability benefits to both home buyers and renters.’”
“‘It is now widely accepted that policies that simply give people more money to spend on housing are likely to be capitalised into higher housing prices.’”
The Leader Post from Canada. “The Saskatchewan Housing Corporation has programs in place, like the Home First home ownership program, which makes it easier for families with low to moderate incomes to buy homes.”
“The Home First program includes forgivable loans of up to $20,000 and deferred payments on low-interest mortgages of up to $30,000.”
“A new housing development in Regina is opening the door to home ownership for some families. The city has committed to providing five-year tax exemptions to families moving into Maple Leaf Estates ‘For our family, it’s an opportunity we probably wouldn’t have had (otherwise),’ said Connie Grasdal, who recently moved into her new home.”
“According to Grasdal, having the chance to build equity in her own home is a welcome change from her days of renting. ‘Especially in today’s market,’ she observed. ‘That’s another reason it would have been impossible for us to find a decent place.’”
“Grasdal, who braved the morning chill to attend Monday’s opening ceremony, explained why she brought her daughters to the event, which fell on a school day. ‘(We’re here) to show how grateful we are for the project,’ she said.”
“While Saskatchewan is in the middle of a booming housing market, there are signs of a slowdown elsewhere in the country. In Alberta, which until recently had been home to the country’s hottest housing market, house prices have been falling recently in some places.”
“But don’t expect the American experience to be repeated anywhere in Canada, according to economist Derek Holt. Holt said there are significant differences in the housing markets of the two countries and he doesn’t think there’s a Canadian housing bubble that’s about to burst.”
“‘Frankly, (American) mortgage brokers just got sloppy,’ he said, referring to practices like ‘ninja loans,’ where financing was made available to people with no income, no job and no assets. ‘I don’t think you had that kind of dynamic in (Canada),’ Holt added.”
“Further, Holt doesn’t think houses in Saskatchewan are overvalued, given that virtually all sectors of the provincial economy are firing on all cylinders. ‘(They’re providing) good, firm support to the housing market,’ he said.”
“Richard Corriveau of Canada Mortgage and Housing Corporation, said Saskatchewan will ‘absolutely’ experience a slow-down in the housing market at some point in the future, like that which is happening in Alberta now. He said both provinces recently experienced price increases of about 50 per cent over two-year periods, which are not sustainable over long periods of time.”
“‘But we’re still forecasting a solid 8.2-per-cent gain (in 2009),’ he said.”
“Corriveau also believes that Saskatchewan’s higher house prices simply reflect the strength of the province’s economy, which greatly reduces the risk of a housing-market collapse.”
“‘Saskatchewan is certainly enjoying its time in the sun and for very good reason,’ he said. ‘It’s long overdue, in my opinion.’”
The Dallas Morning News. “Analysts with the Federal Reserve Bank of Dallas are keeping a wary eye on local housing. ‘We have seen some slight edging down – some downward pressure – on prices,’ said D’Ann Petersen, a business economist with the Dallas Fed. ‘But it’s nothing like we have seen on the national level or especially compared to places like Florida, California and Nevada.’”
“The number of North Texas houses winding up in foreclosure – more than 19,000 in 2007 – is troubling, she said. ‘Foreclosures for me are the wild card,’ Ms. Petersen said. ‘So far, it hasn’t had a large impact on our inventories or home values. And we are in the top three for job gains.’”
“The homebuilding industry is returning to older standards. ‘In Dallas-Fort Worth, every year we have produced more houses than we sold, and we have done that for five or six years,’ said Bruno Pasquinelli of Portrait Homes.”
“‘We have got to get rid of all these extra communities and get our pricing power back in this market,’ he said. ‘There is just too much of everything.’”
“‘Sellers are much more realistic,’ said Virginia Cook, founder of a Dallas real estate sales firm. ‘They do listen to our opinions of home value now more than they did before. People, if they can’t make money on their house, feel like they are cheated in some way.’”
From KHOU.com. “On a street named Celia in East Houston sits what years ago must of have been a cozy little house with a piano that now is way off tune and a big backyard that’s now a jungle.”
“Usually, when you find a house that’s in this bad of shape, it’s been abandoned. But this horrible house does indeed have an owner and that owner has a name: Sam, Uncle Sam. According to county property records, the owner is the RTC: the Resolution Trust Corporation.”
“The RTC was setup by the federal government in the late 1980s after the economy tanked and thousands of homes in Houston were lost to foreclosure. ‘It wasn’t just homes,’ Harris County Appraisal District spokesman Jim Robinson said. ‘We had major commercial property, vacant land, shopping centers … [owned] by the federal government. They generally sold them off.’”
“But why would the federal government be so irresponsible? 11 News spoke to an official with the FDIC, which took over the RTC. He checked their records and said the government sold the house 13 years ago. But the records are so old, he said they don’t know who bought it.”
“The official said it’s likely the home was bundled with other low-value properties and auctioned off to what the official called bottom-feeders: investors who bought up properties dirt cheap.”
“If the properties turned out to be bad investments, the investors would never bother to have the land titles put in their names, they’d simply abandon the homes. They’d washed their hands of them, and so had the federal government.”
“If a house ever became a problem, the problem wasn’t the investors’ or the federal government’s. In this case, it became the problem of everyone on Celia Drive.”
“Jorge Hurtado lives across the street. He has to look at it every day and, ‘worry about it because it’s dangerous for everybody,’ he said.”
txchick- did you really bid on a house
you’re a serial lowballer !
April Fool’s day mi amigo.
Speaking of April Fools, here is another laugh for TXchick.
I talked to the former colleague who moved to Dallas about a year and a half ago because she could afford a house there, but not in NoVa. She was sure the big increase in housing prices was just about to hit Dallas and she had to be there to take advantage of it. This woman is delusional, but not stupid, and she is both an accountant and a lawyer and claims to understand securitization, risk etc.
Now for the fun part.
Her current claims are that Dallas housing prices will go up because everyone is moving there, especially from California, and her house will go up in particular (near Tietze Park in Dallas) because it is close in and gas prices mean that any down turn will only hit the housing stock that has a long commute. She bragged about 160,000 people moving there last year. I think she paid about $330K for her house.
She thought DC area houses would go down because 500,000 military contractors are gonig to be fired by the next president.
When I tried to explain that tightening credit would dwarf any increase or decrease in population, she didn’t understand a bit of it, though she was interested in houses in Fairfax county in VA coming down to $320K. I tried to explain the possibility of neighborhood collapse in Fairfax, and I think she heard me on that at least.
She could have put down 20%, but put down 5% instead, took out a piggy back for the 95% (possibly both fixed, but I’m not sure) and invested the rest of the downpayment money, which has gone way down. Credit rating was over 800.
she’ll be paying heavy 10k or so property taxes on the dallas house- factor that in
hillbama won’t cut anything- just spend more
Bush didn’t do a very good job of saving taxpayer money. In fact, he is the king of deficit spending in all of American history, and no matter who takes office will have to raise taxes. What makes you think McCain will not be just as stupid?
Because Jr was our lousy governor here in Texas which is why I’ve always disliked the man. At least McCain has a track record of being exactly what conservatives SAY they want in the tax area. He tries to only vote for lower taxes when they come with lower amounts of government spending, and he’s never voted for a tax increase.
If she lives near Tietze Park, she’s less than 3 miles from me.
I’ve got a newsflash for her. I lived there 20 years ago. Prices are now up 300% - 500% from then.
Ain’t no juice left in that lemon.
I’ve done this for a while, and I still see the same mistakes made. From Canada, Australia, and even in Dallas, it’s the same thing; rationalization.
Our prices won’t fall because; jobs, growth, it’s always been this way, our lending is more sound, etc. But they rarely get right to what matters; can people living there afford the darn things!
“‘It’s hard to issue new securities when the buyers are effectively on strike. Why should you buy a new issue when everything in the secondary market is on sale, much of it at distressed prices too?’ said one portfolio manager.”
_________________________________________________________
“All the men who have vanished, the men you hated, yet dreaded to lose, it is I who have taken them away from you. Do not attempt to find us. We do not choose to be found. Do not cry that it is our duty to serve you. We do not recognize such duty. Do not cry that you need us. We do not consider need a claim. Do not cry that you own us. You don’t. Do not beg us to return. We are on strike, we, the men of the mind.”
John Galt
So, this is why their is a man shortage in New York City and none of my girlfriends are finding husbands?
“All the men who have vanished, the men you hated, yet dreaded to lose, it is I who have taken them away from you. Do not attempt to find us. We do not choose to be found. Do not cry that it is our duty to serve you. We do not recognize such duty. Do not cry that you need us. We do not consider need a claim. Do not cry that you own us. You don’t. Do not beg us to return. We are on strike, we, the men of the mind.”
John Galt
It’s demographics, bicoastal. In the United States, there are millions more adult women than men. This becomes more pronounced in older age groups.
It helps if you don’t look like hell at age 40 and can contribute good bucks to the partnership.
From us guys…
One we are no longer killing our freedom by getting married. As Brother Tom would say, their are no advantages for a man in marriage. None.
There is a war on, so a lot of guys are over seas.
Finally American women are almost unsufferably demanding and have a huge sense of entitlement.
From us guys… Yo! Babe-magnet.. speak for yourself.
James–All recent medical studies show that a happy marriage provides a big health benefit for men. There was something about it in the news today:
http://tinyurl.com/25a8w6
BTW note that I typed “a happy marriage”. An unhappy marriage benefits no one.
“From us guys…
One we are no longer killing our freedom by getting married. As Brother Tom would say, their are no advantages for a man in marriage. None.”
Yo Joey,
I call em like I see em.
Bicoastal,
They found a guy in a happy marriage? No way. I guess with enough meth…
Oh boy James, wait ’til Big V shows up.
As a married guy who used to be super-bitter, it isn’t a matter of marriage being good or bad one way or the other, but more if it is for you. Just because someone might have had a sucky relationship doesn’t automatically mean that all men/women suck. That’s sort of a sad way to go about life.
PS: I used to listen to ole’ Tom before they cut his show off the air in SF. In fact, me and my wife listened to it and enjoyed it.
LOL@From us guys…we are no longer killing our freedom by getting married.
Is that what you tell everybody?
RE: From us guys… Yo! Babe-magnet.. speak for yourself.
Obviously, no divorce court experience speaking here.
Obviously, no divorce court experience speaking here.
You’re right. My bad.
Only those who successfully screw up a marriage can hold a valid opinion of it because failure = expertise…
I’m just glad my wife doesn’t read the blog
nomarriage.com is the best resource for explaining this phenomenon.
Rather inayn, if you ask me.
Are they willing to trade off being with decent guy (so I’m told) in return for being temporarily stuck in a crappy area?? If so, send ‘em my way.
Lefty Loosey, Righty Tighty
http://andrewsullivan.theatlantic.com/.shared/image.html?/photos/uncategorized/2008/03/31/dating_3.gif
So, this is why their is a man shortage in New York City and none of my girlfriends are finding husbands?
Could be the guys are on strike, could just be that so many NYC women are stuck-up and not much fun to be around? It’s like a lake with lots of big fish and there’s too many fisherwomen..
…… What ?
I can’t think of any bubbly 1st world country that has sustainable jobs & growth in the 1st world, on a long-term basis.
Not one…
Indeed, I think the key word is “sustainable”. Like the old Police song, “When the world is running down, we’ll make the best of what’s still around. Take personal computers or cell phones for example. During their boom years, sales increased YOY in the double digits. But now that virtually everyone in a First World country who would own a cell phone or computer already owns one, and can no longer really justify “upgrades” every two years (since most computers nowadays have more than enough power to run everything you need), where does that leave domestic markets like that?
“can people living there afford the darn things!”
I’ve spoken to people I know, from realtors to buddies, about this one point until I’m blue in the face. They just. Do not. Get it. I get blank looks, sometimes a little good natured ribbing. I know what’s generally affordable in this neck of the woods, for those who live here year round. And, while housing prices are headed downward, I still think anyone living in an HOA or condo association in this neck of the woods (West Coast Fla) is in for a VERY rude shock. We are beginning to see the effects of construction problems in HOAs. Who is going to pay for that? I think there will be a limit to what HOAs and Condo associations can do.
And they will not get it until they themselves can no longer afford to live in their houses. When the teasers run out, when the resets hit them hard, then they will get it.
Well, I sure hope some reality hits here soon. If I hear one more person say how different it is here in BC, I might lose it. Unfortunately prices look to be increasing here on the island again, and I keep hearing that there are still bidding wars in Vancouver over pieces of crap selling for $800 000. Its been almost 10 years of this, where does it end? I would love to move, the more house prices increase the more rent goes up, but my husband and I have good jobs, and our family is here. I keep saying it will be another 10 years until it will be a good time to buy. I feel so resentful towards the people that are older than me who had the opportunity to buy a reasonably priced house. At 26 what chance do I have? Now I have to wait for the market to sort itself out which will be a painful, depressing process taking years.
Hang in there… at least you can save your money by renting. Eventually, they will be losing it simply by owning.
26? Cmon… I’m 30 and me and my wife aren’t even thinking of buying yet since rent for us IN the Bay Area (at least for us) is still like paying basically the equivalent of a 200k mortgage. So buying period, even with a 50% haircut would still be more expensive.
Our way of looking at it is that no- I don’t want to do the rat-race bullcrap for the rest of my life. But while I’m at it, I might as well live frugally, drive crappy old cars, save, and one day- wallah: we’ll ditch this joint and buy a decent place for cash, have zero debt, put the rest in retirement, and if we do have to work, we’ll have day jobs in town. Even if the pay is lower- so what. We won’t have any debt, so all of it goes into the bank. Live where you live and enjoy it. But make future plans as well.
You’re 26, so relax. I’m in Vancouver and I’ve met lots of people in their 30s and 40s who don’t own.
By the way I agree with most of your post.
The vancouver market is still very emotional, don’t you think?
I spent half an hour talking with a veteran real estate agent in Pullman, WA who is convinced that what is happening elsewhere couldn’t possibly happen here. We don’t have a lot of foreclosures (yet). We don’t have a lot of exotic mortgages (though there are no statistics to support or refute this assumption). Schweitzer Engineering is growing. Parents from the west side want to buy homes for their kids to live in while in school…
So I asked him: “Median household income is $50k for this town and median home price is approaching $300k. Home prices increased by double digit percentages over the past 4 years. I can rent a house for $1500/year that would cost $300k to purchase. Do you think this is sustainable?”
His response: “People who can’t afford Pullman will just have to buy a home in one of the surrounding small towns.” (Of course, median incomes in these towns are near $25k/year.)
There are 90+ developed lots on the MLS right now, with TWO (2) pending offers… at the peak of building starts for the year. 155 homes on the MLS with 15 pending offers (100 homes was the high for all of last year, 50 for 2006). But facts certainly won’t get in the way of a good real estate rationalization.
In Canada, 40 yr mortgages have become popular. They’re subprime in all but name.
Vancouver and southern Ontatio are over half a continent away from each other, but I got an e-mail this morning from a crafts store in Stratford that they are closing up. This is incredible because the theater festival starts very soon and really picks up steam in June. They are closing up right before their big tourist season starts. I think they expect Americans to pull back spending a great deal and possibly for attendee numbers to be down as well. Exchange rate.
Every time I read one of these stories on Saskatchewan’s booming market, I just go right to weather.com. Tonight snow flurries are predicted in Regina, with a forecast low of 18 degrees F. Saskatoon may be one degree colder.
I will be so bold as to suggest that “day in the sun” was not the right turn of phrase.
But just wait until summer when the highs reach 40 C (104 F). That unmodulated middle of the continent climate isn’t for wimps.
It’s obvious you are paying quite a premium for Saskatchewan’s always pleasant weather.
And don’t forget that booming cultural dynamism. The Mendell has an exhibit of children’s art on right now
Eat your heart out, AGO!
Saskatoon: Everyone wants to live here — if you consider 200,000 people “everyone”.
I did a personal affordability calculation yesterday. On one level it was somewhat depressing (my wife even shed a few tears over the situation) but on another it was uplifting: Prices have a way to fall before most San Diegans (including us) can afford to buy a home here.
CANADA, back in July 2005, did not have 8 months of constant reports about buyers tricking the system and mortgage brokers tricking the system.
CANADA did not have the next 8 months of (reports of) rapidly escalating number of listings.
CANADA did not have the next 8 months of (reports of) foreclosures rapidly escalating.
CANADA did not have the next 8 months of (reports of) people unable to get financing for their home purchases and prices finally crashing everywhere.
Ben, seriously we’re 32 months behind here. We have yet to have even the stories of Canadians tricking the system.
We do have bubbleland in Vancouver and in a few cities that are caused by the usual gold rush fever and/or high immigration levels but take for example, in my Canadian city, population 1.6 million, the results of 2007 are
2007 house avg price 357 000 $ (+6 %) sales 5 848 (+9 %)
2007 condo avg price 241 000 $ (+5 %) sales 7338 (+20 %)
Sorry but no reports of tricking the system, rapidly escalating inventories, no foreclosures, nor of prices crashing..
Personally I think Americans should be focused on three things:
1. Criminal behaviour of their un-regulated Investment firms.
2. Criminal behaviour of their un-regulated Investment firms.
3. Criminal behaviour of their un-regulated Investment firms.
And to note, Ben’s U.S. reporting is awesome.
Exactly, I predict it’s going to take 10 years to fully collapse and become affordable again, unless the U.S goes into full out depression dragging our economy with it. I wish there was somewhere affordable I could move to.
Comment by living_in_bubbleland
“I wish there was somewhere affordable I could move to.”
That my friend is the only answer that matters. Not funny notes, 50 year I/O bank rental payments or even 100yr multi generation loans. If the prices are unafforable for the average working stiff, the prices have no place to go but down. Heli Ben, Moranson Paulson, and Duh whats my name Bush can throw all the cr@p at it they want and what it will always come back to “its the price stupid”
The price of a house will drop to what wages will support, Wages will not rise to support the price of the house.
“Note to young renters: It’s a very good time to start thinking about buying your first house. Sure, the housing market is in the dumper, and houses are still expensive - up almost a third from their prices at the start of the decade, with some markets considerably higher than that.”
“Right now, the housing glut means sellers are motivated and prices are falling. There’s no need to rush, suggests Walt Molony of the National Association of Realtors. Nobody, not even the usually optimistic agents’ group, is predicting increasing prices.”
*****
The article above from the Boston Globe would make a lot more sense if it were written in 2010. Or maybe even later. The funny thing is that by 2010, it could very well be that not many are going to want to buy a house.
Interesting that the author, Linda Stern (freelancer), even quotes the NAR guy as saying “no need to rush.”
I think she just needed to write an article.
I’ve had a lot of people ask me (a bubble sitter) “so…you lookin’ yet?”. I tell them that I am keeping an eye on things, but prices have a long way to fall and waiting at least a year isn’t too much of a sacrifice to see how things play out.
It really is interesting to see so many people here (SoCal) think the market is bottoming out. I guess the realists have left the area long ago - people are waaaaay to optimistic here. Most believe that ‘desirable’ areas won’t fall more than 5%-10%, and thus far this has been the case (although not for long). The exurbs (IE, Valencia) and flipper areas have been crashing hard, but the ‘desirable’ places have only started the long road down. Nowhere is this more evident than here in the San Gabriel Valley. Take a look at Pasadena - south of the freeway (210) and east of Hill Ave the (asking) prices are still very high, and things are getting sold, albeit at a *much* slower pace. Lots of inventory coming on the market, so this may change soon. Immediately north of the freeway, it is a MUCH different story - TONS on the market, HUGE price reductions. The difference? South of the freeway is Old Town (yuppie condo area) and north of the freeway is a very high crime area with deadly gang violence and lots of flipped properties (as seen on TV!) in foreclosure/fire sale. Pretty bad.
As if the Pasadena housing market couldn’t seem any worse, one must also take into consideration that a significant share of middle-class white-collar office jobs created in Pasadena in recent years were largely at Pasadena based IndyMac Bank (alt-a morgage lender) and a large branch of Countrywide.
This definitely has a *long* way to go, but I must say the pace is quite startling.
One intangible not to be shortchanged is the likely more than average frequency of HELLoc ATM withdrawals, in the city of angles.
Living la vida’ See Me-Dig Me is strictly high maintenance…
You wouldn’t believe how many Mercedes and BMW SUVs I’ve seen in various apartment buildings over the years. Either there are a lot of rich bubble sitters or people are just trying to appear successful. I strongly suspect the latter.
(Note: in my previous post, I really meant to say “west of hill ave” since east of hill but north of the freeway and points east start to get into the more desirable Hastings Ranch area.)
Leased.
This is sort of the story in the Bay Area: The “smart and expensive” areas will supposedly hold up. The situation is that not much is selling, but the prices are still stubbornly high. A few homes have sold this spring: a few million+ homes and a few “regular” 600k+ homes. Otherwise, places like Hayward, Stockton, etc are TANKING.
It really is frustrating to think that people here are still so stupid as to think that anytime in the near future and present is a wise time to buy… yet they do. I’m tired of living here and feeling really agitated over the whole thing. I and my wife make a hell of a lot of dough- as in dual six figures. But I would never place us in the level of risk we’d be in if we were to buy. That’s the worst part because I know that of the many buying now, they’re doing exactly that and paying to the bleeding point on these homes… which seems to be a-typical of Bay Area home buying desperation.
CAM: We bailed on Pasadena 2 years ago — partly because the market value of our little bungalow had reached absurd levels, but also because “boring,” quiet Pasadena had become a more and more uncivil place to live. The City council made endless concessions to developers and event promoters, and the police seems to have throw in the towel of minor “quality of life” crime in the interest of keeping the (gang) murder rate from escalating.
Houses on our old street that would have sold in bidding wars in the first week (in 2005) are now sitting for months without an offer. Yeah, there is a lot of money in L.A., but most everyone still wants value for their dollar; at some point the market just runs out of fools.
I was at the Kinkos across from the Countrywide branch in Pasadena last August. There was a little note up next to the cash register, to the effect that cashiers should no longer accept Countrywide’s charge account numbers. Gave me a chuckle during the otherwise dismal Kinkos experience.
I am chocking that article up to being an April Fools joke.
Very funny Boston Globe. You had me for a second there.
My wife and I had a pow-wow yesterday as well. The town I’m renting in is going to vote on the 8th concerning the new budget. Should it pass, it will result in an additional $900/yr increase in taxes for a household with a 200K valuation on their home (or thereabouts).
Now, the median income for a family of four is around $37K. I don’t know what the median house valuation is around here but I’d put it north of 150K.
This budget increase is for nothing more than some odds n ends. In other words, it isn’t for some extraordinary event or added program.
How the f*ck does the town figure folks are going to be able to afford these increases? Is the assumption that owners are a bottomless pit of money?
Again, we hear the threats of children suffering or firemen/policemen being laid off. The friggin increases are for snow-removal equipment and that sort of stuff.
Anyway, the point of my rant here is that the town/city/state governing boards around the country are absolutely clueless about what is happening and what is coming. These asshats should have been on an austerity budget two years ago, but they are still asking for the most inane things to be budgeted for.
So to continue, that is say $800 increase on a before tax income of 37K or so. I’m not sure I’d want to actually buy around here now that I’m seeing what sort of morons are running the town/county gov’t. Just a note to other HBBers to be careful out there!
OT but here is an interesting coincidence.
WARNING: Tinfoil
http://greatreddragon.com/
`The article above from the Boston Globe would make a lot more sense if it were written in 2010. Or maybe even later. The funny thing is that by 2010, it could very well be that not many are going to want to buy a house.’
Actually, the way they are doing, by 2010 the Boston Globe may not exist anymore.
But, Ben, it makes absolute sense that Saskatchewan real estate will continue going up forever. They’re not making any more land in the Canadian prairies
Also, housing is a great use for agricultural land. They should just build condos all over those useless, worthless wheat fields.
How else will they house all 100,6644 residents?
Of all the bubbles, I believe the Regina bubble is my very favourite.
(100,6644 = 1,006,644 residents)
For American readers: any town in Saskatchewan looks like a smaller, podunk version of Fargo, North Dakota.
the line: “Holt doesn’t think houses in Saskatchewan are overvalued” made me guffaw. Good thing I wasn’t drinking coffee.
It is nuts - how superior folks feel with housing going up.
The folks in Toronto think that it is going to go up forever, and thrilled with the 3 condos that they own - and will retire in 15 years at age 50. Not related just canucks - i am sure it was the same with the wannabe-Trumps in FA and AZ
Ben, where do you get this stuff? Only on April Fool’s? No, I know, it’s out every day of the year, but still…
‘Saskatchewan is certainly enjoying its time in the sun and for very good reason’
ROFL! That’s right, all those people moved to Florida, saw what the place was like, and then decided that they’d rather spend their lives in sunny Saskatchewan!!!
(I’ve been camping in Saskatchewan, up west of Flin Flon (MB), and I sure liked it there, but that was late August, on vacation, escaping the rest of humanity. As for Southern Saskatchewan, it looks like a colder, higher-tax version of North Dakota to me.)
Ah, I didn’t know Flin Flon was an actual place — it’s the name of one of my favorite bands.
All the songs on their first album are named after towns in Canada. Come to think of it, maybe all their songs are named after songs in Canada.
Saskatchewan’s time in the sun is about 2 weeks, mid August, iirc.
Nice place, wonderful people. -60 celsius in the winter.
Nah, it’s only -40C.
I think mercury freezes at -60.
Time to start up the bulldozers. Gonna be lots of construction (actually deconstruction) debris added to the landfills.
Ben mentioned once that this happened in Texas during the 1980s. How does that work, does anyone know? I’m assuming counties or local govs pay for it? Who gets the land, the local gov? What if you have a couple of residents living in a large development?
In Detroit, the city has been bulldozing abandoned houses (after they’ve been trashed by squatters) and selling the lots for pennies on the dollar. One of my friends has been buying lots in his grandmother’s neighborhood for $1000/each.
I’m just curious: what does your friend hope to achieve by buying up those lots? Even if s/he winds up owning 40 acres in Detroit, it still means that this person has to pay city taxes (apparently not a low amount) on 40 acres in a city that by all accounts is about as close as moribund as any place can be (OK, Gary, IN gives it a run for the money). Is s/he planning to build some kind of fortified manor on all the land?
$40k for 40 acres near the Great Lakes might be an amazing bargain, if water keeps drying up…
Near Lake Michigan or Superior, but not near Lake Erie. Lake Erie is a shallow (avg depth 15ft) fishing pond.
However 40 contiguous acres in a city with good transportation is incredibly valuable. The city is giving this away.
I was wondering where, ’cause in the city limits, lots are going for a lot less than 1K. Lots of places there where 1K is too much.
Hoz… WTF?? They are giving them away? So you’re presuming the renaissance of Detroit???
This is why we should eliminate the corporate income tax. Why should we BAIL OUT Centex for vastly overpaying for lots?
————————————————
Centex also expects to receive a related tax refund of about $294 million from the sale, which primarily involves properties in California and Nevada.
Why not just hold onto the funds? Gov should say “take us to court” and see how long Centex can hold out.
I say we put Centex shoes on em’ and see how long they can hold their breath underwater, economically.
Without getting into a whole tax code thing, these guys just lost $800 million on the deal. Yeah, anybody that has paid taxes would get the same deal.
Everything’s a bail-out. I think the pizza guy has my bail-out at the door.
This would make a good weekend topics thread, “What is and What isn’t a Bail-out” and why. Unless of course there was one and I missed it.
No, I don’t think this is a bail out, but I would be amused to see a local gov hold onto a developer’s money, just for grins. I think a developer or two has held onto money they should probably have given back. And of course, gov can always say they need to “look into things” before releasing the funds, like if there were some violations the gov needs to be reimbursed for, etc. Or negotiate. Developers LOVE to negotiate with subs and buyers, gov should do the same. I’d love to see a developer get desperate in a negotiation with a gov and give up some of those millions. After all, we’re probably gonna need them to plow under some of those ghost towns.
You have to try the thin crust bail out with mushrooms. Its the best.
This isn’t even close to a bail-out. Just the tax code. Now what happened to the tax forgiveness…that WAS a bail-out. Changing the tax laws to help speculators. Nice!
What I don’t like is that the government changed the rules for the homebuilders. Net operating loss carrybacks to my understanding were extended to look back 5 years from 2 years so that these big losses could generate cash NOW for the homebuilders.
And thus some of these fire-sale, structured land deals happened so that some of the big homebuilders could raise money. Sell the land at cheap, cheap prices, keep a minority interest, and a right to buy it back within a couple of years for a price that would give the investor a nice profit, and the homebuilder books a loss now so that the government would write you a fat refund check as you wrote the loss on sale against the past 5 years of fat profits so you could raise the money from the government to keep the lights on…
If the government kept the loss carryback at 2 years, a couple of things would have happened. 1. Less banks/builders would have written down their land/notes or sold land/notes to generate a loss (and started to clean up their balance sheet). and 2. Banks and builders wouldn’t have been able to generate tax refunds by doing so.
So, a longer muddle through, with more BKs.
Not necessarily a bailout per se, but a change in the rules to help banks and builders through this mess.
I know a few people in the accounting dept at Centex…denial runs pretty deep there, they are quite an optimistic bunch.
Housing slump comes to the Hamptons
http://us.ft.com/ftgateway/superpage.ft?news_id=fto033120082201006468&page=2
“The downturn has caught up with the Hamptons,” said George Simpson, who runs Suffolk Research, a local real estate data company.
The three-month running median sales price of single-family homes in the two towns fell 19.2 per cent to $638,600 (€400,000, £320,000) between December and February, according to Suffolk Research. That is almost as much as the 19.3 per cent drop in home prices that Miami and Las Vegas, where the boom and bust in the housing markets has been most dramatic, suffered in the whole of last year, according to the S&P Case-Shiller house price indices.
Holiday homes have been among the hardest hit. Last year, sales of vacation property fell 31 per cent across the US, against a 10 per cent drop in sales of homes bought to live in, according to the National Association of Realtors.
Among those caught in the housing trap are three Bear Stearns executives rushing to offload properties after the collapse of the bank, according to a local estate agent.
Their properties, in the village of Bridgehampton, were listed at about $2m, $2.5m and $5m, the broker said. The priciest house has five bedrooms and a large swimming pool with a picnic table built into it.
“‘Saskatchewan is certainly enjoying its time in the sun and for very good reason,’ he said. ‘It’s long overdue, in my opinion.’”
******
Well… if I had to guess what that statement could mean, it would not be difficult for me to say:
“Market top!”
Saskatchewan: not just endless miles of flatitude anymore.
Endless miles of flat-ulence too by the smells of it.
“Australians should resign themselves to the fact that housing will never be affordable.”
I guess they aren’t making any more outback.
Here is how to make housing affordable:
Let the central bank lower interest rates to near zero and relax mortgage lending standards. That will get the housing market to heat up. Wait to allow massive overbuilding for 2 to 3 years. Then jack up the interest rates. Tighten lending regulations, requiring at least 25% personal cash downpayment (with proof of adequate savings) and watch the housing become affordable for a decade or so.
Repeat the procedure periodically as required.
whiskey tango foxtrot?
“The latest writedown — 19 billion US dollars (12 billion euros) — was the biggest single subprime hit so far worldwide and came on top of 18.4 billion US dollars the bank had written down in 2007.”
Seems to me the European banks are the ultimate knife catchers here- They bought when the dollar was strong(er) and they get the double whammy of a depreciating “asset” valued in depreciating dollars. I can’t help but think thats going to leave a serious rasberry on somebodys behind………
Raspberry Kool-aid is being served currently, with the house special being a 30 ounce Big Gulp, in honor of the 30th Anniversary of the last mass gasp.
US writedowns have barely started. Not that you are wrong, the Euro nations are in trouble - a central bank with no applicable taxing authority. It is just a matter of time before some country (I believe France) will pull the plug and sayonara Euro.
I agree. The Europeans are just being honest quicker. The Wall Street Gangsters have a hard time with that concept.
My money is on Deutschland to be the first out the door. They know their currency was the most stable of all when they adopted the euro and they assume that it will work just as well outside the euro. The Bundesbank won’t tolerate the kind of inflation that the other eurozone members will want.
My vote for next out would be Spain, now that their housing bubble is bursting and unlike the good old days, they can’t just devalue the peseta until things stabilize.
My bet is for Italy to opt out within a few years. The conversion to the Euro has not been popular there, and is widely blamed (rightly or wrongly) for inflation.
With a good proportion of their economy founded on tourism and luxury goods, the exchange rate with the dollar will be another cause for concern.
This is where you definitely want to be first out the door, as quickly and as secretly as possible, and pre-empt someone if they look set to go. Think of the downward pressure on the Euro if Germany (or France) suddenly pulled out. Imagine you would effectively have to destroy the EU in the process, though.
The Economic Forecast Survey from the Wall Street Journal.
Interesting to see which forecasters have been the most accurate over time.
http://tinyurl.com/23o7vs
March 13, 2008
old but still good to keep in mind, with current conditions. And it is interesting to note what their current predictions are in light of past success.
Next Scene: Secret underground NAR operations center.
Lawrence “Dr Evil” Yun: Molony, you have failed me for the last time!
Molony: But…
Yun: No Buts. Just Sharks-with-fricking-laser-beams!
<Yun pulls a lever.>
Molony: AAAAAAArrgh!
<splash>
Yun: Bon Appétit, my hungry ones.
I think Molony was just doing a head-fake on us.
Is this an April Fool’s joke?
Never? For ever and ever?
Wow! That’s some impressive crystal ball. Wish I had one like that.
No Joke, Absolute truth. Australia is completely out of land and they are not making anymore.
Population density: 2.6 people/sq km. Only 6 other countries have lower population density (including greenland, mongolia and western sahara).
True, but much of Australia is totally uninhabitable, without water, and they are in the midst of a drought of biblical proportions (though it did rain last week).
“Population density: 2.6 people/sq km. Only 6 other countries have lower population density (including greenland, mongolia and western sahara).”
And how is that different than Arizona?
The outback doesn’t have a Colorado River. If the Colorado didn’t exist I suspect that Arizona and Southern Nevada would be nearly uninhabited. And SoCal would be a much drier place.
Arizona has this little creek nicknamed the Colorado that runs through that gulch that someone named the GRAND CANYON.
Arizona is approximately 4 times more densely populated than Australia.
I wonder what the population of Arizona & Nevada would have been without automobiles & cheap gasoline. I guess we’ll learn the answer over the next 50 years.
They actually have two desalination plants and more on the way. Water is the scarce resource, not land.
The new Sky Is Falling interpretation of climatological events
20-year flood/drought: happens every 5-10 years
100-year flood/drought: 4-5 times a century
flood/drought of biblical proportions: occurs about 2-3 times per century
Meanwhile, meaning of life and death: oh, no big deal, nothing to really concern yourself with - just stroll into your local church and they’ll give you a quick-fix answer that lots of other people are using. That should do the trick.
But that little warming trend that kicked up in the 1990s - that’s a matter of life and death, and anybody who thinks otherwise is a bad person!
[rant off]
“Population density: 2.6 people/sq km. Only 6 other countries have lower population density (including greenland, mongolia and western sahara).”
___________
Thanks for reminding me. I am going to but the western sahara before I’m priced out forever. They’re not making any more sand, you know.
aaagh, **buy** the western sahara.
Sorry, I read this blog on our old home laptop. It is hard to be bitingly sarcastic on this little keyboard.
The giant gray wave is still an inevitability. But it has run into a breakwall.
Correct. The rush of retiring boomers, who apparently were going to retire everywhere simultaneously, isn’t going to happen. Welcome to the future, but it’s more Blade Runner than Star Wars.
Where I work, a few people who were going to retire have put it off. They are banking on an accelerated retirement buyout to offset their now realized RE losses. Once the state starts handing golden handshakes out to reduce FTEs, watch them all rush for the exits. This will have a big impact on RE pricing in a state employment cities like Sacramento.
“Welcome to the future, but it’s more Blade Runner than Star Wars.”
Yeah, but without the great costumes and vehicles. Many boomers would look god-awful in some of those outfits
I think it’s likely to be more Mad Ma than Blade runner!
D’oh!
Mad Max!
Darn, I’d be interested in hearing what Mad Ma had to say.
I’m not so convinced that Boomers can delay their retirements very long. Sure maybe a couple of years. Some will reach the point where they simply can’t keep working for health reasons, while others will be considered too expensive to keep working compared to younger workers. Everyone has a “Best Before” date, sorry.
I agree. There are something like 2x the people turning 60 than turning 20. A delay in retirement will slow the problems, but boomers won’t ALL work forever.
And just ’cause they’re workin’ don’t mean they won’t be consumin’ ever increasing amounts of medical care. (sorry for slippin’ inta Old Western speak)
“Switzerland’s biggest bank UBS unveiled massive new writedowns Tuesday and turned to its shareholders to prop up its capital base, as it became the bank worst-hit by the US subprime mortgage crisis.”
So what happens in the future when our banking crooks attempt to sell our debt to our foreign partners ? I see a big GFY or much higher rates to compensate for the risk of being hoodwinked again.
“‘It is now widely accepted that policies that simply give people more money to spend on housing are likely to be capitalised into higher housing prices.’”
Gee, really? **wide-eyed**
“‘Sellers are much more realistic,’ said Virginia Cook, founder of a Dallas real estate sales firm. ‘They do listen to our opinions of home value now more than they did before. People, if they can’t make money on their house, feel like they are cheated in some way.’”
Ha! That’s a good one. Ol’ Virginia has been nipping at the Southern Comfort again it seems.
Dallas is home to the greediest and stupidest people in the U.S. The OC may come close but at least there you have ostensible justification.
“Dallas is home to the greediest and stupidest people in the U.S.”
Been to Miami lately? Of course, if I were handing out awards, I’d give Miami “Most Corrupt”.
again, you can argue beaches and weather
RE: if I were handing out awards, I’d give Miami “Most Corrupt”.
I’ll put Beantown’s crumbling, leaking, 1YO $15bil gopher hole originally budgeted @ $2.9bil up against whatever you can muster up down there in Miami , Big P.
Providence RI, hands down corruption capital of US.
“Dallas is home to the greediest and stupidest people in the U.S.”
West Palm Beach, Florida, they can’t vote and do not know about personal finance.
Or ostentatious justification.
“Dallas is home to the greediest and stupidest people in the U.S. The OC may come close but at least there you have ostensible justification.”
The amount of do re mi supporting Big D’s hairdos is of bouffant proportions…
The Titanic has set sail…
“Steve Chesterton, of Chesterton & Co Real Estate, said first-home buyers had ‘missed the boat’ and some were postponing having children because of high prices. ‘I feel painfully sorry for the first home buyer it would be extremely difficult with a young family.’”
From the Boston Globe article: A top (credit) score now can get you a 30-year fixed rate loan under 6 percent that will cost you around $1,775 a month to borrow $300,000. If your score is middling, that same loan can go for 7.192 and cost you $2,035 a month. A poor score can mean that you’ll only qualify for a 10.25 percent loan that will cost you $2,688 a month.
Using a $300K + house in this example humors me. How many “young renters” out there can really afford a $1775/month mortgage (and that’s the best case scenario in the example).
My note to young renters: Keep renting.
I thought the analysis of property taxes, insurance and upkeep was pretty thorough.
Oh wait no…she didn’t mention any of those.
Good one… and let’s not forget the HOA if one goes condo!
RE: Using a $300K + house in this example humors me
$300k gets you squat here in eastern Mazzland.
“But they rarely get right to what matters; can people living there afford the darn things! ”
Ben, you hit the nail on the head about Canada. The reason Alberta prices are now declining is not because the economy is bad or oil prices are low (Alberta is an oil exporter). It is because the locals can no longer afford to live hear, and yet supply keeps getting added day after day, month after month…
Why would any foreign banks buy US debts? They’re not worth anything. We’re already in a great depression. I see GDP falling to $7 trillion very soon.
“$7 trillion very soon.”
How could this happen given the existence of a technology called the printing press?
Oh, I don’t know.
There are just some small technicalities involving the tripartite involvement of Congress, the Treasury and the Fed’s balance sheet.
There’s also the teensy-weensy leetle problem of what happens when everyone wants to lend but no one wants to borrow but that may be more graspable since it’s just an updated version of what happens if you throw a party and nobody shows up?
That’s what seems so messed up to me. If the Fed were offering me a sizable interest rate discount, you can bet your bottom Bernanke that I would borrow some, if for no other reason than to buy some gold. (April fools
Looks like gold got a nice April fools haircut :).
The dollar is down 8% against the Euro this year and Mr. Paulson et al have been making the trips abroad to inspire foreign confidence in the GSEs. Since the GSE bonds are down about 10% and the dollar is down about 8%, might as well throw some of those excess dollars into GSE debt. The Euro nations are no worse off and maybe with a wave of the magic wand everything will be peachy keen.
Now that it appears Canada has fully ingested the housing bubble bait, and the hook is set, and they’ll be reeling soon…
This is one of my favorite books on the Great Depression, “Ten Lost Years” by Barry Broadfoot.
Vignettes of Canadians that survived the festivities, as collected by the author in the early 1970’s, as he roamed across the country in search of memories.
Similar to Studs Terkel’s efforts, but Barry found better stories…
Used information, from just 1 Cent.
http://www.amazon.com/Lost-Years-1939-Barry-Broadfoot/dp/0773770941
hey, thanks for the tip. I’m researching Depression stories and this sounds perfect.
“A three-decade veteran at IBM, Dick Boice had planned to sell his house, pack up and move to Arizona with his wife, Lauren, to take early retirement. But two months after the January date he set to exit the work world, Mr. Boice, who is 59 years old, is still on the job. He figures he’ll stay put for another couple of years.”
The way IBM has been outsourcing lately, that may not be an option for much longer. I think their goal is to have almost no US based employees.
Frankly, I thought they had already achived this.
Yeah well, he’s sitting on pretty IBM stock probably - after 3 decades.
senate to offer big bailout
call,email,write,bomb your rep “NO BAIL”
Just look at this bullshit.
The legislation is likely to draw on elements of the Democratic plan such as letting states issue $10 billion in tax-exempt bonds to refinance subprime loans and permitting homebuilders and other money-losing businesses to reclaim previously paid taxes.
Total bullshit.
Democrats also want to provide $4 billion to states to buy up and refurbish foreclosed homes, a plan that the administration opposes as a bailout for lenders and speculators.
Total bullshit.
The upcoming bill also is sure to attract a GOP amendment by Sen. Johnny Isackson of Georgia to award $15,000 tax credits to people who buy and move into foreclosed homes. That would sharply boost demand, Isackson says. Lawmakers in both parties support the idea
Still bullshit, but might help me if we get one.
The measure is also likely to include a plan by Dodd to have the Federal Housing Administration guarantee hundreds of billions of dollars worth of refinanced loans if lenders reduce loan amounts to reflect reduced home values. The measure would force banks to make less money on the loans but would also reduce their credit exposure.
Massive bail-out. Complete bullshit.
I am really pissed off by these Democratic bail-outs, but I am also REALLY pissed off the Republicans let things get out of control like this. Had they not been so corrupt, and did their jobs by regulating, Dems wouldn’t need to bail out anyone.
But I don’t like this regardless.
“The upcoming bill also is sure to attract a GOP amendment by Sen. Johnny Isackson of Georgia to award $15,000 tax credits to people who buy and move into foreclosed homes. That would sharply boost demand, Isackson says. Lawmakers in both parties support the idea…”
*******
In this particular part of the plan, it should be easy enough for anyone to see is that all it will do is raise prices another $15,000.
How can their be a bottom, or can their be true price discovery, in a market that will continually be fiddled with?
Are we trying to repeat Japan of the 1990’s all over again?
No kidding. But I think we will be LUCKY to get off with just the Japan experience. Very lucky.
“..The legislation is likely to draw on elements of the Democratic plan such as letting states issue $10 billion in tax-exempt bonds to refinance subprime loans and permitting homebuilders and other money-losing businesses to reclaim previously paid taxes….”
And the bonds can be insured by Ambac and MBIA. Come on folks, this is a joke.
This is just to do a ‘feel good’ before the election. If the stock market is up, then every one of these proposals will go away.
“The house remains unsold. Meanwhile, Mr. Boice has watched the value of his 401(k) and individual retirement accounts fall by roughly 20% so far this year.”
“‘Everything is just heading south,’ says Mr. Boice. ‘You can’t hardly make any kinds of plans because you don’t know what you can count on.’”
This guy acts like he has no control over the situation, as if something is forcing him not to reallocate his 401k holdings. It’s exactly like the homedebtors who speak as though someone forced them to buy an overpriced house with a bad mortgage. What’s incredible is that no one - media or politician - calls them on this BS.
‘You can’t hardly make any kinds of plans because you don’t know what you can count on.’
Renting makes planning easy.
Note to young renters: It’s a very good time to start thinking about buying your first house. [...] Nobody, not even the usually optimistic agents’ group, is predicting increasing prices.
What stupid advice! If prices aren’t increasing, and it’s far cheaper to rent than to own, then it’s irrational to buy.
More evidence that the masses are getting ready to revolt.
http://news.yahoo.com/s/nm/20080401/us_nm/usa_trucking_protest_dc;_ylt=Ao5jyMxm0KMHhFL8HBu2z9Gs0NUE
Good time to form a Union. Oh yeah, Union’s are bad. I forgot.
The masses have always been revolting. Have you smelled any of ‘em lately?
But don’t expect the American experience to be repeated anywhere in Canada, according to economist Derek Holt. Holt said there are significant differences in the housing markets of the two countries and he doesn’t think there’s a Canadian housing bubble that’s about to burst.
Yes, clearly a U.S. recession will have no negative economic consequences for Canada.
In Yellowknife, Derek Holt, economist for the local real estate association, predicted that a limited supply of land coupled with demand from baby boomers and foreigners would prolong the boom indefinitely.
“The Northwest Territories,” he said, “are working off of a totally new economic model than any of us have ever experienced in the past.”
In Iqaluit, (Pop. 6,184) Berek Dolt, economist for the local real estate association, predicted that a limited supply of land coupled with demand from baby boomers, Northern Right Whales and foreigners would prolong the boom indefinitely.
“Nunavut,” he said, “is working off of a totally new economic model than any of us have ever experienced in the past.” He went on to add that, “RBC has just introduced a new 65 year amortization program specifically for Northern Right Whales. It takes into account their longer lifespans as opposed to other Canadians.”
In Whitehorse, Herek Nolt, economist for the local real estate association, predicted that a limited supply of land coupled with demand from baby boomers, Ermine and foreigners would prolong the boom indefinitely.
“The Yukon Territories,” he said, “is working off of a totally new economic model than any of us have ever experienced in the past.” He went on to add that, “RBC has just introduced a new 3 year amortization program specifically for the Yukon Ermine. It takes into account their shorter lifespans as opposed to other Canadians.”
“In Canada, we have much more stringent criteria in terms of getting a mortgage,” he said. “The borrowers have to prove they are able to pay the mortgage loan back.”
“RBC has just introduced a new 3 year amortization program specifically for the Yukon Ermine. It takes into account their shorter lifespans as opposed to other Canadians.”
Um,, I think you’re making too much light of a very serious situation for future FBeavers who will soon be completely under-Otter. We need to put a stop to all this Moose mortgage lending!
He’s just being a good CanadiYun.
I was worried about things slowing down but it sounds like congress/senate are close to agreement on squashdowns of mortgages.
That should accelerate the decline.
Senate foreclosure relief bill advances
http://tinyurl.com/28vsce
The upcoming bill also is sure to attract a GOP amendment by Sen. Johnny Isackson of Georgia to award $15,000 tax credits to people who buy and move into foreclosed homes. That would sharply boost demand, Isackson says. Lawmakers in both parties support the idea.
The goodies for the irresponsible, greedy and gullible are piling up and getting ready to be taken. With the proposed tax credits, I can imagine that the selling price of foreclosures is sure to go up by at least 15k. Mortgage brokers, RE agents, appraisers, bankers, flippers and fraudsters must be salivating at the thought of this bill’s passage.
“If a house ever became a problem, the problem wasn’t the investors’ or the federal government’s. In this case, it became the problem of everyone on Celia Drive.”
“Jorge Hurtado lives across the street. He has to look at it every day and, ‘worry about it because it’s dangerous for everybody,’ he said.”
Senor Jorge, I have an idea. Ask the fire department to have a practice burn. Or ask them to look the other way, and toss a flare in. May as well start over, yes?
Everyone:
It has been a pleasure posting on this site, but due to recently getting my real estate license and taking a position with the NAR, I will no longer be able to post. Now is a great time to buy!
April fools! Now is a lousy time to buy!
isn’t that a Sinatra song?
Here’s to young renters wherever you are?
Cats, whatever happened to that
obnoxiousprolific and opinionated poster, who kept talking about her service pistol, or service dog, or whatever it was?“The giant gray wave is still an inevitability. But it has run into a breakwall. Investment advisers and retirement planners at more than a dozen firms say they are seeing large numbers of older workers put off retirement as the housing and stock-market troubles have deepened.”
The Grey Swan has landed; WS has provided the subprime, Alt-A and prime mortgage loan catalysts to dissipate baby boomers’ home equity ’savings’ just in time for the peak wave of baby boomer retirements. Luckily we have Social Security to fall back on or we would be in big trouble.
You oughta watch C-Span’s Senate session on “the housing crisis”. These folks JUST. DO NOT. GET IT. We are in trouble when Congress wants to get involved but doesn’t have a clue. Some Senator from Jersey had his boxers in a wad about people “losing equity” in their homes. Now I understand how we got here. Home equity has taken the place of savings for education, emergencies and health care. I heard the same crap on Bill Moyers. Be afraid, be very afraid.
the beauty is that the founding fathers saw this coming and made it so that all those guys can do pretty much is talk all day. if we could figure a way to take the army, air force and navy away from them we’d have it licked.
Get a grip is right. Roubini says that even with a 20% drop in house prices, 16mm Americans have negative equity.
“Two years ago, I predicted home prices would fall cumulatively 20%, but now I believe it will be at least 30%.
With a 20% fall in home prices, about 16 million households are under water. They have negative equity, which means the value of their homes is below the value of their mortgages. With a 30% drop in prices, you have 21 million households that are in negative equity. And since the mortgages are no-recourse loans, essentially they can walk away.
Even if only half of the 16 million households were to walk away, that alone could lead to losses for the financial system of $1 trillion. Even a 20% drop in home values may imply losses of $1 trillion that are not priced into the market today. So that’s the floor. Again, it could be higher — as much as $2 trillion — if prices fall 30% and more people walk.”
http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20080324/REG/767507756&template=printart
Where does Roubini come up with “the loans are no-recourse”? Most states allow deficiency judgments if you proceed by judicial foreclosure.
California has no recourse loans on purchase money loans and also on mortgages that end up being foreclosed by trustee sale rather than judicially (which is probably most of them at the moment, but if mortgage holders thought about it a little more, they might start rating defaulting borrowers future prospects, go the judicial route and preserve the right to collect in the future on a deficiency judgment). And also in California, if the second mortgage is not purchase money (like a heloc) and the foreclosure is on the first and the sale doesn’t raise enough to pay both the first and the second, guess what — the second mortgagee can still go after the borrower down the road, even though the mortgaged property is long gone. Such a second mortgagee, having lost the collateral on the loan, would nonetheless be in as good a position vis a vis trying to get paid back as any credit card company out there. (the credit card companies are unsecured from the get go)
RE: But this horrible house does indeed have an owner and that owner has a name: Sam, Uncle Sam. According to county property records, the owner is the RTC: the Resolution Trust Corporation.”
BS…the owner is not the RTC. It’s the US taxpayer.
And it’s exactly this type of liquidation incompetency which will plague HUD, FHA, and the GSE’s once all the $$$trillions in housing trash has been foisted on them by the Pig Men of Wall Street.
Uh-oh, I’ve lost my equity! Better go out and look for it.
[Slim closes front door and starts walking around the neighborhood.]
“He-e-e-ere, equity! C’mere, equity!”
Since no neighbor has a clue as to where Slim’s equity has gone, Slim goes home to create some signs on the computer:
LOST EQUITY
Very sadly missed!
If you find it, call
520-XXX-XXXX
Then, Slim goes back out to post said sign on the neighborhood utility poles.
Celia, youre breaking my heart
Youre shaking my confidence daily
Oh, cecilia, Im down on my knees
Im begging you please to come home
Celia, youre breaking my heart
Youre shaking my confidence daily
Oh, cecilia, Im down on my knees
Im begging you please to come home
Come on home
Making love in the afternoon with cecilia
Up in my bedroom (making love)
I got up to wash my face
When I come back to bed
Someones taken my place
Celia, youre breaking my heart
Youre shaking my confidence daily
Oh, cecilia, Im down on my knees
Im begging you please to come home
Come on home
Jubilation, she loves me again,
I fall on the floor and I am laughing,
Jubilation, she loves me again,
I fall on the floor and I am happy.