‘Can I Afford It?’ Is A Very Important Question
The Fosters Daily Democrat reports from New Hampshire. “It doesn’t take more than quick drive down area roads to realize home sales have stalled. In Strafford and Rockingham counties, ‘For sale’ signs are reappearing in front of homes that went unsold last year, or worse, in front of foreclosed homes up for sale by a bank or lender. And they’re everywhere. In the first quarter of 2008 alone, 70 foreclosures have been filed with Leo Lessard, registrar of deeds for Strafford County, up from 36 during the same period in 2006, and just five in 2005.”
“Like Lessard, Rockingham County Registrar of Deeds Cathy Ann Stacey has seen substantial increases in the number of foreclosures in 2008. ‘In the first three months of the year, we had 190 foreclosures,’ Stacey said. ‘We had just 92 last year.”
“Lessard said his office saw many people refinancing their homes during the 2003 to 2005 boom. Of those, Lessard says many did not reinvest that money in rebuilding home value.”
“‘Many people pulled equity to take a vacation or buy that big screen TV,’ Lessard said Monday. ‘It’s not something that’s advisable, considering the market has now fallen.’”
The Boston Globe from Massachusetts. “While the Boston-area housing market remains among the most expensive in the country, it is now relatively more affordable than it was earlier in the decade. Median home prices in metro Boston fell to $398,970 in 2007.”
“That’s 4.2 times the median family income for the area of $94,169 - the lowest that this ratio has been since 2001, according to Moody’s Economy.com. Housing specialists consider prices affordable at three times income. The current national average is 3.5 times income.”
“When Heather MacFarlane looked for a condominium in 2005 after getting divorced, she was turned off by high prices and unappealing properties. The few she liked were snapped up by someone else. She decided to rent and furiously saved money.”
“A larger down payment and lower prices enabled her to purchase a two-family in Roslindale for around $500,000. The downstairs unit is rented, making her comfortable about taking on a bigger mortgage on her income.”
“‘I can’t believe I’m doing this,’ said MacFarlane. In 2005, a two-family ‘would’ve been way out of my price range.’”
“Many prospective buyers are staying on the sidelines on the assumption that home prices will continue to fall. ‘I don’t think it’s hit rock bottom,’ said Rick O’Hare, who is waiting for prices on a lake house in the Middleborough area to come down further.”
“‘Even up to a few months ago, if you could breathe, you could get a mortgage,’ said Adam Rosenbaum, a realtor in Arlington. ‘With all the subprime fallout and the rising debt, that’s no longer the case.’”
“Now, Rosenbaum said, many of his clients - faced with having to come up with heftier down payments - have begun inquiring, not about square footage, but how much he thinks a particular property will appreciate.”
“‘I’m not a prophet, I’m a realtor,’ he said. ‘While I anticipate prices will come down a bit more, I tell my clients if they see the right place right now, and have the down payment, buy it….If you’re planning on staying there more than five years, you’re probably not going to lose money.’”
“Tony Annino of Belmont is in the ‘wait and see’ camp. Annino said his job in the finance industry and his reading so much about the economy and the housing market have made him nervous about buying now.”
“‘I’m definitely cautious,’ he said. ‘We’re looking to buy a place primarily for the equity. I don’t want to buy something if we’re in the third inning of a nine-inning game here. If we want to upgrade in a few years, I don’t want to be selling the property for the same price I paid for it.’”
The Record Online from New York. “When it comes to selling a house, times are tough all over. Last year, the number of homes sold fell in 31 of the 37 Orange County municipalities tracked by Orange County Association of Realtors. Some of the (formerly) hottest bedroom communities have been hit the hardest.”
“From 2002 to 2007, Orange County’s median home price jumped nearly 50 percent to $322,500. Every town, village and city in the county posted sizeable five-year increases in price.”
“‘That just emphasizes the point that we as an industry make regarding homeownership being a long-term investment,’ said Ann Garti, CEO of the Orange County Association of Realtors. ‘The average time that a family lives in a home is seven years. Over a seven-year (period), you would have seen a very nice appreciation of your investment.’”
From Newsday. “When George Cornielle paid $812,500 for his East Massapequa high ranch in 2005, he said he was told by his mortgage banker that it was a good deal — and that he could afford it. Now, just over two years later, Cornielle is in foreclosure, unable since last November to make his $4,100 monthly mortgage payment.”
“When he initially applied for a loan to buy the house, Cornielle said in court papers filed last month, the loan application he signed was blank. When he saw it later, the application said he earned $14,500 a month and had two children. The reality, Cornielle said in the court papers, is that he earned less than $4,000 a month — and has one child.”
“Cornielle is suing the Garden City mortgage bank and its owner, Aaron Wider, along with the bank that now holds his loan, GMAC Mortgage Corp. The lawsuit alleges that the appraisal of the East Massapequa house that valued it at $830,000 was fraudulent. The fair market value at the time, the lawsuit says, was $425,000.”
“‘My underwriters are authorized to do anything in their power to protect the continuity of my company,’ Wider said in the depositions, which took place in Garden City last fall. ‘They work for me. I pay their salary.’”
The Asbury Park Press from New Jersey. “Monmouth and Ocean counties led the nation last year in the percentage of borrowers extracting cash from their houses, usually through refinancing or home equity loans.”
“A staggering seven out of 10 high-risk borrowers in both counties — those with low credit scores — refinanced loans to obtain extra cash, Federal Reserve data for the end of 2007 showed. Such mortgage debt will continue to weaken the housing market at the Shore and around New Jersey this year, experts and consumer advocates say.”
“‘It’s no secret that we live in a credit-dependent society,’ said Brett Lopes, VP of Intercounty Mortgage in Hazlet. ‘In the same way that people don’t handle credit cards correctly, they perceived their house was worth more and more and they used it like a credit card.’”
“Toi L. Collins, director of housing counseling at the Affordable Housing Alliance in Eatontown, said she recently heard from a woman who owned a $600,000 house in Fair Haven who was facing foreclosure. After a long telephone conversation, Collins couldn’t convince the woman to come in for help in negotiating with her lender.”
“‘You go through the whole spiel about what they have to do, then you don’t hear from them again,’ Collins said. ‘They just want to bury their head in the sand and not even deal with it.’”
“There were 12,376 foreclosure lawsuits filed in New Jersey Superior Court in the first three months of this year, state officials said Friday. If foreclosures continue at that rate for the year, there would be nearly 50,000, double the number from just two years ago.”
The Courier News from New Jersey. “As homeowners throughout the country expressed their concerns about losing money on their homes in a new national poll released Monday, Central Jersey real-estate professionals say the same worries are reflected locally.”
“Lee Caprarola, a mortgage banker with Wells Fargo in Somerville, believes that prices have not firmed.”
“‘It’s difficult to say if prices are leveling,’ Caprarola said, ‘because the behavior of people who choose to sell may be doing one thing, whereas the behavior of people who are forced to sell could be different. For example, I have financed a number of short-sale properties lately, and those prices still appear to be under pressure.’”
“‘I do lots of new construction as well, and builders are using price and/or financing concessions and/or free upgrades, as a way to turn up or down the volume on sales activity,’ Caprarola said.”
“‘The real estate market has been dead for us here at Sleepy Hollow Realtors since October, with only recently some activity. Buyers are offering well below asking price for properties and then expecting the sellers to make all repairs if any. Then we hope the bank appraisers will appraise the property for value. It’s like pulling teeth, even if you make a deal. If we are lucky to make a deal — about 40 percent of them die for one reason or another,’ broker Joe Burris said.”
“‘I still see prices going down and this is likely to continue,’ said George Pantozzi, a sales associate in Raritan Borough. ‘Because of the property-tax crisis, in many cases, the option of renting out the property is out of the question, because it will create a negative cash-flow situation. Who could afford a negative cash flow?’”
The Philadelphia Inquirer in Pennsylvania. “Several people involved with short sales locally called the lender-approval process that accompanies them long and frustrating.”
“It took Jennifer McMahon and her husband, Christopher from May 2007 to March 2008 to persuade Countrywide Mortgage to agree to a short sale on the five-acre farmette in Glenmoore, Chester County, that they had bought for $379,900 in 2006.”
“‘This was our dream home,’ Jennifer McMahon said. ‘When we started, our credit was really good, and even though this kept us out of foreclosure, we’ve lost a ton of money.’”
“They made some bad decisions, she acknowledged, and got caught in a vise as their 9.95 percent adjustable-rate subprime mortgage began to adjust and their property-tax bill skyrocketed. To make payments, she even liquidated a $15,000 retirement-savings plan, ‘and I was penalized by the IRS for doing that.’”
“Last month, the McMahons closed on the sale of their house to an out-of-town investor, according to their agent, Nicholas Vandekar. Countrywide settled for $316,000 of the $360,000 owed.”
“As it happens, the McMahons had not sold their old house in Malvern, which they were renting to cover its mortgage and tax bills. They have moved back in.”
“Jennifer McMahon said the couple never should have been approved for the mortgage they got. They bid too high, she said, in a market that was stable. ‘We went in with good credit, and we came out completely trashed,’ she said.”
The Morning Call from Pennsylvania. “Sheets of uncovered insulation flap in the breeze from unfinished townhouse units in Allentown. Workers at a closed roofing plant near Quakertown are looking for new jobs. A manufacturer of construction trucks says sales are down. For more than a year, ‘for sale’ signs have lingered in front yards across the Lehigh Valley.”
“Rafael Peralta and more than 100 co-workers lost their jobs when a Quakertown area plant that supplied roofing tiles to home builders closed last month.”
“The 56-year-old Allentown resident is worried about making his monthly house payments, even though he and his wife don’t have one of those risky subprime mortgages. After 28 years on the job, he’s looking for work and watching his money closely.”
“‘Things are a lot tighter now,’ Peralta said. ‘I’m worried.’”
“Peralta’s former colleague Bill Snyder, said when the national housing market began to plummet, the company cut back on workers’ hours. ‘It finally trickled down to us because we supplied the roofs for the home builders,’ Snyder said. ‘No one needs roofs.’”
“At the Carriages at Jordan Creek in Allentown, slow sales have halted completion of additional units. At one end of a row of nine town homes and one single-family home, six unfinished units sit next to three units that are for sale. Across the street are older, established homes that predate the development.”
“Of the homes builder Schoch Homes Inc. completed in the development off Front Street, only one has sold. The other three have been on the market for more than a year, said real estate agent John J. McDonald, who is handling the sales.”
“An adjacent lot was cleared to build 11 more homes, but McDonald said work on the new units won’t start until the economy picks up.”
“‘They do intend to finish them but it is all a matter of the economy,’ McDonald said of the developer. He added, ‘There are a lot of townhouses on the market. There’s probably an overabundance of them.’”
“Foreclosures…have reached the highest level in the Valley in more than a decade, said Jack Gross, owner of Cassidon Realty in Bethlehem, which sells repossessed properties for banks.”
“Home sales fell in February to the lowest monthly level since 2001, according to statistics from the Lehigh Valley Association of Realtors. While real estate agents say the large number of homes for sale in the Valley is a boon for prospective buyers, many may remain on the fence for a while longer before purchasing.”
“A group of Lehigh Valley bankers says the current housing slowdown won’t go away overnight and will affect builders, residents with less-than-stellar credit and businesses considering an expansion.”
“Free-flowing credit that allowed people to buy homes with little or no money down during the boom years earlier this decade has tightened. That means some people may not be able to buy a home, and homeowners won’t be able to refinance as easily.”
“The housing market has slowed here, after home prices rose 10 percent or more each year from 2003 to 2006, according to the Lehigh Valley Association of Realtors. An influx of more affluent buyers from New Jersey who helped fuel the boom, however, has also slowed.”
“‘The New Jersey homeowners would still like to buy in the Lehigh Valley,’ said Bob Rupel, president of Lafayette Ambassador Bank. ‘What’s put that action on hold is they can’t move until they sell what they have.’”
“Bankers said the current climate will encourage a return to more conservative lending, in which people borrow what they can afford, and not more. ‘There are a lot of basics to this,’ said David Lobach, CEO of Embassy Bank, in Hanover Township, Northampton County. ‘Can I afford it?’ is a very important question.’”
‘Even up to a few months ago, if you could breathe, you could get a mortgage,’ said Adam Rosenbaum, a realtor in Arlington. ‘I’m not a prophet, I’m a realtor,’ he said. ‘While I anticipate prices will come down a bit more, I tell my clients if they see the right place right now, and have the down payment, buy it….If you’re planning on staying there more than five years, you’re probably not going to lose money.’
To the Boston Globes of the world: we’ll be sure and remind you of your endless boosterism when the 2008 buyers start defaulting and you are running the boo-hoo articles.
‘I’m not a prophet, I’m a realtor,’ he said.
And then he phophesizes….
Real estate always goes up. Eventually. I guess.
Just like a ferris wheel.
Buy now, before prices fall any farther.
Nice CYA, though: …you’re probably not going to lose money…
I tell my clients if they see the right place right now, and have the down payment, buy it….If you’re planning on staying there more than five years, you’re probably not going to lose money.’
Sound Advice? The answer is no, five years won’t even cover your closing costs.
The public needs to understand that the realtors are in it to line their pockets with commisions, which is your money and they come across as an expert, yet most have no education or skills in finance and most only have a high school education.
The second point is how in the heck does this realtor know that in five years “your probally not going to lose money”. I heard this crap back in 2006 and 2007 and both of these years there was a significant decline in values.
Don’t you just love the new Century 21 Ads these days? ” April is open house month, and now- more than ever- Realtors are ready to…” I don’t remember the last bit. Only that I found the “Now more than ever” statement as insanely hilarious. Yes- now more than ever because many of those Realtors desperately NEED you.
“we’ll be sure and remind you”
– wish I could find the email I sent to Kimberly Blanton (Globe columnist) about a year ago, maybe a year and a half. I was bearish, she stood her (moderately bullish) ground. I’d love to attach it to a new message and send it to her again. Damn.
why does anyone use a realtor ?
got net
Because they are experts who will look out for the best interest of the buyer.
You just made me shot soda through my nose dammit! It burned too…
Whew! I was just about to get up and refill my drink. Glad I waited until after I read this comment,
When we sold our first home we went the FSBO route. We had a ‘buyer’s agent’ come to our house. She basically told us that she could get her clients to pay whatever we wanted. All we needed to do was sign a contract giving her 3%. We told her that she was welcome to bring them around but that if her clients did buy the house she’d get no commission from us. Never saw her again.
I would’ve told that whore to bring her clients over so we could meet them and discuss the price.
and when they showed up, I would tell them EXACTLY what she said.
They won’t let you interact until a deal is made and won’t allow you to be in a position to meet at all until her contract is signed.
I sold a house FSBO and had an agent call me. This was late 2006 and I was concerned I was gonna get stuck with that bad boy so I decided to work with her for 2.5%.
When we negotiated, she brought the buyers over and they sat in her big-ass SUV while we were in the house. They would make an offer, she would take our counter out to them, then bring back their counter and so on.
When I sold my house in 2006 FSBO, I suddenly had two offers. The realtors offer was lower and she asked for a 4% commission. I told her that I was going to go with the other offer. She increased their offer and made it worth my time to sell it to them, but basically the buyer paid her commission. The second bidder did not want to go up on their price. I’d say you were foolish to send her away if she really could get you what you want plus her commission just to make a point. The people who bought my place put down a whopping 2%, and had 3 different loans to make the purchase, some fixed, some variable rate. I asked the realtor if she really thought they could afford it, and she said don’t worry the guys brother is a mortage broker. I suspect he got a commission on every one of those loans. Ahh family
” I’d say you were foolish”
It’s okay. Even though we were foolish and didn’t work with her, it all worked out. We had an open house. I think we served Slim Jims, cheese cubes, pretzels and various sodas that were 49 cents for 2 liters. What we wanted was plainly listed on the brochures we printed. We somehow managed to attract people to our open house using nothing more than a few signs from Home Depot and a small newspaper ad. We got an offer two days after the open house and it was for more than our asking price.
The open house might have cost us $100. The ‘buyer’s agent’ would have cost us between 4K and 4.5K.
Whaaa? Why would she want you to sign a contract? I thought buyers paid for everything!
snort!
Don’t make jokes like that for those of us that drink coffee!
Hee hee… We can basically write off the summer selling season. Sellers will continue to ‘hold out.’ The big price declines, for many areas, will be in 2009.
Got Popcorn?
Neil
I have a friend who is a big shot realtor, and normally we don’t discuss the housing market because he knows we have diametrically opposed views.
Recently, he confided in me that he knows that he had finally realized that the price runups in recent years were unsustainable, but no one could time the “peak” of the market and he and others had been lulled by predictions of a ’soft landing’.
Now that the sh*t is really hitting the fan, they are basically trying to get anyone who “needs” to by right now to buy, but also simultaneously trying to get sellers to lower their prices. Most sellers are incredibly stubborn, however, even when they have lots of equity.
He thinks that realtors have a role in homebuying, particularly with first time homebuyers or people relocating to an area, but otherwise the sector has too much dead weight and that this downturn will be ultimately healthy for them.
I still don’t think he realizes the backlash that is brewing against realtors in the buyer’s market, and is likely to get worse…
But they’re not going to go down without a fight. Here’s the latest “myth-busting” spin campaign from Tucson.
Nobody “needs to buy”.
Perhaps in some very rare cases with special needs, etc. Also, perhaps in very small towns, etc.
However, the vast vast majority doesn’t “need to buy”.
THE END.
I’m renting a house that’s on the market, one showing in 6+ months.
Yest., I heard a light tap on the door, I looked out the window to see a used-house saleswoman standing there (sign on her car). I ran like H-E-doublehockeysticks and let the dogs in from the back yard where they’d been peacefully sleeping in the sun. They’re well-trained dogs, instead of saying “sickem,” I say, “realtor” - well, I said the word and they smacked against the front door barking madly (they were inside, she was out) until she ran for her car.
I gave them all chewies. They actually wouldn’t hurt a soul, they just get excited…
LOL
BWAHAHAHHAHAHAHHHHHHHHHHHHHHHH!!!
Where on earth do they get that Bostons median income is 95K? According to the census bureau it is roughly 50% of that… in 2006.
http://tinyurl.com/43nmln
If the median house price is based upon the REAL median income it is still aroun 9 to 10 times…
Your info. applies to the City of Boston which contains some of the poorest zip codes in the state. The Boston “area” typically includes all the rich towns inside 495 (Weston, Dover, Newton, Needham) median household incomes in those towns are well over 100K.
I took a look at the chart - the Boston metro area they are using includes Essex county (”horse” country - and I don’t mean ranches- think polo ponies) and even a couple of counties in NH.
I don’t get it…are the median home prices for the same area of Boston as the area with the rich towns?
I smell a pot of cooking numbers here…
The statistics they are throwing around are poorly defined, so how can anyone reasonably draw conclusions?
I saw that as well. They include all the “rich” locales, but all the “poor” ones are left out. very devious way of manipulating data.
Suffolk County contains the relatively poor cities of Boston, Chelsea etc. Each county listed contains “poor” towns- they also all contain very wealthy towns.
Also, we need to remember that the median income is probably being earned by people who are the median age, and not by younger workers who probably earn less.
The median income for my town is around $95K, right now there are three houses for sale on my street, two of them are over a million. The family profiled in the article who just bought in Dorchester probably earn closer to 50 or 60.
“The 56-year-old Allentown resident is worried about making his monthly house payments, even though he and his wife don’t have one of those risky subprime mortgages. After 28 years on the job, he’s looking for work and watching his money closely.”
“‘Things are a lot tighter now,’ Peralta said. ‘I’m worried.’”
Wait until the divorces start from Depression II stress and all those dual income households begin collapsing on top of the single mom wreckage.
“Wait until divorces start from Depression II stress …”
This upcoming financial event will severly test the strength of marriage vows (ex. “For better or for worse”); those marriages that survive the test will have the bonds strengthened and the marriage will be better because of it, IMO.
I wish for prices that don’t have to have “dual incomes” to support them. I’m sick of the feeling that one has to be married in order to own a home (especially since re-marriage is definitely not something I intend to ever do).
As it is now, even those places that - IMO - should be affordable to single incomes, are not. Unless one has a really good salary. Heaven forbid you have a single, average salary. While that used to be ok for a small home (around here at least), that’s not the case anymore.
I’m starting to think that, when I eventually start to look, I’ll have to target only houses that have one bathroom. If the desperate FB’s haven’t all added spa-style master baths that are larger than my childhood bedroom because HGTV told them that spending $25K adding an extra bathroom would add over $100K of “value” to their house.
Disgusting.
RE: I wish for prices that don’t have to have “dual incomes” to support them. I’m sick of the feeling that one has to be married in order to own a home (especially since re-marriage is definitely not something I intend to ever do).
I’m in your boat, eastcoaster, just pullin’ on a different oar.
It becomes clear now that I see who wrote the fluff piece… Kimberly Blanton.
From Newsday. “When George Cornielle paid $812,500 for his East Massapequa high ranch in 2005, he said he was told by his mortgage banker that it was a good deal — and that he could afford it. Now, just over two years later, Cornielle is in foreclosure, unable since last November to make his $4,100 monthly mortgage payment.”
812k for east massapequa? lmao
i will be renting for awhile it seems
I guess I should no longer be astonished, but what astonishes me about that guy is that he signed a blank document!
He says that, but I think it had all the incriminating blather there in plain sight when he signed it. Selective amnesia looking for a bailout.
I suppose the mortgage broker had a gun at his head. What a DA, do you leave a blank check at the grocery store too?
Roslindale! Shoot me!!
OT, but interesting, I think. A classmate of mine told me yesterday that she wasn’t allowed to open a bank account because someone had used her name to purchase a mortgage. I told her to contact the FBI. Anyone with advice on this?
F, R, E, E, that spells free, creditreport dot com Ba-beee
“Offer implies enrollment in Triple Advantage.”
annualcreditreport.com
My brother had his ID stolen, he was told to go to the police and report it, which he did. They gave him a card to carry saying his ID was stolen so if he were arrested for someone else’s crimes he’d be supposedly OK. Of course, this probably wouldn’t apply to mortgage ID theft like it would to carrying a fake ID and robbing a store, but it might be a good place to start.
To make payments, she even liquidated a $15,000 retirement-savings plan, ‘and I was penalized by the IRS for doing that.’”
This is the next big crisis that no one is talking about…how all of these foreclosures have erased the social safety net. FBs now will not have any savings, straining social services and the social security fund as they age. Families will have to increasingly carry the burden of aging relatives.
For those still able to work, they will have to compete with younger workers for jobs that are becoming more scarce, driving wages down for everyone, and subsequently tax revenues.
Without fundamental reorganization, the consequences of this bursting credit/asset/integrity bubble will likely last for decades.
To make payments, she even liquidated a $15,000 retirement-savings plan, ‘and I was penalized by the IRS for doing that.’”
This is the next big crisis that no one is talking about…how all of these foreclosures have erased the social safety net.
Nosingleone: There was a study put out last week that discussed exactly what you are saying. Less than 15% of the U.S. population has $100,000 in cash, not including assets. More and more people are using their 401K’s as their new piggy bank. Our next crisis will begin to show in the next 5-10 years as more and more of the baby boomers dump their large homes and assets as they are in need of money for retirement. The vast majority will not be able to retire!
It may begin to show in 5-10 years, but it will go on for a lot longer than that. It seems the biggest advantage of old style defined benefit retirement plans (pensions) is that they didn’t look like piggy banks. Even assuming the system continues to function, you can’t live on social security, not well. You might be able to move in with your grown children and add your payments to the household income - my last surviving grandparent was living with my aunt and her husband for years before she passed away - but you sure ain’t going to live out your Napa Valley fantasies and shower gifts on your grandchildren with it.
only gov workers get those anymore
Let’s be honest here, even had prices simply flattened out leaving boomers unable to sell their over-priced homes there would have been stress on the system. No defaults required. I agree w/ polly*, but since we’ll never get that back in the box how about taking the loan provisions out of the 401k? Oh, pffftt.. my bad then NO ONE would contribute unless they could back their money out at a moments notice!?
Social Security has been cash flow positive for decades. The social programs weren’t the problem. The problem is the money that should have been growing all these years got blown on defense. Take away Iraq, Reagan’s trillion dollar disaster Star Wars, and all the other killing devices we’ve made and you have no crisis today.
But the social programs will pay the price. That is absolutely certain.
Rob,
I have no doubt of that and I think you can include Viet Nam in there as well. I believe they raided the RR pension to boot. Collectively yes, we can kick ourselves in the @$$ all day over the way it’s been squandered. Yet these are things we had no direct control over and boomers had a LOT more warning and time to prepare for this than the younger crowd. I wouldn’t make a point of it except for the fact that when previous generations had long peaked in their consumption curve ( boomers were just ramping up )
The “younger crowd” still has 30 or 40 years to get prepared. Shouldn’t be too hard to see the writing on the wall concerning the viability of a government paid retirement. Personally, I’m (early 40’s) counting on approximately zero- anything I get will just be gravy on top of whatever I’m personally able to save.
Everyone my age (20s) and a bit older already has figured this out.
The legend of the Heedless Loanman of Sleepy Hollow
“‘The real estate market has been dead for us here at Sleepy Hollow Realtors since October, with only recently some activity. Buyers are offering well below asking price for properties and then expecting the sellers to make all repairs if any. Then we hope the bank appraisers will appraise the property for value. It’s like pulling teeth, even if you make a deal. If we are lucky to make a deal — about 40 percent of them die for one reason or another,’ broker Joe Burris said.”
“‘I’m not a prophet, I’m a realtor,’ he said.
Did somebody give him the wrong script?
Yeah like a Realtor could really part the Red Sea of foreclosures?
“They work for me. I pay their salary”
Well therein lies the problem now doesn’t it Aaron? Like a lot of MB firms that operate out of the trunk of a car you paid them to STFU and rubber stamp your originators loans or they’d be drop-kicked to the curb. So typical.
You know I had such high hopes for the New England states? It struck me that NE was one of the first regions to show stress cracks and some semblance of sobriety while the balance of the nation further indulged in a credit-fueled orgy. Guess I was wrong on that one.
To their credit I DO… recall quite a number of anecdotal stories where buyers were openly questioning seller’s “wishing prices” ( but evidently went ahead and took the plunge anyway? )
“‘That just emphasizes the point that we as an industry make regarding homeownership being a long-term investment,’ said Ann Garti, CEO of the Orange County Association of Realtors. ‘The average time that a family lives in a home is seven years. Over a seven-year (period), you would have seen a very nice appreciation of your investment.’”
Hey asshole…. I like how you chose the 5 years that saw the largest misallocation of capital in the history of the world(coldwar exception) and then characterize it as an “investment”. How convenient. Lets see how your infestment pans out over the next 20 years.
exeter,
In light of the hyper-activity of the last several years, that NAR-reported “7 Year” number is highly suspect.
Can this woman be taken out and shot?
Don’t think so. But you just reminded me of that bumper sticker: Some people are alive only because it’s illegal to kill them.
Exactly. Her comments only serve to rationalize the NAR boostering of the last 5 years as they slither out the back door.
Well I don’t know about ’shot’ ( but some intensive SHOCK therapy might be in order! )
More NAR tinkering. Maybe through the 1980’s families stayed put that long but now that’s longer than many marriages ( particularly in The OC ? ) There’s no way a realtor is going to let some owner “sit” on that much equity! They were ALL OVER you w/ how much they could sell your place for. It’s just not how the “system” works any more. Not if NAR has anything to say about it.
7? they have 4.5 left
don’t look good
Precisely. Tossing that number about is just a way for these realtors to put the liability and expectations out… The further the better. When you think about it any realtor trying to sell you an investment based on 5 or 7 or 10 years down the road is really telling you “I’ll be long gone and you’ll be on your own”.
For now, it suits NAR’s agenda ( so we go with that ) but imagine them saying that in 2005! Buyers would have thought the neighborhood, house or realtor SUCKED! SEVEN years! You have got to be kidding me? ( I plan on retiring off this baby in THREE! )
“Many prospective buyers are staying on the sidelines on the assumption that home prices will continue to fall. ‘I don’t think it’s hit rock bottom,’ said Rick O’Hare, who is waiting for prices on a lake house in the Middleborough area to come down further.”
How do they come up with this nonsense? Isn’t the percentage of U.S. households which live in owner-occupied housing at or near a record high?
at or near a record high ??
Yes it is Stucco and a widely overlooked fact IMO….The idea and model that we were going to become a nation of home owners has now come and gone…Its now a reversion back towards the historical percentage…Couple that with the incredible amount of new inventory introduced into the system and it paints a pretty grim picture…
True. On the other hand it would be interesting to know what percentage of people sell and move house in a normal year. Assuming we could find one - it’s been a while i know.
This has been going on for about a year now, so there will start to be a small overhang of people who would normally have reached the point in their lives of buying, upgrading etc. who are now firmly on te sidelines and in waiting mode. (I know i’m one of them.) As time goes on that number will slowly increase.
(So there will start to be a small overhang of people who would normally have reached the point in their lives of buying, upgrading etc. who are now firmly on the sidelines and in waiting mode.)
Along with the reverse — people who would normally have sold but have decided to sit out the market. You wonder how this will affect people’s choices. Death is not a choice, however.
Yes, it’s become a game of “chicken” with determined parties on both sides. Sellers who aren’t in trouble will wait it out and patient buyers will time the bottom.
Only one of these groups is feeding the alligator each month.
I’ll leave you to guess which one.
Hmmnn… let’s see- desperate sellers… or not-so-patient buyers. Can’t make up me mind-
Gator’s good deep-fried.
Econ Theory: Prices are set at the margin.
What matters is not impatient buyers but the patient buyers. They actually set the price in all asset classes always. It may take a while, a serious while even, for them to get there but they always do.
Cue Graham and Buffett and Charlie Munger.
“‘I’m not a prophet, I’m a realtor
A realtor acknowledging he doesn’t have a direct link with the man upstairs. He is probably one of the better ones.
This was our dream home,’ Jennifer McMahon said. ‘When we started, our credit was really good, and even though this kept us out of foreclosure, we’ve lost a ton of money.
Jennifer, knock off with the sob story. You went to the house casino. You double downed. You had a can’t lose strategy. You blew it. Quit bellyaching and go to work. Nobody made a sob story when I had troubles. I just went to work to rebuild.
Like many FBs, she was trying to have it both ways: both her ‘dream home’ and her equity too…
….and their tax write-off, AND their cap free gains and their “prestige” and…
“our credit was really good”
Throughout the society, “good credit” seems to be valued more than actual money. Someone phoned me with one of those “free” credit card offers. When I said OK, he wanted three credit references. I gave him my Merrill Lynch account number (my only CC), period. He said that wasn’t good enough, and I received a letter saying I’d been denied the credit card. The next thing that happened was, the actual credit card arrived in the mail. But it turned out to be one of those “gotcha” cards where the late fee is higher than the actual bill. I cut it up and sent it back within six months. My ML card pays its own bill at the end of each month.
az_lender,
Don’t tell me you gave out a CC or brokerage account number to some guy over the phone??? Along with your SS (I hope not)?
Be careful.
Inflation at the wholesale level soared in March at nearly triple the rate that had been expected as the costs of energy and food both climbed rapidly.
The Labor Department reported Tuesday that wholesale prices rose by 1.1 percent last month, the largest increase since a 2.6 percent rise last November, which had been the biggest one-month jump in 33 years. Analysts had been expecting a much more moderate 0.4 percent rise in wholesale prices for the month.
Not long before the Fed has to raise rates. Not long at all.
And to think: the first rate cut was in August. For those keeping score at home, that was eight months ago. Right at the tail end of the length of time conventional wisdom says it takes a rate cut to worm its way through the economy.
Makes me feel all that much better about September.
“‘I’m definitely cautious,’ he said. ‘We’re looking to buy a place primarily for the equity. I don’t want to buy something if we’re in the third inning of a nine-inning game here. If we want to upgrade in a few years, I don’t want to be selling the property for the same price I paid for it.’”
And there you have it. The entire “homebuying” mentality of the new America. It’s all about profit from housing, not about a place to live.
And the Realtors(tm) have been working off the inflation model for decades. Now, it’s coming to a halt, unless the government can manage to create enough inflation that prices will all rapidly rise.
A House is a place to live. It is an EXPENSE, just like renting. If the inflation model has stopped, sales will decline even further than just the overbought forclosures, due to this mentality.
Where’s my unearned income…..the new entepreneur.??
I had this exact argument with a guy on the AZRepublic site yesterday.
A patio home down the street from me went for $220K at the peak, funded by BoA on a single 100% LTV loan. No 80/20 non-sense involved. Year and a half later, BoA took it back at the trustee sale for $231K. I assume the extra $11k is back tax/condo association fees, unpaid interest….
Anyway, couple weeks ago BoA dumped it for $142K. The place could rent for $800-900.
http://www.azcentral.com/realestate/homes.php?pgAction=homedetail&address=4909+W+CROCUS+DR&city=GLENDALE&zip=85306
The argument was whether or not this was a good deal. My assertion was, of course not. It shouldn’t be over $100K.
His argument was that it could cash-flow positive, if you did 20% down with I/O loan for the rest, and ignore things like repairs and vacancies. Oh, and ignore any closing costs.
His argument was that rising rents would easily cover “other” expenses like repairs and maintenance very quickly. And house price appreciation will make you rich very quickly.
My counter-counter, of course, is that rents arenot rising, vacancy rates are rising, and incentives are larger and larger… Free money rent, half price for 3 months, etc.
AND, let prices fall another 30% back to historic norm, then 3-4% annaul appreciation would take 15 years to get you back to even.
At $140K, this is still a LOSER unless you assume appreciation is “in the bag”. Not as bad as $220K, but still very bad.
a realwhore is trying to fsbo it for 157k
showing that a realwhore isn’t needed
he’ll make 11 cents if everything goes according to plan
Good analysis. And I agree, rents are not rising (except in a few isolated instances related to employment, such as the energy boom areas in WY, MT, ND). If anything, real rents appear to be softening a bit. Despite creeping inflation, I don’t get the impression that many residential or commercial renters are seeking long-term contracts.
Must be nice. http://victoria.en.craigslist.ca/apa/643233952.html
A place that is 1400 now was going for $850 2 years ago.
What’s a patio home?
Many years from now, when historical RE appreciation averages re-assert themselves, this get-rich-quick thinking will be a fond memory for these Trump wannabees.
“Tony Annino of Belmont is in the ‘wait and see’ camp.”
and
“I don’t want to buy something if we’re in the third inning of a nine-inning game here.”
Ok, fess up. Who here is Tony?
“When he initially applied for a loan to buy the house, Cornielle said in court papers filed last month, the loan application he signed was blank. When he saw it later, the application said he earned $14,500 a month and had two children. The reality, Cornielle said in the court papers, is that he earned less than $4,000 a month — and has one child.”
So, the complainant is ADMITTING that he is a party to MORTGAGE FRAUD. He knew the information on the application was false. He did nothing. HE went for the deal, knowing that the income level he allowed, was a lie. Therefore, he could clearly not afford the home.
The “appreciation” game didn’t work out. He didn’t get the big “PAYOFF” of ownership, so now he is suing.
Why has he not been arrested for Mortgage Fraud?
This is a crime. He should be sued by the lender for falsification of loan documents. The fact that the broker wrote fabrications, does not make the buyer blameless, since he clearly knew what was on the application.
I am so, so, so angry that this crap has been allowed to go on for so long, with NO, NONE, Zero prosecutions for FRAUD!!!
Maybe he is trying to get arrested. At least he’ll get a warm bed and 3 squares a day.
Either he signed the contract as filed, and is a fool, or he signed a blank piece of paper, and is a fool. Either way, the remedy of recission is not available due to the party demanding relief being a fool.
Well, the local Dem. party choose my opponent as the one to vote for. Why? Get this–their reasoning was that they disagreed with my belief that the second-home market was going to collapse.
You too eh? Come over to the dark side! No one likes the truth on this issue - not the D’s, not the R’s, not the Realtors, not the affordable housing lobby, not the local pols, not anyone. Go figure.
I can’t wait until I invited to the Realtors’ forum. I want to ask, “How many of you are up to your asses in alligators?” LOL
I’m not suprised that they are against my platform. After all, the other commissioners are either RE agents or owned by the RE agencies.
and they would miss the Floridians SO much, wouldn’t they…
From the NH article:
“In its vivid sketch of consumer distress, the study found more than one in four homeowners worry their home value will actually depreciate in the next two years. ”
That’s 3 out of 4 homeowners that are going to get a big surprise. They will all depreciate.
I got this email. They do it as a reply, like I contacted them. They still have my old CA address I moved out of more than 2 years ago (and it was an apartment). I didn’t have a mortgage there. Anybody else agree they are a bunch of lying scumsuckers looking for knife catchers?
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Fortunately subprime is completely contained.
http://www.nytimes.com/2008/04/15/business/15retail.html?_r=1&hp&oref=slogin
This story talks about Office Depot scaling back its expansion plans. I don’t know about you-all, but I’ve never been into a Tucson Office Depot or Office Max that didn’t seem like a ghost town. Methinks these companies have already expanded way past the demand.
It’s interesting to see the 1-2 punch they are getting. First their customers are cut off from credit. And then the banks cut off theirs. I long for the day when there were not chains all over. All this did was destroy the middle class and concentrate wealth in the hands of the few. Seeing some of these chains implode doesn’t bother me one bit.
Maybe when these chains disappear new smaller ones will rise. It would be great, but I am not holding my breath. The problem is the Wall Street money will go towards the bigger firms. Hard to fight them.
But a bit o’ good news amidst all the doom and gloom. Some office supply stores are holding their own. Here’s one.
Doubtfull, these chains will be purchased by private investors for pennies on the dollar. They will continue to have a distribution system that undercuts small time start ups. The only thing that will bring back mom and pop stores is crime. When people become increasingly poor security costs will hurt big box stores, mom and pop are there own security. No guard is as motivated as an owner. I remember during the Rodney King riots stories of Korean merchants defending their stores with guns. I doubt the minimum wage employee at Office Depot will due the same, probably just join in the looting.
I remember during the Rodney King riots stories of Korean merchants defending their stores with guns
—————–
California changed the law so that kind of “self-protection” is no longer possible.
Reason #7349 that California is the LAST place anyone wants to live as the economy there craters, and third-world realities begin to surface.
An otherwise non-criminal California resident found with a loaded gun in his car is treated approximately the same as someone caught in the midst of armed robbery.
Meanwhile, I just heard McCain, like WJ Clinton before him, make a comment that shows that he thinks the 2nd amendment is about hunting rights. Sheesh.
I think everyone is heading over to Dunder Mifflin these days.
The Office Dept and Max stores in Loveland match your description: ghost towns. So what happens? Staples comes to town of course!
There was a time when Office Depot was cheap. Over the years it has become very expensive - they must have markups of 500% or more on a lot of the chintzy little paper and plastic type merchandise they sell. Like many merchants, they are now being laid low by their premium-price strategy. They’re trying to be more competitive, but it’s too late. Their staff is poorly educated and poorly-trained, so their competition is Dollar General and Walmart, not the locally-owned office supply shop.
High-margin retailers are getting killed, and it’s going to continue. There will be opportunities, though, for businesses with low-price strategies and low costs to survive and even prosper.
Time to shuffle the deck and let the cards fall where they may.
RE: “When Heather MacFarlane looked for a condominium in 2005 after getting divorced, she was turned off by high prices and unappealing properties. The few she liked were snapped up by someone else. She decided to rent and furiously saved money.”
“A larger down payment and lower prices enabled her to purchase a two-family in Roslindale for around $500,000. The downstairs unit is rented, making her comfortable about taking on a bigger mortgage on her income.”
hehehe…$500k mentioned in the same breathe as “first time home buyer”.
What the post doesn’t mention is the purchaser’s job which was noted in the Glob article…and that is (ahem)…”public relations manager(?) for the ‘Boston Home for Little Wanderers’”.
Remember this circumstance the next time a non-profit comes knocking for donations.
“‘Many people pulled equity to take a vacation or buy that big screen TV,’ Lessard said Monday. ‘It’s not something that’s advisable, considering the market has now fallen.’”
It would have taken a hell of a lot more than the purchase of one big screen or a vacation to put debtors into the financial mess they are now facing.
It would be more like they took out annual MEWs and bought big screens for everyone on the block and then invited them all out on disney cruises for the last five years.
Man walks into a trucking company looking for a job. After reviewing his qualifications, the interviewer offers him a job. The trucker says he will only take the job if his friend Elroy is hired as well. A bit perplexed, but not wanting to lose this good candidate, the interviewer replies…”ok, if you can answer this one question I will hire you AND Elroy.”
“You are going down a very steep hill hauling a double-wide load. At the bottom of the hill you notice traffic is dead stopped. You go to hit your brakes and nothing happens. What are you going to do?”
“Shit”, that’s easy!” says the trucker. “I’m going to wake up Elroy.”
Wake up Elroy? Why would you do that?
“He ain’t never seen a wreck like the one we are about to have!”
I think it might be time to wake up Elroy.
Orwellian double-speak courtesy of Orwell’s Fargo
“Lee Caprarola, a mortgage banker with Wells Fargo in Somerville, believes that prices have not firmed.”
“‘It’s difficult to say if prices are leveling,’ Caprarola said, ‘because the behavior of people who choose to sell may be doing one thing, whereas the behavior of people who are forced to sell could be different. For example, I have financed a number of short-sale properties lately, and those prices still appear to be under pressure.’”
The entire economy is collapsing like a house of cards. Back to trade/barter for REAL things that people need. Shacks/huts, caves, teepees, whatever…