The Goal Of Home Ownership Has Turned Out Disastrous
Some housing bubble news from Wall Street and Washington. AP, “Homebuilder Centex Corp. reported a loss of $911 million in its fiscal fourth quarter, as sales tumbled 37 percent and the company wrote down the value of unsold homes. To revive sales, Centex cut its average selling price 15 percent. The average selling price of a Centex house fell to $267,953 from $315,157 a year ago. Still, home closings declined in every region of the country. CEO Timothy Eller called this ‘the most difficult housing market in decades’ and said the outlook remained weak.”
“The Southeast and Southwest were Centex’s worst regions, as home closings fell 47 percent and 40 percent, respectively, from early 2007. It was only slightly less grim in the Northwest, off 18 percent, and Texas, down 21 percent.”
“Builders have been struggling to keep up debt payments despite their declining revenue. Centex reported that its net debt-to-capitalization ratio ballooned to 54.6 percent as of March 31, compared with 37.1 percent a year ago.”
“It was the fourth quarter in Centex’s fiscal year, during which the Dallas-based builder lost $2.66 billion.”
From Reuters. “Included in the latest results was a non-cash charge of $362 million related to the lower value of land and inventory it holds, and a write-off of $395 million related to the sale of 8,545 lots for $161 million, an average of $18,841 per lot. Total revenue fell 36 percent to $2.31 billion.”
“Housing gross margins fell 10 percentage points from a year earlier, as the company aggressively offered discounts and incentives to sell homes.”
“‘We … accelerated home sales in front of impending foreclosures, significantly reduced our unsold inventory and completed a large land sale,’ Eller said in a statement.”
From Realty Check. “Up until yesterday, the builders’ number one priority appeared to be a tax provision that would allow them to carry back net operating losses (NOLs) to profitable years. Well now the builders are changing their tune, or, so they say.”
“Their ‘focus,’ now, is away from the NOL provision and toward a tax break for home buyers. ‘We believe that the tax credit version in the House stimulus package would indeed stimulate the economy much more directly, much more rapidly and much more stronger than the Senate NOL provision,’ National Association of Home Builders Chairman Jerry Howard told me yesterday.”
“I called some folks in the industry. Some big folks. The word I got…is that they all realize the political pendulum has swung away from the tax break, i.e. the direct builder bailout and toward a more consumer-friendly provision: like the tax break for home buyers.”
The NAHB. “The mortgage credit crunch has spilled over into the housing production loan market, threatening to prolong the current housing downturn, the National Association of Home Builders (NAHB) told Congress today.”
“‘The mortgage credit crunch will continue to be the most significant factor impacting the home building industry into the foreseeable future,’ Scott Eckstein, president of the Illinois Home Builders Association, told the House Small Business Subcommittee on Finance and Tax.”
“Eckstein said that the credit crunch appears to be actually worsening. ‘Tighter mortgage lending terms have made it difficult for home buyers to obtain financing to purchase new homes. Likewise, builders are reporting an adverse shift in terms and availability on loans for land acquisition, land development and home construction (AD&C).’”
“‘Defaults on AD&C loans are rising. In this environment, banks are actively reducing exposure levels to home credit,’ said Eckstein.”
“To broaden sources of AD&C credit, Eckstein called for: Fannie Mae to ramp up activity in its AD&C loan purchase program and for Freddie Mac to create a similar program. Federal Home Loan Banks to improve AD&C liquidity by accepting housing production loans as collateral for the secured advances they make to member institutions.”
“The Federal Housing Administration to help increase competition in the AD&C market by insuring the construction portion of these loans in order to attract new originators such as mortgage banking companies. ‘As in the case of the end-loan mortgage market, FHA could be a crucial stabilizing force in AD&C lending in turbulent times such as these,’ said Eckstein.”
“‘Overly pessimistic assumptions about future home sales and values will result in an unnecessary extension of the credit crunch and housing recession,’ said Eckstein. ‘Draconian restrictions on lending or forced reductions in AD&C concentrations will only serve to exacerbate the present crisis and delay, or even prevent, future recovery.’”
The Daily Bulletin. “President Bush on Tuesday acknowledged that the economy is burdened by high energy prices and a slumping real-estate market. Bush unequivocally laid blame on Congress for failing to act decisively in helping homeowners swamped in the subprime doldrums.”
“‘Last year, I called on Congress to pass legislation that would help address problems in the housing market, …’ Bush said. ‘Yet they failed to send a single one of these proposals to my desk. Americans should not have to wait any longer for their elected officials to pass legislation to help more families stay in their homes.’”
“But Congress and the Bush administration’s complicity years ago paved the way for today’s housing crunch, said David Olson, president of Wholesale Access Mortgage Research and Consulting Inc. of Columbia, Md.”
“‘That stated 70 percent goal of home ownership has turned out disastrous,’ he said. ‘The biggest thing Congress can do would be to get more money to the Federal Housing Administration for hiring because that agency is swamped with loans, loans that are liable to blow up two years from now and deepen this thing even further.’”
“A mandate to split the U.S. home loan and home appraisal industries would needlessly damage those sectors and endanger the two largest U.S. sources of mortgage finance, appraisal and lending trade groups said on Wednesday.”
“The plan in question calls for Fannie Mae and Freddie Mac only to finance home loans from lenders that have put their appraisers at arm’s length.”
“The mortgage finance giants agreed to those rules as part of a March deal with New York Attorney General Andrew Cuomo to end an investigation into whether the government-sponsored enterprises (GSEs) had allowed inflated home valuations.”
“On Wednesday, the Mortgage Bankers Association (MBA) and a confederation of appraisal groups outlined their opposition to a plan they called burdensome and wrongheaded.”
“Cuomo has said mortgage lenders and appraisers were at times too cozy. (He) said in a statement the agreements were aimed at ‘restoring integrity to this crucial market,’ which he said was ‘broken.’”
“‘The overwhelming response to the agreement has been a positive one, with almost everyone agreeing that significant reform is needed,’ he said. ‘It is not surprising that current industry participants, many of whom have significant economic interests of their own at stake, have differing perspectives.’”
Arabian Business. “Bahrain-based Arab Banking Corp (ABC) said it aims to raise $1 billion by selling shares to existing stakeholders, after reporting its second quarterly loss on exposure to the US subprime mortgage crisis.”
“ABC posted a loss of $587 million in the first quarter ended March 31, the bank said in a statement late on Wednesday.”
“‘The loss was almost entirely driven by significant exposure to structured investment vehicles and collateralised debt obligations,’ the bank said, referring to financial instruments in which US subprime loans were packaged.”
The Darien Times. “Lack of home buyer confidence, and continued ’screaming headlines’ of doom and gloom scenarios are the main culprits in the continuing housing crisis, according to a national housing expert. Dr. Lawrence Yun, chief economist for the National Association of Realtors, said housing market activity nationally is at a 10-year low, but he believes the market has bottomed out.”
“‘Nationally speaking, we’re at a 10-year low. Home sale activity is matching the 1998 level,’ said Yun, who added that the boom years of the late ’90s represented an ‘overshooting’ of the market. ‘It is my firm belief… that we are overshooting downwards,’ now, he said.”
“What’s keeping the market down, he said, is lack of buyer confidence in light of media reports. ‘They have the financial capacity, but they are holding back,’ he said, adding some buyers are waiting for the prices to drop more before stepping in, while others are simply hesitant to invest in housing with all the dire warnings they see in newspapers and on television.”
“One story, picked up by national media and splashed across the television screens and pages of newspapers was that ‘in 2007, national median home price declined for the first time since the Great Depression,’ said Yun.”
“‘Unfortunately, this fear factor can be a self-fulfilling prophecy. Buyers hold back, inventory climbs; inventory climbs, prices go down; prices go down,’ and that leads to foreclosures, he said. ‘We are on the verge of going into an economic recession. If the housing market does not recover, we will certainly go into an economic recession.’”
“Yun said 80 percent of home buyers are first-home sellers, looking to upsize, downsize, or move, but the housing downturn is also keeping many of them out of the market.”
“‘Many of these listed homes, there are many stubborn sellers,’ he said, drawing a laugh from the Realtors. ‘Psychologically, home sellers are resistant to lowering price,’ because they have put ’sweat equity,’ into their homes.”
“‘They want to buy, but they can’t buy until they sell,’ said Yun.”
“Going forward, Yun said the Northeast, and particularly Connecticut and areas around ’superstar cities’ like New York, will weather the downturn better than others. ‘They always seem to defy the laws of gravity,’ he said.”
“Fixing the issue of sub-prime mortgages, and the predatory practice of some lenders to steer borrowers toward loans they could not afford simply because those loans paid the best commissions, is the goal of the state’s Task Force on Sub-Prime Lending, said Howard Pitkin, the state banking commissioner.”
“‘Forty years ago, when our mother or father bought a house, you probably had to put 20 percent down, had to have credit without a blemish, the banker probably knew your parents and would hold the loan for life,’ said Pitkin. ‘Today, even for the informed, the mortgage instruments being used are extremely difficult to understand.’”
“In Connecticut, there is currently $15 billion outstanding in sub-prime loans, with 71,000 families impacted, he said. Eight percent of those families were past due at the end of April.”
“‘That might mean more foreclosures coming down,’ said Pitkin. ‘Foreclosures are going to be with us for some time and it’s anybody’s guess how many.’”
“Builders have been struggling to keep up debt payments despite their declining revenue.”
WTF does the above mean?
News writers write the way they think. It explains why they write the way they do.
Basically I think they are just saying that even though they have less revenue to do so they are trying to keep up on their loans. Just like if you got a pay cut but you were still trying to pay your bills. It doesn’t really mean anything sinister; just that there’s less money to pay debts.
I think the writer meant that the major builders continue to service their debt instead of taking the easy path of bankruptcy.
By the way, do you remember back in 2005 when nearly all analysts who followed builders stated that a downturn in sales would not imperil such companies because they had very strong balance sheets?
Replace “despite” with “given” and place the clause at the beginning of the sentence.
Nice edit.
It’s the right word. Even though builders have less money, they are still making payments on their debt. I had no trouble understanding the sentence.
Nationally speaking, we’re at a 10-year low. Home sale activity is matching the 1998 level,’ said Yun…
Now if we can just get home prices to match 1998…
What’s keeping the market down, he said, is lack of buyer confidence in light of media reports. ‘They have the financial capacity, but they are holding back’…
They have the financial capacity based on boom-years lending standards. But take away the funny money and you’re left with a lot less of that so-called “financial capacity”.
But, really, what else would I have expected from this guy. He says what he has to say in his position, I guess. Even if he doesn’t really believe it.
Right on, eastcoaster! My thoughts exactly.
Alert! Alert! Devil’s advocate post.
In minor ways, Yun is somewhat right. We may be close to a bottom in sales, say within 10% or so.
In major ways, Yun is a lying shill. The bottom he seeks will run long and flat for endless years until price/income ratios make sense. This is not about doom and gloom. It’s about honest home loaning vs. fantasy finance.
“We may be close to a bottom in sales, say within 10% or so.”
Alt-A and prime resets still on the way…lots more foreclosures to come, and with job losses, high food and energy costs, and tightening credit, who is going to be rushing to buy? Nobody with 2 nickels and a brain in their head.
…with 2 nickels and a brain in their head.
That’s got to be uncomfortable.
I’m actually in the camp of having the financial capacity to buy a home. But you’ll only get my rental agreement back if you pry it out of my cold dead hands….. or when you show me a market where you can buy houses for 100x-130x of the monthly rental costs.
‘Draconian restrictions on lending or forced reductions in AD&C concentrations will only serve to exacerbate the present crisis and delay, or even prevent, future recovery.’
Yep, we have a huge overhang of vacant inventory, but the government should act to keep money flowing to builders who want to keep building.
Builders might get served a little lip service, but no sympathy and no assistance. Cutting off that PAC money was a crucial error that took them out of the game.
Well, at least he noticed that prices fell in 2007.
Gosh, when you read the news about “aggressive” price discounts and falling sales for Centex and other builders, it’s hard to believe it was only last fall that these same losers were doing those “Sale of the Century” weekends…..and just like you guys on the blog predicted, it would come back to haunt all these builders b/c those new sales prices set the comps price….these builders have no way out of this mess.
Funny you mention that.
I stopped at our local Centex development to see if there were any new deals. I checked the Yolo Co recorders office to see what lots were actually closing for over winter. The average was 35k off listing with noticeable big discounts to 220k.
So I pose the question about how far are they really willing to come down now. The salesman, Steve, says they aren’t offering discounts, never were. I say oh really! What about the one you closed at 220k? He comes right back and says “we’d never sell that low”. I told him I checked and indeed they had closed on at least one at that price. “well..” he said, “we might have sold one or two at 229k because they were **irrelevant excuse**”. I give up and leave. The asshat won’t deal and why waste my time.
Now he’s still talking to my husband after I leave. He askes him, “did i say something to offend her?” to which my lovely husband said “She’d like to buy a house but you really sealed the deal when you lied to her” .
LOL - good man! Mine would have just shrugged, like I don’t know why she’s so mean..
Gwyn-Jane -
I’ve been wondering this for a long time - why are you even talking to new house builders?
Aren’t these houses the POS that are going to fall apart from crappy construction?
I admit, I don’t know that market at all, but is that all there is up there in the Davis area?
I ask because I think if you are patient you’d be able to buy something of much better quality and probably not too distantly in the future, considering the way things are going.
I guess I’m just surprised you’re kicking the tires so much with those useless sacks of you-know-what.
We have lots of variety in Davis, jack and sh!t.
An aging 950 sqft 3/1 will cost you 350k and over 400k for anything you might be actually be willing to pay for. The quality of these existing homes makes Beazer look good.
The city pays the county to allow it to skip out on growth quotas which other nearby cities absorb. The little bit of infill that does appear is far more expensive then the existing stock. A 3/1 tiny infill project townhouse will run about 500k and the quality still sucks.
Davis school district is 4 mil in the hole due to declining enrollments. Yolo co. is about to take them over which is probably the best thing that could happen. We’re expecting in Nov and though we’re pretty sure that we are fleeing CA in the next few months, I still go out and kick the tires to reassure myself we’re doing the right thing.
Good for you!!!
I was at a Select Comfort store where the very nice person was asking me how I wanted to finance their great $5000 bed. I politely told her that I just didn’t see $5000 of value there, especially when they want $2500 for the adjustable part, which I can get at Ikea for $500. That about sealed the deal.
It’s a good thing you have a smart wife and not one like the wife in the “Suzanne” commercial…..
“The Goal Of Home Ownership Has Turned Out Disastrous”
These headlines just get better and better.
Dizz-ass-truss.
Here in the Alt-A Bay Area, the goal of thousands upon thousands of individuals was to speculate on a continual rising house market. Aided by the 6 percenters, many of these were houses buyers lived in or are living in… and the worst is still ahead.
I say:
“Dizz-ass-truss!”
*******
Maybe the real disaster is the NAR.
Who needs leadership when you have leaders like this?
“Dr. Lawrence Yun, chief economist for the National Association of Realtors, said housing market activity nationally is at a 10-year low, but he believes the market has bottomed out.”
Why is it that Yun, Chief Economist, only points out very subjective forecasts. There are no real numbers or well thought out equations to his statements.
Why is it no one who quotes Yun points out that he’s called the bottom each month for the past year?
Because the realtors pay too much to newspapers for advertising. In fact, since the advent of Craigslist, its probably all the income the papers are receiving from advertising.
Right. Something like half of their revenue came from classifieds. An anonymous quote…
“Half of the American people have never read a newspaper. Half never voted for President. One hopes it is the same half.”
Because the verifiable evidence does not support any upbeat forecast.
Dr Lawrence Yun, Chief Eclownomist
Quit being coy, FP. You know why!
sf jack,
Took the words out of my mouth. Very little of this frenzied activity of the last several years had anything to do with white picket fences and porch swings. It was about getting in, getting out and moving on to the next deal!
And believe it or not some of the most aggressive players were the first time buyers or those that were at a stage in life where they felt they had little to lose. Other than those “playing” in distant markets and leveraging their equity to the max most with equity and on 15 yr. mortgages weren’t camped outside of condo developments. IMHO.
Yun, LIEareah, all same peas in a pod.
‘They have the financial capacity, but they are holding back,’
Uh No I don’t and no I’m not. Housing costs are way too high for me to consider moving up, I’m in the upper median for net worth and income and I still have no choice but to stay were I am. Housing has to go way way lower for me to be able to stop “holding back” from NAR induced financial suicide.
“Going forward, Yun said the Northeast, and particularly Connecticut and areas around ’superstar cities’ like New York, will weather the downturn better than others. ‘They always seem to defy the laws of gravity,’ he said.”
So the areas that had the biggest price bubble will fare the best? I thought it was areas where prices didn’t rise much that will fare the best, as Yun said in the Midwest. Or places with lots of population growth but overbuilding, as he said in the Southwest.
Yeesh.
If by “fare better” he means prices will be higher here than elsewhere, that is true because incomes are higher here than elsewhere. But it is a long way down to merely “high.”
I fail to see how the Northeast will get out of this one. The city relo forums are swamped with New Yorkers, Bostonians, and other North easterners escaping.
Many of these listed homes, there are many stubborn sellers,’ he said, drawing a laugh from the Realtors. ‘Psychologically, home sellers are resistant to lowering price,’ because they have put ’sweat equity,’ into their homes.”
“‘They want to buy, but they can’t buy until they sell,’ said Yun.”
FunYun, WWWHHHAAATTT? What sweat equity did most of these clowns put in. They LIVED in the house and watched it magically go up, up , up. Now they don’t want to acknowledge that there equity has (again) gone up, up, up in a puff of smoke (and disappeared). Sweat equity means someone WORKED. And even for those few, tough $h!t. Equity gone away.
How many people bought a house and fixed it up using a credit card?
Home Depot and Lowes are huge candy stores for flippers and etc.
Didja hear that Home Depot has trimmed its expansion plans? It’s also closing some stores.
Well, they will now have fewer stores to frequent. Home Depot is closing 15 stores.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aQOq5j34MH74&refer=news
BayQT~
“The following is a list of the locations where Home Depot intends to close stores:
East Fort Wayne, Indiana
Marion, Indiana
Frankfort, Kentucky
Opelousas, Louisiana
Cottage Grove, Minnesota
East Brunswick, New Jersey
Saddle Brook, New Jersey
Rome, New York
Bismarck, North Dakota
Findlay, Ohio
Lima, Ohio
Brattleboro, Vermont
Beaver Dam, Wisconsin
Fond du Lac, Wisconsin
NW Milwaukee, Wisconsin”
No surprises here. The real shame of it all is that Home Depot and other big box stores have a tendency to run small businesses out of town. Fellow I know up North worked all the earlier part of his life to start a hardware store in a smaller town in New England. One of those guys who loved tools ever since he was a pup. Got the place up and running, doing Ok and then BLAMMO! Along comes Home Depot. Another year and he’s out of biz. So I just wonder if a similar thing happened in some of these areas. So now, Home Depot closes up and there’s no little hardware store to take up the slack and how far do people have to drive to get a bunch of nails or something? Ah, there’s the internet, you say. Well, what about the small plumber who’s trying to fix a neighbor’s toilet? He needs to get a flapper. He can’t just drive to Joe’s Hardware and pick one up. Home Depot took care of that. We had that happen around here. Used to be if you wanted to go to Lowe’s or Home Depot, you had to drive about half an hour at least. But, between the local WalMart (before it was super sized and changed location) and the local hardware store and a lumberyard that also had a hardware store, you could find what you needed without too much trouble. But everyone just about creamed themselves when Home Depot came in three years ago (just as the bubble was peaking). Even so, many folks still went to the local lumber yard/hardware on account of it was more convenient for some of us. Home Depot couldn’t have that and bought them out (I hope they paid a ton of money, too), intending to operate an outpost in the area. Well, I’m here to report the place is shut down and looks abandoned.
Local hardware/building supply stores can be overrated. The one I’m thinking of wasn’t within easy driving distance of anything else. The selection and service were poor and the prices high. I went exactly once, even though it was closer than Home Depot. The same can be said of a smaller hardware store closer to us before a chain came in and took over.
Also, realize that Home Depot and local hardware stores are not necessarily in direct competition. Aubachon Hardware has a very nice chain of stores that have expanded since the Home Depot/Lowe’s phonema came about. They sell the little gizmos and chemicals that make it unnecessary to wander around the cavernous home depot when you want just a couple of things.
Also, opening up a Home Depot in Brattleboro, VT was a way dumb move. They shoulda asked me before they did that.
Like Casey Serin. Serinitis is very contagious.
Hey, don’t forget that they called Home Depot and bought those stainless steel appliances. I hear those magically add $10,000 to the home value.
And those granite countertops - just makes me want to run out and buy buy buy!
Sweat equity now includes sweating over making next month’s payment when your total debt service ratio is 60%+.
Hey man, don’t sweat it, just walk away and declare BK.
Don’t pay your CC and don’t pay your mortgage, it’s the
New American Way.
the welfar society sure beats the ownership society !
man
Own WHAT? As far as I’m concerned, nobody owns SQUAT until they hold their mortgage-burning party.
Everything nowadays is sacrificed on the altar of Mammon, aka the “Low Monthy Payment”.
Dr. Lawrence Yun - isn’t he a proctologist? He seems to have his head up somebody’s (or his own) - where the sun don’t shine.
‘a write-off of $395 million related to the sale of 8,545 lots for $161 million, an average of $18,841 per lot. ‘
My count puts this at 28 cents on the dollar. And that’s assuming these lots weren’t written down previously.
Does this mean Centex sold lots in Group A at a 72% loss so it wrote down by 72% similar lots in Group B? Or is the writer trying to say Centex incurred a 72% loss on lots sold? Maybe Reuters doesn’t care if their financial writers don’t know the difference between write-downs and realized losses.
So, does anyone think this was a bad purchase by the investors?
I don’t.
“but the housing downturn is also keeping many of them out of the market.”
No you gibbering fool, its the PRICES that are keeping us out of the market, I’ll consider buying once it makes sense and that my foolish friend is when prices drop to the point of affordability. Go tell your NAR Pals and Builder buddies it’s no longer all about them making money faster than Ben Bernake can print it.
Faster than Ben Bernanke can print it? Damn, that’s fast!
Thing is old BEN isn’t getting the money out to the great American credit junkies, and they are going into withdrawal fast. So where are the helicopters Ben?
No, no, no…It’s the MEDIA that are keeping people on the sidelines. It’s always the Media. Price doesn’t matter since RE always goes up anyway. Just quit listening to the MEDIA and listen to Yun…on your television, radio or local fishrap.
RE: how else will you be able to fill it with stuff you can’t afford with money you don’t have to impress people you don’t like?
Reminds me of the credit card definition (and expand to HELOC). Using money you don’t have, to buy a bunch of crap you don’t need, to impress a bunch of people you don’t like (or know).
In 2002 prices in my area were still in the 300’s.
We still have about 200k more to go just to get to where suzanne can work it out.
“President Bush on Tuesday acknowledged that the economy is burdened by high energy prices and a slumping real-estate market. Bush unequivocally laid blame on Congress for failing to act decisively in helping homeowners swamped in the subprime doldrums.”
Once more we have a mis-diagnosed reason for the slumping economy. Mr. Bush is only parroting what Wall Street says, which is to suggest that Subrpime loans and general Real Estate is the demon behind the downtrodden market. The fact that the real reason is that prices are too high is never mentioned even though this is the actual cause.
Today, even for the informed, the mortgage instruments being used are extremely difficult to understand.’”
How true. I find it extremely difficult to understand how an industry handed out so much money to a bunch of uninformed people with no ability to pay back what they ‘borrowed’ and why they are now wondering why it blew up. I am the only one with that difficulty? It wasn’t hard for me to understand that these loans SUCKED and I wasn’t going to take one.
Exactly. I looked at the entire ARM, interest-only, etc. zoo and decided the risk was too high, considering what fixed rates were. Am much happier to have a nice predictable cost to pay. Also worked backwards from the Worst Case Scenario–ok, if everything goes turtle, how much can I afford to pay per month? Am VERY happy I did so, even though a new, well-paying job landed on my doorstep, doubling income.
So Scott Eckstein, president of the Illinois Home Builder’s association wants FNMA, FHLMC, and the FHLBs to buy ADC loans so more houses can be built. He doesn’t stop there, he wants the FHA to insure such loans so even more houses can be built.
Trade asssociation lobbyists clear have no sense of shame.
Should have read “… clearly have no sense of shame.”
He got me so pissed-off that I made a typo!
NAVY FEDERAL CU - great idea for folks that move every 30 months !!!
# No down payment required
# No PMI required
# Seller concessions up to 4% allowed
# Maximum loan-to-value of 101.50%
(includes a HomeBuyers Choice Funding Fee, which can be financed into the loan amount)
# Available for loans up to $850,000
You know businesses pop up around every base to take full advantage of the military staff. Disgusting that the CREDIT UNION is doing it too.
But USAA is restricting credit now.
Mr. Ekstein wants to eat. So he wants us to guarantee his job of buildling can continue. The fact we don’t need his product, and subsidize him is irrevelant. I need to make horse buggies. I need some subsidies. The fact there is no demand is irrelevant.
“Buy my house.”
“Not until you buy mine.”
“No. You buy mine first.”
“No way. I asked you first.”
“No you didn’t.”
“Yes I did.”
“Just buy it and then I’ll buy yours.”
“Look. I can’t buy yours until you buy mine.”
Well, I can’t until you buy mine.”
“Hey, I said that first.”
“No you didn”t. I told you that last time.”
“No you didn’t.” “Uh huh. I did.” “Buy my house.” “No.” “Yes.” “No.” “We’re screwed.” “Yes we are.”
I’m so glad that my drink mug is on the desk right now. Also glad that my mouth is empty. Otherwise, I would have lost a keyboard.
First rule of reading this blog:
AVERT eyes when inserting anything into face!
Leigh
“How about if we just swap houses instead?”
“No, that won’t work, because then our property tax will jump higher but neither of us will make a profit!”
“Let’s just swap wives instead.”
“‘Defaults on AD&C loans are rising. In this environment, banks are actively reducing exposure levels to home credit,’ said Eckstein.”
“To broaden sources of AD&C credit (that he just said were defaulting at high rates), Eckstein called for: Fannie Mae to ramp up activity in its AD&C (bad) loan purchase program and for Freddie Mac to create a similar (bad loan) program. Federal Home Loan Banks to improve AD&C liquidity by accepting (bad) housing production loans as collateral for the secured advances they make to member institutions.”
“The Federal Housing Administration to help increase competition in the AD&C market by insuring the (bad) construction portion of these (bad) loans in order to attract new originators such as mortgage banking companies. ‘As in the case of the end-loan mortgage market, FHA could be a crucial stabilizing force in (bad loan) AD&C lending in turbulent times such as these,’ said Eckstein.”
So given that Centex’s assets are about $2.3 Billion, and their last four quarters’ earnings have been:
-128M
-644M
-975M
-911M
They’re pretty much on a collision course with bankruptcy in just under a year. Nice to see that on this news their stock price is up 6%, with a 2.7B market cap.
I would short the heck out of these guys, but it seems the market insanity knows no limits these days.
CTX up 5.57% today. Go figure.
But, didn’t you hear? Paulson says the credit crisis is closer to an end — which, of course, is true, even if the end is a billion years away. Such clever wording, and such stupid speculators.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aZGKVAF.Xjeg&refer=home
I hope Centex bites the big one, they deserve to, they’re still building around here. Seriously. Putting in a new development we don’t need or want.
Any puts available?
Which is worse: a landlord or a mortgage company?
Which bills suck more: paying a selfish landlord or a voracious lender?
Landlords can behave unreasonably, and you constantly have to go back and negotiate (e.g., when the lease expires). Make sure you pay your debt service on time and a mortgage company will never bother you again. That said, Id rather give $1,500 per month to a landlord than $3,500 a month to a lender for the privilege of living in the same space.
Landlords can behave unreasonably, and you constantly have to go back and negotiate (e.g., when the lease expires)
On the other hand, if they are that much of a jerk, it’s not that hard to move on, either. (Annoying, but not hard) Smart landlords know that good tenants are hard to find. No need to take hassles from the little Napoleons if you pay your bills on time and take care of the property.
“Little Napoleons”
The female counterpart must be named La Petite Marie Antoinette.
My lease manager knows Im a good tenant but acts like she’s doing me a favor by cashing my “on time” checks.
I wonder how many folks are behind on rent?
I wish we could go back to wom pom and yaks.
My lease manager knows Im a good tenant but acts like she’s doing me a favor by cashing my “on time” checks.
Feel free to send them to me. I’ll be far more appreciative.
I feel like I am a check writing machine.
Fees, bills, auto pay and more bills and don’t forget those snotty taxes.
Shopping for bargains used to be exciting but
now I am an inflation fighting warrioress.
I wonder how all those Los Angeles rentals that go for 3500.00 a month are really working out?
Ben Jones, when is the big shake out coming?
I agree totally.
I pay 1100/mo in a suburb of Boston. A starter house in a nice town with quality schools go for starting at $375k. My monthly Nut would be $2,700/mo on a 30 yr fixed FHA at 5.75$ with 3% down and $360/mo real estate taxes, $140/mo PMI and $70/mo in insurance…. Oh yeah did I say I live in Mass… Oil Heat too I am not even gonna include that in the equation. Needless to say I will be renting untill that house comes down to $275k
How about that MSM?
How about that Barney Frank, Chris Dodd, Chuck Schumer and HRC?
And Bush lackeys?
And Sheila Bair of FDIC?
And Yun and you 6 percenters?
And the Tan Man and you mortgage pushers?
This is it - right here - right above…
All the numbers, the thinking of buyers, simply: the facts.
In Matt’s little post above.
Read it again - closely. There’s a problem here and if you cannot figure it out, you’re all much less intelligent than I had thought.
“It’s the price, stupid!”
Your choice - perhaps the longer you play games with supporting prices, the longer this whole downturn is going to be…
Sounds almost exactly like me. We rent a 4BR in Watertown (not in great shape, but we do have a screened in front porch) and we pay $1200/mo. We have a two family unit next door to us and the top floor unit sold for $375k… with, you guessed it… granite countertops.
I’ve actually had some really nice landlords, particularly those who either have owned their buildings for a long, long time or who inherited it from their parents, so they don’t have a huge mortgage to pay and hence don’t feel compelled to squeeze every last nickel out of their tenants.
These guys tend to recognize that it’s in their longer-term interests to hold onto good tenants, i.e., those of us who pay our rent on time every month and who don’t cause any trouble.
“‘They want to buy, but they can’t buy until they sell,’ said Yun.”
Anyone that wants to buy at these inflated prices probably has no equity these days since wanting to buy over-priced homes and having excessive debt leverage often go hand in hand. How does selling at a loss make them more able to afford an over-priced home?
They are going to sell at their wishing price…. duhh.
Sheesh, you people. You just don’t get it, do you? Real estate ONLY goes up! If it won’t sell for the list prices, they jsut need to rent it out for 6 months or a year, then it will sell for even more than the wish price.
[/sarcasm]
Seriously.. how well has it (NOT) worked out for those people that were told to take their house off the market a year ago and rent it out for a year until the market recovers. Anyone having done that in my neighborhood is down 20%+.
Oh, on the up side, not only will they get 20% less than they may have gotten a year ago, but they will also have to pay more of the closing costs.
Not only that, they’ll have to fix all of the damage left by the tenants.
And if they bought near the top, no way the rent even covered the ITI.
Anyone see the photo op where Hillary took a ride with a J6P in his mongo pickup truck to fill it up. Actually, he only filled it up halfway ($60), but they didn’t say why. J6P (a sheet metal worker) lamented that his family would have to skip the vacation this year because he was spending so much on gas.
No mention of course as to why he drives a big 12 mpg truck as a commuter vehicle to his job. Even if he really needs a truck, why not get something smaller with better fuel economy. Of course we know its a macho thing. No self respecting “dude” would be caught dead in a 4 cylinder Ford Ranger (do they still make those?).
“No self respecting “dude” would be caught dead in a 4 cylinder Ford Ranger (do they still make those?).”
Look… there is one parked on the street in front of my house…
http://www.zillow.com/HomeDetails.htm?zprop=8098415
Well, really… it is parked in front of my work… but it was in front of the house when that picture was taken.
Like that Zestimate? It will be $150K before this is over.
The problem is that politicos of all strips need “victims”. Democrats seem somewhat better at digging them up cause it’s easier to find problems that the government can/should solve. I tend to look at most of the “victims” and wonder who forced them to be in their current position other than themselves.
Yeah hubby bought a ‘98 on his credit card. There are still new ones. It’s funny because one of his sons went through several big macho rigs, rolling one note over to another, looking for just the right image. They live 10 miles out of town, and he’s going BK, and as we left their place last week he said he was thinking of trading again…for a Ranger.
But I “NEED” a big SUV to tow my toys !
Ford stills sells a 2008 Ranger with a 4 cylinder gas engine in the USA. Rumor is that it’s a gas hog even then. Ford also produces a Ranger with a small turbo diesel, but refuses to sell this in the USA. This model gets phenomenal mileage. Alleged reason is the turbo diesel does not meet EPA requirements, which I doubt.
My 2007 Ranger gets about 28 mpg highway on 10% alcohol gas. It’s rated 29 EPA. Toyota Tacoma rated 28 EPA, for those who would not be seen in a *gasp*-domestic. List prices for the down and dirty 2WD, 4 cylinder stick were identical. Selection=zip. Visited six dealers before I found one. New Ranger/F150 ratio on lots about 50:1. Not too different than the Tacoma/Tundra ratio.
Capstead Mortgage Corporation Announces First Quarter 2008 Earnings
“In our view, credit market conditions began improving late in March and into April largely due to actions taken by the Federal Reserve to support the mortgage securities market by providing additional financing to both banks and primary broker dealers and orchestrating the acquisition of Bear Stearns by JPMorgan Chase. Additionally, actions taken by federal regulators to allow Fannie Mae, Freddie Mac and the Federal Home Loan Banks to expand their holdings of agency-guaranteed mortgage securities have provided further support to the market. These actions have improved pricing for most agency-guaranteed mortgage securities, increased the availability of financing via short-term repurchase agreements and have largely stalled momentum toward higher collateral requirements beyond commonly seen levels of 5%. We are cautiously optimistic that these improvements in market conditions may be indicative of a sustained recovery and that the turbulent credit markets experienced since last August are largely behind us.
“With the actions taken by the Federal Reserve to reduce its federal funds target rate aggressively this year, the target rate now stands at 2.00%, down 225 basis points since year-end and 325 basis points from late last summer. As a result, our borrowing rates will continue declining during the second quarter and financing spreads and net interest margins are expected to expand even as portfolio yields decline with lower ARM loan coupon resets and somewhat higher mortgage prepayments. Although mortgage prepayments can be expected to increase reflecting seasonal trends and lower prevailing mortgage interest rates, the increase should be relatively modest because of national trends toward declining home values and tighter mortgage loan underwriting standards.
“We remain confident that our core investment strategy of conservatively managing a leveraged portfolio of agency-guaranteed residential ARM securities can produce attractive risk-adjusted returns over the long term while reducing but not eliminating sensitivity to changes in interest rates.”
http://biz.yahoo.com/bw/080501/20080501006384.html?.v=1
does this mean the housing crisis is over?
“does this mean the housing crisis is over?”
No. It means they can keep hiding their losses for awhile longer…. Party on!
Hillary is a media photo-op whore. She will do anything to get her mug in front of a camera and appear that she cares about J6P. She doesn’t. Problem is, neither do any other of the a$$hat pols. My political statement. They are all a bunch of crooks - both parties.
And yet the two major parties wonder why we Independents refuse to go back to them.
Hey, it’s self preservation for Hillary. Her fellow NY senator, Chuck Shumer, is the uber camera whore of the universe. He would elbow his own mother in the face to get on the TV, or alternately Hillary. Grasshopper Hillary has learned from the master.
“……tax break for home buyers…….”
Am I the only one that gets pi##ed about the government’s use of tax breaks to promote projects, instead of letting them sink or swim on their own merits?
If they keep this up, nobody will want to do anything like build a factory, or promote hybrid vehicles, or invest in anything, without them.
Ooooops……..horse gone, time to shut barn door.
When governmnet subsidizes something, you get more of it………lately, it seems that they are mostly subsidizing “stupidity”
““‘Many of these listed homes, there are many stubborn sellers,’ he said, drawing a laugh from the Realtors. ‘Psychologically, home sellers are resistant to lowering price,”
Maybe it’s because realtors told these same people that prices wouldn’t go down a couple of years ago.
The middle class is shrinking rapidly. That’s not a political belief, two income familes are a fairly new invention.
I have this theory that the bubble got so out of hand partly due to the fact that the American Dream was slipping away and people were willing to do just about anything to halt the downward momentum.
People tend to think in timeframes of recessions but this is a generational shift due to aging boomers, offshore outsourcing, global wage arbitrage, and automation.
Home prices probably should have started falling in 2000 but they doubled in a lot of places.
The middle class is shrinking rapidly. That’s not a political belief, two income familes are a fairly new invention.
True.
But the inherit problem is defining middle class, which changes with every advance that makes it to the masses. Our standard of living is still better than it was 50 years ago. Bigger houses, universal comforts like air conditioning, better cars, 2 cars per household, college educations, etc are all norms that didn’t exist in the 40s and 50s.
By world comparison, if you have cheap and constant electricity, running water, and a steady food supply, you *are* rich. Even the super rich of the late 19th century look “poor” depending on how you define the classes and standards of living.
I do agree with your theory that some of this bubble was somewhat a product of a last ditch effort not to face the music of a declining standard of living. We have an aging population and are starting to compete with 2 of the worlds largest populations (India and China) for the same resources. I can’t help but think that in order to balance out somehow, our standard of living will have to go down, 2 incomes or no.
Good points but now you need two cars because both people work. College is pretty much mandatory for entry into the middle class now and the prices are going up. Also two income families have to pay for day care and have zero hope of paying a mortgage if someone gets sick, even if they have healthcare.
The stuff we want is getting cheaper, the stuff we need is getting more expensive.
our voting choices are Tweedle Dee and Tweedle Dum. My particular choice is McCain over the nitwits (Hillary and Barack). At least he said that it isn’t gubmints job to do a bailout. Plenty of things about him not thrilled about, but don’t want the bailout Casey and Co. folks.
He was against a bailout, but now he’s for one. This guy flip-flops as much as Kerry did.
The link is from “Reason,” which happens to be the first citation I found, but I’m not a libertarian and don’t agree with all of their views. They are, of course, correct on the bailout question.