Is This Supposed To Be A Good Investment?
Some housing bubble news from Wall Street and Washington. CNN Money, “Demand for new homes collapsed last year. Next up could be a similar drop in the rest of the construction market. Economists say a fall-off in nonresidential construction in the face of an economic slowdown shouldn’t be a surprise. ‘Developers are a little nervous about getting enough rent, getting enough tenants so they’re pulling back,’ said Jim Haughey, chief economist for Reed Construction Data.”
“Industry tracker McGraw-Hill Construction reported that nonresidential construction starts had remained strong through February, then plunged 23% in March, the most recent month for which a reading is available.”
“‘The degree of credit tightening going on there is very noticeable right now,’ said David Seiders, chief economist of the National Association of Home Builders. ‘It’s frozen up along with the private mortgage-backed security market.’”
“There has been an average of 32,000 job losses a month in the construction sector over the past 12 months. And a slowdown in commercial construction will lead to even more construction job losses.”
“‘The housing downturn is clearly not over, so this just seems like piling on at this point,’ said Seiders.”
From MarketWatch. “The hoped-for rebound in home sales failed to blossom this spring, with the housing market caught in a downward spiral as falling prices continue to sap consumer sentiment and keep would-be buyers on the sidelines.”
“The final nail in the coffin for the spring-selling period came this week after luxury-home builder Toll Brothers Inc. reported dismal sales figures for the quarter ended in April. The company’s CEO, Robert Toll, said traffic levels at its communities were ‘the worst that we have ever seen.’”
“Most buyers are canceling because ‘they go to their friends and neighbors and say, ‘We just bought a new home,’ and everybody says, ‘What, are you crazy? Prices are dropping,’ according to the chief executive.”
From Reuters. “Squatting is on the rise across the United States as foreclosures surge, eviction notices mount and homes go unsold for months, complicating the worst U.S. housing slump in a quarter century and forcing real-estate brokers to enlist the help of law enforcement and courts to sell empty houses.”
“In some regions, squatting is taking on new twists to include real-estate scams in which thieves ‘rent out’ abandoned homes they don’t own.”
“Others involve ‘professional squatters’ who move from one abandoned home to another posing as tenants who seek cash from banks as a condition to leave the premises — a process known by real-estate brokers as ‘cash for key.’”
“California real-estate broker Steve Smallson said he finds about three squatting cases a month, compared to none last year, in his region of Woodland Hills, a middle-class district of Los Angeles. That includes a case in April involving a foreclosed home worth $1 million where police were called after neighbors reported squatters filming pornography in the house.”
From Bloomberg. “Banks and securities firms, reeling from record losses resulting from the collapse of the mortgage securities market, are failing to acknowledge in their income statements at least $35 billion of additional writedowns included in their balance sheets, regulatory filings show.”
“The balance-sheet adjustments are in addition to $344 billion of writedowns and credit losses already reported on the income statements of more than 100 banks.”
“‘The smart people are the ones who’ve identified the problems, put them out there in full transparency, and addressed them by raising more capital,’ said Michael Holland, who oversees more than $4 billion as chairman of Holland & Co. in New York. ‘There is still billions of dollars of crap out there that hasn’t worked itself through the system.’”
The LA Times. “Nearly two years into a housing decline…many Americans hope the end is near. Most economists believe the worst is yet to come.”
“If the country is to avoid a full-scale recession, however, as some analysts are beginning to consider possible, the economy is apparently going to have to pull itself back from the brink without help from the housing industry. ‘The housing correction is still going to be with us this time next year,’ said Celia Chen, a housing economist at Moody’s Economy.com.”
“When it comes to housing, the optimists are those who see the near free fall in home prices as encouraging: It may at least shorten the economic agony. ‘Because the prices are going down so fast, we’ll be hitting the stabilization point sooner,’ said Lawrence Yun, chief economist at the National Assn. of Realtors.”
“Thomas Lawler, a housing economist, noted that in the last housing price correction, which occurred in the early 1990s, it wound up taking prices seven years to drop 20%. Compared with that protracted slump and recovery, he thinks the current free fall in home prices is a good thing.”
“‘Do you want a slow bleed?’ Lawler asked. ‘Wouldn’t it be nice to just get it over with? It might be that that’s what we’re seeing.’”
The St Petersburg Times. “If it was gloom you wanted, there were second and third helpings to be had last week when the National Association of Real Estate Editors met in Dallas. Speaker after speaker, expert after expert, predicted: Wait till next year, or longer. It ain’t over.”
“Charles McMillan, the new president-elect of the National Association of Realtors, acknowledged that there will be ‘few changes in the next few months,’ but predicted a 6 percent increase in existing-home sales next year, to 5.7-million homes.
“‘There’s no national market,’ McMillan said, although his 1.2-million-member association routinely reports national sales figures. ‘All real estate is local. It’s our job to restore confidence in the market.’”
“A questioner in the audience asked about an NAR promotional campaign that started a few years ago, just as the market was going into free fall - ‘There’s never been a better time to buy a home.’ If someone had taken that advice and bought a home, the questioner said, in some markets that house is worth less today. Why should people listen to NAR?’”
“McMillan dodged that bullet. ‘Realtors can’t guarantee a property will ever increase in value,’ he said, and started talking about mortgage fraud.”
The Arizona Republic. “Despite the housing slump, home sales at a north Mesa planned community were at full throttle Saturday. Buyers lined up by the dozens, eagerly awaiting the chance to buy a homesite in Mountain Bridge, a Blandford Homes development.”
“Buyers flew from Alaska, Canada and other states to nab a piece of desert property.”
“Sales kicked off at 9 a.m., when buyers had first pick of 100 lots and 19 models. Many had camped out since Monday, roughing it for a shot at scoring their dream home. ‘I flew in just for this,’ said Indiana native Lori Schneider, who slept in a Dodge Caliber Friday to earn her spot in line.”
“Buyers admitted to being drawn by the desert views and good values. Home prices are between $240,000 and $800,000.”
“‘I actually would have paid more for this location,’ said Bridget Stone, of Phoenix. ‘I think after today the pricing will go up.’”
The Montreal Gazette. “On paper, they have assets of more than $1 million. But Paul and Mary Staley (not their real names) aren’t feeling all that comfortable these days. They’ve painted themselves into a bit of a corner with two revenue properties, and are unsure how best to extricate themselves.”
“Mary acquired the triplexes in a now-trendy neighbourhood from a relative five years ago. They remortgaged them for $340,000 apiece and used the proceeds to pay off their large suburban home.”
“The Staleys’ problem is that the monthly cost of the mortgage and taxes on the two rental properties currently exceeds the rent by a fairly hefty sum. They collect $3,367 each month and owe $5,600 to the bank.”
“They’ve been dipping into their line of credit on their home for the shortfalls and renovations, and have pretty much maxed it out.”
“‘Because the tenants have lived in our buildings a long time, they’re paying rents far lower than what you could normally charge in that part of town. And we have a bad tenant who hasn’t paid in months. It’s very frustrating, working hard and sacrificing like we do to have someone live for free,’ said Paul.”
“The fact the properties generate less in revenue than they cost each month also suggests a lack of a coherent plan.”
“‘Is this supposed to be a good investment?’ investment adviser John Archer wondered. ‘The properties have to rise in value at least 5.35 per cent a year just for the loss to be offset. And this is before any major unexpected expenses. Why are they hanging on to these properties? For their children? If the properties don’t make economic sense now, will they necessarily make economic sense when they give them to their kids?’”
“Money is going to be tight for as long as they hold on to both revenue properties, even if they can increase rental revenue and minimize expenses, because a significant part of their monthly employment income is being funnelled into them, said accountant Nick Moraitis.”
“While they may come out significantly ahead selling in 10 years if housing prices continue to rise and they don’t add more debt, it won’t be an easy decade for them and may not be worth the hassle.”
“‘Their budget and lifestyle will be strained for the next several years to support the triplexes,’ Moraitis said. ‘I have a hard time seeing why they are keeping rental properties that they are losing money on every month. Just think of the stress-less life without debt, cash in the bank and additional income to spend.’”
Buffett says effects of crisis “far from over”
By Richard Milne in Frankfurt
Published: May 19 2008 16:03 | Last updated: May 19 2008 16:03
Warren Buffett, the world’s richest man and chief executive of conglomerate Berkshire Hathaway, on Monday said he thought the effects of the financial crisis were “far from over”.
Mr Buffett was speaking at a press conference in Frankfurt, where he is meeting German family-owned businesses as part of a four-country tour of Europe.
“It is rippling - there are secondary and tertiary effects. I think the Wall Street crisis is mostly over although I don’t know. The [Federal Reserve] with its Bear Stearns rescue largely stopped that. But I don’t think we are half way or even a quarter of the way through the impact in the general economy,” he said.
The “Sage of Omaha” said the effects of the crisis were beginning to be felt not just by those who had behaved the “silliest” but also now by people “who did sound things”.
At this late hour alchemy is still being performed…
Paper into Gold
How can there be a credit crisis when the gov’t is assuming all the risk for the big banks? It seems that everyone is tiptoeing around the 800lb gorilla in the room, and in some markets apparently we are even seeing a mania pop up all over again. I don’t get it…is it because there are finally some good deals out there that the banks are willing to finance, or are people just stupid and spending all of their cash?
We could claim that all the money the government is giving to the banks is just Manna from Heaven…
Yeah, that’s the ticket.
Oh wait, all of us resemble this comment.
Bull-market geniuses, every single one of them, and not even that. Even the true bull market folks know when to cash out and go home.
“Debt is slavery of the free.” ~Publilius Syrus
I don’t know I have a bunch of cash in the bank and no debt, but I worry that my cash may become worthless everyday. My only consolation is that I think the house I want to buy will drop even faster and that at some point the US consumer will be completely tapped out and deflation may reign.
Place your bets.
Trichet says market correction ‘ongoing’
Jean Claude Trichet, European Central Bank president, warned on Monday that the end of the credit crunch was not yet in sight and the world was experiencing an ”ongoing and very significant market correction”.
View of the day: More credit woes to come
By Willem Sels
Published: May 19 2008 16:01 | Last updated: May 19 2008 16:01
The worst of the credit crisis is not behind us, warns Willem Sels, head of credit strategy at Dresdner Kleinwort.
He says that while liquidity tensions are easing, the market is entering a second phase of the crisis. Real credit losses are accelerating and many areas of the market have yet to see the worst of the crunch. He says corporate defaults have only just started rising and he expects high yield defaults to accelerate sharply to 7-11% by mid-2009, particularly in the US.
The market, however, is only currently pricing in a 6% rate of default, he estimates. Mr Sels says rising corporate and consumer defaults will lead to real losses in portfolios, leading credit spreads wider, especially for non-financials.
He notes the weakness in the housing market seems to be gathering momentum and could still provide a shock to the economy.
“Even if we get a W-shaped economic recovery, the current mid-cycle credit rally seems overdone,” says Mr Sels. “We believe the recent rally has been exacerbated by investors who are “afraid to miss out” or who are too impatient to recognise the lags with which the economy and the profit cycle typically react to shocks.”
Cause of debt was severe apathy.
“The final nail in the coffin for the spring-selling period came this week after luxury-home builder Toll Brothers Inc. reported dismal sales figures for the quarter ended in April. The company’s CEO, Robert Toll, said traffic levels at its communities were ‘the worst that we have ever seen.’”
It’s okay, only eight more months to the next souper bowl.
Silent Spring III: A Taste of Despair
Silent Spring III: The Chainsaw Strikes Back.
The Arizona Republic. “Despite the housing slump, home sales at a north Mesa planned community were at full throttle Saturday
…and the in the southbound train with Fireman Sim Webb shoveling on coal and Casey pouring on steam they left Memphis with 6 cars at 12:50 am, 95 minutes behind schedule
…and he took his farwell trip to the Promised Land.
“Jean Claude Trichet, European Central Bank president, warned on Monday that the end of the credit crunch was not yet in sight and the world was experiencing an ”ongoing and very significant market correction”.
You wouldn’t know that by looking at how the stock market is behaving. Dow 30,000!
Meanwhile, one of our Tucson papers is trumpeting a possible end to the housing slump. Details right h’yar…
“‘There’s no national market,’ McMillan said, although his 1.2-million-member association routinely reports national sales figures. ‘All real estate is local. It’s our job to restore confidence in the market.’”
But the financing is not local. Cash buyers aren’t going to increase sales at existing prices. Inability to sell in one market can prevent one from moving to and buying in another market. Unless investing, one typically does buy in their local market or sometimes outside of their local market if buying a vacation house. However, there are many non-local factors affecting that potential purchase. One local factor that could help, rising wages for the working class, isn’t happening anywhere.
“All real estate is local” is the common phrase.
But to have a clearer picture of the way real estate works, you need to add onto that:
“All real estate is relative.” A major drop in the value of your neighbor’s house will effect your home’s value, even though you may have a bigger and better lot, more bedrooms, etc.–there is a lesser effect the farther away the properties are from each other in both quality and locational terms.
Financial markets are global.
So, capital asset that benefited from the global credit expansion (in residential real estate terms, everywhere that debt is used to buy homes) will suffer in a global credit contraction. The only questions for your “untouchable” market are “when will the adjustment happen?” and “how significant will the adjustment be?”
Moody’s tells us there will be an extended period of bloating, and more than a little bloodletting…
“If the country is to avoid a full-scale recession, however, as some analysts are beginning to consider possible, the economy is apparently going to have to pull itself back from the brink without help from the housing industry. ‘The housing correction is still going to be with us this time next year,’ said Celia Chen, a housing economist at Moody’s Economy.com.”
“‘The housing downturn is clearly not over, so this just seems like piling on at this point,’ said Seiders.”
Residential and CRE correcting together - who’d a thunk it?
Others involve ‘professional squatters’ who move from one abandoned home to another posing as tenants who seek cash from banks as a condition to leave the premises — a process known by real-estate brokers as ‘cash for key.’”
“California real-estate broker Steve Smallson said he finds about three squatting cases a month, compared to none last year, in his region of Woodland Hills, a middle-class district of Los Angeles. That includes a case in April involving a foreclosed home worth $1 million where police were called after neighbors reported squatters filming pornography in the house.”
Pornography in vacant foreclosures… professional squatters in more than one sense.
They’re cutting their operating costs. AWESUMMMMM!!!
Porn is big business, and if I told you the top 5 companies that make money off porn, nobody would believe me.
But I got the data.
(Hint: Most of y’all have heard of every single one of them.)
And USA no number 1 even in this arena. It’s a puny 4th in terms of porn revenue.
Also, the single main driver of Silicon Valley hard drive technology these days is the fact that each household is hoarding porn. Back in the day, it used to be banks storing information.
AT+T is one of them..
Was, but basically you’re in the right ballpark.
yeah.. they took the “AT+T” initials off of Comcast and supposedly disassociated themselves from Liberty Media (hotel porn) but i imagine they’ve just found more devious ways to promote and profit from porn.
2 more guesses.. General Motors and Visa
Good guesses but you only get a prize for the original idea (= Liberty Media.)
Think far and wide.
Forget who owns the content. Who distributes it?
who distributes it?
I havent kept track but last i heard it was the mafia..
lets see.. distribution.. magazines.. DVDs.. Teamsters? Longshoreman? (no.. that can’t be right.. the mafia’s no longer in it)
if you mean digital / TV distribution, i’d fall back to whoever owns the service providers.. hmm.. who owns them satellites .. undersea optic cable..
i just don’t know and i don’t like to guess wrong.
Okay, those top five companies. I’m going to guess that they’re major ISPs like AOL, hotel chains like Mariott, and cable TV providers like Cox or Comcast.
Boy you sure don’t hear “major ISPs” and “AOL” in the same sentence too often these days…
Recall that during the 1990s, AOL was referred to as “The House that Chat Built.” And those chatters weren’t discussing the weather.
Yahoo! is without a doubt one of them.
Nope.
Google me!
eBay-PayPal
Not even close. Think far more mainstream, and think about all the aspects of porn not just the ones you want to see.
Oh… Mickey, Mickey, Mickey… don’t tell me you’ve soiled those pretty white gloves….. What would Goofy say?
That squatters piece says a lot about how many creepy people come out of the woodwork during tough times.
Times are tough? But didn’t shrub tell us as recently as December how wonderful this economy was? For many it never was wonderful, nor even merely good. For too many it’s been a slow, grinding, demoralizing decline.
When those in economic misery can see some that are clearly undeserving becoming fabulously wealthy while others suffer, it’s not hard to see the justification some might have for squatting or taking similar actions. However, I suspect those initial squatters tend to be mostly the opportunistic, cretin type. But that demographic may broaden as the housing crash deepens.
What will it take for lenders to finally sell their foreclosed properties? That would put an end to the squatting.
I’ve always said that when it was George Bailey lending the money, (and you had to see him at the supermarket or the little league game), it would be harder to default. Now these banks are this faceless thing that’s charging them 32% for their credit cards. No wonder they’re po’d.
And don’t forget, it wasn’t just Shrub:
http://www.commondreams.org/views07/0314-31.htm
Just imagine when farming your kid out for child porn or prostitution becomes a legal fashionable way to fund one’s retirement…
Not as long as I own guns.
lvfsd,
Yeah, “cash for key”, smut filming locations and Lawrence Yun hoping for a swift and merciful death all in the same thread! What more could you ask for? Oh and to David Seiders, sorry pal but the only thing “piling on” was YOUR comment. Look dude, since the houses are being used for the above.. “exploits” then the “employment” wasn’t real to begin with.
Maybe smut producers can claim that ALL their movies are made in vacant/foreclosed homes for that extra “thrill factor”?
Maybe smut producers can claim that ALL their movies are made in vacant/foreclosed homes for that extra “thrill factor”?
Foreclosures Gone Wild anyone?
Is there such a thing as a “foreclosure club”?
No, but there is definitely an “unfinished construction” club.
Angeles. That includes a case in April involving a foreclosed home worth $1 million where police were called after neighbors reported squatters filming pornography in the house
Looks like Suzanne and those squirrels have found a new line of work
Squirrell Porn ?
“I tell you Al, when those cops showed up in the middle of a shoot I had to grab my nuts and get the heck out of there”
LMAO!
Maybe that’s where all the new jobs are coming from. Just wondering if they are “hires” or “1099″s.
“Squirrels Gone Wild”
The FB chronicles-
As the short-bus foreclosure tour pulls up, the realtor says to the bright, smiling faces.. “Everyone pay attention. This house is different. It has .. err.. cooties. Now, this is a face mask. It goes over your face… like this. See? And these are surgical gloves. They go on your hands. Help your neighbor put them on.”
I can envision a rash of birthday suits being filed.
…brings a whole new meaning to ’staging a house…’
If the original owners had left the miniblinds, this wouldn’t have caused trouble
“California real-estate broker Steve Smallson said he finds about three squatting cases a month, compared to none last year, in his region of Woodland Hills, a middle-class district of Los Angeles. That includes a case in April involving a foreclosed home worth $1 million where police were called after neighbors reported squatters filming pornography in the house.”
Woodland Hills is now “Van Nuys adjacent”. Who knew?
Another impact of lenders not holding the loans seems to be a total lack of oversight of the properties much beyond noting whether payments are being made on time. It’s hard to imagine lenders wouldn’t be more interested in the condition of the properties if they still owned the loans.
“…we have a bad tenant who hasn’t paid in months. It’s very frustrating, working hard and sacrificing like we do to have someone live for free,’ said Paul.”
Welcome to the profession of being a slumlord. Been there, done that! Having rental property is for professionals only. This is not a job for amateurs. You got to screen tenants to avoid problems down the road. You got to be good with home repair or at minimum know some reliable and skilled handy man.
Every dumb investor had the bright idea to rent their overpriced piece of crap out. Always looks better on paper than in reality, always!
I believe it. I would think twice before pursuing this particular investment. My wife and I have two jobs between us — who needs three?
“In theory, there is no different between theory and practice; In practice, there is.” - Jan L. A. van de Snepscheut
This is in Montreal, a city with rent control (last I heard). I don’t think they could increase the rent much even with new tenants.
Even many bears say there is no housing bubble in Eastern Canada. Wrong, any real estate prices increases at all is an indication of a bubble, just like in the US rustbelt.
I know a couple of fellows who are what one could refer to as real estate investors.
One guy is a minority partner in an apartment complex with a number of Section 8 tenants. Now, before you go busting up your keyboards to say what a horrible thing than is, permit me to share the following bits of info:
1. This apartment complex is within very easy walking distance of the Arizona Slim Ranch. In fact, I can see it from my kitchen window. But its tenants have never, ever disturbed a moment of my peace. And, believe me, if you’re a noisy neighbor who turns my life into a living hell, guess what you’re going to get in return from me? A hard time, that’s what.
2. The owners and resident managers are very good at screening their tenants. They have no qualms about kicking the bad apples to the curb.
3. They keep the exterior of the apartment complex looking neat as a pin. I dearly wish that some of my homeowning neighbors would do the same.
As for the other investor-fellow, he’s a co-owner of many apartment complexes near the University of Arizona. He focuses on renting to students, but he makes darn sure that they have good credit before he shows them a lease.
“Always looks better on paper than in reality, always!”
My wife is handling renting our furnished vacation home overseas. She has come face to face with the reality that those “safer” foreigners aren’t visiting and renting. (Safer because if they steal our air conditioner, they have to pay overweight baggage charges
) Ex-patriates with property seem to be trying to sell it into the weak dollar.
The locals who might have use for the 6 months or so of rent-worth of easily movable furnishings seem to want to rent for the 10 day minimum.
‘Realtors can’t guarantee a property will ever increase in value,’
“It’s never been a better time to take your chances on the biggest gamble of your life”
Mo Money,
I could be getting out ahead of myself but that could signal something of a changing of the guard at NAR!? In fact it’s the most telling public statement any of their members have made in awhile.
Even though McMillan quickly deflected the question and moved on swiftly to someone else’s dirty laundry here’s what “I” heard:
“Realtors (ethical realtors) aren’t qualified to pose the property in terms of “an investment”. They never were in a place to make those kinds of claims. We will be reigning in their ability to take license in their communications to the public”. There’s a new sheriff in town”.
Personally I think he F-ed up and spoke the truth and then quickly recovered. They can’t push houses if they tell the truth. People would stop buying period and most Realtors would be in the soup line with the rest of us.
Right, without the implied promise of appreciation they are dead in the water for many years to come. Just ask those HBs trying the “guaranteed” price gimmick.
One could only hope….
I know that when I buy a mutual fund I get all sorts of disclaimers. Past performance is no indication of future gains, etc, etc, etc. There is a law that makes them tell me that, why doesn’t it apply to used house salespeople?
The realtors must know they are very vulnerable to a bunch of govt regulations restricting their sales techniques… but it’s too late for them to do anything about it now. They’ll get spanked along with the lenders and brokers. Their virtual monopoly on price, sales and listing statistics might even get broken up.
They’re allowed use the word “investment” like the person who says ‘An education is the best investment you can make.’ That must change.
joeyinCalif,
Exactly. They’ve got to be able to hear them breathing down their neck. I don’t think they should or likely WILL be as regulated as insurance or securities, that isn’t necessary. But they shouldn’t be allowed to keep “pocket listings” and all their other and various self-dealing schemes and expect a slap on the wrist at worst.
Their “designations” have to mean something more than a 4 hour internet-based tutorial. I’m not saying there aren’t some sharp RE people out there but most of them don’t have the slightest qualifications rendering opinions about the potential for future appreciation! And as suggested, the “you can always re-fi later” line must be stricken from their vocabulary.
CA should they do away with dual agency. How can you represent a buyer and a seller at the same time? The listing agent during boom times always holds on to purchase contracts till they get one of their own. they know your offer and will shop it around. Many listings were “Sold before Processing”. What a bunch of BS
I hate realtors and I’ve been one for over 20 years.
‘Realtors can’t guarantee a property will ever increase in value.
Nor can they guarantee that old standby: “Oh, you can always REFINANCE later..” Ugh. If you gave me an American dollar every time I heard that, I would be able to buy … errr…. a couple gallons of milk (non-rGBH of course).
Don’t get me wrong guys (gal) I’m the last person to rush to the aid of NAR and help with their heavy lifting! Yet this is what they need, and a healthy dose of it too. They need to get back to basics.
Affordability, good schools, safe neighborhood etc. and lay off the “financial consultant” role. In light of all the fraud and misinformation they’ve allowed ( or aided ) over the last several years this new guy has got his work cut out for him!
The agents renting out foreclosed homes in FL was like the last straw. Also they need something like CRD ( for securities ) where realtors and MB’s can’t go across the street and start with a clean slate. Their record of misdeeds needs to stay with them. That’s a big part of the problem. I think new NAR dude is smart enough to understand if he doesn’t clean up, regulators will step in and do it for them. It’s just that bad.
There’s still talk of a “spring selling season”? How quaint.
There is in the San Jose Merc today - evidently in SoCal there’s a 22% surge in buying in April from March. Only at the very end does it say that sales are down 19% over last year though.
There’s always a jump from March to April. For example, here are some pre-bubble sales numbers for SoCal, from Dataquick’s archives:
March 1996: 17,874
April 1996: 19,728 (10.4% increase)
March 1997: 18,167
April 1997: 20,403 (12.3% increase)
March 1998: 22,899
April 1998: 24,734 (8.0% increase)
Granted, these are smaller jumps than 22%, but how much do you want to bet that figure is revised downward?
what % of this “rise” is foreclosure sales?
Anecdotal evidence of banks trolling for liquidity:
I went to my bank on Saturday to deposit a couple checks (about $130 total) into my checking account. The teller looked at the computer screen and told me that I qualified for some super secret ultra-special savings account that only certain customers qualified for. No minimum balance and great interest, and oh did she mention that it was ultra-special and super secret and only certain customers qualified for it? If I was interested I should talk to Angie in Customer Relations.
I inquired politely as to the interest rate. “Oh, it’s a very good rate. It’s 1% up to $1000, and 2% on the rest.” I tried not to fall over laughing. I only said, Oh. Then the teller she said noticed I did NOT have one of their special credit cards, and shoved a brochure on me for that too. I was walking out and the teller called after me “Would you like me to take you to Angie?” No thanks, I’m good. That poor teller was probably desperate for the commission, which is the only reason I didn’t get rude right then and there.
I remember the good old days when they just gave you a toaster and Green Stamps. Now they analyze my transactions, deduce my spending patterns, and make pitches at the window. For ONE percent! I’m better off buying canned peas and AK-47’s (with ammo for same).
You don’t bank @ the 1st National Bank of Stuart Smalley, do you?
Nope. I suspect that all banks are doing some form cash trolling. They love hounding you at the window (which is why I love direct deposit and the ATM.) What struck me was the desperate tone of the teller’s voice. Funny thing is, I’m hardly a high roller with them. I guess they really need the cash.
Every single one of them is desperate for cash.
I once asked one on the phone, “This is dumb. What’s in it for me?”
I don’t think it was one of the questions on their standard answer forms?
If “they really need the cash,” it’s time to ante up. I have some money in Treasuries at one of my banks and it’s down to about 1.5% or some scratch. It’s time I went in and visited my money.
I got a post card in the mail for a small local bank offering 4.05% interest on a fee free checking account. The postcard obviously caught my attention. Upon further inspection, I needed to use my Debit Card at least 15 times per month with signing for purchase, have at least 5 direct deposit/payments, and on and on. In other words, it would have been one big old nightmare to keep this rate.
I’ve allowed some CDs to automatically renew in the last three months. Oddly enough, my rates have not significantly declined. I’m not getting 5% anymore, obviously, but I’m definitely getting higher than the rates advertised. It makes me wonder.
Any recommendations? I see a few offering 5% on new accounts but the limits are $25K, etc.
You should come bank at Citi, like me.
Citi Never Sleeps (TM)
The bored teenage tellers seem glad of the personal contact when you actually walk into the otherwise empty branch rather than yell at the drive through. (I bank in Southlake, TX, where the per capita SUV count hovers well over 1.)
If only the NAR had been truthful and changed just one word…
‘There’s never been a better time to SELL a home.’
“A questioner in the audience asked about an NAR promotional campaign that started a few years ago, just as the market was going into free fall - ‘There’s never been a better time to buy a home.’ If someone had taken that advice and bought a home, the questioner said, in some markets that house is worth less today. Why should people listen to NAR?’”
“McMillan dodged that bullet. ‘Realtors can’t guarantee a property will ever increase in value,’ he said, and started talking about mortgage fraud.”
I’d like to doctor it more:
‘There’s never been a MORE NECESSARY time to SELL a home.’
or
‘There’s never been a better time to RENT a home.’
Ben I’m surprised you didn’t post this companion WaPo article to the first one in your post:
http://tinyurl.com/3fbw92
Regional Office Leasing Lowest since 1995
For some reason the article doesn’t want to come up for me now - it was there though. It provided a quite bleak report on the DC area office vacancies - which is remarkable considering the amount of government spending increases the last few years.
As another note - once again the MSM uses the “lowest since NNNN” statement when they really mean “lowest since sometime before NNNN, when statistics were first kept”. It’s amazing how often that’s been happening lately. It’s almost as if there’s a concerted effort to hide how bad this downturn really is
.
There is a huge amount of new office space that has been built or coming online out in the Dulles/Chantilly/Fairfax/Reston area…and seems like everywhere you look in Arlington or Fairfax or McLean, you notice lots of older office buildings with “Leasing” signs out front.
Boy that’s for sure re: Fairfax/Dulles/Reston. Lottsa nice stuff for rent, but no corporations willing or able to pony up. Complete, huge buildings for lease. We went out to visit daughter last weekend who lives right within that area, and I had a great Mother’s Day - visited the Smithsonian, ate out at a cool Indian restaurant in Reston, etc. However, I was struck by the number of fully-maintained but totally empty office buildings all over the place. As I said to my husband as we drove by a particularly flamboyant we call the ” fish building ” due to its ovoid shape and red slash marks on a dark blue-windowed background, ” Geeze, I’d hate to pay the light bill on that thing. ” It was Saturday night, no tenants, and was lit up like the Red Light district in Amsterdam. ( I’ve never been to the Red Light district in Amsterdam, but I imagine it would be lighted up….)
Just once, I would love to see a MSM report that said “Figure X is the lowest IN RECORDED HISTORY.”
Of course for J6P, he’ll just assume that means since the invention of television.
“‘I actually would have paid more for this location,’ said Bridget Stone, of Phoenix. ‘I think after today the pricing will go up.’”
At least the Joshua Tree delivery will only take 1 to 2 days max., due to proximaty. Gotta look on the bright side.
Is this 2008, or 2005? I can’t be sure.
Truely, the supply of uninformed Morons seems endless.
apparently there’s one born every minute.
Talk about being late to the party! All this girl’s going to get is some pizza crust and a keg pumping warm foam.
Only one Bridget Stone listed in Maricopa County recorder data.
Bought for $140K in 1998 with $143K loan.
2nd for $7K in Dec 1999.
Refi to $168K in 2003.
Refi to $220K in June 2005.
Refi to $250K in May 2007.
Just a few for sale in that neighborhood.
http://www.zillow.com/search/RealEstateSearch.htm?addrstrthood=4102+east+pinto&citystatezip=85050#view=ver%3D1%26op%3Dsearch%26scen%3Ds1%26map%3D%28Aw%3AAN112014221%21As%3A33717562%21Ae%3AAN111958603%21An%3A33738977%29%26mode%3D%28zoom%3A13%21sortANdir%3Au%21sortANparam%3Ax17%29%26citystatezip%3D85050%26addrstrthood%3D4102%20east%20pinto%26loc%3Dmap
Another serial refinancer.
The Short View: US house prices
By John Authers
Published: May 19 2008 19:47 | Last updated: May 19 2008 19:47
Nothing now creates more uncertainty for markets, and nothing has greater import for the future, than the course of house prices in the US.
US housing, of course, lit the fuse for the credit crisis. Among measures of housing, price is most important because of its link to the risk that owners abandon their homes, and thus to the risk to the value of the mortgage-backed securities that sparked the crisis. The best indicator of the coming rise in subprime delinquencies was the slowing in house price rises two years ago.
U.S. senators say have deal on housing rescue bill
The bill addresses the root of our current economic problems - the foreclosure crisis - by creating a voluntary initiative at no estimated cost to taxpayers which will help Americans keep their homes,” Christopher Dodd, Democrat chairman of the Senate Banking Committee, said in a statement.
http://www.reuters.com/article/marketsNews/idINWAT00951820080519?rpc=44
do you think they finally realized how many tax payors are against any money being thrown at this giant gorilla!
“by creating a voluntary initiative at no estimated cost to taxpayers which will help Americans keep their homes,” Christopher Dodd, Democrat chairman of the Senate”
The simple fact that are working on this asinine bill is costing taxpayers money. The only solace/if any, is that it will be(whatever this bill is) run by the FHA, another lumbering, slobbering Gubmint agency. So it’s bound to be as ineffective as possible. None the less, it will cost the us the taxpayer, and Dodd is as full of crap as the rest of those self serving wastes of time in D.C.
More detail from CNN.com:
http://money.cnn.com/2008/05/19/news/economy/dodd_shelby_deal/index.htm
NEW YORK (CNNMoney.com) — Senate Banking Committee leaders said Monday that they have come to a deal on a housing bill that would prevent foreclosures, create affordable housing and revamp oversight of two of the mortgage market’s biggest players: Fannie Mae and Freddie Mac.
A major part of the legislation would allow the Federal Housing Administration to insure $300 billion in new loans for at-risk borrowers if lenders agree to write down loan balances below the appraised value of their homes.
If lenders agree to write down loan balances? Talk about rewarding bad behavior! Where’s my pitchfork!?
I want my writedown now!
The article has no deatils of any kind, but thiscould be the best housing-bubble news in a long time…
Fannie and Freddie guarantee losses, not government. Government not on hook for losses.
Therefore: Freddie and Fannie bonds are NOT guaranteed by the U.S. Government.
Right?
theoretically.. there’s no law or contract.. but it doesn’t mean the govt can’t voluntarily guarantee those bonds.
The US Treasury dept is sending minions around the world telling foreign investors that the government will guarantee investments in Fannie and Freddie bonds. Fact. Implicit ? Explicit ? Some Freddie bonds do already have a government guarantee stamped on them.
“Nearly two years into a housing decline…many Americans hope the end is near. Most economists believe the worst is yet to come.”
What a lovely disconnect there is between faith and reality.
I have an OT question:
I keep reading that communitites are becoming ghost towns. That people are worried about all the neighbors moving out or leaving in the middle of the night, etc.
But these people that move/flee, they have to go somewhere right? I mean, all these thousands of people in foreclosure or trying to move out of their homes don’t live on the streets. So, where is the influx of people going? Where are they living and what neighborhoods are benefitting from the arrivals? Once they leave their homes, they have to go somewhere… so where? Just curious.
Raptured
n. The transporting of a person from one place to another
Some are moving back with parents. Remember, even 20-somethigns were buying houses. Some are moving into apratments that are coming back on the market after having sat empty for months or years as the owners tried to do condo conversions. Some (like my Sister-in-law) are moving into brand new houses, purchased just before letting their old houses get returend to the bank. Some have been empty for a long-time being held by speculators that bought multi-properties to sell for huge profit but didn’t want to have to deal with renters. Many are becoming roommates. Many are illeagals that are just packing up and heading back home.
Hailey,
I think the general consensus is that they are so many empty rentals right now even w/ bad credit these people can take their pick and will likely negotiate to boot. Some time back we coined the term “re-partments” meaning apartment complexes that were turned into condos and now have “owners” desperate to rent them out. Remember. from inception this was a housing “boom” not a housing crisis. There are over what, two million unoccupied homes up for sale?
Yes, that always irritated me the most (being an apartment renter) - when landlords would take perfectly good apartments, kick out all the tenants and “convert” them into condos for sale. Only to have them not sell or be turned back into rentals later on. I always felt bad for those who were booted for, apparently, no good reason.
You should feel worse for the people that bought!
hmm.. mom’s house? the garage at the kid’s house? but most probably find a rental.. and considering that their credit rating is shot and they’re broke, the places that benefit (if you want to call it that) are probably low-rent neighborhoods.
And a whole lot of foreclosures, maybe half of them (?), are just investment properties so nobody had to move.
HAILEY
QUEENS NYC
From the St. Pete article with McMillan at the NAR:
“There’s a confidence crisis,” Dunn said, with “declining home values . . . at the core.” Buyers are still sitting this one out, she said, until they’re sure the home they buy this month won’t be worth less next month.”
“But she offered this ray of light: “Ninety percent of homeowners make their payments” on time. Everyone’s not a foreclosure victim.”
Chuckle. Weren’t 96% making their payments on time a year ago?
Does anyone else have a hard time believing she’s 61?
http://money.cnn.com/2008/05/16/pf/makeover_june.moneymag/index.htm?postversion=2008051905
Cougar.
photoshop
Photoshop and a digital camera. Many digitals will give you an image that’s a tad fuzzy. The way to correct this is to go into Photoshop and throw a little “Smart Sharpen” on it. That probably wasn’t done with this particular photo.
But, the above being said, the woman probably dyes her hair. And she still has a pretty good figure, which can also help with looking younger than she really is.
well, i saw a staged portrait .. big smiles.. fake wintery background. Maybe something else is fake?
If the user has a bit of talent Photoshop type apps can do a lot of stuff in addition to the built-in functions, like pixel by pixel micro-surgery.. liposuction.. remove wrinkles and warts.. nose and boob jobs.
We soo….. need to raise the retirement age.
Pay Social Security for 40 years, then collect for 40 years. We can’t afford that.
They have $1.2 million nest egg, and they’ll be getting a check from the government every month, for the rest of their lives. Anyone else see a problem with this?
I think eventually the government will start reducing benefits of Social Security based on how much income you make monthly from other sources . The government already started charging taxes on SS benefits, based on your gross income . So ,in many cases the more affluent seniors have to gave back some of the SS benefits by higher taxes .
I have seen these little old ladies living on these modest Social Security checks and I don’t think that they can be squeezed any more .
Nope, that’s about what 60 looks like these days: she’s slim, she’s probably athletic (since they met at in a volleyball league) and she has probably had some work done.
And little things like hair dye make a massive difference to your perceived age.
Geeze, nesting does weird stuff on this site..
In this morning bits buckets I wondered if all the delayed foreclsoure sales were due to lenders filtering out the multi-foreclosure people and processing them, while leaving all the “just on house” people in hopes of some bailout.
TxChick response was the people paid to do this are too busy flinging poo at the zoo visitors to think about it.
Well, I did some digging. TxChick seems to be dead on (no surprise).
The TrstDeeds (actual foreclosures) come in batches from the trustees. Well, some of these trustees are just WAY far behind. Notice of Trustee Sales dated from December with scheduled auction date of Feb weren’t actually getting sold off until March or early April, with another month to get the paperwork to the county recorded, then upto a week for it to appear online.
Some of the trustees are on the ball… Notice filed in March, schedueld for April, sold on the date, and then filed within a week or two appearing online in another week.
Others, months behind.
Today it took 7 trust deeds before I found my first person with multiple foreclosures pending…. 3. Totalling about $1.2 million.
You’re on to something, Darrell. I also think they’re draggin’ down here in Tucson.
How many foreclosures can the banks afford? Even IF they had the manpower to process all foreclosures on time, would the bank still be well enough capitalized at the end of the fire sales?
This is why we haven’t seen a lot of commercial REO sales…if it’s not sold, for a time, the banks can hold the non-performing loans on their books at a higher value. Delay, delay, delay so that you can stay in business…
What’s their incentive to hurry, really? If you could schedule your own funeral, would you schedule it for next week, or drag your feet for a few years?
“Charles McMillan, the new president-elect of the National Association of Realtors, acknowledged that there will be ‘few changes in the next few months,’ but predicted a 6 percent increase in existing-home sales next year, to 5.7-million homes.”
Here we go again. Why the hell didn’t the journalist ask the latest NAR’s latest LiarLeader to qualify his forecast? Every forecast they’ve made has been wrong. Dead stinkin’ wrong. Until NAR concedes to and admits that they’ve given investment advice without authorization or alternately, their leadership is put in front of a grand jury and forced to admit so, they will always be known as the used carsalesmen that they truely are.
“Most buyers are canceling because ‘they go to their friends and neighbors and say, ‘We just bought a new home,’ and everybody says, ‘What, are you crazy? Prices are dropping,’ according to the chief executive.”
Oh, look, it’s not the media’s fault any more…It’s the friends and neighbors causing the housing problems..Hahhahahaha. Way to go Bobby.
Parade
Where America Lives
Great Reasons To Rent
By Mike Hammer
Published: May 4, 2008
Before the housing boom went bust this year, homeownership was considered a good investment. But now, with the rash of mortgage foreclosures, renting may be a more attractive option. Here’s why.
It’s our job to restore confidence in the market.’”
Charles McMillan, how can you restore confidence in the market when the NAR was behind the mess in the first place? The consumer has lost confidence in the NAR and it’s members as a result of “Now is a great time to buy” advertisments which were false and misleading. Talk to the 45% who purchased a home in 2007 and are now upside down and now in the foreclosure process.
The NAR’s credibility stinks Charles!