An Unrealistic Run-Up Of Prices
It’s Friday desk clearing time. “John Lesniewski decided to auction off two houses he owned. Lesniewski, a real estate agent in Suitland, acquired the homes from clients of his under a guaranteed sales program, meaning he agreed to buy the homes if they didn’t sell within a set time.”
“But last year, prices dropped more quickly than he anticipated and he ended up with an unacceptable 13 percent of the homes, he said. To avoid getting hammered again, he hired an auction house this year to sell one house he bought in Laurel and another in Beltsville. He received about $40,000 less than he wanted for the two combined, but he accepted the bids because he needed the money.”
“‘It was a failed experiment,’ Lesniewski said. ‘I should have kept the one in Laurel and rented it out. It was an act of desperation.’”
“The U.S. housing market weakened further in April with a flood of homes coming on the market even as sales and prices declined, the National Association of Realtors reported Friday.”
“The number of homes on the market represented an 11.2 month supply at the April sales pace, the biggest since the combined single-family/condo records began in 1999. The inventory of unsold homes and condos jumped 10.5% to 4.55 million, an ‘uncomfortably high’ level, said Lawrence Yun, chief economist for the real estate trade group.”
“The median price of an existing home fell to $202,300 from $219,900 in April 2007.”
“‘We had an unrealistic run-up of prices and the faster they come back down to the real world the better,’ William Cheney, chief economist at John Hancock Financial Services, said in an interview with Bloomberg Television. ‘The faster prices come down, the quicker we can get back to an equilibrium where we actually have transactions.’”
“The housing market nationwide has been faltering and prices were down about 4 percent in Michigan overall in the past year, said Samuel D. Kahan, senior economist with the Federal Reserve Bank of Chicago’s Detroit branch.”
“Mr. Kahan suggested that the housing price drop could be a great marketing tool for Michigan. ‘You can tell people they can get a four-bedroom home for the price of a three,’ he said.”
“The city of Orlando is holding workshops to educate the public about the dos and don’ts of foreclosure. ‘We’re in a situation where our bills are higher than our income,’ Russ Mayo said. ‘We got a good price for our home three years ago, but now it’s worth less than what we owe on it.’”
“Home foreclosure numbers continue to soar in Central Florida. But now, anecdotal evidence shows that many lenders have yet to send foreclosure notices to scores of homeowners who’ve missed more than a year’s worth of mortgage payments.”
“‘Banks overall are not in the business of owning real estate — they don’t make money that way,’ says Jeffrey Schimmel, an associate who does research on banks and real estate in Boca Raton. After all, he says, ‘It’s not like it’s going to sell this residential product today or tomorrow.’”
“Stockholders of New Century bank told their board of directors Thursday they are concerned about the company’s lending policies of the last year that have resulted in more than $5 million in loans that have not been repaid and a falling stock price.”
“New Century CEO Bill Hedgepath II said the loans were not the sub-prime variety that have plagued so many other banks. ‘We were basically loaning money to people who couldn’t pay it back,’ Mr. Hedgepath said.”
“Stockholders did not like to hear the news of the bad loans or the continuing drop of the stock price. ‘I am an unhappy investor because I have lost a lot of money,’ Frank Arnette of Fayetteville said.”
“One of Britain’s largest estate agents has fallen victim to the slowdown in the housing market, prompting fears for thousands of jobs around the country. Peter Rollings, managing director of Marsh & Parsons, the London estate agency, gave warning that up to a third of the estimated 12,000 to 14,000 estate agents nationally could lose their jobs over the coming year.”
“‘The loss of a third on the back of four years of ridiculous growth would bring it back to normality. It would end the oversupply of hopeless estate agents who in the boom pretended they could sell houses simply by sticking a board outside a home,’ he said.”
“Ahmet Kurtul, the chairman of Majestic Pine Construction in Didim, which sells luxury houses mostly to Britons, said housing sales had decreased by nearly 90 percent since the beginning of the subprime crisis. He said real estate had lost its attractiveness as an investment instrument due to rising interest rates around the world.”
“‘Most of our customers were buying houses with remortgage loans,’ he said. Kurtul said Britons had been buying second homes in Turkey, but that they simply stopped as it became too costly with the increasing loan rates.”
“Hopes that a slowdown in Singapore’s property market is temporary are fading as an uncertain economic outlook and a looming housing glut threaten to plunge the sector into a prolonged downturn.”
“Barclays Capital economist Leong Wai Ho said an impending oversupply will worsen the problem, with 66,000 new homes expected to be completed over the next four years, against forecast demand for 50,000 in the same period. ‘This is the start of a multi-year price correction. Private residential property prices could easily fall by up to 30 per cent by 2010,’ says Ho.”
“The slump in the residential property market and the building industry means less work to go around. ANZ economist Cameron Bagrie said it was important to remember that the good times were not here for ever. ‘The lesson here is that - there is a business cycle, house prices did not always go up, the unemployment rate does not always fall,’ he said.”
“Canada’s long-running housing boom has ended, with the formerly bubbling markets of Calgary and Edmonton already having gone from hot to not, and with the current hot spots of Saskatoon and Regina to follow, a major Canadian bank says.”
“‘After yet another blockbuster year for Canada’s housing markets in 2007, the much-anticipated housing market slowdown in Canada has arrived,’ RBC said.”
“‘The delayed arrival of softer housing markets can be partly attributed to recent mortgage innovation that has seeped into the Canadian market during the last two years,’ it said.”
“Real estate leaders weren’t sure what to make of the sales price figures - up from March to April, but down on the year. ‘I expect there to be a little bit of a jiggle just because of the nervousness of the nation,’ said Victoria Caldwell, VP of the Oklahoma City Metro Association of Realtors’ MLS.”
“Caldwell recalled that just before the 1980s oil bust, ‘there were a lot of wet bars and in some houses you had dance floors.’ Then came the bust and reduction in personal spending.”
“DataQuick reported this week that Sacramento County posted its first gain in year-over year home sales in 37 months. The neighborhoods that made it happen have an abundance of homes with falling values ‘People who have been locked out of the market are buying homes at $130,000 and $140,000,’ said Kevin Cooper, a broker who handles many of the bank-owned listings now in south Sacramento and Elk Grove. ‘There are pretty nice homes out there, homes that previously sold for $275,000 to $300,000.’”
“‘From the Mexican border to Northern California, any ZIP code where prices have fallen a lot is now posting relatively strong sales,’ said DataQuick analyst Andrew LePage.”
“Portland-based Realty Marketing/Northwest says it’s taking bids for a 40-lot project called Heritage Park Estates in Loomis. The bank wants a minimum of $1.7 million, says John Rosenthal, president of the auction firm. He says the property once listed for almost $5 million.”
“The median price for a resale home in Las Vegas will continue to soften this summer, dragged down by foreclosure properties that are “stuck” in lenders’ inventory, housing analyst Dennis Smith said.”
“‘There’s these things called short sales,’ he said. ‘Nobody talks much about them. We hear about foreclosures. Short sales are out there by the gazillions. The banks are taking months and months and they’re just sitting out there.’”
“Smith said Countrywide Mortgage issued a memo saying it would take at least six months to respond to a short sale offer, which is a bank-approved sale for less than the balanced owed on the home.”
“‘What that does to the market is extend the recession,’ he said. ‘I’d rather take the hit and move on.’”
“Gilles and Nicci Imbert moved from Paris, France, into the brand-new Inspirada community two months ago in search of something different. The problem is, not many others have joined them to date.”
“‘I like this kind of place because Nicci is safe and there’s the park,’ Gilles Imbert said, strolling down the empty streets. ‘On paper it’s great. On paper.’”
“Although said Lacey Hawk, who moved in at the end of last year, like others, expects the market will turn around, she and several neighbors said the values of their homes have plummeted by about $100,000. Troubling as that is, Hawk is more concerned about the community HOA.”
“‘It felt inspired,’ said Hawk. ‘It was the old style of people getting together. I thought this was going to be different.’”
“A welcome sign still hangs by the front door. But Charles and Stephanie Masoner say their three-year-old neighborhood just isn’t what it used to be. ‘I think everyone’s just feeling really down, I mean, you talk and the biggest thing is the housing crisis in our neighborhood,’ Stephanie said.”
“That’s because each week more homes fall into foreclosure or are put on the market at slashed prices. ‘This one was originally $360,000 and it’s now selling for like $190,000, right next door to us,’ Stephanie pointed out.”
“When they bought in 2005, they felt like they’d lucked out. ‘They basically told us if you wait you won’t be able to afford one down the road. You know, so buy one now. You know that kind of scare tactic almost,’ said Stephanie.”
“They paid $329,000 for the brand-new, four-bedroom house. It was one of the lowest-priced homes their Aliante community.”
“We’ve all heard the experts say things will get better or it will just take time. But the Masoners say they can’t wait much longer. Charles’ father is ill and they need to move to Idaho to care for him. But with their life savings tied up in the home, just walking away isn’t an option.”
“‘We just feel like we’re in jail, in this prison. Love the house, but it’s just… it’s a nightmare,’ Stephanie said.”
“Today, we are going through the real estate boom and bust. Bankruptcies are climbing again. Houses sit empty. Home improvement projects languish. Builders, contractors, landscape designers, interior designers, roofers, pool builders and more are hurting. Investors are complaining. Brokers are being blacklisted. Refinancing options are drying up.”
“‘No man is an island,’ John Donne wrote a long time ago. Donne’s truism is just as valid today. Our actions, whether wise or foolish, short-sighted or far-sighted, affect many, many others for better or for worse. We need to consider that the next time we take a chance on an unrealistically hot market.”
Another great week folks! My thanks to those who support this blog. Please check back this weekend.
“But now, anecdotal evidence shows that many [Orlando area] lenders have yet to send foreclosure notices to scores of homeowners who’ve missed more than a year’s worth of mortgage payments.”
Wow. Somebody is getting a better deal than I am. And here I was, so smug about being a renter.
get a generator and upgrade fo free , yo
If the bank is allowing someone to live in the house, even if for free, the bank and the neighborhood is probably be better off than if the house was left unoccupied.
……….which basically means that the rental value of the house is maintanence and upkeep of the yard while the market is dormant. (Assuming they don’t trash the place).
Unfortunately for the Bank, unless they foreclose and evict the parasite tenants, they can’t get a realistic cash flow that it would bring as a rental unit.
It would be great if you could approach the bank and offer to make monthly rental payments of $450.00 to off-set their losses until the “asset” could be liquidated. IT would drag down rental values, everywhere.
I love Deflation. Screw you, Ben Bernanke and your co-conspirators of imaginary inflationary wealth!!!
Truly sad.
Let’s get the word out to all the underwater “homeowners” out there. Then the term “FB” will refers to “banks” not “borrowers.”
“Smith said Countrywide Mortgage issued a memo saying it would take at least six months to respond to a short sale offer, which is a bank-approved sale for less than the balanced owed on the home.”
Quotes like this tell me that we are nowhere near this market bottoming out. My guess is that if many of these banks actually started valuing the houses they have on their books properly they would be insolvent. The banks are doing whatever they can to put off the day of reckoning in a futile hope that this market will come back.
isn’t this a violation of SEC or some banking regs ?
foot dragging………….
“isn’t this a violation of SEC or some banking regs ?”
That’s what I was wondering. It’s screwing the shareholders, at the least. I’m amazed that auditors would sign off on the financials without a headline-grabbing disclaimer.
Yes, but the bank examiners will look the other way because the big chiefs at FDIC/OTS/OCC/Fed don’t want a rash of balance sheet insolvencies. The independent auditors will go along because if they don’t they will lose the engagement. Of course the auditors will eventually be sued by shareholders and the FDIC, just like in the last go-round. The collective memory is often very short.
I doubt regulators foresaw a time when banks would not want to act quickly to “collect” on overdue debt.
They’re insolvent on the balance sheet.
We’ve been here before, and it wasn’t that long ago even.
Delaying foreclosure is fine and dandy but gets you nowhere except deeper in the hole.
If I were CEO of some bank looking a year or two down the road, i’d be on the phone hiring agents to rent these REO’s out to people.
Any amount coming in is better than having tons of money draining away in various holding costs, on top of the non-performing loans..
Methinks that “this market” done got up and left town.
Frank,
I’ll agree, we’re no where nears the bottom… in “prices” but in terms of the f-u-n-d-a-m-e-n-t-a-l-s, I think we’re close. Banks would rather tolerate “squatting” than confront the realities of the market. Jumbo Loans are priced at “fuggedaboutit” rates and only truly qualified people can get loans.
No one’s more frustrated than me but I’m confident prices will always follow the fundamentals. The only reasoning I can follow is that the bank has got to be figuring “better “our” squatters than random… squatters!? All have a Grand Memorial Day!
I agree that the banks can only postpone the inevitable and not stop it. I just think it’s interesting that for some time we have been hearing constantly that banks will only foreclose as a last resort, if this was really true we would see these institutions streamlining their shortsale process. I think it may have been true in the past that banks tried to avoid foreclosure but it certainly doesn’t seem to be the case now. The problem now is that these institutions threaten their own existence if the properties on their books are accurately valued. When you combine banks’ reluctance to approve short sales and courthouse backlogs for foreclosures I think the statistics on prices/sales only tell part of the story of how bad this market actually is.
“Countrywide Mortgage issued a memo saying it would take at least six months to respond to a short sale offer…”
At which point it will (theoretically) be BOA responding to the offer.
Forgot about that- prob not a good time for Coutrywide to take more write-downs while the sale to BAC is pending.
Basically Countrywide is saying they will not do short sales. No buyer will wait 6 months to see if their short sale offer is accepted, and no FB has the luxury to wait 6 months to see if Countrywide will approve the short sale of their house.
Six months. So what happens in six months?
Six months from now is November.
What happens in November?
Oooh oooh, jumping up and down, rasing her arm, holding her arm up with her other arm, pick me, pick me.
Is it time to throw the old bums out and vote for the new bums?
“What happens in November?”
The next middle-east shill get their marching orders.
“Fool me once… shame on… shame on you… get fooled, won’t get fooled again.” (G.W.B. 9/18/02).
Against my constant warnings too numerous to count, my sister just put in a short sale bid on a house in Woodland Hills, Ca. Even her bid is probably 30-40% too much.
Anyway, the current FB is a used house sales person who put absolutely ZERO down on the home back in 1/2007 (surprise surprise). During the last 12 mos, she has been threatened with forelcosure, seperated from her husband and is now moving her two kids in with her new boyfriend. And how do I know all this stuff? She tells her life story to whoever views her soon-to-be foreclosed upon home and my sister was no exception. What a loser. What she really needs is a few punches in the face.
She told my sister that Countryslide should get back to her in 30 days regarding the short sale bid. Yeah right. I told her the bank does not want to accept a short sale because then it will have to recognize the loss. Its been 2 weeks so we shall see…
RE: Basically Countrywide is saying they will not do short sales. No buyer will wait 6 months to see if their short sale offer is accepted, and no FB has the luxury to wait 6 months to see if Countrywide will approve the short sale of their house.
FYI, the buyer can get out of a short sale contract after the specified time period has elapsed (the contract expiration). That buyer can decide to stay in the contract, but also continue to look at other homes again.
K
“My guess is that if many of these banks actually started valuing the houses they have on their books properly they would be insolvent.”
Yup. A few things I’ve heard recently:
1. In the 80’s, bank regulators would give a 12-month free pass on REO, after which time, you had better mark it down or move that crap off your books, capiche? Today, from what I hear, the regulators are being tougher on REO–which could be leading to banks dragging their feet on non-performing loans to keep them in a different box from a regulatory standpoint.
2. Some banks are asking investors about buying some of their REO, but NOT putting offers in writing (a written offer would require them to mark down the asset).
3. We heard recently of a major bank that is trying to sell a pool of REO. The best bid they got was ~40% of book value. At that price, the bank is toast.
4. I’m guessing that unlike Japan, who dragged out their banking debacle for perhaps different reasons, we will be dragging out our banking issues to keep banks solvent; slow on the foreclosures, cut dividends, raise capital as slowly as possible to make sure that you stay officially solvent.
I’d be interested if people are hearing the same things. This all points to a long, painful banking recovery.
That said, a very smart, long term investor in banks should be able to sift through the rubble to find some opportunity where banks are going to make it and thrive later in a world with less finance coming from wall street and more coming from main street.
2. Some banks are asking investors about buying some of their REO, but NOT putting offers in writing (a written offer would require them to mark down the asset).
This is exchanging financial liability for criminal liability. Just imagine if anybody shows that the conversation happened.
3. We heard recently of a major bank that is trying to sell a pool of REO. The best bid they got was ~40% of book value. At that price, the bank is toast.
I’ve received several calls over the last month regarding this. vulture funds looking for special assets contact info at larger banks - banks looking to unload large pools at a dsicounted rate. Still lots of liquidity out there.
I wonder where this all will end. I have a tendency to be a bit of a pessimistic person, so I try watch my own bias. However, I just can’t see this ending without a massive recession/depression. It’s unclear to me if this catastrophe will be a year from now, ten years from now or something that slowly drags out. I hope I’m wrong, but I think our financial system has operated a large scale fraud for so long that if sunlight is ever shined in it the whole damn thing will collapse.
“The housing market nationwide has been faltering and prices were down about 4 percent in Michigan overall in the past year, said Samuel D. Kahan, senior economist with the Federal Reserve Bank of Chicago’s Detroit branch.”
“Mr. Kahan suggested that the housing price drop could be a great marketing tool for Michigan. ‘You can tell people they can get a four-bedroom home for the price of a three,’ he said.”
..and this IDIOT works for a Federal Reserve Bank…it’s near time to move the money to the fencepost hole in the south forty
This is the same guy who would say, “all real estate is local” while ignoring that Michigan, a state that is contracting economically, had a housing bubble. If guys like this are driving the bus it’s time to stock up on ammunition.
HA HA HA HA ! If we could sell our remaining real estate here in Michigan, which is scanty, at only 4 percent of what it was ” worth” last year, then we’d jump on it. Michigan will lead the rest of this nation into a depression. Real estate is down about 40% from last year, not 4%. I think he just done forgot to add a zero.
I remember the Western banks many years ago lecturing the Japanese banks to come clean and write off their involvent loans backed by RE. It was the prudent thing to do : Write if off fast and everything would be ok.
Doh !
I just bought a short sale after four months of waiting. I was told to wait up to nine months, so six months is about right.
People who say prices have not bottomed don’t understand something very important. There are two categories of homes right now, traditional sales and distressed sales. You can get a tradional sale that is about 10-15% off the peak price, close quickly and have few problems or you can buy a distressed sale, that is 30-50% from the peak price but may take longer to close and involve some more sweat on your part. My point is that some houses have bottomed and some have not and there is definately competition among buyers in the distressed sale category of homes that are priced right.
K
Good point kman. I offered $410k on a short sale a few months ago (asking price $600K-$640K and this house sold in 2006 for $800k, with two loans adding up to almost $760k). The exact same model a few houses down for is sale at $725k.
I simply got out my scientific calculator and used my very proprietary and sophisitcated formula to figure out my asking price…..(Peak Value x %50) - (arbitrary number pulled out of my a$$ at the time) = Offer Amount
Before a month went by, it became an REO and went on the market for $525k. By the time I got wind of it and checked, the representing agent said there were 7 offers.
It sold. Scuttlebutt was that it went for $499k.
The only reason I made an offer at all, is that it was exactly what I wanted, in the exact location. Oh well, there will be many more opportunities.
RE: Before a month went by, it became an REO and went on the market for $525k. By the time I got wind of it and checked, the representing agent said there were 7 offers.
It sold. Scuttlebutt was that it went for $499k.
We had the same experince. We saw a short sale listing in a great neighborhood near great schools for 259k on a house that sold for 410k in 05′. When we called about the house there were several offers already and when we called back the next day there was a contract already.
We let the agent know that we were going to offer offer full price of 259k and she told us that she would call us if she needed a backup buyer. She called a six weeks later when the first buyer lost patience and got out of the deal. We then signed a contract for 260k and waited four months to close. My point is, jump on a great short sale deals when you see them because they go to contract very fast. Here in South Florida it is hard to get in on the good ones.
It’s probably very important that they not “know” officially that they are insolvent. In the Washington state constitution:
SECTION 12 RECEIVING DEPOSITS BY BANK AFTER INSOLVENCY. Any president, director, manager, cashier, or other officer of any banking institution, who shall receive or assent to the reception of deposits, after he shall have knowledge of the fact that such banking institution is insolvent or in failing circumstances, shall be individually responsible for such deposits so received.
—
How forward thinking
The Yun is on Bloomberg spouting more propaganda.
do not trust a realwhore.
Don’t trust a fake whore either.
which one is txchic ?
http://aussie_news_views.typepad.com/aussie_news_views/images/dallas_cowboys_cheerleaders.jpg
From L to R she is #2.
Well if you’re gonna make me choose, I’ll bet she’s the one in the background with the talons and sharp beak that’s poised to rip apart these surgically altered women.
the redhead
Mrs. Voz is a red head too, and she told me to get out of the oil biz today, and I did…. now the oil rally can really get underway.
sharp tempers those redheads… dont ever cross ‘em.
The redhead’s mom.
I’m not anybody’s mom.
Damn. I love redheads.
Come to think of it, blondes and brunettes too.
Oh yes, and my wife.
It might just be simpler to tell us who you DON’T love, love!
Another redhead here!
Auburn locks here.
Auburn here, with a little help.
a red head that tans is awesome
“YES WE CAN”
YES WE TAN
lmao
From the original post:
“John Lesniewski decided to auction off two houses he owned. Lesniewski, a real estate agent in Suitland, acquired the homes from clients of his under a guaranteed sales program, meaning he agreed to buy the homes if they didn’t sell within a set time.”
“But last year, prices dropped more quickly than he anticipated and he ended up with an unacceptable 13 percent of the homes, he said. To avoid getting hammered again, he hired an auction house this year to sell one house he bought in Laurel and another in Beltsville. He received about $40,000 less than he wanted for the two combined, but he accepted the bids because he needed the money.”
“‘It was a failed experiment,’ Lesniewski said. ‘I should have kept the one in Laurel and rented it out. It was an act of desperation.’”
To which I say, Mr. L, if you’d kept the Laurel house and rented it, would you be cash flow positive? I have the sneaking suspicion that you wouldn’t be. So, as hard as it may seem, it may be best to take your losses and move on.
I have rented for 4 years and owned for 22 years in Laurel. He could not have rented out cash positive, by a long shot. There is too much rental available.
Laurel is at the opposite end of this long county from Suitland. He could not have easily managed a rental.
“Charles’ father is ill and they need to move to Idaho to care for him. But with their life savings tied up in the home, just walking away isn’t an option.”
“‘We just feel like we’re in jail, in this prison. Love the house, but it’s just… it’s a nightmare,’ Stephanie said.”
Why not move the ill father in with them? I have seen it done time and time again. My cousin just moved his Dad all the way from Bradenton Fl. to Wisconsin. I really don’t believe most of these stories anyway.
Because homepwning is a right. The world revolves around homes.
I always hate stories like this where they play the illness card. Sometimes owning a house doesn’t make sense. If you’re the kind of person that would move to care for a relative, than you shouldn’t buy a damn house.
I am that man in my family.
Perhaps the Dad was struck in the goolies by lightening ? He cannot travel after that as they can grow to an unfeasibly large size.
“‘We just feel like we’re in jail, in this prison. Love the house, but it’s just… it’s a nightmare,’ Stephanie said.”
Sounds like good material for a new Suzanne “Buy Now” commercial
That’s what I was thinking. What’s wrong with moving Dad down to where they are located in Sunny CA ? Besides, quitting your job to go take care of an extremely ill parent who may only live a few months is a terrible move. Taking care of them is the right thing to do, but leaving your life is not. I speak from experience, not cynicism. My mother died from a cerebral hemorrhage a few months after being diagnosed with Alzheimers and Parkinsons diseases. We cared for her but did not quit our jobs, moved into her home, etc. It’s bad enough when your parent dies. It’s even worse if you have no framework with which to start your life over.
“‘From the Mexican border to Northern California, any ZIP code where prices have fallen a lot is now posting relatively strong sales,’ said DataQuick analyst Andrew LePage.”
I was reading on Marketwatch that the reason for higher sales in some areas is not really due to great fundamentals, but due to forces sales such as foreclosures, short sells, etc. These homes are forcing a resale market since the banks don’t want to hold on to them or the owners can’t hold on to them. Does this logic make sense?
Heck, here in PHX they were trying to count the bank taking it back as a sale, until they got caught.
http://www.azcentral.com/realestate/articles/0520biz-homesales0520.html
Are we sure that isn’t happening in some more of these areas with HUGE transaction increases?
Interesting…..and, yet I bet they don’t count the values in their median figures - I have noticed Zillow has marked some sale prices as not included in the Zillow calculation of the value of a house/ houses in an area because they are the sale back to the bank figure (I don’t knoe if they identify them as such - but that is what I worked it out to be from the websites I was getting the addresses from and plugging into Zillow).
I used to like using Zillow, but I now believe their calculated value of houses has to be way out if they are not including all the sales back to the banks!
It’s not just sales to the bank they aren’t including. We sold in 2006 to a real buyer, and the actual sales price had no effect on the “zestimate”, which was way more. It’s “mark to model”, actual sales don’t matter.
Darell - nice catch. Guess it’s either lies or deceit.
that’s totally bogus
BTW office REITs may be ok as folks quit commuting and live in their offices
Yup, big spike in sales in Modesto/Stockton. According to some folks I’ve talked to, these are pretty much all foreclosures.
I live in the Sacramento and just about the only thing moving are foreclosures. What they don’t tell you about those multiple offers is that they are all 30 to 60% off the current listing. I was looking at a 1878 Eastlake victorian REO a few months ago and got discouraged by the “we have other offers, we need your best and final…blah blah blah”. We saw something we liked better and pulled our offer. I just saw that it closed at 130k, listing at the time was 199k - just to give you an idea of what is happening out here. Oh and the best part? The purchase price in 06 was 363k. Now that is a haircut.
wow a 65% cut! Dats what I like to see. Bring that down here to So Cal and the Westside/SoBay.
Summer is coming, hair cuts are coooler. Needed much more cutting around the desert. Hurry. -65%
That’s more like a decapitation than a haircut.
I’d go still lower on the body — only thing left is a hairy pair of legs from below the knee.
rob
I know 2 people who have not being paying their mortgage for a year and one has rented out the place for 6k a month and one is living for free. This is in long island ny so you can imagine what is happening in the forelocsure capitals. Their banks have not even started foreclosure proceedings against them,
OT… Had to put this one up… Fingerprinting Realtwhores… Legislation.
http://www.openmarket.org/2008/05/23/fingerprint-registry-in-housing-bill/
Saves a step in the criminal booking process…
I notice it was mostly for mortgage brokers (per the link).
Got Popcorn?
Neil
Can’t afford popcorn : (
haven’t seen these offers for a while
“acquired the homes from clients of his under a guaranteed sales program, meaning he agreed to buy the homes if they didn’t sell within a set time.”
Still being offered by a few REIC-ers in Tucson. Don’t know for how much longer.
OT but here is a little light reading about the OAS objectives with regard to the sovereignty of the US, interesting for sure. Enjoy the weekend!
http://www.theamericanpresident.org/2008/05/07/the-demise-of-our-unique-american-identity/
The most puzzling article is the one that describes Gilles and Nicci’s move from Paris, France to a lunar landscape community in Las Vegas.
What happened, were they deported?
Read the whole article on Inspirada in Vegas. HOA sounds horrible. One resident is complaining that they won’t approve the color of her blinds and they want her to move her 1,500-pound angel statue off the front porch. Ironically, I just bought and placed a statue of an angel reading a book on my front porch yesterday, though it’s nowhere near as gargantuan as the one in the article must be. I will never live in a neighborhood with an HOA.
I have a statue of an oversized phallus on my porch. True story! HOA’s are an oddly American combination of communism and fascism. I for one prefer freedom.
Oh so that’s how you get dates…
My main gripe against HOAs is that they always tell you what color to paint your freakin door. And it’s usually a non-color, like off white. Not even your traditional subdued navy, or forest green, or deep burgundy.
I’m not even talking a fashion forward shade like deep magenta…commie HOA gods forbid!
jbunniii:
Long live your oversized phallus!
phillygal, you shouldn’t pick on jbunniii like that. Goodness, I’m sure that dong is very tasteful, painted appropriately, etc, etc.
Still … say jbunniii having any luck with it? Is it as successful as say those folks who bury statues in their yards to get a house sale?
not picking on him, I believe as you do that the dong in question is very tasteful.
Miss Manners would approve.
Does anyone recall the estate in Beverly Hills in the 80s, where the Mid Eastern magnate painted his male statues in accurate colors. Those statues you could see as you drove by..caused quite a controversy. I think half the estate eventually had a suspicious fire. But the statues were eventually painted a neutral non accurate coloring.
I think they were a little more than lifesized..if you can imagine !
Yes, indeed, who could forget the dark pubes for all the world to see! From what I’ve read, this is historically accurate for statuary of ancient Greek and Roman times. Over the centuries the paint au naturale bleached away to the alabaster white we’ve all become accustomed to.
Anyone recall the Bev Hills estate in mid 80s that caused quite a controversy?
Mid East magnate had larger than life statues on massive front lawn. Painted them accurately.
Estate had a suspicious fire at one time.
Statues were eventually painted over.
It was on Sunset Blvd.
Early 80s I think. Iranian guy.
Yep
Hey you oughta change your alias to “Bigus Dickus”.
PENVS MAXIMVS
Hey, it was traditional in antinquity to display a phallus over the doorway. (It was called a “herm” as in the god Hermes.) It was supposedly to be a lucky charm.
I’ve seen a photo of one… it was a cheap low relief with the legend “HIC HABITAT FELICITAS.”
They have a kind of similar thing in India called a lingan (sp?) in honor of Shiva. Sits in a round, kind of abalone shaped holder in honor of Parvati. They have ‘em in temples and bath them with milk and honey once a year. Kinda kooky.
Lingum
I bet they drive Escaladas in Inspirada.
big fire in Santa Cruz, Calif… 20% contained.. 12 overpriced homes destroyed so far.
80% out of control
Is it 20% contained in subprime? Or in Alt-A?
Come on, man, we need some details here!
My sister called me today to say she was ready to buy 8 acres right where the fire was. I told her to offer 20% less that list.
I am learning from you guys!
I guess the Realtors have FINALLY given up on talking UP the market after they were exposed using phoney sales statistics earlier in the week. Time to talk down the market to get prices down to get some transactions going???
http://www.azcentral.com/members/Blog/CatherineReagor/24055#comments
“Phoenix resale prices could fall to 2002’s level
Real estate market watchers continue to look for the right indicator to indicate when metro Phoenix’s housing market has hit bottom.”
Desperately, OF SO desperately… but it just doesn’t exist!
“Housing analyst RL Brown thinks the median price of an existing Valley home might have to go as low as $140,000 before the market starts to recovery. He tracked the median resale price in metro Phoenix at $211,000 in April.
The area’s median home price hasn’t been at $140,000 since late 2002. It hit a high of $267,000 in 2006. So a drop of $127,000 in less than three years…..”
“Mr. Kahan suggested that the housing price drop could be a great marketing tool for Michigan. ‘You can tell people they can get a four-bedroom home for the price of a three,’ he said.”
You can tell them that, but the reality is that they are getting a four-bedroom house for the price of a four.
No… they are still getting a 4 for the price of a 6. But, that is better than a 3 for the price of a 6.
great marketing tool, eh..
“Maybe you and your girlfriend don’t need 4 bedrooms right now, but I can get you into this place for the price of a 3! And, it’ll cost you less than if you rented a 3 bedroom!”
yeah.. where do i sign..
Yes, maybe now they can get a 4 bedroon for the price of a 3 but in six months it’ll be worth the price of a 2 bedroom.
There are a lot of big over-sized houses for sale in some of the Detroit metro areas. Still, I’m not sure I’d want one of those monsters, the winter heating bills must be something else. I’ve never lived in Detroit but did live in Chicago for 3 years. COLD in the winter. I mean COLD. And I’d assume Detroit has similar weather.
I can speak for the weather in Ann Arbor while I attended the University of Michigan. Gets mighty cold in the winter, especially when the winds are whipping in from the Great Lakes.
Seem to recall some male classmates talking about taking extra care to not freeze certain body parts.
Yes. High ceilings are a really stupid (stooopid) idea around here. Live 25 miles frm Detroit & 15 from A.A. (between them) so I know whereof I speak.
Top headline at Yahoo right now:
Why It’s a Bad Time to Buy a House: High ‘Real’ Mortgage Rates, Record Inventories
Some of the first page of 918 comments were infuriating.
—
nathanmbrown - Thursday May 22, 2008 01:13PM EDT
The value of a home doubles every 10 years. Ride out the storm. This downturn can’t and won’t last forever. And don’t forget the tax advantages of home ownership.
—
The stupidity of some people is… dazzling.
What exactly about my comment is “stupid?” Historically, housing is a good bet to make. And, just like the run-up of prices in housing didn’t last forever, so the downturn will not last forever. We are going through a correction right now. Now is actually a great time to buy given deflated prices. And, yes, there are great tax advantages to owning a home and being able to deduct a number of items. I welcome your response, Matt-in-TX.
nathanmbrown@yahoo.com
I told my wife about a note I sent a colleague, that for the Memorial Day weekend I’m going to set up a chair in the garage and watch my car save gas. She thought about that and noted that gas prices must be causing casual lookers to curtail their free-time neighborhood cruising. While these people, like ourselves, are the least motivated buyers, such reduced driving has to have some additional marginal impact on sales. However small that is, it sure isn’t going to rescue prices.
I was wondering if the current gas prices and concern over future price increases will change people’s ideas about their monthly budget and make them think long and hard about how much of a mortgage payment they can afford. It sounds farfetched, though, considering some of the reckless behavior we’ve witnessed.
I think it has to. It represents either a cash outlay or a near-cash one. I liken it roughly to eating out, where we have to face the reality of the bill each time, analogous to filling up. People stuck with gas-hogs will either realize there’s little to nothing to be gained by dumping a vehicle no one wants and end up with higher monthly payments (pain) for their new econo-car, or they will continue to drive them and fill up with more gas, more often (pain). For most such people, there is no painless remedy possible, so they have to figure out what else “goes away.”
It’s interesting how the airlines, because they have a bottom line to feed, can’t play fancy shell games with their prices/services. Folks are being charged the actual cost it takes to fly them and their tonnage, and wailing because some else isn’t subsidizing their trip. You ever wonder what on earth folks have packed in their 5 huge suitcases?
I’d be happy to guess!
Suitcase #1: Anvils
Suitcase #2: Brick pavers
Suitcase #3: Scrap iron
Suitcase #4: A complete set of hand weights
Suitcase #5: Clothing and toiletries for the trip
Saw a guy bring on a full car muffler once.
And then there was the fighting cock.
Ya know a rooster.
honest.
You forgot Bowling Balls!
I never bring more than 1 suitcase and a purse. Okay, it is a BIG purse and I have brought rocks in my suitcase a couple of times.
‘I am an unhappy investor because I have lost a lot of money,’Frank Arnette of Fayetteville said.”
Golly, Frank, I’m so glad you cleared that up for us.
“No man is an island”
http://www.realestatejournal.com/columnists/private/20060912-private.html
It’s still for sale at $7m
But he wouldn’t take an offer a $1 under $10M.
What happened to that?
The “hilt” of the “mortgaged up to the hilt” go somewhere south of the border?
Oh wait! Those are different musicians.
“Don’t Stay Home”
Life could slip away in absent minded numbness
I’m only sayin this ’cuz I wish for the best
When you always stay in self-incarceration
I thinks it’s such a shame
Don’t stay home this time no don’t stay home
If he don’t have to he don’t want to
Don’t stay home this time no don’t say no
Oh how I’d like to diffuse your time bomb anger
It’s screaming danger danger this kind of world
Don’t care if you’re home so you better get some
Don’t stay home this time no don’t stay home
If he don’t have to he don’t want to
Don’t stay home this time no don’t say no
Everything I’m sayin’ you can dismiss
Because I sat alone on this past christmas
I deserved to be alone
But I guess I should have gone home
“Beautiful Disaster”
Today seems like a good day to burn a bridge or two
The one with old wood creaking that would burn right away on cue
I try to be not like that but some people really suck
Some people need to get the axing chalk it up to bad luck
“Don’t Tread On Me”
Oh, there’s a clock in my head
And despite what it said
Another one on the wall
They don’t agree at all
And there’s a schism in me
And despite what you see
You might see me as calm
But I go out like a bomb
*AND THE GRAND FINALE*
“You Get Worked”
This is happening this here is life
Days spent pondering truth is a knife
Respect due to those who have caught it
Dedicated to our friends who have sought it
Worked for this guy and his band many years ago. He was a douchebag, and obviously not a savvy investor.
Thanks for the laugh.
I’m a dj and never heard of them….nobody asks for those alt grunge wussie singers of the 90’s anyway.
I can’t wait for the housing bailout to pass.
1. Bank takes it 15% writedown and passes on the rest of the loss to the taxpayer. (it only makes sense for the bank if the loss is more than 15%)
2. Current owner immediately puts the property up for sale at break-even price…(fear and loathing and realizing they won’t get any profit anyway by holding)
3. Inventory goes through the roof. Prices fall even further.
4. Owner asks for another bailout…bank declines if not more than another 15% loss.
5. Foreclosure heaven.
Thank you Dodd!
On Wall Street: Drastic action may be needed if housing slump worsens
Friday May 23, 2:05 pm ET
By Thorold Barker
http://biz.yahoo.com/ft/080523/fto052320081413421281.html?.v=1
wall street begging for welfare from taxpayers!!!!!!
There’s nothing they can do.
Even if they bought up all the MBS’s, and actually bailed out the banks, housing would collapse to the level of long-term valuation (which is price to income.)
What on earth CAN they do?
This is all hoo-ey (and you’re falling for it.)
“and you’re falling for it”
the only people that are falling for this are all the stupid mexicans here in california and i mean they are triping and fallling all over each other trying to get in on the scam!
The most interesting part of the article (for me):
The RPX Index, which measures prices per square foot and has fallen almost 15 per cent from the peak, is signalling that prices will fall roughly a quarter before they bottom out.
I confess I’ve never heard of the RPX index. A quick google search shows it’s related to Case-Shiller, but I didn’t find an obvious graph etc. Anybody have a good link to share?
These 32 Commercial Banks and Thrifts May See the Dung Hit the Fan
http://seekingalpha.com/article/78639-these-32-commercial-banks-and-thrifts-may-see-the-dung-hit-the-fan?source=yahoo
link has some scary looking charts.
“DataQuick reported this week that Sacramento County posted its first gain in year-over year home sales in 37 months. The neighborhoods that made it happen have an abundance of homes with falling values ‘People who have been locked out of the market are buying homes at $130,000 and $140,000,’ said Kevin Cooper, a broker who handles many of the bank-owned listings now in south Sacramento and Elk Grove. ‘There are pretty nice homes out there, homes that previously sold for $275,000 to $300,000.’”
This waterfall market is accelerating as it heads to the bottom. The many homes that previously sold for $275K+ and are now selling for $140K- will seriously destroy the comps going forward for sellers holding out for top dollar.
Who’d a thunk. Sellers reduce asking prices and volume increases.
P.S. $140K is (140/275-1)*100 = 49 pct less than $275K. I can’t wait until San Diego homes go on 49 pct off discount…
“‘From the Mexican border to Northern California, any ZIP code where prices have fallen a lot is now posting relatively strong sales,’ said DataQuick analyst Andrew LePage.”
I don’t get it!! I just don’t get it!!!
Sure you get it. All these places that had massive increases in price before, now that prices have fallen a lot, the HELOCed FB’s are underwater, and there are plenty of sales because there are plenty of foreclosures, short sales, bankruptcies, walk-aways, desperation sales, etc. “Plenty of activity” does not mean anything right now; except that the market is crumbling, forcing changes in ownership.
That was my thought. *someone* has to own a house. Are they recording any change of ownership as a sale, even if the bank is now the owner?
I call bullshit on that. In my old neighborhood in San Diego prices are significantly down and nothing is moving.
Prices have come down the most in the least desirable areas, like Chula Vista, Mira Mesa, City Heights, Encanto, Skyline, San Ysidro, North Park, etc. There are more homes for sale in those areas and less sales.
Hope knowone on here works for the city of Velajo.
http://www.foxnews.com/story/0,2933,357881,00.html
Vallejo claims to fame..
..has twice served as the capital of the State of California: once in 1852 and again in 1853.
..a favorite hunting ground for the Zodiac Killer..
On May 6, 2008, the City Council voted 7-0 to file for Chapter 9 bankruptcy, becoming the largest city to do so ever in California.
Stephanie Gomes, Vallejo City Councilwoman largely blames exorbitant salaries and benefits for Vallejo firefighters and police officers. Reportedly, salaries and benefits for public safety workers account for 80 percent of Vallejo’s general operating budget. 98 firefighters made more than $100,000 and 10 made more than $200,000 including overtime.
Two contributing factors have also been cited: the aforementioned high salaries, and current and future pension outlays, payments of which are likely not sustainable if bankruptcy is to be avoided..
http://en.wikipedia.org/wiki/Vallejo%2C_California
Something are just over the top and $200K for firefighters is wrong…you could eliminate all OT and hire 2-3 others at reg time..and still save money
Same here in NYC janitors make $100K..by making all work after school hours overtime instead of hiring another at reg time.
NYC school janitors are scam thats been going on for decades. Jobs are handed out to wives, girlfriends, sons and daughters. Head janitor gets handed multi-million dollar/yr. budget and he hands out, usually, no show jobs to family members.
“‘We just feel like we’re in jail, in this prison. Love the house, but it’s just… it’s a nightmare.’”
I turned 21 in this house,
doing life without parole.
No one could stear me right,
but the posters on the HBB tried,
the posters on the HBB tried!
I am actively trying to become a FB. Yeah, I know this is not a great idea but I want a home to live in for the next 20+ years. I want but don’t NEED. So…here is what I am finding in my local real estate market.
1. New or new homes are priced at approx. $105-$115 a square foot.. They don’t suit my lifestyle at all. I haven’t made an offer on this type of home. My RE Agent tells me most of these homes are over-mortgaged and cannot be sold for less than the list price.
2. Older homes are priced at $80-$100 a square foot. These are the type of homes I am actively trying to buy. The problem is most sellers cannot afford to sell for anything less than the list price because they will lose money due their current mortgage amount.
Basically, our housing market is at a standstill. Sellers cannot sell at reduced costs and buyers like me will not buy unless the price drops to the 2004 prices. The average price in 2004 was $60-$75 a square foot. Now I’m told that interest rates are going to increase steadily for the next few years.
I have set an artificial budget for the home I am willing to buy and will not break that budget. I’m less than content at renting but will remain a renter until I can get what I think is a good house at a good price. The problem that now faces me it rising interest rates. As interest rates climb, my top offer price will decrease. Maybe I am in the minority but it seems like the entire real estate market cannot go anywhere…neither up nor down with sellers that cannot sell at loss and buyer that will not buy an over-priced hunk of lumber and drywall.
With the above scenario, I can see the future isn’t very bright for the sellers. But there will come a time where buyers will just say “I’ll buy that home even though it’s over my budget”. Presto, we have another housing bubble started before the current bubble plays out completely. Guess I will be sitting on the sidelines watching this bubble on a bubble play out. I’m off to call my landlord to tell him there is a leak in the roof and the shower stall has a crack in the floor. At least it’s not my money paying to fix these items. Hopefully the roof and shower gets fixed before mold starts growing.
..there will come a time where buyers will just say “I’ll buy that home even though it’s over my budget”. Presto, we have another housing bubble..
That time may come in year 2020 or beyond, but these days lenders are tapped out.. they cannot afford to risk lending beyond the traditional limits of buyer-affordability.
If you’ve got buckets of cash, go ahead pay whatever your heart desires… try to inflate a new bubble with your own money.
If not, you’ll have to borrow it. How much you’ll be allowed to borrow is not your decision. It’s up to the lender.. and any loans they make will be supported by genuine collateral value and the ability to repay..
joey: I see your point BUT…I know two people who have just made a withdrawal from their 2 story 3 bedroom ATM machine. They are right back to where they started in 2001. No equity in their home at May 2008 home values. In 12 months they will have neg-equity. The media says lenders won’t lend foolishly but in the last 2 months they made two inadvisable loans to just my small circle of friends.
I guess my point is…prices on homes are not falling fast enough for my taste because people cannot afford to sell AND semi-foolish lending is still on-going. These anecdotal examples might be the reason we won’t see 2004 home prices ever again. Sure some places are seeing 2004 prices but with 25%-40+% appreciation rates through 2006, it will be harder to shuck the same % rate in the opposite direction. I’m still holding out hope though. I’ve made offers on two homes at the 2004 price and was shut down.
I’m also looking to buy, as are most people who hang around here.. but the great unwinding is a slow process because the forces that support current prices are massive.
In one corner are all the lenders, governments, sellers, RE agents, brokers, Wall Street, mortgage investors, foreign and domestic.. businesses of all sorts, as well as anyone who owns property. They are working to slow or prevent the fall in prices for their own particular reasons.
In the other corner are the laws of economics, and time.
Place your bets..