A Louder Echo
It’s Friday desk clearing time for this blogger. “Columbia home sales have dropped significantly from May of last year. Amy Hamby and her husband put their home up for sale last month. They have had plenty of interest, but say potential buyers don’t seem ready to plunge into an uncertain housing market. ‘The problem seems to be that they either aren’t qualified for a loan and so they can’t buy the house,’ says Hamby, ‘Or there seems to be some anxiety about investing the money into a home at this time.’”
“While agent Bettye Lay of Carolina Towne Realty said her phone is not ringing as much in 2008, she doesn’t think the sky is falling, either.”
“‘I feel that many buyers watching the news feel that prices should drop more dramatically than they have since the ‘bubble’ has burst,’ she said. ‘However, I don’t feel that Burke County saw the kind of upswing in home prices that other areas of the country saw; therefore, we are definitely not going to see the downturn in prices.’”
“‘Everyone has an expectation,’ said Mike Watts with GMAC Carolina Realty. ‘They live in a home for a couple of years and they want to make the big check when it is time to sell. Say they live in a house for five years. Instead of making $100,000, how about $50,000 or $20,000? That still is a respectable appreciation.’”
“During April and May, North Carolina’s construction labor force did something it had not done in seven years: It shrank two months in a row after a record high. ‘It’s abysmal in the residential side, and employment is falling on the commercial side as well,’ says Tony Plath, a UNC-Charlotte professor.”
“Workers from those harder-hit parts of the country are flowing to North Carolina, looking for work. The problem: Once they get here, they are finding fewer available jobs. ‘Other parts of the country haven’t gotten the memo yet,’ Plath says.”
“Mississippi likely will dodge a mortgage bust because it did not benefit from the housing boom of places such as Florida and California, Federal Reserve Bank representatives said.”
“The Mortgage Bankers Association report showed nearly 10 percent of mortgages in Mississippi were delinquent in the first quarter of 2008. ‘(But now) be glad you’re not in Florida, because that’s a disaster,’ said said Bill Emmons, a senior economist with the Federal Reserve Bank of St. Louis, which serves northern Mississippi.”
“Luxury condos have become a common sight in Austin, but recent statistics suggest that the city’s realtors may be having trouble finding buyers.
“‘Austin real estate has really slowed down in the last few months,’ said Sam Carroll, a broker at RE/MAX Downtown Austin. ‘This may be especially surprising because it’s supposed to be the busiest time of the year.’”
“Carroll said that in many cases the only way realtors can sell condominiums and homes within a reasonable time period is to lower the price. ‘If you have a time line, lowering prices is just about the only thing you can do right now,’ he said.”
“A 13 percent increase in existing home sales in May in the Battle Creek area dwarfed the 2 percent sales rise nationally. Low-end home sales more than doubled, to 139 so far this year from 61 by this time in 2007. And many of those homes, said Realtor Joy Brown, are foreclosure sales.”
“‘I had somebody actually buy a foreclosure on their credit card,’ she said.”
“Austin and Viola Lee bought their two-bedroom condo more than three years ago. Last year, they tried to upgrade, but took it off the market after four months. ‘Little did we know the market was going to continue to be on the down spiral,’ said Austin.”
“A month ago they tried again, and so far, no showings. Two weeks ago they had their third child and need to sell– fast.”
“‘Right now its definitely a buyer’s market,’ said Jeff Boals, a Colorado springs realtor for fourteen years. He says homes used to sell in less than sixty days. Now the average is about a hundred, largely because of foreclosures. Realtors who work with ’short sales’ are as busy as he used to be– the consequences of relaxed standards.”
“‘Everybody, no matter who you are or what you did or how much you made, you qualified to buy a house,’ said Boals.”
“Kent families are feeling the repossession squeeze. Canterbury homeowners are bearing the biggest burden, with a 20 per cent increase in orders compared to last year. Peter Tullett, advice work supervisor Citizens Advice Bureau, added that the number of mortgage repossession cases being brought before Tunbridge Wells County Court was also increasing, and that the credit crunch was not just affecting social housing or low income tenants.”
“He said: ‘We can expect the cards to start falling in the next few months. People have been putting off the day of reckoning for a while now, hoping that house prices will increase for ever.’”
“A homeowner who is losing £12,000-a-month while trying to sell his £1million property hopes to beat the credit crunch by selling it in a raffle. Brian Wilshaw is selling 46,000 tickets at £25 each for a chance to win his 11.5 acre Oldborough Retreat.”
“Brian said: ‘This has been our dream home but now we are retiring we want to let ordinary people have the chance of a lifetime to live here. Rising house and land prices have put property like this one way out of the reach of most people.’”
“Brian said: ‘It’s well worth £25 a ticket. At 46,000-to-one our odds are a lot better than winning the Lottery. We don’t want to make any money out of this. We just want what it’s worth.’”
“Saipan’s ongoing economic downturn is prompting scores of local landlords to drop prices in a bid to stand out among the hundreds of starkly vacant rental properties available on the island. The decline in rental prices is visible every day in housing advertisements.”
“‘Rents for everything, commercial property and apartments, are going down,’ one informed real estate expert on the island said, speaking on condition of anonymity. ‘All of these factors combined have meant economic suicide.’”
“In spite of the price drop, the prospects in Saipan’s real estate markets still have some rental agents and brokers optimistic that conditions could attract new investors banking that the economy will later revive. ‘Now is the right time for people who have the means and the money and want to put in the investment,’ said Mustafa Shakir, chief of Shakir’s Realty, adding that Saipan has seen increasing interest from Korean investors.”
“Rhonda Witty, a real estate agent and foreclosure specialist, said she and fellow agent Yvonne Johnson had heard about foreclosure tours in other cities, and wanted to bring the idea to Toledo.”
“Ms. Johnson, also a foreclosure specialist, said it was important to bring the tour to Toledo. ‘Unfortunately, we’re right up there with Las Vegas in terms of the number of foreclosures,’ she said.”
“For the most part, eastern Oregon real estate has been isolated from the downward spiraling national housing trend, but now it’s starting to catch up.”
“”Last year, houses were being sold before they could be built, but now the market is slowing down. Realtor Fred Oits attributes the recent decline in part to politics.”
“‘Election years usually slow down for the six months prior to an election,’ said Otis. ‘I think people are concerned with who’s going to be elected or what’s happening, although it really doesn’t affect it. They still need a home to live in.’”
“For the first time in nearly six years, the number of Jackson County workers in nonfarm jobs declined compared with the same month the previous year. ‘I think you can attribute a lot of that to the downturn in residential construction and all that it encompasses,’ said Bill Thorndike Jr., a co-chairman of the Portland branch of the regional Federal Reserve Bank of San Francisco.”
“‘Historically, housing cycles were regional and localized,’ Thorndike said. ‘One of the differences this time is that the housing crisis is more of a national phenomenon. Not only from the national downturn in housing but from the economic health of Southern California and Phoenix areas that a lot of our housing stock is dependent on. We’ve received a louder echo.”
“(Washington) state tax collections have dropped for the third straight quarter, bolstering the likelihood the Legislature will have a sizable budget hole to plug come January. And real estate excise tax collections continue to fall in dramatic fashion with the souring housing market.”
“‘We are forecasting what would essentially be the worst downturn in 25 years,’ said Steve Lerch, the state’s interim chief economist.”
“It is important to keep in mind that some segments of the Manteca market have probably hit bottom, but a lot of other segments haven’t quite yet such as McMansions and, depending upon how you view them, the diamonds in the rough or dog houses.”
“Without a doubt the one segment that is probably going to fall more is the condo conversion resales. The Cherry Lane complex - which was selling 18 months ago for $179,000 for a 944-square-unit - has had only one resale unit sell since February and that was for $114,000.’
“There are two same-sized units on the foreclosure list - one for $89,900 and the other for $94,900. There are three on the short sale list - $94,500, $114,000 and $119,000.”
“If the unit listed for $89,000 manages to fetch that much, it will represent the biggest single drop of housing value in Manteca of 50 percent in 18 months.”
“Tooele County’s residential construction industry appears to be at a virtual standstill. ‘I only get 10 percent of the calls I used to get last year, so I’ve lost 90 percent of all work because of the high costs to build,’ said Dan Grgich, owner of DG Construction in Tooele.”
“‘A lot of this stuff gets so expensive, and it drives the costs of the market up,’ he said. ‘That’s why home prices became so expensive. It doesn’t help that banks won’t give any money for spec home building, but they can’t because the federal government won’t lend them any money.’”
“Brad Sutton, broker in Tooele, said the entire homebuilding industry is hurting because of overbuilding. ‘Because there are so many houses that are already up and available, builders and contractors don’t want to build more spec homes,’ Sutton said.”
“‘Tooele County is generally in line with what’s happening throughout the Wasatch Front and the rest of the state,’ said James Robson, regional economist with the Utah Department of Workforce Services. ‘A big part is the tightening of lending standards, and there was also that major housing boom of ‘06-’07.’”
“Throughout the housing crisis, we have heard demands for every variety of government bailout. If we had a spokesman, this is what I wish he would say: ‘Dear Struggling Borrowers and Lenders…”
“It is universally recognized that when you invest in stocks, you are taking a risk-and just as you deserve the profits if the investment goes well, so you must accept the losses if it doesn’t. The same holds true for real estate.”
“The question we face today is: Do we let the market function? There is no conflict between individual responsibility and a functioning housing market; to the contrary, the second requires the first. If we let the market function, home values would fall to some market bottom, new buyers would eagerly seize on lower home prices, borrowing from lenders who would have learned to lend rationally.”
“Clearly, the just and the American solution is for all of us to tell the government that we will take responsibility for our decisions, and that no one has the right to make anyone else pay for his mistakes.”
‘and there was also that major housing boom of ‘06-’07′
Yes, there was that. My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics!
Welcome, class to Personal Money Management 101. Here’s your first lesson of what NOT to do…
“‘I had somebody actually buy a foreclosure on their credit card,’ she said.”
Hey, if it’s low enough, I might do the same. Might as well get the 1% back on that deal.
Not to mention that in a non-recourse state, you can then lose the job, and default on the CC thus truly and propah-ly sticking it to the Man.
WHEEEEEEEEEEEEEEEE!!! Time flies when you’re having fun like that.
Actually, the credit card COULD repro your house. It’s mortgages that are non-recourse, not credit card bills. If the person bought it on the CC with plans of paying it off before it accrued interest, it might make sense.
What about CC paying off mortgage which was non-recourse?
Then, what happens? Seems to me there are any number of loopholes.
Yep, for non-secured debt as long as its a primary residence it falls under the homestead exemption and is protected from creditors. Somehow I doubt this guy will be using it as a primary residence. Of course, if he has available credit that high, I doubt he won’t pay it off in a month. But that may be optimistic of me.
My jaw hit the floor on that one!
Leigh
“The Mortgage Bankers Association report showed nearly 10 percent of mortgages in Mississippi were delinquent in the first quarter of 2008. ‘(But now) be glad you’re not in Florida, because that’s a disaster,’ said said Bill Emmons, a senior economist with the Federal Reserve Bank of St. Louis, which serves northern Mississippi.”
So I guess a 10 percent mortgage delinquency rate is business as usual in Mississippi?
Why you always be harshin’ on him like that with your fancy-schmancy edumacational analysis and all?
I didn’t mean to get moedumacational on y’all…
To be fair, MS was greatly affected by Katrina. My wife’s cousin has only recently gotten back to full-time employemnt. I actually wish the best for these people. If my Plan A ( the Philippines ) doesn’t work out I would very much consider MS as one of the places I would look to snowbird.
Say what you may but they are very nice people.
They are indeed. I’ll be in MS at this time next month. Looking forward to it.
I think the comments are more directed at the suggestion from Bill Emmons that a 10 pct delinquency rate is normal (at least speaking for myself).
Me too; I was just ribbin’ you ’cause I’m bored and I’m just that way, anyway.
Oh no offense taken guys. It’s been a rough week. When you’re an Oregonian just about any place that isn’t rain-soaked 9 months out of the year gets cut slack. Yes, even Yuma.
Good exchange. A dedicated Southron, probably rare on the board, I appreciate good humor even in the direst of times (that trait not at all rare here). Probably wouldn’t be so smarmy if I were one of the FBs, but I’m not. I’d imagine that Forrest Gump might have said, “Screwed is as screwed does.”
Lovin’ it and livin’ it, down South.
Potentially the only time Toledo & Las Vegas have been thought of as being similar…
“Ms. Johnson, also a foreclosure specialist, said it was important to bring the tour to Toledo. ‘Unfortunately, we’re right up there with Las Vegas in terms of the number of foreclosures,’ she said.”
As long as the tour bus is named “The Minnow”, because I’m sure the tour would last a lot longer than 4 hours. It’ll take a few years to tour all the properties as they keep popping up. (And old ones get re-forclosed on as knifecathers notice the handles sticking out of their hands.)
Suddenly, these so called Luxury Condos and overpriced POS McMansions ALL have the financial curb appeal of that ratty green dilapidated 10 x50 ft trailer across the tracks we saw as kids.
Ha Ha
This is were I live and these typical RE BS comments are coast to coast. There are tons of houses on the market here, but the majority have not lowered their price any, and when they do it’s the joke #’s like a $1000.00 reduction on a $200,000.00. The attitude around here is we’ll wait until the market gets going again. The downtown area keeps right on building Condo’s, their plan is to sell them to all the incoming college students this fall. One just finished, 120 units starting at $279,000.00. There are big storm clouds on the horizon, but these guys are not battening down the hatches.
“If you’re interested in buying, now’s a great time to buy,” says Walker. “There’s more inventory. If you ride through any neighborhood in Columbia and compare it to two or three years ago, there are a lot more for sale signs.”
Yeah, because college students are acclaimed buyers of real estate.
“‘Everyone has an expectation,’ said Mike Watts with GMAC Carolina Realty. ‘They live in a home for a couple of years and they want to make the big check when it is time to sell. Say they live in a house for five years. Instead of making $100,000, how about $50,000 or $20,000? That still is a respectable appreciation.’”
YOU FOOL! “Making” $20,000 in five years? The property taxes, maintenance, and insurance ate up all of that $4,000 per year and more, buddy. And the Realtor (TM) commission probably ate up another $20,000.
Keep the popcorn popping,
Red Baron
As Snoopy was wont to say, “Curse you, Red Baron!”
Cute. I only present reality–the Realtors (TM) just think it’s hell.
Keep the popcorn popping,
Red Baron
Besides which, they only “make” any money if they downsize to a smaller place. How many boom sellers took the gains from their house and used it as a down on a more bigger better place?
I know of a couple that downsized while moving to a much more expensive neighborhood. They carried two mortgages for almost a year, and ended up selling their first house for about $20k under their asking price. The wife has come out of retirement to take a job.
In their case, they played musical houses. And you can see from the above that it wasn’t such a fun game to play.
Hasn’t this been the modus operandi since the early 80’s?
The assclowns on “flip this house” and other HGTV shows always conveniently forget to add this into their profit calculations, too. They also assume that you can borrow money for free and fail to mention any interest paid or closing costs for a bank loan. If a real accounting was done many flips would not make money even in the bubble market of 2003-2006.
motorcityjim,
How true! Often thought that myself. The slap-dash guys that finish in under a month needn’t concern themselves with carrying costs but there were still costs associated with the loan. I can’t believe there is still “fresh meat” looking to join that @ss parade?
Say they live in a house for five years. Instead of making $100,000, how about $50,000 or $20,000? That still is a respectable appreciation.’”
R-E seem to be dumber than the general population. Aside from the fact that your primary residence is not an “investment…if I had taken th $65K I put as a 20% down payment on my house in 1989 and bought U.S. Savings bonds at the prevailing 1989 rate, in 5 years I would have made $24,952 (5.5% interest). And there’s no carrying costs, insurance, or agent’s fees here.
Anyway, if you only think you’re going to live somewhere for 5 years, you shouldn’t buy. That’s true at any time….
“Throughout the housing crisis, we have heard demands for every variety of government bailout. If we had a spokesman, this is what I wish he would say: ‘Dear Struggling Borrowers and Lenders…”
“It is universally recognized that when you invest in stocks, you are taking a risk-and just as you deserve the profits if the investment goes well, so you must accept the losses if it doesn’t. The same holds true for real estate.”
“The question we face today is: Do we let the market function? There is no conflict between individual responsibility and a functioning housing market; to the contrary, the second requires the first. If we let the market function, home values would fall to some market bottom, new buyers would eagerly seize on lower home prices, borrowing from lenders who would have learned to lend rationally.”
“Clearly, the just and the American solution is for all of us to tell the government that we will take responsibility for our decisions, and that no one has the right to make anyone else pay for his mistakes.”
—————-
Pop, pop, pop…
That was the sound of liberal socialists’ heads exploding after reading the paragraphs above.
Wow - who said this, James Robson of Utah? Well then, “James Robson for President 2008″.
There is a larger argument that regulations being pulled away or weakened combined with people in power choosing not to use their power led to this fiasco. Many of the loans that failed were garbage that any child could dismiss as blatant fraud. Securitization may be the future, but so far banks have not consistently been able to recover the properties used as collateral, and even then the properties have proven to be worth far less than the mess of loans and derivatives rooted in them. There are no liberal socialists in this picture, just a bunch of Capitalists with a range of ideas about where the lines on the road should be drawn.
And when you hear someone using simpleton, mindless sloganeering like “librull soshalists”, just sit back and consider the source.
Yeah, and thanks for McCain’s ad at the bottom of this thread asking me to “invest” (i.e. squander) my shrinking dollars for “Victory.” As if $531 billion to date isn’t enough for our so-called Victory. Sorry Ben, but that ad just bugs.
Yep! That’s for sure.
There was no “fraud” involved in most of the loans that failed. There was a great deal of “greed,” however. The greed was mutual.
I honestly believe that the bubble was exacerbated by the increasing decadence of our society. There has been a business cycle, and some people have always been avaricious and interested in a fast buck. However, this particular bubble was magnified tenfold by the decadence and greed of our society.
While I am not opposed to more regulation, I really believe that increased regulation probably would have done little to stop this bubble. Greed has just gotten out of control. It’s no different than violence. The laws against murder aren’t the thing that deters people from killing one another; it’s our commonly-held belief that murder is immoral that is the real deterrent.
Unfortunately, our financial morals have eroded and things like the bubble are the result.
Fortunately, this problem will also fix itself. If we get a big enough depression people will re-discover the virtues of thrift and hard work. But IMO that’s what it will take to shock people back into behaving morally again; a few more government regulations just won’t be enough.
Um, az_owner, can you please list for me all of the “liberal socialists” in office in the USA right now? Thanks.
Anyone working at the the Fed
Oh, come on. It’s the “L” word. You want actual facts? You’re supposed to run and hide, lest the word that cannot be spoken sears upon your chest. nanny, nanny, nanny.
“liberal socialists”
I haven’t seen too many of those around, but I sure do see a lot of Big Government “borrow-and-squander” Republicans in Washington.
“Pop, pop, pop…That was the sound of liberal socialists’ heads exploding after reading the paragraphs above.”
You are kidding, right? After all we’ve seen the last 7 years, with zero regulation, massive corporate welfare and a capitalistic system completely run a muck, you are seriously going to slander liberals?
The honest truth is your party wrecked this country in more ways than can be calculated, and they did it with the free market, zero regulation bullshit we all knew it was. Really, didn’t they just want to rob the country? Wasn’t that the true intent?
You know it was. So do us all a favor and keep the BS right-wing garbage to yourself. Truman said it best…
You Republicans stop lying about us and we’ll stop telling the truth about you.
Enough said!
“A month ago they tried again, and so far, no showings. Two weeks ago they had their third child and need to sell– fast.”
Why don’t you two breeders try some family planning ?
Sproggy, sproggy, sproggy
Oink, oink, oink
It’s a sproggy, sproggy, sproggy
Oink, oink, oink.
it’s amazing to me the number of people that put as much thought into having a third or fourth kid as i do taking a dump.
Well, ya never can tell which one might grow up to be president someday - or even the next jeebus.
I say the same thing about my dumps.
Your dumps are more qualified for the job I’m sure.
For everyone in overbuilt flyover land tired of the ceaseless refrain “We didn’t have a boom like X, so we won’t have a bust”, I wrote a blog response:
Examining the myth
so how is life in Billings Montana ? Pros and Cons Please.
Terrible place. Don’t go there LOL
Interesting article. Great comment in the comments section:
“Many do not remember that in the late 80s Missoula had a Real Estate Brokerage named “Busted Ass Realty”.”
“I don’t feel that Burke County saw the kind of upswing in home prices that other areas of the country saw; therefore, we are definitely not going to see the downturn in prices.’”
—————————————————————
And here’s another realTard lying through his teeth and bolstering the denial of RE believers. This sinister tidbit is the syphlitic cousin of NAR’s “every market is different” campaign. The constant stream of bullshit from these people is downright insidious and criminal in my view. The national leaders of the RE crime syndicate trumpet how RE is a great investment. Local half-witted realTards promise in the local press that prices won’t fall.
Any NASD guys here care to comment on these liars offering investment advice with a license? You’d think these local morons would be staying mum about pricing or maybe they are just too friggin clueless to understand what they’re doing.
errrrr… edit: without a license
“…therefore, we are definitely not going to see the downturn in prices.’”
I definitely hope that any future litigation against Bettye Lay of of Carolina Towne Realty features this pronouncement.
Again I just can’t understand why someone hasn’t applied the Uniform Commercial Code. I realize it’s designed to address “products” and not realty but when you have people in FL on Craigslist advertising “Guaranteed Returns” to people in… CA I think you’re definitely flirting with the UCC.
Same deal with these “essay contests” and plastic skanks offering “their personal attentions” along with the house! Mind you while they are a “licensed realtwhore”.
Creative marketing I understand but when you make your appeal across state lines and offer “infestments” to the general public we’ve got a problem. Many of these infestments would be considered a “private placement” by security law standards and as such the prospect should be able to demonstrate they are in fact a sophisticated investor.
Drives me nuts.
The sad fact is politicians are loathe to call for the prosecution of any FB, specuvestor, or houseflipper for anything.
It would just be too unpopular to go after “ordinary Americans,” especially since there were millions of people involved in these shady activities….
How can one “feel” whether or not prices went up to the same extent as they did somewhere else? Since when did data analysis result in emotive conclusions? Do you guys remember a few weeks ago when I posted on the difference between thinking that one is right and feeling that one is right? Whenever someone starts to blah, blah, blah over their “feeling” of a particular factual issue, I start to get all tense and perturbed, like I’m about to snap.
“Mississippi likely will dodge a mortgage bust because it did not benefit from the housing boom of places such as Florida and California, Federal Reserve Bank representatives said”
Never seemingly accounted for in statements like these are the following:
- Based on economic conditions in some of these areas, prices should have been falling when they were rising slowly. Just because they weren’t rising as fast as the peak bubble areas doesn’t mean there wasn’t a bubble.
- The types of risky financing that were used in the peak bubble areas were used everywhere to varying degrees.
- Prices relative to incomes rose to well above historical averages and well above what local wages could support in most areas.
- The types of fraud that drove prices higher was hardly limited only to the peak bubble areas as we’ve seen from numerous stories.
“- Prices relative to incomes rose to well above historical averages and well above what local wages could support in most areas.”
Everyone is missing the importance of Katrina. The Gulf Coast did participate in the US bubble, just not as dramatically as almost everywhere else. Remember, excluding the city limits of New Orleans, the overwhelming majority of the Coast’s economy is dependant on the spending of low-skill workers and tradesmen - traditionally low-paying. Those same workers and tradesmen have experienced previously unheard-of prosperity - both in terms of real $$$ as well as the leverage to demand higher wages in the short-term due to the labor shortage - since Katrina.
Bear with me - I’m aware this is about to sound like a variation of the “it’s different here” theory.
I’ll concede that for the most part N.O. and the other tourism-centric micro-economies are toast. Katrina created a shortage of workers needed just to re-start the refineries/plants/factories/shipyards that were shut down for the storm. FAR FAR more are still needed for ongoing rebuilding that won’t slow for the forseeable future. On top of that, this region is where most of the nation’s energy and raw materials are produced (refineries + chem plants). All of those facilities have been running full-speed since 9/11 and they cannot expand them fast enough with no end in site - creating more demand for basic labor.
I haven’t seen anyone mention this, but TENS OF THOUSANDS of otherwise underwater homeowners on the Gulf Coast were already foreclosed-on (by God) 3 years ago and have subsequently been made whole by the various grant/loan programs. Maybe not 100% (or even close in most cases), but for the most part those losses have already been absorbed.
My whole premise is based on my belief that the vast majority of us currently living in the Katrina-zone either immigrated here or returned because our trade allowed us to not just survive but thrive.
I’m not saying the Gulf Coast is immune to the coming *ecession. Rather, that the Gulf Coast has been in a defacto depression since Katrina and those currently thriving in Katrina’s aftermath should have no trouble whatsoever surviving the coming storm comfortably.
Brian,
Well said. Perhaps the reason that part of the country hasn’t prospered to the same degree as the rest of the nation is because they haven’t figured out how to play the Real Estate Ponzi Game and have foolishly focused on actually creating products?
I’m just trying to figure out how you managed to type an * instead of an r.
depression/recession?
Leigh
Actually, I meant to type the ‘*’. The other dozen or so grammatical errors are the result of typing too quickly after guzzling my Friday afternoon 6-pack. As they say, when in Rome…..
In computing, an ‘*’ is a wildcard, meaning it can represent any character.
I just went over every single letter on my keyboard, and nothing makes sense except for the r. The only thing that comes close is “necession”. I think that’s what happens when a creepy guy tries to get some.
“Rather, that the Gulf Coast has been in a defacto depression since Katrina and those currently thriving in Katrina’s aftermath should have no trouble whatsoever surviving the coming storm comfortably.”
Many folks who survive in the Rust Belt have been in your position for more than a decade…I agree with your post.
“Brian said: ‘It’s well worth £25 a ticket. At 46,000-to-one our odds are a lot better than winning the Lottery. We don’t want to make any money out of this. We just want what it’s worth.’”
Why not let the market decide what it’s worth? I think brian should get used to the idea of bringing some money to the closing cause he truly won’t be making any money out of this.
Over the course of the last year or so Ben featured two or three sellers who tried to unload their house via lottery. None of them sold the expected number of tickets.
But they are only doing it to help the little people…not make money for themselves.
For months now, I’ve been watching the Sacramento area housing market. And I’ve been scratching my head when I see so many homes still priced close to the top. The other day I saw this question on Trulia.com, where a woman was looking for advice on how to price her house:
http://www.trulia.com/voices/Home_Selling/How_much_should_I_list_my_property_for_in_Lake_of_-41713–
“I have a lake front property in the Lake of the Pines, in Auburn, California. Local realtors say to price it at a price that I know does not account for 30% drop in our area since 2006. They also say expect for it to be on market 18 months Their explanation is that there are no buyers anyway, so price does not matter. ”
Is this what’s going on with a lot of prices? How many realtors are giving advice like this? Are they giving advice like this because they want to discourage lower priced competators for their own clients? Or how many realtors are still holding on to the idea that prices are going to spring up again soon –which can’t possibly happen considering the fact that the lenders are still going to be licking their wounds (if not dying from their wounds) in the coming years.
Seems like bad advice to give sellers. In the area where we just sold a house, I saw a decent house sit on the market for more than 3 years. Going from $400k to $265k. Last I checked it still hadn’t moved. (All that time requiring maintenance, mortgage payments, insurance, taxes, etc.) With prices falling as they are, I don’t understand why people wouldn’t want to get the best price that they can now before prices get worse??
“…With prices falling as they are, I don’t understand why people wouldn’t want to get the best price that they can now before prices get worse??…”
Because people in general are morons…that’s the simple answer. When prices were going up they were more than happy to treat property like wall street paper…but on the way down they seem to have forgotten that logic…
The advice the Realtors are giving that lady is horrendous and is an indication they don’t follow market indicators much on the way down as they did on the way up and it’s going to cost a lot of people in the end…as an example I have a client who I have down quite a few transactions for…she called to get info on the market and to see if it was as bad as the media made it out to be ( I indicated no it’s much worse) during the conversation she was informed of a house next door that was on the market for 300k originally listed at 600k had been on the market for a year…seller of this listing just posted a sign on the Realtors sign that says “Will listen to any reasonable offer” Her question to me if he sells for 300k or less how much does it mean my house is worth that I paid 500k for….My answer…Well since it hasn’t sold for 300k we know your house not worth that… Her next question was…if he sells for less than 300k how long do you think it will take before I can sell this house for a profit…My answer…historically houses have appreciated somewhere between 3 to 4% annually so you’ll be there for awhile…needless to say she wasn’t a happy camper when she hung up…
If I were advising folks in this market…I would be telling them slash the price 10% a week untill the phone starts ringing if you can… the faster you can get out the better…
I take it back about the former neighbor’s house still sitting there. I just checked trulia, and they just sold that house a couple weeks ago for $245k, $10k less than what we got for our house. Which just makes our point about pricing to sell. Their home was about 300 sf larger than ours, and they had updated the floooring and kitchen. If they weren’t still trying to hold out for top dollar, they could have easly gotten $300,000 for that house a year or two years ago, and spared themselves the expense of paying for a house that’s sitting unoccupied that whole time.
Yep a lot of these people holding out for the high prices are really going to be hurting. The thing is that there ARE people out there who are still willing to pay 2005 prices. It’s like all these people are competing for those few buyers. I have a feeling that a lot of these people are going to be really upset when their homes are still sitting on the market a couple years from now and everyone’s struggling through one of the worst recessions. And fewer people will be the position to by even after they finally cut their prices.
Man mri… wish you were advising sellers in my ‘hood (Grove/Beverly Center area) It’s surreal, new listings are popping up at ‘06 prices still. The occasional places that are 1mill or a bit less (unheard of a year ago) sell quickly… still a few knifecatchers out there. People are completely of the belief that things will be back to “normal” soon. Crazy….
They’ll be on board soon enough… L.A. will be the last go but when it does it’s going to be a doozie…the shell is already cracking…just be patient
GREED. (In answer to your last question.)
Gosh, it’s almost like September 10, 2001 –all the people who were still holding on to their stocks, waiting for a recovery.
Come to think of it, it’s hard to believe that it’s been almost 7 years. And every now and then I still get a panicky feeling when I feel like I have too much invested in the stock market. Now we have the stock market heading down, and a really bad housing market situation. Now I’ve got myself thinking of how much damage another terrorist attack could do… :o(
We’re far more of a danger to ourselves than terrorists ever will be.
Yeah, because people losing stupid money on bad investments is so much worse than 3000 people being killed in one attack, some of whom had to jump off the 95th floor of a skyscraper because they were being cooked alive in a raging inferno of jet fuel. I can direct you to the videos of these people falling for 20 seconds screaming all the way down if you’d like.
AZ_Owner:
I think bink’s point is that Americans are only relatively civil because our system is sound. Once you start to throw the basic rules out the window, you have to worry about how your neighbor will react.
Ok, I’ll buy that.
Bink’s comment just gave me the same impression that I get when people say things along the lines of “the possibility that global warming may or may not cause the oceans to rise a half inch in the next 100 years is a FAR more important issue than terrorism”.
My mind always goes back to those images of people jumping out of the windows of the World Trade center 1000 feet up in the air, a few hours after they went to work on an otherwise normal Tuesday.
“Bink’s comment just gave me the same impression that I get when people say things along the lines of “the possibility that global warming may or may not cause the oceans to rise a half inch in the next 100 years is a FAR more important issue than terrorism”.”
How interesting that you should connect these two particular dots.
We ARE more of a danger to ourselves than the terrorists. Bush’s invasion of Iraq (no terrorists, no WMD) has cost over 4,000 American lives so far and more than a trillion dollars, that’s $1,000,000,000,000. Both of those numbers are still climbing with no end in sight.
Lucy, I remember at the end of the Clinton administration there was some minor issue (I’ll say minor since I don’t think it was considered important enough to be plastered all over the news) about how well over a trillion dollars in military spending was misplaced and unaccounted for. And what military activity did we have going on during the Clinton campain? He dropped a few bombs in Iraq, and got involved with the Serbs. So relatively those were peaceful times, and the military could not account for over a trillion dollars during a period of what I believe was just a couple years. I agree that a trillion dollars is a whole lot of money. And as someone who has been paying taxes through the nose, I’d like to see all forms of government spending show more accountability. But I think when you compare a trillion spent on a war and a trillion that is simply unaccounted for during peaceful times –it seems biased to only pick on the trillion spent on the war.
In my point of view government is by it’s nature inefficient and wasteful when it puts itself in charge of the public’s money. Look at what a mess social security is. And God help us when we completely socialize health care.
Don’t worry - oil is well over $100 a barrel - the “terrorists” got what they wanted.
Don’t worry - oil is well over $100 a barrel - the “terrorists” got what they wanted.
By terrorists you mean Dick Cheney and GW right.
Wasn’t the “illegal” invasion of Iraq “all about the Oil!!!1!!1″
That worked well, didn’t it?
Me, with the stock market down this far, I’m getting antsy to catch some knives. I didn’t think we’d get this low so soon. All of our 401ks came out of the market back in October and have been sitting in Bonds/Stable funds (whichever suck the least.) I haven’t made squat, but all the other options have dropped by 20% or so in the meantime. I think I might move back in around Nov and figure ‘good enough’. I figure we have more pain coming this summer.
“I have a lake front property in the Lake of the Pines, in Auburn, California. Local realtors say to price it at a price that I know does not account for 30% drop in our area since 2006. They also say expect for it to be on market 18 months Their explanation is that there are no buyers anyway, so price does not matter.”
Those type of realtors should be told to go f^ck themselves. They’re still operating as if the bubble market exists. That type of strategy will not get the place sold. Is there anyone that wants potential buyers traipsing through their house for 18 months? It’s a pain keeping a place clean enough to show for a few weeks or months much less more than a year. Legitimate agents will either tell you not to sell now if you don’t have to sell, or if you do have to sell how it should be priced relative to comps to attract potential buyers. There are good agents out there. Don’t waste time with the obviously bad ones.
Maybe just maybe, the realtor has a hidden agenda.
Maybe they are still trying to unload their OWN properties that they are stuck with.
I ran into the same situation trying to sell my father’s place in Orange County. The two realtors I interviewed both wanted to list the place for 30% higher than the two comps that sold in the last six months, while asking for 6% comission. I think they are trying to preserve the current elevated asking prices so as not to put more low comps on the MLS. One did offer the strategy of lowering the asking price a month after we list it, if we get no offers.
“I ran into the same situation trying to sell my father’s place in Orange County.”
Yeah, well, that strategy ain’t working in Costa Mesa. Prices here are in free fall. Ask prices are all over the map, in some cases homes are $350k ask where they once commanded $700k, and their neighbors are still looking for $650k. Needless to say, there’s barely any buying going on and what does sell is all price-slashed. Buyers are looking to draw blood from the sellers.
If they dont collude, even Realtors would distrust Realtors
Canadian media is starting to crack:
http://tinyurl.com/3nqw62
Alberta housing boom over
Calgary prices dropping, says TD report
Mario Toneguzzi, Calgary Herald
Published: Friday, June 27, 2008
Canada’s housing boom has come to an end and that is no more apparent than in Calgary with prices here expected to fall for another three or four quarters, dropping by eight to 10 per cent from their peak, says a national real estate report.
The report released Thursday by TD Economics says “the long-awaited end of the Canadian housing boom has occurred, reflecting more moderate demand and increased supply of properties for sale.” It is a trend that is broadly based, “but it has been particularly sharp in some of the markets that had experienced the most dramatic price growth.
“Calgary and Edmonton home prices in April and May fell to below year-earlier levels,” said the report, authored by Craig Alexander, vice-president and deputy chief economist, and Pascal Gauthier, economist, of the TD Bank Financial Group.
Not to be rude, but I’m glad the other countries are finally getting theirs too. I had tired of the smug “silly Americans” attitude.
You know, some of us up here in the Great White North have been frantically pointing south for two years now, yelling “Our economy is massively linked to the USA and look what’s happening there! Our prices are as bad as if not worse than California and Florida!”
Naturally it was always “different” here.
Actually come to think of it maybe I’m just as happy to see a few smug little smiles wiped off some faces as well.
Bubbles of this enormity always have strange bedfellows…
Imagine Brits investing in Bulgarian or Estonian housing bubbles?
Every state is in the same precarious position, some better some worse, and following closely @ their heels is local tax collection…
These entities are still writing checks, although they haven’t balanced their checkbook in years, and are afraid to look @ statements.
_______________________________________________________________
“(Washington) state tax collections have dropped for the third straight quarter, bolstering the likelihood the Legislature will have a sizable budget hole to plug come January. And real estate excise tax collections continue to fall in dramatic fashion with the souring housing market.”
“‘We are forecasting what would essentially be the worst downturn in 25 years,’ said Steve Lerch, the state’s interim chief economist.”
Welcome to the disaster that is the “asset-base” economy.
Someone said our economy was based on us selling houses each other.
With money from the Chinese that is never going to be paid back. (Krugman missed the paying back part.)
“Someone said our economy was based on us selling houses each other.”
Ben Jones has been pointing that out for years.
From an August 2005 Paul Krugman column:
http://tinyurl.com/9ksur
“In other words, a fuller answer to my former neighbor would be that these days, Americans make a living selling each other houses, paid for with money borrowed from the Chinese. Somehow, that doesn’t seem like a sustainable lifestyle.”
“How solid, then, is America’s economic recovery? The British have a phrase that applies: “safe as houses.” Our economy is as safe as houses. Unfortunately, given current prices and our dependence on foreign lenders, houses aren’t safe at all.”
I said that about Florida. The entire economy was based on locals selling condos to each other.
And this wasn’t much of an exaggeration. EVERYONE I knew was buying condos, condotels, etc.
Hows about a short walk down memory lane?
Boomtown USA
Something strange happens when real estate makes everybody rich. Is this where your town is headed?
May 23, 2005: 3:46 PM EDT
By Stephen Gandel, MONEY Magazine
NEW YORK (MONEY Magazine) - Twenty-four-year-old Kelly Pearson says the $580,000 ranch-style house she bought near downtown San Diego last August is a dream come true.
It is nice: 1,450 square feet, four bedrooms, two baths, crown molding, a big kitchen with an island and — quick! duck! — a 737 jet descending upon her roof with what feels like 10 feet to spare.
Pearson barely flinches. You see, her half-million-dollar-plus house sits just 1,000 yards from the airport’s single runway. She’s grown accustomed to the near-constant flybys, even if visitors must resist the urge to dive for cover when a plane thunders down. The low, barreling boom of the FedEx jets, biggest of the bunch, rattles the windows. “Every morning,” she says, “10:45 on the dot.”
With no savings, and a college loan to repay, Pearson took out a mortgage for 100 percent of the price of the house. Closing costs were paid for by a $10,000 gift from her parents (money first earmarked for her wedding).
But if Pearson has any doubt about being leveraged up to the eyeballs on a house next door to a major airport, she’s not showing it. The rent she’s getting on three of her bedrooms covers most of her monthly mortgage nut. Besides, a smaller house across the street just sold for $740,000, so Pearson figures her place is already worth $200,000 more than she paid.
Her plan: to borrow more soon and invest in a condo. “Where else can you turn a huge profit on a house in eight months?” she asks. “The possibilities in San Diego are unreal.”
Unreal, indeed. Across the country, talk of whether home values will continue soaring or begin to level off or even tank is starting to drown out every other topic.
Already, even in Money Magazine’s article, they were revealing cracks in her foundation!
the rent she’s getting on three of her bedrooms covers most of her monthly mortgage nut.
So already, in optimistic 2005, she was already losing money each month on her R-E “investment”. And that’s assuming that she can keep three bedrooms rented 100% of the time! Also, there’s probably HOA fees, etc, on top of this.
I’m going to write to Money today and ask for a follow-up article. I want to see how well “Kelly Pearson” did! I’m sure she’s riding in limousines and smoking cigars now with the rest of the jet set; (if not, she will be when she gets her Frank-Dodd-Obama handout.)
“Clearly, the just and the American solution is for all of us to tell the government that we will take responsibility for our decisions, and that no one has the right to make anyone else pay for his mistakes.”
Most FB’s made little or no downpayment, and therefore aren’t losing any of their own money anyway. The lenders and the investors are the ones losing their shirts.
“The lenders and the investors are the ones losing their shirts.”
And conversely, it is this group that would be offered transfer (aka welfare) payments in the event of a bailout.
Most FB’s made little or no downpayment, and therefore aren’t losing any of their own money anyway. The lenders and the investors are the ones losing their shirts
Exactly
Accepting money with no strings attatched isn’t dumb, but lending money in such a transaction is.
Global stock markets set for dismal first half
By Michael Mackenzie in New York, Javier Blas in London and Andrew Wood in Hong Kong
Published: June 27 2008 18:58 | Last updated: June 27 2008 19:17
Global equities on Friday were heading for their worst first-half performance in 26 years after a week when oil surged to a fresh record and there were renewed worries about the health of the financial system and global growth.
A high of $142.54 a barrel for oil sparked a tumble in Asian markets and selling in Europe and Wall Street.
Fears about inflation and slower growth as companies and consumers endure higher energy costs are weighing heavily on equities. Yet as stocks suffer, the surge in oil and other commodities during 2008 has the Reuters-Jefferies CRB spot index on track for its largest gain in 35 years. The index has risen 30 per cent since January, the largest increase since the 30.2 per cent gain in the first half of 1973.
Evidence of renewed financial stress as banks prepare to close out the second quarter and report earnings next month is also fanning fears.
On Friday, the MSCI world equity index had fallen 11.7 per cent since the start of the year, its worst first half run since a decline of 13.8 per cent during the first six months of 1982.
Maybe you oil whizzes can straighten me out…
Is the price we pay @ the pump today, based upon the spot price of like 6 weeks ago, not today’s spot price, right?
If that’s right, America’s gonna be held hostage by the one-arm-outdoor-bandit, to the tune of $7 a gallon, real soon…
Nah. The demand is sort of opaque. Some event will happen, a speculator will panic and rush for the exit, and the rest will follow, trying not to be the bagholder. Eventually, people either have to sell the futures, or take delivery.
My .02 not as an expert.
Actually, if you still remember Amaranth (the hedge fund) this is the reason they went under.
Couldn’t take delivery.
As I recall, both Morgan Stanley and Goldman made mad money off of those trades.
remember the Goldman trade of the 20M shares of Disney right after 9/11 for one of the Bass brothers? I think they made at least 50c - $1/share on that.
Yeah, but both of these were counterparties to the Amaranth trades since they were OTC.
So not only did they hold all the cards, they knew that Brian Hunter couldn’t take delivery.
This was in natural gas, and MS owns most of the containers on the East Coast.
So they happily lost money for a long time before they made billions in one fell swoop.
Get off delivery options
We just went through an oil expiration there was no problem, no sellers, no forced liquidation. There is no physical oil readily deliverable that meets contract specs. There are 13 oil tankers sitting in Iran that may be full of oil, there is a lot of oil en route to China and India that may be resold on the markets.
Speculators are not causing this runup. If there was oil available Saudi Arabia and other OPEC nations could hammer it. Since they are not hammering and it is not in their best interest to have high oil prices, there has to be another factor at play.
Amaranth had a lot of spread positions that were incredibly bullish on Nat Gas, the spreads collapsed.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1023810
The Amaranth Debacle: What Really Happened
LUDWIG B. CHINCARINI
Pomona College - Department of Economics; Georgetown University - Robert Emmett McDonough School of Business
Delivery of Nat Gas was not the problem
Krugman’s column today addresses the oil speculation diversion tactic:
http://www.nytimes.com/2008/06/27/opinion/27krugman.html?hp
Hoz,
Not meaning to be silly, but can you expand upon the contention above that:
“and it is not in their best interest to have high oil prices….”
As far as the members of OPEC are concerned, isn’t the selling of oil the only viable industry in most of these states?
The higher the price, the better, one would have thought, especially where there are no present indications of any dimunition in demand as a result of the higher prices.
When is the price of gas going to go up?
The refiners have to be taking it in the shorts right now. Gas should be at least 5 bucks a gallon by now with these oil prices.
$5/gallon of gasoline is the price at which alternative forms of energy start to become competitive.
Well then hurry up 5.00 per gallon and squeek on buy to 7.00 per gallon so it hopefully sticks.
I will keep driving my SUV and do what little I can to run up the price of gas to help force a change.
As a matter of fact, I hope all the SUV haters thank us for finally acheiving what no tree hugger has ever been able to do. Force the car companies to find a solution, or else they will go out of business.
aladinsane
We may be heading for some unexpected downtime for the refiners to cut the supply of gasoline.
Unlike homebuilders, they will cut production to match demand.
IIRC, a lot of refiners are already running at less than full capacity.
I had somebody actually buy a foreclosure on their credit card,’ she said.”
Didn’t we have some clown try this, living in CO, and buy a POS in Buffalo. His $3K purchase put him in BK more than $30K bellyup when the city tore down his ‘investment’ and he drove to Buffalo to see that he bought a crackhouse and he was billed for the teardown? How many times will this be repeated?
“For the most part, eastern Oregon real estate has been isolated from the downward spiraling national housing trend, but now it’s starting to catch up.”
“”Last year, houses were being sold before they could be built, but now the market is slowing down. Realtor Fred Oits attributes the recent decline in part to politics.”
“‘Election years usually slow down for the six months prior to an election,’ said Otis. ‘I think people are concerned with who’s going to be elected or what’s happening, although it really doesn’t affect it. They still need a home to live in.’”
*************************************************************************
The part about the election year is true, in that area. Tri-Cities Washington (Kennewick/Pasco/Richland) and Hermiston, OR. are heavily dependent on Federal cleanup money - for the Hanford Nuke Reservation, and the Umatilla Nerve Gas Depot (they’re burning it).
If this Federal welfare money stopped coming in, folks there would be reduced to growing and selling melons until another source of income (wind power?) was developed.
I believe he is refering to Bend OR, and the region east of the Cascades. A couple years ago they were still seeing 35% y/y increases when places like Sacramento/central valley were just tipping over.
“Mississippi likely will dodge a mortgage bust because it did not benefit from the housing boom of places such as Florida and California, Federal Reserve Bank representatives said.”
I’m so sick of hearing that same line from every single place in the country except California and Florida. The truth is that perhaps in dollar amounts, yes- CA and FL appreciated more. But as far as housing inflation, some of the worst occurred in places like NC, TN, GA, and TX. Just 4 years ago, homes in Nashville, Raleigh, Knoxville, and so on could be had for as little as 40-50k. Those same houses are 150-200k today. So they escaped the bubble radar, but these areas also got as much or more of a bubble as anywhere else.
Doesn’t work like that.
Those places would’ve had outright depressions in 2001-2002 had it not been for the housing bubble.
Flat prices are no indication that there wasn’t a bubble.
Think of America as a stove with 4 burners, each with a cauldron of worry bubbling at different temperatures, on said burners…
Everybody’s feeling the heat of this First nationwide housing bubble, just varying in degrees of hurt.
Ha
http://www.dallasnews.com/sharedcontent/dws/spt/football/cowboys/stories/062808dnspocowlede.1af5ec3.html
The Summer of Discontent:
http://www.marketwatch.com/news/story/brutal-sales-drop-tap-automakers/story.aspx?guid=%7B4FB1353A%2D6F14%2D48F6%2D8D4C%2D02CA6B6A0B42%7D
A sharp drop in sales is hardly surprising, given gasoline prices above $4 a gallon, weak job growth, and consumer confidence now bumping along at a 28-year low. See full story.
While the growing popularity of smaller cars like the Ford Focus and Chevy Malibu should provide a hint of good news in Tuesday’s sales reports, carmakers’ inability to keep pace with demand for their thriftier models coupled with a glut of unsold trucks sets the stage for some surprisingly stiff declines.
“This is going to be a tough month to write a sales release because there’s usually some highlights to point out,” George Pipas, Ford Motor Co.’s top sales analyst, said. “But this is shaping up to be a long, hot summer…the summer of discontent. We really don’t see it getting much better any time soon.”
….
Also, The Worst Is Over:
We should compile all the lies from Greenspan, Lereah, Paulson …
From Forbes.com
http://www.forbes.com/home/2008/06/26/banking-earnings-goldman-biz-wall-cx_lm_0626credibility.html
Credibility is in short supply on Wall Street. No one seems able to say definitively that the worst is over, and indeed a growing number of voices are saying the worst is yet to come.
On Thursday, Goldman Sachs’ (nyse: GS - news - people ) investment bank research analyst William Tanona cut his view on the brokerage sector to “neutral” from “attractive,” after having upgraded the group after the mid-March implosion of Bear Stearns. With storm clouds darkening over the financial markets, Tanona now says that “fundamentals continue to deteriorate” and that recovery will take longer than originally thought.
Just three days ago, his colleagues in Goldman’s strategy department reversed course and urged investors to “under weight” financial stocks in their portfolios, admitting they erred in recommending the sector in early May on a view that capital raising and government stimulus of the economy would benefit the stocks. “Our thesis was clearly wrong in hindsight,” the strategists wrote.
Worsening trends in the financial markets have made fibbers out of many a bank chief in recent weeks. Fortis (other-otc: FORSY.PK - news - people ), the Belgian banking giant, pulled a 180 Thursday, saying it would raise $12.5 billion in capital, $2.3 billion of it through a share sale and the rest from scrapping its dividend and selling assets. Earlier, the company had said it didn’t need to raise capital.
Same thing with Merrill Lynch (nyse: MER - news - people ), which said earlier this year it didn’t need more capital after raising $6 billion in January. In April, it sold another $9.6 billion worth of securities.
Lehman Brothers (nyse: LEH - news - people ) also said earlier it had adequate capital and then went out in early June and raised $6 billion, announcing the same day a wider than expected $2.8 billion second-quarter loss, all because of more write-downs. That came just weeks after Chief Executive Richard Fuld told shareholders at the annual meeting that the worst of the crisis was over.
…
Perhaps the biggest credibility gaffe this year came when Bear Stearns chief Alan Schwarz said on television that his firm was not experiencing a liquidity crisis, and within the week Bear Stearns had sought a rescue from the Federal Reserve and JPMorgan Chase (nyse: JPM - news - people ).
….
There is no rate or TAF (or other alphabet soup) that the Fed can tweak to fix credibility.
Our admin has a daughter who works at Wells Fargo Mortgage. She says that 80% of Santa Clara, CA mortgages are in some stage of default. Just like all other counties, the residents here mostly believe that Santa Clara county is different because everyone wants to live here. They hail the climate, the jobs, and the culture. Never mind the fact that the entire Silicon Valley is butt ugly to extremes; that the incomes can’t support the house prices; that the “culture” here basically consists of a second-rate theatrical group (although they’re getting better) and A LOT of legal and illegal immigrants from Mexico, India, and China; and that the same climate can be found in a multitude of other California counties.
Well, now people are scared. Scared of the stock market, scared of oil, scared of the housing crash. The glib Silicon crew is being hung out to dry.
Silicon Valley is butt ugly to extremes
I agree entirely. I was just mentioning to someone at lunch today that the million dollar houses here are of the caliber that would be occupied by blue-collar laborers in the rest of the country.
Still, 80% of mortgages in Santa Clara County are in default? I find that extremely hard to believe. Anyone who bought 10+ years ago should have a perfectly manageable mortgage.
Methinks some piece of information got lost along the way…
Although I COULD believe it of mortgages in the last year or two. Those people have got to be sweating bullets.
Check that, Alt-A stated income loans in the last few years. 80% of them being in some stage of default would make perfect sense.
Reset = default
No more neg am left to use = default.
Realization your house isn’t worth what you owe = default.
Sick of paying 50%+ gross income = default
Realizing Recession coming + above = default
People who put money down with a fixed are probably not in default in large numbers. But those loans are in the minority over the last few years.
I’m thinking a lot of HELOCing went on between 2000 and 2006.
As far as using a HELOC to buy a new car…
Californians did it at a rate almost 3x the national average, in 2007.
My neighbor (who also happens to be underwater after buying her condo in 05) HELOC’ed last year to buy a Civic Hybrid 6-banger.
I do somewhat admire her taste in cars, but nonetheless I think she’s going down, financially speaking.
She likely meant to say 80% of loans taken out in the past 4 years.
Unless everyone HELOC’d, of course.
80% is impossible for Santa Clara County, let alone Santa Clara the city. These are not communities that were desert farmland 3 years ago like most AZ burbs.
I don’t think it’s impossible. A default is anything 30 days late or more. I don’t know what the HELOC rate was in this toe-crack town, but I would not be surprised if 80% of the houses here were either bought during the bubble or HELOCed during the bubble. IMO, any bubble buyer/HELOCer has a > 85% chance of being in default at least once during the crash.
I have lived in Santa Clara for more than 30 years and that statement is just not true.
This has to be the funniest Redfin listing I’ve seen in a while. It’s a typical crapbox in one of the more ghetto sections of the Mission District, San Francisco:
http://www.redfin.com/CA/San-Francisco/2906-Cesar-Chavez-St-94110/home/1654370
But what makes this listing special is that Redfin now defaults to a “street view” instead of an overhead map view, and the street view photo for this house shows a crowd of either day laborers or wanna-be gangbangers milling about. Can’t airbrush that away! All this for only $569k or a mere $345 per square foot.
jbunniii,
Remember when the Cesar Chavez street used to be called Army Street?
Is anyone keeping track of how many times a bottom has been called at this point? One of these days, one of these stopped-clock bottom callers will get it right and later will crow about the accuracy of their prediction.
FRIDAY, JUNE 27, 2008
INVESTORS’ SOAPBOX AM
Housing May Have Hit a Floor
Economic Outlook Group sees signs of an inflection point.
SEVERAL REPORTS ON HOUSING have been released the last several days and the data suggest it is finally now bottoming out.
Ben, who is paying for all the McCain ads? TxChick? Nice try but I don’t think it will work. Is there a way to short that guy? O that is probly her strategy, pump and dump…
Who cares? Supporting this blog is a good thing for anyone to do. Campaign stuff ends up splattered everywhere in any case.
McCain gets my vote as “too damn old” for president.
Better old than a crook
http://www.boston.com/news/nation/articles/2008/06/27/grim_proving_ground_for_obamas_housing_policy/?page=full
I wonder if Grandpa McShame is still praying for another terrorist incident…….
Don’t sweat it Cat. Neither one of the loons will have 2 dimes to rub together this time next year.
Right. Imagine if you or I started making pronouncements about how penny stocks “had seen all the selling, and we won’t be going down from here, etc” and broadcasting this to the public, encouraging investments of hundreds of thousands of dollars, and millions in commission $$$ for ourselves.
The next thing you know, there would be an administrative law judge hearing the facts of our case.
Realtwhores constantly give misleading and self-serving investment advice to the public. When real estate was booming, there wasn’t much interest in challenging them. Now that the market is collapsing, they should be held liable for damages, IMHO. When the NAR is finally defending itself in multi-billion dollar class action suits; it will suddenly direct its members to STFU about giving “investment” advice.
Dead on Mormon. I’d love to see the MLS eviscerated. It’s a friggin’ monopoly that needs to be smashed to smithereenies.
Nice to see an article outlining problems in Tooele UT. Tooele used to be the ‘butt’ of jokes for those of us that lived in Salt Lake. It was the sticks and all the bumpkins lived way out there (about 40 west of downtown SLC on I80).
This is too funny, sorry if it was already on the Fla thread
http://hosted.ap.org/dynamic/stories/H/HEART_FOR_SALE?SITE=TXDAM&TEMPLATE=STRANGEHEADS.html&SECTION=HOME
Yeah, I’d prefer the pit bull pictured under “Dog Survives After Swallowing Deadly Toad”.
Wow MSM yahoo with a pro renting article
http://promo.realestate.yahoo.com/rent-dont-buy-your-home.html
In my opinion, McCain is a better choice than Obama. Not that I am so pro-McCain as I am against electing someone who called a hate-spewing racist his ’spiritual adviser and preacher’ for 20 years. I am equally disgusted with both parties and would agree both have done considerable damage to the country and it comes down to who is the one least likely to do additional damage. I am not racist in anyway. But believe the indoctrination I have heard from Rev, Wright is, and he only did it for his own monetary gain.
Who needs comedians when you have stuff like this:
“Brian said: ‘It’s well worth £25 a ticket. At 46,000-to-one our odds are a lot better than winning the Lottery. We don’t want to make any money out of this. We just want what it’s worth.’”
Current headline on Yahoo. This is starting to sound like the new conventional wisdom! We just need Time, Newsweek, and the various network news channels to join the choir:
The Myth of Ownership
Most Americans assume it makes more economic sense to own your home rather than rent. » Still true?
http://promo.realestate.yahoo.com/rent-dont-buy-your-home.html
Rent, Don’t Buy, Your Home
Choice quote: “When the housing market slumps—as it has every 10 or 15 years for the past several decades—homeownership becomes little more than renting, from a bank. Without appreciation, buying a $400,000 house—instead of renting the same property for, say, $2,000 a month—can turn into an expensive, potentially money-losing proposition.”
This guy sounds like we have for the past few years!
“Without appreciation, buying a $400,000 house—instead of renting the same property for, say, $2,000 a month—can turn into an expensive, potentially money-losing proposition.”
How does the equation look if the value of said house drops at over a 20 pct annual rate over a protracted period of time?
Dan Grgich, owner of DG Construction in Tooele says:
“A lot of this stuff gets so expensive, and it drives the costs of the market up. That’s why home prices became so expensive.”
“Banks won’t give any money for spec home building, but they can’t because the federal government won’t lend them any money.”
Dan needs a lot more edumacation on how this all works.
Dan, I ask you, how can you be wrong so often?
Dan is from Tooele, home of the dumbest idiots in UT. He would always be wrong.