Good Times Became Great Times And Then Fabulous Times
Some housing bubble news from Wall Street and Washington. Bloomberg, “Bank of America Corp. will buy Countrywide Financial Corp., the home lender battered by the collapse of the subprime mortgage market, for about $2.5 billion, 37 percent less than originally planned. Bank of America is discarding the Countrywide name, which has become an icon of the mortgage industry’s boom and bust, and Countrywide’s penchant for loans more prone to default, such as subprime mortgages.”
“Countrywide’s biggest challenge is its $27 billion pool of option adjustable rate mortgages, which let borrowers skip part of their payment and add the balance to their principal, said Stuart Plesser, an analyst at Standard & Poor’s. Delinquencies on Countrywide’s option ARMs totaled 9.4 percent at the end of the first quarter.”
“As shareholders were preparing to approve the deal on June 25, California and Illinois sued the lender for allegedly luring borrowers into risky loans they couldn’t afford.”
“Washington Governor Christine Gregoire announced plans to fine Countrywide for alleged discrimination against minority borrowers and asked that the company’s license to lend in the state be revoked.”
“Countrywide Financial Corp. was accused in a complaint by Florida of fraudulently making loans to homeowners who couldn’t afford to repay them. Attorney General Bill McCollum said in a complaint filed yesterday that the company and its founder, Angelo Mozilo, had violated the state’s deceptive trade-practices law.”
“‘Subprime loans were approved for borrowers who were not qualified and could not afford such loans,’ McCollum said in the complaint, which seeks unspecified damages for consumers hurt by the company plus $10,000 fines for each violation of the state’s laws.”
The LA Times. “Angelo R. Mozilo struggled last week to bid farewell to No. 1 home lender Countrywide Financial Corp., the company he led for 39 years only to see it toppled by misadventures in high-risk mortgages.”
“The usually silk-smooth Mozilo garbled words and at one point knocked over his microphone at a special shareholder meeting. Looking grim and sounding resigned, he said the era of independent home lenders like Calabasas-based Countrywide was at an end.”
“‘He was an admired and feared competitor,’ said Paul Muolo, an editor at National Mortgage News. ‘But now his reputation is trashed.’”
“Mozilo’s downfall was his lust to have Countrywide become the biggest provider of every kind of mortgage, Muolo said. The end of the Countrywide story was ‘a total disaster,’ Muolo said. ‘His ego sank him. . . . He had to be first in everything.’”
“Mozilo also faces investigations by the SEC and federal prosecutors into his exercises of stock options. And his reputation for regarding Countrywide as a personal fiefdom has been reinforced by recent accounts of how he intervened on behalf of politicians, athletes and other ‘friends of Angelo’ to give them mortgages on highly favorable terms.”
The Hartford Courant. “Sen. Christopher J. Dodd brought his message of urgency for passing federal mortgage relief back to his home state Monday - on the front lawn of a Spring Street homeowner whose mortgage is in foreclosure.”
“‘We’re running out of time here,’ Dodd said. ‘You’re going to have the August break [for Congress] and, of course, the elections. If this thing goes much longer, the value of it is going to be a lot less.’”
“The longer passage of the bill is held up, the more people will slip into foreclosure, Dodd said.”
The Christian Science Monitor. “In Mesa, Ariz., officials are trying to decide what to do about boarded-up McMansions that become party pads, trashed in raucous ‘raves’ where invitations come by text message.”
“In Atlanta, thieving from abandoned properties is so bad that police caught one man building a new house entirely of pilfered materials from empty homes.”
“Flint, Mich., has had to add firefighters and ladder trucks recently even though its population has declined. Up to 90 percent of fires start in homes where no one lives.”
“(On) Drummond Street, in the shadow of Clark Atlanta University… once a lively street, half the bungalows and shotgun-style houses are boarded up, with trash strewn about. Here, as elsewhere, the falling market has pierced holes in inflated appraisals used to write mortgage notes.”
“Bobby Todd, who has lived here 35 years, now sweeps sidewalks and trims hedges around the empty homes next to his. The mostly young, college-educated speculators bought new pickup trucks with money that he says should have gone into fixing up the houses - and then left when the market tanked.”
“‘They thought they could come make a profit, but they didn’t and they just left it,’ he says. ‘I’m an old man, and now I’m working for free.’”
The Star Bulletin. “Bankruptcies are on the rise in Hawaii, due mostly to a higher percentage of filings related to real estate problems.”
“‘A higher percentage of people filing bankruptcy have real-estate-related problems, much more than two to three years ago,’ said Honolulu bankruptcy attorney Stuart Ing. ‘The vast majority are not out of work, but the pay is roughly the same, and we have people who just have too much in credit card debt and loans.’”
“Many Hawaii residents also have investment properties on the mainland, which are facing foreclosure and debt, he said. Some Hawaii residents invested in mainland real estate but had to surrender because they could not generate enough rental income to cover the mortgage or could not sell the properties.”
“Eli Broad, the philanthropist and founder of KB Home, said the growing number of vacant U.S. homes, mortgage-related losses at banks and declining consumer confidence have convinced him investors are ‘better off in cash’ right now.”
“Broad called for Congress to pass a housing stimulus bill that would provide a tax incentive for first-time home buyers and guarantee up to $300 billion in refinanced mortgages. ‘It’s sad that we haven’t passed a housing bill,’ Broad said. ‘Hopefully that will happen after the Fourth of July.’”
“KB Home reported its fifth straight quarterly loss June 27. The company, the fifth-biggest U.S. homebuilder by revenue, has lost two- thirds of its value since the beginning of 2007.”
“A record 18.6 million U.S. homes stood empty in the first quarter, 5.7 percent more than a year ago, according to the Census Bureau, as a growing number of mortgage borrowers lost their property to foreclosure.”
The Detroit Free Press. “The volatile story of home sales and prices in America is told starkly in the financial reports of Pulte Homes Inc., during the five years that Richard Dugas Jr. has been CEO of the Bloomfield Hills-based company.”
“Good times became great times and then fabulous times, but quickly crumpled into today’s deeply disturbing times.”
“‘The U.S. economy is at risk. This is not just a housing crisis,’ Dugas said Monday, on the eve of his fifth anniversary today as Pulte’s CEO.”
“Dugas and the CEOs of other large U.S. home builders are pushing for a big tax credit on home purchases as part of a broader package to deal with the subprime lending crisis and related epidemic of home foreclosures.”
“Helping people to avoid foreclosure and stay in their homes is a worthy goal, Dugas said, but that alone will not stimulate home purchases. And without home buyers, housing prices keep sinking, leaving more and more Americans wondering how low they can go.”
“When Dugas took the reins at Pulte in mid-2003, the firm was solidly profitable, and the stock price was about $15 a share, adjusted for subsequent splits and dividends.”
“Then the market went crazy. Housing prices nationwide zoomed 12% to 13% a year in 2004 and 2005, much faster than the historic average of 5% annually. Pulte sales soared from $8.8 billion in 2003 to $14.7 billion two years later. Profits leapt 140%, to $1.5 billion in the same period. Pulte’s stock price tripled to $46 a share.”
“But that was then. The U.S. housing market stalled early in 2006 and has weakened since.”
“In 2007, Pulte posted a $2.3-billion loss. Its stock price has skidded below $10, closing Monday at $9.63 a share, down 44 cents on the day.”
“Pulte, one of the nation’s largest home builders, has written off $3.7-billion worth of value in land that it owned or had optioned before housing crash. In late 2005, Pulte owned or controlled more than 360,000 lots around the country. Now it has fewer than 150,000, after selling some and letting options expire on many others.”
“‘It’s a little scary overall,’ Dugas said, noting that Pulte and other new-home builders have cut prices 10% to 20%, but can’t afford to cut further because of the rising cost of materials.”
“Right now, a tax credit of $8,000 for first-time home buyers has a chance of approval by both the U.S. House and Senate. And although Dugas would prefer to make all home buyers eligible to produce a big-bang impact on sales, ‘anything is better than nothing,’ he said.”
The Kansas City Star. “Single-family housing construction continued to drop in metropolitan Kansas City in May, with the number of single-family permits off substantially from a year ago.”
“There were 218 single-family permits issued in May, down 62.2 percent from the 577 issued the same month a year ago, according to the Home Builders Association of Greater Kansas City. Just two years ago, when the local housing market was still booming, there were 929 permits issued.”
“Tim Underwood, CEO of the Home Builders Association, said said a temporary home buyer tax credit included in the American Housing Rescue and Foreclosure Prevention Act of 2008 should provide a significant boost to the housing market.”
“‘The home buyer credit would address many issues of the current housing downturn,’ Underwood said. ‘The tax credit would boost sales, lower new-home inventories and stabilize both home prices and the mortgage markets.’”
The Ballard News Tribune. “Although prices of single-family homes have dropped about 8 percent in a year in Ballard, experts feel the local market is still strong. Despite the constant drumbeat of housing doom and gloom reported nationally, Ballard’s single-family home market is still rosy but has a few faded blooms.”
“Inventory of single-family homes and townhouses for May and June is 222, nearly double that of last year’s listings, and average time on the market is now two months, twice last year’s. Still, area realtors and lenders say the market is relatively strong.”
“‘The best stuff, like a sweetheart of a house on a pretty street in a nice neighborhood is getting full price, sometimes higher,’ said Michael Busacca, a realtor with Skyline Properties’ Northgate office.”
“Busacca lives in Green Lake and has a listing in Sunset Hill for $622,000.”
“‘Lower-end housing sold quickly between 2002 and 2007,’ he recalled of the bygone boom. ‘Now people are more particular if a house has an Achilles’ heal, like small bedrooms, cat or smoke odor, or if it’s on a real busy street. Prices on those are dropping, but it’s pretty tame compared to the rest of the country.’”
“‘Once, lenders gave anyone with a pulse a loan. Now, there are plenty of legitimate first-time buyers but programs have dried up,’ Busacca said.”
“‘The media beats us up,’ complained realtor Kevin Isaminger in Bellevue, who has listings in Ballard, and West Seattle where he lives. He said potential buyers lack confidence in the local market due to pessimistic news reports of troubled markets in other regions.”
“‘It used to be a breeze to sell. Now a buyer takes all the time he wants. With so much inventory comes randomness where a nice house is sometimes overlooked,’ he said.”
“Isaminger said that most of his clients are good friends, like Jason and Adrienne Rice. They live in desirable Sunset Hill, but on busy 32nd Avenue Northwest, and feel their charming three-bedroom craftsman house Isaminger listed nine months ago has sat due to traffic, and the economy.”
“‘We keep getting told by buyers, ‘Your home was our second or third choice,’ said a frustrated Adrienne.”
“Isaminger lowered their house to $499,950.”
“Suzanne Lambalot has lived in Sunset Hill for 31 years (and) is a veteran Ballard area realtor. While she agreed that the busy street might play a role in the Rice’s listing woes, she said business has been percolating in Sunset Hill recently.”
“She agreed with Isaminger’s view that the press is partly to blame for the slower market. ‘We (realtors) say don’t pay attention to the national media. Pay attention to the local market,’ she said. ‘Seattle is insulated.’”
“Dugas and the CEOs of other large U.S. home builders are pushing for a big tax credit on home purchases as part of a broader package to deal with the subprime lending crisis and related epidemic of home foreclosures.”
Here we go again subsidizing a formerly very profitable enterprise. Why can’t these “capitalists” survive on their own skills as businesses?
probably because the prices were so jacked up through corruption and greed and now they can’t take it that the party is really over.
What does it take to start as a builder? A pickup truck, some cheap mexican labor and hammer and nails. If they go under there will be others in the future.
Keep the popcorn popping!
Well exactly. Why would we ever subsidize the building of more homes when we have 2 million that can’t be sold NOW! Remeber:
Privatize Profits
Socialize Risk
“Dugas and the CEOs of other large U.S. home builders are pushing for a big tax credit on home purchases as part of a broader package to deal with the subprime lending crisis and related epidemic of home foreclosures.”
This doesn’t address either of the two main issues affecting housing. Prices are too high and wages are too low. Unless wages rise, which they aren’t, housing prices must fall which they are. Any bill that doesn’t address these two core issues is doomed to fail.
We won’t expand the GI bill for vets coming home from Iraq, but these big house builders can justify enriching themselves by taxpayers subsidizing their business through these tax breaks? Sell smaller houses for less money!, there’s your Patriotic “package.”
You get the feeling that Angelo has his Gulfstream V gassed up and ready to leave on a 1-way trip, @ a minute’s notice, somewhere on a runaway near you…
Angelo has his Gulfstream V gassed up and ready to leave on a 1-way trip, @ a minute’s notice, somewhere on a runaway … parked next to yours?
Jets have no soul.
“violated the state’s deceptive-trade practices law”
And you just NOW figured this out? I know I keep harping on this and really wish some of the atty. crowd would render an opinion but this is where the UCC should have been applied. As the Code typically doesn’t apply to real property (normally) these clowns either dismissed or ignored the UCC.
It shows pretty clearly that RESPA and TIL are a joke.
“..the UCC should have been applied. As the Code typically doesn’t apply to real property…”
This is true, but it can easily be applied to the underlying securities. If these instruments were defective or fraudulent in the way they were represented/exchanged in securities markets, it would trigger scrutiny under the UCC.
Countrywide and other lenders were simply traders. Instead of trading energy contracts like Enron, they traded mortgage contracts. Exactly the same mechanics otherwise. And exactly the same misrepresentations of the value of the contracts being traded.
North GA Dave,
Lost a post there, but, I agree. Just because their “sales practices” weren’t covered specifically by HUD/FHA/RESPA regs. by no means implies “it’s all good”.
As “traders” they may have lost their exclusion from the UCC and may have anyway. Besides when you start to study these TIL regs. you realize that they’re pretty vague.
I want to reiterate again that real estate market should be in a level were financial markets are and since we are in current havoc today, than real estate in California is overpriced at least 35% on today prices. I would say that today we have the same prices in housing, that we had in 2006, compared to today’s financial conditions.
According to a report by Case-Schiller …California is overpriced by at least 60%
I agree. The neighborhood I live in nice but it’s pretty average, nothing special. Schools are okay for the Elementary but the middle and especially the high school stink. The high school is GHETTO. It’s a good location but at $400,000 it’s waaaay overpriced. This is an average neighborhood that a family with the median income should be able to reasonably afford.
No question that Rancho Santa Margarita fits that to a tee.
Look, many of these homes originally went for 250K about 10-15 years ago. Considering inflation, but the age of these homes, they should not be a penny more than 300K, which if yo make 75K is 4X income. i know we squabble over 2.5-3X income, but for this area you have to consider that 4X income would be a steal.
At 300K it also means that homes will have to come down at least another 25%.
Now, consider that at 300K you still have HOAs, Mello Roos, taxes and insurance, it is possible that these McMansions will come down to the original selling prices of the mid-90s.
Even at 300K, you would have a monthly nut of $1800 to just to start. Through in the HOA ($200-conservative, I know) and another $350 for taxes and you have $2350. Then add in another $100 for mortgage insurance, if you didn’t put down 60K (20%) and you have $2450. Finally, toss in maintenance, upgrading and your own elbow grease as these puppies are at least a decade old and some have deferred maintenance and you are up to $2500+/month.
Currently, I rent for $1990/month on the RSM lake and I don not have any of those headaches. Plus, I can move out as the lease does not have anything about breaking it early.
Sure, I cover my LL’s expenses, but I have peace of mind and ZERO debt.
Homes have a ways to go here in RSM before I buy. Let’s see summer of ‘09.
Through = throw.
One thing RSM is not is ghetto. Just chiming in that RSM needs to fall some more.
I work out in Silicon Valley. Needless to say, the prices are still incredibly high. Maybe the word ridiculous is a better word. Small, 1950’s rancher homes have 900k price tags out here, and what’s more- many are still selling at those prices.
Just 30 miles away where I live in the East bay, the story is pretty different. Homes that were 650k a year ago are now 550k. Still way the hell too high, but a 100k drop is a start.
I’ve sort of long written California off as a possible state in which to live simply because despite the economic fallout, price declines, lack of sales, and nightly news, this state is still full of kool-aid drinkers who will keep the prices at stupid levels.
I’m saving up my California dollars for a few more years then I’m jumping ship. 150k still gets you a nice place in so many other states and cities.
Jetson, you are so right.
I have been thinking I might just hang around here for the pension I MIGHT get, while saving for the home somewhere else that I might retire to in 25 years.
So many people pay way too much Sunshine Tax. Life is so much more than just living in an urbanized desert with smog, overpopulation and water rationing. Unfortunately, even the cold states had their own runup fueled in part by ex-pat Californians.
I also wouldn’t be so fast to discount HOA fees. People are going to catch on that paying $300/month for nothing is a big waste of money.
A 30 year, 300,000 mortgage at 7% costs about 1,995/month.
and extra $300/month would cover a $345,000 mortgage (if I did my math right)
I think people will realize that homes outside of “developments” with no HOA dues are worth more/better value
I agree. I would advocate for Italian Lakes as retirement paradise. Lago Maggiore, Lugano or Como comes with similar prices as in Pasadena or Torrance, but population is much more incline to book readers and it is neighboring with Switzerland. I would consider Lake Oswego in Oregon too, during Summer…
Like I said the neighborhood is nice and it’s not a not ghetto area. It’s not a great area with nice schools. It is in an excellent central location, right above Mission Valley in 92123. The high school for this area is Kearny High School in Linda Vista, like I said ghetto.
The homes here are also dated 1950’s and 60’s homes and some are suffering from defered maintenance. My opinion is these houses should go for under $300k.
Not so fabulous anymore:
“WALNUT CREEK, Calif., July 1 /PRNewswire-FirstCall/ — PMI Mortgage Insurance Co., the primary U.S. subsidiary of The PMI Group, Inc. (NYSE: PMI), today released its Summer 2008 U.S. Market Risk Index(SM), which ranks the nation’s 50 largest metropolitan statistical areas (MSAs) according to the likelihood that home prices will be lower in two years. The U.S. Market Risk Index shows risk further diverged along two distinctly different paths during the first quarter of 2008, continuing a trend that began in the fourth quarter of 2007. In general, risk continued to intensify in many of the MSAs where home price growth had significantly exceeded historical norms during the housing boom, but continued to decline in many other areas across the country.
A complete copy of the Summer 2008 PMI ERET report and an appendix that provides data for all 381 U.S. MSAs is available at: http://www.pmi-us.com/eret.
The highest risk of future price declines remains in
Riverside-San Bernardino-Ontario, CA (95.5), followed by Fort Lauderdale-Pompano Beach-Deerfield Beach, FL (92.2), and West Palm
Beach-Boca Raton-Boynton Beach, FL (91.9). The areas with the lowest risk of price declines are in Fort Worth-Arlington, TX, Dallas-Plano-Irving, TX, and Pittsburgh, PA, each at less than a 1 percent chance.”
- No wonder PMI is losing money. How can they predict less than 1% risk of a decline anywhere?
“‘We’re running out of time here,’ Dodd said. ‘You’re going to have the August break [for Congress] and, of course, the elections. If this thing goes much longer, the value of it is going to be a lot less.’”
Let’s get this straight: Dodd lives under the delusion that his foreclosure rescue bill will somehow prop up bubble-era prices?
It will prop up his re-election coffers.
Wages are stagnant, prices rising dangerously, government spending out of control, Federal Reserve creation of money and credit out of control, debts of every kind at record levels and one-half the Army occupying the Middle Eastern oil fields.
Gaahh!
Ex Republican
Wages are stagnant, prices rising dangerously, government spending out of control, Federal Reserve creation of money and credit out of control, debts of every kind at record levels, one-half the Army occupying the Middle Eastern oil fields, taxes being raised everywhere, and no gas at the pumps.
Gaahh!
Obama Nation
Hah, you’re already blaming Obama for today’s problems and he’s not even president yet. He truly must be all powerful.
He’s managed to get bribed by Countrywide before becoming president.
This is an impressive achievement.
Bribed, eh? And McCain’s wealthy 2nd wife can’t cough up the dough to pay her property taxes in SoCal, until being outed by Newsweek:
http://www.signonsandiego.com/uniontrib/20080701/news_1m1mccain.html
“If this thing goes much longer, the value of it is going to be a lot less.”
I think everyone here can agree with that, regardless of what else they might think. Thank goodness the founding fathers designed the Senate as such an inefficient body for passing legislation. It’s part of the reason we’re still hanging on, as long as we have.
“If this thing goes much longer, the value of it is going to be a lot less.”
No doubt it’s going to be less, no matter what. The D.C. Clods will ‘do’ something at some point. It will not correct anything, but that won’t stop them from trying and adding more burden. The day these jokers get to Washington they start working on re-election.
Of course PB…even if you received a sweetheart deal on your loan…no one wants to be underwater…it’s un-american for chrissake
He is so full of sh@t.I hope the bill never passes and anyone one votes yes be tar and feathered by distressed homeowners.
Whatever happened to hope now? Hope in one hand and sh@t in the other?
Here’s the whole PMI list:
PMI Summer 2008 PMI U.S. Market Risk Index
Rank MSA Score
1 Riverside-San Bernardino-Ontario; CA 95.5
1 Fort Lauderdale-Pompano Beach-Deerfield Beach; FL 92.2
1 West Palm Beach-Boca Raton-Boynton Beach; FL 91.9
1 Orlando-Kissimmee; FL 91.1
1 Las Vegas-Paradise; NV 88.1
1 Tampa-St. Petersburg-Clearwater; FL 86.6
1 Santa Ana-Anaheim-Irvine; CA 85.8
1 Los Angeles-Long Beach-Glendale; CA 85.7
1 Miami-Miami Beach-Kendall; FL 84.8
1 Sacramento-Arden-Arcade-Roseville; CA 82.2
1 Portland-Vancouver-Beaverton; OR-WA 79.7
1 Phoenix-Mesa-Scottsdale; AZ 79.6
1 San Diego-Carlsbad-San Marcos; CA 78.0
1 Jacksonville; FL 73.2
1 Oakland-Fremont-Hayward; CA 72.8
2 San Jose-Sunnyvale-Santa Clara; CA 51.3
2 Providence-New Bedford-Fall River; RI-MA 43.4
3 San Francisco-San Mateo-Redwood City; CA 35.7
3 Washington-Arlington-Alexandria; DC-VA-MD-WV 21.4
3 Nassau-Suffolk; NY 21.2
4 Edison-New Brunswick; NJ 16.2
4 Virginia Beach-Norfolk-Newport News; VA-NC 13.8
4 Boston-Quincy; MA 11.8
4 Detroit-Livonia-Dearborn; MI 11.1
5 Minneapolis-St. Paul-Bloomington; MN-WI 8.2
5 Newark-Union; NJ-PA 6.5
5 New York-White Plains-Wayne; NY-NJ 6.0
5 Baltimore-Towson; MD 5.5
5 Warren-Troy-Farmington Hills; MI 5.3
5 Cambridge-Newton-Framingham; MA 4.3
5 Atlanta-Sandy Springs-Marietta; GA 2.0
5 Seattle-Bellevue-Everett; WA 1.7
5 Chicago-Naperville-Joliet; IL 1.5
5 Philadelphia; PA 1.4
5 Nashville-Davidson–Murfreesboro–Franklin; TN 1.3
5 St. Louis; MO-IL 1.0
5 Milwaukee-Waukesha-West Allis; WI <1
5 Cleveland-Elyria-Mentor; OH <1
5 Austin-Round Rock; TX <1
5 Denver-Aurora; CO <1
5 Charlotte-Gastonia-Concord; NC-SC <1
5 Kansas City; MO-KS <1
5 Columbus; OH <1
5 Cincinnati-Middletown; OH-KY-IN <1
5 Indianapolis-Carmel; IN <1
5 San Antonio; TX <1
5 Houston-Sugar Land-Baytown; TX <1
5 Pittsburgh; PA <1
5 Dallas-Plano-Irving; TX <1
5 Fort Worth-Arlington; TX <1
95.5 on a scale of 100, as far as market risk goes?
Goodbye Inland Empire…
What blows my mind is that they really think seattle is low-ranked in risk?? WTF?
Come on, our price-to-rent ratios are way up there near SoCal’s! We’ve got a long way down to go, and we’re just now arriving at the party.
I like the West Palm ranking near the top of the list. This market has come down quite a ways, but we’re not at the bottom yet. The only people actually seeing deals right now are the ones buying the bank owned properties that have sat on the market for a while. Many are selling at less than $100 per square foot.
Denver-Aurora less than 1.0?
Sunnyvale-San Jose-Santa Clara with ony a 51% chance of lower prices? Sunnyvale alone was up over 100% from 2000 — my neighborhood is nice but it’s not $1.3Mil nice like the wishing price I see near De Anza Park. Can’t wait for all these places to crash and burn so we can get back to some normalcy. I’m a tad bit tired of being priced out while all these idiots await their Alt-A resets…
Rob
They run this BS complaint 24/7. This dim-wit seriously has no clue what is going on in our economy. You could train a chimp(no offense to the chimp)to sell houses during the ‘boom’.
“‘The media beats us up,’ complained realtor Kevin Isaminger in Bellevue, who has listings in Ballard, and West Seattle where he lives. He said potential buyers lack confidence in the local market due to pessimistic news reports of troubled markets in other regions.”
“‘It used to be a breeze to sell. Now a buyer takes all the time he wants. With so much inventory comes randomness where a nice house is sometimes overlooked,’ he said.”
Oh come on - you are magically special human beings if you live in Ballard. Purchase price is immaterial in the long-run.
Gag me
Ballard is _SO_ overbuilt with condos! Many many for sale currently, and SO MANY in the pipeline. I’ve seen one condo project switch to apartments already, and there are a couple that haven’t even broken ground yet. When they really get them all built (though I expect some of them will not actually start due to financing problems), it’s going to be a crazy amount of inventory–should be interesting.
Some Realtors even have to get out of bed earlier now.
The Ballard News Tribune? Ben, I have long been amazed at just how wide you toss your net, but… wow. I tip my hat to you. There used to be a poster on the seattlebubbleblog who was from Ballard and regularly taunted Tim and other posters with tales of his rapidly appreciating Ballard abode. About a year ago, he magically disappeared and hasn’t been heard from since. I love the spin in the article about how an 8% downturn is somehow “rosy.” Tell that to someone who bought last year. 8% + realtor fees + inflation, you’ve pretty much lost your down-payment (if you had one).
“The longer passage of the bill is held up, the more people will slip into foreclosure, Dodd said.”
Dodd, you doucherocket, THESE PEOPLE DESERVE FORECLOSURE! THE BANKS DESERVE TO GO UNDER! THE INVESTORS DESERVE TO LOSE THEIR SHIRTS!
Taxpayers do not deserve to get triple-hammered by you a-holes. Responsible owners will have had their property taxes run up over the last few years because of this. They saw their return on savings dwindle to nothing as you tried to save these dingleberry banks with low rates, and now you want them to fork out extra tax dollars to keep these banks afloat and take on the risk of all the deadbeats defaulting?
Where’s Cheney the one time we need him? Well, I guess I’ll fill in for him. Go f*ck yourself, Dodd.
Testify. Trouble is Dodd and all those harping for a bailout get it quite well - propping up a failed business model with future dollars to bankroll socialized risk, furthering a vision of an America that is unsustainable.
Hey bubble,
Come on, tell us what you really think.
I’m with you all the way. Feeling better now, no?
I don’t mind people who can actually afford to stay in their homes being helped out (an extreme minority)…but it shouldn’t be on the backs of taxpayers. It should be on the backs of the stupid banks and investors that made the loan in the first place.
also, as I’ve pointed out before, Barney and Chris have no provisions in their bill to eliminate fraudsters and licensed R-E and mortgage brokers (who should have known better).
And the fraudsters and R-E agents will be the ones who will figure out the system better than anyone else and get the most out of Frank-Dodd
Well,
Even if it does pass, Mr. Bush will Veto this POS anyway. One of the only times I’m actually glad Bush is in the office.
I doubt it. Bush is in full-scale ‘what about my legacy’ mode. He doesn’t want to be the guy who ‘did nothing’ while the economy gets slaughtered.
Bush cares more about his “legacy” as a conservative. If there is too much government backstop in the bill, and they can’t figure out a way to explain it away, he will veto it.
By the way, I am not in favor of this bill either, but the longer it goes, the less impact it has. Remember, the bank/investor has to take all the hit from the amount originally loaned down to 85% of the FVM at the time of the refinance. The longer it takes, the closer that will be to the eventual market clearing price.
“85% of the FVM ”
This little bit concerns me. There is nothing to prevent the govt from defining “FMV” in this case as being the last purchase price.
Considering that’s he’s built his legacy on war-mongering, English-mangling, and Constitution-shredding, I don’t see how he can be saved by nuanced economics bill-not-vetoing.
Where’s Cheney the one time we need him?
I’ve heard Cheney is the only high-level Republican who is specifically against a bailout of any kind for lenders AND borrowers. Everyone else is just pandering to the FBs with a watered-down bill similar to what the Democrats are offering. I don’t like the guy but he has it right this time.
He’s considering himself to be part of the legislature, so he definitely should chip in.
Call the Pres and tell him what you think. It’s easy and you get a real live person. I’m sure it does any good but hey maybe we could jam up their phone lines.
Whitehouse 202-456-1414 or 202-456-1111
Slim here with a question:
Was taking a walk around the nabe last night. Passed by a house that had been reverse mortgaged, but since the elderly resident has moved out, it’s now up for sale.
The price durn near made Slim keel over in the middle of a hot asphalt street. Boy, was that price up there in the stratosphere.
Something tells me that this is a case of “I reverse mortgaged it for the lofty amount of $X, so now I must use that amount as an asking price.” Sort of like what people did during the HELOC heyday.
Does anyone have any experience in this area? Methinks that the current asking/wishing price, that house will sit unsold for a long time.
Suzanne Lambalot
Lambalot? Her name is Lambalot? Does that rhyme with the musical? OMG, someone please tell me it is not pronounced like that. Please. Then again, with that whole real estate is local/its different here attitude, maybe she deserves it.
“Lambalot ” - lamb…a…lot
Does a name like that lure in the homesick rural guys?
‘We (realtors) say don’t pay attention to the national media. Pay attention to the local market,’ she said. ‘Seattle is insulated.’”
Me (Olympiagal) says ‘Don’t pay attention to those lying, slither-eyed, cousins- to- slime- mold realtors. Pay attention to what is popularly called ‘reality’, instead. You know, where house prices are falling monthly, and buyers have to have down-payments and verify income and other ticky little things like that.
Oh, and another thing. Seattle is not insulated.
But Seattle has lots of pine trees. Wrap yourself up in pine boughs, it will keep you somewhat warm and you’ll smell all nice and piney. Insulates much better than sagebrush.
‘Seattle is insulated.’”
In what ? Fairy Dust and Unicorn poop ?
Oh it’s poop alright. Of that you can be sure.
I tried to talk a colleague of mine in Anchorage out of buying a retirement condo in Seattle 6 months ago, but she did it anyway. The guy coming to replace her is also hell-bent on buying a house and is due for more of the same.
She is now really nervous about price drops, and it seems like she could have had a much more pleasant retirement not worrying about it.
Wishing prices in the PNW are higher than ever. Good Kool Aid around here.
Olygal;
Maybe Seattle is insulated if you do the feng shui thing?
Ben left out the best quote of the article IMO:
….”Have you ever gone into a house and felt subconsciously that something was not right here? Feng shui makes the home more inviting with a positive flow of energy which moves in proper directions with color and placement.”…..
“Bank of America Corp. will buy Countrywide Financial Corp., the home lender battered by the collapse of the subprime mortgage market, for about $2.5 billion, 37 percent less than originally planned. Bank of America is discarding the Countrywide name, which has become an icon of the mortgage industry’s boom and bust, and Countrywide’s penchant for loans more prone to default, such as subprime mortgages.”
_______________________________________________________________
Let’s have a contest to think up a new name for Countrywide…
Whadya got?
Countryslide Whoregage
2 thumbs up !
Wife beaters Club?
We Loan to Idiots!
Doublewide
Astroglide?
They should keep the ‘wide’ part of the name, sounds so all encompassing.
Openwide, Spreadumwide Nice’n'wide Far’n'wide Big’n'wide
Bankruptcies “R” us
Congressional Financial Corp
Joshua Tree Mortgage & Loan
JP Morgan Chase Citi
Doh! I meant to say JP Morgan Chase BOA
We break it
You buy it
Leatherhead?
Stupid question: what exactly is B of A buying? THe name sucks, the loans suck, the lawsuits suck. I can’t seem to find the pony.
For a mere $4.5 billion ($2 bil previous, $2.5 bil today) BOA gets a monster sales force, a mortgage platform that they have been dying to have, and “losses” to take against taxable income for years to come. And BOA doesn’t really incur the losses; that’s all based on CW’s outflow of money. That is, except for the $4.5 billion, all the money that was lost was CW’s, not BOA.
I’d venture a guess that the benefits of the losses will be more than the $4.5 billion that it costs to buy CW.
The only thing I can’t figure out is all the lawsuits against CW. Certainly BOA has an army of attorneys who’s figured out how to take care of that part. Perhaps Mozilo will be the one that gets all the blame/liability.
Mo’ Money TSLF, LLC
B of A (Bagholders of America)
BofA (Bagholders of America)
The Short View: The Greenspan test
By John Authers
Published: June 30 2008 19:37 | Last updated: June 30 2008 19:37
Let’s apply the Alan Greenspan test to the credit squeeze. Last month, the former head of the Federal Reserve said: “The worst is over in the financial crisis or will be very soon.” He also provided a gauge. We would know the crisis was over, he said, once the gap between the London interbank offered rate (Libor) and the overnight index swap rate had narrowed to 50 basis points.
His gauge makes eminent sense. Translated into English, he was referring to the extra amount big banks charge each other for three-month loans, compared with the base rate set by the central bank. When the gap between the two increases, it shows that banks are hoarding cash, and reluctant to trust each other with a loan.
Normally stable at less than 0.2 per cent (20 basis points), the gap ballooned last summer as the credit crisis took hold, and banks lost confidence in each other’s collateral.
At one point it exceeded 100bps, but then central banks intervened. As Mr Greenspan spoke, the gap had narrowed 69bps.
But since then, it has widened once more to reach 72bps – still in crisis territory.
Another reason for the gap is that demand for cash i shigh.
A reason for banks needing cash - massive Q2 writedowns will force capitalization requirements to be met.
I suspect that there is a run on cash to meet Q2 window dressing. (I love it when lenders themselves face margin calls)
If I’m right, the gap will narrow in weeks.
Oh we do miss Meshugy, at least compared to the current crop of bulls.
Paul Volcker: central banks should not loose focus on inflation
30 juni 2008 | 8:45 | door: Edin Mujagic
The legendary Fed-chairman Paul Volcker on the dollar, US economy and inflation.
A conversation with the legendary chairman of the Federal Reserve who beat the inflation at the beginning of the eighties.
In April 2005 you said ‘the circumstances seem to me as dangerous and intractable as any I can remember’. Is that now more or less the case?“
I was referring to the situation of excess spending in relation to our ability to produce, our large current account deficit and big import of capital from abroad. That was an uncomfortable situation and clearly not sustainable. My analysis was that sooner of later the US would have a crisis on its hands and now we have one. My hope is that out of this turmoil we will actually begin to see some adjustments that are necessary.”
What are those?
“The housing bubble is behind us. The consumption in the US has to slow. The US exports are doing fine, excluding oil imports our current account deficit is declining. The weaker dollar also helps in that regard. That is the good news.”
What is the bad news?
“We are now in the midst of a very difficult situation on the financial markets. That raises uncertainty. So far the economy has not plunged, but the possibility of a real recession in the US is clearly there. Recession may be an inevitable part of the adjustment the American economy has to make.”
Will it be a mild and short one?
“Economists are not very good forecasters…”
House of Cards
You thought the housing crisis was bad? You ain’t seen nothing yet.
http://tinyurl.com/4qeusm
Excellent summary
Especially the last two paragraphs:
Notes scholar Lionel Tiger: “Those who have been operating the managerial levers of the financial system have failed embarrassingly and massively to comprehend the processes for which they are responsible. They have loaned money avidly and recklessly to people who couldn’t pay it back.
“They fudged data to get loans approved and recalculated. Then they sausaged fragile figments of money reality into new ‘products’ which could be sold around the world to investors eager to enjoy the surprising returns which often accompany theft, managerial incompetence and fraud. When it comes to responsibility for all this, there appears to be no one here but us spring chickens.”
“A record 18.6 million U.S. homes stood empty in the first quarter, 5.7 percent more than a year ago, according to the Census Bureau, as a growing number of mortgage borrowers lost their property to foreclosure.”
My lingering questions on vacancies:
1) Wouldn’t it be in the owner’s interest to sell vacant homes for what the market will bear, rather than letting them crumble into worthless desuetude?
2) Who owns the 18.6 million empty homes?
3) Why can’t cities either tax the owners to cover negative externalities due to derelict properties, or else take possession and resell them to the highest bidder?
Vacant homes spread blight in suburb and city alike
Amid housing bust, foreclosures vex communities trying to hold dereliction and crime in check.
By Patrik Jonsson | Staff writer of The Christian Science Monitor
from the July 1, 2008 edition
Page 1 of 2
Reporter Patrik Jonsson discusses how the mortgage crisis has affected one Atlanta neighborhood.
ATLANTA - In Mesa, Ariz., officials are trying to decide what to do about boarded-up McMansions that become party pads, trashed in raucous “raves” where invitations come by text message.
In Atlanta, thieving from abandoned properties is so bad that police caught one man building a new house entirely of pilfered materials from empty homes.
Flint, Mich., has had to add firefighters and ladder trucks recently even though its population has declined. Up to 90 percent of fires start in homes where no one lives.
From Atlanta’s urban core to leafy neighborhoods filled with chirping crickets in Charlotte, N.C., some 2.2 million homes are expected to go through foreclosure – and stand empty – by the time the mortgage meltdown ends, according to Global Insight, an economic research firm. As the housing dominoes fall far from Wall Street, growing urban “ghost towns” of vacant houses are resulting in a costly crush of weeds, trash, and dereliction on a scale unseen in American cities since the Great Depression, economists say.
A record 18.6 million U.S. homes stood empty in the first quarter
Could this possibly be right? There are 300 Million people in the US, right? Lets presume there’s a house of some sort for every 2 people.
That’s 150 million houses (a very generous estimate!)
18,600,000 / 150,000,000 = .124
Are 12% of the houses in the US really empty?
The Census Bureau keeps repeating that 18m+ vacancy figure again and again, month in, month out. I have to assume that if it were way off the mark, somebody in the MSM would have said so.
I truly think it should be 1.8million homes–still absurdly high, but plausible. That’s closer to the figure that the “house of cards” article cited above says.
I’d be the Census Bureau misplaced the decimal point, and there’s not one person in the MSM smart enough to notice.
The Christian Science Monitor. “In Mesa, Ariz., officials are trying to decide what to do about boarded-up McMansions that become party pads, trashed in raucous ‘raves’ where invitations come by text message.”
I told people in Florida back in 2006 that these McMansions would be boarded up in a few years. They didn’t believe me.
It’s interesting to see that boarded-up brand-new homes are happening elsewhere too!
“I told people in Florida back in 2006 that these McMansions would be boarded up in a few years.”
Throwing good wood after bad.
Nah… The boarded-up windows DO serve a really useful purpose: they keep anyone from noticing the FB-started-fire until after it is going good and strong…
Antioch California.
I really dislike the way honesty has such a bad rep, amongst the 6% set…
“‘The media beats us up,’ complained realtor Kevin Isaminger in Bellevue, who has listings in Ballard, and West Seattle where he lives. He said potential buyers lack confidence in the local market due to pessimistic news reports of troubled markets in other regions.”
Turn those machines back on!
In Mesa, Ariz., officials are trying to decide what to do about boarded-up McMansions that become party pads, trashed in raucous “raves” where invitations come by text message.
They still have raves?
I thought that went out some time ago…