More Sellers Accepting A Loss In California
The San Francisco Chronicle reports from California. “Like an endangered rain forest, the Bay Area microclimates that still enjoy home-price appreciation are shrinking. Just six months ago, areas where median home values were still on the upswing were bigger and more widespread. ‘The entire Bay Area is correcting for the frothiness in the markets that occurred from 2003 to 2006, where by all rational economic accounts the market was outpacing what you’d normally expect to see,’ said Stan Humphries, VP of data and analytics for Zillow.”
“In the beginning of 2000, the aggregate home value in the nine-county region was just a touch less than $381,000. It peaked in the second quarter of 2005 at slightly less than $686,000. Now it’s at $563,288 - near its level in mid-2004.”
“One trouble spot shown by Zillow’s figures is that more than half of the people who bought Bay Area homes in 2005 and 2006 are under water, owing more than their home is worth. Of people who bought in 2007, there are 41.1 percent who are under water.”
Bay Area Newsgroup. “Home values in the East Bay eroded at a faster rate during the spring than they did in the early months of 2008. During the second quarter of 2008, home values plunged on a year-to-year basis by 25.6 percent in Contra Costa County, and by 18.9 percent in Alameda County, according to Zillow.com.”
“The second quarter’s deterioration in home values exceeded the year-to-year declines that occurred in the first quarter of 2008. In the January-March period, home values fell by 23 percent in Contra Costa County and 16.8 percent in Alameda County, Zillow, reported.”
“‘The rates of decline in home values are accelerating, and that tells us we are not near a bottom yet,’ said Amy Bohutinsky, Zillow’s director of communications.”
“The East Bay market with the worst year-to-year decline in home values is the Antioch ZIP code of 94531, where values have nose-dived by 38.3 percent.”
“Perhaps the biggest factor in the East Bay housing market is the effect that sales of previously foreclosed homes are having on residential property values. For example, in Antioch, about 75 percent of the homes being actively listed for sale are bank-owned residences with foreclosed mortgages, according to a survey conducted by real estate consultant Don Morton.”
“‘The good news is these foreclosed homes are selling,’ Morton said. ‘The bad news is these homes are being sold at such a low price that people are losing 40 or 50 percent of the value of their home. That makes east Contra Costa a terrible market.’”
The Marin Independent Journal. “Credit ‘repair’ specialist Hannah Fliegel of Corte Madera helped people remove the stain of foreclosure from credit reports for months before realizing she could do more. ‘I’m taking foreclosure off people’s records right and left, and in the meantime I’m seeing families destroyed because of this,’ said Fliegel. ‘Foreclosures are going to triple before the end of the year in Marin, so why don’t I just stop foreclosures. This is ridiculous.’”
“Fliegel has received several hundred inquiries about this month’s workshop after a mailing to homeowners of distressed properties across the Bay Area.”
“She invited several realty agents to join her group, but they declined because ‘they were more interested in higher sales.’ ‘The Realtors and brokers are not real helpful because they’re not going to get paid,’ Fliegel said.”
“‘The banks need to fix the loans they were giving,’ she said. ‘(People) were told to refinance and treat equity in their homes like an ATM. They got bamboozled.’”
From Bloomberg. “Almost one-third of U.S. homeowners who bought in the last five years now owe more on their mortgages than their properties are worth, according to Zillow. In five more California areas — the Inland Empire (Riverside-San Bernardino), Bakersfield, Yuba City, El Centro and Madera — the percentages were more than 80 percent.”
“In Stockton and Modesto, more than half the sales in the second quarter were of foreclosed homes, Zillow said.”
“‘Sellers are starting to adjust their expectations,’ Zillow Chief Financial Officer Spencer Rascoff said in a Bloomberg TV interview. ‘More sellers accepting a loss is actually a sign of optimism. It means that the transactions might start happening.’”
The Press Enterprise. “Plunging home values means 62 percent of Inland Southern Californians who bought homes in the past five years can’t pay off their mortgages if they sell today. Even 37 percent of those who entered the Inland housing market this year already have lost whatever down payment they made and possibly more, according to Zillow.”
“The median home value peaked at $409,273 in the second quarter of 2006, but by the end of June, it was $261,000, a drop of 36 percent, the report said.”
“The Zillow report noted that 53 percent of the homes sold in the Riverside/San Bernardino/Ontario metropolitan statistical area in the past 12 months sold for less than the purchase price, and seller losses have been getting progressively worse over the past few quarters.”
“In the Riverside/San Bernardino area, Zillow reported, more than 50 percent of the homes sold in the April-through-June period have been by lenders trying to unload houses they repossessed after owners defaulted on their mortgage payments. That compares with just 0.4 percent in the same period three years ago.”
“‘I have customer after customer who calls and wants to refinance but can’t,’ said John Marcell, an Upland mortgage broker and president of the California Association of Mortgage Brokers Education and Research Foundation.”
“Although the Federal Housing Administration has loan products affordable to many first-time buyers, ‘not everybody wants to buy now because they are scared that this (falling prices) isn’t over with,’ he said.”
“‘People are going to these foreclosure auctions and buying homes thinking they are getting a … deal, but are they?’ Marcell said. ‘Until this thing bottoms out and we get rid of all these foreclosures, we have got a problem.’”
The Desert Dispatch. “After aggressively pursuing home construction loans during boom years, High Desert Federal Credit Union is now reeling from the weak real estate market. The credit union is coping with 20 percent of loans at least two months delinquent, records show. The average rate of delinquencies for California credit unions reported in the first quarter is 0.93 percent, about 22 times lower than High Desert Federal Credit Union.”
“The Members’ Own, a credit union based in Victorville, reported a 7.06 percent delinquency rate.
The credit union stopped issuing home construction loans in May to minimize future losses, after specializing in those loans for more than 20 years, said company President Tom Brown.”
“‘The real estate market has really had an adverse effect on banks and credit unions alike, and obviously High Desert was not immune to that,’ said Ralph Ramirez, a spokesman for the Apple Valley-based credit union.”
The San Gabriel Valley Tribune. “Once upon a time, First Federal Bank of California focused heavily on Alt-A, or low-documentation, home loans. But those days are long gone.”
“‘We started tightening our lending standards at the end of 2005,’ said Jim Giraldin, CEO for the Los Angeles-based bank. ‘I wish we would have done it at the end of 2004. We really saw something going wrong and pulled back from the market.’”
“Before First Federal shifted to more traditional loans, many of its Alt-A loans were defaulting. ‘Today our non-performing assets are at 8 percent and our delinquencies have been declining for about three months,’ Giraldin said. ‘We think we’ve seen the worst of it.’”
“Like many other cities suffering through the collapse of the real estate market, El Monte officials claim the number of vacant properties is increasing citywide. Officials blame lenders for failing to maintain foreclosed homes.”
“‘It’s not that we are running into properties that are owned by local banks, but we are running into global conglomerates, and finding a contact person dealing with those homes is problematic,’ said Jim Beres, El Monte’s neighborhood services manager.”
“La Puente City Manager Carol Cowley said that community preservation officers have noticed several unkempt abandoned homes. Cowley said city officials are concerned that transients could move in to the vacant homes, and that the pools could become stagnant.”
“‘We can’t get a response from the lenders and they are just letting the houses go,’ Cowley said.”
The San Diego Business Journal. “There were 7,132 bank-owned properties at the end of July and more than 2,000 listed for sale on the San Diego MLS, Houserebate of San Diego reported on Aug. 11.”
“That means another 5,000 homes that have already been repossessed from delinquent homeowners will soon be for sale on the MLS. In July, 30 percent of the 2,610 homes sold in San Diego County were bank-owned foreclosures, according to CEO Brian Yui.”
“According to Yui, there are a total of 12,000 San Diego homes currently in notice of default and a third of them are scheduled for foreclosure auction in the next 90 days.”
“‘The Alt-A loans are starting to (default),’ said Yui. ‘Those are the non doc (documentation) loans that don’t require a high FICO score.’”
The North County. Times. “For the first time since foreclosures began to rise in 2007, North County homes sold back to the bank broke 700 in one month, according to ForeclosureRadar.”
“‘I think it’s confirmation that the Hope Now Alliance is an absolute failure,’ said Sean O’Toole, founder of ForeclosureRadar. ‘The only thing they’ve accomplished is to get people to sell their last few assets and throw away the money on mortgage payments before it goes to foreclosure.’”
“Further, the notices of default precede finalized foreclosures by three to six months, meaning many of the 1,000 defaults per month since January have not yet hit the market. For each month, the number of defaults increased by about 100 percent from the same time a year earlier.”
“Again, Oceanside and Escondido dominated the region’s foreclosure filings. For the first time, Carlsbad posted a significant increase in finalized foreclosures with 54. Though relatively low compared to North County’s foreclosure capitals, Carlsbad foreclosure number in July was 75 percent higher than its previous peak, 31 in May.”
The Union Tribune. “Six years ago, at the height of the housing boom, the architect-developer partners of Concepto Design Group International in the Gaslamp Quarter and Hoku Properties of San Diego bought a historic home on Hillside Drive in La Jolla for $1.8 million, relocated it and replaced it with a $10 million, 8,910-square-foot showcase property.”
“Completed in 2006, it was listed for $21.5 million and in January 2007, San Diego Magazine published a three-page spread titled ‘Above It All.’ Proud of their work, the partners rejected several offers they considered too low and held out for the gold. That turned out to be a major blunder.”
“In June, the lender, Federal Home Loans Corp., foreclosed on the property and listed it for $12.9 million. The fall of Essencia was not a fluke. At the Union-Tribune’s request, Zillow identified more than 130 homes priced at $1 million or more that were foreclosed on locally from January 2007 through June this year.”
“DataQuick searched public records to identify the most expensive foreclosures in the county, using Zillow as well as its own findings, and came up with the 23 most expensive properties.”
“They include five properties each in La Jolla and Rancho Santa Fe, four in Carmel Valley, two each in Del Mar and Encinitas and one each in Bonita, downtown San Diego, Jamul, Point Loma and Poway.”
“A check of addresses, court records and employment data revealed that the owners included business executives, real estate experts, partnerships, a teacher and others. Most could not be reached, and none would speak on the record.”
“‘It will open some wounds I wish weren’t there,’ said the project architect on the Concepto Design Group house, adding that he and his partners should have taken one of the rejected offers. ‘It’s a beautiful white elephant.’”
The Press Democrat. “The financial bad tiding take more than just a toll on your pocketbook. They also affect your health. Short of winning the lottery or coming into an inheritance, there are practical ways to address the problem: Plan a budget, consolidate debt, trim expenses, live more simply.”
“But there also are strategies and recommendations from the experts for dealing with the underlying stress linked to the struggle for legal tender, before it takes its toll on your health. For a person who cannot afford their mortgage payments and is losing their home, they may need a period of grieving.”
“‘Don’t lose sight of the fact you are alive, you’re breathing, you’re hugging someone you love and your legs work,’ said Alan Dreifuss, a Santa Rosa Kaiser clinical psychologist.”
‘Even 37 percent of those who entered the Inland housing market this year already have lost whatever down payment they made and possibly more, according to Zillow.’
OK, California press, how ya like them apples? IMO, you guys are responsible for a lot of this foolish knife-catching, and I for one will remind you at every opportunity.
How can Zillow even possibly keep up with the number of recent buyers who have lost their full downpayments and more when CA home prices are dropping at nearly 40 pct/year on a statewide median sale price basis?
Although my math could be wrong, that appears to be about $550 per day on a $500,000 house, without taking into account the mortgage payment, taxes, insurance and maintenance. Compare that to a $2,500 or less monthly rental payment for the same property. I realize that this is just the median for all houses sold number but an actual 20% decline on a $500k house would be around $275 per day.
Assume 38 pct YOY decline which, if memory serves, was the last C.A.R. YOY change in the median used home price. At a constant rate of exponential decay, one day’s worth of percentage decline is
((1-0.38)^(1/360)-1)*100 = -0.1327 percent.
Applied to a $500,000 home, the first day’s loss would be
$500,000*0.1327/100 = $663.50, which happens to equal over a week’s rent for me, before even taking PITI into consideration.
BIG OUCH!
Price is immaterial if you can find a Greater Fool.
…which is why those of us who sold in ‘04 and ‘05 should be encouraging home debtors that we know to, “sell now or be priced in forever”. LOL
The windfall I spoke of above probably will end up applying to anyone who has sold for any amount of gain between ‘02 and ‘10.
Above = below, apparently.
“Price is immaterial if you can find a Greater Fool.”
The pool of home buyers with buckets of money and boxes of stupid is vanishingly small any more.
I’ve been renting for 44 months since we sold in Nov. ‘04. My current monthly gain over that time period due to falling prices now stands at $2850/mo.
This single point is validation to me that if a person has recognized this bubble and acted in the most conservative fashion then they stand to gain the greatest windfall of their life.
The wife is getting tired of renting (since late 2003) and wants here own home again. We go out and look around (Escondido-San Marcos area) one day a month to keep in touch with prices.
(By the way, Escondido has been hit hard, we looked at about 15 homes and not one of them was occupied, and while driving around I saw many others empty without a for sale sign.
Last week was a close one. Actually found a very nice 2700sq ft house with a killer view that we both really liked. Bank owned and for sale at 525k (sold for $725k in 2006). My wife is on board with the housing collapse and she actually convinced me to sell and rent. But she is weakening. She cried when I told her I thought it was still too early to buy, but she came to her senses……for now.
She sounds pretty emotional. Are you sure she’s not pregnant? Better stock up on chocolate and plan lots of trips to the beach, parks, museums, theaters, anything to keep her out of that funk.
We just had our first, so I hope that’s the root cause! I want more smart/thinking people to have kids!
That said, I know a lot of bears who are breaking down early. I don’t get it. 2009 is going to be the greatest price drops in the high end areas (where most of the bears wish to buy). When exactly the break away starts… good question. By late Fall at the latest.
Got Popcorn?
Neil
Congrats on the new kernel, Neil. Was it a boy, girl, or bear?
I’m gonna be really surprised if I don’t see the last of the hardcore bulls at least sweating blood by the gallons at the end of 3Q of 2009
Congrats Neil!!!!
Neil, congratulations to you, your wife and baby.
Go Neil!
Will you still love the child if it grows up to be a real estate agent?
Oh Neil, that’s just WONDERFUL!
You are going to have sooooo much fun.
Was s/he 08.08.08 like you thought?
Congratulations!
No chance Big V, but very astute, as we are in our early fifties and menopause may be more likely. I thought she was pretending to be sad as a joke, so, being the good sport that I am, I laughed.
oops
She sounds pretty emotional. Are you sure she’s not pregnant? Better stock up on chocolate and plan lots of trips to the beach, parks, museums, theaters, anything to keep her out of that funk.’
She ought to do like I do, which is be high-strung and excitable every single moment that is is awake and/or has her eyes open. It helps to have ADD, but she could fake it. That way it keeps men on their toes and enchanted, in a state of fascination bordering on mild yet somehow delightful terror, in my experience. Which is a lot more experience than my mom or Baby Jeebus would like, haw haw.
Anyhow, I agree with Big V in this respect: chocolate, candy, ballet tickets, shoes–no matter the reason, these are good things, and surely a good husband such as you are will reap the rewards for your generosity.
I feel your pain J6P. I go through this now on a (dare I say) monthly basis.
We are beginning to see homes that fit our criteria and at prices that don’t put us in danger of bankruptcy. With the monthly gains we are currently seeing in purchasing power I’d surely hate to pull the trigger too soon.
If I had my druthers I’d not buy until NODs trail off on the 3 and 12 month trend lines in my zip of interest. You may want to start a chart of that to help you time your decision to purchase.
I have been looking in Escondido for the last 3 years waiting for the big drop. Thank god for this blog and patrick to keep my strength up to wait. had a big fight with the wife last weekend after the latest bottom is in article in the new york times. All I could say was that we have saved at least 150K in last year, why stop now. I agree with Big V that there are starting to be some possible buys in Escondido yet it still overpriced by at least 20% in the better areas like Mary Lane and San Pasqual Valley.
We could start a little Escondido support group. Encourage yourself with how far we’ve come: 2 years ago, you couldn’t buy a sh@tbox for $450, and now, there are some pretty nice houses for the same. But we have a ways to go; I hope the ones that are currently priced in the high 500s/low 600s will be trading in the mid to high 400s next spring at which time I’ll have a hard time fighting off the little lady. Our lease ends in March but we may be able to go mo. to mo. after that.
Escondido? My home town, but I do not even visit any longer:
http://www.northcountytimes.com/articles/2008/08/11/news/inland/escondido/z1e904e59ff4bbb95882574a2006f0c60.txt
hold out…..this is a 400K home….unless your cash is burning a hole in your wife’s pocket
I think zillow research on denial is very interesting, but still picture is far more funny since their zestimates are genearly very, very optimistic for the sellers. ha-ha-ha! I think this winter will cure the denial totally. Most of the sellers are getting pacifiers like “prices are not down, it is just not selling like before”. And do you know why is not selling?
Imagine how bad the numbers would be if Zillow’s home value estimates weren’t straight out of Realtor(TM) Fantasyland(TM).
(NAR and Disney, you may now sue each other for ownership of the Realtor Fantasyland trademark….)
Pierre! Get the guillotine sharpened, we have more blade catchers. I love the smell of blood in the morning. It would be so boring if there weren’t bottom pickers.
(I didn’t see this one from the start so if I get something wrong maybe someone can correct me)
I saw a great one last evening on tv. A 48 yr old divorcee with two kids (17 and 22) was asking for advice. She was a RE from WA who owned a quote $600K house that she bought with 10% down. Her income had been $140k last year (?) and $70k the next. She wants to sell but can’t and owes $22K on her car. The stock market started going down so she pulled all the money out of her IRA(s) because she didn’t want to lose more. She stated that her IRA withdrawl netted her around $60-$70K which she parked in her savings.
Advice was to sell the house (51% of income), rent, start an IRA, etc. She said that she had a 5% mortgage rate that was too good to give up and she could use banked money to make up the short fall for a year or two until the market changed because RE in the northwest wasn’t dropping that much and the market will come back. There’s a special place somewhere in this current for stupid people. Plus, after another birthday for her youngest son she loses child support. Her ex must be happy he unloaded this one.
I can’t put it more simply than this.
Skill set = Station in life.
Or, as I have said before, “Life is like a shat sandwich, the more bread you’ve got, the less shat you’ve got to eat”.
There are exceptions but that’s it reduced to it’s base number.
I walk by cubicle farms at multiple locations and see people staring at computer screens all day. My god, we’ve become a nation that produces next to nothing.
Were the Romans’ this fat and lazy?
Mike
Yes the Romans were.
The Romans had better parties.
“I walk by cubicle farms at multiple locations and see people staring at computer screens all day. My god, we’ve become a nation that produces next to nothing.”
Anyone who actually accomplishes something is viewed as a sh!t. Ask the ladies; they’ll tell ‘ya: …just a mechanic, …just a high rise window cleaner, …just a soldier, etc., so there ‘ya have it. Some limp office f*ck leads the way until the credit drys-up!
Better parties with food served on lead plates.
Do I stand alone in welcoming the knifecatchers and praising those such as the NAR amd MSM for encouraging them to commit their funds to our cash-starved financial system?
Think about it: If the knifecatchers don’t commit their money then the taypayers will have to. If the FBs aren’t convinced the bottom is near then they will simply walk away and the banks will eat the loss, and the banks loss will eventually become the taxpayer’s loss.
combotechie,
Very good point. I can’t join in celebrating them exactly but I *will tolerate them if only for the important functions you describe. If we can find enough of them to fill the moat, hell, we can walk across.
I celebrate knife-catchers as well. Having some transactions close escrow is essential to price-discovery. If we had zero transactions, Case-Shiller would have a hard time telling FBs how much equity they are losing, and we don’t want the public to lose sight of that!
LA is toast, or soon will be. A friend of mine is (was) a bubble believer, but recently got married and started looking at realestate. He offered on a duplex in mid-city LA for the mid sixes. He will live in part and rent the other part. He’s got a good job (I know what he makes) and so does his wife. They’ve got excellent credit and are putting down 20%.
BofA (who pre-approved them) won’t touch the loan, nor will any other bank. The ended up having to go to a hard money lender, and they still have not closed. No one in LA will make jumbo loans, and that means nothing is going to move in this market until prices come down below 500k. This market is going to sieze up like an engine in the desert with no oil.
“OK, California press, how ya like them apples? IMO, you guys are responsible for a lot of this foolish knife-catching, and I for one will remind you at every opportunity.”
Ben, my favorite part of that SF Chronicle article was the bit about a few “special” areas (e.g. Southern Marin, SF proper and Palo Alto) “holding up” because their medians have gone up. I’ve emailed this reporter numerous times to explain that the median can still go up when prices are coming down, but still the sheeple are getting fed the standard MSM crap about median increase = home price increase. I didn’t bother emailing her again today.
BTW, according to the Chronicle’s own charts, sales in Belvedere/Tiburon (a very “special” part of Southern Marin) were down 70%+ last month versus a year ago. Yeah, I think they’re holding up just great.
First I thought this was amazing…
“Of people who bought in 2007, there are 41.1 percent who are under water.”
…until I read this:
“Almost one-third of U.S. homeowners who bought in the last five years now owe more on their mortgages than their properties are worth, according to Zillow.”
The reports says that the Bay Area is falling faster than the US.
Well, it has to.
It rose faster than the US too far outstripping the incomes (even if they are higher out there.)
Shhh. We don’t talk about that.
OK, we’ll just talk about granola instead.
Yes it is. I’m just biding my time and waiting on the sidelines. Patience and grasshopper sure are nice virtues to have
Also in bay area (Santa Clara CO). I’ve been doing some looking the last few weeks to see what is available. An anecdote of how quickly the market is changing here…
5 bed 3 bath 2500 sq ft was asking $825K in May. Relisted for $765K in August. When I spoke to the RE agent the next day, and said I would not pay over $700K, she said to bring all offers.
Nearly 20% down in 2 months!
And yes, according to propertyshark, the current owners bought for $680K in 2005. So, they have nothing to complain about really (except for a lost opportunity).
Unless a knifecatcher shows up, I expect a foreclosure in the fall.
Any thoughts on house prices in San Ramon? I heard 1.3m house is around 900k now? Is that true
Just relocated to SR, still renting. I can look out my balcony and see brown lawns and way too many for sale signs. I did see a new one, was a sign that said “coming soon”. Not sure what it meant, to the court house steps?
I hope you aren’t serious about giving them a profit when they bought at the height of the bubble. They should be lucky to walk away at this point.
The higher they fly … wait, what?
YikES! It will only continue to get worse…
“‘The real estate market has really had an adverse effect on banks and credit unions alike, and obviously High Desert was not immune to that,’ said Ralph Ramirez, a spokesman for the Apple Valley-based credit union
Merely “an adverse effect” Ramierz !!??”
You haven’t seen anything yet. I bet those old illegal camp sites by the tracks down by the Mojove River and under the Victorville Narrows will be FULL by this Christmas.
…and there will be many more like them the way this old barge, the “USS Debt-ridden Ownership Society”, keeps smacking into those icebergs in the high desert.
“Damned those icecubes and FULL SPEED AHEAD Ralphie boy
It is good news for those of us that waited that now even the nicer neighborhoods are being hit. I noticed the same thing in Denver in the last few months. Previously immune neighborhoods (mainly expensive intown locations) are now falling into the red.
Also keep in mind that this says, “who bought…” I don’t believe it counts those people who refinanced and took out money during this period.
How does this lady get foreclosures of FB’s credit report so quickly? Sorry but that doesn’t sound legal/ethical to my understanding? Is it a matter of getting these people into another home/loan before the FC is even reported?
Anyone have more details on that? First it was “Don’t 1099 Me Bro!” not it’s “That foreclosure never happened”? What’s up?
She probably has access to the Notice of Default list through a title company. These are created for a given county after FBs receive an NOD, before actual foreclosure. She probably then sends them a letter or calls them inviting them to her seminars.
I could be wrong. To your point it sounds like she is repairing the credit AFTER the foreclosure has happened, not steering them away from foreclosure as I assumed it meant.
“I’m taking foreclosures off people’s records right and left”
Sounds pretty urgent to me? I would think anyone that’s a credit repair ’specialist’ would know the difference between a NOD and a FC? Hell, I’ve heard it takes two years to get a Late Payment off your record?
I’m just sensitive about re-filling the pipeline with fresh FB’s. Is that why they’re so concerned about getting their credit cleaned up in such a hurry? So they can “get back in the game”?
My bad. I read it wrong. Sounds like she’s working with FCs, not pre-FCs.
“I’m just sensitive about re-filling the pipeline with fresh FB’s.”
Yeah, that burns my @ss as well.
We keep reading about all these lenders are taking six months or more to start foreclosure proceedings on borrowers who quit paying their mortgage. Similarly, there are endless reports of lenders who do not respond to short sale or loan restructuring requests. Basically, the lenders are completely overwhelmed by implosion.
Do you think these same lenders who can’t manager their valuable assets are actually taking the time to respond to the credit reporting agencies when a consumer protests a ding on their credit?
I imagine this lady is simply sending certified letters on behalf of the deadbeats to Equifax, TransUnion, and Experian protesting the negative foreclosure entry. When the lenders fail to respond, which I imagine is commonplace, the item is removed from the credit report.
I can’t remember which agency it was, but one of those 3 is notorious for letting improper negatives stand on credit reports, regardless of whether or not the creditor provides evidence of the debt. I heard that from a financial lawyer-type guy, and confirmed it by internet search. Lots of complaints just on one of the three, but the other 2 were OK.
Unless those guys have changed their ways, I’m thinking there must be more going on here than meets the eye. Perhaps she is working out some sort of payment plan. Perhaps the FB is in BK. It can’t be as simple as the credit agencies just taking it off because the debtor asked them to.
Is it Experian? They seem to be the most truculent and vindictive of all of them.
It might have been. I should check. I have this nasty little T-Mobile thing that won’t go away. They are crooks, ugh.
That Experian Credit Reporting gang are ALL doing heavy DRUGS !
Last CR, they gave me an super high FICO… and I don’t even TRUST me. I’m not in their region. I always try to pay cash in 30 days or I just don’t buy it.
I’m the biggest “deadbeat” that the credit card companies know of
Gatorfan,
I suspect you are correct. In some fashion or the other that has to be what’s going on. I can’t imagine it would do much good? How can these people qualify for loans in this environment anyway? More importantly, why!?
“more details”
It could be as simple as sending a letter requesting that the credit agency affirm the item on the credit report. They have X number of days to do this and if they can’t then the item must be removed or they (credit bureaus) face statutory damage awards.
With the lenders in total disarray it would not surprise me a bit to see many records cleaned up in this fashion.
I think it’s a big game with the playing field tilted hard in favor of the big boys. If anybody should be playing hard to win and appealing every call it’s the little guy.
Perhaps the biggest factor in the East Bay housing market is the effect that sales of previously foreclosed homes are having on residential property values. For example, in Antioch, about 75 percent of the homes being actively listed for sale are bank-owned residences with foreclosed mortgages
75% of the houses for sale in Antioch are foreclosures?
Wow. Just wow.
That depreciation will only accelerate.
ET-Chicago,
Right, how is that all that much different from say, Las Vegas?
Is the proportion that high in Vegas, too?
I had no idea.
Actually I believe in LV for the month of July it was 74% of sales were foreclosures, 9% were short sales and I suppose what little remained were normal transactions.
The first HBB I ever stumbled across was Patrick.net ( centered in the BA ) and you wouldn’t believe how arrogant and smug some of the bulls were back then! Well as we’re seeing played out in real time folks is those boasting their financial genius in 05′ and even ‘04 are now under water. Course you can’t find any of them now?
DinOR,
I believe that I remember reading you and HARM but never did figure out that “ha ha” character’s story on one of those blogs?
If you want to see smug, arrogant bulls STILL charging around in denial allow me to suggest Jon Lansner’s blog at the OC Register.
(In the interests of fair reporting, there are also some CRAZY bears on that blog.)
About the difference between a 180 Mega Ton and a 300 Mega Ton explosion.
We’re almost into the most interesting 18 month period of time. Not yet… (and we’ll only know we’re in it after we’ve been in it 2 months or so.)
Got Popcorn?
Neil
Don’t think a big shit sandwich ain’t headed our way too. Aerospace is going to crash as well.
Spending is imploding. Revenues will be thin. Cuts will be deep.
Not sure how president obama will f with us in the military systems groups. Probably pretty bad since the power of diplomacy is so strong.
Neil-
Boy or Girl?
The reports says that the Bay Area is falling faster than the US.
But we are immune, we are special, our realtors told us so.
And what is so bad about lower prices? What is wrong with housing, one of the most important aspects to families and communites, being more affordable and not less? Do we complain if apples or gas or cars or etc cost less?
Rhetorical question. Don’t answer. But this whole thing gets me so mad. The complicity of the media, vested interests, the speculative mindset, it is all wrong.
The Marin UHS don’t seem to care much about the FBs:
‘She invited several realty agents to join her group, but they declined because ‘they were more interested in higher sales.’ ‘The Realtors and brokers are not real helpful because they’re not going to get paid,’ Fliegel said.’
Gee, this comes as a real surprise.
“And what is so bad about lower prices? What is wrong with housing, one of the most important aspects to families and communites, being more affordable and not less? Do we complain if apples or gas or cars or etc cost less?”
*****
And finally, of course first again (though years in the making), The Economist points out the obvious!
When will the MSM get around to reporting this “general point”?
“Economics focus
Home truths
Aug 7th 2008
From The Economist print edition
A housing slump helped cause the credit crisis. But its effect on spending may have been exaggerated…
[The last paragraph!]
There is a also a more general point that emerges from Mr Buiter’s paper. Very often there is too much emphasis on the losers from falling house prices and too little on the winners. A fall in house prices is not bad for everybody. In an important sense, a house is much like any other durable good: a fall in prices is a boon for those consumers who have yet to buy one.”
*****
Just to repeat for politicians:
“Very often there is too much emphasis on the losers from falling house prices and too little on the winners. A fall in house prices is not bad for everybody.”
Just to repeat for used house salespeople and others in the REIC:
“Very often there is too much emphasis on the losers from falling house prices and too little on the winners. A fall in house prices is not bad for everybody.”
Just to repeat for the MSM:
“Very often there is too much emphasis on the losers from falling house prices and too little on the winners. A fall in house prices is not bad for everybody.”
Link:
http://www.economist.com/finance/displaystory.cfm?story_id=11885272
when are zips 90274 and 90277 going to fall? precipitously
Palos Verdes Peninsula and Redondo Beach, CA
Both cities are located south of LAX on Sepulveda blvd and then some about 30 minutes.
uh, is that the hill you see from the right seat coming into LAX?
Have you seen that hill too?
Not sure you can see hill from right seat coming into LAX unless on coming in from say China directly meaning no turns and landing on west side of runway.
Since you have seen that hill too maybe you can tell why so few listings and how 9500 homeowners can support themselves and a PV Mall no ones goes to except for a movie.
Yes it is, technically the back (south half) is falling into the ocean, very slowly…………….plunk…….
But in point of fact, the only portion of the hill that will fall in price are those parcels that changed hands since 2000. Change-in-hands, I define as actual sales or refinances at inflated values.
The old money is not going to sell, even when they kick the bucket because tax haven family trusts own most of it. I know a few offspring who can’t wait for the parents to move on to other accomodations, so they can escape hell holes like Manhattan Beach and Torrance.
You might get lucky with the few must sells that will pop up, but the bulk of it is coming up in the pay option resets that are hitting now through the next 20 months.
No. People guage their present home values by recent transactions. It is not only the value of the sold house that changes upon sale, but the value of all comparable houses as well. If you don’t buy that, then the value of any house that did not sell during the bubble also did not rise during the bubble. As each neg-am poser is rooted out, the entire community will be taken down, one notch at a time.
Also, not to be overly argumentative, but I don’t see how anyone can really have “old money” in a capitalistic society. It’s not like an aristocracy, where one family can take over and maintain its status for centuries. People pretty much have to use it or lose it. Case in point:
90277 median years in residency: 2.8
90274 ” “: 6.27
People aren’t exactly staying put.
A quick survey of Zillow.com shows that values are dropping in 90274.
“People guage their present home values by recent transactions.”
I looked at a house that was ridiculously priced recently and asked the realtor holding the open house how she justified the price. She told me that she used the “most recent comps”. Not satisfied, I pressed her on what comps she was referring to, since I had been following the MLS in that area for nearly a year. The comps she used were anywhere from 9 months to 2 years old! She justified this by saying that “nothing similar has been selling for the last 6 months or more”.
I nearly died laughing! She probably thought I was insane.
This is called the pre-capitulation phase soon to be followed by the more important capitulation phase.
Never forget who’s bleeding money monthly. Therein lies the path to (fiscal) sanity.
BWAHAHAHAHAHHAHAHHHHHHHHHHHHHHHHHHHH!!!
LOL!
Big V,
In a way that’s true. Unless you sold your home, took out equity ( presumably to buy other homes ) or set it up as a revolving ATM, then you’re right, it’s as if it never happened.
I know that sounds silly but my wife and I actually argue about that. We sold like the last day of 2003 ( closed in Jan ‘04 ) and it’s been a bone of contention ever since. Thankfully for me NO ONE in our old neighborhood made off with Big Fat Stacks Of Cash either! We’d go back and Zillow ( which I don’t rec. ) and it looked like we were had. But now the place ( rural ) is littered with For Sale signs and not a buyer within miles.
I have a foreclosure question…
I’ve read several articles (dont ask for reference) that you can get a better price on a short sale, than waiting for the house to go thru a foreclosure because the bank would rather avoid the foreclosure process which can cost the bank $40-50K.
Am I missing something here? How can it cost the bank 40-50K? Surely they mean that the perceived value is 40-50K less, not that it costs that in processing. I would imagine in a declining market, the longer the process takes, the less the house is valued at the end.
I understand that doing a short sale is a long process, and most dont happen because of price or timing, but I’m purely interested in the numbers here.
Im not sure of the numbers, but holding properties does involve its own costs. I have been speaking to several ppl in the business that have advised me to avoid short sales as the approval process is tortuous and you get better deals once the foreclosure has taken place.
A bank doesnt have to agree to a short sale, but eventually will need to get it off its books after it forecloses. A bank that needs to dump needs to find the best offer in a short time frame. It’s current losses should be irrelevant because such losses will only mount if they dont sell.
Theoretically, if you can find a bank that is realistic as to what the property will sell for after being foreclosed on, agreeing to a short sale for a few thousand less would be in its best interest. I am not seeing much realism out there yet.
“Theoretically, if you can find a bank that is realistic as to what the property will sell for after being foreclosed on, agreeing to a short sale for a few thousand less would be in its best interest. I am not seeing much realism out there yet.”
I’m not seeing banks being realistic on either REOs or short sales, but especially the short sales (presumably they’re trying to wring a few last coins out of the seller). You’d think short sale would be the way to go, but I read somewhere (no link, sorry) that only about 3% of them get approved.
There is a local bank that foreclosed on a group of brand new condos that didn’t sell on the now-bankrupt builder’s wishing price. They are renovating them (i.e. “flipping”) and putting them back on the market at the ‘target price’ as luxury housing. As far as I can tell, about half of them have already sold. Unbelievable.
It makes me uncomfortable to see banks in the flipping biz. I thought the days of being able to charge a premium over material and labor cost for paint and granite countertops were over. Guess we still have a ways to go.
Are you serious?
A bank that foreclosed properties is flipping homes?
Haven’t people learned that flipping homes is simply adding a premium for renovations.
I honestly cannot stand flippers; who told people that adding cabinates worth 10k immediately adds 50k to the value of a home?
To me, that is artificial money
I thought there was something wrong with me. The last time I went out seriously looking at houses (more recent than I’d care to admit, but I never bought!), the agent kept pointing out garbage “improvements” with ridiculous “values.” Why would I ever pay more for something than the person who actually wanted it?
I just don’t know how to reason against some bizarre value concept where someone else decides the worth of something for me.
Goggle search:
banks “cost of foreclosure”
A top hit is “The Painful Cost of Foreclosure - BusinessWeek”
…New numbers from ratings agency Standard & Poors spells out the cost to mortgage investors. For the 2006 vintage of subprime loans it’s about 19% of the loan amounts outstanding.
How do they get those numbers? S&P figures an astonishing 42% of the loans made that year to borrowers with bad credit will go into foreclosure. Then it calculates that about 45% of the amount owed on those loans will be lost. Here’s the breakdown on that: 19% is lost due to the decline in the market value of the home. That’s about a $40,000 loss on a typical loan of $210,000.
Then there is the 26% lost to the costs of foreclosure. It can take a year or more to go through the whole process from when a borrower stops paying to when the house is finally sold and the lender recoups whatever money it can. There’s 13.6% of the loan amount lost in interest payments. About 3% of the home value the lender has to pay in property taxes. There’s 1% in legal fees, 6% to real estate agents, about 3% of the loan spent on home maintenance….
Interesting point about East Bay prices: They kept going up and up straight through the tech stock bust in the early 2000s. It looks like they are not so lucky this go round…
You had the cushion of dropping interest rates and dropping underwriting standards.
Don’t have either of those right now.
“Six years ago, at the height of the housing boom, the architect-developer partners of Concepto Design Group International in the Gaslamp Quarter and Hoku Properties of San Diego bought a historic home on Hillside Drive in La Jolla for $1.8 million, relocated it and replaced it with a $10 million, 8,910-square-foot showcase property.”
Of course this property won’t sell, it wasn’t architected or developed by La Jolla residents. These outside groups from downtown, where prostitution and drugs are a daily inhibitor to elegance and class, are trying to elevate their status in the community, but will forever be known as outsiders with an aesthetic taste that mistakes chicken liver for goose liver. No self respecting current or future resident of La Jolla would be caught dead in this house. Burn this thing to the ground and sacrificial goat blood will need to be used to replenish the soil so that estate re-birth can occur once again. The whole thing sickens me.
So much of what has happened to older homes in LJ in the past 8 years is just nauseating. Some idiot developer buys a nice older home and razes it and all the landscaping to build out to the absolute edges of the lot with yet another nasty multi-storied Mediterraneanish rectangular stucco McMonster with huge windows. Rinse, repeat and go shade yet another smaller house with a stucco monstrosity. Blech!
I’d love to see more of these eyesores foreclosed upon. Seeing them sit for a few years before being pulled down in favor of something reasonable and less ugly would be even better.
friar john, SD_suntaxed,
Also notice that now 2002 was the “height” of the housing boom. Man, that thing just keeps getting pushed back. I haven’t been there since the 80’s but given this development it’s probably a little late to hope “things haven’t changed”.
Yup, you’ve got new La Jolla to a tee. They’ll scrape a Requa or Gill house with hand-carved woodwork, handpainted ceilings and artisan metalwork from the 1920s, for one of those godawful stucco palaces with lots of garish trim. I’ll take vintage California tile over 500 square foot closets and a Subzero fridge any day. Irony is that most don’t understand how valuable vintage homes by a renowned architect are worth.
Too right!
A little house with real character and detail, not stuck on foam mouldings sprayed over with stucco, is a very endangered species after the past few years. So sad. Lots of quarter-sawn oak, box beams, original leaded glass and vintage tiles would be on my wish list for a dream house. I love Gill’s designs.
No one seems to care about anything but enormous square footage anymore. Detail now consists of what color the fibreglass columns and the granite countertops are. Eeewww.
I would venture to say that even if some hip La Jolla firm did it, they would’ve lost money.
Ahh architects. Not sure who has the bigger ego architects or clinical scientists.
I worked in an architecture firm in the late 80s. Saw a couple of slow downs that impacted the firm. Layoffs and reduction in salary were par for the course when slow downs occurred.
I got a good dosage of Orange County last week. We stayed at the Marriott that’s on the corner of Katella and State College.
Holy gentrification Batman! Lots of condo and apartment buildings under construction, and it seemed that every 3rd car was a Beemer or a Benz (I felt like a pauper driving around in our 4 year old car). The nearby Garden Walk restaurants all had loooonnng lines at dinner time. Viva la burbuja (AKA the bubble)!
I suspect this neighborhood (closer to the stadium than to Disneyland) will soon begin to feel the effects of economic gravity.
“Holy gentrification Batman! Lots of condo and apartment buildings under construction, and it seemed that every 3rd car was a Beemer or a Benz (I felt like a pauper driving around in our 4 year old car). The nearby Garden Walk restaurants all had loooonnng lines at dinner time. Viva la burbuja (AKA the bubble)!”
You are in the Platinum Triangle massive Urban redevelopment zone of Anaheim. Back in early-mid 2007 only the Stadium lofts were up :the rest was just leveled graded fenced off dirt. Surprized at your observations because that entire area is lower middle class, increasingly Hispanic immigrant, and much of that area is either commercial bldgs or light industrail/warehouse. Haven’t been there in almost a year so maybe the Platinum multi- units are going up like gangbusters as you say. The PT is a massive, massive mixed used project, or projects, going up around the area of Angel/Anaheim Stadium, but i suspect that many of those condos will be converted into project apts -the demographics there scream working class immigrant and office workers.
Vineyard bank announced they may not survive:
http://www.marketwatch.com/news/story/vineyard-bancorp-cautions-may-not/story.aspx?guid=%7BDB320FFA%2D96B9%2D4B31%2DAFE2%2DA0008AF38830%7D&siteid=yhoof
They were never going to survive.
Who exactly stated that they were gonna survive besides the insiders?
You don’t even have to be a moron to figure this one out. It’s about as much as a no-brainer in the financial world as you’re ever going to come by.
Vineyard - hah what a joke that bank is/was. Talk about risky commercial lending. That bank led the way and now they are getting their due. Unfortunately most of the execs and top sales people made out like kings.
Since when is “real estate expert” an occupation?
“I am an expert of electricity. My father occupied the chair of applied electricity at the state prison.”
W.C Fields
While people were being told by the devil on their shoulder to treat their house as an ATM (opportunity to do bad), they were also being told by the angel on their shoulder to live within their means (opportunity to do good). When one chooses to pay more heed to the devil than to the angels, then who is the bamboozled and who is the bamboozler?
While people were being told by
the devil on their shoulderthe Fed chairman…Never trust the man.
That’s what we call a “distinction without a difference,” PB.
People were also told that Iraq had weapons of mass destruction and caused 9/11, that it was safe to eat beef and buy Chinese goods, and that decreasing taxes on the rich, deregulating the “free” market, and holding down minimum wage would make everyone wealthy.
Americans will believe anything if it gives them the illusion that they are smarter than everybody else. It’s sad how we’ve become debt slaves to Big Business, which gives orders to fear-mongering politicians who understand mass marketing better than economic and foreign policy.
History books will remember this period of American History in the same light as the fall of the Soviet Union, British or Roman Empires. I just feel sick to my stomach when I look at what we’ve become in the span of 30 years.
O G, people were not “told” any of those things. On the contrary, arguments from all points of view were presented, and the people made their own decisions (except in the case of the Iraq conflict, which was authorized by Congress, not by “The People”, and was soley based on a lie). People still have the ability to change their minds. We can stand up to China, stop globalization. Let the Chinese and all the other backasswards communist nations fall on their faces. Bring back regulation, bring back taxes. Unlike the Soviet Union, the British empire, and the Roman empire, our system is designed to absorb criticism from all angles and to CHANGE FOR THE BETTER OF ALL.
K, done now.
I’m certainly not always right, but I usually came out on the wrong side of those arguments, for all the right reasons. For instance:
Iraq: “You’re not patriotic. Who do you believe? France???”
Beef: “This is all just a PETA campaign and you’re buying into it”
Trickle down: “Look how rich we’re all getting-look at the Dow, housing prices, the strength of the dollar!”
EZ mortgages: “Those old mortgage models don’t work anymore…no one would be able to buy a house if we still used them”
China: “No Americans want those jobs anyway”
Amazingly, all those folks who accused me of being anti-American have miraculously disappeared or developed selective memories.
What is wrong with beef?
What is wrong with beef?
Nothing, really. I agree with most of what NoSingleOne said but as someone who went on an almost meatless diet for 2 years and stopped to recover her health and sanity; I can say that there is way too much hype surrounding vegetarianism. It is not healthy for most of us. Unfortunately, there’s a small group of practitioners of that are as fanatical about their moral superiority concerning the oddly exclusive and hierarchical animal rights movement as any terrorist group.
For most of us, grass-fed beef with the saturated fat and life giving vitamins in tact is one of the healthiest foods on the planet. (And I don’t even cattle ranch!) *grin* Most of actual medical research backs up this point but unfortunately it’s not what Big Pharma/Medicine, Big Agriculture, and Big Government wants to hear. Ironically, most of the PETA activists play right into the hands of corporate America.
The issue with beef is mainly the risk of prion diseases and the lies that were uncovered about it during the most recent scandal (geez people, it was all over the MSM less than 6 months ago):
-bought off and complacent FDA inspections
-the fact that prions are found in almost all tissues, not just “meat on the bone”
-undertesting for vCJD in American downer cows because “we don’t have it here”. The South Koreans almost rioted over this.
-usual concerns about hormones, antibiotics, and colorants (carbon monoxide) hiding freshness
I had been hearing this stuff for almost a decade, and the news only broke this year. IMO, beef isn’t safe at all.
Thanks. I hadn’t heard any bad cases of mad cow yet but prions can cause damage over years.
I think the practice of carving up old animals and using them as feed should be banned. I expect that is causing the issue.
Haven’t heard much about chickens or fish at least.
But damn it I can’t give up my burgers…
Probably explains most of my posting.
Big V,
How can you write “Never trust the man” and then let loose a salvo criticizing NoSingleOne for pointing out the man’s relentless dissemination of misinformation in response to the very next post?
“Consistency may be the hobgoblin of little minds” but there is something the be said for a cohesive worldview…
And it wasn’t only Congress that authorized the Iraq Invasion; numerous public opinion polls showed the country solidly behind the illegal and ill-fated venture. Now that we’re in a desparate military bind, the Russians have a free hand in Eastern Europe.
Spykeeboi
My point is that there is no excuse for people in a free country to blame their leaders. The information was/is available. The only exception to that recently has been WMDs. When people stop taking personal responsibility, then they have no one to blame but themselves.
Maybe I should be more clear. How about this:
Trusting the man implies that people have relinquished the responsibility of thinking for themselves. When you hear your President accusing his opponents of being unpatriotic, that is a red flag. Sounds like China or Russia. Time to demand a debate, ask for proof. Similarly, when you hear the CAR president accusing bubble callers of being pessimistic, you should ask “based on what”? If you didn’t ask, then you were a willing pawn, a doormat, a patsy, and a sucker. Critical thinking skills have to come into play at some point.
The information has *not* been readily available since the dismantling of laws designed to protect the main stream media from corporate consolidation during the past 30 years. You now have a handful of big corporations controlling most of the msm - didn’t use to be that way.
Remember the insightful, objective analysis of the events leading up to the Iraq war writ large in the msm? NOT.
The information was/is available. The only exception to that recently has been WMDs.
I agree. If the world hadn’t invaded Iraq and searched we still to this day wouldn’t know.. there was no way to know.
If people were told the truth, they could exercise free will and make up their minds. Unfortunately, the truth is often discredited by politicians (who supposedly work for us, BTW) who sacrifice making hard but necessary choices for the sake of political expediency or special interests. We’ve seen a lot of that just hearing Bush/Greenspan/Paulson/Bernanke everytime they’ve opened their mouths about the economy. I think that is the inconsistency that big V might have missed.
I distinctly recall Hans Blix saying there were no WMD in Iraq. The information was there, people chose to believe otherwise to further their own agendas.
I recall Hans Blix, I’m sure some of you remember Hans, UN weapons inspector, stating there were no weapons of mass destruction in Iraq. The information about the non existence of WMDs was available. It just didn’t fit in with the agendas of those that wanted the truth to be otherwise.
“It just didn’t fit in with the agendas of those that wanted the truth to be otherwise.”
And where do “those” folks worship?
It was pretty obvious before we invaded Iraq that this was a war of choice. But you had to be a skeptical sort of person willing to search for multiple sources of information. Most Americans relied on the MSM who refused, in the spirit of a misplaced patriotism, to challenge any of the propaganda beating the drums of war. Yet the foundation of American democracy has always depended on questioning the government, and not giving one person the power of a King.
And everyone who insists that the MSM controls all information is heavily discounting the power of the internet. If one is willing to put out the effort, one can find almost any angle on any topic out here - and that’s something that didn’t exist 30 years ago.
They were also told a tale by the Sierra Club Bolshevichs that if we didn’t drill for oil that all w ould be well and our gas prices would go back to $2 per gal.
The banks got bamboozled cause they had idiot employees that gave away their money to folks who could never give it back. Now they want a taxpayer rescue, hell no. The banks can take it in the rear - I hope a lot of them go under…
–
Employees? Managers get paid to not care what their charges are doing? And what about the regulators that are suppose to oversee the management’s practices??
Fish rots from the head.
Jas
Big…
Here’s what bamboozles me.
“For a person who cannot afford their mortgage payments and is losing their home, they may need a period of grieving.”
The angel on one shoulder had spoken. So had the selfish voice.
I have the capacity to enjoy hearth and home as well as anyone, and I spose under some circumstances, I would be sad to lose a home.
But there are lots of homes.
I’m sure many on this board has experienced events that caused lasting grief (and hope they have at least come to terms with them).
Many borrowers could have listened to their inner voice.
They didn’t.
If they got their health, their grief should be short-lived.
“Further, the notices of default precede finalized foreclosures by three to six months, meaning many of the 1,000 defaults per month since January have not yet hit the market. For each month, the number of defaults increased by about 100 percent from the same time a year earlier.”
Excellent!!! This is the best news I’ve heard all day. Truly excellent!
Perhaps all these greedy frakers won’t do it again.
In my area (93552) the monthly average INCREASE is around 400% year over year. Last year it was the same. Still no signs of topping out either.
Putting a Floor Under American Homes: How Low Do We Go?
Highlights
Current estimates of total deterioration in home prices run the gamut from “we’re almost through this” to “we’re only in the early innings.” Westwood has concluded the nation is in the middle of the sixth inning of home repricing, with the ballgame having started later in some markets and earlier in others.
Westwood expects the drop in home prices to ultimately reflect the restoration of affordability and a roughly comparable value proposition relative to the alternative of renting.
Westwood has just completed a small-sample survey of single-family home prices in the 20 metropolitan statistical areas (MSAs), surveyed as components of the S&P Case-Shiller Index, to assess the gap between the after-tax carrying costs of owning and renting comparable homes.
Based on our research, which reflects the recently released Case-Shiller Index data (May 2008), Westwood has concluded the logical sustainable floor for single-family values is approximately 10.8% below current home prices as of July 2008, reflecting a total peak-to-trough decline of 28.2% in the value of single-family housing stock across the nation.
There are, however, substantial variations among the 20 MSAs. Our sample size at the MSA level is small and, unlike our conclusions at the national level, not scientific from a statistical point of view as to each individual MSA.
We therefore, on both the national and MSA levels, contrast our results with broader statistical data on historic measures of local home prices as a multiple of local rents–developing some interesting correlations.
Westwood is increasing its earlier estimate of the total cost to mortgage lenders from the housing crisis to $1.25 trillion from our estimate in Q1 of $1 trillion. We may still be shy of the mark; this figure excludes the “knock-on effects” of the housing and credit crises, discussed toward the end of this report.
http://www.rgemonitor.com/globalmacro-monitor/253320/putting_a_floor_under_american_homes_how_low_do_we_go
Good dig! Great data.
This article is awesome in its scope! Excellent reading regarding where the bottom might be and what it might look like is available through that link!
Wow - great data. And well, I have to toot my horn a bit - this is almost identical to points I made about a month ago. In some of the most bubbly areas (around DC and Florida are two areas I’ve examined closely) I think we’re about 2/3 of the way in price correction. However that’s if prices will only correct back to historical norms. My view then as now (mentioned as a possibility in this article) is that we will significantly overshoot. This is based on continuing credit contraction, foreclosures which are still increasing in rate, and an expectation of general severe economic downturn (e.g. off the cuff I think we’ll get unemployment on the order of about 12%).
So I think in reality we’re only in about the 4th inning, as far as price declines go, not the 6th inning.
However one piece of data that can’t be right. That article shows that prices in LA have already declined back to normal P/R ratio. No friggin way - surely rents haven’t skyrocketed that much in LA have they? Prices are still *way* above normal there.
“However that’s if prices will only correct back to historical norms. My view then as now (mentioned as a possibility in this article) is that we will significantly overshoot.”
*****
I more fully expect an overshoot in the Alt-A Bay every single day.
The bottom callers are ignoring this possibility. Or more likely, they are just clueless to the possiblity.
“‘I think it’s confirmation that the Hope Now Alliance is an absolute failure,’ said Sean O’Toole, founder of ForeclosureRadar.”
Before you make a statement like that, shouldn’t you understand the objectives it was trying to achieve?
“‘The only thing they’ve accomplished is to get people to sell their last few assets and throw away the money on mortgage payments before it goes to foreclosure.’”
Doesn’t sound like a failure to me, from their point of view.
Greatest wealth transfer ever!
Both businesses and individuals are pulling out all the stops in hopes that a rebound is just around the corner. Their reliance on the recent economic past will be their undoing.
More and more of them are going into the most challenging phase of this with no reserves whatsoever. Liquidation might be their only option.
“Both businesses and individuals are pulling out all the stops in hopes that a rebound is just around the corner.”
Good. I wish them much success.
Yeah, me too.
Good luck on that “success”.
This is exactly the point I have been trying to make for the last year. This is not just an irritating recession coming down the pike, that the wizards of finance can fix by tweaking the system. This is the system breaking down, like it or not.
I have used the word “depression” on this blog repeatedly and very carefully, for these reasons:
Much of the population has no savings at all. Rather, much of the population is mired in debt. Credit conditions are worsening.
Foreclosures are rising.
The HELOC ATM is closed.
The growing oversupply of housing and commercial real estate means further losses of equity ahead.
Manufacturing is leaving the country. Unemployment is rising.
The tax base for most levels of government cannot support the entitlement spending already in place.
We already are at/in war(s).
We already have historically low interest rates.
Both real wages and the equity markets have been stagnant for years.
Negative growth is already here - whether or not the lying PTB and MSM admit it. String a couple of years of negative growth together, and you have the classic definition of economic depression. The fact that unemployment is not yet at 25%, or that people aren’t selling apples and pencils on the streetcorners yet, doesn’t change it. Take a look around your hometown and multiply the “For Sale”, “For Rent”, “Space Available”, and “Going Out of Business” signs already there, by a factor of five or six. That is outwardly what the New Depression will look like, this time next year.
I’m not spewing gloom and doom. I’m trying to encourage people to get prepared.
“DataQuick searched public records to identify the most expensive foreclosures in the county, using Zillow as well as its own findings, and came up with the 23 most expensive properties.”
“They include five properties each in La Jolla and Rancho Santa Fe, four in Carmel Valley, two each in Del Mar and Encinitas and one each in Bonita, downtown San Diego, Jamul, Point Loma and Poway.”
The tip of the iceberg is now in view. The rest of the monster berg will become visible when prime and Alt-A resets peak in 2010 or so…
>> “Almost one-third of U.S. homeowners who bought in the last five years now owe more on their mortgages than their properties are worth, according to Zillow.”
Does this mean that soon Zillow can go the way of Kozmo?
Wow, talk about a blast from the past. Kozmo.
OK, favorite Kozmo story: some guy posted that he was too lazy to go to the vending machine which was “all the way” on the other side so he called Kozmo who delivered for “free”.
BWAHAHHAHAHAHAHAHAHHHHHHHHHHHHHH!!!
Anybody have an opinon on Lake Forest CA in Orange County ?
How long to drive to Irvine say Jamboree rd? I may need a rental there and not too familair with area?
Thanks
Lake Forest is rated by the FBI as one of the top 10 safest cities in the US with a population over 100,000. Commute to Jamboree (KIA ?) should be about 20 minutes -
Thanks
“Anybody have an opinon on Lake Forest CA in Orange County…? ”
“How long to drive to Irvine say Jamboree rd? I may need a rental there and not too familair with area? ”
From lake forest to jamboree rd in Irvine is 20-30 minites drive. Very fast drive along the 405 (San Diego fwy) along a very wide portion of the fwy. have no opinion of lake forest except is is rather dull with lots of trailer parks . Not a bad community but not high end, maybe a Tad below Irvine and Laguna Nigel.
Lake forest is reached off the 405/5 via the Lake forest rd or Bake Parkway, both fast easy entry and exit routes into lake forest community.
EZ commute.
Although details of where in LF and where in I might factor in: they both cover a lot of area. It could be cross-the-street easy or nailed-to-a-cross freeway different.
Who’s bringing comps down your neighborhood? Zirrow.
I was flying from Fort Luaderdale to LA yesterday and they were trying to pawn off Panama as the great up and coming new investment on the plane television. The taxi driver in Cozumel told me that business is way down. He said people were throwing around money about three years ago. Now the tourists count their pennies.