Buyers Just Don’t Think It’s The Right Time To Buy
The Keene Sentinel reports from New Hampshire. “The upscale, four-home neighborhood on 40 acres in Chesterfield that Jim M. Larkin invested in has turned out to be a nightmare. ‘I threw everything I had into it and it’s put me on the brink of bankruptcy,’ Larkin said in a phone interview with The Sentinel this week. ‘I’m a homebuilder and designer and basically that business is toast.’”
“In the year and a half since Larkin purchased the land for his neighborhood project and began the design work, he was able to build one house for a client before everything came to a screeching halt.”
“‘The economy dropped down to nothing. Nobody is buying,’ he said. ‘I don’t even get phone calls anymore. … I think everyone’s wondering what’s going to happen next. Banks are being really tight right now and they’re not giving out loans.’”
“‘I think it’s a very challenging market out there,’ said Chuck Nolan, president of the local chapter of the Home Builders and Remodelers Association of New Hampshire. ‘New residential housing projects by private contractors are relatively stagnant.’”
The Boston Herald from Massachusetts. “The latest ‘foreclosure bus’ tour is venturing into unfamiliar territory in a sign that the nation’s housing woes are hitting some of Boston’s trendiest neighborhoods. It’s showing off two condos at Harbor Towers, five condos at the new Broadluxe development along the Rose Kennedy Greenway in the Financial District, two condos in the North End and one in Charlestown.”
“‘It has to do with the overall housing market taking a crazy turn for the worse,’ said John Pace, the North End branch manager of American Trust Mortgage, which is teaming up to bus around the prospective condo buyers later this month.”
“Some of the condos have never been lived in because they couldn’t be sold in the current market. Others were simply abandoned. One is the victim of ’subprime exposure.’”
From The Day in Connecticut. “Real estate sales in the region have been down in the dumps lately, but July truly was the dog days. The median price of a single-family home in New London County for the month showed a $43,000 decline compared to last year, according to the Warren Group. The median price in July was $247,000 compared to $290,000 last year.”
“The statistics made this July the worst for Connecticut real estate sales in the past 13 years. Statewide, the median price of a single-family home slumped more than $25,000 compared to the same period last year.”
“‘The situation isn’t likely to improve much this year,’ said Timothy Warren Jr., CEO of The Warren Group. ‘Even though the decline in interest rates over the last few days may be a boost for some consumers, the market will continue to struggle because of the unavailability of credit and tighter lending standards.’”
“Paul C. Bishop, managing director of research for the National Association of Realtors, told about 150 real-estate professionals that projections show sales numbers nationally dipping nearly 5 percent this year, but rebounding more by than 3 percent next year.”
“After his speech, Bishop admitted that his projections represent ’some science but a lot of art.’ Bishop said projections are based on trends in the national economy as well as expectations that pent-up demand will inevitably start to drive prices higher.”
“The biggest question mark, though, will be when tentative buyers begin to start dipping their toes en masse into the warm waters of home ownership. Bishop said buyers who wait and look for the market bottom could be saving themselves $10,000 on the price of a home but losing the advantage by paying a full percent more for their mortgage rate.”
“‘They’re betting on two things, not just the price of the home,’ he said. ‘I don’t know about you, but two bets is too many for me.’”
The Times Herald Record from New York. “Orange County home prices hit a low for the year in August, as sales and prices continued to decline across the region. Orange’s median sale price for detached single-family homes fell to $291,000 in August, down 11.3 percent from $328,000 in August 2007.’
“The picture in Ulster and Sullivan counties is similarly grim, according to each county’s board of Realtors. In Ulster, the median slid to $237,500 in August, down from $255,000 a year ago. In Sullivan, it fell to $162,500 from $182,500 in August 2007.”
“The number of homes sold in August fell 29.2 percent in Orange, 40.6 percent in Sullivan and 31.8 percent in Ulster.”
“Ken Davies, general manager of John J. Lease Realtors, said that his firm has written up about as many sales in the past three months as it did during the same period last year, but that it’s gotten much harder to close deals. Buyers expect to receive every concession they ask for, while sellers are feeling pretty beaten up.”
“‘It’s very difficult to bring sides together when neither one of them is terribly happy about the whole thing,’ Davies said.”
From Newsday in New York. “A few more than 26,000 homes were sold on Long Island in 2007, compared to more than 40,000 in 2005. Median prices, too, have fallen. As a result, 2007 sales generated $16.4 billion, compared to $22.4 billion in 2005 - a 27 percent decline, Newsday found.”
“The 26,000 homes currently for sale on the Long Island MLS are on the market for a median price that’s $40,000 less than a year ago in Suffolk County, and $50,000 less in Nassau County, statistics show. The number of closings is down 17 percent from a year ago. Newsday’s analysis found it would take 19 months in Suffolk County and 15 months in Nassau County to sell all the homes on the market at the current sales pace.”
“‘This is only the beginning,’ said Pearl Kamer, the chief economist with the Long Island Association, who analyzed the data further for Newsday. ‘This can go on for two or three years, well into 2010.’”
“Some…states saw a decline in sales volume followed by drops in pricing, experts said. ‘In South Florida, prices were rising as volume … dropped sharply, and it was a year and a half delay before you saw the fall in prices,’ said Jonathan Miller, a Manhattan appraiser who also analyzes the Long Island market. ‘That’s not uncommon.’”
“Right now, the problem on Long Island is, in a word, ’stagnation,’ said Commack real estate attorney Lita Smith-Mines. ‘The deals that do start seem to fall apart. I think, basically, you’ve got people hunkering down in everything and, for them, making long-term commitments is a scary thing.’”
“Smith-Mines saw business drop 65 percent since 2006, so she is working on wills and other legal jobs, and has started writing for and editing a magazine called Boating Times Long Island. Another real estate attorney started bartending just to make ends meet, she said.”
“For now, homes are still selling; but it takes longer and pricing is critical, agents said. Debbie Ballantine is hoping that’s the case for her center hall colonial in East Hills. In the spring, she priced the four-bedroom home at $999,999 and hoped for a deal that would close by this month. She and her husband can’t buy in Florida until they sell here.”
“When they first listed the house, their real estate agent, Michelle Cohen, said it was ‘priced to sell.’ But it didn’t. Recently, the Ballantines lowered the price to $899,000. An open house produced a lot of interest - but so far, no buyers.”
“‘I do think at this price, it’s a better price point for people,’ Debbie Ballantine said. ‘It’s a good deal, so I’m hopeful.’”
The Long Island Business News. “Looking for a brighter economy? Don’t hold your breath; unless you can do without oxygen until 2010.And it may be even longer. A growing chorus of financial and business experts believes it will take years for the housing, credit and energy markets to stabilize and for unemployment to recede. For the foreseeable future, in other words, what you see is what we’ve got.”
“The real estate market, the engine that drove Long Island through the first half of the decade, remains flat. In Nassau County, the median sales price as of July was $465,500, down 9 percent from $510,000 a year ago. The news was hardly better in Suffolk, where the median price was $401,750, down 3 percent from the prior year when it was $415,000.”
“Another 181 Long Island homes went into foreclosure in August, up 32 percent from the same period a year ago. In Nassau County, the rate of foreclosures rose 41 percent in August to 117. A staggering 89 homes in Hempstead went into foreclosure.’
“Foreclosures are hurting more than neighborhoods. In Babylon Village, where foreclosures were in the single digits in August, buyers are still using the perceived glut of housing as leverage in negotiations.”
“‘There are buyers who are sitting around and waiting, looking for bargains,’ said Maureen Natoli, with Prudential Douglas Elliman in Babylon. ‘They know that there are bargains out there.’”
“‘The banks are overwhelmed and they’ve become so strict,’ she said. ‘So I’m prequalifying buyers before I let them in the car, especially with gas prices like this.’”
“The financial industry is one of many that has taken a beating in the current morass. Long Island lost 4 percent, or about 3,200 financial sector positions, which includes banks, lenders and insurers.”
“‘We used to be able to weather the recessions,’ said Martin Cantor, director of the Long Island Economic and Social Policy Institute at Dowling College in Oakdale. ‘We can’t do it anymore. We lost jobs in the financial sector and that’s where our growth was.’”
“To make matters worse, lower home prices have done little to stop Long Island’s brain drain, as younger workers move to regions with a more varied housing selection, including apartments, co-ops and downtown living.”
“‘Kids graduating from college don’t really have any housing opportunities here and have to leave,’ said Thomas Conoscenti, the chief economist for the Long Island Builders Institute and the Long Island Contractors’ Association.”
The Pittsburg Post Gazette from Pennsylvania. “Home prices in 15 of the state’s 16 metropolitan areas are in a downward trend, according to a new report from the Keystone Research Center in Harrisburg.”
“Inflation-adjusted home prices in Pennsylvania fell by 7 percent between the second quarter of 2007 and the second quarter of this year. Home prices in this state have fallen for three straight quarters and are now lower than their levels in the second quarter of 2005, the KRC found.”
“Nationally, over that same period, the decline in home values was 9.5 percent.”
“‘We warned back in January that the Pennsylvania housing market appeared to be following national trends,’ said Mark Price, a KRC labor economist and author of the report. ‘The findings of this report bear that out. Pennsylvania has not dodged the bullet.’”
The Morning Call from Pennsylvania. “The Lehigh Valley housing market, which had been holding its own in the face of a national housing downturn, took a big tumble in August. Average prices for existing homes dropped nearly 6 percent compared with the same month a year ago, dragging them down to the same prices as the summer of 2005.”
“It was the largest monthly price drop the local housing market has seen since at least 2001, when the data began to be collected here. The average existing home sold for $228,000 in August, according to a monthly report by the Lehigh Valley Association of Realtors.”
“‘The market is adjusting to reality,’ said Kamran Afshar, a Bethlehem economist who studies the Lehigh Valley economy. ‘People who want to sell a house now, these are the prices they have to deal with.’”
“At the heart of the price decline are supply and demand. A total of 520 existing homes sold in August, down 23.4 percent compared with the same month a year ago and the lowest number of sales since at least 2001.”
“‘We’re not selling them like we used to,’ said Mark Molchany, president of the Lehigh Valley Association of Realtors. ‘It’s no secret.’”
“Clay Mitman, owner/broker of Prudential Paul Ford Real Estate in Easton, said some newly built homes that sold at retail prices 18 months ago have dropped in price $100,000 to sell today.”
“‘For an awfully long time, sellers weren’t bringing their prices down because they didn’t believe prices were falling,’ Mitman said. ‘Now we’re seeing far more price reductions. People who absolutely have to sell realize they have to be the best house for the best price in the neighborhood.’”
“The average price of a new home in August was $440,000, down 10.9 percent from a year ago. And home construction in the area has slowed significantly.”
“‘Despite excellent mortgage rates and a dwindling new home inventory, new home construction and new home sales are definitely experiencing a significant slowdown,’ said Chuck Hamilton, executive officer of the Lehigh Valley Builders Association.”
“‘I think the buyers are there. They just don’t think it’s the right time to buy,’ he said. ‘They’re nervous. It’s consumer confidence.’”
The Express Times from Pennsylvania. “Local real estate agents said Monday the drop reflects sellers lowering their prices. In a market with a glut of unsold homes, those willing to make concessions stand out.”
“‘If there are five or six similar homes in a neighborhood, it’s best price and best value that gets the sale,’ said Clay Mitman, president of Easton-based Prudential Paul Ford Realtors.”
“Lehigh Valley Association of Realtors President Mark Molchany cited supply and demand. ‘Since there is more inventory, you have to reduce prices,’ Molchany said.”
“Those who bought at the peak about two years ago and now want to sell face trouble, Molchany said. But most homeowners are not in that situation. ‘People who bought their home seven years ago, they’re still sitting pretty,’ he said.”
“After his speech, Bishop admitted that his projections represent ’some science but a lot of art.’ Bishop said projections are based on trends in the national economy as well as expectations that pent-up demand will inevitably start to drive prices higher.”
His projections are based on NO science and a lot of B.S. I doubt anyone at the NAR is bright enough to understand what is happening in the market place. They are just praying and hoping the FED’s magic wand will wave across the market and it’s off to the races again. They may put off the day of reckoning but I reckon it’s coming anyway.
The NAR is moving on as if 100% of the houses were bought by occupants, instead of the 40% that were bought by speculators.
The country is grossly overbuilt. Peak sales were grossly exaggerated. The number of actual fence sitters is not that big.
As a stupid comparison, imagine the sale of DVD players. They would go up and up, till so many finally had DVD players that the # of sales would drop off. Nothing that you can do about this, it is normal.
But according to the NAR, the # of DVD player sales per year should always go up.
NAR, you oversold. Most everybody who wanted a home got one. And often, they bought more than one.
What’s a DVD player?
And they’re not the only ones. There’s still a lot of bubble-think out there.
Case in point: Was having dinner with seven other people on Wednesday eve. One gal was talking about moving to San Diego in a year or so. Fella sitting across from her urged her to buy as quickly as possible, because those SoCal home prices would soon be on the rise.
There ya have it. The dinner table real estate report from Tucson.
But, every American and illegal doesn’t have five homes yet ,there is still hope I tell you . Lower the rates to 3.50% fixed and re-spike the punch-bowl and submit the loans to the NEW GOVERNMENT OWNED
dumping ground ,(private investors won’t come up with it ).
“‘The economy dropped down to nothing. Nobody is buying,’ he said. ‘I don’t even get phone calls anymore. … I think everyone’s wondering what’s going to happen next. Banks are being really tight right now and they’re not giving out loans.’”
It isn’t the banks’ fault that hardly anyone actually qualifies to buy a home these days. Conventional lending standards are a b**** in the face of the gimme-now entitlement sheeple.
Lisa,
Those types of comments from REIC Parasites (TM) always get me. My wife works for a Fortune 500 Co. making medical devices. They are asking people to do overtime on the fleeting few decent weekends we DO have in Oregon. Business is booming.
But in the REIC-based, musical houses economy, yes, things are bad. Now the name of the game is “I’m going to drag YOU all down with me”. No home sales=No economy.
I’m with you, D. I’m of the mind that certain regions and certain sectors of the economy are in recession. (I live in one of those regions, so those recession vibes — and plenty of evidence — are all around.)
But, as for the overall economy? I think it’s slowing down, but I’m not so sure if the whole ship is in Recession Sea.
Arizona Slim,
My office window has a perfect view of the main intersection here in our Marion County town. All day every day all I see is drywallers, plumbers, landscapers and electricians frantically scrambling! I think obviously to get to ’some’ job site to finish ’some’ house that NOBODY is going to buy!
So here in OR we’re just now seeing the “mad scramble” to finish projects before a long, dark, cold REIC winter sets in. Are they h-o-p-i-n-g this all leads to more work and the strom passes us by? Abso-freaking-lutely. How many of them are even aware their phone won’t be a’ ringin’ when they get back from their month-long hunting excursion?
Slim,
My son told us an interessting experience he had yesterday.
My son is in Heating and Air.
He get’s to the jobsite at about 7 a.m.
Non-speaking english crew were already on the jobsite, about 6-7 gentlemen. Drywalling inside.
He sees police officers at the job site as he drives up. Pulls the van into site, and sees his partner and the carpenter forman talking with officers.
Apparently, the carpenters keep a trailer at the site with expensive equipment inside, secured with a heavy duty lock (HAR). The lock was broken and empty of expensive tools that carpenters use for their trade.
A thumb print consisting of white plaster material was obtained, by the local sheriff’s office on the scene; lifted from said broken lock.
I was not there, but according to my son, the sheriff confisated green cards, and non-english speaking crew doing drywall were visably upset.
Found out today that the sheriff had to return all green cards (via my son) because they are not lawfully entitled to collect as subject by their juristiction.
OK. My point.
My son may or may not have a trade once the bustle stops. Building houses no one wants.
We advise and mentor him accordingly, and he is updating his education in his trade (for he loves HVAC).
Whew. We live in Wisconsin, and they are still “build ‘em to day come” mentality, in some areas.
People are still spending, although wages are not keeping pace.
I know there are pockets in America that are doing well, academically, technically, etc. The worker bees will make a wage, but will it be a living one?
Rant off!
Dang, your few sentences led to all of this?
Leigh
We just hired two engineers this week and many have left to go to work at startups. My son gets regular emails on internship opportunities at his university and is starting a job on campus on Monday. They have a career fair next week. I usually see career fairs in the spring semester so I guess companies are trying to get an early jump on graduates next year.
On the other hand, AIG lost some 12 or 15 billion in marketcap yesterday (it’s a DOW 30 I think). And MER lost about that much last week. And LEH - yuck. So capital is getting destroyed in various sectors.
In the markets, there’s been a battle between techs that were doing well and banks, homies, insurers, real estate, consumer, etc. that weren’t doing well. It appears that the techs caved two weeks ago. Quanta (they manufacture laptops for Dell, HP, Apple, etc.) is having some problems as they’ve been making more cheap laptops now. It could be that tech is getting dented by the housing bubble pop.
Always appreciate the New England attention in your articles.
The banks shouldn’t be giving out money right now! Prices still falling, defaults still up, who in their right mind would even think about lending more?
In a declining market banks need to require 20% down at a bare minimum. When things go back to normal I don’t think it’s irresponsible to let people put 10% or even 5% down…as long as they have good credit and something in the game. Zero down liar loans to people with 500 credit scores are something I don’t think we’ll ever see again in our lifetimes.
Andy, 5 or 10% is hardly an equity stake. It seems to me that 20% ought to be minimum skin. And with the average duration of employment, 3.2 years, who cares what the credit score is??? I assert that credit scores are meaningless since the entire middle section of the USA has been offshored.
Proof of past performance is no indication of future results. Eat it bankers.
I agree. Credit scores are pretty useless. 20% down will keep prices affordable and reward rinancially responsible individuals capable of saving a substantial amount of cash with meaningful homeownership. We also need to see the end of downpayment assistance programs, which skew the risk and allow otherwise unqualified individuals to enter the home market, falsly driving up prices. I see no problem with such organizations purchasing homes and giving them to people or cooperative building groups, but not programs designed to end in disaster.
That said, 20% down here in sunny southern CA probably means a further 50% decline even over current prices. Perhaps we are in Kansas
GH,
I agree, a lot of the US can now fit in Kansas. Yet the VA Loan program has been in place since the end of WWII without substantial difficulties and through several economic cycles.
Not that vets never default, it can and does happen. By and large though they are rare and getting qualified for a VA loan is no small undertaking. You really have to want a home and I think that is the major difference. It’s not like going to the drive-thru window at Wendy’s.
The VA loans work because the vets have to pay extra for the insurance that the VA provides. For my first house it was almost 2%. I was a reservist, so I paid more.
The VA loans also have a patriotic content. Most vets take their obligation to pay the loan seriously since your honor as a soldier is on the line. Most vetrs realize that their performance keeps the program available and cheap for the next guy.
climber,
You know that’s absolutely true. I knew guys over the years going through a divorce ( which IS pretty common in the service ) and the Sr. Master Sargent would make arrangements for some other guy transferring in to buy it or the troops would just take up a collection etc.
I should have ‘further’ agreed w/ GH in that he’s right on where credit scores are concerned! Like I said, my finance buddy at the car dealership said they have all kinds of people w/ 800 fico’s dropping off keys. So the gloves are off now.
A sense of honor towards your obligations is a good thing and should be part of the “social contract” in my opinion.
A former professor (at an art school) told me that people with fine arts degrees have better records of paying back studnet loans than doctors and lawyers.
Perhaps another clue about our society…
5 or 10% down is an exceptional amount of money when you consider the outlandish closing costs in Florida. I know it’s different everywhere, but here I’ll stick with my views.
I agree with you BA. If you are earning enough to be able to make the monthly payment plus taxes and insurance; if you have six months worth of savings just in case you lost your job, a decent FICO to show responsibility, I really don’t see that it matters how much you put down.
In the Bay Area, most people will never have 20% down. So are you saying houses shouldn’t sell then?
You mean 20% down at current prices. If people had to put 20% down, prices would fall until there were enough buyers to qualify.
Houses will sell, because somebody always has to sell. It’s just a matter of what price a buyer is willing and able to pay.
“You mean 20% down at current prices. If people had to put 20% down, prices would fall until there were enough buyers to qualify.”
BINGO
“And with the average duration of employment, 3.2 years”
Thus making the entire catalyst for the boom all that much more ridiculous. I guess in my own sick mind I just worked off the twisted assumption that boomers looking to retire would be flocking to “park models” and mobile home courts in droves.
I mean after all economically speaking wouldn’t that have made more sense? Let’s see, I’ll sell my outrageously overpriced POS where the majority of equity was market gains and buy an equally overpriced home in the Sunbelt on another 30 year mtg. Makes perfect sense.
Stupidity summed up nicely Dino. It goes to show everyone how deep the RE fantasy ran. Anyways, park model living is quite inexpensive and know quite a few people who’ve done that or have an RV lot in the sunbelt for the winter and drive their Class A north in the summer. Talk about freedom!!!
If I was a bank right now, I would ask for 30-50% down. Prices are still falling and I don’t want to get stuck with a house where the value is continously falling. How far down? I don’t know but 50% is safe unless they want to pay more of an interest premium.
“So I’m prequalifying buyers before I let them in the car, especially with gas prices like this”
Gulp. Pffftt. Huh?
Uh… Faster Pussycat! Save me! Anybody else remember when that was “the standard”? Even if gas was a nickel a gallon, why waste your time carting people around…?
Oh I… get it! During the boom, realtwhores simply drove people w/ a pulse around and then… figured out how to make them ‘appear’ qualified ( on paper ) later!? ( My bad )
I got exactly one ride with a real estate agent. And that was on the day that I found the Arizona Slim Ranch.
Other than that SUV ride, my house-hunting was done by Internet and by bicycling around Tucson.
“a decline in sales followed by drops in pricing”
We are acting this out in my business now. I’ve been reporting on a case where a woman wants to buy a mobile home and lot in PHX area, and where 80% of the asking price is more than I want to lend on such a property. Seller still asking top dollar. I believe I have finally persuaded the prospective borrower that she should consider rental alternatives until the sellers fall in line. Of course PHX has been falling for a long time, but the low-low end of the market has held up better, perhaps because real people can often buy for all cash. However, there is no reason for these prices to keep rising, and the volume in my universe has definitely slowed. Prices next.
“…and the volume in my universe has definitely slowed.”
Welcome to my world. Palm Beach County in a business that relies pretty heavily but not entirely on real estate actually selling…that’s tough!
‘I threw everything I had into it and it’s put me on the brink of bankruptcy,’ Larkin said in a phone interview with The Sentinel this week. ‘I’m a homebuilder and designer and basically that business is toast.’”
You built your upscale money maker over-priced POS and …nobody CAME ?
Instead of complaining…ask me why I’m laughing my ass off at you Jimbo
“‘If there are five or six similar homes in a neighborhood, it’s best price and best value that gets the sale,’ said Clay Mitman, president of Easton-based Prudential Paul Ford Realtors.”
Boy, that’s some real insight there from a REALTOR(R)… if there are five or six identical things, buyers will shop on price! I definitely feel my 6% was worth it for that sage advice.
Meanwhile, Paul C. Bishop is predicting that pent-up demand is right around the corner. The way I’ve been hearing about this pent-up demand implies Niagara Falls is going to boost anyday here. The sad truth is that there are actually more homes than families in America. There is no pent-up demand. Just plenty of oversupply that will take years to burn down, rot, get hit by hurricanes, etc.
off topic but housing related;
lets all start an early run on WaMu by talking about the possible/probable FED takeover tonight.
being a friday, WaMu, well known as a prime scuzz player in the mortgage game, is a prime candidate for the usual weekend-behind-the-scenes-all-is-well-and-aint-nothin-you-hoi-poloi-can-do-anyway 3-card monte takeover shuffle the FEDs pull every weekend.
heck, might as well have some fun with it. if you had half a brain cell then you been payin attn to the mess & wont get caught in financial straights. however, if you didnt bother to change the channel from American Idle then it sucks to be you & you deserve the windstorm happening whilst you kept yer head in the ostrich hole!
done. for now.
Watch out, Shelia Blair may be monitoring your post
aqius,
LOL! Put me down for a $20!
I think Glenn Beck said as much last night. Probably more out of frustration than anything?
Put me down for what I got in my pocketses!
Let’s see:
–27 bucks, about 3 bucks of it in pennies.
–Packet of ‘Extra’ gum from the Dollar Tree, ‘Island Cooler’ flavor. It smells and tastes like peach schnapps. (Ahhh. The nostalgia of college days.)
–A scruffle of lint.
–3 Frito Lay sunflower seeds.
–Somebody’s phone number scribbled in hideous writing on a coaster from my favorite dive bar in town. A person who writes that badly is probably a serial killer and should not be called. Unless it’s ME writing that bad, in which case it’s just fine.
–A pretty rock.
–The One True Ring of Power.
Jeeze, no wonder my jacket’s so heavy lately. But anyway, Aqius, put all that valuable stuff down for me, okay?
What about the tiara?
I’ve kind of been assuming Lehman Brothers will get bailed out this weekend. Paulson just insisted he won’t bail them out, so I fully expected that he actually will during this rainy weekend when we’re all inside watching football on TV.
I’m really kinda bummed about the whole wamu thing. They gave me my first loan (in 01 where I did still have to bring in a down payment and show all my tax slips), I refinanced with them at a nice 30 yr fixed at 5.25 without a prepayment penalty 4-5 yrs ago, the banking service has always been great at the local place by me, the interest rates have always been decent…
The idjits at the top who got greedy and went along with the catastrophic changes in loan underwriting really messed up a good thing. And really, really helped to mess up the Pacific Coast prices.
How stupid and short-sighted. Another company the Naive Steve W had faith in that’s going bye-bye.
Steve,
Don’t be so hard on yourself! I once had an auto loan thru Wamu and my wife, yes, totalled it out before the 1st payment! She was fine but the “deficiency balance” was something they pursued us relentlessly on!
The cancelled warranty, the extended warranty, any kind of rebate was to be fwd’d to them post haste! They set up a payment plan and I paid off the bal. a little at a time. That was when they were run like a BANK! Somewhere along the road they lost their way and became a mtg. company?
I’m betting they’ll have to get an appt. to fail though and LEH is more important right now?
Oh, no worries, I’m not losing sleep over my naivete
Their liabilities are still ridiculous, but they still do have a big deposit base so I still wonder if they’d be attractive to some bank that has a bit more dough. I guess Chase is still in negotiations. The thing that’s more concerning is that deal they made earlier this year–can’t remember who pumped the cash in but I think they are supposed to be guaranteed a stock price in the 7s.
But the thing that would be more concerning, overall, is that if they do go under the FDIC liability would be ginormous. I don’t know what other tricks the gov’t has up their sleeve to help, but I have to imagine they’d try something to make it worthwhile for JPMorgan to pick them up.
Historic times, my friends.
Brother, can you spare a down payment?
the new depression era sign o’ times;
street corner vendors with a sign offering granite countertops, “only” $50 each. (instead of apples/pencils/etc)
** psst, hey buddy, I can get you a deal on surplus stainless steel appliances. barely used. good stuff. Viking. Subzero.
whattya say, pal . . . ?!? ***
Hold on to your hat. People are losing jobs now. Life will get tougher. Whoever has cash makes the rule.
A Tale of Two Pittsburghs:
Pittsburgh has had its own housing bubble that has gone unnoticed by aggregate statistics. As the city has lost population, some neighborhoods have emptied out and declined while others (most notably the East End, and south side) have boomed, with prices doubling or more in some areas in the past five years. That was mainly due to the easy credit and speculation, but it got lost in the aggregate numbers due to price drops in other Pittsburgh neighborhoods over the past few years. The bubbling neighborhoods and the empty abandoned neighborhoods have more or less cancelled each other out in terms of price changes, thereby making Pittsburgh look like its been a stable, very gradually increasing market.
Cleveland is the same way. The new developments have the usual crazy $300k pricing for a cheaply built 4br/2ba new house 30 miles from jobs (but, hey, it does have granite countertops).
It doesn’t show up because there are homes literally being sold for $1, $100, or $1,000 elsewhere in Cleveland. They’re so completely worthless the city (who owns some of them now after attempting to seize them to pay back taxes) just wants to get them off their books so someone else is liable to keep the windows boarded up, pay to fix busted water lines, etc.
I think Detroit is the same way, but I’m less familiar with the pricing in the fancy suburbs there.
Very, very interesting to know! Why haven’t we heard about it until now? Why no MSM coverage guys?
Anyone who would care to research could see declining populations in several areas. If a population is declining, it follows that home prices should decline as well, not bubble up.
But many areas with declining or stagnant population saw huge price increases. That is a sure sign of rampant speculation.
SMF,
Agreed, but any time someone has mentioned the HB over the last several years the first words out of your mouth aren’t usually Pittsburgh and Cleveland? I suppose in ways these things were allowed to fester out of the watchful eye of ever vigilant MSM? LOL!
Thank you for the truth telling Bungalow and appalachia. The idea that some areas aren’t bubbled is pervasive. It’s a REscum and RE dreamers favorite line of denial.
“Those who bought at the peak about two years ago and now want to sell face trouble, Molchany said. But most homeowners are not in that situation. ‘People who bought their home seven years ago, they’re still sitting pretty,’ he said.”
Is that supposed to be an incentive to buy a house now? I don’t understand the logic. So what if a house bought before the bubble has increased in value. It won’t do any good if you buy a house now or 2 years ago and it’s still worth less in 2013!
All this spin about real estate prices is so silly . The prices were fake because of a speculation mania and fraudulent and faulty lending and appraisals . It doesn’t matter what prior prices were under the peak conditions . The model for selling risky low down loan paper ,as if it was not risky, is a broken model . That model that was so destructive for the secondary market was a sham ,but it was necessary for the Ponzi -scheme that made so many of the game-players money for a while .
The government is the only party that would make loans when no normal investor would take the risk without a hefty down payment now,
until at least the market has stabilized . Investors might invest if the loan losses are backed by the government ,or insured .
I don’t know how the powers intend to re-spike the punch-bowl ,but based on the current status of people not having down payments or being able to qualify ,it’s looks grim that demand can take up the pending supply . Even if the supply of homes was somehow eliminated ,the demand for homes would not go back to peak levels .
So ,I think this nation has to get away from real estate being the big industry of choice to put all our eggs in that basket . The fake equity with all the spending it created was good for all business during the boom ,but money has to be directed toward job creation in a different direction . The powers are stuck on real estate ,and people are stuck in real estate .
“Even if the supply of homes was somehow eliminated..”
( Even if the supply of homes was..? )
Wow. That’s a scary thought. And very accurate. Also a relief. This way the next time some shill approaches you w/ their typical and defective logic, just hit them with that and prepare to do your little dance around the ring as they hit the canvas out cold!
And the winner by a Knock-Out..!
Bam-bam Bubble Boy!
“Those who bought at the peak about two years ago and now want to sell face trouble, Molchany said. But most homeowners are not in that situation. ‘People who bought their home seven years ago, they’re still sitting pretty,’ he said.”
Many of those people who bought seven years ago have REFI’d or HELOC’d thinking they won the lottery, and eventually most of these morons will be escorted out by the sheriff after selling off any valuables (401ks) trying to save the McMansion after the principal starts amortizing after the Option ARM recasts.
I see this train wreck having another 3 years to run; 2 million REOs in 2008, 3 million REOs each year in 2009, 2010, 2 million more in 2011.
Got diversified assets?
“Some of the condos have never been lived in because they couldn’t be sold in the current market. Others were simply abandoned. One is the victim of ’subprime exposure.’”
There was no price at which they could be sold? “Subprime exposure” - previously occupied by a Realtor?
OT but it’s eerily quiet here in Houston. I an hunkering down with the family. Enjoying internet access while I can.
Weather is a Slight breeze but with ever greyer skies.
The picture doesn’t look good for Galveston. Already it is getting flooded with sea coming over the wall. There are a ton of McBeach houses in Galveston area there that will likely be firewood tomorrow.
Stay safe.
September 1900: A hurricane which became to be known as Isaac’s Storm struck Galveston, Texas. The death toll was never measured precisely, but it is estimated to be as high as 10,000.
Yes, be careful, HoustonStan. I enjoy your posts very much.
Wasn’t there some epic storm that hit Galveston back at the turn of last century? I recall seeing a special on it called “Jacob’s Storm” on Discovery. Good to hear most everyone other than reporters has already left.
Olympia - thanks. If I get sent to the great blog in the sky, I’ll come back and haunt this site.
Now, Where’s that white sheet. I’ll be the ghost of Housing bubble present.
Stan.
>> ‘People who bought their home seven years ago, they’re still sitting pretty,’ he said.”
Unless you just lost your job in the Financing States of Finarica, and you have to move in order to take that new job in another city, which means that you have to sell your ho…–d’ oh!
I’ve seen those McBeachhouses “Houstonstan” and yeah, they’re toast.
I think something else that needs to be considered are wages. Median and average incomes are not as high as “official” reports say and many people are either receiving below cost of living wage raises or NO raises. This has been the case for many years and probably the biggest motivation for that group to buy a house, thinking they would have SOME kind of investment and hedge against their ever declining real income.
Presently, anyone who could buy a house has done so and is the DIRECT cause of the foreclosures. Not to leave out the greedy and stupid paper industry that facilitated it.
In other words, the bottom of the barrel has been scraped and unless real wages rise in a real manner, there won’t be any REAL estate for that economic class in the forseable future.
How many millions of buyers does that take out of the market?
I noticed that the smiley-face balloons, which were attached to the street sign below my house a couple of weeks ago to advertise an open house above where I live, have lost all of their air and are hanging limply from the sign. The smiley faces have turned into frowny-faces.
“I noticed that the smiley-face balloons, which were attached to the street sign below my house a couple of weeks ago to advertise an open house above where I live, have lost all of their air and are hanging limply from the sign. The smiley faces have turned into frowny-faces.”
Aww. Does this mean the cookies are gone, too, and the milk is sour? Shucks.
Real estate can be such a B E A R.
As Petulant Clark would sing, “Frown Town”!
“‘I think the buyers are there. They just don’t think it’s the right time to buy,’ he said. ‘They’re nervous. It’s consumer confidence.’”
We’re not “buyers”. We are “waiters”.
I have no interest in buying a home right now or anytime soon. Perhaps they are referring to someone else
Consumer confidence! More like do I have a job tomorrow confidence.