Built On A Fallacy
The Pittsburg Post Gazette reports from Pennsylvania. “Howard Hanna III has never seen a real estate market like this — and he has been keeping an eye on real estate for the past 40 years. Falling interest rates and generally low unemployment typically prompt home owners to expand their homes or trade up. But Mr. Hanna, the CEO of Howard Hanna Real Estate, said things are different this time. ‘I’ve never seen so many houses for sale.’”
The Morning Call from Pennsylvania. “At first glance, The Hills at Lockridge development in Lower Macungie Township seems a snapshot of the American Dream. But anxiety lurks behind the panel doors with polished brass knobs. ‘For sale’ signs are prominent.”
“Grass is knee-high in front of some vacant houses lingering on the market, including one with a sheriff’s sale notice taped to a window. Worst of all, many of the residents bought the homes new and paid premium prices in 2005 and 2006 when real estate was peaking. ‘You wake up one morning and think ‘Oh Lord, look at this mess,’ said Anthonis Lewis, who moved to the neighborhood in 2005. ‘What did I get myself into?”’
“Jon Dech purchased his home three years ago, when buying a home seemed a no-lose proposition. ‘When we put our deposit down in the summer of 2005, they had waiting lists of people picking out the end lots and the cul-de-sacs,’ said Dech, who worked in the mortgage industry for 20 years and recently switched careers because of the turmoil. ‘There was a lot of competition. Now it’s pretty much the opposite.’”
“Craig McBean moved from Queens, N.Y., three years ago, seeking a better neighborhood and schools for his four children. He’s seen some homes empty out and no one move in, and he fears a ghost town could develop if the economy continues to erode. ‘We tried to refinance to get a better rate earlier this year and found out we lost $20,000 to $30,000 on the value of our home,’ McBean said. ‘That was a big surprise.’”
“Loren Keim, president of Century 21 Keim Realtors in Allentown, said new four-bedroom, 21/2-bath houses are available in some Upper Macungie Township subdivisions for just under $300,000, and the builders are offering $25,000 cash back to entice buyers. ‘If you happen to have bought a similar home for $315,000 and you put in $5,000 in upgrades, effectively you’re at a $45,000 disadvantage against that new construction,’ Keim said. ‘It’s going to make it impossible for you to sell.”’
The Times Herald Record from New York. “It may seem a distant memory, but just a few years ago, Orange County was in the throes of a real estate bender, as new homes spread across once-rural landscapes and housing prices shot through the roof. Then the national real estate bubble burst and prices began to drop.”
“Building permits for single-family homes dropped to 861 in 2007, about half the high-water mark reached in 2002. Meanwhile, the number of single-family homes sold through August this year is down nearly 30 percent from the same period a year ago. The median sale price was $300,000, 6.3 percent less than in the first eight months of 2007, according to the Orange County Association of Realtors.”
“Today, with homes sales deep in the doldrums, the question is whether the proposed $700 billion bailout of Wall Street for its subprime loan fiasco will revive that trade, and when it might happen. The answer, from local economists and real estate professionals, is unlikely to trigger the popping of champagne corks.”
“It probably won’t rebound to where it was a few years ago, predicted John Finnigan, a former Morgan Stanley employee who lives in Washingtonville and teaches economics at Marist College. ‘Where the numbers were before was built on a fallacy,’ he said.”
The Boston Herald from Massachusetts. “As chairman of the House Financial Services panel, Rep. Barney Frank has been working frantically to get President Bush’s $700 billion bailout of Wall Street passed - a controversial position that has some critics questioning why the powerful Massachusetts Democrat didn’t do more before the crisis spun out of control.”
“‘You’ve got Barney Frank and George Bush leading the charge,’ said state Sen. Robert Hedlund. ‘Here’s a guy whose presidency has been a debacle, and a guy (Frank) who’s been resisting reforms.’”
“Several media outlets noted that Frank, as a ranking member of the committee he now chairs, told the New York Times in 2003, ‘These two entities Fannie Mae and Freddie Mac are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.’”
“But Frank told the Herald yesterday that ‘in 2003, nobody that I knew of foresaw the crisis of subprime lending, and that is what caused this problem.’”
“State Sen. Richard Tisei of Wakefield, who owns a real estate mortgage firm, said there is plenty of blame to go around, but slammed Frank for claiming the crisis came as a surprise. ‘Not only has Frank, but numerous members of Congress have protected Fannie Mae and Freddie Mac for a long time,’ Tisei said.”
The Connecticut Post. “Chris Dodd took control of the Senate Banking Committee in January 2007. Dodd pledged to conduct oversight of the agencies that are supposed to ensure that financial institutions and markets operate in a safe, sound, transparent and efficient manner. Although the committee has held more than 55 hearings, nudged the financial industry to clean up its subprime mess and passed laws aimed at containing the crisis, it has fallen short of curbing the problem.”
“Critics have blamed Dodd for aiding and abetting the crisis as chairman of the committee. In particular, they have raised concerns about his ties to the financial services industry as well as his failed bid for the presidency in 2008. Since 1989, Dodd has raised $43 million for his federal campaigns, including $13.2 million from the financial services sector, according to the Center for Responsive Politics.”
“Among his top contributors are executives of Wall Street giants now in trouble: Bear Stearns $351,950; American International Group $281,438; Goldman Sachs $264,116; Morgan Stanley $209,725; JPMorgan Chase $180,173 and Lehman Brothers $160,400, according to the Center. Dodd has also been sharply criticized for receiving special treatment from Countrywide Financial Corp. when he refinanced his mortgages in 2003.”
“Subprime lending in the U.S. rose from $35 billion annually in 1994 to $625 billion in 2005.”
“Nick Perna, an economist with Webster Bank in Connecticut, said that Congress could have pressured the Federal Reserve to increase oversight of exotic securities, reined in Fannie Mae and Freddie Mac, and done more to protect consumers from predatory lending. But, nobody wants to rain on a parade.”
“‘When housing prices are going up 15 percent we all look smart and nobody wants to do anything to upset that,’ he said.”
The Hartford Courant from Connecticut. “It’s known as the low-ball offer. It can be insulting and a waste of time. But — sometimes — it can work. That’s the experience of real estate agent Tom Abbate, the listing agent of a house for sale in Portland, with an asking price of about $245,000. Soon after it was listed, a potential buyer submitted an offer for $190,000.”
“‘We’re talking more than $50,000 below the asking price. It was ridiculous,’ said Abbate. ‘But I tell people never be insulted by a low offer, because it’s more insulting not to get any offer at all. I’d prefer to get a low offer and try to work with it.’”
“‘What I’m seeing, in the $200,000 to $275,000 price range, is people think they can knock off $20,000 to $25,000 right from the start because there’s a surplus of inventory,’ Abbate said. “People hear the bad news about the market and they think they own the world. And in some respects they do, in certain markets.’”
“Charlie Kaylor, broker in Simsbury, said the timing of a low offer is critical, especially if the seller needs to move quickly. ‘If a house is listed for $300,000, you might get an offer for $260,000 or $270,000. That’s possible,’ he said. ‘But some people consider a low-ball offer offering $190,000, and that’s just silly. Their expectations are not reality.’”
“Low-ball offers can work in certain cases if you approach them right, says Jessica Berganski, an agent in Newington. ‘The perception out there is not only that buyers think they can make a low-ball offer, but sellers are pretty much expecting it,’ she said. ‘It definitely can be insulting, but it all depends on how it is presented.’”
“Berganski listed her own home for sale last year, and said she was upset by an offer $40,000 less than the asking price. Not only was the offer low, she said, but the contract was incomplete.”
“‘Having an offer that is not well put together, when all the pieces aren’t in place, my initial reaction is always, is this a serious offer?’ she said. ‘Home sellers are willing to consider an offer no matter what price, as long as it is a serious offer.’”
The New York Times. “Finally, the McMansion may have reached the limits of its popularity in New Jersey, where it has seemed to rule the residential market with unshakable authority for many years. A new brick colonial in North Caldwell has been languishing on the market for 214 days, despite a price reduction of $200,000, to $1.49 million.”
‘In Livingston, a six-bedroom behemoth built in 2000 and outfitted with a chef’s kitchen, family-room fireplace, whirlpool baths, and so on — and so on — has spent 168 days on the market, and is still there after a price cut of $150,000, to $1.649 million. In Llewellyn Park, a gated community in West Orange, a developer’s plan for a sprawling six-bedroom colonial with six peaks and gables across the facade has not garnered a purchaser in 476 days on the market — although the price for the custom-built abode, to be set on five acres, has been reduced to $4.25 million from $4.5 million.”
“‘McMansions?’ said Joanne Harkins of the New Jersey Builders Association. ‘In a nutshell, people aren’t buying them — certainly not the way they did before. And our members are going to have to evaluate whether there is still a market for this type of product.’”
The Star Ledger from New Jersey. “The meltdown on Wall Street continued to hammer world markets last week. For answers, The Star-Ledger surveyed business and economic experts with a range of backgrounds and perspectives.”
“Developer Emanuel Stern President of Hartz Mountain Industries in Secaucus: ‘In 2003, I began using the phrase ‘these are the good old days of real estate finance,’ to describe the low equity requirements and low interest rates available to real estate developers. We saw rates and spreads narrow to the point where real estate was being treated like a government-issued bonds and equity requirements for even speculative deals fell as low as 5 percent. ‘”
“‘The surprise about this crash is how long the unfettered growth and prosperity extended, and the fear is that we will have an equally long and dramatic downturn. Everyone wants to know, ‘When’s the bottom?’ I think a better question is ‘What’s different about this time?’”
“Most important is that an era of easy capital/credit and leverage is over. The unwinding of that leverage and associated economic pain is not over and will continue for some time to come.”
“Realtor Roy Scott, Owner of Re/Max Village Square Realty, with offices in Upper Montclair, Short Hills, Livingston, South Orange and Maplewood: ‘Unfortunately, the brokers were like fawns because the mortgage industry made it far too simple for too long for people to get mortgages. I would guess 20 percent to 30 percent of buyers should never have qualified and should have not gotten mortgages.’”
“‘As a result, we’re suffering for that, the entire real estate industry. Hopefully, Congress will put some new regulations in place. I knew sooner or later the system was going to break.’”
“‘People were doing some ridiculous things with mortgages. I never pushed a buyer to go beyond their means, but many people did. They got excited and just reached too far. I’ve seen people buy for $300,000 to $400,000 beyond the asking price. People just went crazy because dollars were so cheap and easy to get. They just didn’t care.’”
“……Then the national real estate bubble burst and prices began to drop.”
But, but I thought all real estate was local?
national is so last season. global would be the new black, but it is unfortunately the new red
(in more than one way, perhaps, with this new perverse strain of socialized banking).
Thanks for posting that info about Dodd and Frank. I mentioned a few days ago how deeply involved Dodd was in this mess when folks were wondering why he was so angry about the delays, but I didn’t post a link. Of course, there are many more folks involved that just these two tools.
As far as Pittsburgh goes, yes, there are TONS of houses for sale. Pittsburgh seems to have been in a constant recession since 1980, so things are still relatively affordable. Pittsburgh is a time machine to the 1980’s. Mullets, AC/DC and big haired chicks in Camaros are not uncommon. I freaking love it!
“As far as Pittsburgh goes, yes, there are TONS of houses for sale. Pittsburgh seems to have been in a constant recession since 1980, so things are still relatively affordable. Pittsburgh is a time machine to the 1980’s. Mullets, AC/DC and big haired chicks in Camaros are not uncommon. I freaking love it!”
Oh my word. Add a tattoo and they’ll think they’re in the 21st century.
That backwardness — and the rotten local job market — inspired me to leave Pittsburgh in the late 1980s.
“Mullets, AC/DC and big haired chicks in Camaros”
Why would that seem backward in the 80s?
There’s a guy in my neighborhood (abuout 32 miles SW of Pittsburgh) who has had his father’s old place up for sale for the past year or so. He has an Open House every weekend but it hasn’t sold yet. It’s a 2BR/2Bath and he wants 219K. In the meantime he built a newer place for his father that sits empty because his father was recently moved to a “retirement” home.
Two houses in my neighborhood have sold in the past six months. One was sold to the mother and father of the family that lives next door to them. It sold for ~220K. It has a large “extra” lot and the total acreage is about 2.5.
The other sold for 159K and sits on 1.25 acres (about the same as the lot that Mr. 219K’s house sits on). This property abuts a small parcel that has various gas pipeline monitoring and control devices. The lady sold her farm in Ligonier and moved into this house because her husband was sick and she wanted him to be closer to his family. Her husband died two days after closing.
There are two other houses for sale in my neighborhood and on my drive to work (10 miles) I pass at least 6 others.
what a feeling”
flash dance
Oh, does that one bring back the memories. I was living in Pittsburgh when “Flashdance” was released. The song became an instant hit.
I think it summed up the yearnings of a lot of Pittsburghers. They were hoping for a return to the city’s steel town glory days, which, by 1983, were already gone and weren’t coming back. They were also looking for any sort of uplift from the gloom around them.
Yeah, I know. It was just a movie with a catchy theme song. But, during that time, it meant a lot more.
80’s pop… blech. What a nightmare. Girls running around with spider-headed hair and formerly normal guys wearing pink polo shirts with collar turned up. It was freakish then as it is now.
“Yeah, I know. It was just a movie with a catchy theme song. But, during that time, it meant a lot more.”
Wasn’t the moral of that story “be hot”? If you are a poor, lowly welder, be hot and you will have the option to get together with the boss. If you have no ballet training, be hot and perform a stripper routine to gain entrance to ballet school. Since ballet is all about making up your own rules and being an individual.
“They were also looking for any sort of uplift from the gloom around them.”
Sorry, I was just teasing. I also had fond memories, but I recently watched Flashdance again on an 80s movie bender, and I was like, “what is this movie <i? about ?
Another ‘80 WTH movie: “Risky Business” Watch it again. It is so weird, with the egg and the weird ending and the weird…story.
I hate to put on my cynical hat, but……..
“Hot” people, of either gender, usually do just fine.
Watching Flashdance in Pittsburgh was an experience, let me tell you. Why? Because the movie made it seem like the protagonist could just zip from this part of town over here to that part way over there. And she was on a bicycle.
Speaking as someone who got around by bike in that city, Pittsburgh is not for the faint of heart. In addition to having clueless motorists, it has some serious hills. I lived ’round the corner with one that had a 22% grade. That was a toughie to walk up, let alone ride.
Desperation is breeding strange bedfellows…
“‘You’ve got Barney Frank and George Bush leading the charge,’ said state Sen. Robert Hedlund. ‘Here’s a guy whose presidency has been a debacle, and a guy (Frank) who’s been resisting reforms.’”
Desperation is breeding strange bedfellows…
“‘You’ve got Barney Frank and George Bush leading the charge,’….
BUSH: Roll over, Barn, I want to take you from behind.
FRANK: Is there any other way?
Luv,
Jen
Gosh, I bet you scrunched your brow for hours thinking up that feeble bit of homophobic humor…
BUSH: Roll over, Pelosi, I want to take you from behind.
PELOSI: Is there any other way?
Would that be considered Heterophobic?
BUSH, FRANK, PELOSI: Roll over, America, I want to take you from behind.
Delusional. You have a house for sale for $1.5 mil that’s worth half and dropping a hundred grand makes a difference? Lunacy!
In the 1st time buyers area, I have a bud in Boston who’s trying to sell his condo for $340k. It’s a 1st time buyer’s type of condo. Anyway, his realtor said banks are asking for 20% down payment. That’s $68k in after tax savings. Only a handful of people under 28 have that kind of cash. And if they do, they are probably looking for better condos than in the 340k range.
This bailout still leaves the 1st time buyers out of the game. it’s not going to do jack squat.
“…trying to sell his condo for $340k. It’s a 1st time buyer’s type of condo…”
Good point! What the heck is so “first time” about $340k?
Condoze go boom now - nationwide.
Those with cash today probably have zero interest in 95% of the condoze that went up/converted in this boom. It was a niche market and it will become one again.
As the financial stocks go, so goes North Jersey.
Was Chris Dodd, chairman of the Senate banking committee, influenced by all those big campaign donations and other perks by the Wall Street entities and the big mortgage lenders? Heck no. After all, he’s not one of those wascally wepublicans.
As a Democrat I will accept that Dodd was too close to the Financial Industry and should have been tougher about regulation and reigning them in.
But who has actually been in charge of this for the last 8 years?
Will you admit that George Bush and the Republican Congress has some culpability in this for it’s anti-regulation “free-market” policy.
You’re extending the olive branch expecting truth without the typical black and white, light and dark, absolutist response. You won’t get it.
To make these threads more palatable for me, from now on Republicans and Democrats will now be referred to as such:
Republicans=Hell’s Angels
Democrats=Mongols
Again we seem to be missing the point? After having been “in the throes of a real estate bender” ( loved that one ) NAR, NAHB, the Mort. Broker’s Assoc. has decided it’s a far better thing to sit on the sidelines and watch WS take the hit.
I don’t recall seeing Coldwell Banker, Prudential or any other major 6%’ers going under? They simply told un-qualified buyers that 80% of your pre-tax income is a ‘normal’ payment, collected their 6% plus kick backs from the MB’s and shipped the whole mess down stream.
How are any of us supposed to get behind the MOAB ( Mother Of All Bailouts ) without ANY compensation from the groups that benefitted the most?
Yes, but I like to say, Bush couldn’t have done it without the Democrats. “Impeachment is off the table”. Thanks a pantload, Pelosi.
The Dems are worse off than the Republicans. I know it doesn’t look that way, but Dems are sort of like the butt lickers that line up behind bullies when people are getting whacked. They’re like the person who smiles and simpers to your face and has the knife out behind their back. I know the Reps are going to screw people. It’s out in the open and they make no bones about it. Dems are wolves masquerading in sheep’s clothing. Although to be fair, they do like to use copious amounts of vaseline before administering a screwing.
palmetto,
True, and I’m -hardly- trying to absolve anyone, of anything. At this point I’m for whichever party at least says… they are for holding the REIC accountable.
Paulsen took pains last week in testimony to point out that neither the Fed nor the Treasury originated these cr@p loans! Yet here they are being dumped on their doorstep like a lit bag o’ cr@p Halloween prank.
These loans were ALL originated on a l-o-c-a-l level, under the guidance and authority of STATE regulators! ( Please to note the ‘bluish’ tone of many of the states in the most peril? )
State regulators like NY, MA, NJ and Calif. were stopped by the Bush Administration to reign in predatory lending.
edhopper,
I keep hearing that but AFAIK no one has been able to cite specifics. If you can provide anything in writing that came down specifically from the WH I’d be only too happy to read it.
Near as I can tell the smoking gun is the fees and commissions generated by circumventing state regulators that seem to have been largely oblivious to people with $28,000 household incomes buying $750,000 homes?
It’s all incredible to me. Teachers -refusing- to honor “No Child Left Behind”, “Bush isn’t MY President!” bumper sticker menatality and 8 consecutive years of legions of people attempting to set up a parallel ( yet seperate ) America and somehow when it came to rubber stamping loans for unqualified buyers all of a sudden everybody is in lock step “behind” the President 100%?
I’m sorry, it’s all just a bit much for me to buy into.
a street near me has
NO BAMA painted on it
And these go back to 2005, so it’s not hindsight.
http://www.pianet.com/IssuesOfFocus/HotIssues/modernization/10-18-05-3.htm
http://www.consumeraffairs.com/news04/2005/occ_spitzer2.html
RE: Will you admit that George Bush and the Republican Congress has some culpability in this for it’s anti-regulation “free-market” policy.
Go read Jeff Jacoby’s Beantown Glob editorial on the originations of the debacle posted on this thread.
Who cares about clueless George. When turncoat Sen Jeffers turned independent on us in ‘04 it gave the majority to the Dems and little Tommy Daschle. McCain couldn’t get his regulatory bill out of committee.That would have solved alot of things. Plus ‘ol back door Barney and Raines were still resisting calls for any control of Freddie or Fannie. ACORN and other leftys were running amuck.
I’m sorry that I’m not posting this in Bits Buckets, but it seems to belong in this sub-thread, so here it goes:
Regarding whose fault this is (blue, red or neither). The Journal has 2 interviews which you may want to see. Blame isn’t laid at the feet if either party.
The first, with Andrew J. Bacevich:
>>After 23 years in the army, this West Point graduate has been teaching international relations and history at Boston University.
He talks about the transfer from an empire of production to consumption incredibly well, laying blame with both parties, but ultimately the American people. Quote from him on presidency
(Beginning with the election of John F. Kennedy in 1960) “the occupant of the White House has become a combination of demigod, father figure and, inevitably, the betrayer of inflated hopes. Pope. Pop star. Scold. Scapegoat. Crisis manager. Commander in Chief. Agenda settler. Moral philosopher. Interpreter of the nation’s charisma. Object of veneration. And the butt of jokes. All rolled into one.”
In other words, it doesn’t matter who you vote for anymore, it matters what you begin demanding from your government especially with respect to congress (is my interpretation).
http://www.pbs.org/moyers/journal/09262008/profile.html
Second is with Kevin Phillips. New Book “Bad Money”
http://www.pbs.org/moyers/journal/09192008/profile.html
(note: I just re-read my post, and I want to add that I do believe everyone should vote, it’s the job of a citizen. please everyone, vote, and if you don’t like the main options write someone in - in the absence of votes, special interests have even more room to rush in).
RE: Barney Frank…
This one’s for you, Oxide.
Sorry for the delay in getting back.
http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/09/28/franks_fingerprints_are_all_over_the_financial_fiasco/#
BS rightwing talking points.
Carter!?! Give me a break. Minority lending programs work for 30 years and NOW they cause a housing bubble and credit crisis.
Disregard Phil Gramm, the elimination of Glass/Steigel and the absence of regulation under Bush.
Carter is the only president who ever said: you can’t have everything you want, when you want it, and he was fired by America. Every president since then knows that telling people to stop consuming like drunken pirates is political suicide and they patched the divide with a greater and greater national debt. I think that plan of turning down the thermostat and putting on a sweater is looking better all the time.
RE: Disregard Phil Gramm, the elimination of Glass/Steigel and the absence of regulation under Bush.
I know, I know…all those legions who were too fat, lazy, or disengaged from the physical survival process to walk outta NO to save themselves before and after Katrina…and the thousands of appraiser’s who rubber stamped values dictated to them by mortgage originators, despite specific federal Appraisal Standard Board mandates contained in the appraiser’s signed Statement of Limiting Conditions.
Yeah, yeah…all W’s fault.
hd74man,
Thanks for pointing that out. The evil seed here was at the inception point, the origination process. That’s why as early as Spring of last year the street wouldn’t TOUCH “broker originated” loans! Why!? They weren’t worth the paper they were written on and were pure… fabrications solely designed to generate commissions etc.
When the rationalizing runs along the lines of “If “I” didn’t write the loan; the guy the street ‘would’ have!” you’ve got a lot of issues at the local level. But it’s just too easy…
CRA only applied to banks and thrifts, that’s NOT where the problem began. Also, a law that prevents redlining had nothing to do with income qualifications. It was never illegal to discriminate against a buyer who wasn’t qualified financially.
I’m amused at the great lengths some will go to deflect blame. This entire debacle was the fault of the Republicans who led the charge for deregulation and the Democratic lapdogs who let them get away with it.
Some 30 year old law meant to prevent racial discrimination had nothing to do with it. There are plenty of white suburban types who were stupid enough to buy homes they couldn’t afford. And there were stupid banks that lent them the money.
cynicalgirl,
Couldn’t have said it better myself. With so much of the foreclosed inventory having been second/investment homes I really think the blame game is grossly misguided.
The majority of the problem resides in the fact that it was SO lucrative to originate loans, people invented ways to make them “fly”. Tinkering with DTI and income until it somehow fit the mold. I just find it extremely difficult to believe that with so many people dragging their feet, kicking and screaming every step of the way that in this (1) regard they were amazingly and blindly compliant?
Is this the child that gorges himself on sweets, has a tummy ache and can’t eat his dinner saying “someone really should keep a closer eye on me!” ?
“Is this the child that gorges himself on sweets, has a tummy ache and can’t eat his dinner saying “someone really should keep a closer eye on me!” ?
yes. unfortunately the candy seller and the child both want the game to keep going. the child prefers to buy a few tummy-soothing tablets and keep going. How do you convince a 5 year old to vote for a broccoli dinner?* if either candidate runs a campaign as the mean daddy, they won’t get elected. most still want the weekend daddy.
* when I worked in customer service, my boss told me to treat all customers as if they were 5. It really works. Spend a day treating everyone you meet like they’re 5, it makes you popular!
ella,
LOL! Your boss really said that? ( Yes, I believe it )
Well exactly, to the point to where schools had to take the Pepsi and candy vending machines out of the hallways when 75% of the school was obese!
This really is about getting back to basics. Unfortunately, “the basics” aren’t popular with either party and they’re certainly not popular with voters? That’s all I keep hearing, “I want want my housing BOOM baaaack!” Well sorry, oh and get to bed.
“LOL! Your boss really said that? ( Yes, I believe it )”
She really did. And then she demonstrated it on a middle-aged lady. I thought people would bristle, but they loved it like a cat loves sunshine. It still worries me.
We are so far behind the rest of the country in NYC it’s ridiculous. California and Florida are in the fifth inning, but the national anthem just ended here.
No one is talking about the elephant in the room.
I agree WT. Cut and paste below is full evidence of the fact that NYC area is still neck deep in everything REalTarded.
——————————————————————-
A housing related experience today, Dutchess Co, NY
Subject property: 2500sqft shack, 3 bay garage under house, built circa 2001, on 3 acres of wooded, untillable lot.
Details: Realtor sign went up June2008, “in contract” sign up two weeks ago, tag sale sign up last Friday. Wife suggested we drop in sale after church today so we did. Wife made the mistake of asking how much owner got. “$400k( grrr!) but could have gotten 450 6 months ago. Buyer is a local step up buyer, we’re getting a divorce. We paid 200k for it”. I commented that he’s fortunate because he couldn’t get 250k for it two years from now”. He asked if I really thought so, and I said yes.
So here we are, 3 years past peak price/sales volume and these people are still getting their fantasy asking price and act as if getting 100% gains in 7 years on their initial outlay is typical and anyone who suggests otherwise has descended into madness. This sale might be an anomaly right now as it is the first sale I’ve observed in many months.
But, exeter, they’re getting a divorce. They didn’t “make” anything because their divorce lawyers will make sure they share.
And the divorce lawyers will also get their share.
Much of NYC real estate still hope for European buyers to save them, except they do not know or acknowledge that much of Europe had their own RE bubble and is now dealing with the same issues the US is, such as rescuing banks and mortgage lenders left and right (see what happened this weekend?). Given that how are they suppose to save fancy NYC condos, given that the Wall St. crowd can’t even afford the high-end girl friend/stripper as documented in the Washington Post?
“……They just didn’t care.’”
That says it all.
“But Frank told the Herald yesterday that ‘in 2003, nobody that I knew of foresaw the crisis of subprime lending, and that is what caused this problem.’”
Sounds like Barney buddy needs to get some new advisers. I was reading about problems way before that. Someone should send Barney some of Fleckenstein’s reports from that time period.
climber,
Excellent point. That and the fact that in spite of his defense of GSE’s providing “affordable” housing.., ( it’s never been LESS affordable! ) So just what is it that he’s trying so hard to preserve?
I know that the HBB didn’t come about until 2004, but I’ll betcha that Ben and a few other HBB-ers saw SOMETHING coming back in ‘03.
I wish there was a provision in the Bailout that Banks “must” try to do short sales before foreclosure auctions. It would save the taxpayers a lot of money and keep neighborhoods from becoming drug magnets.
The banks may lose 20-25% on a short sale, they lose 40-50% or more on a foreclosure that has been vandalized.
Remember when sellers made potential buyers write letters to show why they were the most worthy of the potential buyers? Guess those days ate over.
The only difference between the Republican and Democratic parties is the velocities with which their knees hit the floor when corporations knock on their door. That’s the only difference.- Ralph Nader
In its presentation to investors discussing the Wamu deal, J.P. Morgan said it currently projects a 25% decline in housing prices nationally. But it warned that prices could ultimately fall as much as 37%, and by as much as 64% in Florida.
64 per cent in Florida!
“It’s known as the low-ball offer. It can be insulting and a waste of time. But — sometimes — it can work.”
“It was ridiculous,’…‘But I tell people never be insulted by a low offer, because it’s more insulting not to get any offer at all. I’d prefer to get a low offer and try to work with it.’”
‘The perception out there is not only that buyers think they can make a low-ball offer, but sellers are pretty much expecting it,’ she said. ‘It definitely can be insulting, but it all depends on how it is presented.’”
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Oh, please forgive my insulting offer of what I can afford and what your house is worth. I guess a low ball offer should be presented on one bended knee with a ring? Wait, let me declare publicly how much I adore the paint job you did…all those little special touches, like the fake crown mouldings and the little fish decals in the bathroom. I’ll surprise you by projecting it on the jumbotron at half time. Can I give you a pedicure? Oh, come on, you deserve it. What? The air conditioning isn’t on, because you can’t pay the electricity? Wait, where are my palm leaves? You just sit up on that pedestal over there and let me fan you for awhile. How’s that? Better?
One of my stocks is down sharply. I am thinking of selling, but I am just so insulted at what my brokerage says it is worth.
LOL. Well said.
“Falling interest rates and generally low unemployment typically prompt home owners to expand their homes or trade up. But Mr. Hanna, the CEO of Howard Hanna Real Estate, said things are different this time. ‘I’ve never seen so many houses for sale.’”
Housing is a Giffen good now. The demand curve is sloping downwards, as lower prices and interest rates are associated with reduced purchase demand.
Another consideration = in the past 30 years, household size has been going down. this would lead to more demand for housing, whether rental or purchase. Now I am hearing of more 20-30 somethings returning to parental homes due to divorce, foreclosure, job loss, etc. Doesn’t this reduce the demand for housing yet more? And it can only continue as recession and joblessness deepen.
second, what is the effect of state and local taxes increasing - especially as property taxes yield less, but expenses undertaken in the boom years with no thought for the morrow must increase. In the past 30 years, tax increases at the non-federal level have put a heavy burden on middle-class incomes - this trend looks likely to continue. As your home value goes down, your taxes increase - this is not likely to lead to popularity for local politicos.
FWIW, Llewellyn Park was the nations first gated community. Thomas Edison lived there.
‘If a house is listed for $300,000, you might get an offer for $260,000 or $270,000. That’s possible,’ he said. ‘But some people consider a low-ball offer offering $190,000, and that’s just silly. Their expectations are not reality.’
What a topsy-turvy world! It’s obvious the house was never worth $300,000 to begin with, and on offer of $190,000 is probably what the house IS worth. Why is it so hard for sellers and agents to realize that they got it backwards? The buyers should be the ones insulted by egregiously high asking prices, not the other way around.
“The buyers should be the ones insulted by egregiously high asking prices, not the other way around.”
after all their hard work, living in that house for a few years?! how dare you!
Actually, I think as people have begun to define themselves more and more by style and consumer choices, they are more emotionally invested in their choice of house and its perceived worth. Dan Ariely, who wrote that book “Predictably Irrational” (Behavioural Economics) calls this the “Not My House! Sentiment.” Homeowner chose and customized their house and think it’s “special”, therefore immune to an economic downturn.
Someone asked in Bits Bucket on Saturday what the root of all evil is…new answer from me: narcissism
So, anyone cares to predict Fort Lee, NJ price reductions after all is said and done? What sold for 425 in 2001, peaked at 640 in 2005. It seems that 100 grand off peak is a given today based on my research, but it is still too high. I tried to lowball 400K without success so far, but maybe people will get more cooperative around February? Can someone from the area speak the wisdom?
But Mr. Hanna, the CEO of Howard Hanna Real Estate, said things are different this time.
Wow! I wonder how Howard Hanna got to be the CEO of Howard Hanna Real Estate!
Is this a kid? Usually you don’t see titles like “Zach Jones, CEO Zach Jones Internet Software” unless it’s some very inexperienced person. A CEO implies a board of directors, and accountability to investors. Now maybe his little company is bigger than I think it is, but I’m guessing not.
I wouldn’t use the title CEO. Something like “Principal” or “Owner” is more appropriate.
I can recall attending a Pittsburgh church that Howard Hanna The First also attended. He was quite old, and it was pretty obvious that he wasn’t long for the world.
He was the sort of parishioner who others would refer to as, “There’s Howard Hanna,” or something of that nature. He was an old Pittsburgh patrician, and you didn’t just walk up to such people and say, “Hi, Howard, how are you?”
Ok! I stand corrected! Maybe he does have a board of directors (over which he can rightly hold the title of “Chief”)
Stunning upset folks , The house voted down the Bill . I guess they are saying they think they need to design a better bill . Meanwhile the Feds injected funds into the system today (which they always had to option of doing ). I think it is important to note that the stock market was already down before the vote was voted on .
“The house voted down the Bill”
Whew, that was close. Yah, the stock market had a little plungie there, but it is coming back. This bill was a complete waste of time. No, they don’t need to design a better bill. Put the dang thing in the circular file. Or the fireplace.
Starve the asset beast. I have the D8 fired up ready to backfill it.
My theory is that Paulson and BB extended 500 billion in short term loans to banks in the last year and they are defaulting on those loans
,so that was what the emergency was . I think Paulson and BB wanted to just purchase those short term defaulting notes . That’s my theory and I’m sticking to it .
Sounds reasonable, but we’ll never really know, will we? I’m just glad it got shot down, but what happens now?
Lets put it this way . The banks would of had to sell assets to
make good the short term loans that have been extended to them for the last year ,and they didn’t want to do that
I think . If your accept my theory ,the money has already been spent ,so that’s why the need for the Bill . The bill and grounds for the Bill never made sense exactly . I have been watching
Paulsons and The Feds injections of cash based on junk paper for the last year ,and I keep on wondering where that money went .
I think history will show that the Paulson Plan has already been spent . We will have to give at least 500 billion to the lending
industry . Anyway my theory might not be right ,but this Bill was so poorly written and so one sided that its seems like
monkey business .
“I have put back half of my faith in Congress. ”
I just posted upthread a link to a guy who feels that congress is key to changing the country’s consumption patterns:
http://www.pbs.org/moyers/journal/09262008/profile.html
(sorry if it’s too off-topic, it is a bit macro. I’ll stick to more specifically housing related topics…please don’t ban me, Ben!)
Now that this POS of a bill got shot down, I have put back half of my faith in Congress. Now, I think that only 50% are bought and paid for. Seems like the Repubs wanted to really embarrass “Friends of Angelo” Dodd and Frank, and they did. Great job all of your bloggers who actively protested like me!!!
Thanks, Dr. Detroit. I called EVERY day, including today. We don’t need no stinkin’ bill.
I was really surprised! I had to step out and mail a few things and the minute I stepped in a client brought it to my attention. I was like… huh? All the feedback we’d gotten all weekend long was like, yeah it sucks but we gotta’ do it so…
Pretty happy about it. I guess Americans meant what they said and aren’t seeing this as ‘our’ problem. Even though I work in equities I invite the sell off. This really puts their feet to the fire. Good to see the scare tactics didn’t work.
That had a whole lot to do with it. Our S.C. Sen.Jim DeMint who voted against the bill was on the radio this morning saying that they had inundated with angry calls and e-mails, and to keep doing it. They want to be re-elected and it has many of them ‘concerned’ / scared.
I wrote an e-mail to my congressman, Raul Grijalva. A man I seldom agree with on anything. But this time, I agreed with him. He’s just as against the bailout as Yours Truly.
I may even vote for him.
This is too funny. The Times Herald link has a comments/forum page. Check out the fantasy of this deluded poster:
“it is only a temporary setback. Business are still building here. Where businesses are building that creates jobs, and increases the value of homes. I guarantee that in ‘09 you will see a dramatic change in the housing market place here in OC. The prices will return back to what they were when the boom was here.”
It gets better:
“But the spring of ‘09, you will see home values go up in OC.”
http://forums.recordonline.com/n/pfx/forum.aspx?tsn=1&nav=messages&webtag=th-news&tid=9775
The stock market would of crashed anyway IMHO ,so what is happening now is just happening maybe a month early . The stock market was down 450 points before they even went to vote in the House . If we are going into recession ,as the Paulson emergency pointed out ,that’s why the market is crashing . They scared the poop out of people by calling emergency ,which I don’t think was right .
If I was the president I would go on Television and say that under the Feds powers ,they are going to inject 100 billion of cash into the market until the Bill can be worked out .
Down over 700 points! Yep, that sucker went DOWWWWN! The pig is vomiting and that’s a good thing. Flush that crap outta the system.
The Times Herald Record from New York. “It may seem a distant memory, but just a few years ago, Orange County was in the throes of a real estate bender, as new homes spread across once-rural landscapes and housing prices shot through the roof. Then the national real estate bubble burst and prices began to drop.”
I am glad that our current troubles will halt sprawl, at least for a time.
The Lehigh Valley housing bubble has already begun to crash. Prices locally have fallen about 30% and we have 18 months of inventy on had. That doesn’t include the hundreds of pre-foreclosures (1k -3k) rentals on the market. Those rental home 90% of the time were houses that couldnt sell for 9-12 months and now are trying their last efffort, renting for insanse amounts.
This is the 1st article I’ve seen the Morning Call (Allentown, Bethlhem, Easton’s) print that tells 1/2 of the truth.
In 2000 the average home was selling for 95k-105k and that was in great school districts like Parkland or East Penn. At the height of the bubble around 2006 the average home was almost 250k.
As of 6 months or so ago, the morning call was reporting home priced under 200k were selling fast. Well if fat means 2 out of 100 are selling after multiple price drops and 2-3 relistings fast, we are leading the country.
We live in the East Penn school district and I’ve counted about 15 homes for sale all priced under 200k and most around 175k or less that aren’t selling, I guess they caluclated wrong,LOL.
The medium family income ia around 48k per household. And our local inflation as reported in the morning call is almost 7%.
The reason our price bubble happened was because people from New Jersey & New York thought a 3-5 hour commute was feasible, they now found out the hard way, it’s not. When you work 8-10 hour then add in a 3-5 hour commute that’s about 15 hours a day to live in a home (just sleep I mean). The problem with the commuters was that they were lowe class (on the nj & ny scale) households that were priced out of their hometowns because that housing bubble was bigger than ours. Now these foolish people have negative equitity and the McMansion(Sameville, USA) subdivision built on Swamp lamp, hecne the name “bear swamp” are sitting 1/3 empty and many are having to attempt to section 8 out 250-300k homes (what they paid during the bubble) and people still aren’t taking the bait.
Foreclosures for Lehigh & Northampton counties were up over 40% and that was at the beginning of this year,2008. This ponzai/pyramid scheme of housing has only started it’s 2nd or 3rd inning around here. It’s fairly easy to predict that within 2 years, when this “correction” is close to over, the average prices of home around thr Lehigh Valley will be back to 95-105k for the average home. They might acutally be even lower. That’s because of our local inflation and the decrease in wages/jobs.
I make all these assumptions by being a 4th generation family of the Lehigh Valley who will hav our home paid off within 4 years. It’s nice to see many people who moved away during this housing crisis now having the option too move home again and become homeowners at a normal affordable price.
God Bless!
The Lehigh Valley housing bubble has already begun to crash. Prices locally have fallen about 30% and we have 18 months of inventy on had. That doesn’t include the hundreds of pre-foreclosures (1k -3k) rentals on the market. Those rental home 90% of the time were houses that couldnt sell for 9-12 months and now are trying their last efffort, renting for insanse amounts.
This is the 1st article I’ve seen the Morning Call (Allentown, Bethlhem, Easton’s) print that tells 1/2 of the truth.
In 2000 the average home was selling for 95k-105k and that was in great school districts like Parkland or East Penn. At the height of the bubble around 2006 the average home was almost 250k.
As of 6 months or so ago, the morning call was reporting home priced under 200k were selling fast. Well if fat means 2 out of 100 are selling after multiple price drops and 2-3 relistings fast, we are leading the country.
We live in the East Penn school district and I’ve counted about 15 homes for sale all priced under 200k and most around 175k or less that aren’t selling, I guess they caluclated wrong,LOL.
The medium family income ia around 48k per household. And our local inflation as reported in the morning call is almost 7%.
The reason our price bubble happened was because people from New Jersey & New York thought a 3-5 hour commute was feasible, they now found out the hard way, it’s not. When you work 8-10 hour then add in a 3-5 hour commute that’s about 15 hours a day to live in a home (just sleep I mean). The problem with the commuters was that they were lowe class (on the nj & ny scale) households that were priced out of their hometowns because that housing bubble was bigger than ours. Now these foolish people have negative equitity and the McMansion(Sameville, USA) subdivision built on Swamp lamp, hecne the name “bear swamp” are sitting 1/3 empty and many are having to attempt to section 8 out 250-300k homes (what they paid during the bubble) and people still aren’t taking the bait.
Foreclosures for Lehigh & Northampton counties were up over 40% and that was at the beginning of this year,2008. This ponzai/pyramid scheme of housing has only started it’s 2nd or 3rd inning around here. It’s fairly easy to predict that within 2 years, when this “correction” is close to over, the average prices of home around thr Lehigh Valley will be back to 95-105k for the average home. They might acutally be even lower. That’s because of our local inflation and the decrease in wages/jobs.
I make all these assumptions by being a 4th generation family of the Lehigh Valley who will hav our home paid off within 4 years. It’s nice to see many people who moved away during this housing crisis now having the option too move home again and become homeowners at a normal affordable price.