The Past Is History
It’s Friday desk clearing time for this blogger. “Since she put her Norfolk rental home on the market four months ago, Robyn Hofheimer has lowered the asking price three times. Still no bites. Hofheimer and her husband own two houses in Norfolk. Now, the couple want to sell both and move to Virginia Beach, where they grew up. Timing isn’t on their side. ‘The market is just not moving out there at all,’ she said.”
“Two weeks ago, Mari-Ann Messick put her Virginia Beach house up for sale in hopes of trading it in for one closer to the beach. Messick and her husband bought the three-bedroom home in the Lake Shores neighborhood in 1992 for $142,000. She listed the house last month for $345,000. ‘Two and a half years ago, we could have easily gotten $400,000 or $425,000 for our house,’ she said. ‘Now I wouldn’t even dream of listing it for that much. Nobody would even look at it.’”
“Denise Watson and her husband have never owned a home. ‘We thought about buying a house last year,’ she said. ‘But the people we knew in real estate told us to hold off until this year. You don’t want to buy a house for $350,000, then six months later it drops to $300,000.’”
“Home prices that have been on a downward spiral for more than a year in Dutchess County slipped even lower in September. Qing James Ren, who sells for Weichert, Realtors, in LaGrange said he’s recently seen a pickup in activity, but also a change in mood for some as the prices have declined.”
“‘They’ve just slashed the price quite a bit … to get something to move,’ he said. ‘I think it’s panic, really, for the homeowner. They’re willing to take any kind of offer, if there is one.’ For people who have to sell now, ‘They take any offer seriously.’”
“Property owners in South County have seen their home values drop. And people who borrowed against their home equity through subprime loans will find it virtually impossible to refinance for a better rate. ‘What I’m finding is that these people didn’t have to show their income, now their loans are adjusted and they can’t make the payments,’ said Daniel Murphy, owner of Seaside Mortgage Co. in Narragansett. ‘And I can’t do much for them. It’s hard. We’re in a world of hurt.’”
“Economist Leonard Lardaro at the University of Rhode Island, said that even as recently as six months ago, well capitalized banks like Washington Trust would have had some wiggle room to play with to get loans to people who might have missed a credit card payment once or twice. ‘Now, if you have the slightest blemish on your credit record, the credit interview is over,’ Lardaro said.”
“‘We didn’t get involved in the kind of stuff three or four years ago that created this mess,’ said Michael Rauh, executive VP of the Washington Trust Company.. ‘We looked at that stuff and said ‘This is crazy.’ Some people said ‘You’re just a conservative old bank and you don’t get it.’ But as it turns out, we did get it.’”
“There will be Pittsburgh-area pain in employment, lending, and spending for months to come, according to experts. ‘Bank rates are very high right now and haven’t come down even after passage of the (Wall Street) bailout,’ said Mark Price, labor economist for the Keystone Research Center Harrisburg.”
“‘We’re not talking about a Depression, though. That’s crazy talk,’ said Price.”
“Economists seem to agree a wave of home foreclosures began this economic downturn. Dawn Oestreich of Mount Horeb knows this experience first hand. ‘It’s the worst feeling ever,’ Oestreich told 27 News. ‘You don’t want to tell people your house is going into foreclosure. You feel embarassed.’”
“Oestreich says they bought the two story home three years ago with no down payment and shaky credit. When the mortgage adjusted up, her work, and her husband’s seasonal job, could not keep up with the monthly house payments, as they also faced emergency medical expenses. Oestreich knows the financial recovery from losing a home will be tough. ‘Our credit is ruined now.’”
“Denise from Indianapolis: ‘Two years ago I bought my home on a two-year arm, being convinced by the mortgage company I would be able to refinance before the two years were up. Well, the two years were up in September and no one will touch it. I am now being told I owe more than my house is worth. I am a single mom and only bring home $1,500.00 a month. I am now two months behind. The mortgage compant is not willing to work with me at all. Their only advice was to contact a realtor, which I have to pay for, and try to do a quick sale. If I can’t pay my payments, how can I pay a realtor? I am losing a home that I love. The American dream is huge joke!’”
“Sheila from Sacramento: ‘My house is going into foreclosure on October 1, 2008. I pay $2,040 a month in mortgage payments and I take home $2500. I lost my roommate and now I can’t afford to keep my home. I’m trying to get my payments lowered but no one will help me. Does anyone out there know of a way I can keep my home?’”
“”Average Joe” from Georgia: ‘I am 35 years old and working since high school. In the heat of the moment, I purchased a pricy home, expensive home gadgets and a Porsche. Now I am bankrupt.’”
“Prices in the Greater Toronto Area market fell for the first time in more than a decade, according to figures released yesterday. It’s a new reality for some vendors when realtor Duncan Fremlin appraises a property for sale. ‘It’s a tough conversation to have, because sellers don’t want to hear that they may not be getting what they expected,’ said Fremlin. ‘When you do the comparables it’s not about what you may have got last year, it’s what the houses in your area got this month.’”
“Home sales in the Chicago metropolitan area dropped 30.1 percent in August to 6,804 from a year earlier, and median prices dropped 5.7 percent to $251,250, according to the latest report from the Illinois Association of Realtors. For decades he’s had designs on creating and selling homes, but after 9 months on the market, architect and builder Reinhold Schmid had to rent out his latest project and he candidly admits there’s no work on the horizon. ‘The bottom dropped out of the barrel basically,’ Schmid said.”
“In the meantime realtors say owners hoping to get prices from yesteryear for their homes are finding their houses aren’t selling at all. ‘The past is history,’ said real estate agent Steven Sims. ‘We need to move forward if they have a motivation to sell.’”
“Sales did boom in two neighborhoods that have bore the brunt of the foreclosure wave —- north Oceanside and east Escondido, according to the report. In Oceanside’s troubled area, sales were up 248 percent while Escondido’s foreclosure center saw sales jump 306 percent from the same month a year ago. In those neighborhoods, real estate prices have fallen as much as 60 percent from 2005 levels, according to sales records.”
“San Diego County has lost jobs for five of the last six months, according to the U.S. Census Bureau and California Employment Development Department. If employers continue to shed jobs, foreclosures could worsen and the buyer pool could diminish. ‘It means we’re going to be in a recession and it’s going to last a while,’ said Norm Miller, a real estate professor at the University of San Diego. ‘And that will further hurt everything —- housing, car purchases, retail sales. Everything.”‘
“While the $700 billion bailout contains some provisions for homeowners in distress — for instance, modifying interest rates on home loans for hardship circumstances — real estate professionals say interest rate reductions won’t solve the housing debacle in Southern California, where property values have fallen by one-third since 2005.”
“Saving several hundred dollars a month will do little for homeowners in San Diego who can’t make payments on a $600,000 mortgage for a home worth $400,000, says mortgage broker Matt Battiata in Carlsbad.”
“‘I’m recalling days of the RTC and what it did to the property values,’ said Jim Bliesner, executive director of the San Diego City-County Reinvestment Task Force, referring to the Resolution Trust Corp. formed in the late ’80s during the savings and loan crisis to liquidate assets of bankrupt thrifts. ‘It will just prolong the economic decline of property values and resale opportunities.’”
“The loan modification program, at least the Countrywide settlement, aims to stabilize neighborhoods by not letting houses become abandoned magnets for vandalism. But this program doesn’t exist to keep prices from falling further, said Deputy Attorney General Ben Diehl. ‘The real estate market will set the fair market price,’ Diehl said. ‘It’s not the attorney general’s business to enter into a settlement either to inflate or deflate prices.’”
“‘Don’t forget that prices are falling anyway,’ said Chris Thornberg, principal at Beacon Economics. ‘Stopping foreclosures only bails stupid people out. It doesn’t stop prices from falling.’”
“‘The value is really based on what property is selling for, not how badly it’s encumbered,’ said Larry Buster, San Diego county manager for First American Title Company. ‘If Countrywide is reducing the indebtedness, the test is still going to be what are people willing to pay for the property.’”
“Washington’s rescue of troubled financial giants, Sen. Bob Bennett said Tuesday during remarks in Park City, could eventually make American taxpayers some big money. He said 400 people have called his office opposing the bailout for every one person who called supporting the plan. Some of the callers utter bad words as they speak to his staffers, Bennett said, describing that office workers have received instructions to hang up on callers who are obscene.”
“He said the mortgage industry operates differently than it once did, saying mortgages are ’slice and diced’ and ’sold off in bits and pieces all over the world’ to investors. Problems erupt if the original mortgage is not paid.”
“Bennett said the housing market is the bubble of today’s economy, following the dot-com era and the tulip market long ago in Holland. ‘The current bubble has been the housing bubble . . . ,’ he said, adding that people had seen buying a house as a no-risk investment. ‘When the housing bubble burst . . . it created wreckage all around it.’”
“Jeremy Grantham: ‘We got so good at denial. The Fed was in denial, the Treasury was in denial, the bosses of Merrill Lynch and Lehman were in denial. And yet this crisis was the most widely heralded ’surprise’ in the history of finance.’”
“‘All you had to do was open a history book and see what happens when you have a bubble. In this case, there was a bubble in housing and there was a magnificent bubble in risk taking. People were just shoveling their money into risk on the pathetic idea that risk is always rewarded.’”
“‘That is completely misguided. You don’t get rewarded for taking risk; you get rewarded for buying cheap assets. And if the assets you bought got pushed up in price simply because they were risky, then you are not going to be rewarded for taking a risk; you are going to be punished for it.’”
“‘You can lay the evidence in front of everybody, but they will yawn and ignore it. It’s that denial that’s impressive. It’s what happens in bubbles.’”
“The trillion-dollar question everyone keeps asking about the economy is: When will the housing market come back? The answer should be apparent: It won’t.”
“Oh, home sales will slowly rebound and prices will at some point stop falling. But the fast and loose housing market that made the industry billions and fueled the world financial market crash has gone the way of nickel pop and $1 gas.”
“My old granny lived through the Great Depression. To the day she died, she didn’t trust the financial industry because of the people she knew who lost their savings when the banks failed. Will some people feel the same way about home values?”
“Perhaps. Or at the very least, they’ll have real reason to worry if real estate values in their neighborhood start growing at leaps and bounds ahead of wages and overall inflation. And if they question the wisdom of leveraging a house beyond all reason to pay for trips to the mall or vacations in Aruba, the economy will be better for it.”
“As for the real estate industry, it will have to make do with less.”
“Between 25 percent and 30 percent of recent peak housing demand is gone for good and won’t be coming back. Those were the purchases made by investors financed with the cash leveraged out of other properties and the sales to buyers who never should have qualified for homeownership.”
“That means fewer home sales, fewer home starts and less appreciation. And, believe it or not, that’s a good thing. It makes a house a roof over your head instead of a get-rich-quick scheme.”
It’s appropriate that the desk clearing post is number 5,000 for this blog. I think the original HBB had about 750 posts before it froze up. And the HBB2 had somthing like 1,400, so we are well over 7,000 just two months from four years of the HBB. There is something to be said for sticking to it!
My thanks to those who support this blog. Please check back this weekend.
..so how long will it be before the HBB post number intersects the DJIA?
It seems all your hard work has paid off when the thick-headed finally get it…
“The American dream is huge joke!’”
Well, duh! We could’ve told you that 4 years ago.
Props to Mr Jones!
Actually, I don’t think she “got it” at all.
She was one of the perverse, who misunderstood the American Dream.
The original dream was to buy a house and pay it off over your early working years so you could have a PAID OFF house at retirement, and after paying it off, begin Saving money you would have spent on rent or mortgages for a happy retirement.
Her dream was to buy a house that would subsidize her lifestyle without even paying the interest on the loan. It’s a delusion, not a dream. A twisted financial view of getting something for nothing.
It has infected all of American and a good portion of the rest of the world. I am thankful that the new austerity (assuming Paulson and Bernanke don’t screw it up) will make frugality more fashionable.
Drinking champagne on a beer budget is economically incomprehensible except in dreams…….
or………..with really easy credit and a view to bankruptcy.
I think it will be well after the foreclosure when she finally “gets it”.
Thank you, Ben. I really appreciate the work that you put into HBB.
Been reading and occasionally commenting here since 04 - time well spent for me, and as I said Ben for President.
‘It means we’re going to be in a recession and it’s going to last a while,’ said Norm Miller, a real estate professor at the University of San Diego. ‘And that will further hurt everything —- housing, car purchases, retail sales. Everything.”‘
What about housing affordability? Is that part of Norm’s definition of ‘everything’?
I Like Jim Rogers’ definition:
We Are Facing an ‘Inflation Holocaust’: Jim Rogers
‘”We had the worst excesses we had in credit markets in world history. We’re going to have to take some pain,” Rogers said.’
‘”Many people bought 4-5 houses with no money down and no job… you think we’ll just say well, that’s too bad, we’ll start over and nobody loses their job? Be realistic.”‘
Jim Rodger’s was interviewed in Jack Schwager’s first Market Wizards book. Track a copy down and listen to him call Greenspan a liar — in 1989!
Rogers is one of the few people that I actually would trust for financial advice.
Watch out for what you wish.
The week that panic stalked the markets
By Michael Mackenzie and John Authers in New York
Published: October 10 2008 19:41 | Last updated: October 10 2008 19:41
…
The sharp fall in stocks on Wall Street the previous Friday afternoon, which started immediately after markets had received what they wanted with the vote to approve the $700bn bail-out plan, was seen as a very negative sign. Traders also attached significance to the fact that history’s previous great stock market crashes had all happened in the month of October.
The turmoil in global finance has grown and intensified ever since the shocking decision four weeks ago by the US government to allow the investment bank Lehman Brothers to fail.
Many stock markets fell more than 20 per cent this week alone, a drop which meets the definition of a standard bear market.
Japan’s Nikkei 225 index slide of 24 per cent was its worst weekly percentage fall in history. On Friday the S&P 500 was on course to emulate that performance and was 21.7 per cent lower since Monday at lunchtime.
For the week, London’s FTSE 100 fell 21 per cent and the FTSE-Eurofirst 300 slid 22 per cent.
“As was the case when momentum buying created irrational enthusiasm in anything housing, credit or commodity based, redemption and fear-based selling is causing the opposite effect of excessive despair,” said Mr Levkovich.
What makes this one really bad is it’s an October preceeding a presidential election.
Therefore……..
I vote that we eliminate the month of October. That would take care of everything.
but then we dont get halloween candy…
I’ll take sh!tty octobers as long as we get candy at the end.
The trick to Halloween candy:
Get what you like, but something the kids don’t particularly care for. Kit-Kats, perhaps. Or Almond Joys.
The trick to getting home early on Halloween, when you have little kids:
Don’t let them go all the way down one side of the street, then come back on the other……make them run their little a##es back and forth, while you walk down the middle of the street (traffic permitting, of course).
Two or three blocks of this, andf they are ready to go home….
Also…….do not try to stomp out burning paper bags on your front porch.
Also…….do not try to stomp out burning paper bags on your front porch.
Story?
Go rent “Hollywood Knights”
VOOOOOOOOOO-LARE!!!!!!!!
Old joke is to put a bag full of dog shit on someones porch. Light the bag on fire and ring the bell. Run quickly to a vantage point.
Person opens door and stomps out flames.
Its what happens to people that don’t have candy.
Ha ha.
Fresh Candy Corn is my favorite nibbling Halloween treat. I start from the top, eat the white tip first, then eat the orange in the middle and then eat the yellow bottom.
Eat them in a 50/50 blend with salted peanuts. Awesome.
A trick I learned from one of the receptionists I used to work with.
Candy corn and popcorn is a great mix.
Aladinsane believes that some other country will replace the US as numero uno once this depression/recession thingy clears out. I don’t see a whole lot of contenders. Canada, perhaps? Hoz says people are fleeing the $ in search of yen. Could it be Japan? I wonder what Jas thinks. Surely it will not be India.
I don’t think anyone will……..and other than a few interests in Washington and NYC, nobody in the US will care. I think most of us here are tired of paying the freight (in money and blood) for being the “World’s Policeman”. Especially when all this hard won “stability” we have bought hasn’t done the average Joe Q Citizen much good.
My “inner-cynic” tell me we should pull out of just about everywhere, and let everyone else in the world work out their religious, ethnic, national, and territorial rivalries by themselves. If they want to fight it out, sell weapons to both sides until they get tired of fighting. Open the doors to immigrants (especially the highly educated ones), as long as they leave their religious, ethnic, nationalist, and territorial baggage back at the departure dock. This program worked out fairly well between approx.1935 and 1941.
Remember…..most of our ancestors came here to get away from them “crazy furriners”………:)
Open the doors to immigrants (especially the highly educated ones), as long as they leave their religious, ethnic, nationalist, and territorial baggage back at the departure dock.
Good luck getting that past the multiculti brigade… You know, the fools who hate the ‘melting pot’ concept…
To me, immigrants are good for 3 things: cheap labor, new and interesting things to eat or drink, and extra holidays.
How long will it take nyc to bust? look at all the condozes in Long Island city…and there is only 1 real grocery store a C town with use your food stamps and WIC cards here!
http://www.outerb.com/?p=358
Have you found a job yet, d?
for about 3 weeks….some furniture company wanted me for phone sales but turned around and wanted me to find and make excel spread sheets of all the high end furniture stores in the area..and then call every one of them…..their main business is sofa disassembly geting you couch to fit through the door or elevator or stairs….
Seriously its called a sofa emergency. the sofa is stuck who do you call?
Boring as hell lousy computer and my eyes were tearing from the strong workshop florescent lights….maybe i could have stuck it out a few weeks more but i was seeing spots in my eyes by 2pm…. ..all for $10hr……soon as i got out in the sunlight my eyes were fine.
Do you make $$ as a dj?
Yes but no work during the week…..i just dont get it
all the jobs for smart people have disappeared..
must be why i’m still so unusually steadily employed.
I guess that’s why you haven’t given in yet and taken a crappy job. You have enough income to get by, so why kill yourself over extraneous wealth? I think there are jobs out there, but deals are getting worse and worse for the worker.
Lets not forget that all important “fit” you cant be overqualified in this economy….so that leaves older people in the dirt.
I haven’t operated a retail cash register in 16 years, and prospecting for new clients is not fun work you have to have a certain mindset like a real estate agent to market market market all day long….
Or to sit and endlessly call 100- 200 or email prospective new clients…. or stuff envelopes I’ve never been good at factory work
But give me a live situation where you cant make mistakes and i shine.
I thought i was hired to take INCOMING phone calls not to make hundreds or thousands of outgoing calls.
No idea what DJ’ing is like but hang in there.
I wiggle my fingers (play guitar) for a living. Drove a forklift the last time I “worked” in 2003.
The worst thing is people asking me “that’s nice but what do you really do?”
Let me guess - the company’s name is Sofa King, and you said “This job is Sofa King lame!” and quit - right?
Bad-dum-bum. I’ll be here all week. Make sure and tip your waiter.
No but close its not a bad company the people are nice…they do upholstery refinishing, really good people….but prospecting and marketing and creating a data base of say 2000 stores with sales managers names and emails is not my kind of job..
So we left it like that if they get busy and need an incoming phone person i would go back…i like old furniture antiques chairs etc..and i love talking to people …and solving problems
Wait a minute! The actual job of Sofa Disassembly appears to be very interesting indeed! You will get to see the high fliers as they downgrade to smaller apartments. You will get to see spouses bicker “I told you the sofa wouldn’t fit”… maybe they’ll continue to be bickering spouses, maybe not. And you’ll have a lot more to share with us
Oh I forgot the part about writing “JERK” on the sofa with a glow in the dark marker when you encounter one of those (and you have many to choose from in NYC).
Oil is down 48% since it’s peak, the major indexes are down 35%, commodities falling apart, prices falling everywhere, “wealth” evaporating everywhere as asset prices crash, nothing is immune to this bout of deflation so where is all this inflation I keep hearing about? Inflation was rampant 2001-2006 but nobody dared for fear of getting castigated as an “america hater”. As the old jewish guy I work with capitulated and sold all of his stock today, I bought another 300 shares of microsoft. Either prices had to collapse or wages had to quadruple so what did everyone think was going to happen? Prepare for more deflation(realtor scum take note). The dollars in your wallet just got alot more valuable in the last 12 months. Let the race to the bottom continue.
By the way, taxed fuel oil fell through the $4/gal floor today. Heating fuel ought be under $3/gal by now.
I was elated when I filled the 60 gallon gas tank in my park-it-anywhere home and the price was well below $4.
I’ll still work on the solar arrays so that I do not have to suck at this teat so.
I wonder, how long will it take for this deflation beast to binge. How long until we get the real deal, kick ass inflation $hit storm thing? Things are imploding faster than they expanded.
My second child, finding herself larger than her younger brother, played the bully. I warned her that one day the brother would be tall enough to effect revenge. She thought a while and asked; “How long do I have?”
How old are they? I remember telling my little brother that he wasn’t allowed to be bigger than me until I left for college. I think I was 13 at the time (which would have made him 9 or 10). He had been a real tattletale starting at around 5, but was starting to get beyond it which made my larger size a real advantage for the first time in ages.
At 13, I was old enough to know better. With younger kids, it could be seen as rather clever.
Polly, the little man is over six feet and built like an oak. His older sister, 26, he towers over. He treats her kindly, mostly.
She thought a while and asked; “How long do I have?”
lmfao!
How long until we get the real deal, kick ass inflation $hit storm thing?
BB wrote a book about it, he clearly doesn’t want any deflation and he runs the money supply. He recently stated, regarding the recent 900b addition to the money supply that inflation to fight the economic contraction is ok because “gas prices have come down recently”.
I think it was Jas that posted a prediction of a timeline recently, basically predicting price contraction across the board. I agree with that analysis, except the last phase which he left out, which is agressive inflation to maintain nominal GDP. That’s all that matters to these folks. If the dow had gone up 20% you think they would have a problem with that? Nope. It goes down 20% and it’s a $hit storm. They will be along to “fix” it directly.
So Blue skye where do you work on solar arrays. I worked at Kramer junction CA for KJC then FPL at SEGS III-VII for 12 Years. It was the largest solar power site at the time (150 MW).
I’m kicking around the idea of buying stock in my employer right now. The price is RIDICULOUSLY low. Maybe I’ll do it soon.
“in my employer right now”
Are you sure it’s not your ex-employer?
exeter,
Right, in fact I think most studies show that wages have been either stagnant or declining.., but RE Believers weren’t going to let something as ‘trivial’ as that spoil the party now were they?
The sell off in the DOW wouldn’t be that big of a deal to boomers had they not been relying so damn much on ‘everything’ aligning ever so perfectly for their exit from the work force? I guess the plan was to cash out everything at the Peak of All Peaks in both equity AND real estate markets and walk off into the sunset with everyone else holding the bag?
Seriously, it must have been what they assumed would happen. Certainly looks like they built all their plans around it?
I’m in the negotiation process with a homeowner. He is truly a “home owner” though, owns it free and clear. He has 2 homes, one in Florida and one in Illinois. He is forsale by owner asking $430k. I put in an offer for $395k as he said he was anxious for any offers. Meanwhile the stockmarket has tanked 22% down. He has now stopped answering my emails / calls. Ending with just “I cannot accept your $395k offer at this time. thanks”.
I don’t understand it. This is a non-contingent offer. Obviously I was willing to work with him on the price. My guess is that he has decided to hold onto it and dream of a recovery. Either that or I insulted him. Weird. If anything, I should be lowering my offer as my stock portfolio shrinks down to nothing.
Maybe he is NOT a homeowner…..he lied to you.
395k for a 430k shack? Are the floors trimmed out in gold? Crushed bone china for ceiling skim coat?
Both of you have lost your minds.
lol. wouldn’t call it a shack. Assessed at $660k. IMO my price is fair.
Fair for 2006 or 2010?
That homeowner is one damn fine fisherman!!
Offer 375K.
And get a commitment from him to come by to feed the squirrels.
Forget the assessment. Your offer is less than 10 percent from ask which to me is way too high right off the bat.
He said no, so I’d go away and let him come back to you. Then offer less.
The guy doesn’t have to sell. Not everyone has been an @ss about getting into debt over the past fifteen years. We don’t own our house outright but we have 3/4 equity now and have comfortable payments. So we’re pretty much in the same boat and have gotten (and refused) a few lowball offers. Last couple wanted my sofas and fridge in the deal. I sometimes wish I wasn’t dealing with people through an agent… I would have jerked them around a bit for fun. You know, tell them I’d leave the food in the icebox if they came up to my price. People really seem to be worried about our financial status though since we’ve had the house up for sale for so long… had a couple over to dinner the other night who were asking if we REALLY had to sell our house soon… and I am sure if I tried to get rid of some junk in a garage sale, that would really start the rumor mill going.
And the other guy doesn’t have to buy.
Convenient isn’t it?
pt_barnum_bank
Unless it is on the intercoastal or the ocean run away. I lived in florida for 37 years and know all segments of the real estate industry, Florida is years away from recovery.
“I am losing a home that I love.”
My wife put up with a house she didn’t like for 8 years, but we could afford it.
Shoot, I’ve put up with a house that I hate for 11 years cause IT IS PAID OFF.
I like paid off. Paid off feels good.
The idea of paying mortgage again makes me queasy.
At least I like my garden.
Mir
“…You don’t get rewarded for taking risk; you get rewarded for buying cheap assets. And if the assets you bought got pushed up in price simply because they were risky, then you are not going to be rewarded for taking a risk; you are going to be punished for it.’”
Exactly. But if you pointed out the risk factor to your friends back in 2005, you were pointedly told that if you didn’t buy NOW, you’d be priced out FOREVER. So, to them, it was more of a risk not to buy right then.
My husband and I are nearly the only people we know who didn’t buy or refi real estate in the past five years. The bursted housing bubble is still a VERY touchy subject in our social circle (and don’t even mention the stock market).
Well, we did refi, but took no money out, and got a much better interest rate, 30 yr, fixed.
Today, I was talking with a friend and he told me his problem. He paid $300K for his house in 1993 and as it went up in value (up to $1.2 Million) he used the refinance ATM. He now owes $800K and is getting killed in the stock market, I assume that he used the house ATM to purchase stock.
Now after he gambled big and lost, he now asks me for advice? Too late, he should of asked me what to do when he used his house to finance his gambling.
Do any of your friends fit that description?
This guy lives in Freemont-Mission CA and so far he is lucky that his house has not dropped much. But 1 year from now I expect a call from him asking for help. I have a thick skin, but I do feel sorry for his kids. (Today he has no job)
Even people who didn’t use the “house ATM” to purchase stock directly, did.
Anyone who took out HELOCs to buy non-necessities (including expensive cars when a budget one would suffice) and at the same time bought stocks–even with “different” money–was effectively using the house ATM to buy stock.
It’s silly, for example to save money while paying off expensive debt slowly. You’d generally be better off paying off your debt as fast as possible, become debt-free, and then saving.
So when the Housing ATMs stopped working, stock market contributions probably started to drop…
um… I’m going to kind of disagree with that. Of course now the BA is almost always different but when anyone enjoys that kind of success in RE, my guess would be that the majority of ATM’n was for add’l RE purchases.
I don’t believe for the most part ATM $’s found their way into the market. But DO agree that *pos’s friend’s affliction is leverage, and that’s the real problem, and he should have addressed the debt first.
I am convinced that the root cause of the recent stock market sell-off is NOT panic. It is a reversal of the credit expansion. Years ago, it was profitable to borrow $$ at a low interest rate, then invest it in the stock market for a profit. Today, however, such business is lethal. People are now forced to cash out their losing stocks in order to pay off/down their debt. This is also fueling psychological problems, but I believe right now that the psychology aspect is secondary.
If a person had played their cards right, they would have cashed out at the top of market, paid off all debts, and made a tidy profit. Somehow, that’s just not the way it seems to be working out for most people.
“People are now forced to cash out their losing stocks in order to pay off/down their debt. ”
I think this is true V. Sad but true, because that gambling money was all of us little guys’ savings in some form or fashion.
“I am convinced that the root cause of the recent stock market sell-off is NOT panic. It is a reversal of the credit expansion.”
Exactly right, Big V.
I see the media is now trying to blame market psychology and investor fears for the huge sell-off. I see the major problem being the lack of income to support high prices; in the end it’s still a napkin calculation.
I bet a whole lot of people used HELOC money to by stock on margin accounts in Cali.
I live in Irvine and I give it six-eight months before we see a flood of foreclosures.
Would he have shared his earnings with you if his bets indeed paid off?
“If Countrywide is reducing the indebtedness, the test is still going to be what are people willing to pay for the property.”
50% off is what the market wants.. we seen that happen to Stockton and we will be seeing that happen in other parts of
SF Bay Area. Everthing over the past 10 years has tripled in price.
>>>.housingbubblebust.com/OFHEO/Major/NorCal.html
“”Average Joe” from Georgia: ‘I am 35 years old and working since high school. In the heat of the moment, I purchased a pricy home, expensive home gadgets and a Porsche. Now I am bankrupt.’”~~~
That has to be a joke. Come on. How does one have a “heat of the moment” and buy all those things. Was he in menopause and having a series of hot flashes that made him shop against his will? I think not.
Golly gee. No one can a house or a Porsche “in the heat of the moment.” Too much damn paperwork to sign for “heat of” to allow for “moment.”
He simply went nuts thinking he could have it all. Greedy.
If it’s true. I’m still thinking this is a joke.
Sad if not.
Mir
In the “heat of the moment” I fathered four children.
At least I got something good out of it.
From the original post:
“”Average Joe” from Georgia: ‘I am 35 years old and working since high school. In the heat of the moment, I purchased a pricy home, expensive home gadgets and a Porsche. Now I am bankrupt.’”
Gotta watch those “heat of the moment” things. They’ll get ya every time.
I had a heat of the moment 20 years ago with a blonde 15 years my junior. Thankfully I got a great lawyer to design my pre-nupt. Worked out great when she took a hike. I still remember the day she left, as that was the day I had my second hole in one, playing with my lawyer. No joint ownership saved my butt.
News-flash clam:
If you had a prenup, then it wasn’t heat-of-the-moment; it was cold and premeditated. That’s why she had to get away from you, the poor thing.
Oo, burn.
LOL! I skimmed through the SSOTW ( sob stories of the week ) and I thought that guy was among the funniest.
I have no other option ( and I know I’m opening myself to all kinds of scorn here ) but to think all these “illnesses” are primarily the same affliction we ALL have ( namely being sick of WORKING! )
Remember all the article in the NYT about “MEW Dads”? Guys in their 40’s and 50’s that allowed themselves to become obsolete in the work force and just lived off of cash out re-fi’s? So now I guess that’s what is meant when people say “We fell behind on payments when my husband/wife/dog got “sick”.
I was laughing at this nincompoop. I’ve made some stupid mistakes in the last 40 years myself, so I’m not above it all by any means, but a pricy home, expensive “home gadgets” ( flatscreen in every room ?? ! SubZeros on the roof ? Whaaat ? ), AND an effing Porche ? Wow. He had to KNOW what he was doing at some moment. “Heat of the moment” gets girls pregnant, boys not out of high school 18 years of child support, and doth Las Vegas marriages make.
LOL! Yeah, and I’ve made few mistakes my damn self. I guess what I find uncanny is that there must be some correlation between getting that upscale dream house and toys and suddenly “falling ill”?
I think it’s because all these FB’s are getting adept at working the ropes and they full well realize the (1) sure fire thing to keep up the Free Rent scam is… “an illness in the family”. It’s GOT to be! They seldom even i-d-e-n-t-i-f-y the “illness”. I said… my husband is “ill” and that’s all you need to know!
“Sales did boom in two neighborhoods that have bore the brunt of the foreclosure wave —- north Oceanside and east Escondido, according to the report. In Oceanside’s troubled area, sales were up 248 percent while Escondido’s foreclosure center saw sales jump 306 percent from the same month a year ago.”
I am so glad I live in south oceanside.
even though it’s still in the 600’s it’s pretty.
I’ll never buy here unless it goes to 250k.
“San Diego County has lost jobs for five of the last six months, according to the U.S. Census Bureau and California Employment Development Department. If employers continue to shed jobs, foreclosures could worsen and the buyer pool could diminish. ‘It means we’re going to be in a recession and it’s going to last a while,’ said Norm Miller, a real estate professor at the University of San Diego. ‘And that will further hurt everything —- housing, car purchases, retail sales. Everything.”
Do you get the feeling that all those trigger-happy vulture funds are beginning to feel the initial prickly sensation that proceeds the unmistakable eye-popping agony of a JT a$$ ramming?
ex-nnvmtgbkr,
You’d think that these people at some point would make the connection that this was the recession we were -supposed- to have in 2001? ( The one we just couldn’t stomach the thought of? ) And their constant insistance on the impact on “Everything” would be recognized as all the products, goods and services that never would have existed had it not been for MEW? Ya’ think?
They can barely fathom that there might be a recession now even though there is a recession already or that housing prices would drop in the absence of a recession. They are still light years away from realizing there should have been a severe recession following the collapse of the tech bubble.
Heh. Indeedy. Couldn’t he make a pretty penny selling those gadgets and Porsche, btw?
pt_barnum_bank, FSBOS (for sale by owners) always overprice their homes; even at the total height of bubble-liciousness, FSBOs priced themselves 20% over every identical house on the block. It’s just that homeowner mentality of “mine is soooooooo much better than anyone’s and I deserve all this money.”
Hey, that Jeremy Grantham is one smart cookie.
Not in this case. He already tried and failed using a realt-whore. His current price is lowest in the neighborhood. He has lived their 15 years and can price low. My guess is he has decided to hold onto it and weather the storm .
Yes, and when they don’t sell their house, they turn themselves into “savvy” landlords, then let their houses sit empty for months while they wait for that ideal overpaying tenant to come along. Then, when they finally do get a tenant, they act like the tenant is some sort of low-life for not being a homeowner. This, of course, causes the tenant to move out, and the FSBO/LL becomes increasingly bitter as this happens time and time again. Eventually, they capitulate, get a real estate agent, and just sell their stupid house once and for all.
Big V,
Great exploration into the sick mind of some of these people. I have to go through it with clients all-the-time. Of course a natuaral extension of that is buying their newer, nicer, bigger, better “property” FIRST ( which is the catalyst for this entire exercise )
Usually predicated on the “Because we d-e-s-e-r-v-e it!” twisted mindset.
Once rented a house with the wife. You described our landlord perfectly….
What a jerk.
Post number 5000! Congrats
I stand in awe of you, Ben. Keep up the good work!
B is for bubbles
Bubbles, bubbles, bubbles
B is for bubbles
Bubbles, bubbles, bubbles…..
Sung by Don Ho:
Tiny bubbles (tiny bubbles)
In the wine (in the wine)
Make me happy (make me happy)
Make me feel fine (make me feel fine)
Tiny bubbles (tiny bubbles)
Make me warm all over
With a feeling that I’m gonna
Love you till the end of time
So here’s to the golden moon
And here’s to the silver sea
And mostly here’s a toast
To you and me
So here’s to the ginger lei
I give to you today
And here’s a kiss
That will not fade away
Thanks for the post from The Star. Ontario finally cracking. I imagine that the superior haughtiness I experience there will diminish. Blame follows, then anger.
I lost my roommate and now I can’t afford to keep my home. I’m trying to get my payments lowered but no one will help me. Does anyone out there know of a way I can keep my home?
Let me ask this. If some renter lost their roommate and couldn’t pay the rent, would anyone pity them?
No, you can’t keep your home and you don’t deserve pity for buying something you couldn’t afford. Get over it.
‘My house is going into foreclosure on October 1, 2008. I pay $2,040 a month in mortgage payments and I take home $2500.”
Take home $2500 and she bought a house???
The math works fine if you use imaginary numbers. Perhaps like the ones on her mortgage app?
That leaves $460 a month for food, basic utilities and gasoline. Forget insurance and the IRS. Didn’t she have a clue???
She said “take home” so I assume its after tax. Let’s see, with $460, she must
1. walk, bike or bus to work (no car, insurance or gas)
2. stay healthy or have a good employer health plan
3. not have any debts
4. pack her lunch, and avoid eating out
5. keep her heat low, not use the a/c
Yes, it’s possible. She has to live like an immigrant. Except an immigrant would still find $200 to send back home.
How does Ben determine where to put the hyperlinks in the articles he posts? It’s always so random. A lot times he’ll just hyperlink a conjunction or something.
A global financial crash and you’re worried about Ben’s hyperlinks???
“”Average Joe” from Georgia: ‘I am 35 years old and working since high school. In the heat of the moment, I purchased a pricy home, expensive home gadgets and a Porsche. Now I am bankrupt.
—————————————————————————
Uh…and I’m supposed to feel sorry for you?
Is it better to have loved and lost or to never have loved at all?
My guess is the flippers, floppers, real-t-whore’s, and lenders would never normally have been able to afford such luxury…
It is the prudent who are paying for this oppulence and corruption.
Updated version for temporary members of the Ownership Society:
“It is better to have owned and been foreclosed, than never to have owned at all.”
My preferred slogan comes from a San Diego Company’s corporate motto:
“Life is a lease; negotiate well.”
Ownership society? Looks more like the debtorship society to me.
lol. I like that one. There is a woman in my general neighborhood who is somehow still in her house even after the bank bought it back at the foreclosure auction. She has lived there the past year or so without paying a dime. My guess is she must be paying them some sort of rent now just so the bank can keep it on its books longer.
Boy that Senator Bob Bennett catches on quick. Mind like a steel trap. I’m surprised he ain’t some kinda brain surgeon.
I can’t wait until the next headline…..
“Senator Bennett thinks Credit Default Swaps are BAD!!!”
Not to knock the voters of Utah (of which I’m NOT one), but isn’t he from Utah?
Bennett in the Senate, his slogan, very higher-order cleverness
/snark
Remember the guy who defended Clinton in the Lewinsky mess? Same name.
Is it a porsche or a poor-ish?
The future is now
http://www.msnbc.msn.com/id/26531610/
Blue Skye, about a year ago I was chatting casually with someone from Canada at a cocktail party. Inevitably, the housing market came up and I was treated to full-on chest-puffing boasting about how Toronto (where he had just bought a great condo) was a fantastic market, it would never ever ever EVER go down there, it was on an upward trajectory, and (the best part) how Canadians were way too smart to get themselves into the kind of mess the U.S. was in.
Paulson currently puking into microphone live on CNBC or Bloomberg (on Sirius) on the G7 “solution.”
How many more solutions are they going to offer before they solve anything?
All of them.
“The G-7 agrees today that the current situation calls for urgent and exceptional action,” the leaders, who are meeting in Washington D.C., said in a statement. “We commit to continue working together to stabilize financial markets and restore the flow of credit, to support global economic growth.”
The plan of action includes:
* Take decisive action and use all available tools to prevent “important” institutions from failing.
* Take steps to unfreeze credit and money markets and ensure that banks and other institutions have broad access to liquidity and funding.
* Ensure that banks and other major financial intermediaries can raise enough capital from public and private sources to re-establish confidence and kick start lending to individuals and businesses.
* Ensure that each country’s deposit insurance programs are strong and consistent to assure depositors their money is safe.
* Take action to restart the secondary markets for mortgages and other securitized assets.
Urgent and exceptional action. Just like the $850B that was urgently needed in time to crash the market.
sleepless,
Maybe it’s because the wife and I are past our “Peak Consumption” that my view is skewed but I think the LAST thing on the average American worker’s mind right now is borrowing more money?
I mean, c’mon, they’re a hell of a lot more concerned with just maintaining than running up more bills they have now seen they can’t pay? So… ‘who’ exactly are freeing up the credit markets for again?
I don’t think confidence can be restored at this point, no matter what they do.
Wait, they could all resign, that might do it.
As much as the printing plant can produce.
“They” will not be solving anything. They will, however, be taking credit for the natural recovery when it occurs.
Many will be out of office before it does.
Someone should have called the Federal marshals. Not to clean the sound equipment, but to shackle his limbs.
The rate at which new bailout attempts are getting rolled out is increasing. It’s all good, so long as they are seen “doing something.”
G7 ministers poised for joint action
By Chris Giles in Washington
Published: October 10 2008 19:31 | Last updated: October 10 2008 21:15
Finance ministers and central bankers from the group of seven leading economies were poised to agree coordinated action in an effort to stabilise the global financial system as they started their meeting on Friday afternoon in Washington.
The action would represent outlays of hundreds of billions of dollars in each country to provide liquidity to markets, capital to banks and other financial institutions, a backstop to money markets to restore funding for banks and deposit guarantees.
None of the ministers or central bankers was sure the emerging plan would work, but with stock markets in freefall and banks unable to borrow from each other even overnight, they agreed a bold initiative was essential.
EDITOR’S CHOICE
Editorial Comment: More haste, and much more speed - Oct-10
Full coverage: Global financial crisis - Oct-08
Philip Stephens: The financial crisis marks out a new geopolitical order - Oct-09
Editorial Comment: Reaching for the stop button - Oct-09
Lex: The final bail-out - Oct-09
Full coverage: IMF/G7 meetings - Sep-14
Well, they could just start buying up stock on the open market. Maybe bring the Dow back to 10,500ish. That would probably restore confidence. Wonder how many Billions of treasury money that would require…
I’d guess about $4 TRILLION.
true story la calif eastern san fernando valley house bought for 829k in 9/06 w 160k down now for sale for 650k and bought fast……multiple offers ….690k escrow great discount off peak….but not enough, this is a sticky region…..by the way house was bought in 2001 for 279k……..those are the prices i need again..in that area…i think i am dreaming……
“Denise from Indianapolis: ‘Two years ago I bought my home on a two-year arm, being convinced by the mortgage company I would be able to refinance before the two years were up.’”
One thing I’ll never understand is how “refinancing” makes houses affordable, especially when you start out paying a teaser rate for two years. Even the “refinanced” fixed rate would be higher than the introductory rate she paid.
It’s hard for me to believe she wasn’t just trying to Get Rich Quick and flip this thing. And she likely has income from her live-in-boyfriend that she doesn’t mention to get more benefits from the state, or foodstamps, etc. How can you support yourself and children on that budget?
“The Fed was in denial, the Treasury was in denial, the bosses of Merrill Lynch and Lehman were in denial. And yet this crisis was the most widely heralded ’surprise’ in the history of finance.’”
Exactly. Ben saw it. I saw but couldn’t explain it. Lots of people saw it. The only people who didn’t see it were those not paying attention, and those getting paid to shut their eyes.
How did it happen? It was insane!
WT Economist
Maybe the long trail back will feature increased consumer savings, instead of the negative rate that is shameful. Modest proposal: eliminate income tax on interest gained from regular savings. There also are more politically unpopular ways to keep dollars in the United States.
My eyes are much more wide open now.
But it depends on what I see: Interesting light, interesting picture.
Dull light, oatmeal.
I like oatmeal.
Big, yeah, when there is no clarity, oatmeal in a bowl offers refuge… and some good eats.
Bowl of oatmeal tried to stare me down, and won.
Yes, we all saw it. But how do we profit from our insight? My plan was to swoop in and pick pretties from the carcasses. (Vulture capatilizm) The bail out might thwart my plans. I will wait and see.
“How did it happen? It was insane!”
One had to be crazy not to be insane. It wasn’t insane to make a risky loan if you could pass the risk off to someone else. It only became insane if the loan - and the risk - came back to eat holes in your balance sheet.
Those who were sane and didn’t participate in the insanity were driven from the market, leaving the market to be run by the insane.
Darwinism at work.
JP Morgan: “Buy when everyone is selling…”
Financial Times
Global market rout
Published: October 10 2008 09:38 | Last updated: October 10 2008 22:38
The worst week for stock markets since the crash of 1987. Or since the 1970s slump? Or even before then, since the 1930s? It has certainly been awful. Some $6,200bn was wiped off the value of the world’s stock markets last week as a Category 5 Credit Cyclone smashed around the globe. Many markets simply battened down the hatches and didn’t open. What has been going on?
The simplest answer is: distressed selling. Hedge fund redemptions prompted one round of sales. Steep losses in the leveraged loan market, related to Icelandic banks, piled on further pressure. Then there were fears about whether $450bn of credit default swaps taken out to insure Lehman bonds would settle on Friday afternoon. Distress spread from there. Even gold was not immune. Bargains have been spurned – the S&P 500 is now trading on 9 times forward earnings, its cheapest level since 1985. But those deals are going to remain on the table until investors are clearer what the rules are – let alone valuations.
But if earnings tank 50% next year then you are back at 18x forward earnings.
================================================
Bargains have been spurned – the S&P 500 is now trading on 9 times forward earnings, its cheapest level since 1985.
so its a good time to buy the dip ?
http://www.safehaven.com/article-11522.htm
interesting with charts and graphs of previous stock market crashes. So is our crash more like 1973 or 1929 maybe 2002 or 1987 ?
I guess the jury is out on whether the bailout’s stock market crash was by accident or design.
“Bush is going to get on TV at around 10:25 AM this morning to try to make people confident, but I doubt he will be able to help. He threw fire on all of this when he said if the bailout bill doesn’t pass everything will crash. He helped create a self-fulfilling prophecy. There is talk that the Treasury Department will make an announcement today saying that it will temporary insure all bank deposits no matter what their size or that Bush will say this. That is an announcement that would simply scare people even more.”
This is my favorite classic:
September 26, 2006
“You can’t go anywhere without hearing people talk about “the real estate bubble.” Such talk drives me to distraction, and I’ll tell you why. It’s because there is no real estate bubble. Bubbles are for bathtubs.” -kendra todd
“The Great Bathtub Bubble of 2010″
It will be heralded for generations as “what pulled us out of the Big Down”.
Bubbles are for bottom fishers.
I believe Mr. Bubble is giving most people a bath right now.
Here’s a couple of old commericals about Mr. Bubble:
1970’s Mr. Bubble commercial:
http://www.youtube.com/watch?v=OjymtNGUhFA
1950’s Mr. Bubble commerical:
http://www.youtube.com/watch?v=2as4TAsLA44
A lot of folks took a bath.
Rub a dub dub
Underwater in housing tub
Chicago (and other locations).. Coldwell Banker asked their clients to lower their listing prices 10% to get the market going.
Hmmn… wonder if they’ll lower their commissions by 10% too;-)
“Perhaps. Or at the very least, they’ll have real reason to worry if real estate values in their neighborhood start growing at leaps and bounds ahead of wages and overall inflation.”
Many, if not most, will not live long enough to see this happen again.
I guess that depends in part on what banks learn from the current episode about the profitability of bailouts. So far, not so good…
from Bush:
If you are having trouble paying your rent, the government is here to help you.
We have 700 billion to help you pay your rents.
Thanks jorge.
saturday morning and ben is on strike.
Remember…..most of our ancestors came here to get away from them “crazy furriners”………:)
And when they got here, they were “those crazy furriners”