In The Bottom Of The Skid
The Boston Herald reports from Massachusetts. “Massachusetts median house prices have fallen below $300,000 for the first time since 2003, new figures show. Wellesley College economist Karl Case doesn’t think Massachusetts housing has bottomed out quite yet, ‘but we may be closer to a bottom than most people think.’ However, Case added that, if the U.S. economy enters a deep recession, ‘all bets are off.’”
“Timothy Warren of the Warren Group, isn’t convinced that the market has bottomed out yet, either. ‘Foreclosures, tight mortgage-lending standards, job losses and a recession are all going to exert downward pressure on (housing),’ he said.”
The Telegram from Massachusetts. “The median home price dropped 15.6 percent last month to $287,500 from $340,750 in September 2007, The Warren Group reported. Moreover, third-quarter sales dropped to the lowest pace since 1991.”
“‘I have seen a lot more activity. There are different segments of the market, but I am beginning to see the savvy sages out there,’ said Jeffrey W. Hall, president-elect of the Worcester Regional Association of Realtors. ‘They’ve been flipping properties for decades. I think they see that we are in the bottom of the skid. They are very knowledgeable people who stay on top of the market, and do it for a living.’”
“Ms. Leonelli said she has a three-decker rental property listed in Millville for $89,000. ‘At that price you can’t lose,’ she said.”
“Andrea Moulton of Westboro has been looking at homes for a year and a half, and has watched the selling prices of properties she nearly purchased drop by thousands of dollars. ‘I’ve seen a huge change in the market, and I’m glad I didn’t buy then,’ she said. ‘What I purchased would have lost value. I’m in no rush to get into anything. Some sellers are still overpricing.’”
South Coast Today from Massachusetts. “In September, the median price of a single-family home in Bristol County was $250,000, 18 percent lower than the same month last year. Plymouth County’s median price declined by 14.6 percent to $287,000, and Barnstable County’s median price dropped 20.7 percent to $345,000, according to The Warren Group.”
“Bob Lima, broker in Dartmouth, said there has been a drop in the last three weeks in calls from potential buyers. Mr. Lima said the bad economic news this month is to blame. ‘I think people are scared to do anything,’ Mr. Lima said.”
“A home-buying fair called Opportunity Knocks…took place at Normandin Middle School and was sponsored by MassHousing and the Massachusetts Association of Realtors. ‘We’re trying to promote safe home ownership,’ said Goretti Joaquim, business development officer for the Massachusetts Housing Finance Agency. ‘There’s an overabundance of homes on the market, so folks have plenty to choose from.’”
The Belmont Citizen Herald from Massachusetts. “U.S. Rep. Barney Frank said Monday that fewer prospective homebuyers will qualify for mortgages as a result of the financial meltdown, calling that trend a positive byproduct because ‘tens of millions’ of people are not suited to own homes.”
“Chairman of the House Financial Services Committee, Frank said the market will likely encourage a large increase in affordable rental housing. Answering critics who said he was working to deny low-income people access to their own homes, Frank said, ‘I’m not denying them the right to own a home, circumstances are.’”
“‘We made a mistake as a society in promoting homeownership as a universal achievable goal,’ he said.”
The Herald from Connecticut. “Characterizing the current economic crisis as ‘the worst since 1932,’ Democrat Chris Dodd, senior senator from Connecticut, said he was committed to keeping families from ‘falling through the social cracks. The job will be challenging but we can do this.’”
“The senator vowed to step up his efforts to slow down the rate of home foreclosures (according to HRA, now at 1,000 a month in Connecticut) and to crack down on predatory lenders. In answer to a question from The Herald about releasing his own home mortgage information, Dodd said, ‘No one wants the bipartisan ethics committee to complete their work more than I do. That’s what I’m waiting for. Let them complete their work first.’”
“Earlier in the year, Dodd, chairman of the Senate banking, housing and urban affairs committee, praised Fannie Mae and Freddie Mac ‘for riding to the rescue to help people get home mortgage loans.’ He is also on record as saying they ‘need to do more to help high-risk borrowers obtain more favorable loans.’”
The Stamford Advocate from Connecticut. “U.S. Rep. Christopher Shays, R-Bridgeport, has turned to a different surrogate in his re-election fight against Democrat Jim Himes. The National Association of Realtors has pumped $804,371 into television advertisements and direct mail to support Shays, according to a Washington, D.C., organization that tracks the campaign money.”
“Only one other candidate, U.S. Rep. Paul Kanjorski, D-Pa., received more support from the nationwide association.”
“Though Shays acknowledged reaching out to the group, the 21-year incumbent said he didn’t expect it to deliver in such a big way. ‘I’m grateful for their assistance. I’m surprised by it,’ said Shays, a former real estate agent and former member of the association. ‘I’ve sought their help because I’m pretty much in sync with their views.’”
“Many left-wing political blogs have raised questions about the influence of special interests such as the Realtors’ group on Shays’ campaign, pointing to his support of a controversial bill that would overturn a Federal Housing Administration ban on seller-financed down payments on mortgages.”
“A spokeswoman for the Realtors’ group, which has 1.2 million members nationally and about 16,300 members in Connecticut, said the association decided to back Shays before he signed onto the bill. ‘It did not come into play in our decision,’ said Mary Trupo of the Realtors’ group.”
“Shays’ support of a measure that would that create a permanent firewall between the banking and real estate industries won him the backing, she said. ‘Think of where we are right now. Imagine if banks were in the real estate market and they were holding properties. It would be catastrophic,”‘ Trupo said. ‘It would offer unfair advantages to the banks.’”
The Connecticut Business News Journal. “According to the National Home Builders Association, the number of new-housing permits is a key indicator of future building activity - and in September, it has been down across the board. National numbers of housing starts have been released and the future looks - grim? Not so, says Liz Verna of Verna Properties in Wallingford, who chairs the Home Builders Association of Connecticut’s government affairs committee. ‘The 24-hour news media are bombarding people with negative messages about the real estate industry.’”
“Verna believes now is a better time than any other recent period to invest in residential real estate. ‘At the end of the day, people need a place to live - and people who are afraid to invest in the stock market should invest in real estate,’ she adds. ‘It’s the most lucrative investment, and it’s tangible.’”
“‘For other states like California, Florida or Nevada, things look bleak but we are still building in Connecticut, so it’s hard to equate [what's going on in] Connecticut to what’s happening nationally,’ adds Liz Verna. ‘It’s different.’”
The New York Observer. “Harlem condo sales plunged a staggering 76 percent annually in the third quarter of 2008, from 237 closed deals last year to just 57 for the three months ending Sept. 30. The slowdown in buying activity is opening a window for an oversaturation in the Harlem condo market, as several upscale projects like 119th & Third and Graceline Court at 106 West 116th Street are scheduled to open in the coming months.”
“The prospect of a drop in Harlem condo prices almost seems unimaginable to brokers and developers, especially considering that prices uptown are already substantially lower than in the rest of Manhattan. The median sales price for a new uptown condo was $560,000 in the third quarter, whereas the median price for a downtown one was $1,275,000, according to the Corcoran Group.”
“Brokers and real estate professionals working around Harlem…they remain cautiously optimistic that the newer condos will draw buyers. ‘I think Harlem will still gentrify, but I don’t think it will be at the same pace,’ Vie Wilson, an uptown-based senior vice president at Corcoran said. ‘It won’t stop, because we’ve gone too far to stop.’”
From Newsday in New York. “New York City has seen an explosion of suspected mortgage fraud reported by banks to law enforcement, according to government statistics. For 2006 and 2007, banks and other lenders nearly doubled the number of ’suspicious activity reports’ they made of possible mortgage fraud involving borrowers in the five boroughs, the data showed.”
“The increase…correlates with the way the housing market heated up in recent years, said FinCEN spokesman Stephen Hudak. ‘The banks are more aware of the issue,’ Hudak said. ‘From what we have seen just the increased volume of transactions leads to the [increased] suspicious transactions . . . the more transaction are up, the more opportunity for suspicious transactions.’”
The New York Post. “John Devaney, who be came the poster-boy for hedge-fund blow-ups when his $600 million fund went belly-up earlier this year after a wrong-way bet on the direction of the asset-backed securities index, was heckled off the stage in Miami last week during the annual confab for the asset-backed securities industry.”
“Devaney, who made no friends after his United Capital Markets’ flame-out left investors with zero payout, began to speak during a Monday morning discussion at the conference but soon began a rant on why the markets were wrong and he was right. The crowd began to boo and the microphone was taken away from him, according to several spies in attendance.”
From Bloomberg. “Hovnanian Enterprises Inc., the New Jersey homebuilder that has lost more than half its value in the past month, asked bondholders to reduce the principal on its debt in exchange for notes that pay a higher interest rate.”
“‘If you’re a bondholder, it’s a tough deal, but you might do it anyway,” said Vicki Bryan, (a) high-yield debt analyst for New York-based Gimme Credit LLC. Three of the biggest lenders to homebuilders, Wachovia Corp., Washington Mutual Inc. and Merrill Lynch & Co., are gone, pinching the companies’ access to capital, Bryan said.”
“‘If you’re one of the weaker links like Hovnanian, you are trying to make sure you have access to credit going forward,’ Bryan said. ‘The bondholders are being sacrificed, not the stockholders.”’
‘The largest stockholder is Kevork Hovnanian, who founded the company in 1959 and is the father of CEO Ara Hovnanian. He owned about 7.6 million shares, or 12 percent, on July 3, according to Bloomberg data.”
“In the event of a Hovnanian bankruptcy, holders of the new notes would be third in line, behind banks and holders of 11.5 percent notes issued this year, to be repaid, a higher position than holders of the current notes, said Frank Lee, a homebuilder credit analyst in New York. ‘That’s why I call this coercive,’ Lee said. ‘You’re asking bondholders to take a big haircut, and if they don’t take the haircut they don’t have any claim in a bankruptcy.”’
“Some of the bonds Hovnanian is offering to exchange are already trading for 40 cents on the dollar, Lee said.”
From Forbes. “When housing was hot, everyone in the industry, from home builders to mortgage lenders, reaped the benefits. Paydays were rich, and more and more job seekers flooded the business for a piece of the pie. Those days are gone, and so are the fat paychecks.”
“In a look at compensation over the past five years for 27 senior management job titles across 11 U.S. industries, mortgage-lending directors have had the hardest reality check. Their earnings were down 6.3% in the last five years to $101,400 in 2008. They are the only group in the survey to see a decline.”
“This was expected even before the U.S. housing bubble burst in 2006, according to Ed Buchser, president of Pine Brook, N.J.-based Atlantic Home Loans. He says the run-up in house prices caused ‘ridiculous increases in compensation.’ He sees a return to the norm. ‘People that jumped into the industry are finding that the industry doesn’t support them anymore,’ he says.”
“Dane Sinn, manager of survey operations at Compdata, says healthy consumer spending over the last five years spurred demand for finance and marketing gigs. The competition grew fierce and paychecks swelled. ‘In the coming year, it will be interesting to see how pay will be affected for these positions,’ Sinn says. ‘We have not yet experienced the full effects of the credit crisis.’”
“For all occupations, real estate and construction paid an average salary of $100,400 this year, while financial services jobs paid an average $98,700 a year. Says Sinn, ‘There will most likely be decreased demand for these positions.’”
“U.S. Rep. Christopher Shays, R-Bridgeport, has turned to a different surrogate in his re-election fight against Democrat Jim Himes. The National Association of Realtors has pumped $804,371 into television advertisements and direct mail to support Shays, according to a Washington, D.C., organization that tracks the campaign money.”
But that won’t impinge on his decision making if elected. /sarcasm off
And I might make mention of the fact that Shays represents Bridgeport. It’s one of those cities you’ll get shot in broad daylight. And it’s one of those cities where the bubble was a brief reprieve in their long term economic decline.
Long is a severe understatement. it’s the original “Detroit”.
It’s been in decline since before WW II.
Well… Kind of. It went into steep decline after GE and Hubbell pulled out back in the 80’s…
As a native of Detroit, and a 15-year New Englander, I agree that there are many “mini-proto-Detroits” like Bridgeport (I worked on projects there - felt just like home but safer), but Motown is a True Original, if only for the sheer longevity of its’ hegemony (almost a century), its’ singularity (3 major industries: Cars, Cars, and Cars), impact of its’ products (Cars = America) and magnitude of its’ decline (unfathomable). More people (1 million+) have left Detroit than have ever lived in most cities. And Bridgeport isn’t in line for a piece of the Big Bailout - the bankrupt (fiscally and ethically) Big 2.8 Auto Companies are! To see some of the devastation, check out this site:
http://detroityes.com/home.htm
Or google “The Fabulous Ruins of Detroit”. And remember: Detroit was/is a necessary precondition for LOS ANGELES and its’ ilk. The cars had to be made somewhere - even for the Joads - and that was Detroit. It was the Silicon Valley of its’ day, and once had a certain working-class glamour (partly due to inflated wages). But right now, a home actually being sold for purposes of owner-occupancy in Detroit is practically front-page news. (And the News/Freep is only about a dozen pages now). As someone once said, “The City of Consumption ultimately consumed itself”. Will our “Country of Consumption” follow suit?
Best wishes to all. Marquis Dee
Millvilee is rural, not near a major highway, in the snow belt, no public transportation or trains..so who is going to plow the 100 inches of snow?
$89,000 would be ok if you had your extended family living there…but a rental still might be too much
————–
“Ms. Leonelli said she has a three-decker rental property listed in Millville for $89,000. ‘At that price you can’t lose,’ she said.”
Different Millville - this would be Millville, MA, a truly forgotten little milltown in the Blackstone corrider… what was once an important canal route from Providence to Worcester. It has been downhill for the place ever since the railroad displaced much of the local industry.
The price is about right for the area, I think - back to about 1990 levels, not adjusting for inflation.
“The senator (Dodd) vowed to step up his efforts to slow down the rate of home foreclosures (according to HRA, now at 1,000 a month in Connecticut) and to crack down on predatory lenders. In answer to a question from The Herald about releasing his own home mortgage information, Dodd said, ‘No one wants the bipartisan ethics committee to complete their work more than I do. That’s what I’m waiting for. Let them complete their work first.’”
Dodd gets a sweetheart VIP mortgage deal from Countrywide (available only to VIPs, not you or me) and wonders what is wrong with everyone else. I have an idea - take away his golden senate pension and make him live on Social Security…
Dodd knows that a vote from a slimeball who cheated on his mortgage papers is worth just as much as a vote from a responsible citizen. He also knows that it’s way easier to get the slimeball’s votes, and apparently he also seems to sense that honest citizens are in increasingly short supply.
This isn’t a financial crisis it’s a moral one and our wind sock politicians are leading the charge in whatever direction suits their fancy.
“Though Shays acknowledged reaching out to the group, the 21-year incumbent said he didn’t expect it to deliver in such a big way. ‘I’m grateful for their assistance. I’m surprised by it,’ said Shays, a former real estate agent and former member of the association. ‘I’ve sought their help because I’m pretty much in sync with their views.’”
And THIS, my darling HBBer pals, is why it IS important to vote. I was annoyed by all the grumbling about the uselessness of voting yesterday. If you don’t want to vote for Obama or McGrumpyOldster then don’t, but your vote in state and local races may matter very much. For example, my gal Sandra will win here in Thurston as county commissioner. Hooray! HooraaYYYYYYYY! Her opponent is the Master Builder’s stooge. They always try to buy local elections for their minions, those evil wretched fookers. Gosh, I hate them so.
Maybe none of you give a crap about whether my beautiful Thurston county loses all its wetlands and gets paved over, but I sure am fascinated by the subject.
Yep. We don’t have a democracy unless we use it.
Fed elections are hard to make a difference because of sheer scale.
On the local, county, and state level, however, it only takes a few people to make a difference.
I think a lot of McCain voters say they won’t vote this year, hoping the feeling of apathy about crossing party lines spreads to their Republican brethren. Then once in the ballot booth, they will vote (silently) for McCain.
This election ain’t over til it’s over…
And I agree there are a lot of important decisions to make outside of the Presidential race.
It could happen just that way.
McCain in a squeaker.
Diebold programming at its finest.
“We don’t have a democracy”
That’s true. What we’re supposed to have is a representative Republic. I just don’t see much “representing” going on, at least not for the people. Plenty of representing going on for the military/industrial/Wall Street complex.
“I’m not denying them the right to own a home, circumstances are” (Barney Frank )
Right, “circumstances” YOU had a big hand in creating, you, you useless steaming pile!
Hey, at least he’s out of the “Everybody ought to own a home no matter what we have to do to get them into one” camp. He admitted that the push for universal home ownership was a mistake. Do you see Chris Dodd admitting they were wrong? Nope. So at least give him a tip of the hat for owning up to a botch (even if he kind of tried to distance himself from the botch with his phrasing.)
sfbb,
True that. It’s just that his capitulation comes at a time when it’s altogether too late. No matter how much he owns up, he’ll still get re-elected and not one dime of this debacle will come out of his pocket?
I would like to know how many dimes went into his pocket because of this debacle.
Yah, he should be voted out of office for incompetency no matter what. But he at least admitted that trying to force home ownership rates up is dumb. Dumb dumb dumb dumb dumb.
So tar and feathering, but no lighting him on fire afterwards. Save that for Dodd.
RE: you useless steaming pile!
I’m with ya, DIN-
How Frank, Dodd, O’Bamie Boy and all the other friends of Mazillo & Raines have managed to put the spin on, to the extent that they have convinced the masses that their hands are completely bloodless in this fiasco and they are THE SAVIORS TO COME! leaves ya totally gape mouthed.
The end of the Republic is upon us.
hd74man,
And while we’re covering ‘this’ meltdown, quietly behind the scenes, they’re talking about the Gov. buying you out of your 401k ( at pre-crash levels of August of course ) and having the gov. put you in 3% Bonds.
Not to worry! They’ll “manage” everything. Uh… did any of these people that are so in love with this idea stop to think that those dollars ( on a payday basis ) go toward directly funding publicly traded companies? I guess now it will go direct to the government. They want to do away with the tax advantages of contributing to your own plan and replace that with a flat tax credit of $600.
If ‘that’ doesn’t worry you, it should.
Do you have a solid reference for the buying out of 401(k)s at pre-crash levels? I’ve been hearing rumors of this but so far I haven’t found a good source. I can’t believe the government could do this, but at this point hardly anything surprises me.
Thanks in advance.
Michael,
It’s been all over, U.S News and World Report, ABC News and Investment News (which was emailed to me). The audio is on http://www.kvi.com
Kirby Wilbur on 570 AM in Seattle.
Thanks!
RE: quietly behind the scenes,
A WSJ op-ed piece today noted tha tpotential future Barack appointee AG Charles Ogletree is championing a trillion dollar reparations-for-slavery project.
Or to be fair the real number is $800 billion allocated over 10 years.
Huba huba…
For those keeping track of silly things that don’t matter, such as incomes vs. housing prices:
“The Boston Herald reports from Massachusetts. “Massachusetts median house prices have fallen below $300,000 for the first time since 2003, new figures show. Wellesley College economist Karl Case doesn’t think Massachusetts housing has bottomed out quite yet, ‘but we may be closer to a bottom than most people think.’ However, Case added that, if the U.S. economy enters a deep recession, ‘all bets are off.’”
So, in this guy’s fantasy mind, MA housing should cost over $300,000. That’s nice, except that the median household income for the state is only about $56,000. In Bubble Land, housing SHOULD cost 6x your income! Right… and this concept of selling houses for two times what is actually affordable will work long-term how exactly? Oh, that’s right - it’s falling apart even as we speak.
Maryland is the same way, though the median housing price here is “only” 5x median income. Yeah, really “affordable!”
Try as I might, getting this concept through to the die hards here in the bay state has been close to impossible…
Yet a friend is about to “dump” 250000 remodeling a beaten up house in the cape… I told him to start with a 50K budget, but no, it can’t be done… We are talking remodel, not build new!
I’ve typed on here several times before. Case is a jerk. Except for his index there is not one worthwhile thing about this man. Just listen to him speak sometime and you will be convinced. He should shut his yap.
“…if the U.S. economy enters a deep recession, ‘all bets are off.’”
I keep seeing/hearing this qualifier, but I have noticed it is starting to morph. Nine months ago it would have read:
“…if the U.S. economy enters a recession, ‘all bets are off.’”
Progress.
Next year:
“…if everyone launches their ICBMs, ‘all bets are off.’”
“Dane Sinn, manager of survey operations at Compdata, says healthy consumer spending over the last five years spurred demand for finance and marketing gigs.”
Healthy consumer spending? I think he means unhealthy debt, courtesy of the House ATM.
“U.S. Rep. Barney Frank said Monday that fewer prospective homebuyers will qualify for mortgages as a result of the financial meltdown, calling that trend a positive byproduct because ‘tens of millions’ of people are not suited to own homes.”
This is starting to piss me off. Who says? Based on what?
The problem wasn’t the expansion of homeownership to different income groups. It was the excessive prices, and HELOCs off the inflated values.
If sound ownership housing is available for $60,000, then someone with an income of $20,000 should be able to buy it — they’d have to cover the capital and operating cost of a housing unit owned by a landlord in any case. They should have to save a $6,000 downpayment and pay mortgage insurance until their equity reached $12,000, and should not be able to HELOC, except for very limited reasons. Otherwise, what is wrong with that?
The excess owner occupancy isn’t due to people being unsuited to own homes. It is due to people being at an unsuitable point in their lives to own homes. People who do not expect to be settled in one place indefinately, and are not reasonably certain they can stay for five years, should not buy. One should not buy a house in the expectation of selling — and one should never get an ARM for that reason!
Excellent observation WT.
WT Economist,
Most excellent! Had homes been available at sustainable levels, these people would have been able to find other employment and maintain their obligations, no problem.
Was it perhaps a case where they tried to accomplish too much, too quickly? I mean owning a home is one thing, making the leap to thinking ( not that it will one day be paid off ) but rather, becoming independently wealthy, was too much to expect from ANY (1) generation?
In my experience, when public policy isn’t completely frozen by the power of vested interests, it tends to run to oscillating stupidity.
Here is an example of the latter. From lend them money the can’t pay back because everyone should be a homeowner, to don’t lend them money they can pay back because “we” have decided they shouldn’t be.
Enforce the old mortgage standards, and prices will fall to what can be afforded somewhere. All that is required is a mostly steady job.
At one point in the mid-1980s, I remember hearing that two people with jobs married to each other in Oklahoma could afford the median priced house on the minimum wage. How about being able to afford the lowest priced house?
It’s a shame he didn’t bring up the real problems, i.e. low/no downpayment loans (FHA 3% is begging for foreclosures) and downpayment assistance.
This mess would sort out pretty f’ing quickly if they just made Freddie and Fannie and the FHA all require 20% down. And no seconds. (A second mortgage being recorded would trigger a ‘pay in full’ clause.) No more promotion of irresponsible lending by the government.
Wow. You really do want ‘haves’ and ‘have nots’ don’t you?
Wow. You really do want ‘haves’ and ‘have nots’ don’t you?
Are you kidding me?!?
If you can’t save a 20% down payment, what makes you think you’re ready to own a home? Let’s see: can’t save the down payment (probably not saving for retirement either), can’t save an emergency fund in case the furnace goes or the roof leaks (I’ll just put it on a credit card), don’t have any room in my budget to absorb the ever increasing taxes and insurance. Don’t have any “skin in the game” so I can walk away the minute housing values drop below my mortage, leaving a blight in the neighborhood. Does that about cover it?
You need to lose that “entitlement” mentality real fast…
Just as leasing your house could trigger the anti-assignment clause that is ordinarily found in residential mortgages, so too could a second mortgage, at least in a title-theory state. While the enforceability of the anti-assignment clause is well established, I have never heard of it being applied to second mortgages.
potiential buyer,
20% down with it being verified as not a gift (it’s in their possession for a year) will drive housing prices down to levels that ANYBODY who’s willing to save a little bit will be able to scrape together the scratch to do it.
Back when 20% downpayment was the norm, median housing prices were 2.5-4x the median salary. At the 0-3% down, they’re up in the 6-10x the median salary.
If the median salary is 30k, and median houses cost 90k, 20% down is 18k. If median salary is 30k and houses cost 200k, 3% is 6k. So you’re only asking them to save 3 times as much, not 10 times as much.
And if you can’t save money, you can’t manage maintenance expenses/taxes, etc.
The whole reason people were wanting to get into ownership before is that the monthly cost was CHEAPER than renting, and the downpayment assistance programs/FHA low down payment crap showed up because the thinking was “If we can just get them past the down payment, they’ll have more money for savings so they can save for maintenance/etc.”
But what REALLY happened was it started pushing prices in those starter houses up, making them no longer cheaper than renting once purchased, making people who couldn’t save a downpayment in the first place unable to save for maintenance or other unexpected expenses, putting them at risk for foreclosure.
And low downpayments put the FHA at risk of losses from foreclosure.
Now, when you get every dang bank lending with retardedly low down payment levels and loose standards, the entire financial system becomes at risk from foreclosures.
Which is what happened to us.
It’s not about the haves and the havenots. It’s about the ‘responsible enough with their money to be a good borrowing risk’ and the ‘not responsible enough.’
Financial prudence is not class warfare. Government sponsored imprudence IS class warfare, but against all classes.
The whole reason people were wanting to get into ownership before is that the monthly cost was CHEAPER than renting,
That’s why we bought our first home.
I had a whole discussion on another site where a person where their opinion was mixed: no boom time mortgages, but save FHA!!
My replay was that 20%, solid credit, and good job history didn’t hold people back, it leveled the playing field. Look at where those down payment programs got us: we (as a family) are able meet the tradional requirements, are willing and able to do building maintenance but are now effectively priced out of the market, despite doing everything “right”.
I think those requirements also kept the housing stock in reasonably good repair as you had to manage your money and work for the house in question. When prices come down to something reasonable, I suspect the path of least resistance (unfortunately) will be to build new by demolishing something someone didn’t have the money to upkeep.
WT,
My guess is that most OK’s don’t view the simple act of making payments on a house ( however nice ) as a path to untold riches? ( They’re a little more common sense than ‘that’! )
It’s always a leap of faith to plunge into a 30 year mortgage. But the idea was, as your income increases over time, your payment will look smaller and smaller. Well this time we did it the opposite way!
So, who isn’t qualified then Barney? All those people you were trying to bailout last year.
F him and the horse he rode in on. Shays, Dodd and Barney… how do these guys get elected.
RE: and Barney… how do these guys get elected.
They absolutely luv him here in Teddy “Chappaquidick” Kennedy country!
Now you can understand those Texas bumpstickers from the last oil shock which read: “Drive 75…Freeze A Yankee”
“Drive 75…Freeze A Yankee”
Yes ignorance is so funny. Just another version of cut off your nose to spite your face.
RE: Who says? Based on what?
Why, Barney Frank says so. Is there any other reason?
…and he’s just a small part of the “Nannie “we’re from government and we’re here to help, you pedestrian morons” State” thats rollin’ full bore down the fookin’ highway.
Easy to bully the little guy…no ballz when the boyz are involved.
Right on! As an economic refugee/exPatriot from the Great Massachusetts Housing Scam, I can attest to just how “creative” things were getting, even back in the mid-to-late 1990’s to get people into “homeownership” at any cost - “soft second” loans for down payments; no PMI with 10% down; 5% down mortgages…it was clear to me that spending more than 2.5x my income would be irresponsible at best. Yet, homeownership was our Golden Calf, at which the entire frenzied population of the Commonwealth worshipped, listening to the High Priests at cocktail parties expound about their home “appreciation” was “skyrocketing”. Rents in Boston were always high, making it thard to save, and driven higher by loosening standards around the % of rental income that could be counted towards qualifying for a 2 -or-3-family house. Apartment rents driven by young professionals each paying $500-$600 each for a bedroom…do the math! We made too much to qualify for the staggering number of “homeownership” programs, but too little to aford the market. By 2000, with a young family, an decent income, and savings, we were HOPELESSLY priced out, and left for my wife’s hometown, Cleveland. (Little did we imagine that prices would double AGAIN in Boston by 2005!) A tough town, Cleveland, but we could buy a great house in a nice town (Lakewood) at 20% down and only 2x income (even here we were encouraged to spend a lot more and “go upscale” by brokers and lenders, because we were “income-qualified”! Yikes! I knew damned well what I could really afford, and that houses need money and time for maintenance, and that you need savings in case of layoffs, health issues, etc.) Then Cleveland, like everywhere, became a hotbed of “creative mortgage financing” - prices were completely separated from reality, given structural economic decline in manufacturing - and ultimately devastated by foreclosures.
So here I sit, here in Cleveland, having played by the rules, been responsible and prudent, toughing it out, hustling harder every day for business, but getting by, while the good citizens of Massachusetts are shocked to realize that the Calf was really made of lead painted to look like gold. All this is a long way of saying that, in a given economic region, the price of housing (not a commodity to flip or tranche or speculate on, but a PLACE TO LIVE) will (or should) ALWAYS regress to the inflation-adjusted mean relative to the median income. So 5x or 6x income? NEVER made sense to me; several friends still in MA have lost their homes (forced sale or foreclosure) and are renting again - and rents are still high! - if they still have jobs and have stayed healthy. Many more have left for NC and TX and yes, even a few back here to Ohio.
Now the New England Congressional Contingent, funded by Realtors, wants to subsidize mortgages that never should have been made not only because some borrowers couldn’t afford it but because HOUSING PRICES NEVER SHOULD HAVE GOTTEN SO DAMNED INFLATED IN THE FIRST PLACE? Even RICH people shouldn’t have to devote so much income to what is a non-productive asset. Just think what other investment uses that money that got poured into houses and MBS and CDOs could have been put to…alternative energy, maybe? Bonds for Infrastructure, like high-speed rail? AND NOW WE ARE BORROWING TRILLIONS TO “SOLVE” THIS GLOBAL MESS?
Homeownership is a priviledge to be EARNED, not a RIGHT; it is SHELTER not an INVESTMENT; moreover, it is not for everyone! And, now that (I hope) the GOLDEN CALF has been pulled off its’ pedestal, we must ALL, alas, continue to wander in the economic desert for years to pay for our blasphemy. And what of those of us who tried to keep the faith? We and our descendants will foot the bill.
God help us all. Pray for the Jubilee!
“For all occupations, real estate and construction paid an average salary of $100,400 this year, while financial services jobs paid an average $98,700 a year. Says Sinn, ‘There will most likely be decreased demand for these positions.’”
And that my friends is where we are going to see the biggest hit to the economy. A lot of the jobs that are disappearing won’t show up in the unemployment reports, but will have a dramatic effect on Consumer Spending, Bankruptcies and future foreclosures.
Most of these people have little or no real hope of ever finding another job that will pay them even 1/3 of what they were used to making in the housing mania. And there were a ton of them out there, and I would be willing to bet that very few of them were squirreling away those nuts for a rainy day.
When a person doesn’t have income, but still has a large monthly nut, it doesn’t take long until all available credit is tapped out. Gonna be a lot of houses made of cards falling down across the country.
Why won’t they show up? Because they are all ‘under the table’?
So they can’t collect unemployment?
No, they do not show up because they are 1099, independent contractors that bill. When you do 1099 you do not have unemployment, ergo, no work, no money…
That is why long time 1099′ers probably save 30 to40% of their after tax pay, just in case… These guys thought that the good old days never were going to end, and bought the F450, the BMW Z4, the 250K center cabin, and had 3K in their checking, just in case an unexpected expense came up…
(speaking from personal experience, Step Brother is a plumber, and did all of the above… Now he is sweating bullets.)
“and bought the F450, the BMW Z4, the 250K center cabin, and had 3K in their checking, just in case an unexpected expense came up…”
I assume the toys were purchased for little or no down. Lots of these fools keep $3K or less in cash cuz they look at the available credit on their credit cards as money in the bank to be used for that 6 month job loss emergency. The joke’s on them when their lenders chase down the balance over the next few years and reduce their credit limits to slightly above their typical monthly carry over balance. Priceless.
Another thing the FBs are surviving on is 401k hardship withdrawals and loans. Of course, the way the market’ been lately that may not be nearly as much of an option today compared to a year ago.
There are going to be many riches made over the next few years/decade by those with cash and available credit to buy assets at pennies on the peak dollar.
“That is why long time 1099′ers probably save 30 to40% of their after tax pay, just in case… These guys thought that the good old days never were going to end”
Another Key point that you raise is AFTER TAX! I can only imagine how many of these former high flyers didn’t bother to mail in checks with true quarterly estimates as their incomes declined.
Many will still have tax issues, which will only compound the problems arising from their declining incomes. I’ve never been in trouble with the IRS, but had a friend that had a few “misunderstandings” with them. Seems to me that they were not really fun to deal with, and had no problem calling the little lady at work and make her cry in front of her co-workers with some pretty nasty threats. Seems like I heard somewhere that they have toned down the nastiness a bit, due to complaints, but I would think that it would only take a few minor adjustments to the collections policy manual to reintroduce the Old IRS Collection Programs.
RE: 1099 you do not have unemployment, ergo, no work, no money…
Oh, Pinch…don’t forget the FICA self-employment tax…15.2%!
Gawd, I hated quarterly’s.
Every time you’d think you were gettin’ somewhere financially, that double SS levy would knock your azz right down the stairs.
The drop will not show up in unemployment numbers quickly as 1099 contractors earn commissions or are paid by the job.
If an electrician was wiring a couple of houses each month but now has three days of work each month, he is still employed. The income has dropped quite a bit though.
Likewise a used house saleswoman who was selling two houses each month but now is selling two per year, is still employed. Just doesn’t have the previous income.
“Most of these people have little or no real hope of ever finding another job that will pay them even 1/3 of what they were used to making in the housing mania.”
Recalling a post from last week:
See this why the gov’t needs to guarantee everyone’s “livelihood”.
Who remembers that one?
Of all the statistics here, I am most shocked by the fact that we have 1.2 million realtors in this country. That’s a figure larger than the population of several states. For a comparison, the size of the U.S. active-duty military is 1.4 million.
Here in Tucson, one of our newspapers just ran a story on how our police department is having trouble finding enough recruits and getting them through the training.
Not that they’re lowering the standards. They make no bones about how tough the job is. In fact, one of the training drills involves being punched in the face. Why? Because that’s something that’s going to happen to you once you become an officer.
But the story noted an uptick in the number of real estate and mortgage types who have expressed an interest in joining the force. What remains to be seen is how many will stick it out over the long run.
Arizon Slim,
Just think! If they can do HALF for law enforcement what they did for real estate…!..? ( Wait a minute, that didn’t come out right? )
Migratory pukes, what else would you expect? By the way, are there any openings for “training officers”? I’d love to apply.
Punched in the face — that sounds about right. That’s how people feel when their ARM resets.
Yes-punched in the face by their ARM. The wretched, poor FB never saw it coming-a complete and total surprise when the 1-1/2% leaps to 7%. How awful.
For good measure, the predatory lending bastards simultaneously insist that the FB start paying something on the principal!!
Hey Barney Frank-is stupidity one of those circumstances you are referring to? Nothing down, easy money, real estate always goes up, HELOC your way to prosperity. Maybe stupidity is the wrong word. With no skin in the game, maybe their choice was rational.
‘In fact, one of the training drills involves being punched in the face. Why? Because that’s something that’s going to happen to you once you become an officer. But the story noted an uptick in the number of real estate and mortgage types who have expressed an interest in joining the force.’
Oh, my golly, think of the incredibly wonderful job it would be, to be a police trainer in Tucson. You get to PUNCH EX-REALTORS IN THE FACE!! Awesome! Can you imagine the joy?! I can’t!
I mean, yes, I know–I could go out and punch an ex-realtor in the face right now, they’re all over, littering the place up, but if I did then I’d get arrested. And maybe the cop would be an ex-realtor. That’d be irony, but not the kind I like to see happen to me. But as a trainer, that’s your job, man! So punch away…ahhhhhh.
Say, Slim, do the trainers also ‘have’ to taser the trainees? Because that, too, could happen to them once they become officers. How about shoot them a little here and there? How about bang their heads on the floor?
Olygal,
And then we’ll report to our superiors ( after hours of torment ) that they just don’t make officers like they used to..?
Bring in the next “candidates”!
No actually, I ‘do’ see the validity of the “training”. I served on the San Diego County Shore Patrol and there were lots of guys that ‘thought’ they wanted to go into law enforcement until they saw people “at their worst” night after night? I did for almost a year, and it cured me!
‘And then we’ll report to our superiors ( after hours of torment ) that they just don’t make officers like they used to..?’
HAhahahahaha! *wipes tears of laughter from eyes*
Seriously, this is gonna’ be the subject of many a fantasy inside the fluffy-haired, barrette-decked Olyhead.
Now, you say you were in law enforcement? That’s neat. I approve of cops. (unless they’re ex-realtors). I once considered being a cop, because I am a bit of a justice freak and I like to see the deserving be punished. But then it turns out I got these stupid little stick-bug girl arms that I felt would make me an ineffective enforcer. I mean, what, I’m gonna’ specialize in beating up kittens and midgets? If I could just shoot miscreants at will, I’d be fine, because I’m a great shot, but they got these stupid rule thingies that frown upon that practice, I hear.
Oh, also I like to break the law. Another possibly disqualifying element.
So, no badge for Olygal. Alas.
Tazing is also something that the officers and the trainees must experience. From what I’m told — and I know quite a few of Tucson’s Finest — being tazed is NOT fun.
POW!
Suzanne: Thank you Sir! May I have another?
SOCK!
Suzanne: Thank you Sir! May I have another?
……repeat…….
If former real estate agents are joining the police force, I may just become a criminal!
Joe,
I’m willing… to consider it!
How you been doing man? Is this every bit as “pyrotechnic” as we’d promised it would be?
“one of the training drills involves being punched in the face. Why? Because that’s something that’s going to happen to you once you become an officer.”
Good lord. When I played goalie on my high school soccer team I knew I was going to take a ball to the nuts every once in a while but I didn’t have the boys line up to take penalty kicks at my goodies. That seems excessive.
My son also plays goalkeeper. He made varsity as a freshman, but likes club level play better (too many neophytes in HS).
It has to be the most thankless position on the team.
Yep. I can tell you that the 3rd grade crowd is attracted to all the glories of goalie, however.
That’s twice the number of doctors in the entire country.
“Timothy Warren of the Warren Group, isn’t convinced that the market has bottomed out yet, either.”
The Warren Commission is still unsure about whether it was loan gunmen that took out the precedent?
Heh. There used to be a joke that in Annapolis, Md., nobody bothered asking people for their drivers’ licenses for identification–just their realtor licenses.
Keep in mind that only a small percentage of those realtors are actually buying and selling houses on a regular basis (well, even fewer now). RE as a profession is notorious for the high numbers of people in it who make little or no money a year, contrasted with a handful who rake in a lot of dough. It’s like acting, or being a professional competitive eater.
They sure do look out for one another though. Honesty ratings are similar to that of politicians.
“Punched in the face” — that’s how people feel when their ARM resets.
“Earlier in the year, Dodd, chairman of the Senate banking, housing and urban affairs committee, praised Fannie Mae and Freddie Mac ‘for riding to the rescue to help people get home mortgage loans.’ He is also on record as saying they ‘need to do more to help high-risk borrowers obtain more favorable loans.’”
Why is it desirable to help high-risk borrowers buy home loans when prices are falling? Won’t that just make the foreclosure crisis worse, as high-risk borrowers are, by definition, highly likely to walk away from a mortgage if they end up owing more than the house is worth, a situation already facing millions of home owners?
Here’s one big problem. Dodd is the son of a senator. How can the son of a senator have any clue about real life? I doubt that his law degree clued him in to how life really is. I have an idea. Quit voting for political families. I am done. I quit cold turkey. Voting for Bush cured me of that illness. That is one thing I like about Obama. He is not an heir to the throne. I won’t be voting for Chelsea Clinton, either. Ever!
No $h!t, Sherlock Franks, what gave your first clue that not everyone was ready to own a home, or could afford it.
If we can punch police trainees in Tucson, can I go and punch Michael Dell in the face too? I have had an exceptionally bad experience with their warranty repair service. It is worthless, and he should be ashamed of himself for putting his name behind some a poorly designed process. That would be a boost to my morale, just like hitting a few realtors and our friends like Frank and Dodd.
Dell is the poster child of what is wrong with globalization. I will not recommend a Dell computer, unless they are a direct competitor, or they are a realtor..
No offense.
I’ve owned two Dell desktop computers, and they’ve worked like champs.
Dell has offshored their support (so you now speak with a “Jennifer” in Bombay India).
Dell used to be great.
Chase Rep was in Manila. He had no accent. I asked where he was. I was polite.
I own 2 Fujitsu tablet PC laptops, which are hard to buy in stores outside of Japan. Best laptops I have ever owned, and I’ve owned many. I plan to get an Apple desktop once I hit the lottery and can afford a quad core operating system. It’s nice that you can run multiple OSes on them.
I have to say, like cars the American brands have been sucking for awhile, with the exception of Apple. I desperately want to buy American, but not when it means getting a product that I can barely work with.
“‘…but we may be closer to a bottom than most people think.’ However, Case added that, if the U.S. economy enters a deep recession, ‘all bets are off.’”
Newsflash Update!
All bets are now off; all bets have been off for a while now. “Deep” recession? Already got the JT two feet inside you, dipwad.
How can you remain cautiously optimistic about your soon to be on the market condo development in Harlem with a 76% decline in sales yoy, an acknowledged recession, and all the investment banks imploding downtown?
That’s like being cautiously optimistic that an epileptic retarded monkey is going to get into Julliard’s.
‘I think Harlem will still gentrify, but I don’t think it will be at the same pace,’ Vie Wilson, an uptown-based senior vice president at Corcoran said. ‘It won’t stop, because we’ve gone too far to stop.’”
Does he not remember what’s happened to Harlem in the past? It is notorious for gentrification/crashing all through the late 1800’s and up to the great depression.
sfbubblebuyer,
Well… Robin Williams got into Julliard’s!
Right, a 76% decline in sales is nothing to get all worked up about? I spoke with some folks in NY earlier this morning and they noted that it really is an idle threat for finance people to leave his/her firm because… well, where the hell are you going to go? I’ll just go… to..? Oh that’s right, they’re belly up too!
I have a friend whose son is at Juilliard. In addition to being an incredibly difficult place to get into, the school itself is intense.
Everyone, and I do mean everyone, is trying to do their best — and get better. If that means practicing your instrument for 10 hours a day, well, that’s what you do.
I would have said Yale instead, but we already know a retarded monkey can get in there, so it’s not a stretch to add epilepsy.
Well who’s more “spastic” than Robin Williams?
Frank Galindo did a really great impersonation that kind of exposed his “free association” stand up routine that I thought was kind of telling. I think the biggest challenge for any comedian is to ‘get’ people laughing.
Once you’ve done that w/ people ( it’s pretty easy to ‘keep’ them laughing ) It’s hard *not to abuse.
Agreed. Robin WIlliams’s schtick is like what would happen if aliens tried (unsuccessfully) to replicate the concept of human “comedy.”
Here’s an old SCTV clip of Martin Short doing an impersonation of Williams at his “best”:
http://www.youtube.com/watch?v=eFPfGZmFLKg&feature=related
I especially love Joe Flaherty as the guy with the mike, doing that patented, “Oh, hahahaha…what a nut, isn’t he wacky?” thing that the people with the mikes always do around Williams…
Dang. I always thought Robin Williams was funny (if a little too self important.) You all are right, though, “free association” stick isn’t all that hard. Another image shattered.
What if they promoted a safe sex program, using real estate-ese?
Something along the lines of, ‘you’ve got an overabundance of sperm in your market, so folks have plenty to choose from.’
Opportunity Knocks?
“A home-buying fair called Opportunity Knocks…took place at Normandin Middle School and was sponsored by MassHousing and the Massachusetts Association of Realtors. ‘We’re trying to promote safe home ownership,’ said Goretti Joaquim, business development officer for the Massachusetts Housing Finance Agency. ‘There’s an overabundance of homes on the market, so folks have plenty to choose from.’”
A snippet from the NYPost article on Devaney, the hedgie. Seems he threw a post-conference party on mom’s boat:
“During the night, two investors who had lost a total of $1.5 million continued to stew over their loss and, with the help of a few cocktails, cooked up a plan to steal some of the expensive art hanging on the walls of the yacht, our spies reported.”
Genius!
I work with a recent college graduate who majored in finance. He was smart (or more like lucky) enough to get a commission in the military right after graduation. He just told me that most of his ex-classmates from college are already coming back home (after getting their asses handed to them in Chicago or Wall Street), presumeably to live in their parent’s basement once again. I wonder if those kids will be able to get anything close to the replacement salaries mentioned in the above articles? NOT!!!!!
So when does the lucky guy get shipped off to Iraq?
When will the market finally come to its senses again? Apparently these guys some how missed the memo that Wall Street has folded its MBS securitization business.
Wall Street Journal
* HOUSE TALK
* OCTOBER 29, 2008, 10:21 A.M. ET
Economists Predict Home Prices Will Bottom Next Year
By JUNE FLETCHER
When will housing’s sickening slide stop?
According to economists at the semi-annual National Association of Home Builders forecast conference, not soon—though the end is in sight. The consensus: Home prices will bottom out as early as the middle of next year.
I’ve been attending these conferences for years, and last spring’s was the gloomiest I’d ever attended. The latest conference, held last week, was also downbeat, but with a glimmer of hope—many of the economists seemed optimistic that the government’s bailout plan, which includes buying toxic mortgage debt, will lead to housing’s recovery. More affordable prices, pent-up demand, incentives on new homes, fewer housing starts and expected declines in interest rates for fixed-rate mortgages also should help ease the crisis, said David Seiders, chief economist of the trade group.
Although all of the economists agreed that we are in a recession—despite lack of official government confirmation—and have been for many months, several characterized the current financial turmoil as an overreaction, given the country’s narrowing trade gap and strengthening dollar. “I’m hopeful that the markets will come to their senses soon,” said Michael Moran, chief economist for Daiwa Securities America.
“Home prices will bottom out as early as the middle of next year.”
Can someone remind me for how long already the bottom callers have been forecasting a bottom within the next 12 month period? I believe this has been going on already for about three years now, but I am not sure about the exact timing of the onset of this stopped clock forecast.
At the end of the day, people need a place to live
But there are more places to live (i.e. vacant houses) than there are people who can afford to buy them. To put it another way, supply is greater than demand. Plus, if someone can get a rental for less than the cost of mortgage, taxes, insurance, and maintenance combined, then that would be a better option for that person as their “place to live”.
“My house is special, making it immune from price declines that have hit all the other homes in the country.”
October 29, 2008, 11:51 am
Many Homeowners Think They’re Immune to Price Declines
Almost half of U.S. homeowners think their homes are insulated from the broader national decline in prices, according to a survey by real-estate Web site Zillow.com.
Homeowners don’t see price declines affecting their own houses. (Getty Images)
Despite a financial crisis, market volatility and continued indications of declining home prices, 17% of homeowners told Zillow they think their own home’s value stayed the same over the past year, while 32% said their home has appreciated in value. Zillow estimates that nearly three-quarters of homes have lost value in the past 12 months.
However, the numbers in the third-quarter indicate that more homeowners are seeing the effects the bursting of the housing bubble has on them. In Zillow’s second-quarter survey, 62% of respondents thought that their home value had increased or stayed the same over the past year.
The survey was conducted Oct. 7-9, while stock markets tumbled in one of the worst selloffs in history, making the results all the more surprising.
“The human irrationality in terms of pricing and valuing what is ours has always been a barrier to good decision making, and the housing market is no different,” Duke University Professor of Behavioral Economics Dan Ariely said is response to the survey results. Worries persist that unrealistic expectations by sellers can prolong the housing downturn, as prices take longer to find a bottom.
“17% of homeowners told Zillow they think their own home’s value stayed the same over the past year, while 32% said their home has appreciated in value.”
By implication, 17% + 32% = 49% of homeowners in their survey believe their home either held its value or appreciated over a year when quality-adjusted U.S. home prices fell by the largest amount in recorded history. Further, it seems reasonable to surmise the median homeowner believes the value of his home fell by a negligible amount, as the median price change belief is found just south of the last guy in the 49% who believes his home’s market value stood pat or increased. Small wonder it seems as though sellers are holding their homes on the market forever at prices for which they will never find a buyer!
After reading this piece, is there any mystery why it takes upwards of four years for home prices to find a bottom once a correction begins? A market with so many uninformed and irrational individuals on the supply side is naturally going to have a very sticky price adjustment process on the downside, even if there are virtually no bids at current asking prices.
Talking to lots of “normal” people reveals the same generally stickiness. (We don’t need no high falutin’ college studies. )
It’s pretty obvious from my sister’s and in-law’s actions that they are willing to “wait it out” in vain (especially in my sister’s case, who does know better and wants to relocate) for better prices. Everyone knows someone like that - looking to sell but waiting for the insanity of 2004-2006 to “return” and make their dreams come true.
I mentioned yesterday that many VTer’s I’ve talked to seem to believe that the bubble passed them by. I think prices need to come down $80K-$100K to even come close to reasonable. This is in a market where the “average” house is approximately $250K. Right now the market is proving my point, as most housing above $200K in VT is not moving.
It will take years for everyone to accept those kinds of price cuts. Even then, I can guarantee you that 5 years from now, someone is going to try to list a piece o’ crap farmhouse in the middle of nowhere for $250K.
Joe Homeowner does not get inflation. He will hold on for years if necessary to sell at a nominal price near what he paid, losing site of the fact that inflation has eaten a large share of the value he thought was locked up in his home.
Joe Homeowner does not get inflation.
I agree on that as well. Those that bought in the last couple of years and hold for 20 or 30 years or so will be
“okay” if they don’t count the interest paid or the opportunity costs of holding onto the money and/or having the flexibility to move. (People also don’t count maintenance costs, but I digress).
Those like my sister, who I think wants to sell in the next 5 years will probably be most directly impacted physiologically by the drop in housing prices. (The long run of whether they are behind their buy and hold counterparts depends on their circumstances.)
Personally, I’m counting on those people who are forced to sell in the next 5 years or so. Those people will push down the comps.
“Personally, I’m counting on those people who are forced to sell in the next 5 years or so. Those people will push down the comps.”
Your tax dollars may soon be hard at work making sure this does not happen, as our govt would like to transfer collective wealth into the hands of those foolish enough to buy houses they cannot afford.
‘It’s pretty obvious from my sister’s and in-law’s actions that they are willing to “wait it out” in vain (especially in my sister’s case, who does know better and wants to relocate) for better prices.’
By sheer coincidence, I have both a sister and a sister-in-law in the same boat as your’s
Your tax dollars may soon be hard at work making sure this does not happen, as our govt would like to transfer collective wealth into the hands of those foolish enough to buy houses they cannot afford.
It may happen. Or the government may just make things worse. Darned crystal ball is so broken.
Optimism in all things though. My motto is “remember that this is the administration that brought you the Katrina rescue and Homeland Non-Security”
‘Optimism in all things though. My motto is “remember that this is the administration that brought you the Katrina rescue and Homeland Non-Security”’
Absolutely. I am optimistic this administration will not succeed in declaring martial law before they are unceremoniously shown the door around January 20, 2009.
Wall Street Journal
* OCTOBER 29, 2008
Economists Search for End of Woes
Vacancy Rate, South Korea Index Watched for Signs on When U.S. Will Turn Around
By JUSTIN LAHART and KELLY EVANS
…
Homes
The housing market will play a major role in any easing of lending standards. As long as home prices continue to fall, more homeowners will find themselves owing more on their mortgages than their homes are worth. That sets the stage for more mortgages going sour and continued caution among lenders. Through this year’s second quarter, the S&P Case-Shiller national index of home prices was 18% below its 2006 peak; Goldman Sachs economists forecast another 15% fall.
The key to how much further home prices fall, Goldman Sachs economist Jan Hatzius said, is how fast the glut of empty homes is absorbed.
At the beginning of 2005, 1.8% of nonrental homes were empty and waiting to be sold. The Census Bureau reported Tuesday a 2008 third-quarter vacancy rate of 2.8% — even with the second quarter and just shy of the first quarter’s 2.9%. With many homes on the market, sellers are lowering prices to attract buyers.
“If you see excess supply coming down, Economics 101 says that house prices will eventually stabilize,” Mr. Hatzius said.
harlem will bounce back i am sure of it!!!!
i am all over the city everyday, as well as new jersey,conn, and long island and the recurring theme i see is new construction sitting empty or half full everywhere along with for sale signs everywhere!
deep recession is here.
just went to the mall for a new pair of jeans (i lost weight!!)
and it was full of lookie loos but no lines at the register
x-mas stuff everywhere
this should be an interesting holiday season
Mg need any help…? i’m here available and a nice guy
RE: the recurring theme i see is new construction sitting empty or half full everywhere along with for sale signs everywhere!
Commercial RE is the next sector to come unglued.
WSJ said today that lots of current project’s final financing to re-set in 2010-2012.
Trump’s even havin’ problems in Chi-Town with his new project.
Seems to be in a current hole of about $400 mil.
The hammer blow will be bigger than most people think.