Desperation Has An Ugly Face
It’s Friday desk clearing time for this blogger. “A lot has happened since 2004 — in the housing market and in the lives of everyone associated with Vantage Pointe, the largest residential project ever to be built in downtown San Diego. Jennifer Bishop made a 5 percent deposit on a unit in Vantage Pointe in one of the first phases, she said. But now, she doesn’t even want to live downtown anymore, and doesn’t think she’ll be able to afford her unit. Bishop said even if the building’s finished mid-year 2009, and even if it means leaving money on the table, she will probably walk away from her unit next year. ‘If they had done it in 2004, we would’ve wanted to go ahead and live there,’ she said. ‘But it’s just a different time now — a lot of time has gone by.’”
“In a sign that housing policies around the South Bay are ‘out of whack,’ market-rate homes are now selling for the same price — or less — in San Jose, Fremont and Milpitas as homes officially designated as ‘affordable.’ For developers, who are required to set aside a percentage of units for buyers making less than the median income, the situation has become frustrating.”
“‘Why would you pay $510,000 when you can buy market rate for $460,000 or $470,000?’ asked Cheryl O’Connor, chair of the Home Builders Association of Northern California.”
“A moritorium on foreclosures and more affordable housing throughout the city are needed to save East San Jose, according to residents. Foreclosures in East San Jose are up nearly 400 percent since last year, said resident Margie Marquez. ‘It feels like it’s dying,’ she said. ‘We need them to stop the foreclosures.’”
“She and other community activists who packed a community meeting at Trinity Cathedral said a temporary respite from foreclosures would preserve the quality of life in the area while the city pursues how to add more affordable units for those who have already lost their homes.”
“In the South Bay Wednesday night there was some straight talk on foreclosures. At a community meeting it wasn’t just about getting financial help, lawmakers were there promising change through their votes. Inside a downtown San Jose church, people in need asked for help. ‘If I don’t find any help, next is foreclosure or I’m out of the house,’ said Roberto Huerta, a homeowner.”
“San Jose councilman Sam Liccardo was asked if he’ll vote for more affordable housing. ‘Not only will I happily vote for it, I’ll jump up and down if this passes,’ said Liccardo.”
“The battle over the mass modifications of troubled mortgages has begun in earnest. On Dec. 1, William Frey, a private investor in mortgage-backed securities, filed a lawsuit alleging that the proposed modification of some 400,000 home loans originally underwritten by the defunct lender Countrywide Financial is illegal.”
“‘The public policy problem going forward is, if Congress can legislate or a judge can break the contract, then I as an investor will demand a much higher premium,’ says the mortgage-company risk officer. ‘I can’t model and price something that is ‘oh gee, we’re going to change the rules.’ It’s a big problem.’”
“I’ve lived in Washington nearly a decade now, and I still don’t get this place. Of course I’m talking about the Treasury proposal/possibility/plan to buy mortgage debt at a rate that would allow lenders to offer buyers a 4.5 percent interest rate on the 30-year fixed. Well, here’s my two cents: If you take the median priced home in the U.S. which is $183,3000, put 20 percent down (as most lenders now require) and take out a loan for 146,700, your monthly payment at 5.5 percent is $832. Your monthly payment at 4.5 percent is $743.”
“So the big Treasury bailout saves the median home buyer $89/month. (Of course, it’s a bigger savings if you buy a bigger home, but I’m just going by the median.) Is $89/month enough to save the housing market?”
“Eugenio Aleman, senior economist with Wells Fargo, contends that lowering interest rates is ‘a crazy idea’ and that continued government meddling with the housing market is making the necessary correction longer and more painful.”
“Aleman said since home prices generally rise when interest rates fall, the federal government’s lowering of interest rates seems to be aimed at halting the free fall in home values. But he argued that home prices must come down further to draw buyers into the market. Also he said the federal government’s series of actions to spur the housing market has caused would-be buyers to procrastinate because they are waiting for further assistance.”
“The poor employment outlook also is discouraging home sales, he said, noting, ‘How can you buy a home with a zero interest rate if you don’t have a job.?’”
“Luxury homebuilder Toll Brothers Inc. warned Thursday that revenue in fiscal 2009 will be significantly lower than in 2008. Early in the quarter, company executives were optimistic the housing market might be stabilizing, but that soon faded as the U.S. financial crisis worsened in September. Chief Executive Robert Toll praised a proposed initiative for the Treasury Department to lower the rate on 30-year mortgages to 4.5 percent.”
“‘A program like that would go a long way to soaking up excess (unsold home) inventories, assuming buyers had the equity to meet program parameters,’ Toll said. ‘Low interest rates clearly help price affordability.’”
“The only thing that’s working today, it seems, is something completely different, different from what other builders are doing, and in many cases, different from what your company has ever done before. That’s pretty much the only way to stand out from a sea of resales, including ‘used’ homes that when they are only a couple years old are ‘like new.’”
“Whether you can make any money with this strategy, or any strategy, is another matter, of course. ‘No one is making any money,’ one prominent Southern California builder told me the other day. ‘They may not even be building for wages.’”
“In this Phoenix suburb, two townhouses stand vacant, filled with trash and abutting an empty neighborhood swimming pool covered with graffiti. When the 236 plots at a development called Donatela went on sale two years ago, eager shoppers camped out overnight just to enter a lottery for a chance to buy one. Today, one in nine homes at Donatela is in foreclosure or close to default, according to city records.”
“The sign at another subdivision, Starlight Trail, reflected buyers’ ravenous demand for new homes in Avondale: During the construction boom, between 2004 and 2006, the sales pitch changed from advertising homes starting in the $150,000s to advertising homes from the $250,000s. Now the builder is advertising new homes in Starlight Trail starting in the $150,000s again — even though more than 22% of the existing houses there are in foreclosure or close to it.”
“Oak Park’s developer cleared 52 lots, paved roads, installed sewers and power lines, and built four luxury model homes. Workers were cutting trenches for the in-ground sprinkler systems when the bank repossessed the entire property, according to the city and a former employee of the developer. ‘They just went to lunch and never came back,’ said city code-enforcement officer Dave Wood.”
“Since the end of last year, about 2,800 Washington agents have abandoned the business, a decrease of about 9 percent, and hundreds more have put their licenses on hold, according to the state’s Department of Licensing. ‘I think everyone was expecting some sort of rebound in the third and fourth quarter,’ said Russell Hokanson, CEO of the Seattle-King County Association of Realtors. ‘But just when it seemed we were coming out, we had another meltdown in the stock market in September and October and that hit consumer confidence again.’”
“Real estate agent Len Brandt said surviving the current market is a struggle, and requires a second income. ‘My wife works full time — I don’t know how anybody is in real estate right now if it’s their absolute full-time job,’ he said.”
“With the number of home loans shrinking because of the subprime meltdown and resulting tight credit, logic says mortgage fraud would be declining. But a report this week by the Mortgage Asset Research Institute showed fraud rose 65 percent in the second quarter over the same period in 2007. ‘Desperation has an ugly face,’ said Abington appraiser Michael Frolove. ‘If you can’t pay the bills or meet expenses, the pressure to commit fraud is even greater.’”
“On the other hand, the institute ‘could be just discovering old fraud,’ said Philadelphia mortgage broker and Realtor Fred Glick. Still, Glick agrees with Frolove’s observation. ‘I am sure there are loan officers that need the money and will do anything,’ he said.”
“‘Expect fallout, expect foreclosures, expect horror stories,’ California mortgage lender Paris Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her a job. Bowing to aggressive lobbying - along with assurances from banks that the troubled mortgages were OK - regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way.”
“‘These mortgages have been considered more safe and sound for portfolio lenders than many fixed-rate mortgages,’ David Schneider, home loan president of Washington Mutual, told federal regulators in early 2006. Two years later, WaMu became the largest bank failure in U.S. history.”
“One of the most contested rules said that before banks purchase mortgages from brokers, they should verify the process to ensure buyers could afford their homes. Some bankers now blame much of the housing crisis on brokers who wrote fraudulent, predatory loans.”
“But in 2006, banks said they shouldn’t have to double-check the brokers. ‘It is not our role to be the regulator for the third-party lenders,’ wrote Ruthann Melbourne, chief risk officer of IndyMac Bank.”
“Diane Casey-Landry of the American Bankers Association said the industry feared a two-tiered system in which banks had to follow rules that mortgage brokers did not. She said opposition was based on the banks’ best information. ‘You’re looking at a decline in real estate values that was never contemplated,’ she said.”
“Experts who spoke at a forecast meeting on Wednesday said the current recession will continue to have a negative impact on the housing market through 2010. The current housing climate is so bad that, by one analyst’s calculations, there is a 12-year inventory of homes worth more than $1.5 million in east Clackamas County. The equivalent figure for west Portland is about two years.”
“Jerry Johnson, a principal with Johnson Gardner, said a key indicator that the housing market was about to crash came when condominium prices began softening last year. ‘There’s always a canary in a coal mine in real estate markets,’ he said in reference to the condo market. ‘And the canary is dead.’”
“Ken Perry, president and CEO of Broker Knowledge Group, said about 7 percent of Oregon homeowners are ‘upside down.’ Perry said he was warning of the housing bubble and reckless lending practices in 2005, and he watched in amazement as lenders devised riskier deals for home buyers. ‘Did we really think they would pay us back?’ he said, referring to the borrowers.”
“Perry said the recession was unavoidable. ‘This correction is good,’ said Perry, referring to the recession and crackdown on subprime lending. ‘It would have been great five years ago. But the longer we waited to have the recession, the worse it would be.’”
Another great week! My thanks to those who support this blog. Please check back this weekend.
Ben, I’ve decided I’m going to be more spiritual for the Christmas season, starting right away. I’m letting you know personally, because I know you’ll be excited about it, being so spiritual and virtuous yourself, and also because I prayed for YOU, Ben, first of all, so therefore you probably got the benefit of Sweet Baby Jeebus’s full attention before He got bored and wandered off.
Now, I AM spiritual, but not in the commonly recognized style. Also, I’m not talking about ‘religion’–a discussion of my religious practices wouldn’t make it through Ben’s filters anyhow.
Therefore I decided to pray and be good, instead of just having Sweet Baby Jeebus over for a beer and a chat like normal.
So last night after my hot bath I got in my jammies and then I was all clean and steaming slightly, and bright pink, which I knew would attract and please Jeebus, that’s when I knelt down and prayed, and I prayed for some of you.
First, like I said, I prayed for Ben Jones, that he gets pallet of golden ingots and candy and also helps the deserving incidentally, and next for Silverback and her hubby, Polly and her annoying work stuff, Muggy’s completely darling littleman, and of course for Muggy and Mrs. Muggy, so they could take good care of MiniMuggy, and I prayed for Losty and her Doggy Horde, that everyone is healthy and no one is plagued by ticks—I hate ticks—and that she doesn’t get caught. And I prayed for Fasty (Fasty I prayed a lonnnng time over YOU, hahahahaa!) I prayed also for NYCityboy, that Mrs. NYCityboy retains her patience with him, and that he finds a new kind of candy that utterly delights his soul and is just right.
Then I went with a sort of blanket benediction ‘for all HBBers except the ones who don’t deserve it’. (You know who you are.)
So, now I want to know if any of you are experiencing an extra good day? Because if so, I’ll probably pray some more, maybe as soon as next week.
Oh, I forgot, I also prayed for you, Vermontergal, that a Celestial visitor in full regalia will beam down and walk up to your door with a super-exciting present of some kind, presented on a silver salver. I’m going to leave the present up to Jeebus or Santa, but I want it to be extra nice, is what I specified.
Well, what! Hey, if you’re gonna pray, pray big, is my motto. Besides, I know Vermontergal can keep a secret and not go blabbing to the newspapers about it.
“Desperation Has An Ugly Face”. Cher, aka Ben Jones, told me to give you this Mask.
(Hey! It does has Jim Carry properties.) Ladies choice whether to wear or discard it. Merry Christmas and Happy New Year! Cynical differential energy purgatory. Don’t know whether to buy more lower or sell less higher.
“They”? To vote or not to vote.
…if there is a God, pray this Post doesn’t Display. Define “extra good day”, ‘objectively, as opposed to subjectively.’
Damn girl. Calm down. As my ghetto friends assure me, not good enough.
If there is a god, this post won’t ever be posted. ROFLMAO. But my RE agent says I could bid lower if I post weirder. True. Christina Ricci is must hotter, younger, wealthier, and sweeter. But what she lacks is sass she makes up for in ass!
Anyways, here’s to our artist of the week, musician Ben One, in his song entitled “Never Leave My Girl”.
Are you just trying to overcompensate now after stealing this sign? Oly lives in Olympia. Sign stolen by someone in Olympia. By the transitive property, Oly stole the sign.
Missing atheist sign found in Washington state
“Religion is but myth and superstition that hardens hearts and enslaves minds,” the sign from the Freedom From Religion Foundation says in part.
[snip]
Before reports of the placard’s recovery, she said a temporary sign with the same message would be placed in the building’s Rotunda. Gaylor said a note would be attached saying, “Thou shalt not steal.”
“..and so goes the story of how the athiests discovered that society needs religion. Now say your prayers and go to sleep! Santa will be here soon and won’t come if you’re awake!”
That was the one thing that caught my attention as well. Independent of whether I support or oppose the sign’s message, I thought her comment about attaching the note was hilarious…and appropriate.
‘Are you just trying to overcompensate now after stealing this sign? Oly lives in Olympia. Sign stolen by someone in Olympia. By the transitive property, Oly stole the sign.’
Sleepless, I’m going to make a little orange post-it note to myself right this minute to pray for you, that you not be so cynical.
Anyhow, Mr. Man, I do believe in God. I believe most firmly. I see mine daily, because they are really tall and move fairly slowly. Plus Jeebus comes over for coffee quite often, along with Paul Bunyan, so there, Mr. Scoffy.
On another note, Jeeze, those ‘Freedom from Religion Foundation’ people sound like they somehow manage to be even MORE rigid, intolerant, humorless and boring than even your most unlikeable Republicans can manage. It’s like a miracle of science. Or of evolution. Or whatever. (Hahahaha! That’s funny!)
Look, there’s plenty of Gods for all of us, surely? And yet we can all ‘Be good for goodness’ sake’.
‘…even MORE rigid, intolerant, humorless and boring than even your most unlikeable Republicans.’
Now, I meant that in a good way, of course.
And like I said, there are plenty of Gods for all of us. If yours happen to wear suits and have cleanly parted buzzcut hair, well, that’s okay by me.
Wow!…I’m sure glad she didn’t pray for me.
The big guy might triangulate my position, lock on and send in the frigging lightning bolts
Har! Yeah, I could use a prayer so have at it. Oh, and I wasn’t questioning your faith. It’s quite apparent that by stealing the sign that you do believe!
BTW, I’ll be passing through Olytown next Thursday to see Chief Seattle and Friday on my way back. Perhaps I’ll stop in to post a sign of my own: “You both suck, so suck it!” Or something like that.
Oh, I’ll also send you my best wishes as I road rage my way down I-5 on a Friday afternoon!
BTW, speaking of Olympia is The Spar still there?? have only been there once (and liked it a lot) but have a family connection to the place
You’re just praying because you’re trying to get more presents. Well, guess what? I told Santa what you did, and he was PISSED. He says X-mas is HIS holiday. Jesus has nothing to do with it. If there’s one thing Santa hates, it’s when people disrespect the Santa. Then he said you can make up for it by sending extra cookies to Big V’s house this year. If he gets the extra cookies at my house, then he will agree to go to your house later and give you your presents.
Hey, don’t shoot the messenger.
Cramer said matchmaking isn’t easy, but he’s working overtime …of course you mean the synthetically sold short “house”, I presume.
Oly, if you’re still out there, thanks!!! Much appreciated. While you were praying, I was sneaking around the port of entry between Colorado and Utah with a big truckload of…let’s just say stuff*. Didn’t get caught.
OK, OK, the stuff* was my junk from my storage unit, nothing very exotic, a huge straw hat from Guatemala, rustic cowboy furniture, my real mattress (no more squatter’s cot for me), a saddle, hundreds of books on geology and archaeology and flora and fauna of the high desert, dogs, well, you get the picture. The only thing illegal was me, I need a new driver’s license.
There’s a back way around the border when you wanna get back into Utah (not a state line, a border, as Utah is an entity into itself). Made it through, tomorrow going back for run 2.
PS Keep praying on my behalf - I’m afraid to bring attention to myself since the last time I made some smartass comment about Holy Moroni-Macaroni, that bolt hit too darn close for my taste, so now I’m all reformed, sorta. Or laying low is more like it.
Thanks OG.
Hey, Olympiagal, thanks very much for your prayers. You have a good heart and hopefully a good figure as well, if you were kneeling down and praying in your altogether. But sincerely, we do appreciate it. I do believe in the power of prayer. Right now my vey dear husband fell asleep. He got very upset reading “The Flat Earth” which my father gave us for Christmas last year ( now that’s a helluva cheerful present ), so I took it away, and gave him a large thick book of lusty Conan stories from Robert Howard, a great sci fi book called Mindstar Rising, and if he didn’t like either of those, a Dortmunder novel (hapless NY burglar, kind of like NYCityBoy). He finally fell asleep. On top of health problems and not being able to hold a job due to memory problems, when he can find one around here, he got served on Thanksgiving Eve with a lawsuit. Before I knew him, 11 years ago, he had unwisely lent $ 70,000 to an attorney who used the money to buy herself an office condo. She refused to give him a good promissory note, and always was telling him the paperwork was back at her office. His wife had died, and he is unwise with money, being overly trusting with “friends”. Anyway, to make a long story short, she had to be brought before the Attorney Discipline Board in our state, and ultimately, after refusing to comply with a number of their requirements to keep her license, she lost it on a permanent basis in this state. As some people would know, this is highly unusual - usually an attorney is just suspended for 90 days to 6 mos, and take an ethics class, which she refused to do. She also changed the length of the term that the balloon was due from 10 years to 15 years midway through the subsequent 4-year long “negotiations” with our attorneys. She was ultimtely forced to sign a promissory note adhering to the original terms of the paperwork she had sent him 7 years before. Anyway, she stopped paying on the note in 6-1-08, the balloon was due on 7-1-08, we set it for a sheriff sale after all the due process was observed, and now she got a temporary restraining order against the sale which was supposed to be heard within 14 days, but she got it delayed until Jan 27th. Well, our attorneys are working on that one. We are supposed to have drawn a very iffy judge. Once we foreclose on the office, she has another 120 days to “vacate” and “redeem” her wonderful investment. Then, we’ll have to get a cleaning crew in to fix it up and get rid of the filth, and either try to sell it or rent it out for probably around $ 800 monthly. At least it’s in a nice area in a good complex. It will be interesting. I really admire Arizona Lender for being able to successfully make loans to some of these people. It’s a difficult business. Luckily, I’m used to collecting down to the last $5.00 for the institution I work for, against workers’ comp and auto ins. carriers, so none of this crap overly surprises or upsets me. So, thanks very much for your good wishes. We NEED them !
Oh, and he’s a lot wiser with money now
“In a sign that housing policies around the South Bay are ‘out of whack,’ market-rate homes are now selling for the same price — or less — in San Jose, Fremont and Milpitas as homes officially designated as ‘affordable.’ For developers, who are required to set aside a percentage of units for buyers making less than the median income, the situation has become frustrating.”
“‘Why would you pay $510,000 when you can buy market rate for $460,000 or $470,000?’ asked Cheryl O’Connor, chair of the Home Builders Association of Northern California.”
Congratulations to Fannie Mae and Freddie Mac for successfully achieving the objective of their affordable housing mission. However, I am not entirely sure that a real estate bust, an unprecedented foreclosure crisis, a historic inventory glut and a terrible recession were the most attractive way to accomplish the objective.
A market rate of close to half a mill? Excuse me while I sit this one out.
Those are the “affordable” ones too!
A market rate of close to half a mill? Excuse me while I sit this one out.
I think you missed an “h” in the fourth-to-last word there. Of course, I’ve been saying that for years…
Sith?
My favorite was Darth Maul. Why, oh why, did they kill him off so quickly? He was the best Sith.
What ever works.
I’ll say the objective is achieved when the market rate drops to about $240k in San Jose.
I lowballed a house in San Jose. It went up for auction, the folks who won the bid couldn’t get financing on their winning bid of $430k; bank wanted to unload so I offered $250k.
Agent actually called me back too. Told him I really wasn’t that interested so wasn’t going higher and anyway prices would continue to fall. Also told him I was looking for a home to rent; once locked in to the lease, I would be out of the market for a year.
Can’t blame a person for trying, eh? Wouldn’t be surprised if I actually got the house though, then I’d rent it out for a year……………:-)
Meh. In addition to the lowball dollar value in your offer, put tons o’ escape clauses in there.
Thank goodness for those oldies but goodies low ball low riders! May you you have side panel flames imprinted upon your SS check. True. If you want the mounted chrome blower, that costs extra.
/Non Post, /Take III.
Big V,
I believe the market is going to drop further than 240K in SJ
In that case anyone who bought in the last 20 years will be underwater.
In that case anyone who bought in the last 20 years will be underwater.
By the time this hits the bottom, I’m betting it sure will.
“For developers, who are required to set aside a percentage of units for buyers making less than the median income, the situation has become frustrating.”
Just imagine how frustrating it is to have to LIVE on that median income when house price are so out of whack.
“So the big Treasury bailout saves the median home buyer $89/month. (Of course, it’s a bigger savings if you buy a bigger home, but I’m just going by the median.) Is $89/month enough to save the housing market?”
Let’s see: San Diego homes have recently been losing 20 pct of their value a year. Suppose the price of the home you want to buy is now $400,000 but you could wait a year and get it for $320,000 (20 pct less); that $80,000 in discount would be equivalent to 80,000/89 = 900 or so $89 monthly payment reductions (900 months = 75 years). That’s an awful long time to recoop falling knife discounts, IMO.
Hmm not to mention that if you had to sell it anytime in the next 75 years you would have to bring cash to the table to cover the difference. Thats the big reason schemes like this don’t work they don’t prevent the new knife catcher from going right underwater. And I’m sure a lot of the loans are 3% down.
Now if they offered me 1% down and covered and deprecation before I sold then I’d be very interested.
Makes me think they should dream up a futures market for housing.
Generally markets with volatile pricing only work with a futures market. I’ll say nothing more on the subject lest the concept make its way to TPTB.
They have one. Fidelity offers a housing index. They also have an equivalent housing short index. I didn’t find out about it until after the crash started, otherwise I would have gone all in.
I would like a 1 pct rate and instead of giving my lender a loan guarantee, I want the GSEs or perhaps the FHA to make a personal loan guarantee to my household that if we get foreclosed, we get to sell the home for a sufficiently high price to repay the loan and retain a 10 pct profit. If I cannot get such a deal, I plan to wait until home prices have crashed farther than the ABX.HE indexes, the oil price and the Baltic Dry Index price put together before I even start looking for a home to purchase.
The latest scheme to come out of Washington is reduce the DP to 1 1/2%. Were almost there sports fans.
They have a futures market based on the Schiller median prices.
Made this very same argument two days ago. Besides, who has the downpayment or a job?
Only rich guys have the downpayment and a job. I am thinking this 4.5 pct mortgage deal amounts to no more nor less than yet another taxpayer-funded welfare program for the rich, in the guise of a populist “save our homes” program.
Good point.
True confession:
If home prices plummet far enough, I will try to figure out how to qualify for housing welfare money. Not to suggest here that I am really rich nor really poor — my household is merely a speck of middle-class flotsam trying to stay afloat on a tumultuous sea of bailout-driven financial tsunamis.
I guess I am also, by my true confession, revealed to be a pawn in the PPT’s chess game. But I am not a very cooperative pawn…
“Chief Executive Robert Toll praised a proposed initiative for the Treasury Department to lower the rate on 30-year mortgages to 4.5 percent.”
“‘A program like that would go a long way to soaking up excess (unsold home) inventories, assuming buyers had the equity to meet program parameters,’ Toll said. ‘Low interest rates clearly help price affordability.’”
Newly unemployed people and ordinary working people who are worried about their job security will still not be willing and able to afford Toll Brothers homes at anywhere near the 2005 bubble peak price, even if mortgage rates are lowered to 0 pct through taxpayer subsidies.
They wouldn’t want to afford a Toll Brothers home. Family friend used to work for Toll. While in their employ, he coined this slogan:
Toll Brothers Homes: Guaranteed for five years. Then they fall apart.
It’s a doomed project. Maybe if they had a 4.5 rate and no-doc mirror fogging jumbo loans they could prop up prices, but that’s what got us here in the first place, and I don’t think the banks would be enthusiastic about throwing a few more billions of their capital away.
The 4.5% project only really makes sense in the context of California, where $500K jumbo loans are the norm.
The idea of a 4.5% loan in the context of all this bailout money eventually turning into inflation is OK only if you plan to die in your house. Eventually, the inflation cooked into this economy will show up and with interest rates at 10% the mortagage payments will be more than double if they buy your house at what you paid?
I am betting that prices can’t move up for the next 20 years unless the dollar collapses and we are all billionaires.
“Why would you pay $510,000 when you can buy market rate for $460,000 or $470,000?’ asked Cheryl O’Connor, chair of the Home Builders Association of Northern California.”
$510,000 is “affordable”???? Are you people out of your freakin’ mind??? OMIGOD THAT IS SO INSANE!!!!!!!
In California it is…..
It’s not affordable in California, they’ve just deluded themselves into thinking it is. What a bunch of knot heads.
yeah, you’d need an income of roughly $160K for an affordable home.
Blano,
Welcome to my world
Starting to see more houses now below 500K.
“Why would you pay $510,000 when you can buy market rate for $460,000 or $470,000?’ asked Cheryl O’Connor, chair of the Home Builders Association of Northern California.”
Only $460k? Wow, better get my checkbook! What a deal!!
That’s nothing.I saw a Craiglist ad this week that said a place over 900k in Los Altos (or Los Gatos?) was “a great starter”!
You gotta give the bozos points for sheer, naked, cojones.
I guess when lying is your profession, then no lie is too obscene, too gross, or too “over the top” to shame a bozo.
OTOH, maybe they were quoting the price in 2012 dollars. In that case, it might turn out to be completely reasonable.
Speaking of desperation. How about a self proclaimed activist who moves homeless people into vacant foreclosed homes with apparent immunity from authorities:
” Max Rameau, stands outside one of the “people-less” houses that he is using in his own bailout plan in Miami.
Rameau is an activist who has been executing a bailout plan of his own around Miami’s empty streets: He is helping homeless people illegally move into foreclosed homes. “We’re matching homeless people with people-less homes,” he said with a grin.
He said he is not scared of getting arrested. “There’s a real need here, and there’s a disconnect between the need and the law,” he said. “Being arrested is just one of the potential factors in doing this.”
Miami spokeswoman Kelly Penton said city officials did not know Rameau was moving homeless into empty buildings — but they are also not stopping him. “There are no actions on the city’s part to stop this,” she said in an e-mail. “It is important to note that if people trespass into private property, it is up to the property owner to take action to remove those individuals.”
http://tinyurl.com/68rt9o
“It is important to note that if people trespass into private property, it is up to the property owner to take action to remove those individuals.”
And therein lies the problem. Seems like the banks want the local govmints to do their dirty work for them and the govmints are so squeezed themselves, they’re just throwing up their hands. Besides, if the squatters keep up the property, so much the better, that’s one less abandoned property that the govmint has to worry about.
Rameau’s problem is that he does break into these houses and that IS a crime, it’s called breaking and entering. However, if you find a house where a door or window is unlocked and you can enter without damaging anything, and IF you can squat on the property for seven years without ejection, it can be yours legally. Florida does have adverse possession laws. I don’t know quite how it conflicts with trespass.
California has all but done away with adverse possession. They add another “factor” to the common-law ones to assert adverse possession: you have to pay property tax - billed to you! - during the time period on the property you claim! Obviously this prevents almost all but the most dedicated squatter from every getting adverse possession.
People who fail this test end up with a prescriptive easement instead.
Perhaps gaining actual ownership (title) to the property through adverse possession is all but outlawed in CA. But what’s to stop squatters from changing the locks, turning on the utilities and just living in the properties? As long as you are getting a free place to live in, who cares if you have title or not?
test…
Palmster,
Adverse possession doesn’t conflict with the law of trespass at all. Think of it as waiting out the statute of limitations for enforcing a civil trespass action. For this reason the adverse possession must be “open and notorious” so that the actual property owner is “on notice” that the trespass is taking place.
I don’t see that as an act of “desperation”. I see it as a creative form of social activism (and poetic justice to boot). In CA, we call such squatters “Bandos”, and IIRC, Ben posted a link about them several months ago
Problem#1: Millions of empty houses that are dead assets on bank balance sheets and magnets for crime –”party” houses for the local teenagers, mosquito-infested pools, brown lawns, , etc.
Problem#2: Millions of stinky homeless people urinating & defecating in the street, begging for change, bothering people and being general eyesores.
Solution to both: BANDOS!
What’s not to like??
Bandos? Are you one of those MacIntosh computer geeks?
Yeah, squatters are OK with me, as long as they are quiet, clean, and not breaking any other laws.
With no running water, squatting turns ugly really quickly.
Anyone can have the water turned on. As long as you pay the bill, they will give you the water.
RE: He is helping homeless people illegally move into foreclosed homes. “We’re matching homeless people with people-less homes,” he said with a grin.
It’s the beginning of anarchy.
They and the loan servicers can’t get a handle on all this because it’s too damn HUGE!
Called right here on the HBB 3 years ago.
‘Desperation has an ugly face,’
A Divine Image
Cruelty has a human heart,
And Jealousy a human face;
Terror the human form divine,
And Secresy the human dress.
The human dress is forged iron,
The human form a fiery forge,
The human face a furnace sealed,
The human heart its hungry gorge.
William Blake
Lol. Bailout fatigue is keeping me from commenting very deeply anymore too, PB. Preaching to the choir anyway…
I’m just blown away that the economic experts who didn’t see it coming, whose proposals still haven’t worked, and who have clear conflicts of interest are the ones we rely on to see us through, while anyone who saw this coming and thinks free market principles should apply equally to upturns as well as downturns gets labeled extremist, a nutjob or anti-American.
How much deeper can it get than William Blake’s poetic disillusionment with the human condition?
We (or crickets) have small voices, too.
Further in Summer
than the grass
A minor nation celebrates
Its unobtrusive Mass.
Emily Dickinson
There once was a house in BA,
Who’s mortgage was too high too pay;
The owner skipped town,
Since the price had gone down,
So the bank wants its bailout today.
-The elder von Peepwig
It hasn’t even started yet. A lot more to come.
When in disgrace with Fortune and men’s eyes,
I all alone beweep my outcast state,
And trouble deaf heaven with my bootless cries
And look upon myself and curse my fate.
Wishing me like to one more rich in hope,
Featur’d like him, like him with friends possessed,
Desiring this man’s art and that man’s scope,
With what I most enjoy contented least,
Yet in these thoughts myself almost despising,
Haply I think on thee, and then my state,
(Like to the Lark at break of day arising)
From sullen earth sings hymns at Heaven’s gate,
For thy sweet love remembered such wealth brings,
That then I scorn to change my state with Kings.
Thanks for quoting those beautiful lines to time in which their author growest.
Coming back at ya…here is the poem to which I always return when I feel glum about the state of the world. Next I reflect on my dad’s most astute observation that “life is a gift”…
Lines for a Grave-Stone
Man alive, that mournst thy lot,
Desiring what thou hast not got,
Money, beauty, love, what not;
Deeming it blesseder to be
A rotted man, than live to see
So rude a sky as covers thee;
Deeming thyself of all unblest
And wretched souls the wretchedest,
Longing to die and be at rest;
Know: that however grim the fate
Which sent thee forth to meditate
Upon my enviable state,
Here lieth one who would resign
Gladly his lot, to shoulder thine.
Give me thy coat; get into mine.
-Edna St. Vincent Millay-
“A moritorium on foreclosures and more affordable housing throughout the city are needed to save East San Jose, according to residents…. [C]ommunity activists…who packed a community meeting at Trinity Cathedral said a temporary respite from foreclosures would preserve the quality of life in the area ….”
Overheard:
Lord, we just want to thank you for all your blessings upon us. And we would just pray, lord, that you would watch over us and protect us — all of us here in the Silicon Valley — those of us in such dire financial cir-cum-stan-ces.
And now we would just pray, lord, that you would convict all those who would do economic harm to us — convict them, lord, that there IS a better way — the lord’s way — your way, lord. Thank you. Thank you, lord. Sweet lord. Thank you, lord.
NOW! — In the name of Lawrence Yun and the holy ghost I rebuke the demon foreclosers and the demon sheriffs. I REBUKE the loan servicers and bankers. In the name of Yun I REBUKE the evil lenders, brokers, and money changers. All those who tempt our people to turn from Yun and to yield to the ways of the flesh and destroy our quality of life here in Silicon Valley, I REBUKE you all. In the name of Yun, go to lunch. Go to lunch NOW. In the name of Lawrence Yun, I command you: GO TO LUNCH!
Wait — I’m getting something. Is there someone here tonight who recently lost a job in the fi-nan-cial-in-dus-try? And you’re about to miss a second mortgage payment? And you’re in a negative ek-wih-tee situation? And you and your spouse are having some marital dif-fi-cul-ties as a result? And you just bought an unregistered firearm? Yes, Yes, toward the back, on the left. Yes, Yes, I want you to claim the power of Yun. Claim your healing NOW. Yes. Yes. In Yun’s name. YES! YES! Claim your healing! Claim it NOW!
Thank you Lawrence. Thank you, sweet Lawrence. Thank You. Praise Lawrence … praise him … praise him.
NOW! — Dino, play us a good hand-clapper, something up-tempo.
* * *
Luv,
Jen
That was freaking hilarious. That just made my exciting Friday.
Thank you Jen luv
Ode to Cat…
Oh Larry Yun
What will you tell us this time
You’re only dancing on this earth for a short while
And though American Dreams may toss and turn you now
They will vanish away like David Lereah’s
Dreams blown, fading up to the sky
And though you want the market to last forever
You know it never will
You know it never will
And the collapse make the good buys harder still
Oh Larry Yun
What will you tell us this time
There’ll never be a better chance to mess with your mind
And if you want this world to see a bettor day
Will you carry the words of loan with you
Will you ride the great white elephant into foreclosure
And though you want the market to last forever
You know it never will
You know it never will
And the collapse makes the good buys harder still
Oh Larry Yun
What will you tell us this time
You’re only dancing on this earth for a short while
Oh Larry Yun
What will you tell us this time?
http://www.youtube.com/watch?v=b_eUnxDE8YY
Hey Lad,
Why don’t you start posting your parodies on a blog someplace? I did, and I’m collecting a lot of funny stuff. Of course I can’t post a link here because my post will never go through if I do, but for this post only I have included my blog link just in case Ben looks at this thread again and approves my post.
I really think that parody is an important part of the historical record. It’s the part that makes it through the filter when the historians are glossing up the record based on news accounts. Yes, it’s a bit cryptic for general readers, but historians get it because they read the writings of the publicists whose opinions are published in the “approved” news outlets and can connect the dots.
I seem to recall that we had this conversation once (on this blog) when you were posting under a different pseudonym many years ago. It’s not too late to go back and collect your posts using a search engine before it’s all lost in the noise. IMHO a better use of your time than dueling with the cashmeister over the definition of money. At least of more historical value, much like the songs.
People go away, thoughts go away, discussions go away, songs and memes last a bit longer. Powerful songs and memes get incorporated into history.
sm_
Parody and sarcasm are about the only things they can’t take away from us, can they?
I ought to save my mind-spittle I suppose, but i’ll never get around to it…
Hysterical!
Marjoe Gortner Himself could not have preached it more eloquently.
Praise the Lawrence! Hallelujah!!!
More about San Jose’s “affordable” housing program (really just more short-sighted socialism from our dullard leaders):
But the median household income in San Jose is only around $80k! Does anybody see anything wrong with 20% of the population, making 50% more than the median household, being subsidized by everyone else? The San Jose city council has rocks in its head.
So now the city wants to prop up the unaffordable housing market by doing all the legwork to find unsuspecting people to buy this crap? Wow! Taxpayer money would be used to pay new-house salespeople! Would taxpayers also get a share of the commission?
Excuse me, how much for a vowel? And could you repeat that, before I’m perma-banned?
/Take /V!
A moratorium on foreclosures AND more affordable housing??? This is bothering me. WHY ARE PEOPLE SO STUPID? WHY ARE PEOPLE SO STUPID? WHY ARE PEOPLE SO STUPID?
I had a friend who stated :
You can count on people for to things. To suck and to be stupid.
Don’t be frustrated. Sometimes it is easier to push the cart down the hill.
Some times it is easier to just run out of the way and watch the avalanche roll down the hill.
I caught the same F-n thing! It’s infuriating and hilarious at the same time.
I just find it amazing that the solution it’s right infront of everyones eyes, yet they dare not take a look. It’s like trying every other remedy for what ails you than the one that actually works.
JUST LET HOME PRICES DROP! (they’re going to anyway)
Affordability problem solved.
Home prices are dropping at an unprecedented rate, more than a year after BB and HP started their Bailouts Unlimited campaign. Do you think next week’s bailouts will be the ones that stop coastal home prices from falling at a faster-than-20 pct annual rate? I don’t.
BTW, a 20 pct price decline is sufficient to wipe out a previous 25 pct gain in home prices:
(100%-20%)*(100%+25%) = 100%.
The airhead down the street paid $711,000 for her house. That house is worth probably 10% less than the one I live in. I pay $2,400/month. How did this happen? How could it? I thought the crazy lending was over and done with. Apparently, it’s not. What was that bailout for again? All the jobs are disappearing, but people are still getting loans for severely overpriced houses.
What was that bailout for again?*
*Not for the reason it was ’sold’ to the public.
I’m guessing the loan was GSE-funded at the abnormally high conforming loan limit, and came with a taxpayer-provided guarantee? Those poor folks in Detroit and other manufacturing centers are getting forced to guarantee coastal housing that costs north of $500,000. Talk about robbing the poor to pay the rich!
So frickin’ true, Prof Bear. Guarantee our auto industry and we’ll guarantee your overpriced house loans. Like that will ever happen.
‘It feels like it’s dying,’ she said. ‘We need them to stop the foreclosures.’”
“She and other community activists who packed a community meeting at Trinity Cathedral said a temporary respite from foreclosures would preserve the quality of life in the area while the city pursues how to add more affordable units for those who have already lost their homes.”
Those “Community Activists” might consider a moratorium on the law of gravity, as long as they are meeting. Just in East San Hose, of course.
A good facilitator should be able to arrive at a consensus of the matter.
We should elect one of these community activist organizers President! Then we can all get handouts and live like kings!
imagine what you could do with your slice of the TARP that is going to bail out bankers, car makers, and cities/states that can’t live on a budget. Why I’d have enough money to buy a new car cash !
Are you talking about Bush, Bernanke and Paulson the three wise men?
I’m well aware that neither candidate wanted to do anything but prop up house prices. I nearly puked when McCain started proposing buying up mortgages of “retirees” in a desperate attempt to buy some Florida votes.
Would the ‘ol Maverick really use public money to buy votes?
I don’t see how a moritorium will work. Is money going to magically materialize in those 3 months? And by “money,” I mean “27 more years of mortgage payments.” Because that’s the only kind of money that won’t kick the can.
Lowering mortgage rates WILL NOT WORK. The housing bubble popped because we physically ran out of buyers. If people were not willing to buy with a 4.5% NINJA in 2006, then why would they be willing to buy at 4.5% now? They won’t…because there are no more willing buyers! Why is this so difficult to understand?!?
Anecdote: Yesterday, I ordered something from Amazon with free shipping. I thought the slowpoke shipping was free because they put those orders at the back of the line. Yet, they shipped it TODAY, less than 24 hours later. Is Amazon truly getting so few orders with regular shipping? Or is everyone going snail?
Tell us when you actually receive it. Sometimes, those shipped free orders sit on the loading docks for a couple days. Amazon does change their tempo this time of year though, so it is also possible you’ll get lucky with free ship.
So right oxide . During the housing boom they sold to everybody and their brother and even dead people got a loan . The industry worked over-time in rounding up straw buyers ,and lets not forget the Seminar Groups that were busing investors to over-priced tracks to buy second and third homes . How about the” locust “groups that would go from State to State to buy the next great boom property ,leaving the locals priced out of the market .
Sure there isn’t very much demand now . I suspect that the last round of knife-catchers were people dumping and walking from another property and buying a cheaper one . Shelia Blair said in essence that they already had a 40% default rate on the re-written loans from IndyMac .
Who benefited from the boom ? Corporations and rich people and the Government benefited by the people going into debt on false wealth and maybe a few who got out of the markets before it crashed ? Who didn’t benefit from the boom in the final analysis .
The debt people that bought into leverage on false housing prices and people who invested their 401k’s in the stock market or people that got hosed investing in mortgage backed securities ,and employees that loss by investing in their own Company stock ,and the Company
went BK.
I think that the Housing Scheme must of been dreamed up by a
Corporation that didn’t want to raise income ,yet wanted people to
buy products ,or maybe it was just that all that money coming in
from around the World had to find a place to invest ,so why not create leverage based on fake income and fake housing prices .
There was actually a Talking Head on TV today talking about how
people didn’t get income raised based on the increased productiveness of the boom years and the people went into debt instead of using real income to buy things .
“Yet, they shipped it TODAY, less than 24 hours later. Is Amazon truly getting so few orders with regular shipping? Or is everyone going snail?”
Yes this is a good trick to use on Amazon.com. Choose the free “super-saver” shipping when available. They scare you with things like “package may not be shipped until ” but it’s almost never the case. They usually ship it very quickly.
They’re just hoping to get you to pay more for shipping. Amazon.com does *not* want your items to be hanging around their warehouse for 7 days, free shipping or not!
I just used that free super-saver shipping too, and am very pleased with it. John Maddox Roberts would be proud. One of my books was also about 35 percent off. New was cheaper than used when you consider the shipping for the used one. Decius Caecilius Metellus the Younger, here I come. A little Christmas present for yours truly.
“The sign at another subdivision, Starlight Trail, reflected buyers’ ravenous demand for new homes in Avondale: During the construction boom, between 2004 and 2006, the sales pitch changed from advertising homes starting in the $150,000s to advertising homes from the $250,000s.
Now the builder is advertising new homes in Starlight Trail starting in the $150,000s again — even though more than 22% of the existing houses there are in foreclosure or close to it. City inspectors now find abandoned homes in the development stripped of the wiring, plumbing, door handles and appliances.”
Here’s my question: Are they running two shifts? I mean, an evening shift to gather the materials (from the funky places) and a day shift to re-install them in the new places?
A beatiful day here in AZ! But not when it comes to the economy!
Read two stories today - AZ leading the country in budget shortfall, and that the state lost 34,000 jobs in November.
“Lots of states are facing severe budget problems. But only Arizona can say that its problems are the very worst.
The National Conference of State Legislatures released a survey today indicating that Arizona faces a budget deficit representing 24.2 percent of its general fund, easily outpacing No. 2 New York, which faces mere 20 percent reductions.
Rounding out the field of aneurysm-inducing budgets are California (18 percent), Wisconsin (17.2 percent), Minnesota (14.7 percent) and Kansas (14.5 percent).
“While the data we collected from state legislative fiscal officers are pretty sobering, our discussions with legislative leaders tell us that they expect the problem to only get worse,” said William T. Pound, NCSL’s executive director, in a total Debbie Downer of a press release.”
My God - 24%. I knew it was bad - and have been amazed at the near complete silence here as other states take (or at least talk about) active measures to address their shortfall. But I didn’t know it was this bad. Will the AZ Republic carry a headline story on this tomorrow. Doubt it!
And how about the 37,000 job losses here in November? Has there EVER been a month with such a loss (adjusted for population) in this state’s history? Doubt it! Will this story receive the coverage it deserves? Doubt it!
I’m starting to think we have a political-media-business establishment that truly can’t see bad news for what it is. I mean it seems people are unable to deal with this, recognize this. It’s like it can’t be computed.
37,000 jobs in one month. Now certainly the actual number is much higher. You can receive no more than $240 a week for benefits here — few I know in higher salary ranges bother to go through the paperwork and the DMV-like experience for that. The actual figure is higher.
Now what is the total official job loss for the trailing four months? I seem to recall reading the state lost 25,000 jobs in August. Are we down a 100,000 in the past four or five months?
What will this do to the housing market? This is a transplant state — will some return home? Will the population actually drop? What does this do for housing? I can’t see it helping the rental market either.
It’s amazing. What is happening here is now worse than I ever expected. (I expected a greater hosuing price drop than this, but not this early in the cyle.) We have a long way to go yet! Very long.
Roughly 60 days ago I mentioned on this blog that a neighbor was facing foreclosure and the confirmed rumor was that she hadn’t made a mortgage payment in 12-18 months. Well I pulled into the driveway this afternoon and low and behold but a 30 yard roll-off is parked in her front yard and she and her brood of hoodlum kids were filling it full of their detestable cat piss soaked used posessions.
Second- Wife’s friends husband got canned today. He’s a 120k/yr IT type guy with this same company for 10 years.
Layoffs abound. I’m on the chopping block here, I’m sure of it. I’d say my chances of surviving this one are about 20%. Luckily, I have a hubbie, no debt, everything I need, and savings that can last two years with unemployment. That’s more than I can say for most people.
Cisco is letting all of it’s contract workers expire, they comprise 35% of the workforce. My GF just got put on notice yesterday she is being terminated early next week.
To the last person in the USA to have a job:
Don’t forget to turn the lights out.
“Don’t forget to turn the lights out.”
Then take the bulb, “We’re gonna strup this mutha!”
strip, dammit
“Don’t forget to turn the lights out.”
“Then take the bulb, “We’re gonna strup this mutha!”
LOL. Thanks for the laugh. Muggy, but the implication is dead on. This is getting far uglier than most probably bargained for. I’m seeing more and more vacant homes around my area (25 miles outside Olympia, WA), and these are not newly purchased or built. It’s like people just up and left. Unemployment numbers really ratcheting up around here. Have got to be close to 9%, ALREADY.
I’m sorry for you, BigV, and everyone else possibly losing their job. My mother is the head of human resources for a non profit in northern NV, and they recently advertised for a few minimum wage positions. They were bombarded with hundreds of applicants showing up. There wasn’t enough room in the building, and the copier ran out of paper as they were photocopying resume’s, etc. People sitting on the floor, or standing in corners using the wall as a writing surface. I asked her is they were mostly lower income types, with little skill. Her answer was an emphatic “No”.
Rumor:
Tyco in Harrisburg is letting a lot of people go next week.
Not going to be pretty.
I’m thinking of starting to collect my small pension, but I want to squat somewhere for free since I haven’t gotten any bailout $ yet. So far it looks like exeter’s neighborhood in New England or BB in Washington. After listening to the news all day the last thing I want to be is a “taxpayer”.
Sister was laid off but was able to “fall back” onto another job.
Several friends have been canned. Another one today in the Bay Area.
The layoffs are starting to add up! Odds of me getting canned over the next year: my WAG is 50%. Really wouldn’t matter much to me, though, I’d love to take a bunch of time off.
Ain’t gonna happen, V. They wouldn’t DARE!
Big V,
Keeping my fingers crossed for you gal. I’ve been through a few in my days. I can say the companies were very generous with the severence pay.
Sorry Big V. My husband got chopped from his excellent job of 9 years in 2001, and has been chopped 2 more times. Then his health deteriorated, he couldn’t memorize with the required speed in pharmacy school, so had to drop out after 2 1/2 years of classes, and now he’s been let go from two minimum wage jobs after 30 days. He’s steadily grown worse in his cognitive processing speed. I keep worrying about Alzheimers, but I don’t think it’s going to come to that. His application for S.S. disability is lookin’ good, though. He’s scheduled for cognitive testing in Feb. 2009, which is as soon as they can get him in.
I’m buying IT equipment from failed companies and renting it back to the survivors. Some great deals out there, but a few of the zombies are still trying to negotiate. No mercy. Zombies must die, and they will sell cheap or give it up in bankruptcy. In which case the equipment will be cheaper, but the survivors still need the services.
My neighbor got dumped this passed week also…
“‘The public policy problem going forward is, if Congress can legislate or a judge can break the contract, then I as an investor will demand a much higher premium,’ says the mortgage-company risk officer. ‘I can’t model and price something that is ‘oh gee, we’re going to change the rules.’ It’s a big problem.’”
I think that the federal government will change the rules and end up screwing the investors - there is too much political downside in not doing it.
Then the federal government will realize that these investors won’t lend anymore - except at higher interest rates that compensate them for this new “changing the rules” risk.
Then the federal government’s only course of action is to have the Fed print more money, loan it to Freddie - Fannie at 1% and have them lend to borrowers at 3% and everybody’s happy and can go back to borrowing again - well everybody’s happy except the screwed investors.
The only “solution” to all of these housing problems is let the market forces run their course, or completely socialize the financial system. I think we all see which course our government has decided to choose.
Then the federal government’s only course of action is to have the Fed print more money, loan it to Freddie - Fannie at 1% and have them lend to borrowers at 3% and everybody’s happy and can go back to borrowing again - well everybody’s happy except the screwed investors.
Well, that’s not entirely true. House prices may also deflate more rapidly to fall in line with what is affordable. The total value of the loan and the payment basically has to fall in line with incomes. So, incomes would have to rapidly inflate (and that’s unlikely anyway) to cope with current prices and much higher interest rates, or the prices could simply fall more rapidly to account for the increased interest rate percentage.
I thought the deflationary scenario was more plausible anyway given the disconnect between Fed policy and the various bubbles (stock, housing, commodity). I may yet be wrong, but I do believe this is what’s going on.
The quote you got from the guy in the article basically hits the nail on the head. If someone is changing the game below me so I have a hard landing instead of a soft landing, I’m going to add extra padding every time I jump down. As you say and I certainly believe, the market needs to run its course here. I wouldn’t worry so much about the government socializing the losses. They’ll quickly realize the magnitude of the problem is far beyond even their control.
“I think that the federal government will change the rules and end up screwing the investors - there is too much political downside in not doing it.”
OK, maybe a month ago, but the election is over.
“expect foreclosures, expect horror stories”
Gosh thanks Ms. Welch. It’s only 2000 and f@cking 6! Yeah, that really helps, where was your freaking conscience in ‘05, 04′, ‘03? By that time we were in such an irreversible tail spin no amount of letters in the world was going to change the situation.
( But we’re glad you got off your chest )
“Bishop said even if the building’s finished mid-year 2009, and even if it means leaving money on the table, she will probably walk away from her unit next year. ‘If they had done it in 2004, we would’ve wanted to go ahead and live there,’ she said. ‘But it’s just a different time now — a lot of time has gone by.’”
Oh, reeeeeeeeeally Ms. Bishop? So your tastes have changed, have they? It couldn’t be that the condo is now worth .50 what you paid for it, could it? Naaah, can’t be that. Kind of a red-herring response if you ask me.
Yeah. What has changed about downtown and that particular building that makes it a less desirable place to live? Nothing! Sure, it has now become a less desirable place to own, but that is a completely different story, now isn’t it?
I wonder if they can force her to buy the unit. After all, she did sign a contract to do it!
They can sue her, but they can’t force her to sign the application papers for the mortgage. That’s why she’ll lose her deposit.
I doubt they’d have any recourse other than the deposit.
“A moritorium on foreclosures and more affordable housing throughout the city are needed to save East San Jose, according to residents.
Now this is a real head scratcher! If you want “more affordable housing” then you should welcome the foreclosures!
You know what these people really want? Overpriced, expensive housing that someone else (Taxpayers, the Governement) helps pay for!
i wouldn’t be suprised if within a few months (weeks) there’s a push for a moratorium on mortgage payments.
hmm.. before i post this i better look see if it’s happend already.. google.. dum dee dum.. lets see here..
SIPTU (Services, Industrial, Professional & Technical Union of Ireland) is calling for the introduction of a moratorium on mortgage payments for people who have lost their jobs. The union says people who can no longer afford repayments should be offered a two-year moratorium to help them avoid losing their home.
Well, that’s overseas.. what else is around and about..
here’s something.. the Nassau Guardian
BCA (Bahamas Contractors Association) President Wants Moratorium on Mortgage Payments .. blah blah .. Most importantly, he said customers would not have to default on their loan payments, hence racking up late payments and bad credit in the process.
Bahamas.. overseas too?
hmm.. looks like it has yet to hit the US mainland..
Affordable housing courtesy of the gubmint? Cabrini Green, Nickerson Gardens, anyone?
Three cheers for the Alum Rock Ave crowd!
The only thing that’ll help East San Jose at this point is a house-to-house sweep of every residence east of the 101/680 between Berryessa and Capitol. Guns, drugs, prostitution, extortion, illegal gambling, gangs, the whole nest needs to go in a big way. Housing isn’t the biggest problem out there, although it’ll make the existing problems a lot worse.
I had a good friend that lived out in that area. Let’s just say I’m glad he’s not there now.
My grandpa had a house on White Rd. out there back in the 20’s through the 40’s. My mom grew up in it. Back then in was very rural and safe.
Heck my mom was born in Richmond CA back when it was a safe and nice neighborhood.
Funny how things change over time.
Its ugly in East SJ….Gonna get worse…People are starting to get desperate…
“You know what these people really want? Overpriced, expensive housing that someone else (Taxpayers, the Governement) helps pay for!”
They also expect to get into heaven too. Greed!
I’ll bet Heaven is full of just as greedy and conniving souls as are found here on Earth. I’ll bet the Place is run like any large municipality by corrupt politicians and bureaucrats.
“A moritorium on foreclosures and more affordable housing throughout the city are needed to save East San Jose, according to residents. Foreclosures in East San Jose are up nearly 400 percent since last year, said resident Margie Marquez. ‘It feels like it’s dying,’ she said. ‘We need them to stop the foreclosures.’”
Let’s interpret this correctly. These dreamers want to continue to keep prices unrealistically high so the bubble purchasers can get out alive.
“Since the end of last year, about 2,800 Washington agents have abandoned the business, a decrease of about 9 percent, and hundreds more have put their licenses on hold, according to the state’s Department of Licensing.”
I gotta believe that NAR and local/state RE associations have used the boom on membership that paralelled the housing bubble to overextend their own obligations. Please, please, please sweet baby Jeebus, all I want for X-Mas is for the NAR headquarters buiding to be forclosed upon.
“…all I want for X-Mas is for the NAR headquarters buiding to be forclosed upon.”
Now there is a blessing worthy of prayer. Perhaps if all the HB bloggers pray with all their sincerest fervor, it will come to pass.
“Eugenio Aleman, senior economist with Wells Fargo, contends that lowering interest rates is ‘a crazy idea’ and that continued government meddling with the housing market is making the necessary correction longer and more painful.”
Do you still have your job at Wells Fargo? Telling the truth can be harmful.
“…But he argued that home prices must come down further to draw buyers into the market…”
Are you really an economist? Your statement above reeks of common sense.
“The poor employment outlook also is discouraging home sales, he said, noting, ‘How can you buy a home with a zero interest rate if you don’t have a job.?’”
Thank you for bringing this up about no job=no home with a zero interest rate. This is a duh for most of the bloggers here. Unfortunately for the so called experts, they just can’t seem to connect the dots.
Okay, which one of you on this blog is Eugenio Aleman?
Asian savers financing massive american overconsumption - that is the essence of the credit bubble which itself was a key factor in the housing bubble. For want of a better term call it the “China Syndrome” and as we undo this factor similar to a drug addict withdrawing from heroin - its going to get very nasty.
Strange thing is is that every new bailout seems to require new infusions of asian capital
“Aleman said since home prices generally rise when interest rates fall, the federal government’s lowering of interest rates seems to be aimed at halting the free fall in home values. But he argued that home prices must come down further to draw buyers into the market. . .”
“The poor employment outlook also is discouraging home sales, he said, noting, ‘How can you buy a home with a zero interest rate if you don’t have a job?’”
Is this progress? Do we like Aleman, or does he have past sins that make these comments unworthy of HBB commentary.
Okay,
Wha’ts a gal got to do around here. I’ve posted a couple of items about two hours ago and they haven’t shown up yet. All my other witty postings have shown up
Chinese knifecatcher-infesters are on the way. Will they qualify for 4.5 pct mortgage money? I guess they will get to enjoy the next wave of price declines, similar to the pleasure incurred by Japanese knifecatchers of U.S. RE in the early 1990s…
Financial Times
Chinese property hunters to raid US
By Geoff Dyer in Beijing
Published: December 5 2008 20:10 | Last updated: December 5 2008 20:10
Chinese bargain hunters are preparing to descend on American cities such as Los Angeles and San Francisco, where homeowners have suffered some of the steepest price falls in the US.
SouFun, the biggest real estate website in China, is organising a trip next month to look at properties in California and possibly Nevada. Liu Jian, the company’s chief operating officer, said about 300 people had expressed interest in the idea in the three days since it was advertised, though the company would take only a small group on the first trip.
Amazing how things are finally happening that were forecasted on this blog so many years ago. If I were Jas, I would so totally be gloating right now. Where is Jas, anyway?
“‘This correction is good,’ said Perry, referring to the recession and crackdown on subprime lending.”
My how times have changed. It’s starting to sound like subprime lending is a crime! LOL!
Make way for the crash at the high end. Got prime ARM resets? Note that this is merely the tip of the iceberg we are currently seeing, as the prime and Alt-A resets don’t peak until 2010.
Two more hits to the gut
By KEVIN G. HALL McClatchy Newspapers
Dec. 6, 2008, 12:06AM
…
More prime loans default
The MBA’s chief economist, Jay Brinkmann, in a conference call with reporters, said that fixed-rate prime mortgages make up 21 percent of the foreclosures, a big percentage considering that they make up 65 percent of all outstanding mortgages. Adjustable-rate prime mortgages account for 24 percent of foreclosures, he said, and 14 percent of all outstanding loans.
This highlights a new wrinkle in the complicated recession that’s unfolding. The national housing slump was provoked by runaway lending to subprime borrowers, those with the weakest credit histories. Delinquencies and foreclosures among these borrowers appear to have flattened out, but accelerating job losses are adding a new wave of distressed mortgages held by stronger borrowers.
“I think what we’re going to see is a growing delinquency problem among prime mortgages that’s driven by some of these job loss factors,” Brinkmann said.
‘“I think what we’re going to see is a growing delinquency problem among prime mortgages that’s driven by some of these job loss factors,” Brinkmann said.’
Implications:
1) The high end of west-coastal housing is going to crash hard, and there is little prospect the myriad Fed and Treasury bailout programs can survive the political heat that would be generated by programs to save rich folks’ homes.
2) The price distribution of coastal housing is going to flatten like a pancake by this foreclosure steamroller, as lower quality homes will always sell for less than higher quality homes, no matter how far the prices of the latter crash.
Great ,the Foreigners can be slum landlords and own us all by buying the cheap real estate we Americans can’t even afford at these prices .
On our way back from dropping April the Rescue Poodle Wonder Dog off for grooming, we passed 9 houses with foreclosure notices up on them on our 3-mile drive back. Gulp.