The False Market Could Not Hold
It’s Friday desk clearing time for this blogger. “One in eight households with a mortgage ended the first quarter late on loan payments or in the foreclosure process, the U.S. Mortgage Bankers Association said on Thursday. Foreclosures on fixed-rate mortgages, given to solid borrowers with good credit, represented the largest share of new foreclosures for the first time. The jobless rate in Florida is currently hovering at 9.6 percent, double what it was in December 2007. In Lee County, where the median cost of an existing single-family home has plunged more than two-thirds from a peak in December 2005, job losses have been a key driver behind a surge in foreclosure filings.”
“‘I’m getting to the point where I’m ready to break down,’ said Martin Garcia. The medical laboratory equipment engineer has a prime, 30-year fixed rate mortgage with a 9.5 percent annual interest rate. But Garcia was laid off seven months ago. He receives about $900 a month in unemployment benefits. But he is down to just $400 in savings and he won’t be able to keep up much longer with the more than $800 a month in mortgage and maintenance costs he pays on the Miami Beach apartment he bought in 1989.’
“‘Since I’m unemployed the banks don’t want to refinance or do anything,’ Garcia said.”
“Plunging prices, rising unemployment and a new wave of foreclosures are clouding prospects for a quick end to the American real estate debacle. ‘We’re not at the bottom and anybody that’s trying to call the bottom right now is crazy,’ said Jack McCabe, a real estate consultant based in Deerfield Beach, Florida. ‘There’s a huge foreclosure wave still ahead in the next 12-18 months and still a lot of excess inventory.’”
“As the recession deepened in the first three months of this year, foreclosures and seriously delinquent home loans in Connecticut jumped above the rate of one mortgage of every 20 for the first time in at least 30 years. In neighborhoods throughout the state, stories like that of Ruth Jarvis are piling up. A single mother, Jarvis raised her two sons in a four-bedroom, split-level in Bloomfield that she bought in 1990. She got into trouble in 2007 when she refinanced into an adjustable-rate mortgage with a 9.75 percent interest rate.”
“The value of her house has fallen and her mortgage is now higher than the house’s appraised value. ‘I keep wondering why I can’t fit into some program,’ Jarvis said. ‘I’ve been working since I was 16. I’m 59 now. I have a job. I just want [my mortgage]structured so I can afford it. You end up falling through the cracks.’”
“In Connecticut, the economic downturn and layoffs are driving mortgage delinquencies and foreclosures, said Ronald F. Van Winkle, an economist and acting town manager of West Hartford. ‘If you lose your job in Connecticut, you’re hard-pressed to find another one,’ Van Winkle said. ‘Most families need two incomes to pay the mortgage.’”
“The number of Maryland residents who face foreclosure or have missed payments on home loans rose to nearly 121,000 in the first three months of the year, with mortgage woes increasing the fastest among the less risky prime borrowers, the Mortgage Bankers Association said Thursday. ‘Delinquencies are very much tied to employment,’ said Jay Brinkmann, the MBA’s chief economist. ‘When people have jobs and will be buying houses, we’ll see [home] prices stabilize, but until prices increase in some areas we are still going to see a number of homes in foreclosure. If you lose your job, you can’t sell your home for enough to pay off the mortgage.’”
“Andy Lewis, a community development specialist who is tracking Wisconsin foreclosures for the University of Wisconsin Extension, reported that foreclosure cases in the state surged 29% between the first quarter of 2008 and first quarter of 2009. About 23% of the state’s 7,693 foreclosures are in Milwaukee County. Job cuts are taking a bigger toll on homeowners’ ability to keep up with their monthly payments, Lewis said in an interview Thursday.”
“‘The rising unemployment rates are clearly a problem,’ Lewis said. ‘We already know that the top two reasons why people face foreclosure are illness or loss of income. So with unemployment now approaching double digits, certainly that’s everybody’s fear.’”
“A new report shows the Oregon foreclosure rate has jumped to a level seen only once in the last 30 years. The Oregonian newspaper said the foreclosure rate is the highest since it hit 2.23 percent during a recession in early 1985.”
“Steve Blanton with Rogue Valley Association of Realtors says the statewide foreclosure increase could be linked to unemployment. ‘From what I can see at this point, the most recent wave of foreclosures has more to do with the jobless rate that’s out there right now. People are just having more traditional difficulties paying their mortgage payments,’ says Blanton.”
“About one in eight Nevadans is now behind on their residential mortgage, new data from the Mortgage Bankers Association show. ‘What we saw from the MBA wasn’t surprising,’ said Rick Sharga, of RealtyTrac. ‘We saw a spike in delinquency in the third quarter, but we didn’t actually see a corresponding increase in foreclosure activity. Then the moratorium was lifted and it’s pretty much like the dam burst.’”
“President Obama implemented a $350 billion federal program in March to rescue homes headed for foreclosure, which could ease the bump, said consultant Steve Bottfeld. But Rick Byrd of RB Realty in Las Vegas said not to count on it. The first 100 days have provided no traction or relief to homeowners in distress, he said.”
“‘There is no housing relief,’ he said. ‘The reality is that banks and mortgage servicers have multiple layers to obtain compensation when they foreclose on your home, but very few monetary avenues if they modify your loan. So expect foreclosures to escalate through the summer and next fall. Watch prices continue to fall.’”
“At the end of March, roughly 71 percent of owners who bought in Miami-Dade and Broward counties in the past five years were underwater, or owed more than their homes were worth, according to Zillow. Analysts have said so-called negative equity is one of the biggest reasons why borrowers fall into foreclosure — if they need to sell, they can’t, at least not for enough to cover the debt, or, they choose to throw in the towel, thinking it’s better to take their losses and rent.”
“A recent study by Fitch Ratings projected that as many as 75 percent of subprime loan modifications would fall behind by 60 days or more within a year. Jay Brinkmann, chief economist for the MBA, said that so-called redefaults could show up in the new foreclosure statistics: ‘There may be repeat visitors coming back into the numbers.”’
“Brinkmann predicted foreclosures would continue to rise through the rest of the year. A large oversupply of new property makes stabilizing home prices in the state likely a distant prospect. ”It’s going to take getting demand even with supply just to put a floor under prices. Even then, it may not get it up to a point where it gets buyers back above water,’ Brinkmann said.”
“Lois Capps visited the Ventura County Realtors Association in Oxnard on Thursday with the intention of providing an update on what is happening in Washington, D.C. What she got instead was feedback on the difficulties facing the economy and housing market in the county.”
“Legislators were told that the stimulus bill was the only way to stop the free fall and that government had to put ‘a ton of money in the system.’ Capps acknowledged that there was a lot of hesitation over what it could do to the budget and to the children who will inherit this debt. ‘We were told we were in danger of going under, that there was global instability and that if we delayed it would be too late.’”
“Some Realtors pointed out that it was proving almost impossible for people to qualify for a mortgage workout. When asked why the stimulus money went to banks instead of consumers, Capps said: ‘We can’t even compare our current situation to the Great Depression. Economists have explained to leadership that nothing will become whole until the banks regain the confidence to lend. We realize now how deaf the banks had become to being in the real world.’”
“Dallas real estate agent Lydia Player hopes her bright-red convertible will turn a few heads. The new car is a snazzy perk for whoever buys a North Dallas home that Player has on the market. ‘If they don’t like red, we’ll give them another color,’ said Player, who’s offering a string of incentives to lure buyers to houses she’s trying to sell.”
“Dallas real-estate agent Charles Gregory is offering a $40,000 car-purchase credit for anyone who buys a new University Park home he’s selling. Does that mean he thinks the buyer of a $1.995 million house will make the decision based on a free car? ‘Of course not — I’m just trying to get attention,’ said Gregory.”
“Built in 2007, the five-bedroom, 6,600-square-foot house has never been lived in. ‘It’s a wonderful house, and there’s no reason it hasn’t sold,’ Gregory said.”
“Builders who spoke to the Tribune-Herald said they are cautiously optimistic about the home-building climate. Jim Bland said he’s hearing about speculative homes being bought that languished on the market for months. ‘Now it could be they were sold at reduced prices,’ Bland said, ‘but there has been a lessening of inventory.’”
“Through April of last year, Waco issued 199 permits to build single-family homes. This year, it issued 77 through April. ‘I can tell you that most of those 199 permits last year were for speculative houses, and a lot of those are still sitting there,’ builder Pat Hambrick said.”
“For his part, home builder Woody Butler is offering a vacation package valued at $3,000 to anyone buying one of his new homes. ‘Sure, I’m doing that to increase sales,’ Butler said. ‘I don’t want people to have to choose between the two.’”
“In an unusual tactic to sell his waterfront cottage, David Goyette is offering to pay the first three months of a buyer’s property taxes and will throw in a big-screen TV to boot. ‘Buy our house,’ his ad in yesterday’s Peterborough Examiner reads. ‘If you do, we’ll pay you the first three months of your property taxes and buy you a 48- inch flat screen TV of your choice.”
“Sitting in the kitchen of his White Lake property, about 20 minutes northeast of Lakefield, the 58-year-old writer smiles confidently. ‘I agree, it’s an unusual offer,’ he said. ‘I don’t think this has ever been done before.’”
“Goyette put the nearly 3,000 square-foot, four-bedroom cottage on the market last year to no avail. This year, he wanted to sweeten the deal. ‘These are tough economic times. I thought, what can be done that’s innovative?What is it that will cause the final little push?’ he said. ‘So I just made it up. The bottom line is, it’s a very small price to pay for a property that’s selling for $429,900.’”
“The federal agency predicted in its spring forecast Tuesday there will be only 3,950 single and multi-family housing starts this year in Manitoba. That would be a 28.7 per cent decline from 2008’s total of 5,537 starts, and twice the percentage decline the agency was expecting in its February market report.”
“Bank economists and home builders have been forced to repeatedly update their expectations this year as more and more dismal economic numbers come in, and CMHC is no exception. ‘It’s a pretty big revision,’ said Bob Dugan, chief economist at CMHC. ‘We were a little too optimistic for housing starts in the first quarter.’”
“‘Certainly sales had been quiet through the fall and early winter,’ Kensington Homes manager Tony Balaz said. ‘But I can also tell you that sales for April were great… and in May the sales have been good.’”
“He said its also important to remember the last few years have been unusually strong years for new home sales in Manitoba.”
“Vallejo officials said Thursday they’re tired of waiting for the main downtown redevelopment project and are ready to fight, if need be, to find someone else who will deliver. The project’s first phase — 182 condominiums (including eight live/work units) and about 11,000 square feet of retail space on the Virginia Street parking lot site — has yet to break ground.”
“Although city officials say they understand the recession has discouraged Triad from moving forward, Vallejo needs to do just that. ‘I personally think we need to terminate that agreement and believe it should have been done a long time ago,’ said Mayor Osby Davis. ‘There is no point waiting on a watered-down project that isn’t going anywhere, anyway.’”
“Yet another stalled residential development in northern Manatee County is facing foreclosure. This time it’s Curiosity Creek, which was approved for nearly 1,600 homes on the north side of Buckeye Road midway between U.S. 41 and Interstate 75 but has not broken ground.”
“John Green, a Centrum official, said Thursday that the project got caught in the credit crunch and real-estate market crash. ‘We can’t sell it, there’s no financing to develop it and the banks don’t want to lend money,’ he said, adding the developers still hope to reach a compromise with the banks.”
“Residents across Broward County should brace for less service or higher tax rates. The taxable value of homes and businesses fell 11 percent last year, according to preliminary estimates released Thursday by Property Appraiser Lori Parrish. The tax base is smaller than it was in 2006, Parrish estimated.”
“She included foreclosures and pre-foreclosure sales in setting values for the first time. She also focused on sales data from the latter half of 2008 because she said home prices were sharply lower compared with earlier in the year.”
“‘It’s the economy,’ Parrish said. ‘The false market we had could not hold.’”
“The sunny side is not facing up for local real estate agents, who can do nothing but stand back and watch while the real estate market slows down and local housing sales slump. Former independent senator and economist Mary King said yesterday that medium housing prices had fallen ‘between December 2007 and December 2008 by 47 per cent.’”
“Despite what King said, however, Association of Real Estate Agents’ president Richard Saunders said while there is a problem and the more pricey homes are being left on the market for longer than usual, it was not as bad as King has indicated. Following the seminar, which was held at Queen’s Hall, St Ann’s, he told the Express, ‘There is no doubt that there is some retraction in the market, because real estate follows the wider economy. If there is a decline, we will experience a similar decline. This is the situation as it exists today.’”
“He added, ‘I think 47 per cent may be a bit high, and it may reflect a future direction. I would say currently, in the high end (market), we have experienced about a 20 per cent (decrease in sales) already. And in East Trinidad and other areas, outside of that ‘wild, wild west’ it (the decline) is in the ten to 12 per cent (bracket); it’s not in the 20s certainly.’”
“Plenty of swanky summer digs are yours for the taking. From Carmel, Calif., to Newport, R.I., second homes with yachting docks, tennis courts, golf courses and infinity pools — to say nothing of the obligatory spectacular view — are languishing on the market. Prices are down an average of 20%, and as much as 30%, from their 2007 peak. Among the latest price choppers: Kenneth D. Lewis, embattled chief executive of Bank of America, who just cut the price on his 5,700-square-foot Spring Island, S.C., vacation home by 13% to $3.3 million.”
“Perhaps not surprisingly, more and more foreclosed mansions are for sale. In the first quarter, there were 1,214 foreclosures of homes worth $3 million and up, compared with just 279 in all of 2008. Last week in Telluride, Colo., a 6,150-square-foot stone and timber home hit the foreclosure list. During more than a year on the market, its price was cut from $4.995 million to $4.250 million, and the final price is likely to be significantly lower, says Corie Chandler of Peaks Real Estate in Telluride.”
“Buyers in the Northeast who decided last year to wait for further price cuts may like what they see. Sharon Smith Purdy, president of Sandpiper Realty in Martha’s Vineyard, points to a 3,000-square-foot contemporary home that sits on a bluff on Chappaquiddick Island and has 360-degree views of the island and ocean. It went on the market last year for $6.85 million. Last week its price was reduced more than 30%, to $4.48 million.”
“For an impeccably restored 1891 oceanfront mansion in Newport, ‘we will consider any offers,’ says owner Candy Keefe. ‘Anything, anything.’”
“Keefe listed the 22-room house at $14.5 million four years ago. Now, despite extensive renovation in the meantime, the offering price is $12.8 million. ‘We are a family that wants to move on,’ she says.”
I’m back from my impromptu mini-vacation, and hope to get back in the swing of things. My thanks to those who support this blog. Please check back this weekend.
The False Market Could Not Hold
This aggression will not stand, man!
We’re nihilists Lebowski, we believe in NOSSINK.
Ben, did you get the photos?
Do you mean my photos or someone else? I shot some Joshua trees in Hesperia and some La Jolla stuff, etc. La Jolla houses look kinda middle class to me, with expensive cars parked here and there. Small lots, etc. But the seals are nice. I liked OB better.
Wow..we must have really driven Ben over the Edge. He really WAS hiding out and camping by the RR tracks and river UNDER the Victorville Narrows Bridge eating cold beans all this time.
“…Victorville Narrows Bridge”
Dang it Mikey, you know the “Shadow Gov’t” is still in operation right? RIGHT!
…besides, what? you forgot your hobo signs or what? I love ya bro…
Running water, one foot in Victorville and one in Apple Valley. Keep the Law confused. This roadrunner stew needs more salt…Oops, I meant…chicken.
Come out of the woods, my man Mikey. Have a cold beer and watch the Spanish language channel. They have wrestling with cool masks and midgets! It’s super! Plus great soap operas!
I swear, in the last three weeks I have totally regained my lost Spanish.
…’Esperanza! Mi corazon! Ai ai ai!”
Hahahahaah! Serious, though. Civilization is okay in many ways.
Ha ha Oly,
I’m not the ONE suffering from prolonged PNW “Dark Forest Cabin Fever Syndrone”, reduced to watching Spanish soaps and mud-wrestling innocent clams for entertainment.
There are a lot of nice mansions in Palos Verdes, Malibu and Manhattan Beach. No lots in Manhattan beach so figure those could tumble a lot more.
Malibu has the most.
La Jolla is mostly middle class housing filled with wanna be rich folks.
Even the majority of PV is middle class w/attitude.
Once the “assets” deflate then its a different story about who is rich.
“David Goyette is offering to pay the first three months of a buyer’s property taxes and will throw in a big-screen TV to boot. ‘Buy our house,’ his ad in yesterday’s Peterborough Examiner reads. ‘If you do, we’ll pay you the first three months of your property taxes and buy you a 48- inch flat screen TV of your choice.”
Can he not figure out how to estimate these numbers, run a present value calculation, and deduct it from the price? Don’t most buyers already have a TV? Why does anyone want to take his credit risk on property tax payments? Sure its gets some attention. Smart buyers say “what a dumb ___” and move on. Not all attention is positive.
Natalie,
Well… along with his “I don’t think this has ever been done before” comment I think that fairly well cements it, no?
Sorry dude, maybe in 2006 you could have gotten away w/ cheap ploys like this ( 2007 in OR ) but that’s simply not going to cut it now. Best of luck.
My mom was stuck owning two homes at once, buying before she sold the old one against my advice. She would call me crying every week about the two mortgage payments. I said why not lower the price $10k a week until its gone. She kept saying my Realtor says it’s not the price, we just need to find grab the right person’s attention. She hired stagers, etc. to no avail. She eventually lowered the price and it sold immediately. Shocking.
“In an unusual tactic to sell his waterfront cottage, David Goyette is offering to pay the first three months of a buyer’s property taxes and will throw in a big-screen TV to boot. ‘Buy our house,’ his ad in yesterday’s Peterborough Examiner reads. ‘If you do, we’ll pay you the first three months of your property taxes and buy you a 48- inch flat screen TV of your choice.”
“Sitting in the kitchen of his White Lake property, about 20 minutes northeast of Lakefield, the 58-year-old writer smiles confidently. ‘I agree, it’s an unusual offer,’ he said. ‘I don’t think this has ever been done before.’”
“Goyette put the nearly 3,000 square-foot, four-bedroom cottage on the market last year to no avail. This year, he wanted to sweeten the deal. ‘These are tough economic times. I thought, what can be done that’s innovative?What is it that will cause the final little push?’ he said. ‘So I just made it up. The bottom line is, it’s a very small price to pay for a property that’s selling for $429,900.’”
Natalie; Yes, that is the ticket! Just drop the darn price you moron! I like how he used the line:
“…selling for $429,900.”. I don’t think so buddy. Maybe selling for under $200,000.
Bottom line, drop the price!
Natalie,
Throughout all… of this, I think I can count the victories I’ve had w/ friends & relatives on one hand. So after hundreds of stern warnings and thousands of words of caution, not a very good track record.
It’s not as if there wasn’t ‘enough’ economic burden from the fallout on a national basis, taking on the add’l load on a personal front is more than any of us should have to bear.
Thanks DinOr. It was awful because she got to the point where she was asking me money to help cover the debt service. I finally said cut the price or you are cut off. It’s amazing to me how many friends and family take the advice of Realtors over loved ones. Realtors have one goal - to maximize commission revenue. Some have been successful in the business for decades, and still do not know anything about the economics of real estate but boy can they sell.
I’m still trying to figure out how a four-bedroom, 3,000 square-foot house can be called a “cottage.”
Natalie,
Good for you standing your ground. Personally… I think you were more generous than “I” would have been? Don’t get me wrong, my wife assures me I’d have a lot more money if I wasn’t always bailing out friends.
But helping people that have lost jobs or had a serious illness is (1) thing ( making ‘other’ people’s “margin calls” for their failed speculative infestments is another )
That is what I was wondering too. Aren’t cottages little things with vines and monring glories and no central heat and very iffy hot water?
I think he meant to say “‘So I just made it up. The bottom line is, it’s a very small price to pay for a property that’s NOT selling for $429,900.’
Natalie, I am just about to undertake your tactic with my cousin Sherry in Maine (not to be confused with my cousin Nancy in Wyoming). My cousin Sherry refuses to drop her price and says the realtor advises her not to. It’s been sitting on the market six mos with no offers and almost no traffic. Meanwhile she’s gotten money from all her four kids, and a little bit from me. No lower price, no more subsidies. Will make this clear to her the next time she asks for help.
What is it about housing that makes people act in that manner? I have friend whose father is trying to sell a 2nd home and has decided for whatever reason that the home is worth $900k and he doesn’t care how long it takes to sell (In my opinion he’d be lucky to $600k). I can’t think of any other asset where people would act in this manner, but with housing it seems to be common.
“Realtors have one goal - to maximize commission revenue.”
Sheesh, doesn’t volume count for anything?
“Sheesh, doesn’t volume count for anything?”
I sometimes ponder why Realtors generally appear to be against falling home prices when it would presumably result in higher volume and stability for the industry. I think the answer is that most are over debt leveraged themselves when it comes to housing. I have yet to see a Realtor live in a home (including seconds and investments) well below their means. Also many Realtors get listings by telling clients if you hire me I think I could get X (which is higher than what others are quoting). Encouraging immediate price cuts might look disingenuous. It would also undercut the concept that it is always a good time to buy. It’s hard to rely on repeat business when your former clients were left with a bad taste in their mouths.
Tim, if housing isn’t appreciating at insane levels, they can’t make the ‘easy’ money. If housing collapses back to historical levels (sales and prices), you’ll see about half as many realtors around. (Or fewer!) Half as many realtors means half as many membership dues to the NAR.
So why exactly would they cheerlead themselves from the ‘rich house’ to the ‘moderately well off house’.
On an individual agent level, pushing for lowered prices makes sense. On an industry wide level, pushing and praying for the hype to reignite makes sense.
Once a certain percentage of individual agents see the writing on the wall, even the bastions will fall.
My parents did the same thing. They sat on an overpriced home for a year. As soon as they lowered the price it sold. Yes, shocking.
Natalie, this seems to be a common tactic with realtors. I would think they would encourage realistic pricing just out of self interest, but that doesn’t appear to be the case.
I know someone who has had his home on the market for two years, and has heard the same schtick from his realtor. Two years and only one bid on the property (that person then couldn’t qualify for a mortgage) and still he is being told price is the reason it isn’t selling.
Frank Hague,
Right, the realtors are just playing the numbers game from here on out. They have -tons- of overpriced listings and they know full well most of them will never sell at that price.
So rather than be professional and upfront w/ sellers they figure it accomplishes (2) things. Firstly it helps to support prices in their area ( thank you captain obvious ) but secondly and more importantly the few closings they actually ‘do’ have will give them a commission large enough to hold them over until the next one.
And if a few -more- sellers wind up in desperate straits over their antics? Hey, tough, this is ‘business’.
Here is something else to consider, that I think many realtors take into account, if a realtor gives a realistic estimate of what a house can sell for there is a good chance they won’t get the listing. The sellers in many cases are more delusional than the realtors.
This isn’t the Ontario Fb story I’ve been watching for, is it?
Probably.
Goyette must not read USA papers because our builders have been incentivizing for years now - with little success. Most have gotten the idea that they simply need to slash the price.
The “novel” ploy I’m seeing around here is FOR SALE OR TRADE riders on the yard signs.
OK Boss, let’s think this out…
You think your house is worth $300k, and you want to move up, presumably. Who are you going to swap with? The guy who thinks his house is worth $500k may be willing to downsize, but he’ll want you to bring some cabbage to the table.
You wish to downsize, you say? The gal who thinks her house is worth $200k will have to pay you some cash money to close the deal. The only realistic option is if you’re seeking a lateral move. And who does that?
phillygal,
So, so true. I’ve seen a few faint-hearted attempts on C’list for “Equity Swap” type websites that never got off the ground.
Part of the pitch was “Why deal with lowball offers and unqualified buyers? If you have ’substantial’ equity in your home, you may be able to arrange an exchange with…”
? And then it just kind of dies off…
They’re playing off the car swaps, which can actually work. “I got a jetta, I need a truck.” Of course, these are all old cars that are paid off and none of them worth all that much. If you try and swap a car with a lien on it, nobody’s going to touch you with a ten foot pole.
The best thing about these attempted house swaps is that they signify a big price drop to come.
REality bites.
I can see trading a Marshall Plexi for a Super Reverb.
Or a Dirt bike for a Vespa.
But swapping houses….
not
+1
God I could use a Deluxe Reverb.
Bad ( Voodoo ) Chile,
I’ve played through a Fender “Super 60″ since 1989. The problem w/ ‘that’ particular model is that when you go to re-tube, sadly it has a “fixed bias”. So there’s no potentiometer for the tech to tweak.
My new Groove Tubes had to go back into original box and one channel is on it’s last legs. I need a complete overhaul, but trade!? NEVER! The reverb is so sweet even your mistakes sound good, which is fortunate for me.
Back to HBB:
That is a bummer. I live in an apartment, I’ve just got one of those Epiphone Valve Jr’s. Sounds great until I play it next to a ‘good’ amp. Then I’m jealous….
Back to HBB
(PS: I’ve stuck with Bad Chile for some odd reason…long story….)
People who get a new job that turns a reasonable 20 minute commute into an hour and a half long nightmare?
Oh, wait. Nobody gets new jobs in this economy either…
Housing swaps could work for people being transferred by their employers. But I doubt the plan is being targetted to such people.
I think the killer quote from Mr. Goyette is:
‘So I just made it up. The bottom line is, it’s a very small price to pay for a property that’s selling for $429,900.’
Dude, it’s NOT selling for $429,900. That’s the problem.
“For an impeccably restored 1891 oceanfront mansion in Newport, ‘we will consider any offers,’ says owner Candy Keefe. ‘Anything, anything.’”
OK, I offer $800, but only if you can provide clear title. Then I’ll live in it until the weather turns cold and then I’ll walk away.
NOBODY is going to want such a mansion at ANY price. Especially when “cap and trade” causes utility bills to go through the roof in a couple of years.
If I were you, Candy, I’d stay away from that “anything” word, unless, of course, you are a loose and really hot babe!
I was very wakeful last night for some reason, so have been doing useful things such as “helping” my husband win some Pogo badges while he sleeps, fixing our new computer that wouldn’t display any pictures, etc., and taking occasional catnaps with some funky dreams. I found the pictures of Candy Keefe’s Newport mausoleum, and all I can say is “wow, you’d better get your husband back up from his new job in Florida, because that puppy ain’t going to sell nohow.” They’d be better off giving it to the National Preservation Trust if they’re still taking white elephants like that. Just goes to prove that the top docs have money to burn, and then some. He must have had some incentive plan at Brown University. Yee gods.
From the original post comes this gem:
“We realize now how deaf the banks had become to being in the real world.”
Being the offspring of an almost-deaf person, I can personally attest to the fact that the real world has a tendency to yell. Loudly. At you. Especially if the world thinks that you’re not listening to it.
(My father is the almost-deaf person. My mother is the yeller.)
Wall Street Journal
* REAL ESTATE
* MAY 29, 2009
Mortgage Rates Surge, Sap Hopes
By NICK TIMIRAOS and RUTH SIMON
Home-mortgage rates have surged to their highest level in more than three months, threatening prospects for quick rebounds in the housing market and consumer spending.
The average rate for 30-year fixed-rate loans jumped to 5.44% on Thursday, the highest level since early February, according to a survey by HSH Associates, a financial publisher. That was up from 5.29% Wednesday and 5.03% Tuesday.
Mortgage rates are being pushed up in part by a steep increase in yields on long-term Treasury bonds, which have a strong influence on the cost of home loans.
“The spike in rates has the potential to derail a lot of things,” said Mahesh Swaminathan, a mortgage strategist at Credit Suisse Group in New York. Higher rates make it less likely that homeowners will be able to lower their monthly payments by refinancing, which could put a crimp on consumer spending. They could also mean lower earnings for banks, which have profited from increased refinancing.
“Higher rates make it less likely that homeowners will be able to lower their monthly payments by refinancing.”
Are there really people that were waiting around for rates to get lower? Unbelievable.
O percent is pretty much a hard lower bound on mortgage rates, and we just touched off generational lows. So unless one is willing to wait another fifty years or so, the trend is not your friend…
What’s better is people moaning and crying about 5.5% rates.
“If they go up to 6%, I don’t know WHAT we’ll do!”
Ridiculous!
I’ll grin broadly and as I contemplate my 4.875% mortgage.
We have 5.75 % here, but we didn’t want to put any money into refinancing AGAIN, so I guess we’ll be sititng pretty below the national average rate soon.
Unless, of course, you intend to pay cash, in which case the trend is your friend - as the already diminished pool of people able to qualify for a mortgage becomes even smaller, lessening demand, and oops, prices still going down. Be interesting to take a look @ price trends back @ the 80’s when interest rates were double digits but funny financing hadn’t happened yet.
I’m right with you. Given that my cash is largely in CD’s, our effective borrowing rate is just 3% (with no points and only two month’s interest penalty for early withdrawal).
It really isn’t that hard to understand. The economic foundation of this country derailed the last 8 years, and printing our way out of it only shits the pain, and makes it worse. I was a minority voice here saying interest rates HAD to rise. It was the only way the pain could be felt. Somebody has to pay for this mess, and that somebody is all of us.
The government did their manipulating, and the invisible hand just responded. Interest rates were ALWAYS going to be the end game in this. I am fully expecting 15% + rates.
BTW, my loan broker called after we backed out and basically told me how unfortunate it was that we backed out/didn’t lock last week before rates went up. I just laughed. Does this guy understand that prices will now also respond to these higher rates by going even lower??? This is only going to put MORE pressure on prices to go lower.
This country has a “stupid” problem. If we are going to start anywhere, we need to scrap our education system and come up with something that allows people to use their heads.
I’m surrounded by MORONS.
only sh*ts the pain
How did that get through the blog censor? Is it because it is howlingly funny AND accurate?
I noticed that “shifts” too
Typos can be so muckinfuch fun!
WFT???
Prices will only respond if coordinated efforts are not maintained to keep vacant homes off the market. Otherwise, massive amounts of wealth will be destroyed as vacant homes crumble into dilapidated desuetude, but at least home prices won’t collapse as fast as they otherwise would.
I don’t know about that. Some of the homes you are thinking of are in totally useless locations. Near desert California, inland Florida exc.
Not seeing as many fall into disrepair in coastal areas yet.
Should be some kind of gradient here.
Trying to quote the funny part only _____ the pain got ME censored (And I modified it a little even) so I’m not sure how you got through the filter, but that is a hilariously accurate typo.
At some level, the HBB has always been a collection of people who have at least some understanding of math - even before economics and securitization law and the history of economic manias and all the other stuff.
I talked through a very very basic example with my parents assuming $1500 of a payment going to interest (ignoring other costs) and what happens to the price when you go from 5% to 8%. My dad got it right away. I’m not sure my mother understood, but she believed me once my dad told her I was right. The complete disappearance of $135K got through to them.
The one thing you have to remember is that it will take a little while for the price to adjust. The sellers have to be convinced that the increase in rates is permanent enough to be included. If the increase is just a two week “blip” they will just wait an extra two weeks to sell.
Banana! You backed out!
I am soooo happy!
Last week I remember writing, “Another fallen soldier [sigh]”
And here you are back in the land of the living, the land of the solvent, the land of the cash-rich. Welcome home.
Oh, please-oh-please can I earn double-digit interest on my savings?
That would be fun. I wouldn’t even have to make mortgage loans any more.
I wish I could have been doing that all this time..instead of spending the interest on my savings, I’ve been having to deplete it instead. It’s sad that I’m happy I at least locked up some money in a 5% 1-year CD…sigh…
Cash cash cash cash cash …
Ummmm, love that cash.
So does everyone else … especially the ones that are fresh out.
(Ask the tax man.)
bananarepublic,
Are you sure you meant to say you were a “minority voice” for higher lending rates HERE… or coast to coast?
That wouldn’t be ‘my’ recollection? After all, -demanding- higher int. rates that are ’somewhat’ anchored in reality is the cornerstone of bubble blogging, no?
Agree with that. Seems like most of us here have been clamoring for higher rates because most HBB’ers HATE debt and would appreciate a much higher return on our savings. Higher rates make debt less palatable, so we LOVE high interest rates!
Agreed. What these realty whores and mortgage broksters don’t want you to know is every 100bps increase in rates equals about a 10-12% decrease in purchasing power. Example: a 100,000 payment @ 5% is the same as an 89,500 payment @ 6%. The majority of home buyers are payment buyers. Rates have backed up over 50bps in two weeks. For the average home in Florida where I live, that means about a $20,000 or so hit in value.
The mortgage market virtually locked up this week due to serious dislocations. Jumbo’s are over 7%. Unless you were locked in, you ain’t closing nothing!
Interest rates were ALWAYS going to be the end game in this. I am fully expecting 15% + rates.
yep
‘We’re not at the bottom and anybody that’s trying to call the bottom right now is crazy,’ said Jack McCabe, a real estate consultant based in Deerfield Beach, Florida. ‘There’s a huge foreclosure wave still ahead in the next 12-18 months and still a lot of excess inventory.’
I would love to see the list of high-profile bottom callers whom Jack McCabe is calling out as crazy. Can anyone please name some names?
So long as top economic policy makers with MSM bully pulpits are in collective denial, no housing market bottom will be reached.
I like to help you find that list Mr. Bear…but Snoopy, Woodstock & I are hot on the trail of locating the mysteriously disappearing… “Ground Zero”
I want to name the name not of a bottom caller but of a public figure whose tune has changed markedly: Glenn Hubbard, Dean of the Columbia B School.
Last summer and fall he was endlessly on TV and on the op-ed page of the NYT, always ALWAYS calling for “policies that will stabilize house prices.” Meaning, prop them up. First I sent him an email saying something like, “I am a tenant, you are a moron.” Not in those exact words. Next, since he often appears with former Fed Vice Chair Alan Blinder of Princeton, I send Blinder an email saying, “Is Hubbard a big landlord, or just a moron?” A couple of days ago, Blinder and Hubbard were on the NewsHour again, and THIS time Hubbard said nothing about propping up house prices. I’d love to take credit for that (but I don’t). Not that I agreed with whatever he said, but at least I didn’t have to throw a brick at my television.
Is he related to L. Ron Hubbard?
Since L. Ron’s only son changed his own surname, Glenn is probably not the grandson even though the age is plausible. So I guess the main relationship is, both Glenn and L.Ron wrote sci-fi — L.Ron explicitly, Glenn disguising it as economics.
Well they both invented religions too.
From Jack’s mouth to our ears.
Good as gold
My MSNBC (Microsoft’s National Barrack Channel) Web page cheerfully tells me that the recession is magically going away, and everything is rosey.
Last night I saw some program on HGTV about young people shopping for their first places. They showed a little concrete 1950s dump in South Florida with an asking price over 300k, and I realized that the whole thing must have been filmed years ago at the height of the mania. The next program had some 20-Something guy looking to buy his first place, and hoping he could find one under 350k. What 20-Something is earning 80k - 120k a year to be able to afford this?
More and more of these shows stretch credulity past its limits. Seeing a 23 year old shopping for a house and insisting on 4 bedrooms, 3 baths, granite countertops, stainless steel, and large yard–all of this for someone who has never owned a house or held a job for more than month–is nauseating. These fools have no idea what owning a house involves. I doubt they’ve ever cleaned even a single room.
Naturally, however, there is always a realtor there to sucker them into deals they cannot possibly win. What could the producers of HGTV possibly be thinking, other than ratings and ad sales, regardless of harm done to get them?
Funny, I was having the same reaction watching the same show last night. It borders on evil to push people into a financial morass they can never recover from, and to tweak emotional buttons to do so.
I’m married with 2 kids and we not only don’t have a 4-bed 3 bath, granite coated palace, we don’t want or need one! Who wants to spend every waling hour cleaning & gardening — or working so you can hire someone else to?
People NEVER take these costs into consideration, it’s crazy!
I was trying to explain to my mom how buying a house is not a good long term investment, a fun place to paint aqua yes, but not a money maker. When she pointed out my dad’s house as an example — he bought in the 70’s for $80K and now it’s “worth” $1 mil, she didn’t take into account the gobs of dough that went into the new roof, painting this massive house several times, the plumbing problems, the sick oak tree that had to be cut, the landscaping costs each year, yada yada, not to mention the outrageous property taxes in NY that were never cheap but run about 18K a year now. Over 38 years. Ouch.
Also in the HGTV show — that dude, Hawk? If you have that much trouble finding financing it’s a SIGN.
Where have you been lately? You probably know this, but those houses still being built in south Tampa are absolutely gigantic, right out of the height of the mania where the conventional wisdom was to stretch to buy the biggest house in the best neighborhood. Sometimes I see an uninspired 4,000 square-foot rectangular monstrosity going up on a street of 3/2 houses and feel sick to my stomach, like medieval people must have felt like when the plague returned.
Oh, and the St. Pete Times today had a puff piece on a barely-informed septugenarian Australian and his son roadtripping to Florida with an intent to “snap up” foreclosed properties. Disgusting.
“I doubt they’ve ever cleaned even a single room.”
Back in my old neighborhood it’s common to see the long time senior citizen residents still doing all their housework themselves whilst the newly arrived couples (many with stay at home wives) hire maid and lawn services to maintain comparatively small houses.
Houseownership today: everyone wants the profits and prestige, no one wants to rake the leaves.
We have maid and lawn service. The landlord pays the lawn service. I pay the maid service. Why maid service? Because we’re both working a job and we have a 7 month old baby. My wife is sooooo much happier with every other week serious scrub downs on the house. And yes, I’m lazy.
My 83-year-old mother does the yardwork. Except for picking up the leaves in the fall. She hires one of those services that has a leaf vacuum. They do a good job.
BTW, my 84-year-old father does the housecleaning.
I live in the tall dark forest. What sort of dummy fiddles with moving around leaves and planting petunias and mowing lawns and other similar such nonsense, in the forest? Not THIS dummy.
(Now, my garden, a small deer-fenced area in the back, that’s different. But my garden only likes me to handle it. It’d get mad if I let a stranger caress it and pry curiously at its secrets. Can’t p*ss off the garden, nohow.)
Wood Troll…buy a bridge like everybody Olygal !
I knew there was a reason why I enjoyed Oly’s posts so much. I was raised in a house in the woods. No mowing for my family either.
I was raised in a house in the woods. No mowing for my family either.
IIIIII was raised in the red- rock badlands of Utarr. Rocks don’t mow fer cr*ap.
I traveled myself to the woods, Slim.
Just got my very own forest Oly!
17.58 acres - no garden yet.
I’m in box h e double hockey sticks right now!
Leigh
Serious!? Tell us all, Missy Green-Eyes! Every single detail!
Ok.
4000 sq ft 4bd/3ba/3.5gar -
2 natural fireplaces
NO granite
many, many, many windows
half way between Madison and Milwaukee
Full block w/real brick w/2×6 interior walls
Super insulated
Walkout basement yippee with hydronic heated floors
Oh, and a big pond with a live stream feed
Built in 96 before all the craziness
2 decks
About five acres cleared for the garden
beautiful mature hardwoods/lovely fruit trees/colorful perennials and wildflowers too!
Leigh
Leigh, don’t turn into a troll.
Oh, Leigh could NEVER be a troll. She’s just annoyingly contented right now, is all…
Hahah!…
Tell us more! Like how you skipped around like a bunny, Leigh! Tell us about your pond! Is there frogs in it!?
ha!
Hey Az_sniff.
I’m not a troll sista!
Oly! The best frogs evah! Tree frogs!
They are sooooo cute - tiny ones and they stick to the windows - the most gorgeous green - and what lung for such little ones!
Oh! frack, bunnies galore!
Turkeys - and I mean fat ones!
And! Eagles! Oh, and - wow- peacocks!
Frack, it’s animal heaven. Sigh.
But no big foot - grrrr.
But hey, does a tame goat count? Yes she does!
Leigh is not a troll!
Sounds like an amazing place, Leigh! Hope you guys have a wonderful life in your new home. Enjoy!
“The next program had some 20-Something guy looking to buy his first place, and hoping he could find one under 350k. What 20-Something is earning 80k - 120k a year to be able to afford this?”
That’s what I really don’t get. I make that range of salary, and no way do I think I could afford anything close to 350K. Probably don’t even want to spend half that much on a house.
People have completely lost touch with what’s affordable. A $300k home is VERY expensive, and reserved for people making a minimum six figures. Instead, we’ve got couples making $70k combined buying these things as if they’re cheap. Unbelievable.
Those people always go for the highest priced one out of the three “choices” on those shows, it seems.
“My MSNBC (Microsoft’s National Barrack Channel) Web page cheerfully tells me that the recession is magically going away, and everything is rosey.”
I would reply more in depth to your post, but I’ve got to mow down those green shoots that have started growing in my yard!
Hmm maybe it’s green “chutes” they’ve been promising. Watch where you mow..
(Microsoft’s National Barrack Channel)
Army barracks?
Speaking of false markets that cannot hold, how is the decoupling hypothesis holding up these days?
Economic Report
May 29, 2009, 1:41 a.m. EST
Japan’s April housing starts worse than feared
By Myra P. Saefong, MarketWatch
TOKYO (MarketWatch) — Japan’s housing starts fell much more than expected in April, as building construction dropped for a sixth month in a row, according to government data released Friday.
Housing starts were down 32.4% from a year ago, at 66,198 units in April, the Ministry of Land, Infrastructure, Transport and Tourism reported.
Analysts polled by Dow Jones Newswires were expecting a decline of 22%.
Housing starts have been falling each month since from the November 2008 level, data showed.
Meanwhile, Japan’s overall building starts were down 32.5% from a year ago to 9,431 units in April, the ministry said.
April construction orders from Japan’s 50 leading domestic constructors sank by 25.9% to 562.8 billion yen ($5.8 billion).
Myra P. Saefong is MarketWatch’s assistant global markets editor, based in Tokyo.
Was it Japan that was supposed to have decoupled from us? Ithought it was China, India, etc. that had allegedly decoupled…
I thought the idea was that the Asian economies did not need Uebermensch consumer J6P American because they were going to start trading amongst themselves. Perhaps Japan was not part of the story. Regardless, the decoupling hypothesis is hogwash, even as its inventor is now stretching out the time horizon for it to come true over many future decades. By the time the data comes in to either prove or disprove his hypothesis, many of us will be in the long run…
‘Former independent senator and economist Mary King said yesterday that medium housing prices had fallen ‘between December 2007 and December 2008 by 47 per cent.’
How are the rare and well-done housing prices holding up, senator?
LOL! I had to go back… funny. Oh and just “slide mine across the grill” please?
That article is from the Trinidad & Tobago news. No English-speaking proofreaders maybe. You have to give them credit for putting Mary King at the top of the article. She said the prime minister was wrong to call the present downturn a “blip.”
“Kenneth D. Lewis, embattled chief executive of Bank of America, who just cut the price on his 5,700-square-foot Spring Island, S.C., vacation home by 13% to $3.3 million.”
Sorry, Ken, no ‘Friends of Angelo’ loans for your would-be buyers…
Isn’t he one of those crooks that got bailouts from us and Bonuses too?
F.Him, and the horse he rode in on.
Sorry ya’ll. These folks get off scot free and our country allows they to continue their golden parachutes ..and and and. I have low BP but think it is rising.
Is there a SA* chapter in San Diego? Because I feel like I am on a serious binge after reading Ben’s Friday desk clearing post…
*Schadenfreudics Anonymous
Might be time for an impromptu HBB brewski support group gathering in Encinitas / Carlsbad
We need to start working on that. Is Ocean Beach too far away?
Corripe Cervisiam!
It’s all Mr. Bear’s fault Ben, he made me have a play date with my bookmarked Latin site yesterday.
Can we arrange one on the evening of the 3rd of June???
I will be driving, escaping the desert to SD and then homeward, but would love to stop for libation and a meetup.
O.K., hump day… wed June 3rd…calling: San Diego REBear / CA Renter…incoming!
I am working on a new project down in SD - La Jolla. Driving from South OC to SD.
Can I join in? I will buy a round.
O.K., the blood’s coagulating…I’ll be arriving by train…Carlsbad/Encinitas/Solana Beach/Serrento Valley…within stumbling distance…
I think I’m up for the 3rd, but need to double check the calendar at work.
Late as usual. Yes, it looks like the 3rd would work for me as well.
OB is a big can-do for me
If in OB, I highly suggest Newport Pizza. Best beer selection in the area by far, and the pizza isn’t half bad either.
Also best done during daylight hours, but then - this is OB.
Newport Pizza does have a great selection of draught beers. But I’m thinking the Sunshine Co has more room.
Also, I chatted with SD bear and she says July is looking better. But you guys can storm Pizza Port Carlsbad w/o me!
Try South Beach if you like Seafood. It’s across the parking lot from the pier. However, Thee Bungalow is probably the best food around if you like the fancy stuff( too “nice” for me.)
Wish you guys would do some of these Calif meet-ups when I’m actually THERE (winter only)
Ah you ‘fairweather’ friend ! ;>
Well tell us you’re here and set a date. We’ll show up! (So you winter in CA and summer in AZ? That just seems wrong to me.
)
Summer in Maine, LEND in Arizona.
Ahhh, much better. Maine looks like a great summer state!
We realize now how deaf the banks had become to being in the real world.’”
What, they won’t take a loss to help everyone who was told ‘you can always refinance in a few years.’ Argh! The home ATM is broken. Step back from the Debt machine!
/rant
Ok, I know most HBB’rs were against MEW, but the victum mindset. Lets here them say: I bought a Hummer, too much home, but at least we get to keep the wife’s boob job.
When I see the ‘upgrade market’ get back to healthy, then I’ll know its ok.
Trying to artificially keep down payments low is going to spank us later. If someone cannot save $10k+closing costs, they really are not ready to be a home owner. If you want to pay above $289k (what I believe should be the FHA limit), its just silly to think less than 10% down is ok. Above $417k? Lets see 20% down or pledged assets. Above $729k? The historical norm for the top 2% of the population was to put 25% to 30% down, so that’s fair for Jumbos up to $2 million. Above $2 million? That’s already gone back to its norm, so let them pledge their assets against the ‘cash flow management’ a mortgage provides. I’m amazed anyone will insure low down payment mortgages anyway.
ok, second /rant.
Got Popcorn?
Neil
We need to get RepoMan to start taking back the boob jobs. (google “repo the genetic opera” for more about The RepoMan.)
Ouch!
Well it’s conceivable that dragging this out will prevent the worst from happening. But make NO MISTAKE, dragging the whole process out for a longer period is all that the government CAN do. The bubble prices were completely unsustainable and they MUST fall to affordable ones. This means the destruction of HUGE amounts of “wealth.” There will be no return to the gogo bubble appreciation rates of a few years ago.
Was looking up at No Cal and can see the price drops creeping in toward San Francisco. (family up there, renting)
Its creeping in here for Los Angeles south bay.
Still seems like we have a good solid two years left of all this madness.
Bottom should be 2011-2012 but overall larger market will be earlier. Will scrape along that for a long while. Lot longer than in 92-98. I’m thinking till 2022-23.
Its creeping in here for Los Angeles south bay.
The price decline is defiantely creaping. Please click on my name for my South Bay LA blog. The 2nd to latest articles have some graphs on $/ftsq. note: its definately a 3rd string blog.
The earliest bottom is Feb 2011. We simply cannot have a bottom in the 2nd half of the year. Spring selling season will create a bottom one year… but not this year or next.
I think we’ll scrape until 2015 and then repeat the darn cycle… Just my opinion. Certainly farther out than the 6 months away the REIC always says the recovery will begin… (Always frackin six months out!).
Got Popcorn?
Neil
And that’s why I keep Zillow handy. We need to remind ourselves that Venice crackerboxes sold for 325,000 back in ‘97.
The price decline is defiantely creaping.
I know you meant to type “definitely creeping”, but I love defiantly better!
“Ok, I know most HBB’rs were against MEW, but the victum mindset. Lets here them say: I bought a Hummer, too much home, but at least we get to keep the wife’s boob job.”
I dunno Neil. I suppose anything can be repossessed
We didn’t want any encumbrances so we paid cash;
Only second time in my life that I wrote a check for over a half a mil. Still remember vividly the numbers going bong - bong in my eyes…
For your wife’s boob job ? Wow !
For an impeccably restored 1891 oceanfront mansion in Newport, ‘we will consider any offers,’ says owner Candy Keefe. ‘Anything, anything.’”
Hmm . . . anything? OK, I’ll bite — $100k cash for your 22-room oceanfront house.
Remember when Realtors used to tell us smugly that below asking price offers would not be considered and if we have any interest they suggest we submit an offer within the next two hours over asking and perhaps we might get lucky? I am an open house junky. I would say that at over 50% recently, when I ask for the price, they say the list price is $X - I shouldn’t be telling you this, but I think they are willing to take significantly less - They really need to sell.”
Offer $10. That thing will probably eat up $100K in energy and cleaning products in 10 years before you even get to the property taxes.
I was thinking of turning it into a boarding house, or maybe a home for wayward girls? A doggie kennel?
Bidding war! I’ll see your $100 and raise you $10 !
“The medical laboratory equipment engineer has a prime, 30-year fixed rate mortgage with a 9.5 percent annual interest rate.”
Geez when did he buy it? In 1989? And was there no chance to refinance since?
They don’t explain why he’s not just selling it right now, too.
Wow, az_lender will be happy to give him a re-fi at 8.4%.
He may have bought it originally with a conventional loan, and now needs a jumbo. Just one more item to consider.
‘If you lose your job in Connecticut, you’re hard-pressed to find another one,’ Van Winkle said. ‘Most families need two incomes to pay the mortgage.’
Thus it is in America…x2 incomes that last for 30 years… A receipt designed to: ” Preserve the Union”
You joke. But I have friends in that situation.
Its pretty sad how fragile the household is that requires two incomes for a long time. You can swing a DTI of up to ~52% when you drop to one income. (e.g., Any more than that and its disaster even amoung the most understanding couples. )
Doing quick math,
If income #1 is $1 per time period
If income #2 is $0.50 per time period
Debt payments (including taxes, etc.) are $0.52 per pay period or a starting DTI (on two incomes) of 35% to survive losing the lesser income (DTI goes to 52%). If equal incomes you must start out with a DTI of 26%!
Somehow I doubt Mr. and Mrs J6P ‘homeowner’ kept total DTI below 35% much less 26%.
If they were starting at a 38% DTI with equal incomes… its just not going to be possible to service a debt at a Debt to income of 76% when surviving off the one income.
Oh… I had friends who had a DTI of < 12% where it was no issue to lose the income of the spouse who earned double of the other. (Nearly paid off home, unusually well performing LARGE 401k’s, secure pension, etc.) But for most, this is another unpaid mortgage.
Got Popcorn?
Neil
Then they are fools. They need to cut their “lifestyle” to fit their incomes.
“You joke…”
Hey Neil, sadly, that’s not a joke…that’s my pain looking at something that has become an expected “reality” in America…”land of the Free”…to be as equal to or better than… the person living next door.
Read Elizabeth Warren’s “The Two Income Trap”… interesting food for thought.
+12,000 on that suggestion. Elizabeth Warren rocks!
Thanks for that math Neil. BTW, that there is exactly the reason I live in Palmdale and not Santa Monica.
she bought in 1990. She got into trouble in 2007 when she refinanced into an adjustable-rate mortgage with a 9.75 percent interest rate… *snip snip* …‘I keep wondering why I can’t fit into some program,’ Jarvis said. ‘I’ve been working since I was 16. I’m 59 now. I have a job. I just want [my mortgage]structured so I can afford it. You end up falling through the cracks.’
Your mortgage WAS structured so you could afford it, you dingbat! If you hadn’t refinanced and taken money out, you’d be fine. There’s no way your 1990 purchase price is below water. YOU TOOK THE MONEY! Now it’s time to run.
She needed the money to pay off some bills and her credit was bruised, so she said she had little choice but to sign for the higher rate
I wonder what those “bills” were all about. A school nurse should have a darned nice medical plan - probably belongs to the teacher’s union.
Was it the Porsche?
And why was her credit “bruised” if she had been making mortgage payments for 17 years?
She medically needed that porche. Her psychological trauma from too much HGTV was such that only a souped up sports car could heal the wounds.
Personally, I’m trying to convince my wife that a ‘67 or ‘68 VW Bug would be medicinal. She’s not convinced.
sfbb,
Don’t laugh, you have no idea how many FB’s I’ve talked to in the last 10 years have made ridiculous claims like:
“Everything’s been so stressful, we really just needed to get away”
Well how “stressful” would things be if you didn’t have two nickels to rub together ( like I know you don’t! ) After awhile it just gets insulting.
I’ve been hearing things like that from my in-laws. Things are NOT going to end well for them, and they’re at the end of the credit-rope. Bankruptcy, foreclosure, and starting over at 65+ for them.
I see very much the same thing for their other daughter and her husband.
Not having debt makes us feel rich. (Not rich enough to get an old VW, however.)
Children?
T minus 11 years and this “employed” dingbat has a mortgage burning party. Or double up pmts and be done in 5.
I feel there is some key information missing in this lady’s story.
“…Kenneth D. Lewis, embattled chief executive of Bank of America, who just cut the price on his 5,700-square-foot Spring Island, S.C.”
There’s that word again: “South Carolina”
There’s that “other” word again: “Bank of Oppoortunity”
There’s that “other other” word again: “White Male Banker”
“Banker - the other white meat.”
The money quote of the day. Thanks.
“…..She got into trouble in 2007 when she refinanced into an adjustable-rate mortgage with a 9.75 percent interest rate.”
“The value of her house has fallen and her mortgage is now higher than the house’s appraised value. ‘I keep wondering why I can’t fit into some program,’ Jarvis said. ‘I’ve been working since I was 16. I’m 59 now. I have a job. I just want [my mortgage]structured so I can afford it. You end up falling through the cracks.’”
If she could afford the payment when she refinanced in 2007, why does the value dropping keep her from making the payment? Why not use some of the money she got by “pulling her equity”. These victim tales are so boring and repetitive.
Yes, If you pull out equity and cant pay, you are not the victum, you are the perp.
Out of the frying pan and into the fire:
Maryland Man Charged with Arson in House Fire
Investigators found that Swanhart was about $17,000 behind on mortgage payments on the house he told investigators he originally planned to “flip.”
http://www.claimsjournal.com/news/east/2009/05/29/100941.htm
got s’mores?
I looked up the source articles on that story - I owned a house no more than 2 miles from there in the 1980s. Nice farm area, with small developments tucked in here and there, now overpriced of course.
We bought in ‘82 for $65K, sold in ‘88 for $107K before the downturn late ’80’s downturn. A few months ago I checked on Zillow and their estimate for our old place was $300K at that point, now it’s down to an “more affordable” $252K. Probably really worth about $180K, maybe lower if the final crash landing is really hard.
“Yet another stalled residential development in northern Manatee County is facing foreclosure. This time it’s Curiosity Creek, which was approved for nearly 1,600 homes on the north side of Buckeye Road midway between U.S. 41 and Interstate 75 but has not broken ground.”
“John Green, a Centrum official, said Thursday that the project got caught in the credit crunch and real-estate market crash. ‘We can’t sell it, there’s no financing to develop it…”
Before the housing mania, this was prime tomato growing area.
One could argue that farming isn’t a path to prosperity.
Be hard to convince me that it was in nation’s interest to export much of the fresh produce business to Mexico and parts south.
Oh, the Mexican standard of living was supposed to rise so they could buy U.S. exports.
Right.
“‘I’m getting to the point where I’m ready to break down,’ said Martin Garcia. The medical laboratory equipment engineer has a prime, 30-year fixed rate mortgage with a 9.5 percent annual interest rate. Anybody else think that something sounds wrong with this story? Certainly 9.5% WASN’T absurdly high for a mortgage when he bought in 1989 but why didn’t he refi ~2003? He could have gotten a 15 year, lowered his payments AND shortened his term. And EVERYONE was refi ing to lower their rates then. He would have been getting offers EVERY WEEK.
He could have refinanced during the early 1990s. Say, in 1991 after the Gulf War ended.
Probably bought too many luxury sedans and went on too many nice vacations along the way…
News from behind “The O.C.” curtain:
From the comments:
“Lee, why do you get such great joy about the housing market not doing well. What a butthead.”
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)
Early May home prices up in 8 O.C. ZIPs:
May 29th, 2009, 12:01 am posted by Jon Lansner/ocregister
http://lansner.freedomblogging.com/2009/05/29/early-may-home-prices-up-in-9-oc-zips/23583/
So are you Lee?
Ha! No, that would be: “Hey drop off the key’s Lee, there’s 50 ways to leave your house!” …followed by: “Just get on the bus Gus…and get yourself FREE!”
“A new report shows the Oregon foreclosure rate has jumped to a level seen only once in the last 30 years.”
Does 30 seconds count as “New”?
They might have to make up a “new” bumper sticker in Oregon:
“California’s…welcome to Oregon…now please make an offer”
Am I getting the impression that Californians are loathed as much in Oregon as they are in Arizona?
Well, their old bumper sticker was:
“Californian’s…welcome to Oregon…now go home!”
In New Mexico growing up back in the day, as Santa Fe went from being lame to hip there was a bumper sticker that had the following:
What’s the difference between Texans and Cailfornians? Texans leave.
Well, in Santa Fe, folks are wondering, where have all the Californians (and their money) gone. E.g, store owners, and those who erected ‘charming casitas’ in their cramped backyards, in order to rent these out. Some have been advertised for months.
I met a few Californians who are EAGER to sell at a loss, because they want to go home!
I can’t see surfing Oregon in anything less than a 5-4 wetsuit. Booties, glovies and hood.
But other than that, my Irish blood loves cold weather.
“…my Irish blood loves cold weather.”
So why did god invent whiskey?
So the Irish could drink a type of anti-freeze and possibly still live.
Am I getting the impression that Californians are loathed as much in Oregon as they are in Arizona?
I remember bumper stickers in the ’80’s that read:
“Don’t Californicate Oregon”
I think Arizonans are much more accepting of Californians than Oregonians are.
No one picked on me in AZ when I moved there in 1996. And now I’m considering moving to Oregon. At least my plates are Arizona!
In 1975 I bought a t-shirt in Oregon which read “People in Oregon don’t tan in the summertime - they RUST” with a cartoon of a swimmer applying naval jelly to his body. This was presumably to scare away people from California.
So many people immigrate to CA from other states and parts of the world. California attracts the crazies and opportunists. Could it be that those are the people leaving for your state? Maybe you should ask them?
Why is it everyone thinks it’s their god given right to vacation in or move to CA while keeping California residents out of their home state?
Btw…born and raised here in Northern California. Received a conservative upbringing in a logging/fishing town. Parents stressed self reliance, hard work, and personal responsibility. That’s who I consider a CA resident. Not some carpetbagger.
If Oly comes to CA I won’t every flash a mean bumper sticker at her. She can come to my old home town and dig for clams. I’ll even show her the good beaches.
If Oly comes to CA I won’t every flash a mean bumper sticker at her. She can come to my old home town and dig for clams. I’ll even show her the good beaches.
Awesome! I’m making a note of this.
*makes a note of it on an orange post-it *
…And if YOU perchance come to WA I will first of all loan you the nicest spare cape in my hallway closet, and then invite you to go down and wrassle some geoducks upon the chilly and pebbly beaches we boast of hereabouts. When we win we can eat them up on rice while we watch mutant bug movies on the teevee.
The cape offer makes a trip to the PNW sooOOO tempting! Not sure about the mutant bug movies.
I seem to remember you own a boom stick and or hand cannon? If we every encounter each other you can have some of my reloads. What caliber do you require?
Okay, NOW I’m enchanted.
I have an adorable pearl-handled Raven .25, which I love, since it is so cute and all. This’s the one I keep handy near my cozy bed to use to shoot out the window and into the forest when I hear a noise at night, like if Bigfoot or a chipmunk is out there lurking around, little things like that.
In an emergency it’d be the one I’d run for, because I know right where it is. it’s on top of the storm-water retention pond design manual, next to a box of Kleenex and a stuffed panda bear.
I hear from cops that this gun is stupid, that a bad person could withstand this gun, but I still love it.
My only regret is that I didn’t get the pink-pearl handled one when I was there at the pawn-shop. Sigh. Maybe another time…
And a Marlin papoose rifle is in the hallway closet, next to some capes, a number of rain-coats, and some sandy boots, and kites and stuff.
And a Sig-Sauer black greasy smelling pistol my brother gave me two Christmases ago.
Now that I think of it, I should probably try to remember where I put that one, huh.
Donde esta mi post?
(I don’t know the Spanish for ‘blog post’)
*test *
Love your post, robiscrazy!!! It gets old hearing everyone else complain about “Californians” (who probably aren’t real Californians anyway), yet they have no problem moving here!
Second that about **real** Californians being about the most down-to-earth, normal, very cool people. The arrogant ones are almost always from somewhere else, and are posing as Californians.
More car mishaps in the milkcrate household. Leaving Panda Express with takeout dinner and child tagging along. A woman who had just left a real estate company that had a sign saying “loss mitigation” and “REO” on it backed up in the lot. I saw her moving, honked my horn, to no avail.
Bump.
Kid asks if she can stay in the car.
Yes. Good idea.
So I exit and meet the woman, who was apologetic if not a bit animated, understandable. No damage, maybe a paint smear.
What got my dander up:
“Can I get through here? That isn’t a good place to park.” These words came from a pushy, motoring mother who did not have a bright enough bulb to see that two car operators had dinged and were taking a gander of what was and what may have been. What I said: “You need to be more patient.”
The mother in a a hurry to park swung her expensive car into a place.
I took a few steps toward her and her car, perhaps to instruct her some more on the value of patience. Though the language may have been bluer than that, and by that point I didn’t care who she would raise on her cell for some knight in shining armor.
“It’s not worth it, let it go,” the REO office visitor lady says to me. She… was right of course. I had to be the change I wanted to see. According to your generation and education level, that last phrase can be attributed to either Ghandi or Miley Cyrus. Plus my food was getting cold. And my daughter was there.
Anyway, the level of distraught, distracted and ill-tempered people really seems to be on the increase. And it hasn’t hit 115 yet.
The flood of RealtyTrac foreclosure notices that I get could have something to do with it.
(Recapping, another motorist slightly bumped me in the back about two months ago while I walked in a school parking lot. Guy did not see me.)
Lot of tension at HOA meeting two nights ago, where I am now a board member again. We’re financially sound, don’t have much common area, but many people think over the top enforcement of CC&Rs will somehow get their equity back. That’s not how I roll (enforcement nitpicking), and anyway, they seem to think that their housing values are going to rebound any day now. One believes that uncleaned gutters are depressing home prices by tens of thousands of dollars. Gutters?
They are deluding themselves.
I digress.
milkcrate,
The other day you alluded to “battling depression” and these types of events are often the icing on the cake for ‘me’. I don’t know, it seems to be acute in OR for some reason? And we’re not even ‘that’ damn crowded.
Dinor, yes, I had sposed/noted that you seemed to have a downcast fog about your posts, maybe two weeks ago.
Today is another day.
Glad your hanging tough.
Go ahead and digress, ’cause that’s what I’m going to do.
Last night, I was at a public meeting about Tucson’s about-to-be-finalized city budget. The subject of real estate infestors reared its ugly head, and no, I didn’t start the festivities.
Much concern from those present about those infestors buying houses, ostensibly to live in, but, oops, just who are those rowdy tenants who keep causing the neighbors to call the police?
More than one person suggested that those properties be taxed at the proper rate. (It’s higher for investment properties than it is for residential.)
The city council member, sensing a groundswell of opinion in favor of such a thing, said that it was worth looking into.
“loss mitigation” …some sort of omen?
comment
It was like an omen.
Only things missing: falling window glass and creepy, Medieval choir sounds.
milkcrate,
According afficiando’s, that (4) minutes of “Suspiria” are considered the finest in Italian Horror film history!
Yeah, “downcast fog” sounds about right? I recall going into Labor Day 2006 feeling good for the first time in years. Home prices in most markets were moderating, int. rates were rising and other than a complete lack of affordability..? Things seemed hopeful.
and you gotta have some projectile vomit
One believes that uncleaned gutters are depressing home prices by tens of thousands of dollars. Gutters?
They are deluding themselves.
This is just another facet of the all-pervasive “real estate altered consciousness syndrome” that is discussed here. The root of it HAS to be the fact that a person’s dwelling really is the most significant asset the average peep owns, amt. leveraged notwithstanding.
The idea that a house will provide security in retirement, riches untold, kids’ college education, what have you…is just ingrained in average American’s consciousness. And the REIC profits from that delusion. Maybe if you approach any interactions with these deluded people the same way you would an individual under the influence of Ecstasy, or some other happy-making substance, it will help you to communicate with them.
So you had a minor fender bender in the middle of a road/car path and stopped to have a discussion? You aren’t on CSI, and cannot gauge much about the accident from the two cars current postion.
Get out of the way! You could have parked in a space and had the same discussion.
Same advice if someone bonks you on the highway. No need to block a lane. Pull off to the side.
No need to block a lane. Pull off to the side.
Not always. Years ago I got rear-ended hard enough to almost tear off the bumper. I pulled my car to the curb and the bitch who hit me split! If I had left my car where it was and jumped out, I probably would have gotten her license number.
Logic like that from a distance makes plenty of sense.
When you are traveling with a fourth-grader and the car is hit, however slightly, it takes a while to gather yourself.
Point taken, though.
I don’t think it’s the heat. I live in DC and it ain’t no 115. I got roadraged/tailgated and flipped the bird today on the beltway for not speeding 15 mph above the limit, and yes I was in the far right lane getting ready to exit. People are on edge.
One believes that uncleaned gutters are depressing home prices by tens of thousands of dollars. Gutters?
I hope you are in a position in which you can be amused by this delusion, or at least relax in the comfort of knowing what you know.
I digress.
Interestingly enough, I grasped every single word and probably every nuance.
What I think is: it was nice you were mindful of your daughter sitting there watching.
2. It’s too hot where you live.
3. I don’t know where you live, but it’s still too hot.
Okay, then. And thanks for not becoming a CNN newsflash.
I was thinking the same thing that CrackerJim mentioned above regarding the Jarvis tale of woe. If Jarvis’s mortgage is higher than value of the home she bought in 1990, we can assume she took a pretty big equity loan out when she refinanced in 1997. So where did all that money go?
Why doesn’t anyone who is griping about their interest rate and being upside down consider the fact that that a lot of money was taken and spent? Yes, it is hard to feel sorry for them.
“Why are all these “investors” convinced in a neighborhood of empty homes they will even be able to rent the place?” That is the rub isn’t. There are five homes for rent in my little subdivision of Pulte and Beazer homes. All of these home where purchased in the last 100 days by investor. Now non of these idiot drove around the neighborhood before they close. If these investor would have, they would have saw 20+ plus homes for sale and another 10/15 for rent, these people are so clueless. They are creating the same bubble from before there are not enough renters out there. I guess they have such a low mortgage maybe they can hang on to them longer sitting empty.
I agree with kalyson. I have friends who did the refinance trick to pay for trips to Europe and other expensive vacations. Now they are upside down and broke. I do consider them friends but it impossible to feel bad for them.
Does that mean you don’t want to help pay their mortgage? But, we’re “all in this market together!” (That’s a recent quote from some HUD official.)
This morning over b’fast I wa sreading the paper and pointed out to my SO the Orwellian irony of Obama’s “housing plan” being called Making Homes Affordable while its goal is to prop up housing prices.
My friend just bought a townhouse in Delaware because he is getting married, and his girl “wanted one.” He even asked for my advice a few months back…
Well, at least one person in that marrage is getting what they want…
(Just kidding - the wife and her friends are in the living room watching tv, I’m stuck in the bedroom with a guitar and a beer and a computer….)
Yikes! And what was your advice?
Don’t buy a freaking house!
OT _ I recall there are many HBBers who enjoy photography, and art, and the technical side of creation. For an inspiring look at a “photo a day blog,” which is non-commercial and falls into the art for art’s sake genre, put the words “Talkington video photo” into search engine.
Y’all know I am not a pimp.
If you appreciate photos, wonders await.
“Built in 2007, the five-bedroom, 6,600-square-foot house has never been lived in. ‘It’s a wonderful house, and there’s no reason it hasn’t sold,’ Gregory said.”
What can I say?
NZ Renter is happy in a ~2000 sq ft house, and she is a professional who also owns (paid cash for) a very large racing sailboat. Also takes a year off from working when the mood strikes.
There is only 3000 sq ft of private space in the Whitehouse. How on earth did people start thinking that they needed twice the personal living space of the Whitehouse?
Do they have 14 children like Octomom?
Do they hold diplomatic receptions?
Good grief, even if one wishes to thrown a grand party for scores of people, there are plenty of venues for hire.
Candy Keefe wants to move on…is there anywhere to go but down, from that location? The Vanderbuilt Chateau was sold for one dollar, by the way, something to consider if she really wants to move on.
And apropos the middle class thinking it needs mansions: Hammersmith Farm comes to mind again, also on the Newport peninsula, a really modest house, esp. considering how many people stayed there in the summer, and one of them was a president.
You know, two weekends ago my daughter & I were visiting Oatlands, an 1806 Greek revival in VA, and we ponied up for the enchanting house tour. It looks huge in the pictures, but when you get to sit up on the front porch waiting for the guide to show up, rocking away in the rockers thoughtfully provided, and feeling the breeze come up on the bluff where the house is located, you realize that it’s really not that big. It looks grand, but it’s the original redo the owner had done in 1806, and the porch and front door are beautifully proportioned, and relatively small. I was equally surprised by the inside. The public rooms weren’t even that big, and it doesn’t have a ballroom. The house and plantation were owned by top-tier society people, and they didn’t have to have a modern-day McMansion-sized house. Interestingly, the house supposedly had had most presidents from George Washington ( he was retired by that time ) to Harry Truman as visitors, many as overnight guests. The bedrooms are pretty standard-sized to miniscule. If the president stayed overnight in a 12 x 15 bedroom, why isn’t the same size good enough for Mr. & Mrs. Junior McMansion-Hunters ?
“The Breakers” really sold for $1? That must be an interesting story.
Most mega-mansions have no resale value - there aren’t any buyers. People who really have that kind of money would rather build their own ego-trip themselves, not buy someone else’s “used fantasy”.
Hearst Castle was given to the state of California.
Jack Simplot’s mansion in the hills above Boise was given to the state of Idaho for use as a “Governor’s Mansion”.
Come to think of it, all the mega-mansions in the SF bay area never sold to owners as residences. The Ralston Mansion is now part of the College of Notre Dame campus in Belmont; Filoli is now a park; and Villa Montalvo is an “artist’s colony” and park.
“In an unusual tactic to sell his waterfront cottage, David Goyette is offering to pay the first three months of a buyer’s property taxes and will throw in a big-screen TV to boot. ”
It sure is unusual. The obvious thing to do is to pretend that property taxes don’t exist. Why scare off the first time buyer?