A Price That Works In A Market Headed South
It’s Friday desk clearing time for this blogger. “The Obama administration’s program to modify troubled mortgages has started strong but must pick up steam, U.S. Housing and Urban Development Secretary Shaun Donovan said in Seattle. Donovan defended the administration’s foreclosure-prevent efforts from arguments that those efforts are artificially propping up a market that should be allowed to sink further.”
“‘When your neighbors house is on fire you don’t wait to call the fire department to help put out that fire, because the danger is it’s not just going to destroy that home, but it’s going to spread in the neighboorhood and destroy other homes as well,’ he said. ‘The effect of foreclosures has been to accelerate and deepen the declines in value, particularly in communities where it’s been concentrated. Studies have shown that those are not natural declines or declines that would otherwise happen.’”
“The median price of an existing Atlantic County home was almost unchanged at $218,700, down just 0.2 percent from the first quarter, according to a National Association of Realtors survey. This follows quarterly drops of 4.4 percent and 8 percent the previous two quarters and strongly suggests falling home prices have bottomed out in the region. ‘The numbers are fantastic,’ said Richard Shaffer III, president of the Atlantic County & City Board of Realtors.”
“One buyer who apparently timed the real estate market right was Connie Hackney, an Atlantic City police officer who bought a Chelsea Heights property in June as an investment. ‘I did good for a change,’ Hackney said. ‘When prices started coming down again, it seemed reasonable, so I jumped on it. Now I hope it goes back up again.’”
“In the midst of a wobbly economy, Salem has an abundance of luxury condominium units for sale. Gene Krametbauer recently purchased a condo at the 295 Church Condominiums. The Nevada resident bought the condo for his son, a student at Willamette University’s law school. Buying the condo was a better investment that paying rent for an apartment, he said. Krametbauer figures he can sell the condo when his son finishes law school, or keep the property and rent it.”
“None of its 27 residential condos had sold until its developers agreed to sweeten the deal for buyers. During the past month, a 25-percent discount for buyers paying in cash, plus a $14,000 credit, helped sell seven units. ‘How could a guy pass that deal up?’ Krametbauer said.”
“Dallas-Fort Worth home sales prices were basically flat in the second quarter after a long string of declines, according to the National Association of Realtors. ‘Yes, it appears to me that we are at the bottom of the housing market in most Texas cities at this point,’ said Dr. Mark Dotzour, chief economist at the Real Estate Center at Texas A&M. ‘I feel that now is the time to buy a house in most all Texas cities. Housing affordability has never been higher than it is right now.’”
“A second wave of home foreclosures is sweeping across St. George, with banks unloading properties seized from investors onto the market, driving down other homeowners’ values. It’s trouble for young Utah couples like Bradley and Kirsten McArthur who, because of a layoff, found themselves with a mortgage they couldn’t afford and a house they couldn’t sell for enough to cover the balance on their loan.”
“After failing to find any buyers within $100,000 of what they owed, their lender eventually accepted a short sale of $140,000 in satisfaction of their $240,000 mortgage. ‘We went up fast and came down hard,’ said Kirsten McArthur, 25, a stay-at-home mom with a 1-year-old boy.”
“Three out of four of the county’s real-estate sales are foreclosure listings or short sales, said Alan Carter, owner of Southern Utah Title. Expensive new homes around St. George are commanding the biggest discounts. Carter told of one builder forced by his bank to surrender a $2.8 million property that wasn’t selling and had plunged in value to $800,000. ‘I bought it,’ said Carter, who plans to move into the 6,400-square-foot house. ‘It has a $24,000 refrigerator and two Bosch dishwashers. It’s just over the top.’”
“A list of the biggest increases in foreclosure rates across Florida reads like a map of the fallout from the unbridled real estate boom. Foreclosures spiked 788 percent during the last three years in the 20th Judicial Circuit. Speculative buyers were ‘like an infestation,’ and the areas that they targeted are now paying the price, said Lewis M. Goodkin, a real estate analyst. But speculators were essentially only the first, inevitable phase of the defaults. The problem has spread thanks to the recession and the impact of unemployment. The next phase is just beginning, Goodkin said.”
“‘What we’re going to see is discouraged homeowners who either bought at the peak or bought at a good time, but borrowed against their homes, and thus are underwater,’ he said. ‘Those owners in the market are going to be increasingly prone to take a walk.’”
“Kathy Marlowe, an agent who specializes in distressed properties…already is seeing new foreclosures among people who bought in the calmer days of 2000 or 2001, saw their home values skyrocket in the boom and began flocking to second mortgages. ‘That imaginary equity everybody had back then — even people that didn’t buy, many of them decided to take a second mortgage out,’ Marlowe said. ‘Now they are underwater, too.’”
“Karen Weaver, global head of Deutsche Bank’s securitization research division said last week that 48% of U.S. mortgage owners will end up owing more than their home is worth by 2011. Q: What mortgages are most responsible for this problem?…A: ‘These products — option ARMs, subprime, etc. — were regarded in the industry as ‘affordability products.’…If you look at Los Angeles: At the peak of home prices in LA, only about 9% of people living in Los Angeles made sufficient income to purchase the average house….For a first-time home buyer, it meant that it was highly unlikely that you were able to purchase a home unless you used one of these very aggressive products that stretched your [income].’”
“At what point of being underwater do homeowners start falling into foreclosure rapidly?”
“Once you get to the point where negative equity is significant — for example, 25% or more — there have been studies that suggest you get more strategic defaults. People say, “I bought my house for $500,000, it’s worth $250,000, there are 10 available for sale in my neighborhood. It makes no economic sense to spend the rest of my life trying to pay off a $500,000 debt when there’s no reasonable likelihood to expect this house to go back up to $500,000.”
“This might sound extreme, but we have borrowers who bought a $500,000 home in California at the peak of the market on $50,000 of income. So for them to devote their gross income for the next 10 years solely to paying off [their] mortgage doesn’t make any sense.”
“The Coachella Valley home sales market is on the rebound, a new housing analysis shows. Average home sales prices that hit lows of $87,152 in Desert Hot Springs and $53,180 in the Salton Sea area, and put many homes well under the $300,000 water mark. ‘This market is healing itself from the bottom,’ said Greg Berkemer, executive director of the California Desert Association of Realtors. ‘It collapsed from the bottom, and it’s healing itself that way.’”
“‘We called the bottom three to four months ago,’ said Fred Bell, executive officer of the Building Industry Association Desert Chapter. ‘I think we’re there.’”
“The real estate bust pushed home prices in San Joaquin County off a cliff, but some would-be home buyers are still finding it difficult to buy houses. Investors have an advantage, even when they offer less money, Stockton resident Carol Ridolfi said. ‘I’ve been trying to find a house since November,’ she said. ‘The investors come in and pay cash right beneath me.’”
“A record 990 Hawaii homes were foreclosed upon in July, a 332 percent increase over a year ago, according to RealtyTrac. RealtyTrac’s Daren Blomquist described ‘a sense in many areas that we’re seeing a false bottom.’”
“‘People have been snatching up properties … at what they think are rock-bottom prices, but you may have this whole new wave of foreclosure inventory coming online that people aren’t really taking into account as they make their purchase decisions,’ he said.”
“A recently enacted state law designed to give homeowners more time to fix their troubled mortgages has delayed but not derailed foreclosure actions in Illinois, say two reports. ‘The 90-day window is good but only good if you can help the borrower get into a better loan and theoretically that would be through the [federal loan modification] program,’ said Geoff Smith, Chicago-based think tank Woodstock Institute’s vice president. The grace period ’seems to have achieved its goal of delaying the foreclosure process. What happens next is where the big question mark is.’”
“Some good news is tucked into new Canada Mortgage and Housing Corp. data showing overall housing starts dropping in July on Vancouver Island. Casey Edge, executive officer of the Victoria office of the Canadian Homebuilders’ Association, said the numbers are good for single-family and semi-detached homes. ‘Clearly what is taking the hit right now is the condo market,’ he said. ‘The important thing is that we are coming out of an absolutely devastating crash in the housing market from last year.’”
“Housing market conditions in Las Vegas remain softer than a week-old banana, but real estate observers are seeing more signs of recovery with each passing month. Tim Kelly Kiernan, foreclosure specialist in Las Vegas, said he thinks a tremendous amount of foreclosures are yet to come. Various reports show a few hundred notices of default being filed daily in Clark County. He had five clients recently with great credit scores who tried to sell their homes in a short sale, or for less than the mortgage balance, which requires lender approval.”
“‘If they aren’t successful, they will just stay in the home for as long as they can, not make the mortgage payments, save that money to move forward in their lives,’ he said. ‘Not a good sign for home values, but they feel they will never recoup the lost equity in their homes.’”
“Sales of existing homes in Colorado fell in the second quarter, bucking a trend of rising sales nationally, according to a report Wednesday from the National Association of Realtors. In Colorado, what is hard to figure out is why the state sales numbers dropped so much in the second quarter when Denver sales were up. The discrepancy likely reflects a sharp decline in sales in parts of the state that have previously resisted the housing slump.”
“The Mesa County clerk and recorder’s office reported there were only 717 sales in the second quarter there, compared with 1,381 in the second quarter of 2008. Declining home sales could reflect a state divided between areas ahead and behind the curve on the housing downturn. Markets that have resisted the downturn, such as Grand Junction, may be seeing sales slow as buyers and sellers try to find a price that works in a market headed south.”
“‘Our market is off significantly from last year. We have gone from 130-plus drilling rigs down to the mid- 20s,’ said John Huff, a partner with Coldwell Banker Home Owners Realty in Grand Junction.”
IMO, it has been instructive to watch what happens in early markets, and Colorado was one of the first to crash. Remember it wasn’t that long ago that resource areas in that state and Canada took comfort in their temporary price stability, only to see that crumble as the others?
Anyway, my thanks to those who support this blog. You regular readers/posters have a bunch more company these days, so mind your manners. Please check back this weekend!
Still waiting for reality to hit in Boulder. Instead prices have continued to rise. There’s always next year, I guess.
Boulder is like SLO, those damn student rentals keep the prices high. HEad to Golden.
If I wanted to commute 30 minutes from the north-east there are some houses that have gotten significantly cheaper already. Not cheap enough to justify the commute, though. Not when I can rent something good enough within walking distance of work and spend my weekends doing whatever I want.
“This might sound extreme, but we have borrowers who bought a $500,000 home in California at the peak of the market on $50,000 of income. So for them to devote their gross income for the next 10 years solely to paying off [their] mortgage doesn’t make any sense.”
You think someone should have been buying a half million dollar house on $50K income? Did THAT make sense?
Boulder also allows very little development.
So it really is different here?
I know about the development caps, I just still keep expecting prices to at least stop rising. I’m amazed that there’s still so much money sloshing around.
CC Dude,
Yes the SLO prices are supported by Cal Poly students…yet the median price for SLO (city) June 09 recordings was 20% below June 08. In watching for Morro Bay prices and other SLO County prices to drop, I have felt I am watching paint dry, and yet the prices ARE a lot lower than they were a few years ago.
I too am waiting to buy in SLO. Morro is too foggy for me, all your stuff stays wet. Yes, it is cheaper, but it has a long way to drop to even out with local salaries.
I apologize to anyone whom I may have offended with my unmannerly posts (e.g., referring to the $8K new home buyer credit as Dough for Dumps). I will have to blame it on my mom’s dad, who hated the Social Security program when it was enacted for the role he thought it would have in destroying good household financial management, and who claimed that WPA stood for “We Piddle Around.”
BTW, one of my grandfather’s former (high school) students later authored a widely used undergraduate economics textbook. The book is in its 12th edition and has outlived its author.
Why, exactly, are you apologizing?
It was meant to be a joke…
I got it.
Ben was asking us to behave.
He must have gotten a flood of new email enlisters/posters/lurkers.
OH goody, the new kids!
should I put a shirt on?
should I put a shirt on?
Probably that would be good. The one that’s not stained with blood and whiskey.
LOL, and pants too.
PB, you have revealed yourself as my long-lost illegitimate nephew. My father used to tear up his SS checks…but only after he cashed them, of course.
I thought WPA stood for “we punish Anglos”.
“One buyer who apparently timed the real estate market right was Connie Hackney, an Atlantic City police officer who bought a Chelsea Heights property in June as an investment. ‘I did good for a change,’ Hackney said. ‘When prices started coming down again, it seemed reasonable, so I jumped on it. Now I hope it goes back up again.’”
So it wasn’t a Bubble; it was a giant spring!
there’s that damn word again…hope.
Nope…. no hope for hope. Can’t have that.
If you have to use the word “hope” it isn’t an investment, it is speculation.
Nicely put!
Well, at least she refrained from the standard “snapped up”?
yo dude….you left out “change.”
Or course prices will go up again! With millions of foreclosed homes yet to be listed, and millions of jobs yet to be lost, this is a great time for uninformed speculators to take that 15 to 20 per cent additional loss that EVERY NON-REALTOR HOUSING EXPERT IS PREDICTING. Do these freaking people even know how to read? Lady, put your hope in one hand and your shit in another - guess which hand is going to be warmer.
No they don’t know how to read, or write. Look who we got for a Prez.
You mean the previous prez. This one is educated.
we have people in america who think resolution conflict is the
“jerry springer way”.
THey both went to Harvard but only one is a Marxist. Sorry
They both went to harvard bu only one actually learned something. Not sorry.
Hey, I’m on your side, but Gary Schilling is saying only 5% “real” RE deflation from here. OK, he also says we’ll have deflation in other goods/services across the board, so one can add to the 5% “real” deflation a certain amt of additional nominal RE deflation. I’m just trying to temper your assertion that “every” non-realtor predicts 15%-20% additional loss. Schilling has been calling down the housing bubble for a number of years but seems to feel that the downdraft of housing relative to other goods/services is mostly done.
We can agree that “every” non-realtor housing commentator is predicting SOME additional depreciation.
“I feel that now is the time to buy a house in most all Texas cities. Housing affordability has never been higher than it is right now.”
Even if the second is true, the first may not be.
As Americans became more affluent, and then reacted to falling wages by sending additional family members to work to keep spending, then reacted to falling household income by borrowng more and more money to keep spending, a higher and higher share of household income went to housing. It is a 60-year trend.
That might reverse. Because as incomes decline and import prices rise (which they will when the rest of the world recovers) the affordability of everything will decline, and as the population ages and debts need to be paid back taxes will rise. Something has got to give.
According to the Consumer Expenditure Survey (BLS), Americans spent 20.2% of their income on shelter in 2002 (not including other housing costs like energy, maintenance and insurance).
That’s up from 16.3% in 1985 (see the Statistical Abstract of the U.S. on the Census Bureau website).
Going to the Historical Statistics of the U.S., also on the Census Bureau website, it was 17.6% in 1970 but had been just 14.2% in 1960. And 11.1% in 1950.
Looks like the percent spent on housing fell from 1970 to 1985 when the economy was bad, but it wasn’t this bad.
Now one reason housing spending rose is that housing quality improved. Everyone got their own bathrooms, running water, heat, hot water, electricity, etc., and fewer Americans lived in shacks or three to a room in tenaments.
But at some point it reached the point of diminishing marginal returns, pushed forward by social pressure, marketing, and “investment.”
I meant to say CES data shows spending on shelter at 20.2% of the total in 2007 (not 2002), up from 11.1% in 1950.
That could reverse.
You want to, or need to, cut your cost of living? Start with asking how much house and how many automobiles you need.
Don’t you just love these realtards with their predickions They must have been going to seminars given by Lareah, LAY or Yun.
‘The effect of foreclosures has been to accelerate and deepen the declines in value, particularly in communities where it’s been concentrated. Studies have shown that those are not natural declines or declines that would otherwise happen.’”
The dreaded vaugue and unsupported studies have shown justification. Probably look and many of the supporting research will have been done by the REIC, economists that just didn’t see this happening and others with a vested interest in proping up the market.
What’s a “natural” decline?
What’s so unnatural about a collapsing bubble? Hasn’t pretty much every financial bubble in the history of the world ultimately collapsed, despite the best efforts of All the King’s Horses and All the King’s Men to prevent it?
I’m steadily less impressed with the new administration.
We might just end up with socialized medicine. Fine.
Doesn’t really make me lose a lot of sleep.
Being dumb with business and money. That worries me. A lot.
Nth dumb president in a row. Guess the last smart one was Bush Sr, and he had other interests than us little folks.
Bubble president 1 was Reagan. an actor.
Bubble president 2 was Clinton. Aranged his own bailout after getting involved in some stupid deals. Then had Rubin lead him through everything.
Bubble president 3 was GWB. The village idiot who had no clue about any of this. And a GS drone treasury secretary, who bailed them out GS with AIG and TARP1
Bubble President 4 is the savior. He is busy trying to find his backside with both hands. Doesn’t have a clue what to do except stick to the teleprompter and message being handed to him. Same as Bubble President 3, but somewhat more charming.
Well, that trainwreck of leadership is leading us exactly where you’d expect. In to the shitter.
My guess is, any American who has experienced the helping hand of government assistance with their life, are rapidly cutting spending/saving anticipating the worst.
We best be putting up the storm shutters and battening the hatches Stucco.
Exactly.
Why aren’t you guys concerned that insurance companies need to get their pants jerked into a knot?
That is the real fight. Not what you think it is.
What’s a “natural” decline? It’s natural to decline buying something you can’t afford.
Hear hear.
And studies have shown that cigarette smoking is not dangerous to your health. Many, many studies have shown that.
Other studies have shown that black is white, and white is black. That number five is really number four, and number four is really number five.
There is a study for every damn thing…
Us voters need to be giving our elected officials a copy of “The Kiss My Ass” study at these townhall meetings.
Obviously a jerry springer fan.
Although I wish we all would vote
out the congress critters in office now.
Turbotax Timmy needs his house to be propped up. How much is it under water now HBers ???
‘When your neighbors house is on fire you don’t wait to call the fire department to help put out that fire, because the danger is it’s not just going to destroy that home, but it’s going to spread in the neighboorhood and destroy other homes as well,’ he said. ‘The effect of foreclosures has been to accelerate and deepen the declines in value, particularly in communities where it’s been concentrated. Studies have shown that those are not natural declines or declines that would otherwise happen.’
You still didn’t address the concern expressed, Shaun. And you protect against “unnatural” declines but not unnatural increases, which just so happen to be the cause of the decline? Something stinks here.
No one was complaining when prices were going up 20 - 40% a year. This was the time to address the issue of foreclosures. Of course prices would have stayed relatively low, and we would be enjoying a more stable economy today.
Yup, it seems like everyone is screaming for and preaching the virtues of nice solid ground now that their housing goldmines have begun sinking into bottomless swamps of recession.
Gimmie another Amen there Brother Flipper
Oooh! I love religion!
Mikey, us smug tenants have a lot to be thankful for. AMEN.
sleepless,
Right, and… I’m pretty sure the FD would prefer you give them a call. What am “I” going to do? Run over and form a bucket brigade w/ dixie cups?
I really, really can’t stand this guy.
Yes, if my neighbor’s house was on fire, I would call the fire department, because his/her life would be in danger.
If my neighbor’s house declines in value, or is even foreclosed on, this is not life-threatening. It’s not a contagion that’s going to spread to me! I rent. And even if it does “spread” — it’s not going to destroy anything but delusional fantasies. The houses themselves will be OK.
If everything is an emergency, then we are always in crisis mode and then people can justify spending tons of money and suspending common sense to fight the “crisis.”
Let’s take it down a notch, Shaun.
I already filed him under the same category with Lereah and Yun.
“-it’s not going to destroy anything but delusional fantansies.”
bonfire of the vanities
“I bought my house for $500,000, it’s worth $250,000, there are 10 available for sale in my neighborhood. It makes no economic sense to spend the rest of my life trying to pay off a $500,000 debt when there’s no reasonable likelihood to expect this house to go back up to $500,000
I think the reasoning is more that they purchased the house for $500k and there is no reasonable likelihood that the house will go up to $1million.
“I think the reasoning is more that they purchased the house for $500k and there is no reasonable likelihood that the house will go up to $1million”.
Ed-Zachary!
“Ed-Zachary!”
Ah, so you’re familiar with that one. Awesome.
Skip,
Exactly. You’re housing “option” didn’t pan out. So just like ‘most’ options, it expires worthless, right?
Palmy, what is that? Ed-zachary?
waiting for lesson!
A completely tasteless and juvenile joke.
I’m a bit of a lowbrow.
Desert,
Google Ed-Zachary. I did. It’s a joke.
Thanks, pal, sfo gal!
Palmy we all have our moments!
More likely they bought it for 250k and refied it to 500k? 1099 coming non to soon. hahahahahaha
Oh, many tanks for this post Ben…It just reaffirms my whacked self-imposed “healing & self-reflection” therapy I’ve utilized most of my life past age 15…I hand wash my dishes.
‘We went up fast and came down hard,’ said Kirsten McArthur, 25, a stay-at-home mom with a 1-year-old boy.”
“…Carter told of one builder forced by his bank to surrender a $2.8 million property that wasn’t selling and had plunged in value to $800,000. ‘I bought it,’ said Carter, who plans to move into the 6,400-square-foot house. ‘It has a $24,000 refrigerator and two Bosch dishwashers. It’s just over the top.’”
One of my cousins and her family moved to St. George a year or so ago when he got done paying off his medical training for the Army and decided to set up a family practice there. I can’t imagine why they picked St. George. Maybe ’cause he’s an OB/GYN and there’s plenty of new babies in St. George. It’s HOT, and not very pretty.
Vast acres of pastel stuccoed and faux-river-rocked McMansion subdivisions interspersed at precise intervals with strip malls, every one of which looks identical, and studded at precise intervals with Mormon churches, one per subdivision, every single one of which looks even more identical. Like giant Monopoly houses, you can about see the little rims around the edges where they were die-cast.
Driving through St. George is like driving along on a mobius strip, around and around and everything looks the same and you never get to the end, and you have to start hanging your head out the window so you can barf, except then all the air-conditioning gets out and your head starts cooking and your cowboy hat blows away, and you’re so dispirited and head-cooked you don’t even care, because at least the hot wind is drying the tears on your cheeks.
I got distracted by the mournful thought of lost cowboy hats
I got distracted to, and was even thinking of the day when driving cross country with the radiator bag on the front of the car, with the window wind wings open directly at our faces. Like it was going to cool things off.
Wow.
Yeah! That’s what I said! And you wasn’t even there, or you’d have been double-wowed.
That was beautiful, especially the dried tears on the cheeks.
St. George and environs has a Chenoble effect because it is down wind from the atomic test sites. A bunch of Big C.
My gawd, Oly. That was just– inspired. Faulkneresque, even.
I got distracted by the mournful thought of lost cowboy hats and giant Mobius strips, but my point was going to be that when they bought in St. George my aunt mentioned to my mom how my cousin felt ‘incredibly lucky’ to get into their house in a posh new subdivision, since prices were going up ‘like a rocket’.
I wonder how she feels nowadays?
I can’t remember if I’m having a feud with that particular cousin. I have a lot of cousins and it’s hard to keep track, you know how it is. I’ll check with my sister; she remembers these things, and then I’ll know whether to laugh heartily or else sympathize sadly.
Olygal,
But… bu.., St. G was going to benefit from all that “growth” in Vegas! ( Cue the Rolling Bubble music please? )
Yar! Just like Mesquite, and Henderson, and Pahrump and all those other little parched desert towns down south. Prosperity for all! Endless appreciation! Retirement in the sun! And Vegas is immune to recession, so that’s great, too!
….oh, wait….
“parched desert towns”
You know, ( as I often do ) I wonder what the scale of this thing would have looked like had there ‘not’ been the effects of the Rolling Bubble, Realtwhore participation and some semblance of regulatory scrutiny?
I don’t know if anyone here would know ( or care ) but if you’re securities registered, you -have- to disclose if you have accounts at other firms. Defiance=Expulsion.
Is there NO regs. where realtwhores are concerned? I mean obviously they pulled the same stunts their clients did? You know, run around town and get 12 loans simultaneously before they show up on your credit report?
Pahrump is famous for its whor e houses and being uglee.
Have any of you pulled up on google the map for ALL the atomic bombs set off all over Utarr and Nevada?
It is an amazing map, Keep going diggin into this site on each bomb or locality, it gives dates and how deep, and the names of each bomb.
Well over 4 thousand.
So, St Geor is kinda toxic.
Drove thru Pahrump after hanging out in Death Valley. That was two years ago. Stopped for some fuel and there was a real estate office next door. Plenty of properties listed for sale posted in the window. Even back then. Wonder what it’s like now?
Oh, passed thru St. George on that same trip heading towards Zion National Park. Hard to imagine spending $800K on something in that town, much less $2.8 mil.
Mobius strips
If I was gonna open up a strip club thats what I would name it.
Hey, and it could star ‘Plenty Cooperative’!
)
(Thanks, DennisN
You might accidentally only attract perverted mathematicians.
(You bring to mind my friend in graduate school who raised his tuition for our math degree program by moonlighting as an exotic male dancer…)
You might accidentally only attract perverted mathematicians.
I’m happy already. Do they have money?
Well, now. I sure would have wanted to sit next to your math classmate. I am sure the math would have stuck.
I have a lot of cousins and it’s hard to keep track, you know how it is. Put their names in your family tree software, with relevant comments, and then be sure to password-protect it.
That’s a good idea. Then I could do little cross-links sorting out all the various permutations of the feuds, grudges– both minor and serious, fulminations, and out’n out incipient duels, re: who’s been kilt or will be kilt soon, with those ones specially tagged so I’ll remember to send out condolences cards.
‘It has a $24,000 refrigerator and two Bosch dishwashers. It’s just over the top.’”
WTF does a $24,000 refrigerator do? I would rather have the boat and motorcycle.
I understand that cars now cost more than we paid forour house in 1990, but I can’t imagine a home refrigertor that costs more than our house,
Good grief! I had to replace my fridge last summer and was frosted about having to pay 200 bucks to do so. (It’s a small fridge.)
Over the top $24000 fridges are SO 2006-ish.
“WTF does a $24,000 refrigerator do? I would rather have the boat and motorcycle.”
Cue Spinal Tap:
Most blokes only pay $1000. Ours is $23000 colder.
Yeah, I wonder what happens when you turn that one to 11.
what happens when you turn that one to 11 is that Global Warming will abruptly end.
Don’t all of you get tired of being so smart? There ought to be a book. Although everyone who read it would be zapped to Tralfamadore by the end of it, automatically.
YOU need to write a book, Oly.
“WTF does a $24,000 refrigerator do?”
Substitutes for the county morgue long term body storage.
“WTF does a $24,000 refigerator do?”
Maybe it milks you.
It could really frost you.
Snort, sloth.
“WTF does a $24,000 refrigerator do?”
Creates $24,000-worth of installment debt.
that’s the milking
Cools 24,000 Beers, that’s what.
“WTF does a $24,000 refrigerator do? I would rather have the boat and motorcyclekeeps”
Why it keeps their main course tuna salad sandwiches expensively cool and also creates a mild room chill when they flaunt it’s silly price around the little people.
Really impressive…huh ?
He should have read Consumer Reports. A lot of those fancy pants appliances have terrible repair histories. I wonder what it costs to fix a $24K refer when it breaks? And you can’t just throw it out and replace it with a $1K refer from Lowes - those babies are built-in.
You heard of Costco closets - giant ones to store hundreds of rolls of TP? This guy bought himself a Costco refer. He can put a whole side of beef in there.
I know this has been talked about before, but the US demographics are going to have a bigger impact on housing that most can appreciate. The US census shows data by age group for the US and other countries. They also show a forecast going out each decade for the next 100 years. There is a high/mid and low population model. While 20-30 years from now the population growth may absorb much of the excess housing stock, there is a critical underlying issue in the interim. In short, there are a lot more 50-60 year olds (boomers) than 20-30 year olds. (about 20% more in absolute terms). Combine that with the following generalizations: people at the end of their careers tend to have saved more, are more likely to have some kind of pension (state or private), own municipal bonds and have lower expenses. Now my great mental leap, I believe a significant portion of the boomers want to trade down as they get close to retirement. Problem is, there are far fewer people to trade down to. This has the most dramatic effect in areas like the Northeast/Midwest (departure states) and a follow on effect in Arizona, Florida (destination states). I hate to say it because I’m almost fearful it will be done, but the government almost needs a cash for cluncker house program.
The lack of savings be tomorrow’s seniors is going to be a killer. As the generations go by that is less and less their fault — pensions taken away in two tier contracts, lower wages — but still.
People has better expect to, and have the health to, keep working. The days of seven day a week golf and four times a year cruises for what used to be the middle class are OVER. If people are going to move to Florida, Florida is going to have to provide jobs (not impossible — working at Disney isn’t the worst second career).
This is something I never quite understood. Would not carefully saved money not make for a good retirement?
I know, jobs suck these days and costs for necessities are skyrocketing… But for many currently heading into retirement, their best working years were during boom times.
Hmmmm, something not makes good grammatical sense there - not too many nots I hopes
Meh. Most of them lived beyond their means and got busted going for the big dirty.
They saw just one last job that was going to put them in the big time. Flip x number of houses with lots of leverage.
Then boom, it all blew up.
The “big dirty” comes from trailer park boys… a bad b movie. Basically half the cons in prison talked about Jesus and the other half talked about getting out of crime after trying to pull the big dirty. The big dirty was the job that got you enough money so you were out of the poor house.
The guys talking about Jesus were generally in jail after failing to pull off the big dirty.
James. I cannot freakin’ WAIT to read your autobiography!*
*And I normally hate autobiographies.
Carefully saved money has made ME a good retirement. However, the only reason why this has worked out is that very few other people my age were saving it. If they had all been saving it, we wouldna had any “prosperity,” and I wouldna been able to charge high interest rates to my generational peers. In essence I am living on OTHER people’s SS checks. If everyone my age had been Carefully Saving Money, and then all started to spend it simultaneously while no longer producing goods/services, then we would just be having massive inflation. (Which may come anyway.)
For years, Arizona has relied on the notion that people will retire from Up North and move here.
Well, sorry, Grand Canyon State, but the times they are a-changing. Not only do the Up Northers want to stay close to their children and grandchildren, it’s likely that they’ll stay in the workforce longer. Many of them will have to.
And here’s another not-so-nice bit of news about Arizona and other Sun Belt states: We like the active adults who move here. But, when they get old, frail, and dependent on public money, we’re not so friendly toward them. In short, you don’t want to be old and frail here because you’re not going to get much help.
That’s when those who don’t want to pay NY taxes get shipped back to NY to take advantage of the benefits they didn’t want to pay for.
That’s an issue that someone should want to raise IMHO.
Derek,
Well.., the “design” was that ( prior to downsizing ) they would time the market w/ Cramer-like precision and leave some other greater fool ( like people from My, my, my Genera-shun ) holding the bag!
Now that they can’t possibly hope to get out for what they paid.., they have to frantically unload all those kewl toyz.
A good set of kinife catching articles.
Was the gubmint in the business of encouraging households to catch falling knives during the Great Depression?
Something that someone posted last evening caused me to look at Case-Shiller and to note with amazement that in real terms, housing APPRECIATED during the GD (because everything else was deflating so much).
‘This market is healing itself from the bottom,’ said Greg Berkemer, executive director of the California Desert Association of Realtors. ‘It collapsed from the bottom, and it’s healing itself that way.’”
Huh ?? I get it the first rule of digging yourself in a hole is stop digging.
I think he means prices are still getting sucked down into a bottomless abyss!
“A record 990 Hawaii homes were foreclosed upon in July, a 332 percent increase over a year ago, according to RealtyTrac. RealtyTrac’s Daren Blomquist described ‘a sense in many areas that we’re seeing a false bottom.’”
“‘People have been snatching up properties … at what they think are rock-bottom prices, but you may have this whole new wave of foreclosure inventory coming online that people aren’t really taking into account as they make their purchase decisions,’ he said.”
————————————————————–
Speculation is alive and well in HI. Nothing new there. However, the *journalist* reported that the new buyers are potential knife catchers. That’s progress in my estimation.
Anyways, my housing millionare brother from HI emailed me last night about housing…….. I think some reality has penetrated his dense empty skull, formerly devoid of an honest view of whats happening and wants to broach the subject with me. His arrogance was very strong up until 2008 and he didn’t want to hear a word about collapsing housing prices. Even during July 4 2009 reunion he murmured “prices are sideways in HI” which closely matched his statement in 2007 that “prices will plateau”. He was delivered a tidal wave of facts on July4 that he had no means to refute and I haven’t heard a peep from until last nite.
“‘People have been snatching up properties … at what they think are rock-bottom prices, but you may have this whole new wave of foreclosure inventory coming online that people aren’t really taking into account as they make their purchase decisions,’ he said.”
It is oh so sad to read about flippers who thought they bought foreclosures at bargain-basement prices who now are about to be engulfed in the foreclosure tsunami wave. You’d have thunk a few might have learned something from what happened to Japanese investors who tried to bottom fish the US market in the early 1990s, but I guess not…
You’d have thunk a few might have learned something from what happened to Japanese investors who tried to bottom fish the US market in the early 1990s…
Yes, but learning something from what happened to the Japanese would require doing some homework. And you know — from being a college faculty member — that a lot of people don’t like to do that.
“‘People have been snatching up properties … at what they think are rock-bottom prices, but you may have this whole new wave of foreclosure inventory coming online that people aren’t really taking into account as they make their purchase decisions,’ he said.”
by next year the properties will be snatching back.
“by next year the properties will be snatching back.”
LMAO….. schweet…
“about to be engulfed in the foreclosure tsunami wave”
Reminds me of the Surfaris’ song “Wipeout!”
I don’t know if you’ve seen the jim the realtor web site in san diego. He had a repeat forclosure. Property in Carlsbad went from 1.2M forclosure and sold for 980k. Second buyer lost it and its listed for 780k. Second buyer defaulted on 720k loan.
Expect the bank to sell it for under 729k or the FHA limit. Not because of the loan limits but because its a steal!
Then expect it to creep on to the market in 3-4yrs for 400k-500k.
I’m guessing their will be three bullet holes in the bathroom ceiling. One for each knifecatcher that ended up with a gun in his mouth.
Ha ha, the bank is smart to keep re-selling it. At least they get each knife-catcher’s down payment to eat SOME of the depreciation.
Same thing happened in Houston from 86 to 91. (Oil bust) My friend bought a condo 2BR 1 Bath, once an average part of town. Today, crack houses, robberies etc.
The transaction prices went something like this:
82 30K
86 60K
87 40K foreclosure
90 20K foreclosure
91 6K
I know it’s hard to believe but it dropped 90% from the peak. I was in grad school at the time and wrote a report on why it wasn’t a good buy at 6K and got an A. Too many problems in the area. Today it might be worth 15K, almost 20 years later. At least most in Texas learned their lesson so today the fallout is less.
Speaking of markets headed south, how about them oil prices today? It looks like oil traders are ditching their faith in the Fed’s incipient recovery fairy tale, running for cover instead. Enjoy your race for the exits, boyz!!!
Crude Oil Lt Sweet Electronic (Nymex)
NYMEX: CL08XE
67.29
Change
-3.23 -4.58%
Volume 259,931
Aug 14, 2009 2:36 p.m.
Previous close
70.52
Well, there’s still a tiny chance that I’ll make money on my end-of-September “put” on DJIA. But if it expires worthless, never mind, I had my huge cap gain on Morgan Stanley bonds from Jan to June.
Luckily my whole bet against stocks is only $900.00.
“The Obama administration’s program to modify troubled mortgages has started strong but must pick up steam, U.S. Housing and Urban Development Secretary Shaun Donovan said in Seattle. Donovan defended the administration’s foreclosure-prevent efforts from arguments that those efforts are artificially propping up a market that should be allowed to sink further.”
Sho’ me the money! (And some hard figures documenting how many homeowners have been “helped” wouldn’t hurt, either…)
Toll Bros’ pump-and-dump ploys never end, do they?
market pulse
Aug 12, 2009, 12:58 p.m. EST
Toll shares top $23 for first time this year
BOSTON (MarketWatch) — Shares of Toll Brothers Inc. (TOL 22.58, -0.56, -2.41%) traded above $23 on Wednesday for the first time in 2009 as the stock gained more than 10% in the wake of the luxury builder’s preliminary results for its fiscal third quarter. The firm said home orders rose from the year-ago quarter for the first time in four years, while quarterly revenue fell less than analysts had expected. The iShares Dow Jones U.S. Home Construction Index Fund (ITB 12.53, -0.34, -2.64%), which follows builder stocks, was up about 3% in midday trading on Wednesday.
Toll Brothers Homes. Guaranteed for Five Years. Then They Fall Apart.
– Actual Toll slogan. Modified by friend of Slim family. He used to work at Toll.
Pulte in the midwest/east was just the same way according to a mini documentary of all the mold, even PRE bubble yrs.
Then Pulte bought out Del Webb (senior housing developments)
Toll Brothers Homes. Guaranteed for Five Years. Then They Fall Apart.
Spang on. I was listening to someone just the other day telling someone at the next table over about the house they bought in Tanglewilde*, over in Lacey. I don’t know if it was Toll, or DRWH*oreton, or Quadrant—they’re all kind of a similar blur of wretchedness and greed. Anyway, 3 years old and the foundation is cracking, along with other problems. Gonna cost a ton to fix, evidently.
Then my coconut chicken came and I stopped listening.
*Gosh, I hate stupid developer names.
“Gosh, I hate stupid developer names.”
Oh, come now, Oly! You can’t fool us. Given the fact that your hate for developers precedes all that, is there a developer name that you think ISN’T stupid?
PS - I like your anger.
PPS - Good to see you back.
You! Mr. Man! Yer teasing me, sleepless. I see that.
*fake grumble *
Say, how’s things down the road? Are they good?
But hmmm….no, I don’t think I’ve ever seen a developer name I didn’t object to, except for that recent one in Florida, ‘The Acreage’. Wha…? The Acreage? That made my head stall for a bit.
You know what, I think the filters come up at evening, because that’s when Ben knows that everyone gets silly. I was going to chastise you, sleepless, for teasing me, and then ask how you were.
Oly, what’s a coconut chicken? Wait! That may be ATE-UP’s new name… coconut chicken!!!
*falls off chair laughing *
That is a SUPER thought.
I don’t mind waiting at the back of the hot dog line, especially if they are reducing the prices while I wait.
If Colonial fails, mortgages get more scarce
Colonial BancGroup controls 25% of all warehouse-lending funds. If the bank fails and that money disappears, mortgage loans will be even harder to get.
By Colin Barr, senior writer
Last Updated: August 14, 2009: 2:48 PM ET
NEW YORK (CNNMoney dot com) — The potential collapse of Colonial BancGroup poses another hazard to the still-shaky housing market: Mortgages could become even harder to get.
The Southern regional bank, based in Montgomery, Ala., is the largest remaining player in warehouse lending, which provides short-term financing to independent mortgage bankers. At one time, these mortgage bankers originated half of all U.S. home loans using these funds.
Today, the warehouse lending market is decimated. In 2007 it was worth an estimated $200 billion; now there is just $25 billion available — 25% of which belongs to Colonial. If Colonial fails, those funds become even more scarce.
“It’s like if they shut down half the concession stands at the baseball game,” said Scott Stern, CEO of the Lenders One mortgage bankers group in St. Louis. “It means the guy who’s last in line is going to have to wait a lot longer to get a hot dog, and in this market who knows what the price is going to be when he gets there?”
…
PB,
Make light if you will ( but that is some serious, serious sh!t )
I recall MB buddies bemoaning the fact they “couldn’t get deals done”* in ‘07 as the warehouse lines were getting shut down. Wonder what they’d say now?
If everyone -insists- on using “tsunami” and “snapping up” after specifically and politely being asked not to! ( I’ll be forced to call out the big Realtwhore Guns! )
Doing/Getting Deals DONE!
“especially if they are reducing the prices while I wait”
…except in this case, I think they are talking about the price of mortgage money rather than the price of houses.
Well, anyone can get a (smallish) mortgage very easily from az_lender. Hardly any loan demand right now. My rate is still basically 9.0%, and perhaps more people have noticed the folly of borrowing at 9% to pay for assets that are not appreciating.
Dumb question of the day:
Have the members of the Obamanomics Genius Trust or the Fed research staff to date even acknowledged the existence of a housing / credit bubble?
From my experience as a kid playing Little League Baseball, I can assure you that it is very, very difficult to hit a ball with your eyes closed.
From my experience as a kid playing Little League Baseball, I can assure you that it is very, very difficult to hit a ball with your eyes closed or with severe, uncorrected myopia. My team would always try to talk me through each pitch, which hardly ever worked. My fielding position was always deep center field, where they would also try to talk me into catching pop-ups out there, didn’t work either.
Good thing we didn’t play on the same team, tresho (or did we?), as I was of the same ilk…
So far the obama stimulous plan has basically been firing up the printing press and throwing money at the problems.how long does that last?
Finance and Economics
Buttonwood
Law of easy money
Aug 13th 2009
From The Economist print edition
A 300-year-old example of quantitative easing
I think it lasts till public sentiment makes it too unbearable. You see bond yeilds rise quickly and then its difficult to make any loans.
Additionally I believe the wealth distribution is being made a lot worse with the way this is being done.
If the government printed physical dollars (not debt from treasuries recirculating dollars) and spent them on infastructure projects that benifited the public in some way. Increasing efficiency in commerce with better mass transit and roads, energy efficiency projects for buildings, energy independance projects, communications exc… it would go a lot further to helping.
As is, we are running more debt which helps the richest folks the most, along with giving the banks and speculators another spin on the wheel. Most of the money seems to be going to stock buybacks and other bull shit.
Basically think, if we are stuck with this stimulis which I don’t agree with, that its being applied in the least efficient way possible.
When I’m thinking about it, though defense is always a necessary evil of an expenditure, its better than handing it to specuvestors in the dang hedge funds.
“As is, we are running more debt which helps the richest folks the most, along with giving the banks and speculators another spin on the wheel.”
It just slightly rigs the game when the Fed loans hundreds of billions of dollars at an interest rate of zero to Megabank, Inc to invest at whatever rates they can get in a tight credit market, no?
“…even acknowledged the existence of a housing/credit bubble?”
Some things are better left unspoken. Especially in the age of Drudgery.
Tampa gives St. Jetersburg the greenlight to build the wall.
http://www.tampabay.com/news/localgovernment/article1026935.ece
it was needed for privacy and security and to hide the 5-foot electric transformer needed to power 33,000-square-foot home.
I’d hate to see his electric bill.
He gets Wholesale rates…not like us peons who pay retail
It’s bad folks! How bad is it, Muggy? So bad there’s a freaking vampire scene growing in Tampa.
“Some feed on blood volunteered by donors who allow them to cut their skin and drink.”
http://www.tampabay.com/features/humaninterest/article1027763.ece
I need to be more careful with what I wish for, I have often stated that I look forward to the bust allowing some culture back into the bankster’s paradise, but this is NOT what I have in mind.
You’d think the ‘Sunshine State’ wouldn’t be paradise for vampires.
Only in Ybor!
About the time ya think ya heard everything…
Hey Oly!!! Ya wanna be a Vampire, we’ll get a gang together! Alpha will join! I know that!
Sounds like she has an iron deficiency. Wouldn’t it be easier to get some vitamins from your doctor or local health food store?
Good grief! Now I’ve got the SNL skit “Goth Talk” stuck in my head.
————————————–
Amy Mulrennan likes the taste of blood. She has since she was a little girl. It reminds her of her Plant City grandmother, who teased her for eating meat rare.
Now 24, she’s a mother of two who goes by Raven. She has been a tattoo artist, massage therapist, body piercer and fetish model.
She says she drinks blood for the energy and for the bonds it creates.
There are different ways to do it, Raven says. You can get a finger prick machine at a drugstore. You can make a small cut with a sterilized razor blade and drink out of a special suction cup. Or you can put your lips on the slit and nurse right off the skin.
SNL “Goth Talk” broadcasting from Tampa Bay. Classic!
http://vampirefreaks.com/playvideo/?v=12454
“Homeowners Frustrated With Banks”
By Chris Chan
Demonstrators picketed Chase Bank in downtown San Diego on Friday, calling for relief from foreclosure. The activists were made up of homeowners and mortgage brokers who have struggled to modify loans with Chase. Dave Van Waldick, the founding director of the Homeowners for Hope Foundation, said the group hoped to be a voice for the millions of homeowners at risk of foreclosure.
“In some cases, the prices have dropped substantially, and it may be appropriate to actually reduce the loan balances,” Van Waldick said. “This is the mandate that the current administration has given to the banks, and they’ve been very slow to come to the table.” Among the demonstrators was former Chase client Julie Nielson. She said she tried to modify her loan before and after losing her job two years ago but found the bank unresponsive. I could never talk to the same person, I could never get anybody’s last name, I couldn’t even get their extensions when I would call,” Nielson said. In a statement, Chase said it has made great efforts to help struggling homeowners. The company said it has already helped 598,000 homeowners avoid foreclosure since 2007 and has approved more than 170,000 modifications since April of this year. Gary Kishner, a spokesman for the company, said modifications depend on an ability to pay. “We don’t want to put them in a loan where three months later they’re going to be in the same situation,” Kishner said. “That doesn’t help them.” SDSU lecturer Mark Goldman said banks may not have incentive to help all struggling homeowners. “No matter how bad they mess things up on this side to mitigate loss and save as much money as they can on their own assets — which is their loans –there’s really no motivation for them to do that,” Goldman said. “The government will just bail them out.”
This was posted by the local San Diego NBC affialte. GRRRR. How is any of this anyone elses fault? The people need to suck it up, face reality and deal with the situation they got themselves into! I am beyond frustrated with the whole situation. My husband and I played it correctly and did not get into the herd mentality, “Buy now or be priced out forever.” Now the herd wants the banks to lower their loan?!? If you can’t pay for it, don’t buy it! Yeesh, how hard is this people???
A very frustrated and rapidly loosing patience,
Stars End
“If you can’t pay for it, don’t buy it.”
RIGHT. But then how would us bloodsucking lenders get away without doing any real work. The trick of mortgage lending is to be very very lucky in picking a group of borrowers who can’t lose their jobs (Soc Sec recipients) and whose properties depreciate no faster than the loans amortize (hence, no 30 year notes).
I feel your frustration, Stars End.
It’s nuts out here.
“No matter how bad they mess things up on this side to mitigate loss and save as much money as they can on their own assets — which is their loans –there’s really no motivation for them to do that,” Goldman said. “The government will just bail them out.”
What a frigggin mess. Can you say Hello to Moral Hazard? Both sides playing the same side of the coin.
Is there actually a macroeconomic budget constraint after all?
Finance and Economics
Assessing quantitative easing
Muzzled
Aug 13th 2009 | WASHINGTON, DC
From The Economist print edition
Politics stops the Fed from expanding an asset-purchase scheme
BACK IN 2002, before he became chairman of the Federal Reserve, Ben Bernanke claimed that if short-term interest rates fell to zero, a central bank still had the ultimate weapon: printing money by purchasing government bonds. Having now actually tried quantitative easing himself, Mr Bernanke is discovering its limits.
In March the Fed announced plans to purchase $300 billion of Treasury debt by September with newly printed money (to be more precise, electronic money in the form of bank reserves) and to more than double planned purchases of mortgage-related debt to $1.45 trillion. The $300 billion in Treasury purchases, in particular, were widely assumed to be the start of a much more substantive plan. Yet the Fed’s latest policy meeting wrapped up on August 12th without any plans to expand either scheme, although it did move the completion date for Treasury purchases back to the end of October and kept the option of boosting purchases later. It left its short-term interest-rate target at zero to 0.25%.
…
Very interesting. Maybe the Chinese laughing at Geithner caused someone to take notice.
From Ben’s post:
“‘When your neighbors house is on fire you don’t wait to call the fire department to help put out that fire, because the danger is it’s not just going to destroy that home, but it’s going to spread in the neighboorhood and destroy other homes as well,’ he said. ‘The effect of foreclosures has been to accelerate and deepen the declines in value, particularly in communities where it’s been concentrated. Studies have shown that those are not natural declines or declines that would otherwise happen.’”
——————————
Following that same logic, would it not also be true that fraud and unaffordable mortgages could accelerate and steepen the rise in prices, particularly in communities where it’s been concentrated?
Fraud (and I’m including mortages that had no hopes of ever being repaid) is what drove up the price of house X. Once that house sold, in the mind of every neighbor, their homes were suddenly worth that same price. It didn’t seem to matter that the price was a result of fraud. Now that prices are headed where they belong (pre-fraud levels), everyone seems to think the declines are “unnatural.”
Good point Ca renter . The problem is that the property taxes were raised accordingly to the fake rise in price ,so the homeowner had to pay for having a higher priced house also .The other problem is that homeowners
took equity out of the property during fake peaks in the market ,and now they seem to feel like they shouldn’t pay for those equity extractions ,in spite of getting goods from those refinances based on peak values .
Its absurd that lenders and homeowners would make loans that could not be paid back ,just based on a notion that real estate values always go up .That is the big fraud of the market and that is how loans were sold . A fake market is going to crash and burn ,and the declining value is natural as you said .
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