Home Prices Could Be Upended
↑ by the Mysterious Flying Miser ↓
From the Press-Enterprise:
“The median price of homes sold in Riverside and San Bernardino counties inched up by $5,000 last month from July, but fewer were sold as would-be buyers had trouble finding bargains in a diminished supply of low-cost foreclosed homes, according to the monthly report from MDA DataQuick.
“Chapman University economist Esmael Adibi cautioned that factors can change from month to month, and he said year-over-year statistics show Southern California’s housing market is headed in the right direction. ‘This is not a sign that the housing market has bottomed out but, definitely, the rapid decline in prices and decline in sales has leveled off,’ Adibi said. As long as sales continue to rise and the inventory of unsold homes diminishes, ‘ultimately the prices are going to firm up.’
“Andrew LaPage, an analyst with San Diego-based DataQuick, warned that there’s widespread uncertainty about how many more distressed homes are stacking up and are destined for foreclosure. ‘It could undermine any price stability that’s forming out there,’ he said.
“Sales have increased year over year for 17 consecutive months in Riverside County and 15 consecutive months in San Bernardino County. Overall, Southern California sales slowed between July and August, which DataQuick described as ‘unusual,’ considering home sales typically are active in the summer.
“The dip could be a result of fewer ‘bargain’ foreclosed homes on the market, LaPage said. But with more foreclosures likely coming, depending on the severity, median home prices could be upended again, he said.
“‘It’s such a crazy market right now,’ said John Marcell, president of Upland-based Better Mortgage Brokers, who said bidding wars have discouraged first-time homebuyers and flooded the market with investors. One recent deal brought in 17 offers, he said. Ridding the housing market of unsold inventory is a good thing, but he said special consideration should be given to homebuyers living in the house instead of investors buying homes to rent them.
“Marcell said he expects to see more foreclosures into 2012 as the unemployment rate rises. The sale of new homes in August was a record low in San Bernardino County where 241 were sold. In Southern California, as well as Riverside County, new home sales were the lowest they had been in the month of August since 1993.”
“But for new home developers, any home sold whether its broken in or brand new, is a good sign that people are willing to buy, said JP Ackerman, director of strategic marketing for Pulte Homes, Del Webb and Centex of Southern California. Ackerman said the price difference between a resold home and new home has winnowed enough to make it possible for firms like his to appeal to a first-time home buyer who doesn’t want to enter a bidding war for a pre-owned home.
“‘They’ve collapsed to a point where they’re right on top of each other,’ he said of prices.”
From USA Today:
“Tens of thousands of financially strapped homeowners who have asked lenders to lower their mortgage payments are instead winding up with higher monthly payments and larger debts on their homes. Homeowners who were hoping for lower payments are discovering to their dismay that lenders roll late fees, back taxes, or other costs into the principal, sometimes turning a difficult payment into an impossible one. That is one reason that many reworked mortgages are sliding back into default.
“Of loans modified from Jan. 1, 2008, through March 31, 2009, monthly payments increased on 27% and were left unchanged on an additional 27.5%, according to a recent report by banking regulators. Many modified mortgages fall delinquent — 25% to 40%, depending on the type of mortgage — often because of homeowners’ loss of income or additional outstanding debt, according to a report last month by CreditSights, a financial research firm.
“‘Payments have gone up …. (and) the payment relief can last for the first few years and then go up (again),’ says Alan White, assistant professor of law at the Valparaiso University School of Law in Valparaiso, Ind. He has studied the subprime mortgage situation for 10 years. ‘(The lenders) focus on today and not on the future.’ Even under the Obama plan, they don’t focus on permanent debt reduction, White says.
“The majority of borrowers who’ve gotten mortgage modifications have seen their overall principal balance go up, according to an analysis by CreditSights and ICP of about 660,000 mortgages modified this year. In about 90% of the modifications, the principal balance after a modification was larger, CreditSights said.
“That’s the situation facing Samantha and Steve Jensen. When the couple bought their $550,000 home in Scottsdale, Ariz., six years ago, they thought they’d found the perfect place to raise their three children. But when their adjustable-rate mortgage reset to a higher rate, they could no longer afford the monthly payments that jumped by about $1,000 a month, to $3,300. So they were relieved when their bank in June offered to modify their mortgage by lowering their interest rate.”
“Under the modification they were to pay $2,600 a month — but then they discovered they also had unpaid property taxes. Once the bank added taxes to their principal, they say, their monthly mortgage payment grew to $3,500. They got a modification in June and are now two months behind on their mortgage payments and facing possible foreclosure.”
“‘The bank could have done more and reduced our principal,’ says Samantha, 40, a special education teacher. ‘You have the anticipation of relief and then you realize it’s not going to make it better. It’s like being punched in the stomach twice.’”
“Some research suggests lenders may gain financially if they don’t modify a mortgage at all. According to a paper published this year by the Federal Reserve Bank of Boston, more than 30% of delinquent borrowers fix their situation on their own and are able to pay even if no action is taken. Another reason lenders might resist modifications is the combined impact of high redefault rates and falling property values in many markets. A lender might calculate that helping a borrower avert foreclosure now only risks a deeper loss if the house goes to foreclosure anyway a year later. And some lenders say even if they modify loans, so many homeowners are underwater — meaning their homes are worth less than their mortgages — that some borrowers are defaulting on purpose, walking away after the lender has spent money and time renegotiating the loan.”
President of a mortgage brokerage in Upland sees more foreclosures going into 2012?
I guess that means that some of us on this board who thought 2012 might be the “bottom” could be characterized as cockeyed optimists.
When the skies are brighter canary yellow
I forget ev’ry cloud I’ve ever seen,
So they called me a cockeyed optimist
Immature and incurably green.
I have heard people rant and rave and bellow
That we’re done and we might as well be dead,
But I’m only a cockeyed optimist
And I can’t get it into my head.
I hear the human race
Is fallin’ on its face
And hasn’t very far to go,
But ev’ry whippoorwill
Is sellin’ me a bill,
And tellin’ me it just ain’t so.
I could say life is just a bowl of Jello
And appear more intelligent and smart,
But I’m stuck like a dope
With a thing called hope,
And I can’t get it out of my heart!
Not this heart…
South Pacific by Rodgers and Hammerstein
A great tune. Rather than post a link, I recommend searching youtube for “South Pacific - A Cockeyed Optimist”
One of my favorite musicals. My high school did South Pacific. I worked back stage on this musical.
I’m gonna wash that loan right outa my hair,
I’m gonna wash that loan right outa my hair,
I’m gonna wash that loan right outa my hair,
And send it on its way.
Dang PB,
Now I got that tune in my head
I’m gonna get that song right outa my head,
I’m gonna get that song right outa my head,
I’m gonna get that song right outa my head,
Before I go insane.
I’ve already gone insane.
Best one is from Dame Kiri Te Kanawa, New Zealand’s most famous escapee. The goal of every New Zealander with ambition - to get out of this overpriced third world hole
South Pacific is now playing at the Golden Gate Theater in San Francisco. The musical will be there through October 25th.
Barney Frank might be better looking than me, but I slobber a little less.
Too funny pressboardbox.
‘Seven years of plenty and seven years of famine’, saith Joseph to the pharoah. 2005 to 2012 sounds about right. Woops, they didn’t have dems muddling in things. How about them 125% loans out there. There we go again !!!
Lobbyists are in charge, and mostly reps. Follow the $, pismo
And all this just confirms that there really will be another leg(s) down.
And that leg down begins any minute now. I’m thinking October. The scenario I’m anticipating is dow 10,000, pump then dump. And along with that will go more jobs, more defaults, etc. Should be a real hoedown hootenanny.
Why are you guys so pessimistic about the PPT’s ability to keep pumping the stock market up from its current level all the way to the moon? Personally, I think the stock market is headed skyward, and the dollar is headed down as low as necessary to continuously propel the stock market. But then I am known to be an ursine creature.
Well, some of us are “ursine” w/r/t stocks, some like you are “ursine” w/r/t the dollar. If you think the PPT can propel stocks upward forever, how do you explain their failure to hold the DJIA up around 14K where it was? ??
“Personally, I think the stock market is headed skyward, and the dollar is headed down as low as necessary to continuously propel the stock market.”
Have you made sure that your father is “all in”?
“Homeowners who were hoping for lower payments are discovering to their dismay that lenders roll late fees, back taxes, or other costs into the principal, sometimes turning a difficult payment into an impossible one.”
BWWWAAAHAAAHAAHAHHA!!!!!!!!
Thanks for the laugh. ROTFLMAO!!!!
BWWWAAAHAAAHAAHAHHA!!!!!!!!
It never ceases to amaze me how many morons believe “lower payments” means more affordable.
It’s all about the worship of the “howmuchamonth” god.
Soon to be supplanted by “larger than expected reset” Devil worship.
I wonder if these dazed and confused trapped fools can remember when their RE agents said…
“Let’s see how much house you can afford” with a toothy smile as wide as a Great White Shark
“‘The bank could have done more and reduced our principal,’ says Samantha, 40, a special education teacher.
Apparently there isn’t much of an IQ gap between Samantha and her Special Ed charges. These cretins always bleat that it’s the lenders’ fault - but whose signature appears on the mortgage contract?
Oh, but she and her mouth-breather husband didn’t understand what they were signing. That makes it someone else’s fault. Write the lady a bailout check.
Yeah, I’d love to just stop paying my taxes, and then turn around and blame it on some random bank that I once did business with. “The bank should have reduced my car payment by the amount of back taxes that I owe”. That oughta work.
This points out the incredible degradation of our (ahem) educational system. Morons turning out morons. But hey, all that diversity training makes up for common sense and the three R’s, right?
I have been wondering how, after all that has happened, people can repeat the same errors. I think a large part of it is the educational system, where children are indoctrinated rather than taught.
Yeah and we have to accept those people’s cultures who swear and use the N word like diarrhea!
———————————
all that diversity training makes up for common sense and the three R’s, right?
I’m always puzzled when one of my students enters the same erroneous data into his/her computer over and over, and gets the same error message over and over, but continues to enter the bad data, thinking that sooner or later the computer is going to realize that it was dealing with bad data to begin with and quits displaying the error message.
Silly Palmy,
You seem to have the misguided notion that education is designed to give children the skills they need to go out into the world and be productive citizens. What a quaint, obsolete idea. No, Palmy, our education system is based on helping our children feel GOOD about themselves. Look at all these awards for “excellence” - everyone’s a winner! Can’t choose sides for kickball, Gawd no - someone’s self-esteem might suffer!
So if these children as from grade to grade as irreflective, barely literate dolts, and graduate with no skills whatsoever outside of “ACORN community activist,” our educational system will have achieved its desired ends - tenure and permanent employment for incompetent and indifferent NEA members. And if our dumb-a$$ kids can’t compete with Indians, Koreans, and Scandanavian kids who take education seriously, well, let’s just ensure we have an ever-growing supply of Stimulous jobs for those who dutifully vote Democratic, or military slots for those who vote Republican.
Oh come on now be a good sport. Why cant the bank pay her property taxes for her also. What the hell is going on in this Country!
If FHA loans mean you only have to come up with a 3.5% down payment, and the govt. has been handing ot $8000 credits, and Realtwhore commissions are about 6%, doesn’t that mean that a new homedebtor with a $200K mortgage who gets the credit, is INSTANTLY UNDERWATER WITH NO SKIN IN THE GAME?
Talk about counter-productive policies. Anything to keep the graft money from the NAR and banks coming in. The taxpayer is just being bent over the table for the pleasure of the big boys.
There are also a lot of state/county incentives that go along with the $8K. In Atlanta, there is a 10% rebate program. I think there’ s an income limit but it’s in the $80K area. On a $300K house that’s a nice little $38K check the government is sending.
The city gives a 10% check for signing onto a mortgage?
I think that’s only if you can prove you have no job and a criminal record or have other previous government experience.
Is that related to rehabilitation of blighted, abandoned, foreclosed properties in the city of Atlanta? Or is it for anyone buying a home? Does it include suburbs? (These questions came to mind because of comments elsewhere about the city of Atlanta having large swathes of blighted areas surrounded by attractive suburbs.)
Seriously, I’d be interested in reading more about this if someone could send me a link. (I couldn’t find anything from a perfunctory google). I’m just curious, not looking to buy.
I don’t know all the details. I looked into it about a year ago, just a google search “Atlanta housing rebate” kind of thing. Stumbled on to some website run by the city. And it says basically if you earn up to $X (which IIRC was $80Kish) and you buy a house in the city of Atlanta, you can get 10% of the cost as your downpayment.
There is also a state wide program in GA that will give you $14K if you buy a foreclosed property. This has no income limit and the house can be anywhere in the state. The 1 stipulation is that you have to live in the house for 5 years. If you sell before then, you have to pay the money back, but even then it works as an interest free loan.
I’ve given up on buying a home at the present time (as of two days ago I managed to convince the wife to stop looking). You would think with a big down payment, approved conventional financing, and a head on my shoulders (not to mention the phoenix area’s MASSIVE forclosure rates etc) that I would be able to find a house. Everything I’m looking at (smaller-family homes for myself, the wife, and our baby) in the 90,000$-130,000$ range) is flying off the shelf at 10,000$-30,000$ over asking prices (often for more then the appraisal). We’ve went from an atmosphere of dread (with good-deals starting to happen and houses sitting on the market for hundreds of days) to completely irrational exuberance.
I don’t want a house in the ghetto, I don’t want a house 30 miles outside of town next to a cattle-farm in a ghost-town subdivision. I want something modest within 10-15 miles of our work (in Tempe) in a decent neighborhood. I could have easily had this in the exact pricerange -anywhere in town- before this retarded boom happened - the only difference between today and 2002 is the economy here is HORRIBLE today and unemployment is approaching record heights. Why are all of these idiot’s rushing to spend 140,000$ to make 8,000$?
The final straw was 2 days ago looking at a home in an old neighborhood in Mesa. It was a well-kept 60 year old home and the homes in the neighborhood are cared for (the majority of them had previous sale-dates in the 70’s, 80’s, and 90’s, very little boom selling in this strange little corner of mesa). The downside? This little holdout enclave is also completely surrounded by some of the worst neighborhood’s in town. The wife, in full-on nesting mode, saw the good in the area and anyone could plainly see she’s frustrated and ready to get the purchasing over with. I offered full asking price (in my humble opinion at least 15,000$ more then the house is worth). The realtor literally laughed at me, he said there we’re already 20 offers on the house and that I’d have to “get serious”.
I don’t want 8,000$. I want an affordable home. I am going to blow a fuse when they “suprisingly” reestablish the 8,000$ credit after it expires in November.
I can’t remember who’s comment it was yesterday, but there was a statement by someone high up at fannie mae saying the 8000$ credit was helping home sales and prices. The comment was something to the tune of “because higher prices and making homes unaffordable is part of fannie mae’s mission statement, right?”. How true. How corrupt.
Oh, how can you stand it when someone laughs in your face? I hate that SO much. Makes me wanna punch ppl. If it makes you feel any better, I’m pretty sure this bimbo will be begging you for a sale within months. The recent stimulus, even if extended, is only a temporary bump. Once it’s baked into the price and people get used to it, then the novelty will wear off. People can’t be stupid enough to think that a temporary tax cut today is going to help them sell down the line for more money. It doesn’t take a genius to see that the tax cut will cause higher prices today at the expense of lower prices tomorrow.
I don’t think they can do any more foreclosure moratoria either. The banks will eventually have to sell these things.
Well if they intend to start forclosing on people again I certainly haven’t seen it.
There are 12 (twelve!) people in my office right now who haven’t made a home payment in -forever-. The current leader is at 13 months.
Nobody has been kicked to the curb yet, not one of them. I know that’s just a small segment of the population here but it’s 12 people I see every single day and I’ll start believing things are getting back to normal when they start actually losing their roof. Most of them think it’s funny at this point, they’ve accepted that the home is going to eventually be taken back and are simply enjoying saving thousands of dollars a month in the meantime.
I know; it makes me mad too. I would suggest squatting, but I’m sure your wife would protest to the skies on that one. I agree that it’s totally not fair and it’s totally not right. I have also met/heard of TONS of people who haven’t made mortgage payments in a year, who are still living in the house or renting it out (and you know they would evict their tenants if the tenants stopped paying). Jerks. Makes me mad.
Ben -
Yeah, squatting isnt going to be an option, I’ll just stay in my nice Apartment, all utilities included, 2 bedrooms, 5 miles from work, 800$/month.
The non-mortage making “landlords” are the biggest reason I won’t try and rent a house. They are still asking for stupid rental-prices and aren’t even sending the payment collected to the bank. I need a stable roof over my head, I don’t want to spend all the effort moving only to be kicked out by a mortgage holder 6-12 months from now. And, as you said, the “landlord” will still actively persue you for your rent and kick you out of the property if you weren’t making YOUR payment. It’s just stupid.
Sorry, meant to say big v, not ben. Mind was wandering. Need more coffee.
“Chapman University economist Esmael Adibi cautioned that factors can change from month to month, and he said year-over-year statistics show Southern California’s housing market is headed in the right direction.”
Everyone of these kneejerk commentaries has the same exact theme. String together a few MSM recovery stories, add a few anecdotes about knifecatcher bidding wars and top it off with Ben Bernanke sauce (you know, the guy who can predict the past) and the above statement is what rolls out of their mouths.
Might make sense to use the $8,000 credit to buy a house and then stop making payments on day one.
Suspect you might be able to live rent free saving money until at least 2012 like the folks at your work. Is Arizona a non recoruse state?
Yeah, no recourse on 1st mortgage in AZ. Sad thing is I bet you could do exactly that, buy and live there for a loooooooong time. I’m trying not to frak my credit though, I have an idea for a new business and will probably need the good standing credit to get things off the ground in a few years.
Getting bonded etc is so much cheaper with good credit.
Temporal, congratulations on your decision to remain a tenant. I think Big V is right: your opportunity will come. Just continue your patience.
According to my BiL, who has good REIC connections, fewer than 30% of foreclosures have actually been marketed by the banks. And a vast number of properties whose FB “owners” have walked away or ceased making payments, have not even entered the formal foreclosure process.
Which means, there’s a massive glut of homes in a kind of limbo, that at some point will HAVE to enter the market, especially as communities start taking a harder line toward unkempt properties. While the measures taken to date - bailouts, $8K tax credits, grace periods, etc. have created an illusion of stablization, all this has done is delay the inevitable - under the facade, an even worse downturn is building irresistable momentum.
This I can believe. The news was saying 70% of phoenix homedebtors were underwater on their home. I wonder how many people are sitting, squatting in the home they “own” without making payments.
Of course, it may be better for the banks then the alternative, people gutting the house of everything (kitchen sink and AC included) and leaving a dirty ruined husk. I get the feeling much of this lack of forclosure is a “property preservation” method.
I wonder how many people are sitting, squatting in the home they “own” without making payments.
I’m guessing a lot more are burning the furniture and selling everything they can on e-Bay to try to keep up with their mortgage payments, even though they’re way underwater, because they desperately want to believe that things are going to “turn around” any day now.
People, men especially, do not like to admit they made collossial mistakes. They’ll go to any lengths to cling to their illusions and refuse to concede defeat - look at Dick Cheney still defending the disastrous decision to invade Iraq. So the majority of these FBs will hang on and try to keep up appearances as long as they can, against all hope or logic. But when they do throw in the towel, they won’t be alone - the quiet desperation is already palpable and all-pervasive.
You’re right, Sammy. Many men on this blog (you, for instance) have chosen to blame “women” (particulary their wives) for “forcing” the men of the world to buy overpriced houses. Why are so many men unable to admit their mistakes?
Ummmmmaybe the sex is good????
Why are so many men unable to admit their mistakes?
I hope I didn’t come across in that way. My wife has been my partner for 8 years now, she’s in nesting mode but I’m not saying she’s forcing me to make a mistake here. She’s smart enough to know we will find a home priced comfortably for us, sooner or later.
Besides, she’s right about some things, I wouldn’t mind having a back yard and a dog, or a garage again.
Big V,
You do like to turn everything into a gender issue, don’t you? There’s no question that in a certain percentage of cases, women badgered their husbands to buy overpriced houses. In other cases it was doubtlessly the husbands who were the prime movers. In terms of assigning blame, I’m guessing it’s about evenly divided, from what I’ve seen. Lately I’ve seen a lot of cases where men aren’t really acting like men, in terms of accepting their personal and family responsibilities. So, what exactly is your point?
My point, Sammy, is that you have spent so much time blaming women (typified by “Suzanne”) for their husbands’ willing house-buying, and I have seen you make so many woman-hating statements on this blog, that I feel the need to deprive you of any masculinity you may have fooled yourself into thinking you possess.
My aim was not at Temp; it was at you.
Yada, yada…
)
EVERYONE is stupid. I base this on close observation. It doesn’t matter if you have an X or a Y chromosmal ornament; we all get to be stupid in a variety of creative and annoying and incessant ways.
(Except for me. IIIIIIII’m above that stuff, of course.
Oh, speaking of X and Y, I had a very spirited martini-fueled afternoon conversation today about that Caster Semenya south African runner.
Now, I was handed plenty of gender issues as a lass—there’s a photo of me and my sisters on my mantle and we have marine-style boot camp buzz-cuts (my dad cut our hair, with a buzzer).
AND (are you ready?) in another photo we are wearing camouflage dresses. My mom sewed them, of course.
Why camouflage dresses? You ask with astonishment and dismay?
Because girls should be modest and wear dresses when they go out to learn how to hunt poached deer and then subsequently dress those poached deer. Duh!
Anyway, no conclusion was reached, but on the other hand no furniture was busted either, so it was actually a pretty civil dialogue.
Look at me for instance. I’m a male and just as stupid as can be. You can tell by reading most of my posts.
Oh, but I forgot to further articulate my point, which is that everyone is dumb except for me.
Sigh.
….I locked myself out of my own car earlier today, for the first time ever in my life. Luckily some unshaven but nevertheless handsome Evergreener college boys came dashing up to save me. I stood there and watched them labor and shout at each other with their chin stubble and I thought: ‘You know what? One day I’m going to be an old lady with a cane.’
My birthday’s on Tuesday, is why I’m thinking about it, I guess. I was so distressed that I almost forgot my phone number.
Look at me for instance. I’m a male and just as stupid as can be.
Haw! Funny…
That’s okay. I forgive you. As long as you forgive me.
pressboardbox you are not stupid. Aggravating, a PITA, but not stupid.
“EVERYONE is stupid. I base this on close observation.”
When the mind is made up, the ear is deaf to even the best arguments. This is the sign of a strong character. In other words, an occasional will to stupidity.
– Friedrich Nietzsche –
OlyGal –
I have bookmarked that quote in my tattered copy of Nietzsche’s Beyond Good and Evil. I have double-dog dared myself to read it to the next uppity Mormon missionary who questions my beliefs regarding their version of God.
12 (twelve!) people in my office right now who haven’t made a home payment ??
And there-in lies the problem…
In that the economy is so bad it seems everyone I know is starving and losing their homes, or in that they haven’t made payments in forever?
Its funny actually, this all started with one guy, and as the months ticked by he played devils advocate to the other struggling homedebtors. One by one they joined him. One recent convert blew through all his savings waiting for incomes to come back up (we’re in sales), his recent comment to me was “I should have done this 6 months ago”.
Dark days are here, I work my rear off and my income is STILL off 50%. Many of my compatriots (those still here) are hanging on making minimum wage. The reason that is a problem is ordinarily they would be unable to support themselves at that wage, quitting in the process, and leaving me a bigger slice of the pie (the strong survive and all). Instead, they now have lower costs of living then even me, while living in 300k homes on the golf course rent free and hanging onto their job making 1400 a month waiting on things to improve.
Its like darwin in reverse.
“Dark days are here…”
Agreed, end of days.
end of days
they’ve been saying that for millenia
they’ve been saying that day after Jesus was crucified.
Don’t you wish that your landlord or lender would let you live in your house or apartment rent free?
It makes me feel so warm and fuzzy when I read about people not making payments for a year or more and not getting kicked out.
Maybe if we all stopped making our payments we could all live for several years rent free. Think how overwhelmed the lenders would be.
“There are 12 (twelve!) people in my office right now who haven’t made a home payment in -forever-. The current leader is at 13 months.”
Are they paying their property taxes?
Seems like the county assessor would be down on them like a falcon since the safety net is catching more souls these days.
Kind of off topic. But when I was a salaried employee (not a consultant), I was disappointed to get bonuses rather than increments in pay.
If the $8,000 tax credit was instead a yearly tax credit added onto the mortgage interest deduction for the duration of the mortgage, then yes, it’s of some value.
But a one time deal? What a farce!
Patience, Temporal. The current false uptick is, how shall we say, a “temporal” phase. Don’t let your wife’s “nesting instinct” prod you into making a grave financial error, when patience will be richly rewarded - and the entire character of neighborhoods and communities could be transformed for the worse by foreclosures and walkaways.
The smug realtor of today, confident in the illusion that the boom times are coming ’round again, will be shaken and chastised by next Spring. The warning signs are multiplying that the crash is set to move into its next, worse phase.
And won’t you love the sound of the last laugh going down.
I agree with your advise Sammy…
He or she who laugh last laughs best
Everything I’m looking at (smaller-family homes for myself, the wife, and our baby) in the 90,000$-130,000$ range) is flying off the shelf at 10,000$-30,000$ over asking prices (often for more then the appraisal).
Temporal, I remember when those of us who discovered Ben’s HBB in 2004 were collectively fuming at the idiocy of our fellow citizens who were falling all over themselves to buy overpriced houses before they were “priced out forever.” Now the wails of those same FBs are music to my ears. Uncounted millions of them are hanging on by their fingernails - the next leg down will be a brutal cull that will dramatically swell the number of foreclosures and ultimately bring the long-awaited capitulation.
So while I get your frustration, don’t let it cloud your judgement when the final reckoning still awaits.
Poetic sammy. My sentiment then and now, exactly.
Temporal, I remember when those of us who discovered Ben’s HBB in 2004 were collectively fuming at the idiocy of our fellow citizens who were falling all over themselves to buy overpriced houses before they were “priced out forever.” Now the wails of those same FBs are music to my ears. Uncounted millions of them are hanging on by their fingernails - the next leg down will be a brutal cull that will dramatically swell the number of foreclosures and ultimately bring the long-awaited capitulation.
I pasted your post in full, I liked it so much.
I didn’t discover Ben’s Blog until about late 2005 or even early 2006—I can’t recall, as it’s all a blur of joy—but there was STILL nothing but wonderment over the massive idiocy and utter craziness.
Now the wails of those same FBs are music to my ears.
Sigh. I’m afraid I feel the same way. Probably because I’m a malicious person.
…And now I’m going to tell you an Olympiagal Story of Great and Consuming Joy.
Today I went out to get snacks for a little afternoon get-together and I was standing in the check-out line? Okay?
Are you listening?
And as I waited I heard an elderly lady complain to another elderly lady about a ‘local developer’ (And I KNEW the name! I know him! I know him well. I hates him forever. )
Anyway, she said this local developer was not going to be able to pay her anymore because all of his projects are now in default.
I didn’t say anything to the nice old ladies, mostly because I was raised to be polite and respectful to old ladies— I just grasped the edge of the conveyor belt so I wouldn’t fall down as I had a *gasm*.
Probably that’s why the bagger-boy offered to help me out to my car with my cheese and crackers. I was all flushed and weak-kneed and wobbly. Oh, gosh, that was so wonderful. I…just…I mean….
*fans flushed face *
Sometimes I forget the depth of my hatred, but then I get reminded of it.
What would the developer have paid the elderly lady for if he weren’t in default? Is she an investor? Financed a land sale? A vendor of construction supplies?
She’s probably one of those crusty, greedy old birds who sold off land at bubble prices to an equally rapacious developer. It was an owner carry, and she got cooked as well. Boo effing hoo.
Love that, Olygal!
It might be re-established to 15K! Then what?
Panic?
Or maybe wait for them to make it 30,000 next november. It’s only money, right?
Slippery, meet slope. Don’t worry though, the cash is backed by the full faith of the us government. As long as everyone claps their hands and believes we’re going to be ok.
Or maybe they could let house prices find their own level, leading to affordability, stability, and improved economic growth (thanks to people having money to spend on something other then the mortgage). Naw, that plan requires someone to rip off the bandaid, and who wants a little pain when we can let the underlying wound get infected. I hear they remove limbs under general anestesia, no pain, won’t hurt a bit.
Temporal,
I was so outraged at the response of that scumbag realtard that I read it to Mrs. Exeter.
She said, “Don’t walk, RUN and challenge the laughing hyena to sell”.
Lol, I appreciate that exeter (and Ms. Exeter).
Like I said, its the straw that broke the temporals back. The 20 other desperate 1st time buyers can have it. I’m taking my quarters and going home. The only sad thing is (at least at the moment) the realtard is right. I stand no chance of buying an affordable home without bidding stupidly high for the property. I’m not willing to pay 10k over an already dreamworld appraisal to buy a house in a subpar area. IF this stupid 8k cash for crapshacks ends things should get better for me.
For an example of this take a look at bid stastics on hud homes here over on mcbreo.com you’ll see anything remotely habitable is bid well above asking lately. The realtard, vile as he is, is just trying to get me to stop wasting his time, and he succeeded. He’s undoubtedly going to ride this wave of prosperity and suffer big in the next leg down, but that doesn’t make me happier about it.
So sorry to hear about your ordeal, Temporal.
Here in San Diego, we are going through the very same thing. It’s not easy, because Mr. CA renter is getting restless about buying a house already. I am trying to get him to wait another year or two (at least), because the manic buying activity we are seeing today is NOT healthy, no matter what “they” say.
Sorry, but I wouldn’t be hoping on affordable housing anytime soon. The good houses will be gobbled up or sold to insiders (more “infestors”) while the junk will be left to rot at slowly declining prices.
I think my previous comment got ate by the great filter in the sky.
Anyway, I’m giving up on looking for a house for awhile. I don’t want 8,000$, I want an affordable home that isn’t in the Ghetto (or 30 miles outside of town next to a cattle farm in a ghost-town subdivision nobody has ever lived in).
To all of the idiots out there bidding 10,000$-30,000$ over asking prices on -every- home I’ve tried to purchase in the past 4 months (which by the way we’re already overpriced by 10,000-30,000$): Enjoy your falling knife.
I can’t tell you how frustrating it is to be an approved conventional buyer with a large down payment in Tempe (arizona) and still be completely unable to buy a house. This even with the massive supply of homes, the rediculously high forclosure rates, and an economy in the toilet. I’m not going to bid 10,000$ over some already inflated appraisal value to have the “honor” of purchasing someone’s beat up old 1970’s cinderblock home half a block from a circle-K that went out of business and became a payday loan office.
Oh, and the best part - the home being bid on hasn’t had a payment made on it in a year yet the homedebtor is still living there trying to short-sell it, or it’s a bank-owned crapbox missing every single appliance and it’s “as-is” with no promises the whole thing won’t fall over tomorrow. You’d better bid 20,000$ over asking prices though and jump on this thing immediately without even inspecting it, because if you won’t there are 20 people standing behind you for the opprotunity.
What the hell happened to our country? This would have never flown in any previous decade, I distinctly remember my neighbor’s father losing his job, and them being forcibly removed from the home a mere 3 months later. I lost a friend (they moved away) and learned a valuable lesson about “home ownership” (namely, that you don’t OWN anything unless it’s paid off). I remember my family buying a “fixer-upper” forclosed home, it had been on the market for months and they bought it well below asking price. I remember housing being affordable even on 15 year loans. I remember buying -my- first house at 2X my annual income - a handsome 1400 square foot 3 bedroom in a nice little neighborhood.
And this didn’t happen back in the 1950’s. I’m 28 years old.
I give up.
Temporal:
It’s not time yet. Remember the Ivy Zelman chart? Prices won’t hit bottom until 2010-2012, depending on where you are and what market you’re looking at. Have patience. Patience, my friend. Rent a house; they’re CHEAP!
I know it’s not time yet, I was willing to accept a haircut, the wife is in full-on nesting mode and is sick of our apartment (we sold our house years back when things got stupid).
Also, regarding rent - even here in the phoenix area (Tempe) with massive rental vacancy rates (I think last I heard valley-wide it’s 19.6%), people are asking big money for rent on homes. My apartment is cheap, admitedly, but take a minute to look up rental prices in the area for single family homes. People are still detatched from reality, but most of them are so underwater they need a rediculous rent payment to make the mortgage - assuming they are paying the mortgage. And if they aren’t, expect to be out-on-your-rear moving AGAIN in 6-12 months. I’d rather stay in my apartment until I find a home to buy.
RE: The Nesting Instinct
You can quell this in two ways, as follows:
1. This takes effort, but find a house you can rent from a non-FB LL. Use the interwebs to check the county recorder’s office and find out whether or not the prospective LL has any NODs (on any property), how many properties they own, when they bought them, and whether or not they have gotten more loans than they have properties (indicating equity loans). Once you’ve found a stable LL, then you can move your family out of the shared-wall apartment and into a nest.
2. Make sure your wife understands that you are protecting your nest egg by avoiding a falling nest. Tell her you want Baby Temp to live in a good neighborhood, and buying would make that impossible.
Good luck.
-V
Definitely easier said than done. It seems every landlord here is a fb. I get the feeling the “good ones” are already taken, as it were.
For now i’ve got her ok with staying in the apt until things calm down on the realty market.
RE: nesting instinct. Someone mentioned this idea a few weeks ago and I thought it was GREAT.
I have a strong nesting instinct and want to buy but this idea has helped me avoid that fate the past few years, not to mention save a bundle.
Part one: Set up an HSBC or ING or some such account for your wife, call it the House Fun Money Account, and put a chunk of change into it every month. Tell her that this is money to be used to decorate, upgrade, landscape etc. etc. when you do eventually buy a house. Make sure to check the balance of it regularly and ooh and aah about how much you have saved and how much fun you are going to have with it.
Part two: indulge her occasional discussions about why planting Russian Sage in your future front yard is a better idea than planting French lavender.
Good luck and patience!
You can be sure that the N.A.Realtards are going to milk the “nesting instinct” to the max for their own purposes.
and perhaps why Russian sage is better than a row of Joshua Trees…
Funny, I think I have a little more nesting instinct (or at least desire to remodel instinct) than my wife. One thing I think has helped us both is just running the numbers; right now, we rent a decent condo that’s smaller than a house that we would buy, and we can do fine here for at least another 9 months (bambino on the way in December). Not only is our monthly rent smaller than the throwaways alone (interest, homeowners, etc.), but even if our target house goes down even “only” another $50,000, we’re many years ahead in paying it off sooner. Anything more is added gravy.
Your heads are definitely screwed on right, nice going!
Think about renting a duplex instead of a house…Probably many long time owners of these…It will offer you most of the amenities of a house…
I like duplex’s, even considered buying one early in the decade… Unfortunately the wife doesn’t share my enthusiasm for multi family housing, she’d rather stay in our apt, which at this point is fine by me.
On another tangent regarding this; here in phoenix duplexes and 4plexes are usually situated in parts of town you do NOT want to live, so I can respect my wife’s disinterest in this. It would likely be a step down for us.
I remember buying -my- first house at 2X my annual income - a handsome 1400 square foot 3 bedroom in a nice little neighborhood. … And this didn’t happen back in the 1950’s. I’m 28 years old.
Sounds nice. Why did you sell?
Wait, wait. Temporal: Before you answer that question, let us guess.
Was it because you wanted to lock in your profits, then use the money to buy something nicer once prices came back down?
I was working for a smaller company in a smaller town. The manager passed away suddenly (a great guy and a tragic loss). Long story short they put the owners grandson in his place, he stole from me and I brought upthe theft (with evidence that he was doing it to all the other emplyees) in a company meeting.
It didn’t go over well and I was blackballed in the town as a result. I put the house up for sale and moved to phoenix. House sold almost immediately and I moved into a cheap apt.
Are these buyers investors or people who will live in them? I guess you can’t really know for sure but what’s your guess?
And also…I know Phx has crashed and burned. But $90- 130k screams ghetto to me. Is that realistic for a middle class neighborhood? Atlanta is a cheap city relatively speaking, but $130k means bars on the window.
Phoenix used to be extremely affordable. 130k bought you a nice home anywhere in town. I looked at a home in scottsdale years back before the boom, 210k for 2300 square foot. Same house today is still double that. Prices are easily still inflated anywhere desireable to live.
Tempe used to be 100 to 130 a handful of years back, now its 200k for cinderblock with a swamp cooler. The difference of course is today the economy is worse and everyone is losing their jobs.
Well not everyone obviously. Someone with a job is buying all those houses you say you’re being outbid on. I’m seeing a disconnect on your part. On the one hand the economy in Phoenix is awful, jobs are scarce, etc. And then you can’t buy a house because you’re being outbid every time you try.
Eddie:
130k used to be the price for a normal, middle-class 3/2 in Phoenix. The problem is the housing bubble. There are still too many people who think we’ve “hit bottom”, who are waiting for the V-shaped recovery, and who are willing to do anything to get their hands on a “deal” so they can flip it. Prices are still headed downward, but we’re not there yet.
Eddie, I second Big V’s comment. The “disconnect” is all the stupid lending and stupid subsidies over the last 7-8 years. What’s so hard about that to understand?
Yeah, while I continued to make loans in the PHX area in 2005, 06, 07, 08, what I’m finding now is that nobody WANTS a loan, because the prices of MH+lot are very, very sticky, but all the potential buyers see that nothing is moving. Beneficial for me, since the debtors are NOT in default (not any of them), but I don’t know when I’ll have the opportunity to write any more notes.
I MEAN! …they want $130K+ for 400 sf MH with maybe a 600 sf “AZ room,” on a 30′ x 50′ lot in an RV park. Yeah yeah, you get your 1/200 of the swimming pool and the other rec facilities, that’s not negligible, but this same type of housing went for about half of that price in the early part of the present decade.
That’s the stupidest thing I’ve ever heard of. So, in other words, they’re valuing a 30′ x 50′ trailer park lot with a few amenities at $110k? That’s more delusional than words can describe. I’d put it’s value, without the trailer, at less than $20k.
To me $130K for a house that is not in the heart the ghetto seems cheap. Dirt cheap actually. And I guess I am not the only one given the anecdotes told by Temporal.
$130K even with $0 down is a $700 mortgage. Call it $1000 with tax/insurance/maintenance. Can you even rent a house for less than that in Phoenix? How much is a 3 bedroom apartment? Can’t be much less than $1000.
“That’s the situation facing Samantha and Steve Jensen. When the couple bought their $550,000 home in Scottsdale, Ariz.”
You got suckered into borrowing $550k for a HOUSE? A friggin HOUSE??????? I hope these two crash and burn like a 747 falling out of the sky. THEY DESERVE IT. They’re DUMB. At 40 years old, they were somehow convinced by something or someone that a house is worth $550k…. Yeah…. 40 years old, they’ll ALWAYS be STUPID. If you’re still making teenager mistakes when you’re in your 30’s, you’re just plain dumb. Similar to the kind of dumb that makes some people toss their entire life away to gamble, do drugs, have affairs etc.
We’re are so fawkin doomed.
Would have been interesting to hear what the husband did for work.
How much you want to bet he was a carpenter, realtard, mortgage maggot…. the usual suspects.
I went to the article to see if husband’s line of work was printed (it’s not). I found this instead:
One such homeowner is Carol Cole, 71, who received a modification in February that cut her payments from more than $3,000 a month to $2,500. That’s still $500 more a month than she was paying when she bought her $575,000 house in Santa Rosa Beach, Fla., about five years ago.
With income from her spa business falling, she’s worried she’ll become delinquent on her mortgage as soon as this winter. Cole has applied for another modification, but she says her bank has told her she has to wait 12 months to qualify for help. Her lender, Bank of America, said it had to deny her request for a further modification because the investor who holds her mortgage does not participate in the government’s modification program. However the bank is continuing to pursue the case.
“It’s a terrible challenge (making the payments) and I’m trying not to fall behind, but it’s going to get to the point I can’t make it,” Cole says. “This affects your health, your relationships. You don’t eat or sleep.”
SEVENTY ONE.
Sigh,
Leigh
And - just ’cause I know ya’all are interested
Here’s a link to her spa -
http://www.aquariusspa.com/
*shakes head*
71 year old owner of “spa” business? Could that be a euphamism for “madame”?
HA!
I think you meant “madam”, though. When I took French in high school, our teacher used to get offended when we would call her “madam” instead of “madame”.
Funny.
Maybe she’s just a mad dame.
Yeah, I ought my second home at 40 and had a tough time swallowing the notion of a $200,000 mortgage. At 1,000sf, the realator called it a ’starter-home’ - I call it my ‘ender-home.’
For all Phoenix Kreskins, will it be possible to buy a liveable foreclosure for about $20000 (price I would have paid without this rebate ruse) before June 2010? Because my credit is bad and I don’t want to pay a huge deposit just to rent. And what’s the Healthcare job market like in Phoenix?
My permanent residence is in Phoenix. I cannot help you on the first question since I’m renting and have been out of real estate since 1996.
For your second question: My sister is a medical records supervisor. She interviewed in the Glendale / Peoria part of the metro area for a direct hire job at $65,000. She previously was making $100,000 in Sonoma County. She decided to take a job in the Baltimore metro area paying $90,000.
I pointed out to her that I could have moved my lease to another apartment in the same corporation from southeast to the northwest and she’d be able to live there rent free in Phoenix. Also I pointed out the cost of living calculator, that $100,000 in Sonoma County is not much different from $65,000 in Phoenix.
She instead wanted to live “near the water and where it’s cooler.” So she is in a very nice upscale loft building on the waterfront in the Baltimore area. I have to admit I like that loft structure so much that I would not mind living there in Baltimore just to be in the same loft building. Lots of pretty young women running around, lots of pubs and restaurants within walking distance. Inner Harbor a little bit further, but still walkable.
$20,000 for a foreclosure may be likely in Phoenix, but you probably won’t like the neighborhood where it’s in.
I remember in 2003 or 2004 in Old Scottsdale next to the Continental Golf course, condos on the other side of the grass were selling at $118,000. That actually was not too bad back then. I think prices are starting to get back down to that level. The Sunscape Villas “conversions” are a joke. I lived at Sunscape before they were converted.
But why do you have to buy? The AZ economy is shakey right now. This is a false recovery and there will be a lot of foreclosures in the next three years. Someone posted a link that 128,000 mortgages in Phoenix alone are going to be underwater with the resets that are going on now. Over 60,000 homes are listed for sale currently in Phoenix. In another two years there will probably be 90,000 homes for sale.
That $20,000 foreclosure will be $10,000 in a couple of years.
Thanks again. After owning three places and living in multiple apartments, I dread living in another complex. I’d like a place where my adult kids could come if (more like when in this economy) they lose jobs, where they could have some privacy (I’m hoping for a three bedroom, a pipe dream I know) and play their guitars.
I know if I buy by next June I could risk a price drop and a bad neighborhood, but I’d throw away $5000-$10000 on even a studio, which I’d dislike due to the claustrophobia.
At least I’ve been to Arizona in this decade and I’d feel ok living there. Can’t say the same about Florida for sure.
So the previous poster is seeing 20 offers made on $100K homes which end up selling for 20K over asking. But you think there are foreclosures to be had for $20K and will soon be available for $10K.
How do you figure?
Just from what I see of condos on Realtor.com and all, but I’m sure that as you all say, there are a multitude of (Investor?) offers on these and I’d never get one. They probably aren’t in the best part of town, although I know to stay away from 27th Street.
Guess I’m stuck with Florida, if I get that lucky.
Anything 20000 dollars is going to be SCARY in phoenix. If you can live there you are braver then me.
As for houses in the 90 through 130 range, they are artifically flying off the shelf because of the 8000 dollar rebate. I’m sure lower priced housing is moving a bit quicker than normal as well but beyond a certain point (60k maybe) anything you find is going to be virtually unliveable. At that level the only people willing to live there are usually unable to finance.
Go East,
If you’re priced out of Phoenix and Las Vegas, I think you should re-think your finances. Im being snarky, but come on, Phoenix and Las Vegas are about as cheap as it gets.
I posted here before about FL. My wife and I want to move to Tampa/St Pete. We went there last month to check out both rentals and homes for sale. It’s a bit of a myth that FL is this magical cheap oasis. There is nothing decent to rent under $2500 and sale prices for anything decent is still $400K and up….that is if you don’t want to live in a house built in 1957, last renovated in 1982 and with gang bangers for neighbors. If you don’t mind living in a s&1Thole then yes plenty of cheap living available.
Nothing even to buy in Orlando or on the West coast, Ft. Myers or Lehigh?
RE my finances: I have to live somewhere after I graduate, and it won’t be in L.A. If I have to rent, so be it, but not in CA. I just don’t think I can rent anything with my credit.
There’s gotta be plenty of FB’s that will rent to you even with bad credit, if you’ve got cash. And you’re kidding yourself if you think any place at 20K wouldn’t have any other cost associated with it. IMHO, you’re better off renting for now.
I am not as knowledgeable about housing, zoning, etc. as are many of the posters here, particularly exeter and others who have rolled their own and lived to tell the tale and bank the savings.
However, it seems to me that we may run the risk of borrowing some of the characteristics of those who sneered at us yea, these many years. If cheap, paid for shelter is one’s objective, why not look into the designs that have been invented specifically for developing countries. I will spend some time looking through my archives, can’t find the folder, but there is one non profit in TX who patented a concrete-like shell hardened over a inflatable air frame. True, it had the shape of either an Airstream trailer or a yurt, and one module was not palatial, but it could be had for $20-$30K. Plenty of empty finished lots in all of these places we’re talking about going for 10% of bubble prices (if what I read is to be believed). Somebody already put in the utilities and hookups before going belly up.
Yeah, it’s small - but it’s paid for, and 800 sq ft (whatever) has plenty of room to hold your guns and Akita. As for the bad guys, try breaking through a hardened door in a concrete shell without being in a world of hurt. I am always on the lookout for Plan B and Plan C. This option would be right up there on my list. When I am in the market for free and clear options, personally, I’m gonna give on the peripheral element of cookie cutter design.
I’m not willing to just up and die, if my free and clear housing option fails “your” sniff test. I mean the generic “your”, not the community here, of course.
So there.
Right, if I were to experience a default on one of these MH+AZroom+lot-in-RV-park entities, I’d be trying to sell
it for $60K (the 2002 price), not $20K. These places are safe, but you have neighbors right in your face.
Thanks for the information. I am not in that kind of healthcare: I won’t make anywhere near that salary. I thought about the East coast, but rents looked too high for me. At my future salary, about the only water I might be able to see is in Florida, but I hesitate to consider buying a foreclosure there due to hurricanes and humid heat. But if I’m priced out of Phoenix, I may end up there.
“broken-in” home
“Pre-owned” home
Just can’t say it, can you?
How about “pre enjoyed”?
Or “previous owner hung himself in the closet”…
“Kill Bill?”
Kewl. You could make a lot of money off the haunted-house tour.
Well I am not an investor by any means. I bought in 2007 (cheapest in town) because there were not really any decent rentals in the small town I moved to to get a teaching job. I was laid off when they hired someone at a far lower salary (from Central America.) So I lost the house. Then I went back to school to retrain for healthcare. I’ll graduate by June, but I can’t afford CA, renting or otherwise. I am just looking for somewhere to move to that’s affordable. I don’t relish buying someone else’s former dream, but I’ve lost mine several times along the way. Vegas is out of reach already, I know. So is Phoenix a possibility? Or will I have to look at Florida?
Sorry, correction: I bought in 2005.
” they could no longer afford the monthly payments that jumped by about $1,000 a month, to $3,300. So they were relieved when their bank in June offered to modify their mortgage by lowering their interest rate.”
“Under the modification they were to pay $2,600 a month”
So they couldn’t pay $3300 and were about to walk, but they relieved with $2600? It’s not that hard to find $700 a month. Cell phone $100. Cable $150. Starbucks every day on the way to work $100. Gym memberships $100. Cut out Friday night restaurant visits from 4 times to 2 times a month, $200. And so on.
They will probably have to do all those cuts like you suggested. There was one year where I had to go without cable because my PITI payments were too huge. Also if they have a 5 year old car they could take out collision and comprehensive. I saved a few hundred dollars per year doing that.
Eddie:
You are assuming they were spending on all that stuff to begin with. Remember, their initial payment was only $1,000/month, so they probably stopped spending unnecessarily when it shot up to $3,300.
You pay a hundred bucks for your cell service? I only pay 40!
Actually my cell phone bill is $150. Unlimited minutes and data. It’s my only phone and I used 2000+ mins a month.
No, their original payment was approximately $2300 and it went up by “about” $1000 to $3300.
Oh, you’re right. Silly me.
“Home Prices Could Be Upended”
No worries, Moody’s has got you covered:
“Where Home Prices Are Likely to Rise”
http://finance.yahoo.com/real-estate/article/107740/where-home-prices-are-likely-to-rise.html?mod=realestate-buy
Atlanta, Ga.
Percentage Change:
1 Year, 2009: -14.91%
3 Year, 2009-2012: 0.98%
5 Year, 2009-2014: 11.35%
Austin, Texas
Percentage Change:
1 Year, 2009: 0.29%
3 Year, 2009-2012: -1.54%
5 Year, 2009-2014: -1.01%
Baltimore, Md.
Percentage Change:
1 Year, 2009: -13.32%
3 Year, 2009-2012: -3.33%
5 Year, 2009-2014: 9.22%
Boston, Ma.
Percentage Change:
1 Year, 2009: -9.75%
3 Year, 2009-2012: 4.48%
5 Year, 2009-2014: 20.44%
Charlotte, N.C.
Percentage Change:
1 Year, 2009: -8.15%
3 Year, 2009-2012: 3.54%
5 Year, 2009-2014: 12.20%
Hmmm. Why should anyone believe this garbage? After all, Moody’s has blown every single housing forecast they’ve ever submitted. Here’s some proof from their 2006 forecast:
http://money.cnn.com/2006/10/05/real_estate/moodys/index.htm
I think the article is very specifically intended to get FBs to keep paying the mortgage on their underwater properties.
If you want a good laugh read the Moody’s guestimate. They should have put 50% declines on all those central valley and golden empire towns and they would be closer to the fact!
‘(The lenders) focus on today and not on the future.’
Focus on today, ignore tomorrow, and you’ll feel great about everything!
Economic reality torches green shoots theory with a flame thrower:
Sept. 18, 2009, 7:48 p.m. EDT
Moody’s bearish on housing recovery
Analysts say it will take more than 10 years to recapture peak home prices
By John Spence, MarketWatch
BOSTON (MarketWatch) — Moody’s Investors Service threw cold water on optimistic projections of a V-shaped recovery in the battered U.S. housing market, predicting it could take more than 10 years to get back to boom-level prices.
“For many reasons, the rebound will be disproportionately small compared to the decline,” Moody’s said this week in its latest outlook on the residential market. “It will take more than a decade to completely recover from the 40% peak-to-trough decline in national home prices.”
The housing market is in the third year of the current downturn, one of the worst corrections in U.S. history as a result of the economic recession and the mortgage industry nearly grinding to a halt during the credit crunch.
“The bursting of the housing bubble precipitated a crisis in financial markets the likes of which have not been seen since the Great Depression and plummeted the nation into recession,” Moody’s said.
“The scars that this downturn will leave on the economy and the housing market will be long lasting and persist in nearly all facets of the housing industry, including the demand for homes, ownership patterns, homebuilding, and house price appreciation,” the analysts forecast.
“It will take more than a decade for many measures of housing activity to regain ground that has been lost as a result of the correction: The intense downturn will overcorrect for the excesses in the housing market generated by the boom years,” they added.
…
“More than 10″
… Yeah, a lot more.
“‘It’s such a crazy market right now,’ said John Marcell, president of Upland-based Better Mortgage Brokers, who said bidding wars have discouraged first-time homebuyers and flooded the market with investors. One recent deal brought in 17 offers, he said. Ridding the housing market of unsold inventory is a good thing, but he said special consideration should be given to homebuyers living in the house instead of investors buying homes to rent them.”
Investors flooding in to compete with first-time buyers? That does not sound much like my impression of the Ownership Society concept. Do the investors think real estate is always going up again? If not, why are they eagerly catching falling knives? And are they getting crazy loans to finance their purchases, similar to back in 2005?
Here’s my thing:
If investors are paying more than house-livers are willing/able to pay, then to whom do they think they will be selling/renting these houses? Other investors?
Speculative. Bubble.
Hey Big V — Sounds like we will be enjoying cheap rentals for the foreseeable time horizon!
I have no idea who these “investors” are, or what they think they are doing, but I don’t understand the urgency to hurry up and overpay for low end housing. The mania continues.
The Obamanites have missed a one-time opportunity at financial reform. Or perhaps that was the whole point of green shoots — to eliminate the political pressure for meaningful financial system reform?
Capitol Report
Sept. 18, 2009, 5:27 p.m. EDT
G20 has run out of gas
Promise of reform of financial system stalls as recovery arrives
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) — The Group of 20 leaders may strut and preen next week at their summit in Pittsburgh about how they saved the world economy and made sure a crisis never happens again, but many analysts have already turned their backs on the group, convinced no serious reform plans are on the table.
“The air is seeping out of the G20 balloon,” said Jeffrey Garten, the former dean of the Yale University business school and a top international economic adviser to President Bill Clinton.
The Group of 20 has superseded the Group of Seven as the premier semiannual gathering for the heads of state of the major economies.
“The further away we get from the epicenter of crisis, the less likely the G20 is to coalesce around anything that has any teeth,” Garten said. “I think the real danger here is almost nothing done to prevent another financial crisis from coming down the pike.”
Uphill battle: G20 leaders, experts say, will be hard pressed to achieve any substantial progress at the Pittsburgh summit. Shown: Pittsburgh’s Duquesne Incline.
Simon Johnson, a former chief economist at the International Monetary Fund and now a professor at the Massachusetts Institute of Technology, called the Pittsburgh summit “largely a smokescreen to look busy.”
“There is nothing in the works to defang the financial system,” Johnson said.
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The patient still lies bleeding perfusely as the IV bags are replaced with fresh blood. No effort has been made to suture the wounds. Meanwhile “Mission Accomplished” is celebrated in the ER with a round of champagne and high-fives.
Band-Aids are an inferior treatment for gunshot wounds.
Listen up folks….
I’ve alluded to it before and many others have suggested shadow inventory but I’ve haven’t seen any first hand evidence of it until the past few days.
I monitor REO lists daily for say…. the past 2 years. Late last winter and very early spring I noticed some classier shacks of all stripes showing up. About May/June they dropped from the rosters fairly quickly which I took as sales… Hell, we heard from the goddamn lying realtor scum that “the market is picking up”. Well guess what’s showing up on the REO rosters again??? You guessed… these same shacks that disappeared earlier in the year and at significantly lower prices.
I don’t pretend to know what’s happening aside from the fact that these banking pirates are playing games but it seems to me that the housing collapse and REO inventory is static at best and likely growing rapidly. It’s important to remind myself there is no better time than now to be deliberate, cautious and fully armed with CURRENT market conditions.
Carry on.
No different from when you go into a model home, and they have that cute little display model of the development (all covered in astroturf) with all the red “sold” buttons. Funny, every time I go to some model home like that, they only have 2-3 lots available even though the project has been rotting the last 3 years.
“You guessed… these same shacks that disappeared earlier in the year and at significantly lower prices.”
- Where were they over the time between when they disappeared and when they reappeared?
- Was the bank simply not reporting all their REO to mislead would-be buyers into thinking that inventory was drying up?
- Is this illegal, or does it just take the appearance thereof to an honest person?
And, the advertisement says ‘REDUCED’ ,(when in truth, the price is the same or higher). It’s called Realtor hype 101.
In my neck of the woods….errrr…..or swamp….which is the Treasure Coast of Florida….I see them playing a game of musical houses. Houses are for sale, then go off the market, then back on the market. Same houses that were for sale, signs come down, and the house sits empty with grass growing for months. Then suddenly someone mowes the lawn and a sign goes back up. I see this all over the place. Someone doesn’t want you to know they aren’t getting sold. Finally am seeing some foreclosure notices on some houses that have just sat for months and months. The banks just letting them ride.
People are crazy about the 8K. I also have decided to not buy. I want to see this play out. What happens after the gov. incentive is taken off the table.
I think they know the markets will continue downward. They just want the collapse to be managed. I expect a year from now prices will be down. Supply and Demand….somewhere down the road the markets have to acknowledge the truth.
“People are crazy about the 8K. I also have decided to not buy. I want to see this play out. What happens after the gov. incentive is taken off the table.”
Easy. The govt renews the incentive and raises it to $15K. And I hope removes the income cap and restriction to 1st time buyers (my 3 years is up in April, so I can wait if it isn’t). A lot of people getting the $8K will be kicking themselves for missing out on an extra $7K.
For the record I am opposed to any govt incentive on principle. But if the govt will send a $15K check to me for doing something I would have done anyway, I won’t send it back.
I’d have liked a $15K incentive as opposed to an $8K incentive, but the ancillary benefits to buying when we did (i.e. SLEEP*) are actually worth far more to us than the cash. And hey! We actually ran the numbers and only looked at houses we could comfortably afford; our PITI is barely more than our rent (and we’d been holding a portion out of income for that purpose.)
*Long story short: Toddler has his own room now, sleep training took like a dream. Never underestimate the value of a kid sleeping through the night.
Is it true that everybody wants de 8k… Government already told about the debt of money because of this credit for the people. But I don’t know that this is helping too much.