The Housing Bubble

Readers suggested a topic on taking it to the streets. “Talk talk talk about how bad real estate is, about how anyone who bought during the boom was stupid, how the fundamentals demand a 50% price correction, and how this is certain, the only question is when. Do this over and over and over and over, to anyone within earshot. Get this buzz going so loudly that even the deaf MSM becomes aware of it. In other words, break the illusion that all is well and this is just a blip.”

“If you do this incessantly, and if after this you still want to buy something, prices should be within reason. But, you may have to be willing to continue to take losses for awhile, because prices will probably over-correct and if you buy on the way down, it may continue going down even lower than fundamentals suggest.”

A reply, “I’ve lost friends not because I’ve spoken out about housing but simply because they’ve been irked I haven’t bought yet. I started getting reports this summer about someone making snarky remarks to mutual friends and the thing is it wasn’t behind my back. They were just as eager to confront me head on as if it made any difference in their life. This was the million dollar home purchaser. She said they had to stretch to buy and yet she got very agitated that I was waiting.”

“In my circle, speaking out about the housing syndicate would be tantamount to taking all my clothes off and waving a flag on the steps of town hall. It couldn’t rid me of friends and associates fast enough.”

“What I’m saying is it’s not time yet. Not time at all. As long as central banks apply all the band-aids and paper clips to keep the Ponzi going, people just won’t allow themselves to focus on the full picture. Or maybe they sort of allow themselves to see it in the middle of the night but if everything they’ve got is riding on the game being true, they don’t want to hear anything to the contrary.”

Another said, “I’m thinking the real ‘oh sh%t’ moment won’t happen until 2015. This is far enough in the future to bankrupt many of today’s speculators counting on 2005 prices in 2015 to make their ‘investments’ whole. Around this time the truth should then be plainly visible that housing is not a real investment and should generally be a minimized expense. By then rational expectations should have taken hold that housing will either a) lose money, or b) stay roughly in line with inflation, some key locations being excepted.”

“All around I’m hearing talk about ‘it’s a great time to buy, etc.’ This kind of talk was also heard in 2009 and look what has largely happened since then. If this is a 9-inning ball game, we’re probably still in the top of the 4th.”

One had this, “The truth will be plainly visible that 1/3 of the population can’t retire and expect all current workers to pay for it when the jobs are gone. And voting ourselves benefits we don’t want to work for is a lame way to run a Country. I don’t talk about it much I don’t need any more weirdness after all I moved back to S. CA, although Phoenix was worse about buying not buying.”

“I think here in S. CA, they just think I’m poor. In Phoenix they were younger and dumber in general and needed the comfort of the herd all going down together. You don’t need friends like that.”

And finally, “I’ve been talking for about 7 years now. What if *I* still want to buy something?”

The Frederick News Post in Maryland. “Frederick County had 76 foreclosures in November, up from 55 in October and 52 in November 2010, according to RealtyTrac. Home sales in the county were 177 for November, down from 183 in October. More than 168 homes sold in November 2010. Gloria Castle, president of the Frederick County Association of Realtors, said via email that while local sales were down in November, only 40 percent were foreclosures. Castle also said the inventory of homes on the market was down in November from a year earlier.”

“That inventory, 1,054 in November, doesn’t include the ’shadow inventory’ of potentially distressed homes, said Buzz Mackintosh, co-owner of Mackintosh Inc. Realtors, via email. Mackintosh said Standard & Poor’s defines the shadow inventory as a property 90 days or more delinquent on mortgage payments, as well as those already in foreclosure or are already in the hands of the lender. ‘A lion’s share of that shadow inventory is most likely not in Frederick County, which would be good news for our local real estate market,’ Mackintosh said.”

The Desert Sun on California. “The number of scheduled trustee sales in California last month climbed 14 percent to 26,509, marking a 10-month high and helping the state maintain the second-highest foreclosure rate behind Nevada. Notices of trustee sales are the final step before homes with delinquent mortgages go to auction.”

“More than 5,300 new default notices were mailed to homeowners in the region in November, a 35 percent year-over-year increase. Not since November 2009 has the region seen a year-over-year increase in foreclosure activity, RealtyTrac reported. James Saccacio, RealtyTrac co-founder, said the ‘bellwether states’ of California, Arizona and Massachusetts all posted year- over-year increases in foreclosure activity.”

“Many real estate experts anticipated that filings would jump as lenders and mortgage servicers began ending the voluntary suspensions of foreclosure actions that they initiated in late 2010. Lenders that put temporary holds on foreclosure filings have been resolving problems with processing and paperwork, said Bret Cohn, senior VP with Franklin Loan Center in Palm Desert.”

“Other, seasonal factors likely contributed to November’s increase in foreclosure activity, said Jim Franklin, president of the Palm Springs Association of Realtors. ‘In November, lenders file more trustee sales notices so they’re ready to go in January,’ Franklin said. ‘I think the banks are more sensitive about not taking somebody’s house at Christmas.’”

The News Press in Florida. “The 20th Judicial Circuit in Lee County and other circuits across the state are in a tizzy over how to proceed in the wake of the Florida Supreme Court’s decision Monday to terminate the state’s mandatory foreclosure mediation program. ‘Literally everything across the state is upside down,’ said Jonathan D. Conant, president of the Conant Mediation Center, which manages the state program for the 20th Judicial Circuit, which covers Lee, Collier, Charlotte, Glades and Hendry counties.”

“The termination of the mandatory program comes on the heels of an October review of the program by an assessment work group created by the Supreme Court, recommending that the program be stopped. ‘It was the consensus of the work group that the emergency in residential mortgage foreclosure filings that occurred in 2008-09 continues to exist as an emergency in pending foreclosure cases,’ the report says. ‘There are now approximately 350,000 backlogged foreclosure cases in the circuit courts.’”

“There were 1,426 cases referred to Conant Mediation Center. Of those, the mediation center was able to contact 832 borrowers. ‘Others ignored us or thought we were bill collectors,’ Conant said.”

“Of those 832 borrowers, 337 cases were scheduled for mediation. Of those 337, a total of 269 actually took place. Of the 269 cases, 80 reached agreement.”

The Miami Herald in Florida. “‘I don’t think any real rebound is going to happen until at least 2013,’ said Jack McCabe, CEO of Deerfield Beach-based McCabe Research & Consulting. ‘Right now we have 371,000 open foreclosure files in Florida, and you have 800,000 mortgages that are 60 days late or in default. I don’t see the market rebounding for at least two years.’”

The Dover Post. “Delaware lawmakers passed a package of legislation in July that now requires for an automatic mediation program when a complaint for foreclosure is filed. Attorney General Beau Biden said it is imperative that discussions take place face-to-face between the lender and the borrower before the property is foreclosed upon. ‘This isn’t about someone getting away with not paying their mortgage,’ he said. ‘It brings the two parties together to discuss and set terms in which everyone is satisfied.’”

“Each of Delaware’s three county sheriffs are reporting an increase in sheriff sales for 2011, with a majority of those properties being mortgage sales. Both New Castle and Sussex counties saw an increase of more than 400 sales in 2011 compared to the previous year, and Kent County’s sales has nearly quadrupled since 2010. New Castle County Sheriff Trinidad Navarro said it is often hard to predict how many sheriff sales the county will process year to year.”

“‘We make projections based on historic numbers, but the numbers now are unprecedented,’ he said. ‘The reality is there’s still no end in sight.’”