Creating The Illusion
Readers suggested a topic on perception. “Do people want to be lied to? I look at the debt overhang with this economy, and realize it’s going to be tough sledding until we get out from under it, perhaps for a generation. In state and local government, I see the crushing burden of past debts and pensions. And yet no politician is willing to say ‘here is the reality, let’s work together and deal with it.’ It’s like ‘elect me and I’ll fix things.’ But you can’t make the past go away. Romney is being dishonest. Obama should have been making ‘blood and tears’ speeches for the past four years, but went with happy talk instead.”
“I own an overpriced house. Worth over $1 million, in theory, in a neighborhood traditionally occupied by civil servants and small shop owners. I’ve got one kid in college and one going in. At these prices, they can’t live here. Friends have moved away because they didn’t buy before the bubble. The only people who benefit from this are those who cash in and move to Florida. That cash pumps up the economy of Florida, while the excess debt on the buyer cripples the consumer economy of New York.”
A reply, “Humans have an innate sense of what is just and what is not, and THAT plays against their innate greediness. Somewhere between the two, the manipulative wreak their mischief. No one WANTS to be lied to, but our small vanities prevent us from recognizing when we are. Hence the rationale of politics.”
Another had this, “Hearing what you want to hear may be the truth on occasion. Often it isn’t. Often the truth (this is going to cost a lot, you can’t get the good deal with that credit score/small down payment/whatever, there aren’t any tickets left) isn’t what you want to hear. But every once in a while, the truth is what you want to hear. The determining factor is whether it is what you want to hear, not whether it is untrue.”
A reply, “Well…nobody asks to hear a lie that they didn’t want to hear. And everybody is happy to hear the truth that they do want to hear. So we’re really just choosing between lies we do want to hear and truth that we don’t want to hear. Tons of people seem to prefer the lie.”
The Guardian. “A national campaign representing more than 50,000 families caught up in America’s foreclosure crisis has been launched, with the aim of making mortgage relief a key issue in battleground states during the 2012 election. The Home Defenders League plans to be active in 17 states across the US recruiting members via phone and door-to-door campaigns. Staffed by people who themselves are suffering from foreclosure, the HDL wants to create a powerful lobby in swing states like Florida, Colorado, Nevada and elsewhere.”
“It is planning to tap into some of the 15.7 million American homeowners suffering from foreclosure or whose houses are ‘underwater.’ It seeks to vet politicians on their attitudes towards a policy of resetting mortgages at current market levels, arguing such a move would keep families in their homes and provide a stimulus to the economy. ‘This country needs this. It is not just about helping struggling homeowners, it is about fixing our country,’ said Amy Schur, head of the Alliance of Californians for Community Empowerment.”
From OpEd News. “Don’t get snookered by the ‘housing prices have hit bottom’ hype. It’s just another scam to lure people back into the market. The only reason that prices aren’t still plunging, is because the banks have slowed the foreclosure process to a crawl to decrease supply. It’s all about creating the illusion of a ‘bottom.’”
“But, if you absolutely ‘must’ buy a house, then at least consider this tidbit from Abigail Field over at Firedog Lake: ‘Phoenix: RealtyTrac identifies 6,611 ‘bank-owned’ properties there. An Arizona realty website lists only 275 for sale. Similarly, Yahoo real estate claims there’s over 8,000 foreclosure properties in Phoenix, but Realtor.com lists less than 4,000 homes of any type. AZHomeonline.net lists a bit over 4,000, plus 312 foreclosures and shortsales. So are the foreclosures in Phoenix on the order of 300 or 6,600? Makes a wee bit of difference when the non-’distressed’ market is about 4,000, don’t you think?’”
“‘Phoenix isn’t the only place where banks are holding properties off the market. In Portland, Oregon, banks aren’t selling 80% of the homes they own, The Oregonian reports. All the bank owned inventory statewide represents more than a year and half’s supply of houses all by itself, according to a RealtyTrac executive quoted in the piece. If the housing inventory is that distorted in Oregon, what’s it like in the hardest hit states?’”
“Now check this out from CNBC: ‘Foreclosure activity in April fell nationally to the lowest level since the summer of 2007, but government intervention and the recent $25 billion mortgage servicing settlement are now changing the face of the crisis.’ Jeez, they’re running out of houses. I guess I’d better go out and get me one right now!”
“So, the question is: When are the banks going to put more of their distressed inventory on the market? Answer: No one knows for sure. But when the government and the central bank are on your side, then there’s no hurry. You can take your own sweet-time and drag the Depression out for ever.”
From SmartCompany. “Approximately 99.7% of the earth’s people believe Australia is the strongest, wealthiest, most fortunate nation on the planet. The 0.3% who do not believe it are all Australians. We rank at or near the top for economic prosperity, standard of living and personal wealth. That’s how it looks from the outside looking in. But Australians refuse to accept it. We’re a boom nation with a recession mentality.”
“How did we get to be so pessimistic amid so many reasons be bullish? How did a nation that embodies confidence and success in so many spheres – notably in sport and in entertainment – manage to develop such a massive dose of the sulks? Here’s a plausible explanation, one that speaks directly to the real estate industry.”
‘We are infested with politicians, industry associations and business leaders who seem determined to talk us into a recession. There is no greater example of the problem that the housing sector. For years the HIA has been trying to extract concessions from government by pumping out ‘crisis’ media statements on an almost-daily basis. We have an affordability crisis, a housing shortage crisis, a red tape crisis, a taxation crisis. Even positive data has been twisted into a tale of pessimism.”
“Australians are out there buying homes and investment properties again – and markets are rising. But they’re not building new homes, they’re buying existing ones. Why would anyone want to build when the HIA keeps telling them the industry is stuffed and their products are too expensive? The only thing that’s collapsed is common sense and sound judgment at the HIA.”
“They should be selling the benefits of building new homes. They should be highlighting the areas in Australia where the economy is strong and business is good.”
From Kuensel Online. “This week the central bank, having exhausted its Rupee borrowing limit of INR 10B from the State Bank of India, had to borrow INR 2B from the Punjab National Bank of India at a higher interest rate to replenish domestic banks that had run dry of Rupee to facilitate payment of import from India, Bhutan’s largest trading partner. Now almost 12 weeks since the central bank tightened credit, land prices in Thimphu and other urban centres are showing signs of falling. This is significant because land prices in Thimphu have always been appreciating and accelerated in the last decade.”
“Just as easy credit helped fuel speculation and pushed land prices to ridiculous levels all these years, the absence of money in the market is having the opposite effect. With loans no longer easily available landowners are willing to let go off plots here and there to complete a construction or repair one, educate children, buy a car or a truck or machinery required for an ongoing project.”
“Whether people selling land at lower than market prices represent a few desperate cases or is the beginning of a trend remains to be seen. But the fact that sellers are willing to go below is a clear indication that land in Thimphu is way overpriced. Overpriced land has its baggage in terms of unaffordable housing, which rides on an ever -increasing population gathering at urban centres.”
“Years ago when rent control measures were proposed the banks were the first to object, apart from real estate owners, because they could go bust if hundreds of housing loans clients defaulted in repayments if rents did not catch up. The crunch just may be a blessing is disguise.”
Let’s see.
“Civil servants” meaning union goons
With golden pensions. In an insane tax state run by the union goons.
What is the first thing they do? Move to a low tax state!
———————–
“I own an overpriced house. Worth over $1 million, in theory, in a neighborhood traditionally occupied by civil servants and small shop owners. I’ve got one kid in college and one going in. At these prices, they can’t live here. Friends have moved away because they didn’t buy before the bubble. The only people who benefit from this are those who cash in and move to Florida. That cash pumps up the economy of Florida, while the excess debt on the buyer cripples the consumer economy of New York.”
My wife is a civil servant. She is neither a goon nor in a union. She doesn’t have a pension waiting for her, just a 403b.
Would you mind canning the insults?
You may as well get used to 2banana’s pathological Republican bigotry or just ignore his post. He’s part of the Republic army of bigots who can’t stand to have a black president.
I think it should be a DUMB black president just like we had a DUMB black mayor ….
Ohboozos legacy will be the Death of political correctness…have Holder appoint people to prosecute leaks in the WH, but no bankers go to jail….no clawbacks of illegal bonuses….just so wrong….face it YOU were Duped!
who can’t stand to have a black president.
“He’s part of the Republic army of bigots who can’t stand to have a black president.”
Would you support a black neocon?
I’m no fan of neocons, regardless of race, creed or national origin.
I feel the same way about communists.
“I feel the same way about communists.”
Ditto.
MEGADITTO!
“union goons”
You can look forward to a curtailment of vital government services from some of America’s most dedicated and upstanding citizens (firemen, police and school teachers) if 2banana’s candidate gets elected. But at least the 1% will get to keep more to themselves.
Democrats say Romney doesn’t support firefighters, teachers, police
Decision 2012
Gregory Wallace
POSTED: Saturday, June 9, 2012 - 3:00pm
UPDATED: Saturday, June 9, 2012 - 3:04pm
NATIONAL NEWS (CNN) — President Barack Obama’s presidential campaign continued to pounce Saturday on Mitt Romney for his comments opposing more stimulus measures, claiming they show the GOP presidential candidate isn’t on the side of teachers and first responders.
Jumping on Obama’s assertion on Friday that the “private sector’s doing fine” - which he later dialed back - Romney said at a campaign event later in the day in Iowa that the president is “pushing aside the private sector” in favor of more government. That includes supporting economic stimulus measures that helped cash-strapped local governments pay the salaries of some public employees.
“He wants another stimulus. He wants to hire more government workers,” Romney said. “He says we need more firemen, more policemen, more teachers. Did he not get the message of Wisconsin? The American people did. It’s time for us to cut back on government and help the American people.”
…
Only to a union goon:
If we don’t give firemen $200,000 pensions then we don’t support them.
Etc.
Give it a rest.
“Give it a rest.”
Black pot, meet Mr. Kettle.
You had to lead off with this, didn’t you? Real union goons are so far in the past they might as well be dinosaurs.
I’ve been a “union goon” now for about 30 years. The musician’s union is so weak, it can’t even provide enough of a funeral benefit to bury a deceased member.
Yup, that’s my mother. A retired union goon.
Mom taught public school for 22 years, and Dual Banana Person, I hope the two of you never come face to face. ‘Cause she whup you but good.
The obama free sh*t army on the move and wants even more.
Do they really think if this starts that everyone will just stop paying their mortgage to get some of that obama free sh*t money?
Reset mortgages to current market levels? Does that also work when prices go up? You “make” $30,000 in equity so your mortgage goes up $30,000? Why not? Seems only fair.
How about you pay what you promised to pay? Oh - that would be an evil conservative position.
Oh - you renters and those with paid off mortgages - FU.
It seeks to vet politicians on their attitudes towards a policy of resetting mortgages at current market levels, arguing such a move would keep families in their homes and provide a stimulus to the economy. ‘This country needs this. It is not just about helping struggling homeowners, it is about fixing our country,’ said Amy Schur, head of the Alliance of Californians for Community Empowerment.”
How about you pay what you promised to pay? Oh - that would be an evil conservative position.
Does that include states who promised pensions to their workers in exchange for lower pay?
Ox-
Over time, and in many cases, the pensions have gotten out of hand. Jerry Brown has proposed pension reform in CA (curtailing pension spiking, and other ridiculous practices, etc.). It has gone nowhere with the politicians in Sacramento.
People are fed up with the excesses.
You don’t get more than 2/3s of voters in San Jose, CA (a strong Democratic voting block) voting to cause union members to pay more into the system if things are hunky dory.
Stockton is going bankrupt in part due to a union contract where people got healthcare FOR LIFE with as little as ONE MONTH of service. There is no scenario that I can imagine that makes that reasonable, except one with stupidity/corruption negotiating for the City, and one of greed negotiating on behalf of the unions.
Rental, can you support those statements with #s, facts, actual links?
Doubtful Stockton is going bk due to unions. Seriously..
I burned some butter on the stove this morning, didn’t mean the house burnt down.
http://m.recordnet.com/apps/pbcs.dll/article?AID=/20120603/A_NEWS/206030309/-1/WAP&template=wapart&m_section=WAP
“Pay As you Go” healthcare will cost about $18MM next year. Stockton’s shortfall is ~$26MM.
http://www.publicceo.com/2012/06/in-stockton-bankruptcy-pensions-may-not-be-cut/
“Stockton may use bankruptcy to cut generous lifetime health care promised retired city employees, which the council was told will soon cost more than health care for current workers.”
Reference to $26MM shortfall as well.
Here they note annual healthcare costs being only about $14MM.
http://www.recordnet.com/apps/pbcs.dll/article?AID=/20120523/A_NEWS/205230326
The important part:
“Retirees in all but two labor groups had no minimum years of service to become eligible for lifetime health care, the city report says.”
No minimum years of service for lifetime healthcare. Unbelievable.
I’m not saying the healthcare is the only reason Stockton is filing BK, but it appears to be a significant part of the $26MM shortfall (and thus my words “in part”).
If you want to see the rest of the things the City did wrong, here it is:
http://www.stocktonfirefacts.com/?page_id=33
I’m guessing you don’t need links to the San Jose vote or Jerry Brown’s non-progress on reform…that seems to be pretty common knowledge.
The real “free stuff” army consists of too-big-to-fail banks allowed to borrow at zero percent interest and invest in Treasuries. Try posting on that sometime.
The lost 20 years comes to mind…
“So, the question is: When are the banks going to put more of their distressed inventory on the market? Answer: No one knows for sure. But when the government and the central bank are on your side, then there’s no hurry. You can take your own sweet-time and drag the Depression out for ever.”
—“A national campaign representing more than 50,000 families caught up in America’s foreclosure crisis has been launched, with the aim of making mortgage relief a key issue in battleground states—-
How’s dat saying go, da one mis-attributed to de Toqueville?
“When the population of a democracy realizes it can vote itself largesse, then the democracy is doomed, and dictatorship arises”.
Or somethin’ like that
“banks have slowed the foreclosure process to a crawl to decrease supply”
How can they do this unless there is massive collusion, with possibly the fed?
I mean, if these were little or regional banks, wouldn’t they want to get in line first?
I can’t believe how screwed I’m feeling lately, and it’s doubled since I don’t know how to make that screwed feeling count with my vote.
I’ve gone into this at length. It wouldn’t take massive collusion, just Fannie Mae, Freddie Mac and HUD could accomplish what we are seeing. Since none of these three really care about the bottom line anymore, ‘getting in line’ could be outweighed by political considerations.
But as to the perceptions concept, I thought this fit with the question, ‘Do people want to be lied to.’
Pretty much everything for sale here in Phoenix is short sale.
Either the other inventory is already gone, or it is being held back. I have no idea which.
“Since none of these three really care about the bottom line anymore…”
That is quite the understatement! The GSEs have already eaten through $190 bn of the $400 bn the Treasury Secretary allocated to them a few years back.
Bloomberg
Geithner Adviser Says Options for GSE Reform Need Further Study
By Clea Benson - Jun 1, 2012 11:16 AM PT
All options for overhauling the U.S. system of housing finance pose challenges and need further study, an adviser to Treasury Secretary Timothy F. Geithner said today.
…
Fannie Mae and Freddie Mac have been operating under U.S. conservatorship since investments in risky loans pushed them to the brink of insolvency in 2008. The two companies have relied on almost $190 billion in taxpayer aid to stay afloat.
Don’t forget the Financial Accounting Standards Board AKA FASB. These are the guys that really set the rules about how debt is carried on the balance sheet. They are the Supreme Court of the accounting world from A to Z and it’s their rulings on mark-to-market that have allowed most of the housing stock to be held off the market. When you think about it, they are almost as powerful as the FED.
“I’ve gone into this at length.”
Thanks for the remember — in my haste and frustration I forgot.
reminder
Where is Mr Potter when you need him?
Here he is! Meet Wendell Potter, the Benedict Arnold of the insurance industry.
I have been reading a few things about the Economist Profession.
If you have a PhD in economics, it seems your career options are limited to:
1) The PR Tool. The public relations department of your private employer tells you what the conclusion is and writes your press release. You then develop a model that supports the desired conclusion.
2) The Political Hack. Polling data is used to discover what voters want to be true. Lobbyists give money and tell you what they want. The press department of the political entity you work for writes the conclusions that meld the voters’ desires and the lobbyists’ desires. You then develop the model that supports the desired conclusion.
3) The Academic. You get a job teaching at a small, unknown school. If you want to ever promote above underpaid, overworked teacher, you need to be published. To get published, you figure out what conclusions readers of financial magazines want to be true. You then develop models that prove those conclusions correct.
4) The Cog in the Grinder: You actually start with the data and develop conclusions about markets, and use those conclusions to develop proprietary analytical trading algorithms that you hope will let you manipulate markets to generate large profits for your employer, without actually producing anything of value other than “bringing liquidity” to markets by snagging a piece of other peoples’ pie.
People may not want to be lied to, but it certainly seems to be the implied job description of the Economists.
Professors don’t get promoted by publising in financial magazines. Only by publishing in professional publications in the technical journals of their trade. You get to publish in the financial mags (presumably they pay) as a reward for having slogged through the other stuff.
You have a strawman bullsh!t version of reality, which fits in perfectly on this thread!
A friend of mine has a PhD in an offshoot of economics (an extremely analytical side of econ). At one point she was offered a position at a major pharma to be part of their decision analysis team (ie. to choose the direction of the company’s development pipeline). Not a cog there, one of the drivers of the machine.
“It is planning to tap into some of the 15.7 million American homeowners suffering from foreclosure…”
Is someone who stopped paying his mortgage and was evicted in a foreclosure procedure technically still a homeowner?
Loan Purchases by the GSEs Plunge
Forget the national jobs report for a second. The mortgage industry may have another problem on its hands: originations as measured by Fannie Mae and Freddie Mac acquisitions in the secondary market took it on the chin late this spring.
Fannie Mae bought just $52 billion of home mortgages from its seller/servicers in April, a 45% plunge from March, according to new figures released by the GSE. Freddie Mac bought $26 billion of loans, a 39% decline from March.
…
didn’t they up the fees? Maybe more people are going conventional to avoid the fees.
No, that was FHA. FHA imposes two fees: one is FHA version of PMI, and the other is some funding fee (I never quite understood it) which you pay every month. The PMI goes away when you hit 22% equity, but the fee never does.
Contrary to popular belief, Fannie and Freddie have tightened up considerably in the NEW mortages they buy. At least they did for me. My loan officer admitted that they were going to sell my mort to Fannie immediately, and that a lot of the hoops I was jumping through were to satisy Fannie. It was the loose paper of 2008-2010 which they bought, which is doing them in.
‘It was the loose paper of 2008-2010 which they bought, which is doing them in’
They both stopped issuing financials in 2005. It wasn’t because their computers went down. They were broke. And I documented that the govt plan to put them in receivership was worked out in spring 2005.
Speaking of tight inventories, my son’s trumpet teacher is downstairs giving a lesson. He and his wife are temporarily located nearby, while they try to buy a home closer to our area (and his wife’s job) than where they lived over the past several years in the SDSU area.
The word is that it is very hard to close, as very few homes are on the market, allowing the seller to drive a hard bargain. I just checked on Redfin to confirm, and it turns out there are all of 6,060 homes currently listed for all of San Diego County (SFRs, condos and town homes) during what is normally the peak of the red hot spring sales season. By comparison, back when I first started paying attention, inventory numbers in the 13K+ range were normal.
It appears the banks have successfully manipulated inventory down to a level roughly proportionate with the rate of home sales. Any thoughts on who controls San Diego MLS inventory, and how?
CIBT,
I’d like to make a very important point:
1. Historically, bank sellers represented a very small percentage of homes on the market;
2. REGARDLESS of whether or not banks or holding back inventory they control, the low levels of inventory is a sign that there are very few non-distressed sellers willing or able to sell at current prices.
When distressed sales leave markets (whether real or artificial), we are going to find supply collapsing into the price bottoming process.
Prices will only resume their march downward if the market is flooded again with distressed sellers. This can only be the case if that particular market actually has distressed inventory on the books and is potentially released.
I know in my immediate neck of the woods (the City I live in), there is no such shadow inventory (less than 25 bank-owned homes, less than 25 in pre-foreclosure, less than 50 in the foreclosure process). In San Diego County, total REO appears to be about 4,600, down from about 6,600 last year, and falling by ~350-400 per month.
Even if all the REO were put on the market tomorrow, it sounds like San Diego County would STILL be below normal levels. It seems like the answer to your last question is largely San Diego County homeowners, by simply not wanting to sell today.
I am a firm believer that there will be an end to the distressed selling…it will happen over time. If people are in the market to buy, in a market that has seen a mini boom, and they wait for a re-crash (and actually see the re-crash happen), they should jump on the opportunity to buy. This shrinking of inventories will happen again, once the distress leaving the market is real and lasting.
One more quick point. If a market starts to have price increases, those price increases will begin to shrink further the already shrinking numbers of new problems entering the foreclosure pipeline. The cycle of negative feedback loops will begin to be broken.
“…very few non-distressed sellers willing or able to sell at current prices.”
I think I understand ‘willing to sell’ but not ‘able to sell’; please explain if you do.
That said, my view of the dearth of homes for sale is that potential supply is being manipulated from high up in the system to be held off the market ‘until prices come back.’
What if prices don’t come back? Look no farther than Japan if you don’t believe that is a possible eventuality.
“Able”=”underwater, still paying their mortgage, but can’t write the check to sell at today’s prices”
If you believe the US still has a growing number of households (San Diego as well), and if prices don’t come back, then we should see the lack of supply of existing homes for sale result in new homes of various types being built to meet the demand from new households.
That is, of course, unless the market you are in has a lot of empty inventory (ie. high vacancy rates; generally not the case in California), or if it isn’t economically feasible to build new homes. This last point–economically feasible to build–is why I’m waiting for someone to share stories of builders buying raw land, putting in the infrastructure, and building new homes.
Eventually either a) it becomes feasible to add more inventory, or b) no new homes will be built. My assumption is that “a)” will eventually become true. This will happen when either prices rise to a level that makes sense to add new inventory, or the cost to build is at a level where builders can go from raw land==>new home at prices competitive with the current supply.
CIBT, can you explain “from high up in the system”? Are you suggesting REO held on the books of financial institutions and Fannie/Freddie/FHA?
Or that, PLUS banks slowing down the foreclosure process (to reduce the amount of REO that ends up on their books).
I suspect your answer is “both”.
In California, the data doesn’t appear to support that explanation.
If banks were not pushing homes into the foreclosure process, you would expect to see more and more delinquent mortgages in CA. This is not the case:
Delinquency rates peaked in CA at 11.8% in February 2010, according to LPS, and are now at 6.4% (in the state of CA).
If banks were holding inventory, you would expect to see REO numbers continue to grow. This also doesn’t appear to be the case:
REO according to Foreclosure Radar in CA was at 108k a year ago, now at 82k homes. I don’t know what the peak was, but it appears as though more is leaving the pool of REO than coming in.
IMPORTANTLY–if the delinquency rates from LPS are accurate, and banks are NOT holding onto inventory longer than they need to in order to sell, then we should see an acceleration downward in the number of REO held by financial institutions (fewer new homes landing on the books with the same number exiting). This appears to have happened recently in 2012. Last year this time, REO inventories were falling by ~1k per month, in Q1 2012, they started to fall faster, by 3-5k per month. I am not yet convinced that the trend will be sustained, but I am watching carefully to see if this trend downward continues…the update for the month of May should be out next week on Foreclosure Radar.
If Fannie/Freddie were holding inventory, you would see it show up in their books (unless they are defrauding all of us…not unheard of). This also doesn’t appear to be the case:
In Q1 2012, Fannie “acquired” (took onto books as REO) 3,829 homes in the state of CA, and “disposed” (sold as REO) 6,187 homes, with a new number of homes on their books of 11,789 as of the end of the quarter. The peak REO on their books according to their records was 21,800 as of the end of Q1 2011.
I understand the en masse withholding of inventory by financial institutions is a common belief on the board…I haven’t yet seen data to support that view…at least with respect to California or Arizona.
This all leads to a good set of questions:
There can only be two explanations for the lack of distressed inventory; 1) financial institutions are purposefully holding back inventory; or 2) there is simply less distressed housing out there to be sold. Those in the bear camp point to #1…those in the bull camp point to #2. If financial institutions are holding back inventory, where would this show up in the data? If it isn’t showing up in the data, why not?
I have yet to see a data driven argument for #1 (it’s all been anecdotal, and gut feel). Can someone help me build that argument?
‘In San Diego County, total REO appears to be about 4,600, down from about 6,600 last year, and falling by ~350-400 per month.’
What about San Diego County homes where the owners stopped paying their mortgages, their taxes, or both? Is that counted as REO, even if the banks have taken no foreclosure action?
I’m going to guess no, and further guess that the number of homes in mortgage or tax default which is not yet REO far swamps the 4,600 official figure you mention. I don’t know how others count shadow inventory, but I include homes which will eventually go into foreclosure, due to irremediable payment shortfalls. Given how bad the recession hit San Diego, and how crazy the bubble years got here, I have to go with my gut level belief that the eventual number of homes in foreclosure will prove ‘larger than expected.’
Not counted as REO. The current numbers for SD county (according to Foreclosure Radar) are:
6,447 (pre-foreclosure, NOD filed, but not yet scheduled for sale); and
6,548 (scheduled for sale, but not yet foreclosed)
Pre-foreclosures are down ~25% year on year, and scheduled for sale are down ~14% year on year.
I count shadow inventory generally as:
1. Non-current homes over and above what is around at a typical market (everything over 5%)…this includes everything from missing one payment, all the way to going to the courthouse steps tomorrow; PLUS
2. REO, on the books, but not yet sold.
As noted before, some homes will voluntary walk-aways and re-defaults post modification, but generally:
1. The longer we go, the fewer new walk-aways there will be;
2. More recent modifications have had lower re-default rates than the early ones.
Properties in Palm Springs are selling fast. And prices in some areas are increasing.
Don’t know about further down valley. Seems that there are few if any homes that are reo in PSP.
Still don’t understand why the REO market seems to have dried up.
Kind of like Twilight Zone around here.
Take a look at Foreclosure Radar for their hard data:
http://www.foreclosureradar.com/california/riverside-county/palm-springs-foreclosures/listings
Seems like a gradual slowdown in new REO, etc. Doesn’t seem to be a good reason for a sudden drying up of inventory.
How quickly are homes selling once they are on the market? If homes are selling more quickly, and there are fewer coming on the market each month (on the margin), as would seem to be the case from Foreclosure Radar, it would shrink inventory faster than the reduction in new REO would indicate.
Any anecdotal (or otherwise) information as to how quickly homes are selling?
With so many major players on the international playing field facing economic slowdowns, is it whatsoever plausible to even suggest the U.S. housing market has reached a bottom?
India’s slowdown
Farewell to Incredible India
Bereft of leaders, an Asian giant is destined for a period of lower growth. The human cost will be immense
Jun 9th 2012 | from the print edition
IN A world economy as troubled as today’s, news that India’s growth rate has fallen to 5.3% may not seem important. But the rate is the lowest in seven years, and the sputtering of India’s economic miracle carries social costs that could surpass the pain in the euro zone. The near double-digit pace of growth that India enjoyed in 2004-08, if sustained, promised to lift hundreds of millions of Indians out of poverty—and quickly. Jobs would be created for all the young people who will reach working age in the coming decades, one of the biggest, and potentially scariest, demographic bulges the world has seen.
But now, after a slump in the currency, a drying up of private investment and those GDP figures, the miracle feels like a mirage. Whether India can return to a path of high growth depends on its politicians—and, in the end, its voters. The omens, frankly, are not good.
…
What most people have difficulty with is connecting dots. I could do an entire blog right now on the housing bubble in India. Same with Australia, China and Canada, each. Some say the unemployment rate in the US is around 20%. Many European countries are even worse. Banking systems of entire countries are at risk of failing. Bank runs, riots, Goldman Sachs taking control of nations.
I read my paper’s business section every day — it largely consists of stories from the wire services. I do think we want to be lied to. The analysis is so thoughtlessly mainstream I ask how anyone can be paid to write it. We are standing on the cusp of such dramatic change, and we don’t care to know it.
Speaking of wire services, sources for information….
Yrs ago, night of San Fran earthquake, friend and I return from dinner and he, being major PC (originally Palo Alto) tech dude turns on his pc to which we see Reports just starting to report.
Lesson was that reuters, ap and all the rest took their info from each other. As we watched the feeds, the #s went up, down, sideways etc.. and all using info from the first “source”.
None of it was accurate or even Eye witness as was later pointed out. Thus, most of our “information” can possibly be the same thing. Telephone, telegraph, tell a friend.
“I could do an entire blog right now on the housing bubble in India. Same with Australia, China and Canada, each.”
Tunnel vision is a primary cause of economic collapses which nobody could have seen coming.
Nobody can accuse Romney of underestimating the economic ignorance of the average American voter.
Weak recovery
Obama’s blamelessness
Jun 4th 2012, 22:27 by W.W. | IOWA CITY
BARACK OBAMA botched the recovery. That’s the central claim of Mitt Romney’s campaign. If enough of us come to believe it, Mr Romney will win in November. However, the main determinant of the electorate’s ideas about Mr Obama’s culpability for the lagging recovery will not be the campaigns’ competing TV spots, but the performance of the economy itself. Of course, that won’t stop pundits from doing what they can to shift blame onto the other team. Every vote counts!
…
I figure Romney can blame obama for up to 4 years for a bad economy - just like obama blamed Bush.
Of course, Romney won’t have a super majority in the house and a filibuster proof senate for his first two years.
Isn’t it kind of silly to just blame the last 4 or even 8 years, when clearly the blame should be placed on the last 50 years?
And, if Republicans were blaming Obama after less than a year, would Democrats not be justified in blaming Romney after an even shorter amount of time?
And, tell me, exactly what is Romney going to do in those first 100 days? I mean, other than lifting government regulations to give businesses the right to burn, rape, pillage and plunder…. What is Romney going to do for the middle-class?
I know Obama sucks. Now convince me that Romney will not be worse!
“I mean, other than lifting government regulations to give businesses the right to burn, rape, pillage and plunder…. What is Romney going to do for the middle-class?”
Better the devil you know.
Better a man with no plan that a man with a really bad plan.
Counter with the political saw: “Take a position, any position, as long as it’s not the fetal position.”
I did see that last month Romney stopped in Florida, where he suggested that repeal of Obama’s Wall Street reform would give us the gift of higher housing prices. That reform is weak stuff, but if asset price growth depends on re-creating the pre-2008 environment, shouldn’t we be rethinking the way we do things?
This is not an endorsement of Obama’s housing policy in any way. I have come to the conclusion that the federal government should not have a housing policy, other than to prosecute fraud. And I am hardly a libertarian.
“…as long as it’s not the fetal position.”
Does this include the ostrich position (i.e. head buried in the sand)?
“I have come to the conclusion that the federal government should not have a housing policy, other than to prosecute fraud. And I am hardly a libertarian.”
I’m with you, but it appears we are in the extreme minority, and the Nation has a very long way to go before we are not.
To be honest, I think that government should offer some help to first time buyers. Real first-time buyers, mind you, not this three-year crap. Besides the touchy-feely stuff, there is some value in making a mortgage payment instead of a rental payment, especially when the rent goes up.
But once you’re on the property ladder, you’re on your own.
So you’re fontloading the excuses. Way to be a proactive partisan drone!
It is difficult for me to choose between two mediocre candidates when it seems to me to that we are really facing a horrible choice between extreme the elements of their respective parties. Neither party has a credible plan for growing the economy or curtailing the rapidly growing public debt and each side is bought and paid for by special interests.
The only thing that both parties seem to agree on is that continued warfare is good business.
Neither party has a credible plan for growing the economy
S. 3816. Eliminating tax cuts for moving jobs overseas. It was defeated.
If only we cleaned out the intractable republican congress…that would be a start.
When you have people who constantly dig their heels into the ground, stipulate constantly that they will never fix something that needs fixing because they don’t like someone, who CONSTANTLY take Vacation after vacation and
DO NOTHING, then possibly, they need to be ousted as ‘do nothings’.
Why are we constantly voting in these schnooks when they make $170k yrly, no ss taxes, make laws for US citizens that do not affect them, make money hand over fist with INSIDER tips, and get so many vacations that most cannot even come close to…?
They are on vacation Now. And then an entire month off in August, plus all the other weeks they get off. Why do they get paid so much?
“And yet no politician is willing to say ‘here is the reality, let’s work together and deal with it.”
Jerry Brown is giving it a shot. In January of last year, he said, ““These cuts will be painful, requiring sacrifice from every sector of the state, but we have no choice.” He is now asking Californians to vote themselves a tax increase and massive spending cuts in November. Barely more than half of the voters support it according to polls, and the support is slipping slowly. Point being, he did just that, saying in effect, “here’s the reality, let’s deal with it”. We shall see.
Our “worst president ever” Carter also said it, in his crisis of confidence speech. But we’d rather figure out which guy we’d rather have a beer with, and vote for that guy.
I wonder how many Realtors® there are per unit of inventory in the hot markets? It’s got to be getting ugly out there. Can this be any better for the used house sales community than the inactivity of the last 3 years?
This is a point which I find astonishing: The NAR leadership seems to miss the fact that ever less affordable home prices translate into less work for their membership.
How stoopid can stoopid be?
The NAR leadership seems to miss the fact that ever less affordable home prices translate into less work for their membership.
Stunning isn’t it?
And even their street level Liars completely miss this fundamental. And all of them point in a thousand different directions when the question of cratering sales come up. Inflated prices never seem to be a part of their lexicon.
Maybe one of the lurking Liars can develop the intestinal fortitude and explain to us why this is.
Whatta ya say NAR scumbags?
Hwy50inaGovt.Bailout
So we have the recent gaming going on with ZIRP so the DOW can be pumped, the banks can skim a few billion in treasuries, and the govt. can spend the counterfeit money at face value and pay low interest on that $1.5 T/annum approx. that it borrows to make up for the “revenue shortfall” all while of course dispensing free cheese to diverse interests and groups.
The next shoe to fall just has to be inflation, the better to elegantly repudiate debt while maintaining the illusion of paying it off. It has always worked this way throughout history and we know it has to happen here. The question for me is this. Do the “inside trackers” have a plan for this to happen or is it going to be determined by chance? If there is a plan it sure would be nice to know when it all begins, or to know ahead of time when it’s going to happen even if it happens by chance…
Sorry not to join the ideological flame fest, but it’s hard to see how much difference who’s to be president really makes. I’m just really curious about the ZIRP/inflation inflection point and when it arrives. It fits in so well with the question of denial and the desire to be told “sweet little lies”.
To get inflation going, we need wage increases. Without the wage increases, rising prices means falling demand and excess supply, undoing the inflation.
How do you think they are going to engineer wage increases for the middle class as we continue to off=-shore jobs in the face of our already slack labor market?
I agree they may want to heat up inflation. I’m not convinced they can.
A huge number of construction jobs were lost in the downturn and haven’t come back. When those jobs come back, it will put a lot of less educated people back to work…and they spend the money…causing a boost to the economy overall.
My fear is that once that begins, wage inflation will return.
Based on the slack in real property (vacancy rates), this could begin to happen within the next 2-3 years, IMHO.
You come up with raft full of lies with every post.
You’re an untrustworthy snake in the grass full of misinformation and bullshit.
http://www.npr.org/blogs/money/2011/12/21/144079247/we-lost-2-million-construction-jobs-only-half-are-coming-back
NPR–referencing only half the 2 million jobs coming back. None have come back so far. NPR is assuming half come back.
As an ex Republican, on a daily basis I get emails of Republican propaganda… The most recent is pretty typical. All rhetoric, vitriol and untruth. Today’s is a pretty classic example. It is from a guy running for congress.
“Personal liberty, free markets, and a belief in what the individual can accomplish have made us great.
All these values are under attack by President Obama and his Democratic allies in Congress.
Our country has a decision to make: will we continue to uphold the values that have sustained our nation for over 200 years? Or will we allow bigger government to run us off the cliff?
I will never back down in my commitment to freedom.
Will you help me in this fight?”
Well Mr. Schweikert for Congress….
First you have to tell me what you are going to do about $600B a year international trade deficits, falling wages and fewer jobs for the middle class, widening wealth disparity, $1.3T a year federal budget deficits for as far as the eye can see, the long series of successively larger asset price bubbles such as junk bonds, internet stocks, housing, commodities…
Or how about the TRUE assaults on personal liberty such as the PATRIOT act, denying homosexual equal rights, the utter failure that is the 30 year war on drugs that has not reduced usage, only increase the number of people in jail and the profit motive of the increasingly violent cartels that produce, traffic and push the illegal drugs…
“Now almost 12 weeks since the central bank tightened credit, land prices in Thimphu and other urban centres are showing signs of falling. This is significant because land prices in Thimphu have always been appreciating and accelerated in the last decade.”
“Just as easy credit helped fuel speculation and pushed land prices to ridiculous levels all these years, the absence of money in the market is having the opposite effect. With loans no longer easily available landowners are willing to let go off plots here and there to complete a construction or repair one, educate children, buy a car or a truck or machinery required for an ongoing project.”
Sounds like they are selling land in Thimphu in order to raise cash. Similar dynamic to households all over the world selling gold to raise cash.
Cash seems harder and harder to come by anymore. Cash is king.
This country is 16 trillon in debt and the market reacts with favor in loaning Spain money.
When is the last time you took out a loan because you really don’t have the money behind you and you went to bed thinking all is well in my life now?
Most peole are so much in problems and debt they just want to make it to the grave without living in a park.