Bits Bucket for June 15, 2012
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Shadow inventory of homes drops to 2008 levels
by Kim Miller
The number of homes with seriously delinquent mortgages, in foreclosure or bank-owned dropped nationwide nearly 15 percent in April from the same time last year giving hope that the housing market will continue a slow recovery.
According to a report from the Santa Ana, Calif.-based CoreLogic, the number of homes in the shadow inventory was about 1.5 million _ a four-month supply _ in April, which is about the same level the country had in October 2008.
“Since peaking at 2.1 million in January 2010, the shadow inventory has fallen 28 percent,” said Mark Fleming, chief economist for CoreLogic. “The decline in the shadow inventory is a positive development because it removes some of the downward pressure on house prices.”
This entry was posted on Thursday, June 14th, 2012 at 11:22 am and is filed under Florida economy, Foreclosures, Housing affordability, Mortgages, Real estate bust. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
2 Responses
orofthepress.com Says:
June 14th, 2012 at 3:23 pm
Wrong facts. Corelogic only counts the properties that banks already foreclosed on but haven’t put on the market yet. Yes, that statistic is down because banks have refused to foreclose since the robo-signing scandal broke. But Corelogic is not counting the nearly 7 million homes that are seriously behind on payments…..
Foreclosure is so 20th century.
“Wrong facts”. In scientific studies, facts are usually derived from observations by reliable people in the field and at the source. I don’t believe any of the pap the MSM,the RE crowd, the financial institutions or the government cares spew. I can however make my own observations by what I see in my own community, and reports from trusted friends. These observations not only include the house market but couple that with the increase in vacant RE, the continued closing of businesses, the continued loss of jobs, the stagnate wages or loss of income, etc.
Housing today reminds me of the daily wrap ups of Wall Street action, blow by blow pap, and that puts visions in my mind of circus clown and hawkers on the boardwalk.
There are some services that track this. Foreclosure Radar tracks unsold REO in the Western States, so you can extrapolate a number. California is at +/- 80k and if you assume they are the same as other states, it would imply a total in the US as a whole of ~570k REO on the books of banks. Let’s say 10% are on the market for sale, this would take Core Logic’s number from ~1.5 million to 2 million…taking a 4 month supply to ~6.
April’s reading was 80k of REO on Foreclosure Radar for California. May’s reading is 75k.
Last 5 readings were:
94k
91k
86k
80k
75k
Before that, the numbers were falling by about 1-2k per month.
More signs of recovery in the Sierra Foothills above Sacramento: 3000 home HOA for subdivision built from 2004-2007 is getting solvent. Majority of homes have reset prices (short sale, foreclosure & loan mods). HOA dues $120/mon. Delinquencies down from 350, to currently 220. Normal is 1-2%, or 30-60 property owners. The pig has moved thru the python…..
Buy today, underwater tomorrow.
Actually CoreLogic reports this morning that home prices in Placer County are up 8% over last year…..
Actually, sale prices are falling in Placer county. Don’t believe me? See for yourself.
http://zillow.com/local-info/CA-Placer-County-home-value/r_1325/#metric=mt%3D36%26dt%3D1%26tp%3D6%26rt%3D6%26r%3D1325%26el%3D0
The Month over Month and Quarter over Quarter index for Zillow shows the prices are up. This is a good indicator the bottom is in.
The index you quote shows my house up $6,000/mon in the last 30 days and up $30,000 over the last 12 months.
Hardly underwater…..
My loan payment is $2650 PITI (plus 155 HOA) and the house next door just rented for $3295.
Again, hardly underwater.
The market is gaining momentum and prices are firming….
My loan payment is $2650 PITI (plus 155 HOA) and the house next door just rented for $3295.
Being able to rent it cash-flow-positive by $500/mo is a great sign, jinglemale…
It doesn’t necessarily signal the long-term trend, but it is one good metric for pricing.
“The Month over Month and Quarter over Quarter index for Zillow shows the prices are up. This is a good indicator the bottom is in.”
M-O-M and Q-O-Q is ALWAYS higher in the spring.
Nice try liar.
That has not been true here since 2007. It is true now. And you probably will say inventory always goes up in the spring! NOT. Inventory is still dropping and it is 7 days from summer. Just more signs of a recovery….but you know what Upton Sinclair said…..
“That has not been true here since 2007.”
It IS true. LOOK at the chart. Spring prices bounce up from winter prices.
Why are you lying about it?
Now you have a larger, hungrier python. Buckle up!
Or perhaps a lot more piglets running around ……
Bailed out by the government the day after.
Oh knock it off, JingleRenter. The only reason there’s any life left in the Sacto market at all are the massive and on-going subsidies to the county’s RE donors, er developers, and public “servants”– and you know it.
Tahoe, Placerville, Lincoln, Ione, Somerset, your own backyard; my anecdotal evidence tells me that housing is 50%+ under 2006 prices and still falling. And the greater market is dead.
Wow, AHansen, why would you say that?
I will tell you my daughter is trying to buy a house and every property has multiple offers and most are at or over the asking price. This is not indicative of a “dead” market.
I am not saying everywhere is rosy and wonderful, but there are signs the market has some strength.
I will tell you my daughter is trying to buy a house and every property has multiple offers and most are at or over the asking price. This is not indicative of a “dead” market.
No, it is indicative of not enough inventory.
Whether that is the “natural” state of the market, or the “manipulated” state of the market is the key question to whether it signals a rebound, or a dead-cat bounce.
Correct. Now we know why the Shadow Inventory became so large.
In California with respect to supply/demand, shadow inventory and the addition of new supply:
REO is shrinking at an accelerated rate as compared to the second half of 2011 (down 5k per month, with total estimate at 75k as of the end of May). This is no commentary with respect to how many of the 75k are on the market (the banks could be putting 5k on the market at a time, for all I know). - Source: Foreclosure Radar;
Non-Current loan rates are now at approximately at 9%, and have been steadily falling since Q1 2010 when rate peaked at over 15% (”normal” is ~5%). - Source: LPS
Vacancy rates are at 5% for rentals and 2% for owner-occupied (lack of supply goes deeper in CA than shadow inventory manipulation; housing units per capita is very low). - Source: US Census
Addition of housing units is 40th in the US as a whole (0.23% growth from 7/2010 to 7/2011 vs. the US-ex CA at 0.38%). - Source: US Census
Manipulated or not, shadow inventory is steadily declining in California (Foreclosure Radar and LPS), and the “natural” state here is that there isn’t enough housing for the population (Census).
What, The fruit pickers don’t have enough $900k mcmansions? Somebody tell Tool Bros quick!
We don’t have enough $150,000 homes, that’s the problem (so we get overcrowding in rental properties, etc.). Why don’t we have enough? Bureaucratic red tape trying to get entitlements.
I’m aware of one such entitlement project (in the sphere of influence of the City, in the general plan as housing, surrounded on three sides by housing, flat, no environmental or traffic issues, relatively pro-growth City, no Coastal Commission involvement, etc.). It’s been nearly a decade just to get the approvals to build.
I remember meeting with a small private homebuilder in Southern California about a decade ago; his strategy? Build homes that start in the $100’s. It was a challenge to get the land and permitting costs low enough. He sold them as fast as he could build them.
No need to call Toll…they are already buying…
http://www.businessweek.com/news/2012-05-30/toll-buying-half-of-a-2-379-home-california-subdivision
“More signs of recovery in the Sierra Foothills above Sacramento:”
What’s the employment like up that way? There would have to be some extremely high paying jobs and more on the way to support a rebound in house prices of that magnitude. You see, 400k and up tract homes were just a fantasy created by a mania. I suppose not enough time has passed for that reality to be absorbed by the bubbleers. Good luck to you sir, if you had any sense you would sell into this dead cat bounce before it’s too late.
I think I’ll just keep buying, as the fundamentals have not been this good since 1995. I will give you updates periodically about how it is going.
Jingle, you seem to be in the area…have you seen any builders begin to finish new lots? We’ve only heard of builders exhausting what they have (in terms of finished lots), not finding any new, and seeking greener pastures rather than buy raw land and go through the process of finishing. Some we’ve heard have started looking for finished lots in Reno.
It will be interesting to see what happens once all the finished lots have been built upon (lots of people staring at one another trying to figure out why builders aren’t building).
Haha, go for it man…all in baby.
Exactly, nick. California is functionally bankrupt and thousands of State and county employees around the Sacramento area are facing furlough and layoff. House construction jobs (a major industry there) are approaching nil, and migrant labor is deserting, taking it’s mortgage payments with it.
Moreover, everyone I know who is trying to sell up there (below real estate lady pricing even,) has had approximately zero activity over the last two years.
There is an aura of cheerful desperation in jingle/rental’s posts.
Rental,
I truly do appreciate your posts and hope you guys are successful in your investment strategy, (I’ve family and close friends invested up there,) but your cheerleading is beginning to smack of NAR talking points, and I’ve come to expect a more analytical (and original) voice from you, so I’ve gotta call ‘em as I see ‘em.
Respectfully,
a
No offense taken ahansen. I’ve been watching this cycle play itself out in CA over the past 8+ years, and it feels like things are starting to move in a different direction. My knowledge base is predominantly in California, so that is my focus. Here is my perspective…where there are talking points that mix with NAR, I apologize…it’s unintentional.
I’ve frankly been frustrated, as the same analytical processes that people on this board used to correctly call the housing bubble seems to largely be missing when it comes to trying to analyze what is happening now. For instance…at the peak, people here (rightfully) thought that prices would need to correct 40-60% to be “fairly priced”, and now that in many places they have, people expect prices to fall further, and criticize people who make decisions to buy. Likewise, people frequently note 100-120x rental income as a “fair price”. in many places in California, this is the metric, if not better. Yet there is a frequent desire to believe that things will continue to get worse. My commentary trying to share counterpoints is often derided as lies.
My focus is primarily in CA:
1. Starting over a decade ago, one of our professional colleagues (lots of initials after his name), went through a litany of reasons why California had a chronic housing shortage…lots of his points resonated with me and were driven by hard data, and as we worked through this cycle, these points have stuck with me as underlying the dynamics of this cycle with respect to CA.
2. The numbers support this if you compare population growth with number of housing units built in CA starting in 1990. The estimate for the number of housing units needed to be built in CA to keep up with population growth was in the range of 200k per year. CA did a crappy job doing so–2006, for instance was something like 220k units–a peak number. This cumulative shortage still exists, and it is massive. I hesitate to go through the math, because I’ll be called a liar, so I’ll put the raw data out there and let someone else do the math.
The US ex-CA has a population of 273.9 million and housing units of 118.6 million or 2.31 people per unit (July 2011 numbers from the Census).
California has a population of 37.7 million and housing units of 13.7 million, or 2.75 people per unit.
You’ve got to build A LOT of houses in California to make the numbers the same.
3. This shortage shows up in vacancy rates, overcrowding, and generally speaking, higher prices for owner-occupied housing in California (this has been the case for a long time)…this lower supply/higher prices is one of the reasons why CA has a low homeownership rate (54% if I recall the last number correctly).
4. So, when all of a sudden debt became freely available in California without regard to underwriting standards, it was like gasoline was poured on a pile of dry tinder, and a match was lit. Prices raged like wildfire, since people who were always out of reach of ownership could “own”. In our business we stepped away from housing in about 2004–it simply stopped making sense in terms of incomes relative to prices. We couldn’t figure out how someone could pay 8-10x their income for a house.
5. When prices crashed, this fundamental supply supply/demand imbalance did not go away, and necessary development was delayed.
6. When home prices crashed, so did land values. And contrary to some voices on the HBB, land values fell to levels below the hard costs in the ground (ie. essentially negative land values). Much of this land traded (either to investors, or to builders). This is much of the land that is being built upon today. When that land is gone, either a) the economics of homebuilding will need to work again starting from raw land, or b) no new homes will be built. In California, “a)” is highly likely. In many parts of CA, the economics do not work starting from raw land–especially where there is the most land.
7. At this point, I believe we are at an inflection point in California. In my opinion, inventories of new homes will continue to fall until we start seeing builders develop more land into lots (which in many places won’t happen until prices rise), and existing home inventories are falling, in part because California has been working through their inventories of distress–and distressed sales make up over half of all sales in CA…as that distress diminishes, there will not be new supply to fill the void.
8. Where from here? I think inventories shrink for a lot longer than people expect, prices start to move up (in some cases violently) until builders can add more supply (or people can’t afford to pay). This could take some time…it takes too long to get approvals to build in California, and lots of processing at various cities was stopped during the downturn. And the Fed will be complicit in their keeping rates low for too long.
California’s bubble was a debt driven housing bubble, substantially aided by supply/demand imbalances. As we work through the inventories of distress, the supply/demand imbalance will still be there…hopefully without the credit bubble again.
As you are calling it like you see it…so am I…I continue to try to be respectful, and appreciate civil discourse on the board…I think it makes it a valuable forum.
No problem A. I understand a lot of people believe housing will go lower. I am just sharing my obsrvations: demand exceeds supply, prices are firming, rents are escalating, and the population is growing. That is a boots on the ground report. You can read all the lagging data you want and draw your own observations. I will continue to buy below reproduction cost and earn 5%-10% on my invested cash.
I am just sharing my obsrvations: demand exceeds supply, prices are firming, rents are escalating, and the population is growing.
I’m sure those observations are accurate, jinglemale.
I think what people on the board are wondering, though, is whether those are short-term conditions, or indications of longer-term trends.
Is the ten-year timeframe going to continue in this direction, or will there be a reversal and a better entry-point than the present?
My adopted home island is getting a bailout! We’re big like Spain now!!!!
http://tinyurl.com/7hpse7c
Hope you speak Russian.
Shaky Cyprus teeters between Moscow and Brussels
Cyprus officials have said they are in discussion with Moscow for a loan of 4-5 billion euros. Russian newspapers have hinted that a deal is in the works, although the finance ministry in Moscow says it has received no such request.
The question is: what would Russia get in return?
http://www.reuters.com/article/2012/06/15/us-cyprus-bailout-russia-idUSBRE85E0NR20120615
Russia will get a deep water port in the Eastern Med overlooking the British base at RAF Akrotiri. Not a bad deal for the Russkies. I’ll get to watch the Russian frigates come and go from my kitchen window. That will be quite a strange sight to see.
Drumminj-
A quick tech question for you-
I’ve downloaded the joshuatree_2_1.xpi file. How does one install it?
Thanks.
Open Firefox and drag the .xpi file into your browser window. That’s what did the job for me.
Thanks, slim. yep, that’s the easiest way. Or, if you download it in firefox, it should recognize the file type and install it automatically.
Worked for me. Thanks.
And sorry if my posts offend you.
Argh! This is just like nails on a chalkboard to me:
http://www.marketwatch.com/story/housing-market-rebounding-but-slowly-2012-06-14
“Now, the reality: Even those confident enough to make a purchase in today’s market may face issues when trying to close the deal.
The report points out that 33% of member brokers of the National Association of Realtors reported contract failures in December—a jump from 9% a year earlier—due to mortgage applications being denied or the appraised value of the home being lower than the negotiated price. ”
It’s NOT hard to get a mortgage. It’s a “normal” lending market, you need to bring some cash to the table and actually be able to pay for the house. And yet, day after day, I hear nothing but Realtors complaining that “nobody can qualify with these standards”. This is a total crock; the only way you can consider this a tight lending market is if the entire sum of your experience to date began in 2004.
If anything, historically (last 100 years) this is one of the loosest credit markets EVER. Rates are at lifetime lows, and a standard 20% down will get you a great rate on a conforming loan.
The media needs some perspective. My parents first home was purchased with a ~12% mortgage. And they had excellent credit, 20% down and both had very stable (tenured) jobs, and still had to provide all kinds of documentation. Wake up people, the days of a Wallmart employee getting 100% financing on a 500K house are over. But if you have a 200K income and 100K downpayment, the bank will be happy to lend you 400K to buy that same house.
That’s how the system is SUPPOSED to work.
Overtaxed- Thank you for that post. Lenders doing their due diligence isn’t the gestapo. You can’t fake it until you make it as a home buyer is good news.
Rates are at lifetime lows, and a standard 20% down will get you a great rate on a conforming loan.
With rates at lifetime lows, you are essentially investing your down-payment at that rate. Makes more sense to go 3.5% down in this mortgage market.
I agree, if you can get a low down mortgage, go for it. Borrowing for 30 years at a deductible 3.5% is, IMHO, crazy (for the banks). If they would lend me 100M dollars, I’d never work again and just collect the 1-2% spread I can get to earn 1-2 million dollars yearly buying high quality bonds.
People can borrow at rates lower than massive highly capitalized companies (including municipalities). That’s crazy!
Leverage is your friend, assuming you can stand the risk, in this type of environment.
Wow, this fake Househunters thing of my sister’s is really blowing up…I guess there’s supposed to be something on Good Morning America or The Today Show this morning or tomorrow morning. They got interviewed for it yesterday. They’re even reporting on it on places like HuffPo and Slate. It’s weird because that was years ago and she just casually mentioned it on a blog this week. Are people really that surprised?
You mean even the puffing ho’s ‘reporting’ on a sensational story that doesn’t mean squat? Fake reality shows? Next thing you’ll be telling me professional wrestling is fake and that Hulk Hogan is just a publicity hound.
Say it isn’t so Ben, say it isn’t so. The Hulk is my hero, he could sell me a house any day of the week.
Think about Hulk; how long has it been since he wrestled? But he still makes it into the news.
Sometimes I look at headlines on Yahoo or CNN and laugh. ‘What’s the worlds hottest pepper?’ That kinda thing.
wasn’t there one recently…something like this:
“Scientist prove men and women are different”
There was also a story picked up earlier this week about a guy who played a single round of the video game Civilization for 10 years - or 3500 game years or so- and it devolved into a world not terribly unlike the book 1984.
I guess it’s a slow news week.
“There was also a story picked up earlier this week about a guy who played a single round of the video game Civilization for 10 years”
I actually find this interesting. It is something that I might do if I had the time. I would probably want to play with the algorithms after a while.
wrastlin’ is fake?
Yeah, I guess it is fake. But it’s a multi-billion dollar fake. I read that the pawn shop show was at one time the top rated show on TV! But we’re supposed to believe that some lady walks in trying to sell a submarine? Just another day at that crazy pawn shop!
Don’t forget the repo guys reposessing jets, hang-gliders, space ships, and back-hoes. Talk about a glamorous job.
Or the guys driving around buying old junk. Or the ridiculous looking dude arresting bail skippers. I don’t have TV where I live but see this stuff when I’m on the road. I do admit to liking the craziest stuff on wheels, where skateboarders take face plants and people on ATV’s run over themselves, etc.
I wonder if that’s staged?
When on the road I briefly watched the jet airliner repo show. Not quite like the car repo guy. They did have to make sure that the jet was airworthy before taking it, and there was all kinds of paperwork (it was an international repo) to complete.
I watched for about 10 minutes, before concluding “that job sucks” and changing the channel.
“jet was airworthy”
If it has been sitting around for months, without someone at least checking it over, and completing the services, it, by FAA definition is “Not Airworthy”.
You can get a “Special Flight Permit” (Aka “Ferry Permit) from the local FAA office where the aircraft is hangared, but that is another big set of problems, if you don’t know what’s wrong with the airplane.
Of course, this doesn’t stop some of these dumbazzes. We had a lien on an airplane once……..the leading edge panels were off, and half the stuff on the airplane wasn’t working, because it had been stored for THREE YEARS. These yahoos sneak onto the facility at 2am, stuck some batteries in it, and took off “as is”
In the show I saw it was an Airbus used by some fly by night charter operation in Europe. It wasn’t used on a daily basis, but it wasn’t sitting around for months either. Part of their job was finding where it was at the time.
IIRC, one of the repo dudes inspected the plane and its logs. I forget what, but something was not kosher and they had to being in a mechanic (in the dead of night) to make it ship shape. Then they fueled it, informed the airport authorities they were repoing it, hit some legal snag, brought in another dude to straighten that out, after that was done, they took it.
I suppose that in the show they would only showcase guys who do things by the book.
“I do admit to liking the craziest stuff on wheels”
Awesome. COPS is my sin.
“These yahoos sneak onto the facility at 2am, stuck some batteries in it, and took off “as is”
Your posts about the aviation industry continue to be my favorite tangents on this blog.
How did we neglect to discuss professional wrastling on the recent “People Like to be Lied To” thread?
Eat your vitamins and say your prayers brother!!!!!
Her friends said it just aired on GMA.
Good for your sister.
It may seem like no big deal to a lot of us, but the general public, different story. There are a lot of people who still think that shows like “Househunters” couldn’t have been faked.
Advice to your sister: Be very kind and patient with the media. As silly as they may seem at times, just bear with them.
What really scores points with media people is sending them a “thank you” note after the interview. They’re not expecting it.
So, when your nice note lands in their in-box, they’ll really appreciate it. That can work well for your sister (or for anyone else) here if the media come a-calling in the future.
I assumed it was fake in the sense that the buyers saw more than 3 houses and didn’t make such a huge financial decision in 1 day like it’s portrayed on the show. I didn’t think it was fake in that 2 of the 3 houses weren’t even for sale.
It would be more realistic if they had to act within 15 minutes after seeing three houses and battle it out in bidding wars.
Family of four? I hope they represent the Lollipop Guild.
Tiny House on Wheels Serves Family of Four
This tiny house on wheels is designed to serve a family of four.
That’s pretty impressive at a foot print of 20′ by 8’6″, wouldn’t you agree?
Since it was designed to be used in Canada, you can also be sure that it’ll withstand cold climates.
YOU MIGHT ALSO LIKE
A Tiny House for a Humble Family
Woman Living in a Shipping Container and Tiny House on Wheels
Smart Family Living in Tiny House to Build Their Future Now
Evan and Gabby’s 117-square-foot Tiny House on Wheels
http://www.tinyhousetalk.com/tiny-house-serves-family-of-four/ -
What’s the big deal? The cabin on my cruiser is only about 10 x 14. That includes the head and galley. Does not include the V-berth (the can’t stand up place for two to sleep. Does not include the deck, which is the steering place and porch. I live in this space half the year full time. My cruising partner lives in it with me full time for two months of the year. It can sleep six, they say. I’ve done a week cruise with an adult partner and three teens. We spent a lot of time outdoors.
The typical house isn’t necessarily so large to accomodate the people comfortably, it’s for their stuff. Some people need a LOT of stuff, others not so much. A person only needs about 10 ft2 each to sleep, 10ft2 to cook, 10 ft2 to put your clothes and food (which can be under the sleeping space), 10 ft2 to shave and pee, 20 ft2 to entertain and play a game of cards. The rest is dance floor.
If everyone had to build/buy a house right now, that they could actually pay for today, imagine what size the typical house would be. My guess is there would be a lot of tents.
“I’ve done a week cruise with an adult partner and three teens.”
Do five years with an adult partner and three teens in a 20′ by 8’6″ and let me know how it went.
LOL, time, the other dimension.
After the experiment you suggest, I predict that they would all be gone and I would be right here where I am!
That’s why only those who can swim are allowed onboard.
I’m with Blue on this one. Living on board makes life very simple; you learn immediately what is necessary and what it not
and what is not is left on the dock. Just make sure you bring your cedar bucket….
Family of 4, 117 sq ft? So 30 sq per person.
A shared 8X8 prison cell is more roomy.
Each to their own I guess.
Funny eyeglass commercial.
I’m not that guy anymore! I got a good Job! I bought Khakis! The casino dropped the charges!
Saw that. But the guy had the kind of of face I just wanted to punch.
“But the guy had the kind of of face I just wanted to punch.”
You got a point there. Now what did you think of the Pearle Vision “naughty librarian glasses commercial”?
Pearle Vision Commercial - YouTube
Apr 28, 2011 … 2011 commercial for Pearle Vision Glasses. …
http://www.youtube.com/watch?v=WTuyoOyWh0c - 155k - Cached - Similar pages
Yeah that one seems to be on a endless loop on teevee.
My wife and I have been watching the Vienna, Virginia area since before the collapse. I would honestly consider my wife an expert on the area…she knows ten times more about the area than most real estate agents we have met at many open houses.
The neighborhood is close to Tyson’s Corner with somewhat of a commute into DC. Most of the homes are 1950s style ramblers on one side of 123 and a little more modern 1970ish style split levels on the other side.
During the bubble there were about three or four custom home builders in the area that were buying up lots, tearing down the ramblers, and building pretty nice craftsman style homes. One builder we not got caught with his pants down a bit and almost went bankrupt. The others either had some serious backing that got them through the crisis or didn’t really extend themselves too much on spec housing.
Now…the area is overwhelm with builders we have never even seen before. One builder told us the new ones are people that lost their jobs with the big mcmansion developers and are building specs in the area. The few builders we know who have been in area for awhile are not holding specs at all and do not wish to do so.
Observations:
1. It’ is really screwed up that banks are taking risk with spec housing on these new builders when the builders much more familiar with the area know the risks and choose not to do so. That’s ok though I reckon. I am sure they know that future taxpayers of this nation have got their backs.
2. For the past few weeks only a few ramblers have even gone on the market. That hasn’t happened…even during the boom. It seems that all you see is just…BAM…a new $ 1.4 million spec house is on the market.
I think there is serious collusion going on between the banks, realtors, and these builders to control prices. It’s crazy again out there…at least in northern va.
Great street report.
The money comment;
“I think there is serious collusion going on between the banks, realtors, and these builders to control prices.”
Deep down you know this is true or you wouldn’t have said it. Let’s stop fooling ourselves, looking the other way and pretending and embrace this truth. Then speak to it wherever and whenever possible.
“Then speak to it wherever and whenever possible.”
To whom? Who will listen?
If somebody listens then he probably already knows the truth. If he’s the guy who doesn’t want to hear the truth then he won’t listen.
Unless the subject of money enters the picture, that’s when people really begin to listen. Losing enough of those dollar thingys tends to get one’s attention. But at this point one has to be very selective as to who to listen to the most and who to not to listen to at all.
For fun, amusement, and education one should now and then attend an investment seminar.
I think the first step is closing all of my accounts with commercial banks. I’ll move it all to credit unions. I know its not much considering they can get all the free money they want from the fed, but I dont want to be a part of it anymore.
Malfunction Junction
Yeah, we thought the same thing over 2 decades ago, and for the most part, it was true back then. Fastforward to the last decade. Fees for all kinds of stuff now, 90 days no payment car loans, and 3% down mortgages. They are just the cousin to the banking system. Not much difference.
It’s not like the NCUA’s insurance is different than the FDIC. Cousins again.
During the peak of the housing/finance bubble, our CU had 125% LTV, and they deny it to this day. We remember it well. We had over $5**K at risk in our accounts. We paid attention.
During the peak of the housing/finance bubble, our CU had 125% LTV, and they deny it to this day. We remember it well. We had over $5**K at risk in our accounts. We paid attention.
My CU used to throw HELOC parties in the lobby. Complete with popcorn.
These days, they’re promoting student living loans. So you can put your college party life on a mortgage. Or something like that.
Az Slim
Wow, on the targeting of college students at your CU.
I recall the credit card sales-sharks on campus. I didn’t become shark food. Most did.
It’s pretty simple…. You’ll be swindled if you buy today. Prices are falling.
Complete with popcorn.
That’s probably where Neil disappeared to, then…
I never understand this love affair some people have with CUs. What’s so different about a CU vs a bank? You give them your money. They give you 0% interest. You want money you borrow money at 4%.
I’m not being snarky, I just don’t see why people who rail against big bad evil banks embrace CUs when it’s the same thing.
At least with BofA I know that no matter where I am in the country, there’s a BofA ATM within 100 feet of me which means no ATM fees. With a local credit union, once I’m out of town, I’m paying $3 each time I use an ATM.
Generally, CUs:
Charge you slightly less on loans
Pay slightly better on deposits
Don’t nickle and dime you to death like banks.
As for ATMs, I can withdraw free of charge at any CU ATM around the country, as CUs do not charge each other ATM fees.
As for BofA, I took a quick looksie online. There are a whopping two BofA ATMs in all of Colorado, according to their website. And there are no branch offices.
My bank reimburses me for the charges on up to 5 ATM withdrawals a month on other banks’ ATMs.
Same here Polly. I went Schwab Bank, access to any ATM and get rebates for ATM fees (even the crazy Vegas machines) up to something like $25-$30 per month. They even waive wire fees.
“To whom? Who will listen?
If somebody listens then he probably already knows the truth. If he’s the guy who doesn’t want to hear the truth then he won’t listen.”
I will say it felt similarly back when HBB were among the lone voices crying in the wilderness about incipient price declines back in 2006. It was even worse then, as an army of trolls invaded the HBB to tell us how wrong we were.
In retrospect, the trolls looked foolish, and we were right. I don’t believe it will be different this time.
“I think there is serious collusion going on between the banks, realtors, and these builders to control prices. It’s crazy again out there…at least in northern va.”
You are correct, IMHO.
Gretchen Morgenson on Fannie Mae’s Web of Influence
http://www.youtube.com/watch?v=Tez5DW_07Mc
I doubt the banks are lending 100% of project cost.
Around here, a similarly hot market (mid-Peninsula, SF Bay Area), smaller builders may get the bank to provide debt for 50-70% of the project cost, but they need to raise equity for the rest. Banks have a fairly good cushion.
Heaven help you if you own a house in a place like this.
—————————————
Detroit: The Triumph of Progressive Public Policy - How did this great city fall so far?
Capitol Confidential | 2/14/2012 | Jarrett Skorup
Imagine a city where all the major economic planks of the statist or “progressive” platform have been enacted:
* A “living wage” ordinance, far above the federal minimum wage, for all public employees and private contractors.
* A school system that spends significantly more per pupil than the national average.
* A powerful school employee union that militantly defends the exceptional pay, benefits and job security it has won for its members.
* Other government employee unions that do the same for their members.
* A tax system that aggressively redistributes income from businesses and the wealthy to the poor and to government bureaucracies.
Would this be a shining city on a hill, exciting the admiration of all? We don’t have to guess, because there is such a city right here in our state: Detroit
Detroit has been dubbed “the most liberal city in America” and each of these “progressive” policies is alive and well there. How have they worked out?
In 1950, Detroit was the wealthiest city in America on a per capita income basis. Today, the Census Bureau reports that it is the nation’s 2nd poorest major city, just “edging out” Cleveland.
At the same time that union, the Detroit Federation of Teachers, has won rich salary and benefits packages for its members. Detroit spends one of the highests amounts of money per student nationwide and the district’s spending per pupil is eighth highest out of Michigan’s 551 school districts. For all that, by almost any measure Detroit schools have for decades failed their students: test scores, safety, drop out rates, etc. Detroit’s public school students perform among the lowest in the state. On a 2009 test for urban districts from the U.S. Department of Education, DPS students performed “barely above what one would expect simply by chance, as if the kids simply guessed at the answers.”
For example, in 2003 philanthropist Bob Thompson offered $200 million to build 15 charter public schools in the city in which he would guarantee a 90 percent graduation rate. In response, the DFT balked because charter schools are not unionized. The outcome was that the union jobs trumped better outcomes for children.
People vote with their feet, and all the above suggests why, over the past decade, DPS has lost about 10,000 students each year to charter, independent and suburban schools.
Of course it would be unfair to place all the blame for the city’s decline on public employee unions. Detroit is home to the Big Three, whose contracts with their own powerful unions provided the model for those public employee arrangements. The UAW successfully extracted wages and benefits estimated at $73 per hour before the recent shake-ups began.
“Detroit, remember, was going to be the ‘Model City’ of Lyndon Johnson’s Great Society, the shining example of what the ‘fairness’ of the welfare state can produce. Billions of dollars later, Detroit instead has become the model of everything that can go wrong when you hook people on the idea of something for nothing - a once-middle class city of nearly 2 million that is now a poverty-stricken city of less than 900,000.”
Today, Detroit is down 25 percent over the past 10 years; to just over 700,000 and dropping fast.
Progressives will complain that this portrait oversimplifies the factors involved in a great city’s decline. Perhaps it does, but with this question in mind: At what point does the weight of evidence and logic make it impossible to avoid concluding that in the case of Detroit, correlation is causation?
It wasn’t “liberalism” or “progressivism”, Detroit collapsed because all the Racist® white people moved to the suburbs.
We certainly see more COEXIST bumper stickers in rich, lily white Boulder than ever did living in an integrated working class neighborhood in Cleveland.
I live in one of those integrated working class neighborhoods. And, true, you don’t see a lot of “coexist” stickers.
Those people tend to move in, find that this place is a lot more pugnacious than what they’re used to, and they flee for hippie-er, more granola-ish neighborhoods. I’ve seen this happen more than once.
We feisty loudmouths are the ones who stay and prosper. The ability to not take shhhhh-eet off-a no one is what really counts. The “coexist” types tend to be pushovers, and that works against them.
“coexist” yep, real popular on a Prius in our white flight area of So Ca. Yet, I find the ones that have to promote it, are usually the less tolerant of all.
We travel by subway for doctor appts and adventures, and meet all kinds of urban types, poor, professionals, etc… We don’t own a “coexist” sign/button. We live it.
Reminds me of the Congress For New Urbanism types. All for public transportation and urban living, then get in their SUVs and go home to their McMansions. UCS’s meetings were an eye opener for me. Those people for the most part were fos.
I think the COEXIST bumper stickers are ubiquitous all over the state. They are quite common even in redneck Loveland (though I can’t say I’ve ever seen one on a pickup truck)
Actually, a lot of Detroit’s woes can be laid directly to former Mayor Coleman Young who ran the city from 1974 to 1993. Young was a racist who decided to use Detroit’s finances to enrich himself and his friends while he directly attacked the “white devils” that lived in the city. Unfortunately for Detroit, this exodus took good jobs and the tax base along with it. Left behind was a decaying, hollow shell of a city with crumbling buildings, soaring crime, increasing welfare rolls, and deteriorating infrastructure.
Can Detroit be saved?
No change is possible because almost everything in Detroit is under the control of the Detroit teacher’s union and the Detroit public employee’s unions. Together, they block any and all needed reforms and Detroit continues to spiral into oblivion. Detroit is the shining poster child for fully implemented liberal policies. Those residents that remain keep repeating the same insane policies with the same kinds of politicians in the hopes of a different result. Isn’t going to happen — Detroit is dead.
I never thought I’d find myself agreeing with you, 2banana, but on one point I do. Coleman Young was a disaster as Detroit’s mayor.
Just like NYC David Dinkins was so bad Gulianni had to come in and fix everything
Are Detroit’s suburbs thriving?
And how are Toledo and Cleveland doing? Is there any comparable city that was so dependent on one declining industry?
Before the rise of the auto industry in the early 20th century, Detroit had a highly diversified industrial economy. Afterward, it was like a monoculture. And we know how well that worked out.
Pittsburgh has a more diverse economy and has been stable economically. I haven’t followed their politics, so I don’t know enough to comment on that.
Pittsburgh has a more diverse economy and has been stable economically. I haven’t followed their politics, so I don’t know enough to comment on that.
Yours Truly lived in Pittsburgh during the 1980s. That was when the steel industry went into freefall. And that really hammered the city. Unemployment was up near 20%.
But good ole Pittsburgh had other things going for it.
Wonderful quality of life, for example. If you think people in Detroit have your back, wait ’til you go to the ‘Burgh. This approach may often take the form of tough love. (”What that hell ya doing buyin’ that house? You can’t afford it!”) But the love under it is indeed genuine.
Then there are the colleges and universities. Literally something for everyone. They’re major employers and educators.
Not to mention the hospitals. I owe my life to a couple of them. You need some topnotch medical care? Go to Pittsburgh. Seriously.
“Eds and meds” helped the ‘Burgh make an economic comeback. And, yes, the manufacturing base is still around. It re-invented itself.
And you want to know something else? Pittsburgh does pretty well in the IT industry. Just go check out the companies that have emerged from Pitt and CMU. Not to mention of the country’s best website hosting companies, pair Networks.
Last but not least, something very near and dear to my heart: One of the most happening bicycle scenes in the United States. Even with all those steep hills. Thing I learned about Pittsburgh hills: Insult them. Then beat them on your climb. It’s fun!
I’m proud of my birthplace.
You keep harping on this. You mean we SHOULDN’T co-exist?
I think his point is that folks who slap one of the ubiquitous “Coexist” bumper stickers on their cars only give lip service to the concept, especially in places like lilly white, upper middle class Boulder.
You should have seen how fast they abandoned my son’s elementary school when it exceeded about 30% or so Hispanic. Within 5 years it was 85%. And these weren’t rednecks who were running away…
Carl, was it just the demographic (e.g. 30% or so Hispanic), or was there gang activity and associated violence going on at the school as well?
I can’t see avoiding the former, but I could easily see avoiding the latter.
I can’t agree. I see Coexist as a courageous sticker, compared to, say, Support the Troops. Especially in CO, ground zero for the Focus on Other’s People’s Families. It’s basically a lily white person standing up for the pagans/Muslims/Hindus rather than being intolerably Fundy.
it depends where you live.
“I see Coexist as a courageous sticker,”
Please, I will bet people with those stickers are some of the least tolerant among us, and there is nothing courageous about a PC sticker on your car. Yes, let’s Coexist with every culture except the American culture. I left California in the early 90’s to escape these numbskulls.
Carl, was it just the demographic (e.g. 30% or so Hispanic), or was there gang activity and associated violence going on at the school as well?
I can’t see avoiding the former, but I could easily see avoiding the latter.
No, if there were gang activity or violence we would have left, too. They made a really valiant effort to recruit people to stay, but the excuse given was usually something along the lines that they just couldn’t have their little precious going to school with people who didn’t value education as much as they did (the school’s average test scores were falling…but not among native English speakers). Paranoia of anything that might make their kid less likely to get into the Ivy leagues.
Will post reply in tomorrow’s bits bucket.
For several years, my alumni magazines have been running stories about young University of Michigan grads heading east from Ann Arbor. No, they’re not trekking to New York like my generation did.
Instead, they’re heading to Detroit. Where Woodward Avenue is now called Webward Avenue. A lot of high-tech startups there.
The kids seem to enjoy Detroit’s friendliness and sense of community. In D-Town, people really look out for each other and have each other’s backs.
Ever so slowly, Detroit is on the comeback trail. I wouldn’t count that town out.
Just as I wouldn’t write off the state of Michigan. I know a young man who left Tucson and went to Michigan for love and the music scene. He and the wife are making a wonderful life there.
“Ever so slowly, Detroit is on the comeback trail.”
Probably not the way to bet.
If you’re betting for the long term, it is.
And keep in mind that the current crop of young people has a very different outlook on the world than we do.
For one thing, they’re a lot more interested in seeking out ethnic diversity than us over-50 people. They didn’t grow up with the collapse of Detroit — the Livernois Riots of 1967 are nothing more than a history lesson. So is the white flight that followed.
For another thing, they’re young. They don’t understand how hard things can be. And, since they don’t understand, they’re more willing to try things that we’d pass up. Sometimes they succeed at the things we shy away from.
“If you’re betting for the long term, it is.”
Proximity to a huge source of fresh water and shipping lanes bode well for the long term. There is a reason Detroit grew in the first place.
Detroit is a football team that goes 0-16 one year then finishes at 1-15 the next year and the fans are excited about the improved team’s prospects for the future.
LOL! It’s worse in Denver. No matter how mediocre the Broncos are, you’d be forgiven for thinking they’re in the Souper Bowl.
FWIW, the Lions did bounce back and make the playoffs. Thank heaven for the NFL’s All American socialist revenue sharing!
When I think of Detroit, I not only think of the automobile industry, I think of Motown. Great music. ( I was a youngin, but gained an appreciation later on.)
Obama makes election-year change in deportation policy.
Next in lines:
1. Romney’s association with Evil Mormon Church
2. The good ol’ racism
BTW, I do agree with Obama not deporting kids. Should have happened long ago not before the election. Then again where are debates and where’s the congress? We don’t have an emperor, do we?
No we have “the one’
He can enforce the laws he likes, not enforce the laws he doesn’t not like and make up laws (through executive order and the “appointment” of czars) to bypass the congress.
Like I said - the Bush days now are (insanely) the “good old days”
FWIW, Bush did those things too. That’s what’s so disappointing about Obama: Nothing changed.
Bush granted unilateral amnesty to millions of illegal aliens without the approval of Congress? Care to provide a link for that….
Who said anything about Amnesty? I was responding to banana’s correct complaint that Obama selectively chooses which laws to enforce. Bush did the same thing, albeit with different laws being ignored.
I have no doubts that Romney will do the same.
Go ahead and believe that Mitt will change things. It will be more of the same.
As for the illegals, both parties love them. The GOP loves the cheap labor and the Dems love the future voters. The GOP is currently talking tough on illegals, but I’ll bet Romney will make a case for Amnesty (after being elected), just like Bush did.
And now I do believe Romney will win, especially if Obama keeps shooting himself in the foot. It almost seems deliberate.
Obama makes election-year change in deportation policy.
And before we forget, Amnesty was also on the table during the Bush years. Going the executive order route is raising it to another level.
That said, Obama really seems hell bent on handing the election to Romney. Not that it matters, regardless of who wins we’ll be boned. And no, Ron Paul doesn’t have a snow ball’s chance in Hades of winning.
Congress is irrelevant, Obama chooses which laws to enforce and which to ignore.
He’s not even using an executive order. He simply told Napolitano to start up the green card printing press.
I mostly lurk here, but I need some advice today.
My fiancee’s brother called last night for advice about real estate. Brother lives in Las Vegas (yeah really) and is in construction, does flooring, and has managed to stay employed during the downturn. (He’s really good at tile work.)
So it seems that their next door neighbors moved to Michigan last year, but kept their house as a rental (I know, groan) as they were very underwater. So it has been rented since then, however the renters just moved out a few days ago stiffing them for the last months rent and not paying some of the utilities. They have decided to “let it go”.
Brother has lived in his house for over 20 years, so they are not underwater, but now he has decided he wants to buy (via short sale) this house and rent it out for extra cash flow. And it might actually pencil out: It was renting for $1200, but that was a little high for the neighborhood so I told them count on $1000. I believe the old owners still owe something like $140k, zillow says it is worth $70k and he wants to try to get it short sale for $50-60k.
It is an older neighborhood, but apparently the previous owners put in a lot of work (they were good friends with the brother) and it is in good repair and there is some sort of warranty on all the appliances.
I checked an Nevada is a “one action” recourse state. Not exactly sure how that works. I have asked them to find out if there is a second on the house, as I think that might make a difference if this is doable. If they get the bank to agree to a short sale, can the bank still come after them for the balance?
Ok I am putting on my flame suit now…..
If it cash flows on REALISTIC numbers to include all expenses with absolutely no dependence on “appreciation”…
And your fiancee’s bother is a handy man…
And your fiancee’s brother knows how to screen renters and how to deal with the bad ones…
It might make sense.
House that rents for $1000 to be had for $60K?
If your bro doesn’t buy it, send me the info, I’ll buy it.
Based on the purchase price being 100-120x the monthly rent, this house might be a good buy. Just check the nabe and the local economy carefully.
Well his brother is the next door neighbor, so he knows the neighborhood very well.
It is an older neighborhood, and is actually the house they grew up in. The mom got transferred to CA in the 90s and the brother bought the house from the mom.
can the bank still come after them for the balance? ”
after who the buyer ? No, but all that will be in writing lots of documents. read carefully.
A co-worker is buying homes in Vegas and renting them out, myself I was a landlord once upon a time and don’t like it much.
“…however the renters just moved out a few days ago stiffing them for the last months rent and not paying some of the utilities.”
Landlord’s human relations 101, hehe.
If it does really pencil out, and goes on the open market, your brother better be prepared to fight it out with the FHA buyers and cash flow seminar graduates.
Well he is hoping to get it before it hits the market, since he is friends with the owners.
Nice.
From the Startup Rules of Josh James, founder and CEO of Domo, the all-star executive who also co-founded Omniture and took it from inception to IPO to sale for $1.8B to Adobe:
“Rule 45: No Unemployed Candidates. Always an Excuse. Too Risky. Top-Rated, Currently Employed Candidates Who Won’t Leave… PERFECT.”
http://www.forbes.com/sites/davidkwilliams/2012/06/13/the-case-for-hiring-under-qualified-employees/
Comment by Bill in Los Angeles
2012-06-13 07:25:22
Still want to go back to that original company - not for the love of the management, but with a big pile of cash and be driving an Audi R8 with investment income higher than the annual income of managers two levels above me - that’s the only revenge I wanted.
Bill, just saw this from a couple of days back…
I can empathize with the sentiment, but I would point out that the best revenge is not to care what they think at all. In other words, not to care even about making them jealous.
Second, bila. Absolutely.
http://www.census.gov/popest/data/housing/totals/2011/index.html
Census released state by state housing unit numbers yesterday.
Rule 1 if you are in an hole…stop digging.
Comparing year on year increases in the number of housing units is telling:
Florida added 29,904 housing units from July 2010 to July 2011 (a 0.33% increase)
California added 32,308 (a 0.24% increase)
Arizona added 15,848 (a 0.56% increase)
Nevada added 8,046 (a 0.68% increase)
Nationally the increase was 0.37%…California is still digging, but with among the smallest shovels of all states…Nevada seems to have brought in a back-hoe…
When you look at the overall vacancy rates, these numbers should be different…also from Census data.
CA rental vacancy rate is 5% for rental, and 2% for Homeowner.
FL is 13.6% and 2.7%
NV is 11% and 2.1%
AZ is 12.7% and 2.4%
California should be building the MOST of these states given vacancy rates…and they are not.
Bubonic plague near Prineville, OR. I think mikeinbend is younger than this.
http://www.msnbc.msn.com/id/47832395/ns/health-health_care/?ocid=ansmsnbc11
“The unidentified man, who is in his 50s, remained in critical condition Friday at a Bend hospital. His illness marks the fifth case of plague in Oregon since 1995.
State public health veterinarian Dr. Emilio DeBess says the man was infected when he was bitten by the stray his family had befriended. The cat died and its body is being sent to the Centers for Disease Control and Prevention for testing. “
Promoted! I just went from 4 to 40 schools.
Give me a minute to BARF.
Congratulations!!!!
Wow! Congrats!
Congrats, Muggy!
I remember you saying you had a feeling something was going to change soon…
Thanks — it’s looking more and more like we’re going to be staying in this region for a long time. What’s missing? Oh yeah, an affordable house!
As an aside, I predict that if Romney is elected he will renew Race to the Top, so this was not a proactive move on my part to get out of the federal grant business ahead of cuts, but I wanted to get back in-district anyways.
*Posted after federal contract hours 15 JUNE 2012
Condolences.
If I didn’t think RBHS had already filled its vacant principal position, I would suggest you apply. One great school, one principal.
YES!!!
This makes me so happy, mugs. I can’t even tell you….
http://xfinity.comcast.net/articles/finance/20120615/US.Mapping.Greece_s.Exit/
“How shock waves will hit US if Greece drops euro
Loading… Share No Thanks Must Read?Thank YouYes 13 Email Story Print By MATTHEW CRAFT, AP
1 hour ago
FILE - In this June 10, 2012, file photo, supporters of the extreme right-wi…
NEW YORK — The unthinkable suddenly looks possible.
Bankers, governments and investors are preparing for Greece to stop using the euro as its currency, a move that could spread turmoil throughout the global financial system.
The worst case envisions governments defaulting on their debts, a run on European banks and a worldwide credit crunch reminiscent of the financial crisis in the fall of 2008.
So this lays out the potential mechanisms of cascading defaults. How long would it take for contagion to spread from Greece to the rest of the Euro nations to the US economy and the rest of the world? A day, a week, a month?
My guess would be a couple of days to a week. Governments will try to stop it. The US might be able to if Congress and the President could agree - unlikely in an election year and with factions in Congress willing to play brinksmanship. Is it possible that the Republicans could splinter over an economic crisis of biblical proportions (How’s that for hyperbole?
) There were Democrats that supported the first TARP under GWB. House Republicans that have already won their primaries might be persuaded.
1. Why would we WANT to stop it?
2. Cheap vacations are back! At least in Greece.
3. More Democrats voted for it than Republicans in both chambers, but the level of bipartisanship in the TARP vote was pretty much unprecedented for such a controversial piece of legislation. In the House, 171 Democrats and 91 Republicans voted for it. In the Senate 40 Democrats, 33 Republicans and 1 Independent voted for it.
http://www.opencongress.org/articles/view/2090-Refresher-Course-TARP
4. And - obama (as a senator) VOTED for it too.
Thanks for the link. I wish it had number of nays split by D/R. It is not really surprising that more Ds than Rs voted for it in the House. Ds were in the majority when it passed.
As for want, some will, some won’t. I did not say anything about want.
Simply that current economic winners will try to maintain the status quo.
Didn’t McCain also vote for TARP?
It actually has a link to the roll call vote. More Rs than Ds voted against it, but the split was not extremely lopsided (108-63).
McCain, McConnell, Boehner, Cantor, and Paul Ryan all voted for it. Russ Feingold voted against it.