Teeing Up The Pig For The Python
It’s Friday desk clearing time for this blogger. “It was surprising to me several years ago when a legal aid attorney I knew became a go-to foreclosure crisis expert. April Charney has pointed out the dark clouds lurking behind whatever silver linings are being touted by those who claim the housing market has stabilized and is getting healthy again. Foreclosure stats, she said in an email, are often manipulated by too many factors to be meaningful. One factor she has talked about for years is still in play: Banks acting as mortgage servicers often aren’t the ones that lose when mortgages they sold go bad, so government efforts aimed at reducing foreclosures may cause delays more than than actual preventing foreclosures.”
“‘Servicers are financially better off with a foreclosure,’ she explained. ‘They are fee-incentivised to keep a loan in default limbo for as long as possible.’”
“Portland senior housing inspector Mitch McKee has become the point man for the city’s recession-fueled stock of dilapidated homes. McKee focuses most of his time dealing with houses in the limbo between foreclosure and repossession. Take, for example, a home on North Buffalo Street that has long drawn the ire of neighbors. Christine Duffy, the chair of the Arbor Lodge Neighborhood Association who lives on the same block, said the house found its way onto Craigslist as a free place to stay.”
“According to Multnomah County records, the home was first scheduled for foreclosure sale in December 2010, but the bank called off the sale. It’s now scheduled for auction next month. ‘You’d see all kinds of people coming and going in the middle of the night,’ Duffy said. ‘It’s what can happen to any vacant property when they sit vacant for a while.’”
“Most lending institutions don’t invest a lot of money in making repairs. Rather, the properties are ‘broom swept’ or tidied up, real estate agent Patti Syme said. If the home is vacant but not quite through the foreclosure process, it’s likely no one is maintaining it, said Julie Sundquist, an associate broker with Coldwell Banker in Nampa who works on Fannie Mae properties, because lending contracts don’t allow for it.”
“In May, there were about 30 REOs, or bank owned homes, on the Treasure Valley market, said Pioneer Title Co. CEO Tim Bundgard said, compared to about 250 a year ago. It’s hard to predict how much shadow inventory banks are holding back, but Bundgard doesn’t foresee another flood of distressed properties hitting the market. ‘I think (banks) are more cautious and they’re taking their time to process so they don’t knock the values down,’ he said.”
“For-sale homes in California are sparse, even in areas with high foreclosure rates. It has led to buyers like Jennifer Bryant, who is willing to throw money at just about anyone willing to sell her a house. Since February, Bryant has made 35 offers on homes in Riverside, only to be elbowed out by other bids. With few houses available and many bidders chasing these properties, she feels she has, at most, an hour to consider each house.”
“The cruel irony for Bryant is that she sees vacant homes everywhere, from her drive to work to a neighboring home where she resides. But vacant does not mean available. The house may still be in the process of foreclosure. ‘Some of these houses that I’ve offered on, I haven’t even actually seen,’ she says. ‘If my husband can’t go by it, I’ll just make an offer on it. If I haven’t seen pictures of it, I’ll just make the offer on it.’”
“The recording of deed-of-trust assignments in Colorado — the ownership rights of mortgages and the ability to foreclose on them — has more than doubled in the first five months of the year compared with the same period last year, The Denver Post has found. Assignments of deeds of trust in Boulder County are up by 72 percent for the first five months of the year compared with last year — the lowest in the seven-county region — and exploded by 213 percent for the same period in Adams County, where some of the highest concentrations of foreclosures occurred since the housing bubble burst.”
“Jerry Hansen, a real estate broker who said he has expected foreclosure papers on his Aurora home since 2008, is among several homeowners interviewed by The Post who said they’re merely waiting for their lender to make a move. All said they were unaware their deed of trust had been assigned. ‘We’ve been sitting on this bubble for the longest time and I have no doubt it’s coming,’ said Hansen.”
“‘With an election year, you’d think the probability is low that these are indicative of foreclosures to come,’ said Lou Barnes, a mortgage banker with Premier Mortgage Group in Boulder. ‘But it could well be they’re teeing up the pig for the python. If that’s the case, it’s going to be very bad for the pig.’”
“Canderel Group is racing to build Canada’s tallest residential building with its 78-storey tower called Aura. Canderel executive VP Ben Rogowski said that, inevitably, many of the people buying units in the skyscraper are investors, but he doesn’t see a problem with that. ‘I know there’s a lot of concern but these investors all want to make money,’ Mr. Rogowski said.”
“For about the price of a HDB 4-room resale flat in Bukit Merah, you can get to own a home in a five-star mountain resort located at the gateway of the Canadian Rockies. Canadian developer Stone Creek Resorts will be conducting sales events from next month in Singapore, Hong Kong, Beijing and Shanghai of The Residences at Silvertip Village in Canmore, near Calgary, Alberta.”
“They are available starting at C$550,000 (S$682,000). Mr Julian Sedgwick, director, head of business development at marketing agent Savills, said: ‘Alberta is a secure and fundamentally solid Canadian real estate market. For investors, there are two potential tenants’ streams - the vacationers and long-term renters. This market has a lot to offer Asian investors as their economy continues to boom and with their stronger currency.”
“Water usage figures suggest more than 90,000 homes in Melbourne are possibly unoccupied. Casting doubt on regularly reported vacancy rates, Deakin researcher Phillip Soos used City West Water and Yarra Valley Water figures to look for homes that consume less than 50 litres of water per day, saying these are all most likely unoccupied. The average water use by households is 350 litres per day, with a single toilet flush using up to 12 litres of water.”
“Soos says 5.9% of homes he looked at were vacant and says the bulk of these are speculative homes, which rely on capital gains rather than rental incomes. ‘Landlords have an incentive to withhold properties from the rental market, as they profit substantially from realising capital gains upon sale rather than from long-term rental income. Surprisingly, many of these suburbs are in inner and mid-rim locations,’ Soos writes.”
“Earthsharing spokesperson Kath Fitzgerald says the figures are ‘jaw-dropping’ and that property speculators ‘create a media atmosphere that there is nowhere to live. Australia has one of the most generous residential property taxation regimes in the world. Capital appreciation has dwarfed rental income for years. Withholding properties from the market is a rational investor strategy. The National Housing Supply Council claims a 228,000 housing shortage nationwide. We say there is nearly half that locked up here in Melbourne.’”
“Martha Wright lives in the beach town of Avalon, N.J. Her house is on the bay — she built it — in a vintage barn style more than a decade ago. Although Wright had a high-paying job as a marketing executive and a strong credit score, she ended up with a subprime mortgage loan for more than $750,000 from Washington Mutual. Wright: My mortgage was originally a Jumbo No Doc loan. A liar’s loan.”
“When Wright’s salary got cut in half four years ago, she refinanced, but still had trouble making payments. Since then, Wright has spent countless hours fighting to stay in her home. She hasn’t made a monthly mortgage payment in more than two years. Wright: You’re looking at late fees that have compounded on late fees and interest that has compounded on interest.”
“Nationally, the average distressed homeowner is delinquent for nearly two years before losing their house-that can be longer in states like New Jersey, where foreclosures have to be approved in court. And all that time carries a personal cost, says Wright. ‘It’s the depression, it’s the limbo, it’s the ups and the downs. It’s the ‘I’m making contact with somebody, I’m making progress.’ It’s two steps forward, you think, and then all of the sudden, it’s four steps back.’”
“RealtyTrac reported that foreclosure filings in the U.S. rose 9 percent in May compared to April. The Grand Strand area saw an increase in foreclosure filings as well. ‘I just feel like foreclosures are part of any economic downturn,’ commented Anthony McMinn. Just two doors down from his Carolina Forest home is a foreclosure, but he does not mind. It is an easy stance for him to take, since he is not trying to sell, and because his house was a foreclosure when he bought it a year ago. ‘We were able to get this property at a great deal,’ he explained.”
“However, he understands others who bought their homes years ago may worry about foreclosures in their neighborhoods. Neglected foreclosures just add to a drop in values. So the new report showing a spike in foreclosures last month may add to the concern. ‘If I was one of the people who bought a property in here when it first opened and almost $200,000 for it and somebody came in a bought it for 50 percent less, then I would have a problem because I’d have a problem with my mortgage,’ McMinn explained.”
“Realtor Cliff Nolan said he is beginning to see more foreclosures on the market, probably because banks are now working through a back-log. ‘They’ve been careful not to saturate the market and drive it down, but there will be an influx here over the next couple of months of foreclosures on the market,’ Nolan said.”
“He says it will still be a good time to buy, but anyone looking to sell or refinance will have to deal with low prices and current values. ‘Sellers are going to have to price it realistically, and they’re going to have to willing to compete with foreclosures,’ Nolan advised. ‘The foreclosures are go to sell more quickly, and they have been, because they are willing to adjust that price every 30 days until it sells.’”
“Soos says 5.9% of homes he looked at were vacant and says the bulk of these are speculative homes, which rely on capital gains rather than rental incomes.”
Just insane. Speculating whether you will be able to rent out a housing unit for more than your costs is speculation enough. If you are going to hold housing as inventory, you are better off with land and gold, which do not require much maintenance and do not depreciate.”
“Landlords have an incentive to withhold properties from the rental market, as they profit substantially from realising capital gains upon sale rather than from long-term rental income. Surprisingly, many of these suburbs are in inner and mid-rim locations,’ Soos writes.”
Insane.
’she ended up with a subprime mortgage loan for more than $750,000′
…it just happened! and now she’s *fighting* to hang on!
Very few of them cared, since they were on the “property ladder”. They were going to flip the house for a big capital gain eventually.
Houses are for living in. Your own house isn’t an investment; it doesn’t appreciate over inflation, and it doesn’t generate rental income. Until people stop believing their houses are “investments”, this farce will continue. We’re at least a decade away from that.
‘But it could well be they’re teeing up the pig for the python. If that’s the case, it’s going to be very bad for the pig.’
When this bubble finally pops, it is going to be epic. Those who think it has already bottomed out are clueless fools who are blithely ignoring the warning signs of what is to come.
And I was going to post after that quote: If you let the pig get big enough first, it can also be very bad for the python.
“When this bubble finally pops, it is going to be epic. Those who think it has already bottomed out are clueless fools who are blithely ignoring the warning signs of what is to come.”
Calling jinglemale…
“He says it will still be a good time to buy, but anyone looking to sell or refinance will have to deal with low prices and current values. ‘Sellers are going to have to price it realistically, and they’re going to have to willing to compete with foreclosures,’ Nolan advised. ‘The foreclosures are go to sell more quickly, and they have been, because they are willing to adjust that price every 30 days until it sells.’“
In other words, get what you can get for your house today because it’s going to be less tomorrow for years and decades to come.
This is an important concept in the whole picture. Once the asset manager decides to sell, their only strategy is undercutting the market. A sign of this is all the reports on people buying REO’s to rent. The reason? They can’t sell them, because no matter how low a price they pay, the REO’s are already undercutting them next week.
This is also why the govt shouldn’t be facilitating a dribbling out of REO inventory. Sure it helps the GSE’s bottom line, in the short term. But it is resulting in consumers paying more than they would otherwise, with taxpayer backed loans to boot.
“Once the asset manager decides to sell, their only strategy is undercutting the market.”
This reminds me of a longstanding curiosity of mine: Was the term ‘Dutch auction’ coined to describe how tulip bulb sales were conducted in the aftermath of the Dutch tulip mania?
Any factual evidence on this subject would be highly appreciated.
No, Dutch auction is a mechanism where the price starts high and drops until someone ‘takes’ the bid. It is typically used in selling flowers in the Dutch market.
“It is typically used in selling flowers in the Dutch market.”
Not surprising, but apparently off topic. Did you never hear of the Dutch tulip bubble,when exotic tulip bulbs briefly sold for more than the price of a house, until the tulip bubble burst?
My question was whether tulip bulb owners trying to unload overpriced tulip bulbs after the crash were the accidental inventors of the Dutch auction.
Wikipedia says that Dutch Auction was indeed named after the Dutch Tulip frenzy.
Dutch auctions are best used when it’s more important to sell something quickly than it is to fetch the highest price. In a Dutch auction you save time because there are no bidding wars, just one winning bid. That’s why they use it for perishables like flowers.
OK, now we are making some progress.
Next question: Was the original Dutch auction an accident, kind of like current home owners who finally give up and reduce their wishing price repeatedly until they find a buyer when they cannot find one at the level they expect, or were owners of tulip bulbs actually planning to sell for below “list price” when they first put their bulbs on the market?
Dutch auction, Beach Boys style:
PRIVATE PROPERTIES
Updated June 21, 2012, 8:12 p.m. ET
Beach Boy Mike Love Reduces His Pebble Beach Home by 12%
Mike Love, a member of the Beach Boys, has cut the price of his 8,995-square-foot Pebble Beach estate near Monterey, Calif., by 12% to $6 million. The property was first listed in 2009 for $7.9 million.
…
(6/7.9-1)*100% = -24.1%.
Kinda looks like a 24% reduction…
GSE Losses As Shadow Bailout
Roosevelt Institute Fellow Mike Konczal writes on the troubled nature of GSE’s in a time of recession.
I want to talk about this, from Megan McArdle:
“It’s looking increasingly like Fannie Mae and Freddie Mac are going to cost the US government much more than AIG. In its latest long-term budget outlook released in late January, the CBO projected that the AIG bailout would ultimately cost the Treasury $9 billion dollars. Indeed, the entire private financial industry bailout is ultimately expected to cost less than $30 billion…By contrast, the nationalization of the Government Sponsored Entities is expected to cost the Federal government $64 billion between 2011 and 2020, on top of the $110 billion we’ve already spent.”
…
These were government agencies that were privitized, paid out huge executive pay, and then nationalized, shifting the related losses to the taxpayer.
They were the very essence of the “privatize profits, socialize losses” business model.
BofA reject wins Fannie Mae booby prize
Thu Jun 7, 2012 1:24am IST
(The authors are Reuters Breakingviews columnists. The opinions expressed are their own.)
By Daniel Indiviglio and Agnes T. Crane
WASHINGTON/NEW YORK, June 6 (Reuters Breakingviews) - No good deed goes unpunished. Fannie Mae (FNMA.OB) has chosen Timothy Mayopoulos, its general counsel, as its new chief executive. His promotion won’t improve already tense relations with Bank of America (BAC.N) – the mega-bank fired him in 2008 after he questioned mounting losses. But his integrity and background make him a decent fit for the job.
As the top lawyer at BofA during the crisis, he counseled executives they didn’t need to disclose Merrill’s mortgage-related losses if they didn’t creep too high. But as Greg Farrell points out in his book “Crash of the Titans,” new estimates just days after shareholders had approved taking over the Thundering Herd “had busted through the outer limit of what Mayopoulos had been using as his guideline.” A day after trying to raise it with BofA’s finance chief, he was fired.
Running the mortgage zombie could make for some awkward conversations with his old firm. While Fannie’s general counsel, Mayopoulos recused himself from dealing with a long-running spat over who should take the hit on faulty mortgages BofA had sold to the agency. But as chief he may now have to deal directly with Brian Moynihan, who briefly replaced him before being put in charge of the investment bank and, ultimately, all of BofA.
He’s also taking a $2 million pay cut to move to Fannie’s corner office. That’s a rare and humble step in the world of finance and a welcome attribute in an organization like Fannie Mae better known for accounting shenanigans, eye-popping CEO pay and now a $116 billion bailout tab.
…
If Fannie had already copped $116 billion in bail back when this article was current, with a (doubtless) similarly large bailout for Freddie, and yet another one likely in the future outlook for the FHA, why does Megabank, Inc have its underwear in a knot over a far smaller bailout of Bankia?
“Once the asset manager decides to sell, their only strategy is undercutting the market.”
I’m going to be skewered for this comment, but I think this is critical in the price action that has been going on for the past 2+ years, and goes beyond bank asset manager motivation.
Most “flippers” of foreclosures have promised their investors something like 20-30% annualized returns (I know this because I’ve been pitched). The only way they get those returns when factoring in the price of fix-up and cost of sale, is to sell those houses fast.
This is evidenced in Foreclosure Radar’s data. For CA, the average time to resell a home that was sold to a third party on the courthouse steps has ranged between 127 and 138 days over the prior 12 months. For comparison, when an foreclosure goes back to a bank, the average time before resale is between 224 and 264 days over the same timeframe.
The ONLY way they can get this kind of velocity is to undercut the competition and the recent comps (to get the offer, and not have an appraisal problem). Flippers are far more aggressive than banks (who may not undercut recent sales initially–since they need to at least try initially to sell for “market value”, ie. the recent sale comps).
So, when you have a large percentage of homes that trade in a market that have been foreclosed within the past 12 months (ie. a lot of flipper inventory), this will continue to drive prices lower. In California (per Zillow), about 30% of all home sales were foreclosed within the prior 12 months.
In the case of California, for every 2 homes sold that are a traditional market sale, or a short sale, there is 1 home sold by a bank as REO, or a flipper.
So, take an example of an area where a certain traditionally marketed home sales have been $200,000, and there are three new homes put on the market. 2 go on with more traditional sales price at $200k, and the flipper puts their home on the market at $190k-195k so they can sell quickly.
When a third party (Case Schiller) looks at the data, all three of these are officially market sales, and when they look at the three, they say “voila” the market fell by 1-2%.
Here is the point…this is solely because one in three sellers is motivated by speed, not price (a non-typical set of sellers). Prices get driven lower and lower as the market sellers are forced to drop their own prices to meet the new perception of “market value” (since appraisers are going to look at the $190k-$195k number as a reasonable value)–to which the flippers will undercut again and again.
This is the market dynamic that can serve to push prices below where they would be if the market were entirely made up of more traditional buyers and traditional sellers.
This is why looking at the supply of new foreclosures in a market is so critical to understanding where market prices could be headed. This is why I am concerned about places that have been very slow to foreclose (NY, FL, IL, also NV now, etc.), because if they pick up speed, this dynamic will increasingly start to drive prices lower again.
In the grand scheme, this drive lower will be temporary, based on there being a finite number of homes that will ultimately be foreclosed. But this move lower could last as long as the non-current loans are being burned through, which in the case of the states I noted above could be years (as it has been so far for places like CA, AZ, CO).
This is also why I am more bullish on places that have been steadily burning through their inventories of REO and non-current loans while judicial state have been kicking the can (places like CO, AZ, CA). As the percentage of sales that were recently foreclosed falls from 30% to lower, more traditional numbers, there will be a natural tendency for prices to rise a bit, like taking a weight off of a mattress. For CO, this number is now 18%, AZ 25%, and CA 30%…all falling percentage-wise.
The mattress won’t spring to the ceiling, but it will be effected by the removal of the weight.
This is also why I am more bullish on places that have been steadily burning through their inventories of REO and non-current loans while judicial state have been kicking the can (places like CO, AZ, CA).
Arizona is a non-judicial foreclosure state. And home loans — as opposed to HELOCs — are non-recourse.
That being said, foreclosures and REOs are taking their sweet ole time coming to market.
“That being said, foreclosures and REOs are taking their sweet ole time coming to market.”
It’s all relative…regardless of the actual pace, AZ is doing FAR better than places like Florida:
1. Per Fannie last quarterly update, they are now selling more REO in AZ than they are taking in (a shrinking inventory of REO). Florida is still taking in more than they are selling (a growing inventory of REO).
2. AZ’s non-current loan rate is down to 9% from 16% in February 2010. FL was over 20% then, is still over 20% now.
Also in terms of reducing non-current loan percentages over the prior 12 months, AZ is the best in the country (reduction of non-currents of 24.6% year on year), with CA being at 21.6% year on year, second best.
“Florida is still taking in more than they are selling (a growing inventory of REO).”
And there is building still happening!
“And there is building still happening!”
And that’s the insanity of it all…I don’t understand what is happening in Florida…
Rental Watch said: “In the grand scheme, this drive lower will be temporary, based on there being a finite number of homes that will ultimately be foreclosed.”
Mathematically, yes, it’s finite. Economically, we keep manufacturing more foreclosures, as delusional buyers continue to buy and borrow in order to obtain properties that they falsely believe will produce capital gains or rental ROI.
Since the system continues to foolishly lend, it continues to create new foreclosure candidates far in excess of the historical norm. So this situation will persist for a long, long time. Remember that quote about the market being foolish longer than you can remain solvent? It’s not just a saying.
I disagree. Buyers today are in far better condition to NOT be foreclosed than buyers in 2005-2007. The default rates for instance for the 2010 and 2011 vintage FHA loans at this stage are below any vintage going back to 2005–take a look at the LPS April Mortgage Monitor for the graph (Google search will get you there)…alternatively look at the graph gallery for delinquencies on the “Calculated Risk” blog, that takes this graph from LPS.
For instance, 12 months into the loan, a the 2007 vintage FHA borrowers had a ~1.4% default rate. 12 months into the loan for the 2010 vintage FHA borrower, there is a 0.2% default rate. You cannot say that FHA borrowers today are just as strong a foreclosure candidate as those who are currently being foreclosed. The facts are that the 2007 vintage FHA borrower was 7 times more likely to be delinquent one year in.
I haven’t seen the data (and I’m sure it’s out there somewhere), but given the supposed “tightness” of mortgage lending, I would be shocked if the numbers were much different for other lenders.
We may be manufacturing more potential buyers to be foreclosed, but at a MUCH lower rate than the current troubled vintages of buyers/borrowers from 2005-2007.
In the cases of those states that have been foreclosing (judicial primarily), you don’t need to be too theoretical in your determination of when the market clears…there are lots of data points with which to draw a line.
If you are curious about this, I encourage you to look through the current and historical LPS “Mortgage Monitor” reports, as they pertain to state-by-state non-current loan data.
If you plot the State of California non-current loan rate, you will see that it has fallen very steadily by ~0.2% to 0.3% per month over the past 2+ years. If you expect this to continue (and unless the politicians get in the way, I don’t see why it won’t), the non-current loan rate hits about “normal” by the end of 2013.
Ditto for Arizona.
In Nevada, they went from being a non-judicial state to quasi-judicial…once they did, it slowed the foreclosure process, therefore prematurely and artificially lifting the metaphorical weight off the mattress, and now everyone is (wrongfully, IMHO) claiming victory.
If any other state that has an excess of non-current loans begins to foreclose and burn through them like AZ or CA, you will find prices fall. The question is whether the PTB in those states will allow that to occur.
“Buyers today are in far better condition to NOT be foreclosed than buyers in 2005-2007.”
Nonsense.
Inflated prices drive defaults. Current transaction prices are grossly inflated. Todays sale at a grossly inflated price is tomorrows default.
Thanks, Truth. That’s pretty much my response. Buyers at lower prices in a wholesale economic crash will have as much trouble as buyers at higher prices in an economic boom. It all comes down to what you can actually afford.
Don’t the delinquency rate differences with the same seasoning from the 2010-2011 vs. 2005-2007 speak to what people can afford?
It’s not just what they can afford. It’s also whether they should strategically default as well.
I understand the point Neuromance. However, I think it is very safe to assume that both:
1. The fall in values from the peak in 2006 to 2012 will prove far more extreme than any fall in values from 2010 to 2013/14/15; and
2. The ability to pay is much greater for some who bought in 2010/11 vs. 2005-2007.
1 and 2 would then lead to assuming that new foreclosures arising from buyers in 2010/2011 will be much lower than from buyers in 2005-2007.
If people disagree with that, then I give up on this particular line of reasoning…there is no use in wasting the keystrokes.
“If people disagree with that, then I give up on this particular line of reasoning…there is no use in wasting the keystrokes.”
That’s the best idea you’ve come up with yet because we’re not going anywhere. That’s a promise.
Truth says
“…..were not going anywhere. That’s a promise.” Rental Watch, Truth speaks the truth…he is going nowhere….that’s a promise.
Rental Watch, please don’t give up. I enjoy your posts and am living proof of your stats above:
I have been buying houses in this downturn: below reproduction cost, using 25% down payments, fixed rate loans, and renting them out for positive cash flow. The liklihood I will default is very low.
Compare that to the 2006 buyer: purchased at 100% above cost, 0% down 100% financing, neg am loan, with payment resets 1-3 years away, sucking huge negative cash flow.
The housing market is resetting and is stabilizing. Zillow indicates 10 out of my 10 houses increased this month in rental value and 7 out of 10 increase in price.
And you couldn’t find a buyer for any of them for a fraction of what you got in them.
What kind of fraud are you anyways?
These international desk clearing days are like driving by a traffic accident. That Toronto piece alone is worth almost an entire post for the all-out mania it neutrally reports on (at least the commenters pass judgment). See below:
_____________________________/
Mr. Ritchie … believes speculation about the number of foreign buyers is overblown but acknowledges there is a risk when investors are overseas.
“If somebody buys and they’re in Nigeria, how the heck are we going to deal with that – aside from the deposit we have,” Mr. Ritchie said.
Remo Agostino, director of development at Daniels Corp., said he still sees an opportunity to build more projects – in emerging downtowns such as Vaughan and Markham – and especially along transportation corridors. … The buyers are out there, as evidenced by the lineups that form outside the sales offices when Daniels launches new projects.
“It really is a social phenomenon when we go on sale,” he said.
It’s nuts. I mentioned I could have a housing bubble blog on Australia, Canada, and China; each! There’s so much happening right now, and a lot of it is interconnected.
There’s so much happening right now ??
You got that right…One of any number of Macro-political events could explode into front page news throughout the civilized world…2-year treasuries would go to 0%…
I wonder how history texts 100 years from now will chronicle this debacle …
or will our descendents still be kicking the can?
or will our descendents still be kicking the can ??
We are done kicking…Some real change & pain is coming either by choice or force….
I wonder though … will debt simply be repudiated and after a control-alt-del will they just start all over again?
will they just start all over again ??
You mean a etch-a-sketch moment ??
One of my in-laws is moving to Toronto, so hopefully in the near future I will have a chance to report first-hand on what is happening. I have not been since 2001. I suspect the current view from the CN Tower is disturbing.
“‘Servicers are financially better off with a foreclosure,’ she explained. ‘They are fee-incentivised to keep a loan in default limbo for as long as possible.’”
Money quote. I know the rest is very spectacular, but this is the money quote for the US market.
It has led to buyers like Jennifer Bryant, who is willing to throw money at just about anyone willing to sell her a house.
Why am I reminded of that saying about fools and their money soon being parted?
It’s pretty unbelievable to read about greater fools with buckets of money and boxes of stupid at this stage of the game.
This era belongs to the MegaFools, who will be supplanted by the GigaFools.
But if there IS a debt reset — everyone with houses, underwater, overpriced or otherwise — will have a house. And everyone else, will not.
‘if there IS a debt reset’
Is that like the cram-downs that are coming any day now? For the past 4 years.
If you think that’s gonna happen, I’ll say the same thing I said 4 years ago; get out there, buy a big, beautiful house and stop making payments on it.
“That being said, foreclosures and REOs are taking their sweet ole time coming to market.”
Here’s what I don’t get….folks who are buying now, or have bought at one of the previous market “bottoms” we hear about every year….these buyers will be good for one transaction, but that will be it. They likely won’t be trading up, over or down, unless they made a decent down payment and can afford to absorb the loss.
So we still have all this shadow inventory, boomers needing to downsize, and a lot of home debtors unable to move.
This spring feels like the “lift” the market got with the homebuyer tax credit…pulled demand forward, and then put a stake in the heart of those buyers when prices resumed their decline.
“The average water use by households is 350 litres per day, with a single toilet flush using up to 12 litres of water.”
Oh my.
I use 1/10th of that. With a friend aboard. 60 gal tank = 1 week of drinking, cooking and washing. Of course I am not watering the garden or the kids.
“with a single toilet flush using up to 12 litres of water”
4 gallons? I guess we’re the only saps using the low volume (and flush more than once if you left a big mud snake in the bowl) toilets.
First of all, ew.
Second of all, my first apartment in the DC area had a low flush toilet, and it was not always effective. Another reason to prefer the older building.
More money down the drain.