They Want To Purchase As Much As They Can
It’s Friday desk clearing time for this blogger. “Real estate sales activity in Garfield County through mid-summer continued ahead of last year. For the three-county area extending from Parachute to Aspen, though mid-year, real estate transactions were about one-third each bank sales, short sales and traditional sales, said Mike Dunn, who owns the Roaring Fork Property real estate company in Glenwood Springs. ‘So, you’re still basically looking at two-thirds of the activity being distress sales,’ said Dunn, who specializes in short sales.”
“It’s not difficult to find homes for buyers, but they are going fast and oftentimes have multiple offers,” he said. ‘And the prices are being held lower because of the distressed properties still coming onto the market.’ That could change quickly once the distressed properties clear the market, Dunn also said. ‘We will likely see a big price jump after that. And, we could even see another housing bubble, because there hasn’t been any new construction,’ he said.”
“Veronica Roberson, VP for sales and marketing at home builder Taylor Morrison, said the company sold all its homes in a 70-unit project in Elk Grove. The houses ranged from 2,400 to 3,600 square feet with options that could boost the biggest model to 4,000 square feet. Prices ran from $350,000 to $450,000, she said. ‘We had about 30 (homes available) at the beginning of the year,’ Roberson said, ‘We went through them pretty quickly.’”
“Buyers were mostly families who were looking for ‘lots of room,’ she said. With prices and interest rates near record lows, ‘they want to purchase as much as they can,’ she said.”
“Older Americans are struggling to make ends meet on nest eggs earning paltry returns, but the underlying factors of the mortgage crisis began long before the recession. As housing prices soared, older homeowners took home equity loans and second mortgages on their houses, just as their younger counterparts did - but with less time to weather the financial storm if the monthly payment became unaffordable.”
“Marta L. Carreno, 70, managed to rent an apartment in June after the bank started foreclosure proceedings on her condo in Pembroke Pines, Fla. Her dream retirement has turned into a nightmare, she added. The two-bedroom condo she bought in 2005 for $230,000 is worth less than half that now. Even before her husband died in 2010, the couple had asked for a loan modification. Now without his pension or Social Security, there’s no way she can afford to keep it. Instead of fighting the foreclosure, she has decided to let the bank take over her property.”
“‘I live one day at a time,’ she said, her voice wavering with emotion. ‘I never thought I would end up this way. I’ve lost everything.’”
“Bank of America offered Ronni and George Mandell a chance to modify the loan on the house they’ve owned for 10 years in order to make payments more manageable, but only with conditions that include essentially agreeing to a gag-order when it comes to the deal and the financial institution. That means keeping quiet about opinions of the bank on Facebook, blogs, websites and in the media, and taking down any existing postings.”
“The Mandells said they fell behind on payments starting in 2010 after George Mandell was laid off and out of work for a few years,. Because they fell behind, they tried to adjust their monthly payments with Bank of America, but didn’t qualify for certain modifications. Mortgage documents say they owe $229,000 and bought the home for around $108,000 in 2000. They haven’t sent in a mortgage payment since 2010. The Mandells rejected the settlement. ‘I cherish my rights to free speech,’ George Mandell said.”
“Jumana Bauwens, a media relations representative of Bank of America Home Loans, said such non-disparagement clauses are not part of loan modifications for ‘customers in need of assistance’ and that more than 1 million Bank of America clients have been helped by loan modifications. The Mandells have too much income to qualify for assistance under that type of program, she added. ‘The bank has provided them several opportunities for home retention and they have defaulted on every modification.’”
“In writing about the new book recently released by former Federal Deposit Insurance Corp. chief Sheila Bair, a Wall Street Journal columnist notes some of Bair’s assertions about housing policy in the U.S. during her tenure at FDIC. ‘To require every borrower to essentially prove that he or she could qualify for a new loan was stupid—the loan had already been made,’ Ms. Bair writes. The program, she writes, was ‘designed to look good in a press release, not to fix the housing market.’”
“As Southern Arizona’s economy slowly climbs out of a horrific recession, hard cash is the new king that reigns over the land empire business. Once the housing bubble burst in 2007, the industry entered a ‘gray market’ of uncertainty. Many speculated and hoped the federal government would step in with a rescue program like the Resolution Trust Corporation (RTC) of the early 1990s. The RTC was formed by the federal government to liquidate troubled real estate assets from failed savings and loan institutions.”
“Expecting a recovery in 2011, builders acquired about 1,900 lots from mid-2009 through 2010. However, the renewed demand for housing didn’t materialize as hoped and just over 1,425 new home permits were issued in 2011. That was the lowest volume since 1,307 permits in 1967.”
“Absent the pressure of an RTC-like mandate, some land experts believe the current down cycle has lasted longer than it should have. ‘Last time, many people thought the RTC was destroying the market. Dumping assets was killing prices. This time, some felt that an RTC-type program would have healed, reset the market quicker. But that’s something we’ll never know now,’ said Jim Marian, a principal at Chapman Lindsey Commercial Real Estate.”
“Jackie Zhang didn’t stay up late crunching the numbers before he decided that China’s Xinyuan Real Estate Co. Ltd. should pay $7.4 million for a portfolio of residential properties in northern Nevada. Zhang believes that residential development in northern Nevada potentially could draw big investments — maybe $100 million at a time — from Chinese investors. And he expects to be in the forefront of that deal-making. ‘I want to be the first Chinese mayor of Reno,’ he laughs.”
“Gu Yunchang, deputy head of the China Real Estate and Housing Research Association, said there is little chance for the price to rebound substantially as major customers in the market now have changed. Compared with 2007 or 2010, self-use buyers now dominate the market because of the policy to restrict the amount of homes a family can purchase. ‘They are more sensitive to price changes and their purchasing power is not as strong as investment-oriented buyers. Therefore a big rebound will definitely restrain their demand,’ said Gu.”
“The price rebound did change some buyers’ plans. Liu Gang, who failed to buy an apartment in May because of a three-month business trip overseas, has now postponed his home purchase plans. ‘Since the price has rebounded, I am not in a hurry to catch up. The price has exceeded my affordability so I have had to give up,’ said Liu, who had planned to buy an apartment ahead of marrying.”
“If younger property prospectors do not act fast they could miss out entirely on the chance of ever getting a foot in the property market, according to the accounting and wealth advisory group Chan & Naylor. The group said Gen Y’s ‘popular blind faith in the property bubble popping soon’ served as a major hindrance to investing, adding now was the time for the hesitant ones to make their move. Chan & Naylor director Ken Raiss pointed to projections by the Australian Bureau of Statistics which show the demand for housing would rise by 15 per cent on the previous generation. Raiss said potential investors, especially first-time buyers, sitting tight for a bubble to pop could be waiting a long time.”
“Raiss recommended first-time buyers adopt a more strategic approach to property investment, like using their purchase for rental purposes rather than personal occupancy. ‘Property acquisition should be treated as a business process as opposed to an act of the heart, and realise that it can be a stepping-stone towards acquiring the perfect home later in life,’ Raiss added.”
“Michael and Sarah Moy, 31 and 30, built their family home in The Ponds, on the city’s northwest fringe, where more than 64 per cent of households are making mortgage repayments in excess of $1800 a month. ‘I do consider having to pay more than that stressful, that’s a big chunk out of anyone’s wages,’ Mr Moy said. ‘I know it (only) leaves near half our money for the month, so it’s a big chunk.’”
“These are the people most affected by the tiny percentage point fluctuations of the Reserve Bank of Australia. The Moys have two children. ‘We have to think about what’s coming in and what’s going out before we do it, most of the time,’ Mrs Moy said.”
“If younger property prospectors do not act fast they could miss out entirely on the chance of ever getting a foot in the property market…”
NO!
Not this again!
Oh yes…again and again. And the people who fall for it will get to learn the hard was, same as those who came before.
(Sorry to repeat that quote so often, but there seem to be an unlimited number of potential housing bubble applications.)
I read this the other day:
Experience is the best teacher. Unfortunately, she kills all of her students. — Anonymous
Buy now or get priced out forever!
The people buying now have to buy in order to chase prices down. The same forces that built the price increases of inflation, build the price decreases of deflation. Increasing prices are found from transactions. Transactions push up prices during an inflationary period. Then during a deflationary period, more transactions happen, and prices keep dropping.
We need people to catch these falling knives, since the knives don’t just drop from the highest point and then reach the true floor. They are caught several times in bloodied hands, all the way down. This is Human nature. This is a market.
In places like Detroit, we need more transactions, to determine the real lower prices of property. That millionaire near Detroit who bought 650 houses at a tax auction for around $7500 per house, shows what prices for housing are really falling toward. I myself am helping to renovate a ~$3000 house (1BR, soon to be 2BR) in my area. Another $4000 spent to renovate it (and benefiting from previous renovations from knife catchers in the past few years), and we hope to rent it out for $300/mo. Assuming cash flow of $250/mo, that’s a 28-mo payoff period. And the owner is just getting started.
In rusty cities like mine and like Detroit, the real price of housing is less than $30K per, and deals down to 10% of that price can still be found. And that’s still too much money, since jobs are scarce and jobs are still planning on fleeing the area. Transactions will help us get there faster, albeit the spacing out of job flight means we’re still on a schedule we can’t control with transactions or any real individual plans whatsoever.
And of course the Australian economy is dropping into a severe recession right now. This is like the infamous realtor “time 2 buy” campaign of 2007. Financiers and assorted real estate parvenus desperately want the country’s young people to sacrifice themselves, for years, so that just one or two more quarters of profit can be obtained.
It seems that the developed world, and Westernized portions of the rest of the world, have forgotten entirely that people are more important than inflated assets.
Nothing about Spain here, but interesting news from Catalunya last week. I’ve often written in this space that the economic crisis, and the responses to it, easily could break Spain apart, and Canada too. I’m actually surprised that Greece has not become a military dictatorship by this point.
It seems that the developed world, and Westernized portions of the rest of the world, have forgotten entirely that people are more important than inflated assets.
Forgotten? I think they actively disbelieve it at this point.
I get polite confusion at best and often outright hostility when I suggest that housing prices being 1/3rd of what they are today would be a huge boon for our economy in the long run, freeing up disposable spending and allowing for education and retirement savings. Clownifornia has a lot of the “I got mine, so screw you!” mentality about housing prices.
I saw a Yahoo or MSN piece last week entitled “rising home prices show economic recovery picking up steam.” I didn’t bother to read it. These stories are so rote they probably could be computer-generated by now.
‘I didn’t bother to read it’
I do sometimes. On Yahoo finance they have at least one very day.
BTW, didn’t the recession officially end in 2009?
But yeah, they’ve merged housing with the economy news-wise. The one the other day about when houses will return to the peak prices was nuts!
To me, this is the most interesting period of the housing bubble yet, because so many international markets are fixin’ to blow. And the US market is only hanging on with duct tape.
Duct tape?? Or Scotch Tape?? If it were Duct Tape, it would be solid…lol.
To me, this is the most interesting period of the housing bubble yet, because so many international markets are fixin’ to blow. And the US market is only hanging on with duct tape.
BINGO!
‘Duct tape?? Or Scotch Tape?’
This reminds me of something. The other day I was listening to Car Talk and they mentioned that duct tape was good for many things but not taping ducts. Then I was discussing Scientology with a friend who mentioned that they don’t believe in science. I thought, Scientology is the duct tape of religions.
“Scientology is the duct tape of religions.”
Similarly, Christian Science is the Scientology of Christianity.
sfbubblebuyer said: “Clownifornia has a lot of the “I got mine, so screw you!” mentality about housing prices.”
You get that everywhere, since Americans were totally sold on the two great false ideas of:
1. Your domicile is a financial investment like any stock or bond. (Note: It’s not.)
2. Your domicile is part of a wealth base that will make you rich. (Note: It won’t.)
So necessarily, everyone under these twinned delusions (i.e. most people) believes that prices falling is frickin’ armageddon. And sadly the government is enforcing all sorts of arbitrary policies that are running the armageddon program… the most famous of which is the trillions in US dollars that have been devoted to bailing out the bankers and investors and other such rich people. Or course we’re in the middle of a financial armageddon now… we’re actively transferring public and private wealth into the hands of rich guys! Duh! This can only end badly!
‘We have to think about what’s coming in and what’s going out before we do it, most of the time,’ Mrs Moy said.
That’s your mortgage broker going in-n-out, Mrs Moy.
“I never thought I would end up this way. I’ve lost everything.”
You still need to lose the illusion that things you have only promised to pay for later actually belong to you.
‘Mortgage documents say they owe $229,000 and bought the home for around $108,000 in 2000. They haven’t sent in a mortgage payment since 2010. The Mandells rejected the settlement. ‘I cherish my rights to free speech.’
Honey, where are the boxes?
The people in Reno probably saw this dude coming from miles away:
‘Zhang, a 34-year-old graduate of New York University, had been traveling the United States from San Diego to Washington, D.C., to Maine in search of residential development opportunities for Xinyuan. At the invitation of Tom Gurnee, a northern Nevadan who serves as chief financial officer of Xinyuan Real Estate, Zhang included Reno in a visit in the autumn of 2011. Leaving his downtown hotel room at 2 in the morning, Zhang saw vibrant nightlife, young people on the streets and busy restaurants — a big little city.’
‘In the subsequent couple of days, he also was struck by the openness of northern Nevada residents and the region’s clear skies and clean water. Side trips to Virginia City — its Chinatown rang a particular emotional chord with Zhang — and Lake Tahoe helped seal his commitment to the region. “I have to follow my heart,” Zhang says.’
Interesting. At one point in my career I spent three days of interviewing for a professorship at the University there. Part of the interview included several hours spent with a RE agent. This was around 1978. At that time I was told they had a water problem that would limit future building in the area. I was also told that banking was a problem too because of the transient population. I turned the job down. If I didn’t have another job offer elsewhere at the same time I might have.
That is hilarious. Zhang is the paradigmatic “fool in the poker game.” Like most people in that role, he is unaware. Although I will say that Bernanke and the Fed intentionally have made savers the fool in the poker game. I take that as a tacit admission that our economy needs irresponsibility in order to survive in its current form.
He says he wants to be Mayor of Reno. I bet the local real estate people said, ‘uh, sure, you can be Mayor. Key to the city, anything you want. Just sign right there Mr Mayor.’
He probably thinks Reno 911 is just another version of Cops.
Given the physical cost of improvements, and assuming “finished lots” means “finished lots”, and there is no water issue (you have to buy your water rights in Reno), and there is no significant bond issuances, and Mr. Zhang understands how to deal with the politics in Reno to make sure his raw land doesn’t stay roughly worthless, I doubt his $7.4MM investment is at risk (that is about $25k per finished lot).
However, to understand the nuances of the Reno market, he probably should have stayed up late…
Also, his idea that $100MM chunks are going to flow to Reno is laughable. It’s just not that kind of market. Yes, Apple has a growing a presence there. Yes, it has been growing steadily over a long time. Yes, it is an outlet for people who are tired of living near Sacramento and paying CA income taxes.
However, it just will never have the explosive growth that will attract $100MM at a time…
With due respect, IMHO there was nothing unintentional about BB’s move to marginalize savers. His objective is to juice up the movement of money, to create liquidity. He’s moving money for the 1%’ers through QE. That, of course, does not trickle down to the great unwashed like us. That circumstance was intentional, and baked into the cake.
The thing that does trickle down to the great unwashed is keeping up demand for $8/hour employees. This is accomplished by having savers spend, spend, spend!
When there are no more savings to be had, we will have the curtailment of medicare, medicaid, SNAP and SS benefits. This will serve to cull the legions of great unwashed, now that we have nothing more to contribute to “society”.
So, in one fell swoop, we will be providing one another with $8/hr jobs by spending everything we have. And then, we will do “society” the favor of dying off once that has been accomplished. Needless to say, the policy decisions enacted by BB will have been the salvation of medicare; medicaid; SNAP and SS. With so many fewer participants, BB will have made the programs solvent again.
The hindsight of history will award BB the stature of a god.
‘I want to be the first Chinese mayor of Reno’
–you wish Mr Zhang.
They do have a water problem in Reno…it is not unusual for Lake Tahoe’s water level to drop “below the rim,” during summer and droughts, thus causing the the Truckee River to cease flows.
My last visit to Reno’s downtown included nightly entertainment…watching security guards chase street walking ho’s thru the various casinos as the shady ladys seek shelter trying to get out of the periods of snow outside.
‘Mortgage documents say they owe $229,000 and bought the home for around $108,000 in 2000.’
Something doesn’t add up there, and the reporter must be dumb as a board to miss it. Even if they bought in 2000 with 100% financing (kind of unlikely, despite the crazy lending of the bubble era), if they had paid their mortgage faithfully ever since, they would owe less than $108,000 today. Where the extra $121,000 in debt came into the picture is a glaring omission.
Financial journalists who can’t write a coherent story should be taken outside and shot.
“Something doesn’t add up there, and the reporter must be dumb as a board to miss it.”
Oh they get it, but their paycheck depends on them not getting it.
I’m sick of paid prostitutes who publish BS for blood money. I’ve had it.
I just need to figure out how to lob more effective bombs at these people. (Just mean the figurative bombs, of course…)
Developers have presented homeownership as an exclusive club for generations. “If you ain’t in you ain’t shit”.
I’m reluctant to talk of conspiracies since what appears to be is often only a simple confluence of interests which looks like a conspiracy, but in fact is not. Here we have the interests that include developers and builders who want to sell big expensive houses, and banks making commissions and fees shilling govt’ backed mortgages at interest rates far lower than anyone would risk if their own money were at risk. Then we have local zoning laws all taken from the same urban planning textbooks which create artificial constraints on the supply of buildable land and the types of house one can build. It all adds up to people living in more house than they need or can ever actually pay off. If people had to pay market rates for mortgage interest and the land use planners were put out to pasture, we’d have lots more people living in cozy cottages on small lots and a whole lot less malinvestment in the sort of crap that keeps people in constant debt…
“…people in constant debt…”
It’s a lifestyle choice I would respect, if these losers didn’t come crying for a bailout the moment their poor financial decisions blow up on them.
I guess these protestors must have missed the memo that the American taxpayer is now the owner of Fannie Mae and Freddie Mac. Suppose that the GSEs actually had to come up with the money to make these losers whole. Wouldn’t it have to come out of other peoples’ pockets? Or could the Fed just create the bailout proceeds out of thin air with its magic money machine?
This stoopid reporter seems to fully buy into the “free money for housing market losers” bailout concept. I imagine she is another FB talking her book.
Ed DeMarco’s Unruly Dinner Guests
By Deborah Solomon Sep 27, 2012 1:13 PM PT
Edward DeMarco may want to be late for dinner.
About 150 protestors plan to gather in front of DeMarco’s Maryland home this afternoon to hand a pink slip to the acting director of the Federal Housing Finance Agency. Calling themselves the “Fannie Freddie 99 fighters,” the protestors plan to “fire” DeMarco for his continuing resistance to principal forgiveness for loans backed by mortgage giants Fannie Mae and Freddie Mac. They intend to make “demands” that include “properly considering homeowners for permanent affordable loan modifications” and “offering foreclosed properties to former owners and/or local non-profits at value rather than selling to hedge funds,” according to a press release.
The protest follows another demonstration that took place Thursday morning in front of Fannie’s Washington, D.C. office. That event, which disrupted traffic on one of Washington’s main traffic arteries for about 30 minutes, culminated in the arrest of five people for refusing to get out of the road.
It’s not clear what effect the DeMarco protest might have other than enraging his neighbors in the Washington suburb of Silver Spring, who will no doubt resent yet another demonstration interfering with their commute. The object of attention — DeMarco — is unlikely to be home at 5 p.m. (This may be a government town, but most top officials don’t work 9-to-5 hours.)
Still, it may help to keep pressure on DeMarco, whose intransigence is keeping millions of homeowners from potential relief that would enable them to keep their homes. About 4 million of the loans backed by Fannie and Freddie are “underwater,” meaning the mortgages are worth more than the home. As Bloomberg View has written, cutting a chunk of the outstanding principal could go a long way toward restoring equity in those homes and preventing another wave of foreclosures.
One person whose home is not underwater is DeMarco. According to Maryland property records, DeMarco bought his three-bedroom, split-level brick home in 1992 for $230,000. It was most recently assessed at $424,020.
DeMarco could no doubt increase the value of his home — and many others — by allowing principal forgiveness, since more foreclosures will only further depress home prices. True, the housing market is showing signs of life but it’s not out of the woods. Helping restore equity for people who need a little help to stay in their homes would be a lot more fun for DeMarco than sleeping at the office.
Im starting to see more realtors coming out of the woodwork around here.Somehow they always find a nice ride to put around in.