Bits Bucket for November 24, 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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Guilty Pleas in Foreclosure Fraud Cases - NYTimes 20 Nov — The founder and former president of DocX, once one of the nation’s largest foreclosure-processing companies, pleaded guilty on Tuesday to fraud in one of the few criminal cases to have arisen out of the housing crisis.
The executive, Lorraine O. Brown, 56, entered a guilty plea in federal court in Florida and a plea agreement in state court in Missouri related to DocX’s preparation of improper documents used to evict troubled borrowers from their homes. Ms. Brown’s guilty pleas will lead to a prison term of at least two years, the Missouri attorney general said.
Foreclosure abuses, like the routine filing of apparent forgeries with the nation’s courts, gained widespread notoriety in 2010. Ms. Brown admitted to directing DocX employees, beginning in 2005, to sign other peoples’ names on crucial mortgage documents…In her plea, Ms. Brown admitted to participating in the falsification of more than a million documents.
ThomsonReuters added: According to the court papers, DocX charged mortgage services about $5 to $15 per document, and hired temporary workers to sign thousands per day. The firm grossed approximately $60 million between 2003 and 2009, the court papers said.
“…pleaded guilty on Tuesday to fraud in one of the few criminal cases to have arisen out of the housing crisis.
The executive, Lorraine O. Brown, 56,…”
Talk about your bad luck! Almost nobody committing criminal acts connected to the housing bubble suffered legal consequences. What did poor Mr. Brown do wrong in life to get so unlucky?
sad thing is no one cares who goes to jail or who doesnt. they just care about their home and stock values.
The sad thing is Jonesy is still giving you latitude here. I forecast it will come to end soon.
Darryl Is A Liar
Your use of pseudonyms with offensive attacks embedded in them is one example of what I thought Ben was referring to. I hope it comes to an end soon.
(Full disclosure: I missed most of the day in question, so maybe I don’t have a clue.)
I know. Your feelings must be hurt. Gawd it’s tragic….
Your feelings must be hurt.
It’s not my feeling that are hurt; I generally don’t end up in your cross-hairs because we’re on the same side of most debates.
But that doesn’t mean that I don’t find your approach to detract from the level of discourse on the blog. I wish you would reconsider the name-calling pseudonyms.
When a liar lies, he is a liar.
sad thing is no one cares who goes to jail or who doesnt. they just care about their home and stock values.
+1, azdude.
What about all of the large banks who HIRED Ms. Brown and her DocX firm _specifically_ because they would get the correct forms forged for them?
Outsourced fraud is still fraud.
OMG, I can’t believe what has become of our so-called system of justice.
I can’t believe what has become of our so-called system of justice. I believe what has happened is that what there was of our ‘rule of law’ has failed.
Google ‘mortgage fraud conviction’ and you will get a great many hits from local news sources about cases all over the USA. The big winners have scarcely been touched.
Exactly tresho.
“Sacramento’s uptick in housing aids underwater owners”
http://www.sacbee.com/2012/11/24/5007013/sacramentos-uptick-in-housing.html
“After the housing bubble burst, tens of thousands of people across the Sacramento region were trapped in homes worth less than they owed, with experts predicting it could be many years before they recovered their lost equity.
In the past six months, however, rising prices have substantially reduced negative equity in the region, real estate tracking firm Zillow said in a recent report.
Today, nearly 5,000 underwater homeowners are nearing the point where their home values exceed their loan balances.”
—snip—
“It was a good feeling to sell that house and get out. I never want another mortgage payment like that again.” –Aitken, a pharmacist.
“their lost equity.”
“Equity” is a fallacy. Why throw good money after bad on interest payments, maintenance costs and a depreciating asset?
There is no “equity”.
“It was a good feeling to sell that house and get out. I never want another mortgage payment like that again.” –Aitken, a pharmacist.
Once bitten, twice shy?
I would like to believe that. But in the aggregate, I bet a decent fraction of people don’t learn the lessons from this that they should have.
“People are smart.”—ditech.
An FB friend of mine caught the echo this summer and sold. She never wants a mortgage again. Having sold, quit the job she hated, took early retirement and she’s traveling the country. Lessons taught by pain are not soon forgotten.
“Lessons taught by pain are not soon forgotten.”
+1 The pleasures of pain are never forgotten.
Three weeks ago, I was walking around my mother’s Sacramento neighborhood and saw three houses that were empty, with documents posted on the windows and doors, but no sale signs in the yards. Shadow inventory, folks, shadow inventory.
Why Housing Hasn’t Hit a Real Bottom
George Mason University professor Anthony Sanders weighs in on the latest housing data.
Duration 3:41
Date Nov 19, 2012
when the sheep figure out housing has bottomed it is too late to buy. you want to get ahead of the dumb money.
When Darryl the realtor stops lying to the public, the world will be a better place.
You also want to sell your flip investments before the smart money figures out that what looked like a recovery was actually just a large, slow dead cat bounce.
Sell that investment condo now, Darryl, before it’s too late!
darryl is having fun fixing up his new condo.he is going to make some bank on his condo thanks to policy makers.
Darryl couldn’t build a doghouse in 6 months if I gave him plans and materials.
Darryls losses are mounting already.
why do you have such a hard on for mr darrell?
First principles of statistical inference suggest that azdude is not darryl, as I recall none of darryl’s posts below thirty words…
what looked like a recovery was actually just a large, slow dead cat bounce.
I want to believe that. The “recovery” certainly doesn’t seem to make any sense from a fundamentals POV—e.g. exactly why we all started to believe there was a bubble to begin with.
But what if the Fed really can re-inflate forever? They appear to have the will; they appear to have the means; what will prevent them from following through on it?
“But what if the Fed really can re-inflate forever?”
Maybe they have finally figured out how to grow trees to the sky, but I sincerely doubt it.
“what will prevent them…”
Food and fuel have doubled and they will again if the Fed continues. No big deal if food is 5% of your budget and you have plenty of money left at the end of the month. A huge deal if you have kids and live on the edge week to week. I suspect this inflating is sucking the life out of the economy. Save the house mortgage lenders this way today and tomorrow take the hit on failed commercial loans. It is all extend and pretend.
I suspect this inflating is sucking the life out of the economy.
I see 4 factors sucking the life out of this economy. You’ve mentioned one. The other 3 are: massive overload of debt that is not being resolved, Fed’s misallocation of fiscal policy, and shortage/competition/rising prices of basic commodities, mostly oil, not related to inflation.
“when the sheep figure out housing has bottomed it is too late to buy.”
The sheep don’t have any money, and anything that does manage to come their way is 125% rigged. No timing required.
The sheep already are all in, thanks to FHA lending.
Minyanville’s Jurow: No Housing Bottom in Sight
Tuesday, 20 Nov 2012 12:54 PM
By John Morgan
Housing prices in the United States are at a false bottom because of bad reporting data, and the distortion masks the fact prices in many areas have further to fall, according to Keith Jurow, author of the Minyanville Housing Market Report.
“If I saw a bottom, I would say it,” he told Yahoo.
“There is no housing bottom in sight.”
Jurow discounted the latest monthly report from the National Association of Realtors (NAR) that showed a year-over-year increase of 11.1 percent in median prices in October.
“I don’t pay much attention to median prices because they are very deceptive. Banks around the country are not foreclosing,” he said
Because homes that eventually will be foreclosed on are not included in the data, the true state of housing is hidden, according to Jurow.
“If you eliminate sales of the lowest priced houses, it’s going to push up the median price in almost any market. That doesn’t mean the market as a whole in that area is improving.”
Jurow said a more accurate measure of housing prices comes not from median sales figures calculated by the NAR or other sources, but from raw sales numbers recorded by real estate brokers.
For instance, he noted, while median prices for October were reported up 25 percent year-over-year in Fairfield, Conn., the actual price per square foot was down 6 percent during the same period.
“So there’s a big discrepancy,” he told Yahoo.
The fact banks are sitting on “shadow inventory” merely delays the eventual reckoning in housing prices, according to Jurow. But he said the leftover effects of easy credit are an even bigger reason for a poor real estate market.
“The cause is that we had the biggest credit bubble in our history,” he said.
“Great credit bubbles never end softly.”
…
Our fed induced dead cat bounce is probably the sell-signal for the early boomers who have been quietly watching this housing mess from their mortgage-free homes in mature tree-lined neighborhoods, but now desire a smallish place in the sunbelt with the difference banked.
Totally agreed! My colleague at work is a case in point…
Even though unemployment is still going up in San Diego, at least our housing model has bottomed out. At least that’s what the experts tell me!
SD unemployment rate rose in October
Written by Jonathan Horn
9:37 a.m., Nov. 16, 2012
Updated 2:31 p.m.
After three consecutive months of decline, San Diego County’s unemployment rate rose in October, a month rife with economic uncertainty.
At 8.6 percent, the region’s jobless rate ticked up from a revised 8.5 percent in September. Still, other than September, the rate is at its lowest since February 2009, when it was also 8.6 percent.
The jobless figure rose because more people entered the labor force than those who reported they had jobs, according to data the state Employment Development Department released today.
The October jobs report is a snapshot of how San Diego County employers reacted during a month of economic uncertainty. They didn’t know whether President Barack Obama would be re-elected (and whether health care reform would be repealed); they didn’t know if taxes would increase (they will, due to the passing of Prop 30 and Prop Z), the makeup of Congress or who the next mayor would be (Bob Filner).
“Definitely there was a sense of uncertainty from a national level to the local,” said Ruben Barrales, CEO of the San Diego Regional Chamber of Commerce. “I think it affects different industries in different ways.”
…
“The jobless figure rose because more people entered the labor force than those who reported they had jobs”
San Diego Metro added about 4k nonfarm jobs from September to October 2012 (seasonally adjusted), and approximately 23.5k jobs year on year (October to October). This is directly from the BLS.
When unemployment drops nationally, we are all quick to point out that people are fleeing the labor market, and so the lower unemployment rate masks this negative effect.
When unemployment rises, and people entering the labor force, shouldn’t we all look to see what is happening with actual job creation?
modelmarketMy son will be buying a home in SD in the next few months and i can confirm the market has bottomed. Very little inventory!
How can that be when prices are falling and inventory is massive?
You can only see a bottom from behind, so you must be seeing something else.
“…i can confirm the market has bottomed. Very little inventory!”
I guess you missed the memo that low-end inventory has disappeared thanks to QE1, QE2, QE3, and massive injections of federally guaranteed mortgage monies into the hands of marginally qualified buyers, leading to a perceived ’shortage’ of ‘low-end’ homes (those priced under $500K).
I’m pretty sure you will find no ’shortage’ if you move up your price range to, say, the $1M+ market. 1172 of 4380 (over one in four) homes currently shown by Redfin as ‘on the market’ in SD County list for over $1M. I can assure you that you will find little competition in that range, as a colleague who had to drop the asking price $500K to find a buyer willing to pay north of $1M can attest.
Above all, what I believe you, Darryl and the others who confidently crow about a bottom at this point have missed is the unprecedented amount of market manipulation which has gone into short circuiting the housing bust and engineering an artificial housing bottom. Do you believe that past housing bottoms were engineered through intervention, rather than by letting market forces run their course? (I don’t…)
Perhaps this manipulation can and will be continued and will continue to be effective indefinitely, and perhaps not; only time will tell.
everyone knows the market has been manipulated. the question is how do you make money off of it.
The taxpayer seems fine with picking up the tab to carry all these homes being held off the market. I dont see anyone making a fuss over it.
I dont see anyone making a fuss over it. Why try when no matter how much fuss one makes, it doesn’t matter?
Whenever I read about housing ‘inventory’ I immediately suspect BS or RE pimping. Inventory is entirely artificial, just whatever would-be sellers & brokers are putting on the market. Of course it’s a manipulated figure.
“…in SD…”
San Diego or (gulp) South Dakota?
I’m guessing there is very little inventory in South Dakota, cause nobody wants to live or build there…
I don’t know about South Dakota, but the ‘oil patch’ in North Dakota has a genuine housing shortage. AFAICT, North Dakota was minimally affected by the housing bubble, perhaps the least affected state in the union. Oil & support workers have been flocking to the oil patch and have bid up prices. Old timers have been forced out of the market or have sold out & moved away to spend their gains elsewhere. Some workers must commute 300 miles a day. Previous booms in farm land prices seem to have been taken seriously and aversion to taking on long term debt for short term gains seems to be more common there. So not a great deal of new building has been going on. Many understand the boom will end as quickly as it began.
300 mile commute! Around here, temporary RV parks sprang up when the pipeline went through. Now they are closed.
300 miles a day? I’m surprised the state isn’t one giant trailer park. That’s probably the best option…
Imagine trying to live in an RV when it’s -40 outside.
“Imagine trying to live in an RV when it’s -40 outside.”
+1 Yeah, no playing catch with the son.
“Imagine trying to live in an RV when it’s -40 outside”
It’s a challenge at 15F.
get on the bernake bandwangon my friend.
Does ‘bernake‘ rhyme with ’snake’ in your world?
you know what bro, I think this poor guy is just being used. If everything falls apart and the policies fail he will be the one to blame. He is an appointed position I believe. We always need someone to blame but ourselves.
We always need someone to blame but ourselves.
Umm, I reject that.
_I_ am not the one massively manipulating markets. Or are you the one who is doing it?
That BS that you wrote above was standard blame-the-victim stuff.
Fail.
I am the one questioning whether the Fed is acting outside the bounds of its charter. Don’t blame me.
_I_ am not the one massively manipulating markets. Or are you the one who is doing it?
Most of us are just along for the ride. Keep your lap bar firmly engaged until just before you jump off the roller coaster.
Keep your lap bar firmly engaged until just before you jump off the roller coaster.
Generally they recommend that you wait until it comes to a complete stop before disembarking.
But will the Fed ever stop manipulating? I have my doubts.
Is the eurozone crisis contained at this point?
Data confirm 17 eurozone nations have slipped back into recession
From Our Press Services
Posted November 15, 2012 at 5:33 a.m., updated November 15, 2012 at 11:28 a.m.
Protesters, unseen, throw fireworks to the police riots during a general strike in Madrid, Spain, on Wednesday. Spain and the rest of the 17-nation eurozone have fallen back into recession for the first time in three years, data released Thursday have confirmed. (AP Photo/Andres Kudacki)
Photo by Andres Kudacki
LONDON — The 17-country eurozone has fallen back into recession for the first time in three years as the fallout from the region’s financial crisis was felt from Amsterdam to Athens.
And with surveys pointing to increasingly depressed conditions across the 17-member group that uses the euro at a time of high unemployment in many countries, there are fears that the recession will deepen, and make the debt crisis — which has been calmer of late — even more difficult to handle.
Official figures Thursday showed that the eurozone contracted by 0.1 percent in the July to September period from the quarter before as economies including Germany and the Netherlands suffer from falling demand.
The decline reported by Eurostat, the EU’s statistics office, was in line with market expectations and follows on from the 0.2 percent fall recorded in the second quarter. As a result, the eurozone is officially in recession, commonly defined as two straight quarters of falling output.
“The eurozone economy will continue its decline in Q4 and probably well into 2013 too — a good backdrop for another debt crisis,” said Michael Taylor, an economist at Lombard Street Research.
…
For a parallel nonsensical “no bubble here” argument, imagine a U.S. economist circa 2004 saying, “The truth is, the consensus on home price appreciation has consistently underestimated their targets.”
In short, nonsense.
Fears that the ‘mother of all bond bubbles’ is coming could be overblown
John Shmuel | Nov 23, 2012 6:56 PM ET | Last Updated: Nov 23, 2012 7:22 PM ET
Bloomberg/Peter Foley
Last week, Sheila Bair, former chairman of the Federal Deposit Insurance Corp., warned the U.S. Federal Reserve is creating another financial crisis with its quantitative easing policy.
There was no shortage of analysts ringing alarm bells when bond yields hit record lows this summer. They argued rock-bottom interest rates wouldn’t last for long and investors would get burned as a result. Many market watchers labelled the flood of money into the bond market as a “fear trade” driven by panic that a possible eurozone breakup and another global recession were around the corner.
Five months later, the macro picture has stabilized, with an unlimited bond-buying program from the European Central Bank cooling concerns that a eurozone collapse is inevitable. But bond yields still remain close to historical lows, suggesting investors are as fearful as ever. The amount of money flowing into bonds is staggering. Research by JPMorgan shows US$2-trillion has flowed into fixed-income funds around the world in the last four years, compared with US$400-billion into equity funds.
Naturally, when that much cash pours into a single type of asset, the bubble word starts getting tossed around. Last week, Sheila Bair, former chairman of the Federal Deposit Insurance Corp., warned the U.S. Federal Reserve is creating another financial crisis with its quantitative easing policy. She said the sheer amount of money flowing into the fixed-income market is creating “the mother of all bond bubbles.”
The idea is gaining steam among some analysts and, certainly, the media. But John Lonski, chief economist at Moody’s Capital Markets Group, points out analysts have generally been wrong in the last two years when forecasting what the bond market will do. “The truth is, the consensus on Treasury yields has consistently overestimated their targets,” he said.
…
cant the bernak keep yields down by being the buyer of last resort?
For the record, Sheila Bair is a Republican, presumably not “left-wing.” Pointing out unrectified crimes in the financial sector is a nonpartisan activity. And as former director of the Federal Deposit Insurance Commission, she hardly qualifies as “anti-banker.”
I apologize in case I once again overestimate the journalist profession’s obligation to do a little homework as insurance against making false statements in a news story.
Sheila Bair Says We’re Headed for Another Crisis
By Jordan Weissmann
Nov 15 2012, 12:48 PM ET 10
The former head of the FDIC thinks we’re in the middle of a “bond bubble.”
As head of the Federal Deposit Insurance Corporation during the financial crisis, Sheila Bair — a lifelong Republican — became a hero to bailout skeptics, and liberals in particular, for her stance against the soft treatment of big banks and in favor of aiding suffering homeowners. She’s cemented that reputation since leaving government, advocating ideas like breaking up too-big-too-fail firms and taxing financial transactions, and publishing a book full of criticisms about how the government reacted to Wall Street’s meltdown.
So Bair probably isn’t going to lose her status as a left-wing — or at least anti-banker — icon any time soon (she even endorsed Elizabeth Warren). But lately she’s been on the warpath about another issue, one she returned to in a discussion at the Washington Ideas Forum today. She thinks we’re in the midst of a bond bubble that could lead us towards another big bust, or perhaps a new financial crisis, and that the Fed needs to pop it by allowing interest rates to rise.
…
Bair probably isn’t going to lose her status as a left-wing — or at least anti-banker — icon any time soon
“Left-wing” because she wants banking accountability? Labels are funny.
It’s a strange world where “conservatives” mollycoddle the too-big-to-fail banking monstrosities that have only morphed into their present forms in the past decade or so.
Real conservatives would have acted conservative by definition instead of deregulating the banks.
There was NOTHING conservative about The Commodity Futures Modernization Act of 2000 or the The Financial Services Modernization Act of 1999. Both of those acts have led to a financial system so out of control that they needed bailouts -bailouts in which the taxpayers didn’t even get any equity in the banks they bailed out. There is nothing conservative about that.
There was NOTHING conservative about The Commodity Futures Modernization Act of 2000 or the The Financial Services Modernization Act of 1999.
Correct. On the international scene, those Acts would be labelled as “neo-liberal”
It is really hard to figure out if the vultures are “neo liberal” or “neo conservative”. It’s ike a conversation with someone who has Borderline Personality Disorder. How about “Corrupt”, “Conflict of Interest”, “Predatory Public Servants” & etc.?
Sheila Bair’s recent book is worth reading. If you don’t want to read the whole thing, go to the end & read her recommendations for what she thinks needs to be done to get us out of the mess we’re in. From a WSJ review:
Here is a brief list of some of her top zingers.
Treasury Secretary Tim Geithner “looked like a scared little boy” at the press conference where he announced the 2009 stress test initiative. He was chosen to be Treasury Secretary “for all the wrong reasons… That ill-fated choice was painfully apparent as he struggled to get the words out, his voice at times quivering, his eyes darting nervously back and forth across the room.”
“Was it gross incompetence or unbelievable disrespect?… Maybe the boys didn’t want Sheila Bair playing their sandbox.” – Bair on learning that other regulators didn’t loop her in on developments in rescuing Wachovia during the financial crisis.
Citigroup’s Vikram Pandit “wouldn’t have known how to underwrite a loan if his life depended on it.”
The Obama administration’s 2009 plan to help struggling homeowners “was doomed to failure,” “cheated borrowers” and was “designed to look good in a press release, not to fix the housing market.”
Then-Treasury Secretary Henry Paulson and Neel Kashkari, who was heading the bank bailout-program TARP, pulled a “bait and switch” on American taxpayers by claiming that TARP wouldn’t let Treasury use the funds for mortgage modifications.
On Mr. Paulson not having time to meet with her early on: “Clearly, the former CEO of Goldman Sachs didn’t think the head of an agency that insured $100,000 bank deposits was worth his time. That would change…”
Ms. Bair got zinged herself by a protester outside the Treasury building during TARP negotiations, mistaking her for a “fat cat” banker as she exited. “How much did that suit cost?” the protester asked. $139 at Macy’s, Bair replied.
“wouldn’t have known how to underwrite a loan if his life depended on it.”
Typical Wall Street banksta…
I come up with 26,412 empty houses in this county yet inventory is down to nothing and prices are rebounding.
The 10 Markets with the Most Empty Homes
Posted: November 20, 2012 at 6:48 am
3) West Palm Beach, Fla.
> Vacancy rate: 6.7%
> Median price per square foot: $109
> Unemployment: 8.4% (Miami-Fort Lauderdale)
http://247wallst.com/2012/11/20/the-ten-markets-with-the-most-empty-houses/ - 64k - Cached - Similar pages
——————————————————————————
Posted: 5:16 p.m. Monday, Nov. 19, 2012
Rise in Palm Beach County home sales cuts into inventory
By Kimberly Miller
Palm Beach Post Staff Writer
According to a report from the Realtors Association of the Palm Beaches, existing single-family home sales increased 22 percent in October from last year, and were up 12 percent from September. Prices also climbed with the median sales price jumping 23 percent from last year to $222,500.
But West Palm Beach Realtor Shannon Brink likened the choices of homes available to a department store clearance rack a week after a sale. Inventory has dropped 55 percent from last year to a 4.7 months’ supply in October.
“There is nothing left but the items no one wants,” said Brink, adding that he’s had four buyers looking in the $100,000 range recently end their pursuit for a home. “Or they’ve decided to try and save up more money for a higher down payment because there is virtually nothing left that’s available that doesn’t need repairs or exists in less desirable areas.”
——————————————————————————-
Palm Beach County QuickFacts from the US Census Bureau
http://quickfacts.census.gov/qfd/states/12/12099.html - 168k
Housing units, 2011 668,159
Housing units in multi-unit structures, percent, 2006-2010 41.0%
41% of 668,159 would leave about 394,214 single family houses in this county of which 6.7% are vacant which would be about 26,412 empty houses which does not include the 10`s of thousands of houses where people have been living without paying the mortgage for 3 - 5 years which does not include the re-defaulters and yet West Palm Beach Realtor Shannon Brink says….
“There is nothing left but the items no one wants,” said Brink, adding that he’s had four buyers looking in the $100,000 range recently end their pursuit for a home. “Or they’ve decided to try and save up more money for a higher down payment because there is virtually nothing left that’s available that doesn’t need repairs or exists in less desirable areas.”
the taxpayer is being stiffed with the carrying costs to keep the inventory off the market so prices can increase. It is what it is. you are not going to change what is going on. Dont fight the trend. you have figured out the trend now get out there and make some money. just cause you dont like what is going on doesnt mean it will change. the powers that be have made their choice on the way to fix things. will it work, who knows. you are smart enough to figure it out now make some money. Dont fight the trend!!!!!!!!!!!!!!!!!!!!!!!!
The trend is down. Why borrow gobs of money only to lose it while prices continue their downward trend?
Do you really lose that borrowed money? the only money you could technically loose is a down payment and the difference in what you would pay in rent.In some areas it is cheaper to buy than rent. most people are getting homes for 0 down or 3.5% down.
They have very little of their own money in the deal. Using other peoples money is called leverage.
People have figured out that if home prices crash you simply let the bank take their collateral back. Seems to me that the biggest risk is on the one loaning the money. since that money is basically being provided by the govt they have a huge incentive for prices to go up. Within 3 years you can buy another home if it doesnt work out.
the only money you could technically loose is a down payment and the difference in what you would pay in rent.
That’s only true in a no-recourse state, or if you have no other assets and are effectively judgement-proof or willing to go BK in a recourse state.
Not to mention that there is an emotional toll to being underwater on your house, and I’d prefer not to go there.
Those details are for the informed not the sheep.
And none of those markets in CA.
http://trends.truliablog.com/2012/08/housing-glut-or-housing-shortage-americas-got-both/
With 4 of the lowest 10 vacancy rate markets in CA:
San Jose, Orange County, Los Angeles, and Ventura County
+1
As I’ve said before, supply shortage does not equal “listing shortage”. This can be easily manipulated.
Actual supply shortages are not listing shortages, but not enough homes relative to the people who want to live there…this shows up in vacancy rates. Low vacancy rates equals supply shortage. High vacancy rates does not equal supply shortage.
Actual supply shortages are difficult to be manipulated.
Housing Demand cratering in Phoenix
http://www.zillow.com/local-info/AZ-Phoenix-home-value/r_40326/#metric=mt%3D30%26dt%3D1%26tp%3D5%26rt%3D8%26r%3D40326%26el%3D0
But I thought Phoenix is a big turnaround?
Zillow Home Value Index Y-o-Y
Phoenix $121,100 28.3% (?)
Sale price per square foot up 31%.
terrible job market. very few “career” type jobs in PHX. relatively uneducated workforce, unlikely to attract a lot of new good employers.
any turnaround would be temporary. good local jobs are needed to make high housing prices sustainable.
terrible job market. very few “career” type jobs
I think that can be said about most metro areas these days.
I was contacted by a head hunter about a job in Phoenix. As if I would even consider living there.
I would never consider living in PHX either. I have been there a few times–low cost of living, but poorly laid out (too spread out) and awful climate for 4-5 months/yr. Because of the job market, I’ll most likely be living in the northeast, even if I was offered an amazing job in the heartland or south. It’s important to be near the center of gravity in case you do need to find a new job.
These times are most rewarding with mobile people. One year in Phoenix I earned over $210,000. One year in Florida I earned $170,000. Currently in LA I earn less than in Florida, but I had no time to search for a better paying job. Every week I do not work I also lose income and may as well take a lower paying job right away than a higher paying job in five months.
good local jobs are needed to make high housing prices sustainable
Not true. Any part of the country where retirees are willing to move to spend their savings will tend to have higher housing prices than other areas not so favored. San Diego is one of those ‘favored’ places.
Also, the Fed is running a long experiment in sustaining unrealistically high housing prices.
You’re actually wrong. Your rationale assumes that there will always be more and more retirees to take the spots of the ones who pass away. It also assumes there isn’t a ton of buildable land on places like SoCal, Arizona, Nevada, and Florida. This is also a lie.
As soon as there are smaller generations (i.e. after the Boomers) there will be higher supply than demand for the retirement-type housing you speak of.
Also, people who are retiring are generally not buying the largest and most expensive houses. Most are also not buying in prime locations. Lastly, they don’t have the perceived need of being near the “best” schools.
In short, you made a lot of assumptions and they largely do not and will not pan out in the long run. San Diego has high prices because of restrictions on building, a high military presence, and the fact that CA historically was a good place to do business. This is not nearly so true these days, by the way.
In short, you made a lot of assumptions and they largely do not and will not pan out in the long run.
In the long run we are all dead. I am describing the situation in SD as it IS. You are the one making assumptions, such as what happens after the boomers. Whatever happens at that point is just speculation. people who are retiring are generally not buying the largest and most expensive houses Compared to the Midwest, any decent housing in SD is expensive. Relative size of housing isn’t material to this discussion or to the housing bubble, just expense.
San Diego has high prices because people (are willing and able to) pay them. Period.
Most are also not buying in prime locations. If San Diego isn’t a prime location, what is?
there will be higher supply than demand for the retirement-type housing you speak of Let’s resume discussion of this issue in 20 years.
CA historically was a good place to do business Detroit was that, once.
there isn’t a ton of buildable land on places like SoCal, Arizona, Nevada, and Florida You left out the Dakotas, Montana, Wyoming, the upper peninsula of Michigan, places like that. Not all restrictions on building are related to government edicts. Some just make sense.
Your rationale assumes that there will always be more and more retirees to take the spots of the ones who pass away. It also assumes there isn’t a ton of buildable land on places like SoCal, Arizona, Nevada, and Florida. This is also a lie.
As soon as there are smaller generations (i.e. after the Boomers) there will be higher supply than demand for the retirement-type housing you speak of.
You win Honest Person Of The Day award with this post
Operative Word: Demographics
And the demographics are ugly in terms housing inventory and housing demand.
Carry on with the truth brother.
Good neighborhoods in my part of Phoenix metro still have little to no inventory under $225k, I don’t know if its lack of sellers, too many buyers, low interest rates or just a coincidence. It has been this way since the early spring, I am interested to see what happens next year during the so called “selling season”.
Before this spring, you would see a bit more inventory with the fixers sitting on the market for a while, but even then the inventory was lower than you would expect for such a dead time in the market.
When I look at zillow for my area, I see the last sale is still in bubble land on a large number of homes, those homes appear to be occupied by the bubble buyer. So those folks are either still able to afford the payment or have been living free for a number of years.
Interesting times.
“Banks have forgiven $2.5 billion in first mortgage debt nationwide between March and September for 21,833 homeowners.”
As far as I know Landlords have forgiven their tenants $0 in rent nationwide between March and September.
Posted: 3:36 p.m. Friday, Nov. 23, 2012
Banks favor short sales over debt forgiveness
By Kimberly Miller
Palm Beach Post Staff Writer
WEST PALM BEACH —
Florida homeowners have received more than $3 billion in mortgage relief and benefits from the nation’s five largest banks since a landmark settlement was signed in March to atone for foreclosure-related offenses.
But the majority of the banks’ debt forgiveness has come in the form of short sales, a gesture that homeowner advocates say doesn’t match the goal of the agreement, which was to keep borrowers in their homes.
More than $2.2 billion, or 63 percent of Florida’s total take so far from the settlement, has been in deficiency waivers for short sales, according to quarterly progress reports submitted this week to settlement monitor Joseph Smith.
Nationwide, about 60 percent of the debt forgiven through Sept. 30 has been through short sale deficiency waivers.
“We believed the intent and motivation for this settlement was to keep people in their homes,” said Laura Johns, a community organizer with the Home Defenders League, a national organization whose Florida base is in Orlando. “What we see happening in Florida is people being pushed out of their homes and the homes going to investors.”
The average borrower’s relief in Florida from the settlement has totaled $74,673.
About 5,110 Floridians have received an average of $10,850 in “transitional” money to leave their homes, while $6.9 million in debt has been forgiven to homeowners who have deeded their property to the bank rather than going through a lengthy foreclosure proceeding.
Johns said banks should be focusing more on primary mortgage principal reductions that will leave fewer homes underwater and make monthly payments more affordable.
While principal forgiveness on first mortgages has totaled $386.7 million in Florida between March and Sept. 30, it makes up just 11 percent of the overall relief so far. About 3,240 Floridians have received a first lien principal reduction, averaging $119,256.
Banks have forgiven $2.5 billion in first mortgage debt nationwide between March and September for 21,833 homeowners. The average forgiveness amount was $116,929.
Paul Baltrun, director of homeowner assistance at the Law Office of Paul A. Krasker in West Palm Beach, said he had a client receive a $390,000 reduction on a Bank of America first mortgage, dropping the balance to $231,000.
A second client had his entire second mortgage of $63,252 forgiven by JPMorgan Chase.
http://www.palmbeachpost.com/news/business/real-estate/banks-favor-short-sales-over-debt-forgiveness/nTDg5/
To be FREE of any bill collectors for life and people are complaining they have to move?
has been in deficiency waivers for short sales,
“About 5,110 Floridians have received an average of $10,850 in “transitional” money to leave their homes,”
Thats just a drop in the bucket….that adds up to $54 million
Florida homeowners have received more than $3 billion in mortgage relief and benefits from the nation’s five largest banks since a landmark settlement [...]
But the majority of the banks’ debt forgiveness has come in the form of short sales
Ya gotta admit, this is pretty smart on the part of the banks. They agree to a settlement, effectively wiping away their liability for years of malfeasance during the lending boom; and then they meet their obligations under that settlement by forgiving the post-short-sale loan balances that were essentially un-collectable anyway (because the FBs have no money and no assets).
Brilliant.
No Bankster Left Behind!
+1 It’s a good thing to have IQ on your side.
Quote of the Day: Who said this?
what will stop them from them (FED) doing what their doing?
A Bolshevik uprising in the USA?
A Bolshevik uprising in the USA? IMHO, the far more likely outcome is an economic collapse similar to the fall of the USSR.
This is the most likely scenario.
A wave of real, significant inflation might stop them. Might.
At the moment, the relative proportion of inflationary vs deflationary pressures has allowed them to get away with it.
There is still a lot of deflationary pressure lurking out there in the system; all of the uncollectable debt that needs to be wiped away is strongly deflationary.
Congress authorized the Fed in 1913, in a Christmas recess vote, you know, like the ObamaCare vote.
CONGRESS giveth and Congress can taketh away.
However, our CONgress hasn’t got the nads to do anything fiscally responsible.
The FSA is much too big and they are restless.
No guesses? Anyone!?
Ron Paul
Excellent attempt, though surprisingly wrong.
Mitt Romney.
hmmmmmm?
http://news.yahoo.com/shipping-containers-become-condos-detroit-110032447–abc-news-topstories.html
Use of shipping containers for housing was discussed in posts yesterday.
Worst Metaphor of 2012: ‘Fiscal Cliff’
By Rick Newman
November 21, 2012.
Ben Bernanke may be a brilliant economist, but as a wordsmith, he’s responsible for popularizing what has become one of the most grating clichés of modern times.
It was the Federal Reserve chairman who warned of a “fiscal cliff” back in February, when he testified before Congress. Here’s how those two mellifluous words flowed from his mouth then: “Under current law, on January 1, 2013, there’s going to be a massive fiscal cliff of large spending cuts and tax increases. I hope that Congress will look at that and figure out ways to achieve the same long-run fiscal improvement without having it all happen at one date.”
Congress has figured out no such thing, of course, which is why we’re still talking about Bernanke’s fiscal cliff—and twisting the unhappy metaphor into worse and worse constructions.
There are two problems here: First, there’s no intuitive connection between government finances and the geologic formation known as a cliff. It’s an incongruous concept, like something you dream about after having too many glasses of wine: Your mother-in-law on a Harley, or bifocals on your pet schnauzer.
Second, to satisfy our need for drama, somebody or something needs to approach this cliff in an uncontrolled fashion, as if it’s one of those old Road Runner cartoons. Since the cliff is “massive,” the consequences of going over it need to be catastrophic. If said thing or person does go over the cliff (without an Acme parachute handy) there will presumably be carnage at the bottom.
…
we obviously have a spending or a revenue problem. On the revenue side it isnt cool to raise taxes if you are trying to win an election. now that the incumbent is safe for 4 years and doesnt have to worry about being reelected I think taxes are going up for sure. the bill is coming due for all the bailouts of the past 4 years.
It took a lot of spending to get reelected. All the freebies being offered were no coincidence.
I think the biggest problem with balancing the budget is the politics involved with getting elected.
Voters are getting hooked on the govt helping them.
My Ex thought I had a revenue problem. I thought she had a spending problem. The argument was eventually settled by reality.
excellent analogy
By Roben Farzad on November 23, 2012
Last year, for the first time, sales of adult diapers in Japan exceeded those for babies. (That can`t be good, can it?)
“It has been a fool’s game to guess when the yen would finally weaken,” writes Hunt, “but economic healing in the West and eventually inflation and rising interest rates here could certainly be a catalyst, as could money printing in Japan.”
It should be remembered, however, that the Bank of Japan has already shattered what is widely regarded as the ultimate monetary taboo: printing money to buy equities to boost the chronically moribund economy. To little apparent avail, so far.
http://www.businessweek.com/articles/2012-11-23/japanese-stocks-yes-they-really-think-so - 76k -
Japan’s plight exposes capitalism’s greatest flaw, namely that capitalism requires growth to work. China will be in Japan’s shoes sooner than most expect.
http://www.guardian.co.uk/world/2012/mar/20/china-next-generation-ageing-population
China’s economic miracle has been fueled by its “demographic dividend”: an unusually high proportion of working age citizens. That population bulge is becoming a problem as it ages. In 2000 there were six workers for every over-60. By 2030, there will be barely two.
China will be an old nation before it is a rich nation. Ergo, it will never really be a rich nation in per capita measures. And because of wealth concentration within the Party and its cronies, it will be awful for the average person there once the country gets old.
“it will be awful for the average person there once the country gets old.”
“Last year, for the first time, sales of adult diapers in Japan exceeded those for babies”
I guess it`s going to be awful for the average person there pretty soon.
The One Housing Solution Left: Mass Mortgage Refinancing
By JOSEPH E. STIGLITZ and MARK ZANDI
Published: August 12, 2012
MORE than four million Americans have lost their homes since the housing bubble began bursting six years ago. An additional 3.5 million homeowners are in the foreclosure process or are so delinquent on payments that they will be soon. With 13.5 million homeowners underwater — they owe more than their home is now worth — the odds are high that many millions more will lose their homes.
http://www.nytimes.com/2012/08/13/opinion/the-one-housing-solution-left-mass-mortgage-refinancing.html -
Wow, that first paragraph says a lot!
how about mass credit card refinancing….let everyone pay Zero percent for 10 years….that could save serious debtors from filing fr BK….for 10 years
As usual, your idea is idiotic. Credit cards are unsecured debt. I can at least see some rationale for the gov refinancing mortgages, if the program was properly run (note: I doubt it would be propertly executed). Credit cards? LOL, no.
Whats idiotic about it? Tens of millions of CC are now variable interest rates…so Bernanke raises rates and banks increase minimum payments and millions have to file for BK today ……its just more of extend and pretend….
Whats idiotic about it?
It’s not structured so as to be a massive subsidy to the big banks.
Now if instead you had suggested that the Federal Reserve buy up all of the CDOs of CC debt from the banks and from the secondary market at above-market rates, then you’d have an idea that might well fly.
Think bigger bank giveaways.
so true it would be a subsidy for the people…..the last schlub on the totem pole.
“With principal writedown no longer an option, the government needs to find a new way to facilitate mass mortgage refinancings. With rates at record lows, refinancing would allow homeowners to significantly reduce their monthly payments, freeing up money to spend on other things. A mass refinancing program would work like a potent tax cut.”
Why not send every filing taxpayer a $500,000 stimulus check?
Sheila Bair has a better idea: Fix income inequality with $10 million loans at 0% interest for everyone!
MORE than four million Americans have lost their homes since the housing bubble began bursting six years ago. An additional 3.5 million homeowners are in the foreclosure process or are so delinquent on payments that they will be soon.
So what happened to the free sh&t army?
“So what happened to the free sh&t army?”
They are getting $10,850 in “transitional” money to leave the homes they have lived in rent free since 2007. I wonder if that includes the wave of re-defaulters who got a mortgage workout and big suprise, continued their Beatly ways.
Just from the numbers here, four million, 3.5 million and 13.5 million. I would say the “free sh&t army?” probably had another strong Black Friday with that disposable income that some have to throw away on rent and mortgage payments. Although my DBLL2 is going to have to tighten his belt this Christmas, he is 1 week away from being down 11,900 tax free $ in 7 months.
So it’s starting to sound like the free gig is running out.
“So it’s starting to sound like the free gig is running out.”
I would agree with that.
Quite honestly although I never did agree with their stance on why they should not have had to pay, I think the Beats were sold out on the mortgage settlement by the government in favor of the banksters and TPTB.
“With 13.5 million homeowners underwater”
‘Bubble Guppies’
A bubble in Switzerland? Studies start at $1M. Very relaxed rules on non Swiss ownership. But the Swiss are among the largest buyers.
http://www.nytimes.com/2012/11/25/realestate/big-deal-selling-a-hot-spot-to-the-beau-monde.html
Can’t find a job? Move overseas.WaPo 23 Nov 2012:
After applying for 279 jobs over two years, my husband finally got the offer he’d been hoping for: a well-paid position teaching philosophy at a respected university. We should have been thrilled. There was just one little thing.
The job was in Hong Kong…When Liz Jackson, 31, earned her PhD in educational policy from the University of Illinois, she hoped to find a job as an assistant professor. She applied for about 50 jobs in 2010. But U.S. colleges and universities were shrinking; layoffs and hiring freezes were rampant. Jackson’s only nibbles of interest came from the Middle East and Asia.
She ended up taking a position as an administrator at a university in Abu Dhabi, in the United Arab Emirates. There’s no crushing need for PhDs in educational policy in the USA, last I checked. “We can pay off our student loans in the next six years,” Jackson says. Together, she and her husband owe about $200,000. “That would be impossible in the United States.” At the moment, the US getting hit by a missile fired from Iran is also impossible. Abu Dhabi is well within range of Iran.
My sister got a job teaching English in Harbin in 1993. Not a good choice. The climate is Siberian & the air pollution at that time (both from coal fired plants and tobacco fired lungs) hurt her so badly she had to leave after six months.
What these “go work overseas” articles tend to overlook is that it’s next to impossible for Americans with ordinary skills to get papers to work outside the USA. If there are locals who can do the job you can pretty much forget about it as procuring a work visa will be next to impossible. Unlike our nation, most other nations have high barriers to entry and they save the good paying jobs for their own people. The only way to get in is to have a skill that’s scarce, and as a recent grad you probably won’t have it unless you’re a PhD.
next to impossible for Americans with ordinary skills to get papers to work outside the USA Only if you define ‘ordinary skills’ as those not in demand. At least there’s a way out for unemployed PhDs in the USA.
If you have those “in demand” skills then you can find a job here at home, and with better pay than in the sweatshop countries too.
Superstorm Sandy proves value of exceeding city code: NYC: A state-of-the-art city recycling plant is rising at the South Brooklyn Marine Terminal.
Reviewing projections for local sea-level rise, the company and its architects decided to elevate portions of the site to heights exceeding city requirements by four feet. Using recycled glass and crushed rock discarded from projects like the Second Avenue subway line, they raised the foundation for the plant’s four buildings and a dock.
The fill added $550,000 to the plant’s costs of around $100 million, said Thomas Outerbridge, Sims Metal’s general manager.
But it proved more than worth it. When a 12-foot storm surge swept through nearby streets and parking lots on Oct. 29, the plant’s dock and partly completed buildings did not flood.
Some potential flood protection measures are relatively simple, like keeping sandbags handy and installing floodgates at building entrances. Others are more complicated, like relocating critical equipment like boilers above ground level or encasing them in watertight enclosures and rebuilding houses on concrete piles.
The storm’s aftermath also revealed a need for emergency generators to run at least one elevator in tall residential buildings and to pump water to high floors so the buildings remain habitable after a severe storm, some owners said.
The NYT recently ran articles about the vulnerability of the electrical grid from weather & terror-related events.
If Sandy’s New Jersey damage toll alone is north of $29 bn, is it safe to guess the total East Coast damage (including to NYC and surrounding areas) exceeds $50 bn?
Yup, $50 bn is what several on-line estimates are for.
The ext question is how much is it going to cost to condemn thousands of very expensive homes? houses that had 100 feet of beach now have zero….will they rebuild the sand dunes ….. whats the value of prime beachfront property that’s now 80% under real water
Building a server over the weekend, and got two bad drives according to the RAID manager. I moved them to different slots on the back-plane, and sure as chit, the same drives are reported bad. That’s two out of a fresh box of ten! These are are top shelf Seagate Constellation ES drives. Made in Thailand. Apparently the rations need to be cut in half and the beatings increased until quality control improves.
QC is crap just about everywhere these days.
NY REGION
November 23, 2012, 9:28 p.m. ET
Christie Sees $29.4 Billion in Sandy Costs
By HEATHER HADDON
Superstorm Sandy caused more than $29 billion of damage in New Jersey, according to a preliminary estimate released by the state on Friday.
The $29.4 billion in damage included losses to personal property, businesses, transportation and utilities, along with costs to New Jersey’s $38 billion tourism industry, according to the Christie administration. The figure accounted for federal aid the state has already received, and the total damage estimate could increase in the weeks ahead, Gov. Chris Christie said.
Gov. Chris Christie in Toms River, N.J., on Wednesday. The governor said he will work with the Obama administration to get funding from the federal government.
“I stand ready to work with our congressional delegation and the Obama administration to get the funding support New Jersey expects and deserves in the aftermath of this catastrophe,” Mr. Christie said in a statement.
…
John McAfee: sex, drugs and anti-virus software
John McAfee, the founder of the McAfee computer security firm, is in hiding in Belize. Christopher Williams examines his colourful life.
By Christopher Williams, Technology Correspondent
3:48PM GMT 15 Nov 2012
He’s the opposite of the common stereotype of the boring computer nerd. John McAfee, wanted for questioning over a murder and in hiding in Belize, has spent almost two decades living a life of alleged heavy drug abuse, sexual experimentation, deadly extreme sports and media manipulation.
It was as a software designer at the arms giant Lockheed in the 1980s that the 67-year-old, English-born American set out on the path to infamy and fortune.
Computer viruses were beginning to emerge and spread, and his machine contracted an infection dubbed Pakistani Brain, which slowed down floppy drives and made seven precious kilobytes of memory unavailable. McAfee resolved the problem himself, but hit upon the idea of creating software that could detect malicious software and remove it automatically.
“It was an accident, like anything else in life,” he later said of his invention.
…
“…two decades living a life of alleged heavy drug abuse, sexual experimentation, deadly extreme sports and media manipulation.”
Sounds like more fun than flipping 3/2 fixers. Application please?
And he’s got his own blog, too.
He’s timed it pretty good…when he dies he will have used himself up.
Drove around Vancouver island today, and saw many groups of “for sale” signs at intersections. About the same frequency as I saw them in California just before prices crashed there.
Canada is about to learn that it really isn’t different here.
Sounds like great fun for a HBB regular to observe, and say “I told you so” to anyone who didn’t listen to your warnings.
Enjoy your moment of Schadenfreudic rapture!
Saw the movie Lincoln tonight. It’s a must-see…destined to become a timeless classic.
P.S. In this movie, Daniel Day-Lewis is one with the former President…
Sixteen year old boys’ hormonal constitutions simply don’t work like this.
Husband uses GPS to track teacher having sechs with teen
…
Neely explained to police that the 16-year-old, with whom she had been intimate on several occasions at her home, had kept asking for sechs.
Noting “midlife crisis feelings,” Neely told police, she thought that if she had sechs with the teenager he would stop asking, the newspaper reported.
Why does weird stuff always seem to happen in Florida?
Don’t forget the alternative: Germany.