We Got Into Problems Because Things Were Too Easy
The Michigan Avenue Mag reports on Illinois. “According to the latest stats from the S&P/Case-Shiller Home Price Index, Chicago led the most recent monthly gains with a 3.2 percent increase. This news prompted Michigan Avenue to do a temperature check of Chicago’s luxury market with some of the city’s big-ticket brokers. Where does this price increase leave the luxury housing market for now? Elizabeth Ballis: ‘Building is back, and location can drive up the price of lots, especially in Lincoln Park. We just helped a client buy a potential tear-down in DePaul for $30,000 over list, closing at $1.325 million, and there were six offers that first day. Basic lots cost $1.2 million and up in Lincoln Park now. But in this case, the buyer is going to rehab it. It will probably sell for close to $4 million when it’s done.’”
“Pamela Raia: ‘Luxury buyers are trying to take advantage of those really high-priced homes that languished over the summer. They’re not new anymore, so a buyer will use this as an opportunity to make an offer under ask, and often get it.’”
The Chicago Tribune in Illinois. “Former WFLD-Ch. 32 news anchor Jan Jeffcoat has sold her three-bedroom, single-family house in Roscoe Village for $725,000. Jeffcoat first listed the house in July 2012 for $799,900. She later reduced her asking price four times before finally selling the house. She purchased it in 2007 for $807,500.”
“Listing agent Jennifer Miles of Koenig & Strey, said the buyers, a family from the suburbs, converted a cascading slate waterfall into a rock-climbing wall. ‘It’s a niche-y kind of house, so I think that the sale price was fair market value,’ she told Elite Street.”
The World Herald in Nebraska. “The City of Omaha is dismantling the former WallStreet Tower showroom in north downtown and will put the city-owned land up for sale, expecting a restaurant, retail store or some other use to occupy the prime real estate. City government officials leased the parcel of land to Kansas-based developer Townsend Inc., which in 2005 envisioned building a 32-story condo and commercial building a few blocks away at 14th and Dodge Streets. That project, however, never got off the ground, and the showroom that was used for marketing the condos sat idle for years.”
“City Attorney Paul Kratz said there are ‘always dreams’ but currently no definite vision for the parcel.”
The News Sentinel in Indiana. “The city of Gary has selected the recipients of five homes it will sell for a dollar each and is planning to make more available at the same price next year as it seeks to fill abandoned houses and stanch the exodus of residents from the northwestern Indiana city. Mayor Karen Freeman-Wilson estimates the city about 25 miles from Chicago has about 10,000 abandoned homes, The Times of Munster and the Post-Tribune reported.”
The Kokomo Tribune in Indiana. “Starting at the end of 2008, Kokomo and Howard County went through a period where almost no new homes were built. In September 2007, the average weekly earnings for a private sector job in Howard and Tipton counties was $1,169, according to the U.S. Bureau of Labor Statistics. Last month, the average stood at $590. Unemployment remains above the statewide average.”
“This year, there have been 26 permits issued for new home construction in Kokomo, up from 17 last year. While that’s nowhere near the kind of activity seen in the city in 2005, homebuilders are hoping it’s the start of a return to prosperity. ‘I don’t think we’ll ever get to that point we were at back in the early 2000s,’ said Mike Ullery, president of the Howard County Home Builders Association. ‘The whole reason we got into the problems we had was because things were too easy back then.’”
The St. Louis Dispatch in Missouri. “Mortgages will be more expensive and harder to get next year. You can blame — or thank — Uncle Sam for that. Why would you thank him? Because he’s trying to avoid another housing price crash and big bank bailout far in the future. The bottom line: ‘There are going to be good people that qualify today that won’t qualify a month from now,’ said Ruth Battle, senior VP at Paramount Mortgage in Creve Coeur.”
“Some lenders aren’t happy with that. ‘They’re taking the art away from the business,’ said George DeMare of Midwest Mortgage in west St. Louis County. That art involves judging a person’s character to make a loan to someone who doesn’t quite fit the guidelines.”
The Herald Times Reporter in Wisconsin. “After fighting for nearly two years to keep their more than 110-year-old Wausau home out of foreclosure, Joe and Jennifer Wiater are finally walking away. The couple, who now live in a De Pere duplex, moved in with family for a spell after Joe was laid off in late 2011 from his retail management job. They have worked multiple jobs to stay afloat ever since. But after not receiving a single offer on their home, they’ve stopped paying their mortgage and will soon lose their home in foreclosure.”
“The Wiaters had bought the home in 2006 for $112,000. They tried to sell it for $105,000 before lowering the price to $99,000. ‘We felt like at some point we’ve got to move on,’ said Jennifer Wiater.”
“Recent data released by the U.S. Census Bureau shows that Wisconsin’s home ownership rate continued to inch downward even after the recession ended, dropping 1.4 percentage points from 2010-2012 — compared to the prior three-year period from 2007-2009. During that span, at least half of all Wisconsin counties saw a drop in home ownership in the recession’s aftermath, even as home sales and prices rebounded in much of the state.”
“The census figures come as little surprise to Wisconsin real estate experts, who say the numbers reflect both foreclosures and people who sold their homes under duress during the economic downturn and moved into rentals — or with family — where they’ve remained ever since. ‘It’s been horrendous,’ said Dennis Siem, owner and broker with Coldwell Banker in Marinette. ‘We used to have 16 agents working here, now we have seven, and none of them are making any money.’”
The Stevens Point Journal in Wisconsin. “Recent decisions in Marshfield and Stevens Point have drawn a contrast when it comes to the development of new housing complexes in central Wisconsin. One city is approving projects despite vocal objectives of a few directly affected residents, while the other isn’t. Leaders of both cities say there is a marked increase in the demand for multi-unit housing complexes, from young professionals moving to Marshfield for employment and from students attending UWSP.”
“‘The new generation — the millennials — they don’t have that romantic connotations with houses that we might do,’ said Marshfield Mayor Chris Meyer. ‘They have a different mindset. They saw their parents go upside down on their mortgages, or end up being foreclosed upon. They look at that and say, ‘Why would they want that?’ It’s just a different trend looking forward,’ he said.”
“Some lenders aren’t happy with that. ‘They’re taking the art away from the business,’ said George DeMare of Midwest Mortgage in west St. Louis County. That art involves judging a person’s character to make a loan to someone who doesn’t quite fit the guidelines.”
The “art” eh? :chuckle: …. the statement is quite funny. Isn’t is strange how people will always attempt to re-characterize something illegal using vague rambling BS? In this case, fraud is “art”.
Foolish corrupt mortgage pimps and realtors.
The art, in my case, is using other people’s money in order to make myself rich.
The art, in my case, is using other people’s money in order to make myself rich.
That’s some awfully vague rambling you’re spewing…
The Herald Times Reporter in Wisconsin. “After fighting for nearly two years to keep their more than 110-year-old Wausau home out of foreclosure, Joe and Jennifer Wiater are finally walking away.
That’s what you get for buying a pre-WW2 firetrap.
Aside from that, WI exhibits everything that is wrong with housing. Inflated prices, realtor corruption, defaults and delinquencies everywhere….
Use of Arm loans have doubled
And 43% is the debt level for buyers
Ha pot New yr
All the states where pot is getting legalized can look forward to a new generation of subprime koolaide drinkers who will get foreclosed within the next decade. Whacky tobacky clouds judgment.
Whacky tobacky clouds judgment.
So does booze.
I have my doubts that MJ use will go up all that much.
2 beers or .07 and 4 hits of med mj and you can’t drive
no way to detect or stop them
buy an H2 or bigger
You think they weren’t already driving under the influence?
Apparently, you can still be legally fired for lighting up a joint.
http://www.denverpost.com/marijuana/ci_24799683/employers-can-still-fire-pot-smokers-legal-use
“Use of ARM loans has doubled.”
Ahhhh, the music.
Luckily for me the learning curve is flat.
“Ahhhh, the music.
Luckily for me the learning curve is flat.”
And flatted-thirds is the appropriate triad to accompany the depressive state in store for these ARM armed DebtDonkeys.
“Use of ARM loans has doubled.”
the last bastion of hope for the industry is finally rearing it’s ugly head!
And yet it’s a another signal of the next shoe to drop…..
incredible- NPV etc. not taught in school
sociology,political science
ARMS were a good risk back when we signed up in 1984 under Volcker at 17.5%. It went down to 12.5% and we refi’d into 8% eventually. Now an ARM is risk going the other way.
In 1998 our we bought at 7% APR on a conventional mortgage. Now buyers would frown on that deal. Way back machine.
And now you’ve locked yourself into $200k-300k losses because you paid cash. (supposedly)
“‘The new generation — the millennials — they don’t have that romantic connotations with houses that we might do,’ said Marshfield Mayor Chris Meyer. ‘They have a different mindset. They saw their parents go upside down on their mortgages, or end up being foreclosed upon. They look at that and say, ‘Why would they want that?’ It’s just a different trend looking forward,’ he said.”
Thats right. One of the unstated reasons why home-debtorship is at record lows as measured by the census bureau.
There are far too many reasons to avoid 15-30 years of debt slavery plus a lifetime of increasing property taxes, insurance and huge maintenance costs. And with little to zero pricing power, those costs cannot be passed through to tenants.
“‘It’s been horrendous’, says Dennis Siem, owner and broker with Coldwell Banker in Marinette. ‘We used to have 16 agents, now we have seven, and none of them are making any money.’”
These agents are part of my army of minions. They do all the work in rounding up an bringing to me RE marks so as I can offer the marks dotted lines to sign.
They work, I reap. When they no longer can work I still get to reap because the dotted lines that were signed while they were working still keeping on working for me and will continue to work for me for the life of the mortgage - which wil be forever if it can be arranged.
These minions were convinced they were going to become rich and many of them quit good paying jobs so as to cash in on the riches that was just waiting for them, but they learned the hard way that the true riches, the lasting riches, were not in the one-time selling of the marks but rather the true riches lay in the once-a-month payments paid by the marks to the bankers after the sales were made.
Actually these minions do not bring to me these marks, rather they bring to my mininons these marks. You see, I have my own set of minions that do all the work of gettting the dotted lines ready for the marks to sign.
Just as the RE minions work and I reap so do my minions work and I reap. And when my minions are no longer useful to me I will cast them out into the cold. And if the day comes when I need more minions then I will bring into my clutches a newly minted bunch who I will cheerfuly churn and I will cheerfully burn.
Life is good.
Marionettes make great minions!
“Some lenders aren’t happy with that. ‘They’re taking the art away from the business,’ said George DeMare of Midwest Mortgage in west St. Louis County. That art involves judging a person’s character to make a loan to someone who doesn’t quite fit the guidelines.”
How’d that work out for the lending market’s scam artists circa 2007?
“The city of Gary has selected the recipients of five homes it will sell for a dollar each and is planning to make more available at the same price next year as it seeks to fill abandoned houses and stanch the exodus of residents from the northwestern Indiana city.”
It’d be cool to look at the last sale price before 2007 for these houses now selling for $1!
I’d be curious to know how they came to be owned by the city, and the process by which the new owners were selected, because with the current echo bubble it seems like an opportunity for selected people to make money flipping the houses to hedge funds or corrupt Chinese bureaucrats.
On the other hand, drive around there for awhile, and $1 will seem like overpaying. It is the most impressive set of industrial ruins outside of Detroit. I have an elderly relative who grew up in Gary and still lives nearby; he gives me a tour periodically.
There will come a time when apartments in lethally-contaminated Chinese cities sell for the equivalent of $1.
italy will leave eu this year, maybe this quarter.
Quitting the Euro or the EU? Or both?
If anyone will quit the EU soon, I think it will be the UK.
and princes tony was always pushing to go w the euro
‘It will probably sell for close to $4 million when it’s done…I think that the sale price was fair market value’
The “experts” tell the flippers they’ll probably make a million bucks. They console the lady who lost 80k. But if they aren’t making money:
‘We used to have 16 agents working here, now we have seven, and none of them are making any money.’
I hear fast food pay is going up.
when sh@t hits the fan again will they let the markets crash again to gobble up cheap assets again?
Meaning what…. We go from 25 million excess, empty depreciating houses to 25 million?
‘As many as 4.6 million users of Snapchat have had their usernames and phone numbers downloaded by a website…Last fall Spiegel reportedly turned down as much as $3 billion from Facebook and $4 billion from Google…Snapchat’s breach and response call into question whether Spiegel is a Zuckerbergian wunderkind or 23-year old wiseass. If its the latter it calls into question whether Snapchat has much to offer beyond fleeting appeal and buzz.’
‘Until he proves otherwise Evan Spiegel is looking like a guy who turned down $4 billion for a company that just lost its reason to exist. That being the case we’ve got an early leader for biggest loser of 2014.’
http://finance.yahoo.com/blogs/breakout/snapchat-hack-may-have-just-cost-the-company-founder–4-billion-155733225.html
Sometimes I wonder about this country. I’m no prude, but when I was in college, this sort of stuff would have got me a slap in the face. Beyond that, is this where we are going with technology? The cutting edge of sending pictures of your whoopties to one another?
I remember guys showing me nude photos of their ex-girlfriends 30+ years ago.
Snapchat is just a “cool and edgy” way of doing it.
I mean, people have to justify the $60+ a month they spend on their smart phones, right?
$60? I have been shopping lately and it seems all the plans which have data, text, and talk are all $100+.
I believe I will go with one of those carriers that don’t subsidize the phone, which are more in line with $60/month. I am still reading but some seem to have customer service, coverage, billing, issues, etc.
walmart is $45 unlimited everything- check tower locations
Thanks. Straight talk is one I’ve looked at. Some ST users have complained that there is no clear statement as to when their data gets throttled. I only need about 2.5G a month. These type pay as you go plans seem to be a good option, just a matter of finding the right one.
There’s a tower about a half mile from me which supports my 4g well. I wonder how I find out which carriers use that tower.
I use Virgin Mobile. You have to have/buy one of the phones in the column on the right.
It’s $35/300 min, $45/1200 min, $55/unlimited min. All plans have unlimited messages, data. $5 less if you use Auto Pay. I don’t use it much, but it’s been fine every time I’ve had to (Vegas). I pay $25 because I was grandfathered in.
“whoopties”
Lol.
When I was in high school, that meant a car with no top.
Well, duh. If you aren’t getting married and having kids, for whatever reason, why would you need a house?
The only millenials I know who are considering purchasing real estate are the lucky ones with good jobs.
How is it that you characterize 30 years of mortgage slavery and a lifetime of financial losses “lucky”????????
They’re lucky because they have a good job, not because the have a mortgage.
That’s better.
It’s what I said
I recently put a bid in to purchase a home a few weeks ago. The seller came back just before new years and asked that all qualified bidders submit a letter as to why they feel they should have the “right” to purchase their home. I laughed and sent them a letter telling them to get bent. If it has come down to boot licking in order to purchase anything, I will remain on the sidelines.
If I had to choose, I’d write the letter before signing up 30 years of mortgage bondage and a lifetime of irrecoverable losses.
Sounds like old times. I would write a letter describing how I’d leave rat poison in the yard for the squirrels and have my 12 gauge at the ready for any offending birds looking for berries in the yard.
IL and especially CHI are broke- see their re tax bills? going up big,yo
Housing Analyst - you repeatedly say on this blog that housing is always a loss over time, but is that always the case? Whether it’s a mortgage or rent, one always has a cost for housing. So if someone can buy (ie have a mortgage) for the same cost per month as someone who rents, how is it that they are “losing?” Particularly when you take into account the fact that rents always rise over time, and the buyer has a fixed mortgage for 30 years.
I bought 2 years ago, put down 5% on a $270k home, and my total payment including all taxes, fees, and HOA is $1,800. I rent the place out for $2,200. How exactly am I losing?
ALWAYS
Now quit hiding behind alternate usernames….. you coward.
who is this loser?
Calculate that 30 years of interest and you’ll see that you are barely breaking even (this includes mortgage deduction too). HA is right, Houses do depreciate. Roofs eventually fail as do hotwater tanks and furnaces. I own a house. But after 16 years of understanding realize it’s a great place to live but not park your money. Real estate investing is only good for people with deep pockets and can pay in all cash. Once you finance a property you loose.
If I “break even,” that means that all of the money I paid is now returned to me via equity. True, that is not an “investment,” but what does the renter have to show for it? Nothing.
I’m not trying to be a contrarian just for the sake of it, I honestly want to understand HA’s point. Continually saying homeowners “always lose” doesn’t make it so. Again, if my mortgage payment is less than what it would cost to me to rent, AND I am gaining equity along the way, how do I lose? Of course the structure itself depreciates, but the land does not. That is the value of home ownership.
“if my mortgage payment is less than what it would cost to me to rent,”
But it’s not.
Even today (I live in La Mesa btw), if you have 20% down payment, you’re at rental parity (in most areas). That’s before you even take the deduction for mortgage interest.
Again, with that payment locked in for the life of the loan, how does that person lose versus the renter? Is that renter, who will most definitely be “losing” the money he pays in rent, be able to make up the difference by investing the would-have-been down payment? Seems highly unlikely.
The last bubble burst because housing payments were far greater than the costs of renting. In those scenarios, I agree that prices must come down. Unless of course, the home is along the coast, or downtown, where “buy vs. rent” doesn’t seem to matter. Foreign investors and rich people who have more money than they know what to do with remove all logic from the equation.
Anyway, until the cost of owning becomes 10%, 20%, etc greater than the cost of renting - why should people choose to rent? Either way, it’s just a payment.
It’s quite simple really.
Rental rates are half the carrying costs of buying at current asking prices.
your right, he is full of sh@t. who do you think this is?
:rolleyes:
I’m not sure who you guys think I am, but these are my first posts on here. No need for the vitriol. I’m asking honest questions here, and so far no one has addressed them.
HA, you just said rental rates are half the carrying costs of buying at today’s prices. What area are you talking about? In that instance, I woiuld 100% agree with you that that is a bubble. The only caveat to that I suppose would be if it’s San Francisco or New York, or places where the super rich buy up real estate and don’t much care what the rent would be. But I’m not in one of those areas.
I’ll ask again and hopefully you’ll answer. I put down 5% on a $270k purchase price, and my total costs are $1,800 a month. That will go down to $1,675 in 6 months when I get rid of PMI. I rent the place for $2,200. How am I losing??
Now that was somewhat lucky, I got a low price and a low interest rate (3.625%). Today, I’d have to put down 20% to get that same payment, but even in that instance, I’d still be paying less for a mortgage than rent. And that’s before I even deduct the interest.
So hopefully you’ll answer now. If a person can put down 5% to 20% and be at rental parity, how are they losing?
Because it can be rented for half the inflated amount you paid.
How did you get suckered into paying the inflated price?
Okay then, since you can’t fathom this being a real life example… Theoretically speaking, if you were presented with such a scenario, would you buy? Again, 5% to 20% down, resulting in a PITI payment that is the same or less than rent.
And if you would not buy, why not?
I’m really trying to understand why a person would choose to pay more in rent than the cost to own.
I’m really trying to understand why a person would choose to pay double to a bank than to pay half to a landlord.
I’m really trying to understand why a person would choose to be a troll rather than answer a simple question.
You seem like an intelligent person, yet you refuse to engage in any real conversation. Why?
Look man, I agree with you that a lot of areas, especially in California, are bubbly. Even in my examples that I’m giving you, all it will take is for the coastal cities to take a hit, and it will effect La Mesa as well. If China’s housing bubble bursts, that will affect the US. But over time, if a person buys when the conditions are favorable (ie total mortgage costs the same or less than rent), how can they lose?
I won’t hold my breath for a real answer from you, but I’m still hoping.
Then don’t troll.
You might find this story in an Australian newspaper of interest about the property market from an astrology point of view http://www.news.com.au/finance/real-estate/your-property-star-guide-for-2014/story-fndban6l-1226794260347