Red Rock, Arizona
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
November 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
I put this together last weekend. I’m going to get back to making videos after getting sidetracked with work for a while.
I’d say half of the houses for sale in my brief drive around this project were obvious foreclosures. Red Rock is located 20 miles north west of Tucson’s edge on interstate 10.
Reminds me of Florida. Klassy indeed.
Awesome video, Ben! Especially that house that was passed from lender to lender.
I’m ignorant here… but I thought that lenders sold loans pretty much only to Fannie Mae and not to each other? So if the house forecloses, what happens? The bank sells the house and pays off the loan to Fannie Mae? Or if they can’t sell the house, they sell the debt service to another lender? Or does Fannie Mae take the house?
The process is kept murky to outsiders, you can speculate as to why. There is a general process; the GSE’s guarantee the loans lenders make. If a default occurs, there is a period of time which the originator (or company that bought it) is in charge of the foreclosure process. At some point the GSE’s guarantee may kick in and probably they pay off and take the house. It’s at that point different standards of maintenance, etc, are ordered to property preservation companies like mine (through mortgage field service companies that typically handle the properties for the new owner). FHA works in a similar manner.
Of course there are times when we are maintaining a house that hasn’t been foreclosed, but abandoned to some degree. That last house had a paper saying something about JP Morgan. It could be they are servicing it or own it. I don’t usually stick around to read the fine print! But somebody did a number on that kitchen. I don’t know what the value of ripped out cabinets would be. Zero I’d guess. More trouble than it would have been worth. But I see it all the time.
“The process is kept murky to outsiders”
Anything to obscure the massive excess empty and defaulted inventory. We know of 6 different entities that have passed around the same house.
20 miles north of Tucson? Isn’t that like Wile. E. Coyote land?
How much are they asking for those remote shacks? Are tumbleweeds and road runners included free of charge?
$131,990 - $192,690
http://www.pulte.com/communities/az/red-rock/red-rock-village/2040/index1.aspx#.V5EDdKJTRL8
The land most similar to Wile. E. Coyote is between Winslow and Holbrook, IMO. You have to wonder about the wisdom of requiring only 500 bucks to snap up one of these beauties.
Given that location, I think I’ll just hang on to my 500 bucks…
I remember laughing out loud on a road trip across the western half of AZ about 40 years ago, at a huge billboard advertising land for sale, touted as “good farmland”
Reminded me of the lines:
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away.
Thanks, enjoyed it!
(BTW reminded me of the ’90’s neo-noir thriller “Red Rock West”
set in a very grim fictional Arizona town called Red Rock
“If you’re missing a hinge … just use some string.” Heh. Speaking of Tucson, whatever happened to Arizona Slim?
One can only survive there if your ac is working. Isn’t GA this cheap?
One can only survive there if A/C continues to be available, the grid continues to operate flawlessly, along with all the other conveniences of modern civilization, like cheap & abundant fresh water, motor fuel, etc. There may come a time when the majority of AZ’s population must evacuate to save themselves.
Yup. Same thing with Florida. If the conveniences of modern civilization ever go away, there will be an exodus out of here that will make The Grapes of Wrath look like a fun college road trip. And while buildings in Phoenix and Tucson will remain for awhile, the flora grows so fast in this climate that I can see everything being reclaimed by nature at frightening speed, much like the jungle covered abandoned Mayan temples.
And I’m not sure where everyone would go, either. It would be a bitter irony if people evacuated to Cuba.
Ha.. I was once reading some article about Phoenix being a good place to retire, and comment section turned to the water shortages. The answer from some optimistic residents was that “we” Americans were an innovative country, and “they” could just find a way to pipe all the freshwater from the Great Lakes.
Innovate, my butt. I see no reason to innovate water over 2000 miles — uphill, btw — when those desert lovers could simply innovate their butts to Michigan. And I assume that they are expecting the rest of country to pay for these pipes, right?
They couldn’t do that. Anything in the Great Lakes water shed, including the lakes, has to get approval from Canada since they share it with the US.
Thank you Canada!
“they” could just find a way to pipe all the freshwater from the Great Lakes
Not while there are so many unused & abandoned homes in Detroit and other parts of the Great Lakes industrial wastelands, available to buy for a song, on which taxes must be paid out the wazoo forever after.
Why are banks holding so many foreclosed properties for years? What ever happened to dropping the house price down by 50% (example) to get rid of the property? Looking at Zillow there are thousands of properties being held by banks in Palm Beach County at this time. The same appears to be true for the rest of the U.S. Why? What will they be able to get for them when the ‘bubble bursts’? Whatever happened to ocean front condos being ‘given away’ like we saw when the last bubble burst? Could this ever happen again?
They’re just waiting to recoup all costs. They figure they can keep surviving until the market keeps appreciating. Especially when these a-holes receive billions in handouts indirectly from the US taxpayer through the Fed Reserve.
Kinda tough to do when prices are falling.
Miami Beach, FL Housing Prices Crater 5% YoY
http://www.zillow.com/miami-beach-fl/home-values/
“….just waiting to recoup all costs….” Wrong.
The loan servicers make the decisions today and they have no economic interest in the loans. The investors are the losers.
The loan servicers (who handle the defaults, billing, “winterizing” and auctions) prefer to keep the houses on the “books” forever, so they can continue billing the investors for $300/hour in Special Servicing fees.
This big conspiracy theory you all reference about the “lenders” holding product off the market is a joke. There are no “lenders”. They sold the loans off to your pension funds and life insurance companies 10-years ago. The idiots running the investments for those funds have no power and even if they did, they are not interested in the extra work to force the servicers to act appropriately.
There is no big lenders’ conspiracy to hold product off the market. The loan servicers are acting in their own economic interest to keep their jobs by keeping the houses in their Special Servicer pools. Once they sell them, they are out of a job. Follow the money……….
‘There is no big lenders’ conspiracy to hold product off the market’
Yeah, right, the guy in the room who heard “foam the runway for the banks” is imaginary. His book on the matter never existed. (Elizabeth Warren never denied it, and she was there. Odd. Come to think of it neither did the treasury secretary.)
And when Bernanke repeated it, he was out of his mind drunk.
I work in this business. We went from buttoning everything up the day the utilities got cut off to wandering in 2, 3 or 5 years after the FB’s poured concrete down the toilet and left.
I agree the Fed did a lot of foolish things and went easy on the banks, so I agree with you Ben.
The point I am making, and one you should see every day as you clean up this mess with the servicers, is that the banks passed of the risk within a month of originating the loan.
The SERVICERS control the inventory and they are motivated to keep the houses in their control and keep charging servicing fees to the investors (who bought the MBS pools assembled by the banks).
The banks don’t have any economic interest in the assets.
Look at the data from the FDIC.
As of 3/31/16, there was $4.4B of OREO on FDIC insured’s banks balance sheets in the 1-4 unit residential category.
This data set is for banks that have $16.3T of deposits in 6,122 institutions (in other words, all FDIC insured banks in the country).
At an average of, say $100k per home, this means there are 44,000 homes on the books of the banks. That $100k is a WAG, so the 44k could be higher (or lower).
‘The banks don’t have any economic interest in the assets’
Then why did they need the foam? Why was dribbling out foreclosures for years specifically stated?
The FDIC stuff isn’t where the debits would be. That would be the trusts that ultimately funded this stuff. The trusts could sue the banks for screwing them, maybe that’s what the foam was for. But instead of getting to the bottom of things we got the treasury secretary meeting with a senator and TARP “watchdog” to hear him explain how they are using billion of dollars that was supposed to help FB’s used to drag it all out and take their crap shacks over time. That’s why HARP redefaults have always been so high. They were never going to recover in a meaningful way. It was never meant to work.
And a false bottom wasn’t enough.The government/central banks just had to re-inflate the bubble for their big “wealth effect”. Is that a conspiracy theory too, even though Bernanke said it straight out?
The trusts could sue the banks for screwing them, maybe that’s what the foam was for.
That very well could have been part of it…I think BofA’s settlement was what, billions?
I also think that the “FOAM” was for the INVESTMENT banks, not FDIC insured, where the banks borrowed short-term, and invested long-term…when short term credit dried up, the investment banks were left with complicated assets that they couldn’t sell for anything other than pennies on the dollar.
And when you leveraged them 10:1, you’re f—-d.
So, they suspend mark-to-market accounting for complex securities…foam.
So, they convert some of the investment banks to traditional banks so they could access the overnight credit window at the Fed with their balance sheet that became “mark to model” instead of “mark to market”…more foam.
I absolutely agree with you about the foam.
I also agree with you that the Fed’s interest rate policy put a rocket engine under home prices.
However, I disagree with you that the bottom in home prices was false.
One reason is based on logic…the other on fact:
Logic:
When home prices are falling by 5%+ per year, it is foolish to buy a home with less than 5% down. Buy a home…get wiped out within a year. Despite mortgage rates being low, demand for mortgages was also low…low mortgage rates didn’t increase demand for mortgages.
Traditional buyers dried up, and many, many more buyers were for all cash. These buyers may have been starved for yield by the Fed, but they were also buying homes for rental yields that were historically quite high. I know this…our firm invested in an LLC where we bought homes for a 7%+ cap rate in infill Los Angeles, where in normal times they would have traded for a 5% cap or lower.
If you looked at a long-term graph of rental yields, you would see that despite the Fed keeping rates at an all-time low, rental yields for single family homes in So Cal were historically high, which drove our investment. And rents at that time still weren’t that high due to the sh*tty economy.
Fact:
If you graph the national Shiller housing data on a real basis, home prices got within about 10% of the prior two cycles’ housing troughs. If the floor was artificial, it was artificial by less than 10%.
Incorrect.
CS trough in 2009 is double long term trend.
Bailout: How Washington Abandoned Main Street While Rescuing Wall Street
https://books.google.com/books?isbn=1451684959
Neil Barofsky - 2013 - Biography & Autobiography
Geithner apparently looked at HAMP as an aid to the banks, keeping the full flush … would “foam the runway” by stretching out the foreclosures, giving the banks …
I think in part, it’s because it’s generally not banks that are holding the assets.
Remember one of the big problems with the bubble was that those who originated the loans were not keeping them on the books? The game was entirely about making the loans, creating mortgage backed securities, getting the credit agencies to slap AAA ratings on the MBS and selling them ASAP.
In other words, the “banks” have long sold the loans through MBS. The special servicers are now dealing with the bad assets, and perversely, I’m guessing that the more assets they manage, the more they get paid. There are rules that they need to follow in the servicing agreements, but I’m sure those rules allow lots of flexibility.
When I bought my condo in 2013, the loan originator sold it within 1 month. Not sure if that’s the same thing, or very common practice to have your brand new loan immediately sold? Before I sold the condo in 2015, it was sold again to another servicing agency.
There are two pieces.
1. The MBS which your loan was added to and then sold; and
2. The servicer who is in charge of collecting payments and sending money to those who bought pieces of the MBS.
The servicer might change many times, which you might see a lot (as you change who you send payments to). However, that doesn’t mean there your loan was moved to a different mortgage pool.
My loan is still with the bank that made it…almost 4 years ago.
No RW, it is more likely your LOAN SERVICING is still with the bank that originated it, but your loan was put into a MBS pool of mortgages and sold off to investors.
That’s possible JM.
That said, my loan was made through a part of the bank where I was told my loan would likely be held on balance sheet (I asked because I wanted to understand if I could make a large paydown and re-amortize the remaining balance at some point in the future). I was never notified of my loan being sold, and my lender (Bank of America) does hold approximately $170 Billion of loans to 1-4 unit residences on balance sheet.
So, could they have sold it and kept the servicing? Maybe, but I think there is a reasonable likelihood that they didn’t.
Hillary is fiscally conservative compared to Trump it seems.
Wall - $30 billion
Deportations - $600 billion
Tariffs - $6000 per yr per person
military build up - $600 + billion
yikes!!! got debt?
Well Defense is already $600+ billion once you factor in the Overseas Contingency slush fund, and this is under Barry Obama, so that’s a moot figure.
Wall for $30 billion? Whats the ROI within 2 yrs? $50 billion from cutting off welfare leeches? The ROI would just keep going and going, so, moot point.
Deportations? Hell if it was $1 trillion, once again the ROI is there. You can tax people less, by people I mean US citizens, schools get better, it’d be a great trickle down.
Tariffs costing $6,000/yr? How so? We’ve bled jobs YoY since the introduction of Nafta. Love that F150 built in Mexico? How about those Canadian GM models?
Undocumented immigrants do not qualify for welfare, food stamps, Medicaid, and most other public benefits. Most of these programs require proof of legal immigration status and under the 1996 welfare law, even legal immigrants cannot receive these benefits until they have been in the United States for more than five years.
Military, add $600 billion to today’s cost. Trumps want is yuuuuuge!
Walls dont keep contraband out of prisons. But this wall will be different.
Dont like illegals, DONT HIRE THEM!! DONT RENT TO THEM!
Undocumented immigrants do not qualify for welfare, food stamps, Medicaid, and most other public benefits.
But their anchor babies sure do.
And even if the kids were not born here, they have a “right” to free public education. And I’ll bet they also get free meals at school too.
DONT RENT TO THEM!
I strongly suspect that would be considered discriminatory and illegal, because you would ask any Hispanic applicant to prove legal residence. Now, if everyone was legally required to demonstrate legal residence to rent, then you could legally refuse to rent to illegals.
C’mon, you dont tell them it is because they are illegal. You just use your brain.
Dont eat at restaurants that hire them. If you are serious.
Funny how democrats, after years of the obama trillion dollars deficits, now care.
Every illigal deported or stopped at the border will save at least $50,000 a year in free sh*t not given out. Go add that to your math.
Obama cut the deficit.
The “debt” still hasnt been pd though. Bush War was expensive as was the Vietnam war.
know your party.
I told ya! illegals dont get welfare! doh!
Visit your local ‘re
Emtala gives then free health care
We’ve passed the point where deficits literally don’t matter. Spend a little, spend a lot, cut spending, from where we are, they all end in blood and tears.
Free college
Free paid leave
Lots of free stuff
Only lp.org offers cuts
Awesome, gotta love boots on the ground data! Sure beats MSM narratives.
What do people do near Tucson? I know there’s Raytheon and Intel correct? More importantly, how much longer can people siphon off the drying up Colorado River?
California is much much closer to drying up and falling off than Tucson.
Along with $4,000/month rent in SF you get rationed showers as part of the move in deals. Don’t water that rooftop herb garden either.
True but even at that fee, it’s half the cost of buying at current asking prices of resale housing.
Yes, it’s terrible out here. We ate all the pets last month, and are starting cannibalism on Saturday, after the daily mandatory floggings. Lucifer himself is rising for a couple hours on Sunday to burn the unholy with the righteous fire of holy retribution. I don’t know why I stick around…
Have you ever been to northern CA? green as can be, fern-gully like.
How is Buffalo, NY this time of year? Did you order your firewood yet?
And falling housing prices.
Redwood City, CA Housing Prices Crater 10% YoY
http://www.zillow.com/redwood-city-ca/home-values/
how much longer can people siphon off the drying up Colorado River?
Until we build a dam at the Utah state line and withdraw from water compacts written up in the 19th century.
Frist Time Homebuyers Save the Market!
The sub headline is funny, “Housing faces ongoing supply constraints but continues to rebalance back toward a more normal market “.
Guys its ok, we are heading back to a more normal market according to NAR
marketwatch seems to have as much credibility as the Washington Post, NAR and the Boston Globb.
Most don’t remember the initial ripples of subprime defaults were made with lenders tied to builders:
July 1, 2009 4:24 PM
Beazer Homes charged with mortgage and accounting fraud
‘Federal investigators have charged Beazer Homes USA with criminal mortgage and accounting fraud, and the Atlanta homebuilder has admitted to its wrongdoing, agreeing to pay a $50 million settlement, court documents filed today show.’
‘The charges, filed in U.S. District Court in Charlotte, relate to Beazer’s alleged participation in a fraudulent scheme designed to increase its mortgage division’s profits and sell Beazer homes, as well as an accounting fraud scheme designed to “smooth earnings.”
‘According to an agreement filed at the same time, the Atlanta homebuilder accepted responsibility for several fraudulent mortgage origination and accounting practices. Company officials could not immediately be reached for comment.’
http://www.mcclatchydc.com/news/nation-world/national/economy/article24544195.html#storylink=cpy
‘Beazer Homes USA is an American homebuilding company based in Atlanta, Georgia. The company builds and sells primarily single-family homes in twenty states of the continental United States. It also offers home mortgage services through its subsidiary, Beazer Mortgage Corporation. Beazer Homes USA was found guilty of mortgage fraud on a grand scale in the Subprime mortgage crisis and is credited with being a significant trigger of the Great Recession.’
https://en.wikipedia.org/wiki/Beazer_Homes_USA
Good news….
“Oil Falls Back To Two Month Lows On Product Glut”
http://oilprice.com/Energy/Energy-General/Oil-Falls-Back-To-Two-Month-Lows-On-Product-Glut.html
Meanwhile, Jon Corzine remains a free man. Reuters: Corzine, others settle most litigation over MF Global collapse.
Non-citizen immigrant adults and children are about 25% less likely to be signed up for Medicaid than their poor native-born equivalents and are also 37% less likely to receive food stamps, according to a 2013 study by the Cato Institute.
Citizen children of illegal immigrants — often derogatorily referred to as “anchor babies” — do qualify for social benefits. Also, undocumented immigrants are eligible for schooling and emergency medical care. Currently, the average unlawful immigrant household costs taxpayers $14,387 per household, according to a recent report by The Heritage Foundation. But in its 2013 “Immigration Myths and Facts” report, the U.S. Chamber of Commerce says most economists see providing these benefits as an investment for the future, when these children become workers and taxpayers.
A CBO report on the Comprehensive Immigration Reform Act of 2007 concluded that a path to legalization for immigrants would increase federal revenues by $48 billion. Such a plan would see $23 billion in increased costs from the use of public services, but ultimately, it would produce a surplus of $25 billion for government coffers, CBO said.
The American economy needs immigrant workers.
The belief that immigrants take jobs that can otherwise be filled by hard-working Americans has been disputed by an overwhelming number of economic research studies and data.
Related: Four immigration fixes that could turbo-charge tech.
Removing the approximately 8 million unauthorized workers in the United States would not automatically create 8 million job openings for unemployed Americans, said Daniel Griswold, director of the Cato Institute’s Center for Trade Policy Studies, in his 2011 testimony before the House Judiciary Sub-committee on Immigration Policy and Enforcement. The reason, according to the U.S. Chamber of Commerce, is two-fold. For one, removing millions of undocumented workers from the economy would also remove millions of entrepreneurs, consumers and taxpayers. The economy would actually lose jobs. Second, native-born workers and immigrant workers tend to possess different skills that often complement one another.
know your party
Housing Lola housing!
Hawthorne, CA Housing Prices Tumble 6% YoY
http://www.zillow.com/hawthorne-ca/home-values/
well he is sort of right i think a big percentage of jobs would require second language to get hired, and employers would have a hard time filling them.
Ben Jones, an online article comment repost with your gracious permission:
“That game is over. People are no longer going to accept lies, permit corruption, and watch passively as the obnoxious Radical Left Wing Fringe screams bloody murder, rants relentlessly, and makes themselves so repulsive that people just give in to shut them up.
Note to Radical Left Wing Fringe: We now know without doubt that you do not represent more than 30 percentage points of the population. Your influence is magnified a thousand times over by your monopoly on the MSM, Hollywood, academia, Facebook, Twitter, and other visible niches - made highly visible by the mutually reinforcing echo of each other’s remarks that amplifies them far beyond their real numbers.
MSNBC is a ghost town. Colbert is literally ignored by 98% of the TV households in America (a rating point = 1% of the TV households - his time slot averages about 2 rating points, or 2% of TV households). The Mexican-controlled NY Times (Carlos Slim), the Tech Valley-controlled Washington Post (via Bezos), the corporatist-controlled Big 3 TV nets (i.e. GE owns NBC), and so on are all examples of either overblown images of influence, or the fact that nearly all of Big Media is owned by just 6 oligarchs.
The message is simple - a very few humans control the information dispensed to hundreds of millions of people. And don’t lie to yourself - these controllers and their minions communicate with each other at-will, discussing what each will do, and how they will do it.
To put it in simple terms, when it comes to the question of journalistic integrity, the sex workers in Times Square have more personal integrity about being prostitutes than do the propagandists masquerading as journalists at these information channels.
These propagandists have increased their pitch to ever higher levels of screeching, their vacuous brain cavities thrown into complete dysfunction by the cognitive dissonance created by the conflict between their self-perceived intellectual superiority and influence, contrasted with the ever increasing levels of being completely rejected by American voters.
In short, the more they rant, the more votes for Trump. They are in a Death Spiral, and they are screaming all the way down to their destruction.
This destruction will be complete at the Democratic Convention when Hillary has the mother of one thug after another denigrate the police for taking the lives of their sons who attacked the police. When they finish, America will turn its back on the Black and Hispanic Racists of BLM and La Raza, and their Black and Hispanic Racist Apologists.
With each second that passes, their plane-load of Radical Left Wing Fringe-members comes closer and closer to the instant it crashes, and burns, on Election Day.”
https://www.youtube.com/watch?v=barWV7RWkq0 - 188k -
‘Wolf of Wall Street’ Producers Implicated in proposed $1 Billion U.S. Asset Seizure
Among the Justice Department’s assertions: That some $1 billion originating with 1MDB, a fund started in 2009 by Najib Razak, the current prime minister of Malaysia, was plowed into hotels; luxury real estate in Manhattan, Beverly Hills and London; fine art; a private jet and the 2013 film “The Wolf of Wall Street.” The lawsuit doesn’t name Mr. Najib and no charges were brought against him, but there are 32 references in the complaint to “Malaysian Official 1”. The complaint says that between 2009 and 2011, $1 billion was diverted to a company in the Seychelles called Good Star Ltd., which was beneficially owned by Jho Low, a Malaysian financier and confidant of Mr. Najib. Mr. Low used some of the money transferred into Good Star to pay casino bills, including $12 million to Caesars Palace in Las Vegas and $13.4 million to the owner of the Venetian Las Vegas casino, the filings say.
debt serfdom is the new american dream.
Mark Cuban - To paraphrase @realDonaldTrump I’m the government and I’m here to save you, give you a job, cut you off from the world & end tech progress