Part Of A Natural Cooling Following The Boom
The Gazette Times reports from Oregon. “Despite national headlines warning of shaky ground in the mortgage lending industry, home buyers shouldn’t necessarily assume that owning a home in Corvallis is out of their reach. ‘Just because it’s raining in Florida doesn’t mean it’s flooding in Oregon,’ said Van Melick, senior loan officer for Corvallis Metro Mortgage. ‘Anybody with reasonable credit who has a job and can qualify for the payment amount can qualify.’”
“That doesn’t mean that the housing market hasn’t changed from a year ago. From October 2006 to last month, just 3,859 homes sold, compared to 4,504 during the same period a year ago. And more than 2,250 homes were listed on the market during October in the mid-valley.”
“What has changed, Melick said, is freewheeling lending to people whose financial situations fit colorful acronyms: NINA (No Income, No Assets) and NINJA (No Income, No Job, No Assets).”
“‘The problem was that as the housing boom started to rumble up, there was improper use of (subprime loan programs) and that got people into programs that were inappropriate,’ he said.”
“Melick said the housing market seems to be straddling a buyer’s and seller’s market, with many buyers expecting to find great deals, but a fair amount of sellers hanging on for a better price despite the conventional wisdom.”
The Mail Tribune from Oregon. “There could be more belt-tightening among Southern Oregon wood-products companies after layoffs were announced at a pair of mills last week.”
“‘The decline of new construction has had a huge impact on wood products, including us,’ said Roger Rutan, VP of marketing (for) Springfield-based Timber Products.”
“Glendale-based Swanson Group announced 150 layoffs in several mills in the region and others around the state have seen cuts as well, said David Schott, executive director of the Southern Oregon Timber Industries Association.”
“‘We’re seeing lumber at or below prices we’ve seen at any time in 50 years, when you factor in inflation,’ Schott said. ‘A year and a half ago, studs were running $320 to $340 per thousand board feet for green Doug fir. It’s averaging $150 to $160 now. It’s the most ugly pricing I’ve seen since 1980-81.’”
“He said new housing starts nationally will decline to between 1.1 million and 1.2 million by year’s end, roughly half of what they were a year ago.”
“‘The economy is not strong and job creation is mostly service sector and government jobs when we need more created in the manufacturing sector,’ Schott said. ‘When you look at the $320 billion trade deficit, you know we’re not creating wealth in this country.’”
The Columbia Basin Herald from Washington. “Several local housing industry members are nearly unanimous in the sentiment that now is the perfect time to buy a house in the Columbia Basin.”
“In looking over statistics from the Grant County Assessor’s Office and the Northwest MLS, Susan Alsted-Fanning, owner of Alsted Real Estate, said Grant County was one of seven counties in Washington to register double-digit gains over 12 months ago.”
“‘That’s exciting in itself,’ she said. ‘Our median price home is up from $132,000 to $152,000 this time last year.’”
“‘Which is exciting to me, because there’s more and more condos being built and sold,’ she said. ‘In 2006, the average price of a condo was $206,000, and this year it was $286,000. Condos have not been good over the years. They just took off.’”
“‘If you were a buyer, you’re still going to end up being a seller in most cases, and I don’t see any of these prices dropping,’ she said. ‘Interest rates are low, there’s choices, there’s new homes in all different directions and that always helps. We have plenty of supply, and we’re not overbuilt.’”
“It appears most buyers of condominiums, which are raising the market, are coming from out of the area and using their properties as second homes in most cases. In Moses Lake, Alsted-Fanning’s office has seen two buyers from Alaska.”
“‘If you drive around Moses Lake, you see new construction everywhere,’ she said. ‘North, south, east, west - there’s more coming in. There’s hundreds and hundreds of new construction (projects) being planned right now, and I don’t see a lot of empty homes out there.’”
“She advises people who are presently renting to purchase now. ‘Take this opportunity and buy now, because it will favor you,’ she said. ‘The buyers, if they’re on the sideline just watching right now and waiting for the right time, I don’t think there’s a better time than right now.’”
“Alsted-Fanning urges sellers to consider the fact that buyers are savvy.”
“‘They will not put up with previewing overpriced homes,’ she said. ‘For the sellers, I say state your home, make your repairs, clean your clutter out and don’t overprice, because we do have a lot of competition with these new homes.’”
“John L. Scott Real Estate Owner Alan Heroux said the national housing trend is ‘basically tanking right now.’”
“That’s because the national real estate market was treated as any large investment concept, Heroux explained, appreciating at a high level for several years until, like any investment, the actual value was much lower than the perceived value.”
“‘People went, ‘Wait a second, we’re paying more for this than what it’s really worth,’ and it kind of started to unravel from the top down,’ Heroux said. ‘Nationally, that has a lot to do with the subprime market for mortgages. They were giving credit to people who should never have had gotten credit.’”
“Locally, the market has returned to more of a normal market, Heroux noted. In the last few years, sellers were essentially able to demand what they wanted for their homes, and buyers had no choice but to pay it, he said.”
“Negotiations are going on, he said. ‘We are a little bit above what we probably should be value-wise on homes, but we’re not like the national market where it’s 50 percent overvalued,’ he said. ‘Our prices are a little bit on the high side, but sellers are starting to negotiate now. It’s actually a normal real estate market, which we’ve needed to do.’”
“Sellers do need to understand the difference between perceived value and actual value, Heroux advised.”
“‘The reality is if they bought their house for $100,000 and thought it was worth $200,000, but it turns out it’s only worth $175,000, people think they lost $25,000 in value,’ he said. ‘They didn’t; that value was never there, it was a paper value.’”
The Daily News from Washington. “For five months, Les Campbell waited for his three-story house on Curtis Drive north of Longview to sell. As many as 25 people came to look, but Campbell soon realized few were serious about buying.”
“They’d show up just to take a tour of his home to see what was available, but only one or two people were ready to make the commitment to pay close to the asking price of $340,000. So Campbell decided to wait until next spring to try to sell the 2,800-square-foot home.”
“‘I think it’s just a slow market,’ the retired General Motors manager said.”
“Campbell is not alone. Recent statistics released from the Northwest MLS, which tracks home sales in Western Washington, show far more houses on the market than a year ago.”
“In October this year, 759 houses were listed on the market in Cowlitz County, up 27.6 percent from a year ago, according to the listing service. The inventory of available homes has fallen 6.1 percent since August, which some local brokers saw as a record-breaking month in Cowlitz County.”
“Across the 20 Washington counties included in the listing service study, the number of homes listed for sale increased by 31 percent from October 2006.”
“Despite the glut of homes, local real estate agents are insisting that Cowlitz County remains a good place to buy. The market has slowed, they say, but it’s part of a natural cooling following the local housing boom of the past two years.”
“In fact, a group of brokers and mortgage lenders have launched an advertising campaign reminding people that Cowlitz County has good things to offer.”
“Agent Shirley Nelson said she’s seeing a lot of low offers from buyers. That’s part of the reason, she said, that sellers are waiting longer for offers close to their asking price.”
“‘Our sellers are saying, ‘Nope, we want what we want for our home,’ said Nelson, who was a co-sponsor of the ad campaign.”
“The recent house-flipping craze, spurred by popular television shows such as ‘Flip That House,’ has also contributed to the glut of buyers looking for a deal, Nelson said.”
“Shirley Little, incoming president of the Cowlitz County Association of Realtors, added that the wave of low-interest loans that had grown popular during the housing boom are taking their toll. After paying a small down payment, some home owners came to realize they couldn’t afford the high rates down the road and have been forced to give up their homes, she said.”
“‘The same buyers six months ago, a year ago, can no longer buy homes,’ Little said.”
The Kitsap Sun from Washington. “Kitsap real estate prices leveled off in October while the number of homes on the market continued to rise, according to statistics released last week by the Northwest MLS.”
“There were 453 more homes for sale in Kitsap in October 2007 than in the past year, and those that did sell went more cheaply than in previous years.”
“The bottom line on the new stats, according to Mike Eliason, executive of the Kitsap Association of Realtors, is a supply-and-demand story.”
“The real estate boom of the early 2000s fueled a boom in construction of homes, Eliason said. But the red hot market also contributed to money lenders’ willingness to get anyone into a home who wanted one —regardless of credit.”
“When the overall U.S. housing market finally turned south this year, it caused a flooding of foreclosures, and made even more homes available.”
“Central Kitsap experienced the highest rise in number of homes on the market. The Seabeck and Holly areas, for example, had 80 homes on the market in October 2006. In the same month this year, there were 142.”
“Demand, meanwhile, as lenders tighten restrictions on attaining mortgages due to fears of more foreclosures, has decreased. Eliason said that the market is entering its ‘winter cycle,’ where real estate activity is less.”
“Eliason predicts a downturn of the median home price in Kitsap County, one that will be more accurately aligned with Kitsap’s wage earners. ‘We’ve pushed people out of the housing market,’ Eliason said. ‘Now we’re going to start to see people coming back.’”
The Columbian from Washington. “At a time when more Clark County homeowners are faced with the threat of foreclosure, a local agency has discontinued counseling services that help with mortgage default.”
“The Vancouver-based Community Housing Resource Center’s four-person staff has been unable to handle the rising caseload after its full-time foreclosure counselor resigned two months ago. The center is referring foreclosure calls to two informational Web sites and a foreclosure advice line.”
“The loss of default counseling comes at a time when local foreclosures have more than doubled, according to RealtyTrac, which showed 374 foreclosure filings in Clark County during the third quarter, which ended Sept. 30, up from 180 foreclosures filed during the same period a year ago.”
“In the meantime, an increasing number of phone calls to the center reflect the problem of rising foreclosures, said Kevin Gillette, program manager. ‘We’re getting quite a few inquiries regarding this, and we hope to hire someone’ to continue the counseling, he said.”
“He added that foreclosure is a highly emotional issue for clients. ‘There’s so much in the way of emotion, depression and anger,’ Gillette said, because homeowners in default face limited options now that home sales have slowed and prices have softened.”
“‘Quite frankly, you’ve got a lot of people owing more than what the houses are worth,’ he said.”
3:00 pm : Just reported, the National Association of Realtors Pending Home Sales Index for September grew by 0.2%. A decline of 2.5% was expected.
EGGGGGGGGG
Wrong answer: ‘The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in September…was 20.4 percent lower than the September 2006 level of 107.6. ‘Even with relatively low fourth quarter sales, 2007 will be the fifth highest year on record for existing-home sales. The median existing-home price in 2007 will have fallen by less than 2 percent from an all-time high set in 2006,’ Yun said.’
‘The PHSI in the Midwest is 14.4 percent below a year ago. In the South, the index is 19.7 percent lower than September 2006. The index in the West is 25.6 percent below a year ago. In the Northeast, the index is 23.1 percent below September 2006.’
Ben, what I posted was on the home page of Yahoo.
I’m just funnin with ya. They have been doing that MOM YOY game since I’ve been doing this.
You forgot they also lower the previous months numbers every time.
Appearently they dont’ lower them every time. When this number was release last month, it was 85.5. The revised number is still 85.5.
My comment is to remember the HUGE cancelation rates the builders have recently been talking about….. You can’t buy that new house if you can’t close on your existing. My guess is that a lot of these transactions from September won’t actually close.
That report on the Realtor site was stupid. The whole premise is that there is “pent up demand”. I have no doubt that there is quite a bit of demand- I myself being one of those- but demand has nothing to do with actual sales because for one, getting a loan is only going to get harder, prices in most metros are now too high for the median income wage earner to afford, hence you have a situation where even if there is demand, the problem is the ability to get into a loan period.
Today on Wall Street was one of those feel-good days where even a tiny little bit of good news was reason enough to celebrate between the falling bombs.
Yun is good.. he may not have any morals, but he’s doin his job.
if he was a divorce lawyer and i neeeded one, i’d hire him.
Pinch~
er…pop butt…(love smacking butt’s I do!)
Dang Ben, you’re full of good information and you’re having fun!
Sassssssssssy!
Leigh
Realtors Forecast Bigger Drop in Sales
http://biz.yahoo.com/ap/071113/housing_forecast_realtors.html?.v=2
That’s it! That’s the sign! Now run out and get those houses or be priced out forever!
case closed,
get to the malls, and buy large houses. No recession and housing bust has abated, all financials are golden, you cant lose money in the stock market, the check is in the mail…..
the bigger the lie….
I live 20 mi south of Portland,Or. There are some silly prices here, too. I laughed out loud when I saw the asking price for some house on my street. What do these people think - I cant imagine.
Yeah, I’m not far from there myself. There was a Craigslist posting in Wilsonville the other day that had me ROFLMAO! Guy has what sounds like 5 acres off Advance Road (by the old Sandelie GC) and if you make him a CASH offer by Nov. 15th he’ll knock 50k off his 900k price!
Oh and then adds that he is “retiring”. Golly mister, can “I” pay for your retirement!? Let’s be honest, most of those places back up in there (while pretty) are really more “homesteads” than mansions? Many of thos folks HAVE lived ther for years, but they also WORKED on their place for years. So if you want a home with a barn from the 40’s, a main house from the 50’s, a garage from the 70’s and satelite dish from the 80’s..? you’re in!
I think a lot of people simply enjoy listing their house/land at absurd prices, and then daydreaming of what a wonderful life they would/will have if/when they sell. They’re the delusional crowd. We won’t have hit bottom until they’re few and far between.
A friend lives southwest of Portland in a 3-yr-old house. Paid cash on purchase (over 600K), and is listed over $800K today. 3800 sq ft. 2 ac. Says they put in over 100K in upgrades. “Just want their money out”.
Another day, another bizarre story.
HAHA he just lost a sheeetload of his retirement money…. $800K for Portland….enjoy his whining….ill bet he will sell next year for $499K and with complain how real estate was such a bad investment.
“Squalor, crime follow wave of foreclosures…Middle-class, new developments reeling from vacant homes, shady renters.”
http://www.msnbc.msn.com/id/21773482/
Maybe those foreclosed on who move to a nice, safe apartment a distance away aren’t the worst off.
“Eighty-five bungalows dot the cul-de-sac that joins West Ontario Avenue and East Ontario Avenue in Atlanta. Twenty-two are vacant, victims of mortgage fraud and foreclosure. Now house fires, prostitution, vandals and burglaries terrorize the residents left in this historic neighborhood called Westview Village.”
Hard to believe that 15 years ago people were moving from NYC to Atlanta because they thought it was safer.
Of course, some renters are better than others.
“Franklin Reserve resident Susan McDonald said two of the homes on her block were turned into indoor marijuana farms. Both caught fire last summer after the pot growers tapped into the city’s electric grid with faulty wiring. But McDonald, who has lived in the community for three years and is president of the residents’ association, jokes that they make better neighbors than some. ‘The pot growers, they mow their lawns, they take out their garbage.’”
And, boy, are the nose hits good when you stand nearby and watch their houses burn down!
“The effects aren’t confined to just low-income or redeveloping communities; they are seeping into middle-class neighborhoods and brand new developments.”
This is perhaps the part I loathe most about the bubble and its bust. The de-stabilization and crime and vagrancy that follows. That’s the ONLY reason I’m not even looking for a deal right now, because this problem needs to unwind with the prices. Sure, I might be able to get a good, cheap cash deal in Florida right now. But what good is it if the neighborhood declines?
Seriously, the flakiest renters haven’t even been foreclosed on yet!
I love Diane: “No amount of shunning media stories or ignoring foreclosure stats can make up for the fact that houses in this country are just too expensive. You want to juice the market? Lower the price. The crazy record appreciation we saw at the beginning of this century was unwarranted and undeserved, and it came darn well close to tanking our entire credit system. That’s a cold hard truth and Realtors should educate their clients about that.”
“So Campbell decided to wait until next spring to try to sell the 2,800-square-foot home.”
“‘I think it’s just a slow market,’ the retired General Motors manager said.””
Southern California, fall-winter 2005 and 2006…”wait until the next spring selling season”.
Wait until Spring, Bandini errr Campbell.
Not meaning to hijack this thread–what is with all these folks?
Stare offs?
Yeah, like you’re going to win that one, when we have the money you want?
Get, stay, keep your house off the market!
Some of us are looking for a home, dang it!
Apologize for the rant/off.
the numbers juggling….i love it..its like juggling 2 knives…then someone throws in another…then another…now we added pendings to october. They just cannot form a bottom and build from there. It’s so stupid and if they think we cannot see it they are kidding themselves.
It’s true that we can see through it, but they are playing to their audience: realtors, and all the sellers hanging on to their wishing prices. All the folks who are waiting for the Spring 2008 rebound.
You know, the Parallel Universe crowd.
Side note, the National Association of Realtors is still putting a positive spin on everything…headlines from their web site:
“”NAR Puts Housing Market in Perspective: 2007 will be the Fifth Best Year on Record ”
“Modest Recovery for Existing-Home Sales in 2008 as Credit Crunch Subsides”
“NAR Combats Homelessness Among Veterans”
“Improvement in Mortgage Market Bodes Well for Housing in 2008″
Beautiful site arroyogrande!!!!!
Makes me sick to my stomache that the NAR would use my brothers and sisters to futher their agenda.
Thank the Heavens I don’ shoot people (anger is one thing, even mean people, I would not shoot).
My brethren may be of a differernt ilk?
http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/11-09-2007/0004702025&EDATE=
Nor would I blame her! Shameful, just shameful.
Sigh,
Leigh
“Beautiful site arroyogrande!!!!!”
Thanks!
“It’s 2011 Already-How Much Longer Will This Housing Slump Last”
Ben,
this hits the nail on the head (and perhaps weekend topic worthy).
http://prudentbear.com/index.php?option=com_content&view=article&id=4819&Itemid=53
kinda wordy.. what is this person trying to say?
tighter control on immigration (illegal?) and tight control of money supply and.. “a need for investment in mid-career education” ?
kinda wordy.. what is this person trying to say?
same here, it confused me.
sigh. Now I understand how shrub won two terms.
Yes, all of us here are both stupid and voted for GW Bush.
Now that we’ve got that cleared up, why do you even bother talking to mental midgets like us.
You gotta love the pomposity…
The article in 2 sentences: When the middle class realizes it has received a collective Joshua tree due to 30 years of bad policy decisions, the US may end up with a (real) socialist system.
This could have been avoided if the Pig Men of Wall Street took a little less, and left more of the scraps for the rest of us.
Wow, you are good at expressing the gist!
What I’ve been bitching about since I appeared here.
Kind of a wordy Ron Paul manifesto.
Stupid me did understand that part. But I was searching for the proposed solutions, those of hich i was able to glean from that piece, i already outlined in my comment above. They seemed a bit naive to me.
Prudent Bear funds sell short in just about everything .. except PMetals, on which they go long.
I am not a gold bug and maybe that’s why i don’t respect that persons opinion to the degree i should..
So, the world is going to hell in a handbasket? On that most can agree..
But as far as the causes and cures, I can do without heavily biased opinions that try to steer me down a chosen path.. buy gold.. not.
Hi Joey,
Here’s my read for what it’s worth.
We (our nation) are:
Lazy
Stupid
Sheep
Who continue into apathy, allowing the rich to rape us, and destroy our way of life?
Sigh,
Leigh
Leigh…. You must hate america. You want us lose in iraq don’t you. /sarcasm off
Daniel Weintraub: Proposal to write-down loans could wreak havoc
By Daniel Weintraub - dweintraub@sacbee.com
Published 12:00 am PST Sunday, November 11, 2007
With the housing market in decline and the mortgage industry in free fall, government officials are searching for something they can to do stop the bleeding. But a recent proposal by the head of the Federal Deposit Insurance Corp., while meant to help consumers, would actually hurt potential homebuyers who stayed out of the red-hot market rather than buying a home they could not really afford.
Sheila Bair, chairwoman of the FDIC, proposed last month that lenders simply freeze interest rates on so-called subprime mortgages carried by people who live in the homes they bought and who have been current in their payments so far. Many of these people took out loans with low introductory “teaser rates” that will soon be adjusted upward, in some cases costing the homeowner hundreds of dollars a month more.
Bair’s idea has appeal. It would certainly help troubled borrowers who can’t afford the payments to which they agreed and are at risk of losing their home to foreclosure. In some cases, it might help the lenders, too. Foreclosure can be an expensive process, so keeping a person in their home at a lower rate could be cheaper than taking the home back and then trying to resell it in a sinking market.
Many lenders, in fact, are working with borrowers on a case-by-case basis to do just that. But Bair suggests an across-the-board action instead.
“We have a huge problem on our hands,” she said. “We can’t just sit here doing this kind of case-by-case, laborious restructuring process … For owner-occupied housing where the loan is current … just convert that (loan) into a fixed-rate mortgage. Keep it at the starter rate. Convert it into a fixed rate. Make it permanent. And get on with it.”
Bair’s proposal, however, ignores some basic facts about how the mortgage and housing markets work.
For starters, each loan is a binding contract between a lender and a borrower. The lender has given up some money that could have been invested elsewhere, and the borrower has agreed to pay a certain interest rate for the use of that money. Included in that rate is a risk premium. The less reliable the borrower, the higher the price they have to pay for the money, to compensate the lender for the higher likelihood that some of those loans will never be repaid.
If, suddenly, that agreed-upon interest rate is unilaterally lowered, the contract held by the lender is, if not worthless, seriously devalued.
Few people care about lenders losing money. They are not exactly sympathetic characters. But follow that money a little farther along its path. Many of these loans were packaged and sold to investors as securities. By putting their money on the line, those investors were the ultimate source of the capital that allowed millions of people with low incomes or spotty credit records to buy a home.
An across-the-board write-down of those loans would wreak havoc on the securities industry, causing an overnight loss of billions of dollars of value in the investments they hold. It would also send an ominous message to anyone thinking of investing in the mortgage market in the future: your money is not safe here. Future investors would thus require an even bigger premium to part with their money for mortgage loans. The end result? Less money in the mortgage market, less money to lend and higher interest rates for everybody.
So while a few people who borrowed more than they could afford would get relief, others who sat out the housing boom because they were more prudent would be penalized. While they saved money for a down payment on their first home, the higher interest rates caused by the bailout would mean higher housing payments for the same-sized loan, further postponing their ability to get into the market.
And that’s not all. One of the effects of foreclosures is downward pressure on housing prices. The bubble financed by these easy loans pushed the price of housing out of the reach of many prudent first-time buyers. The current decline, while painful to some, is a correction that eventually will make homes affordable again and bring more people into the market. Freezing interest rates at below-market levels would prop up the price of those homes. That’s great for anyone who already owns a house, but it’s a blow, again, to those who sat out the boom hoping that they could buy a home when normalcy returned.
None of this is to say that homebuyers who were truly defrauded by their lender should be stuck with their mortgage contract. In some cases, mortgage brokers or lenders failed to disclose how the loans would work, or inflated appraisals or incomes. Those contracts should be voided.
But consumers who simply gambled that the market would continue to soar and that, after a time, they could refinance their unaffordable loans at a fixed rate, are not victims. They are adults who made a bad decision. And they should not be rewarded at the expense of renters who restrained themselves amid the frenzy and are waiting for interest rates and home prices to come back within a range they can afford.
Not to mention the fact that some homeowners with good credit will be paying MORE per month on the same size mortgage, than someone with a much lower credit rating. Thus, the lower your credit score, the lower your APR.
I don’t even see how it could even be a consideration. In fact, it should be an utter embarrassment to even suggest it. Forget the prudent renter, your penalizing every future generation who didn’t even have the chance to make ANY decision at all.
“it should be an utter embarrassment to even suggest it.”
It is pure “simple answer” thnking.
People are getting kicked out due to ARM resets, so stop the ARM resets.
NO, you moron!!!
People are getting foreclosed on because they bought houses at grossly inflated prices which they could NOT afford.
People are getting foreclosed on because people with suck credit were allowed to buy houses with grossly overinflated prices, using $0 down.
People are getting foreclosed on because people were allowed to.. NO, encouraged to… commit mortgage fraud be overstating their income when getting no-doc, Alt-A loans with no job or income verification.
So, the ONLY pain free solution to this mess is to hop in your time-machine, jump back about 5 years, and make regulations preventing people from buying houses they can’t and won’t pay for.
Heck, the time-machine solution makes just as much sense as the “freeze the ARM” solution!
Speaking of Havoc:
Report Forecasts $223 Billion Decline in Property Values and Lost Taxes As Foreclosures Surge
A bit late to think of this, but hey - AP is starting to get it.
Get it??
That study was a JOKE!!!!!!!
They took the drop in property values caused by a foreclosure during a NORMAL market (.9%) to houses in the same block or so. They then multiplied that buy the median house, and by the number of expected foreclosures, and then by the number of haouses around the projected to be foreclosed house.
Well, this is NOT a normal market. Supply is high, demand is gone and prices are unaffordable.
We’re NOT going to see .9% decrease due to each foreclsoure. Heck, PHX had a .9% drop LAST MONTH according to Case-Shiller.
This story is off by about one and a half orders of magnitude!
.9%? More like 40%!
“Mortgage Woes to Sink Property Values”
Ya think?
Hey sounds like Daniel has been reading Ben’s blog. Okay which one of you is Daniel?
I’d not be surprised if he was reading Sacramento Landing. He’s a local for us. Daniel has been on Xmas card list ever since he wrote a piece that ripped Davis (my city) a new one.
Gotta hand it to him - at least he talked about prudent savers. Most of them don’t even consider the ramifications of bailouts.
I give him kudos
Freezing interest rates at below-market levels would prop up the price of those homes.
I don’t understand the logic behind that. It is true that the person living in it may get to continue living there with the lower interest rate, but when they try to sell it the price they can get for it is based on what the buyer’s interest rate is going to be, which as the author points out:
The end result? Less money in the mortgage market, less money to lend and higher interest rates for everybody.
The proposal feels unfair that some people who should never have qualified for a home loan will get to keep their home. But I don’t see how it keeps prices from coming down in the long term. And in the short term it means fewer people for me to compete with while I am still renting.
Darn. Forgot to kill my italics.
That last paragraph is mine, not quoted.
The proposal feels unfair that some people who should never have qualified for a home loan will get to keep their home. But I don’t see how it keeps prices from coming down in the long term. And in the short term it means fewer people for me to compete with while I am still renting.
Death to superfluous italics attempt one
I apologize, I wish I was God, however is not and has ever been fair!
We all do the best we can given the current circumstances. I am not saying we shouldn’t try to change it, but you must recoginize there is no guarantee that you will suceed.
I wish that I could wave a “magic wand” and make the world fair, but I don”t.
The best that I can offer is hang close to your family and friends, while the wirlwinds wipe around. Hopefully, you will survive for another day.
If I was a devout christian, I would close with “God Bless”.
Hmm. Still seem to be unable to kill the italics. Sorry, guys, trying again.
It’s not my day. One last try, and then I’ll have to hope someone else can fix it.
Gee Bair’s proposal is not just GOOD it’s GRAND. I buy a house on an interest only loan with a $2600 month mortgage payment but only pay a minimum $1200 so I’m not behind in my payment. Now they freeze my payment and I live cheaper than nearby renters paying $1600 month and get a tax deduction to boot. And best of all the lien holder sits with a loosing asset. We’ll call this new mortgage “Country Wide Rent Control”.
God help us with loonies running the asylum!
heila Bair, chairwoman of the FDIC, proposed last month that lenders simply freeze interest rates on so-called subprime mortgages carried by people who live in the homes they bought and who have been current in their payments so far. Many of these people took out loans with low introductory “teaser rates” that will soon be adjusted upward, in some cases costing the homeowner hundreds of dollars a month more.
Bair’s idea has appeal. It would certainly help troubled borrowers who can’t afford the payments to which they agreed and are at risk of losing their home to foreclosure. In some cases, it might help the lenders, too. Foreclosure can be an expensive process, so keeping a person in their home at a lower rate could be cheaper than taking the home back and then trying to resell it in a sinking market.
Many lenders, in fact, are working with borrowers on a case-by-case basis to do just that. But Bair suggests an across-the-board action instead.
“We have a huge problem on our hands,” she said. “We can’t just sit here doing this kind of case-by-case, laborious restructuring process … For owner-occupied housing where the loan is current … just convert that (loan) into a fixed-rate mortgage. Keep it at the starter rate. Convert it into a fixed rate. Make it permanent. And get on with it.”
I admit, I’m misogynist. So I have trouble taking seriously any Shiela the put up as head of the FDIC.
There’s a tiny bit of sense in her proposal, but only a tiny bit. For those subset of homeowners who
1. Put down a down payment
and
2. Aren’t paying interest-only or neg-am
and
3. Haven’t HELOC’d anything
it *may* be OK to tell the lenders: “You must refi this into a 15- or 30- year fixed, at a rate of 6.2%”. This is to presume that the lenders used less-than-honest means to get these people into bad loans.
But folks who put NO money down (i.e., those who won’t lose anything if they have to walk away) and who were only paying interest (i.e., merely renting the house anyway) should, at best, be able to hand the keys back to the bank and walk away with no-recourse.
Allowing these folks to pay teaser rate forever is the craziest thing I ever heard. And if they’re in category 1, 2, or 3 above, they’ll eventually stop paying anyway. They never had any intention to pay off this mortgage.
“…said Van Melick, senior loan officer for Corvallis Metro Mortgage. ‘Anybody with reasonable credit who has a job and can qualify for the payment amount can qualify.’”
Thank you Captain Obvious. That was brilliant. Now, on to the more important question. How many people can actually afford the houses?
Ben has a gift for making these dolts statements just jump right off the page now doesn’t he? “Anyone that can qualify can qualify”. WTH?
Qualify for WHAT btw? The only time I go there is for the Corvallis Knights games and to visit daughter # 2. So I don’t see much other than her apt. and Goss Stadium but it seems silly to me that ANY college town participated in the “boom” to begin with?
Closing italics
Those contracts should be voided.
and the taxpayers still get it in the assssssz
people know what they signed- they’re being encouraged to lie about it by the pols
“She advises people who are presently renting to purchase now.”
I love the Northwest. I lived there for 12 years and it’s a part of this country that always feels it is different and not part of any national trend. It’s unique. We’re different kind of mentality. Completely mental. Enjoy the ride WA and OR.
“Completely mental”
LOL! O.K, that’s true but I promised myself I wasn’t going to get all negative again! Isn’t it just possible if we are ALL delusional enough we can continue the Ponzi/”Growth” scheme while the rest of the country falls into chaos and we still get MEW RV’s?
I’m sure just about every part of the country thought they could “will power” their way through this and arrive on the other side unscathed. Since we’re the last to fall it seems like that belief has deep roots here. Completely unfounded mind you, but.. deeply rooted.
Here is one for you WA fans -
http://tinyurl.com/3xdk6f
They dropped it a whole 20K! Whoop-Ti-do! Someone had this person a nice parting gift and show them the door.
“‘We’re seeing lumber at or below prices we’ve seen at any time in 50 years, when you factor in inflation,’ Schott said. ‘A year and a half ago, studs were running $320 to $340 per thousand board feet for green Doug fir. It’s averaging $150 to $160 now. It’s the most ugly pricing I’ve seen since 1980-81.’”
Funny thing, I’m not seeing this spill over into retail prices at the hardware store. Reminds me of gasoline, a little.
“I love the Northwest. I lived there for 12 years and it’s a part of this country that always feels it is different and not part of any national trend. It’s unique. We’re different kind of mentality. Completely mental. Enjoy the ride WA and OR.”
I’m seeing some hysterical prices here. A delusional homeowner and his patsy realtor (or vice versa), just listed a trailer on 5 acres for $350k. I had a good, hearty laugh. The place should be selling for like $75k, max.
This was a reply to Chris in Birmingham, not sure why it didn’t nest.
While I’m sure it wasn’t the same one (I’ve seen one JUST like it!)
Again, can we keep this up and pretend we aren’t in any way connected to the other 48 states? It seems to work for other issues?
Clearly you’re nowhere near Jackson county. Here, that’d be considered perfectly reasonable…..even a bargain, if it was a decent mobile. Deee-liver me.
Same here. For some reason, the volume of absurd wishing prices seems to have really ramped up in the last 3 months. Not sure if people are hoping for one last hurrah or what. I’m seeing $700K+ homes in close in SE Portland that MIGHT have commanded $400K in the last 2 years. Don’t get it.
“He added that foreclosure is a highly emotional issue for clients. ‘There’s so much in the way of emotion, depression and anger,’ Gillette said, because homeowners in default face limited options now that home sales have slowed and prices have softened.”
Ah…now I see the theme for future HGTV shows. Angst intervention. Calling Dr. Phil!!!! Memo to Oprah!!!
FB: “I’m just so angry and so…depressed..oh, yeah, I feel emotional too!”
Dr. Phil: “I’m going to get you the help you need. Starting tomorrow you’ll be spending a month at the acclaimed rehab center, “Asshat Addiction Centers of America”.
Oh lordly, you want homeseller entitlement angst? Read the HGTV RE boards. They can be hysterical.
“Asshat Addiction Centers of America”.
Does hording supplies and cash get me in that club?
Horders Anonymous.
Can somebody tell me why I asked the bankteller to cash me out a four figure check in 5’s, 10’s and 20’s? She was laughing at me in a nice way when I told her that small denominations work better in a bank running environment. I got the idea from one of you posters and I didn’t really know why I did it.
Having my taxes go up and my dollar weakened is an incredibly emotional issue for me! I’m very depressed about over this. The lesson I learned is if you follow the rules and try to take care of yourself, you get SCREWED, and the only way to stay ahead in America is to lie and cheat.
You can get ahead with honest work; I’ve worked my butt off and was very frugal, and did OK. But to *stay* ahead requires working beyond the system. Why? Because once the government senses you have a pile of money, they devise ways to confiscate it.
“He added that foreclosure is a highly emotional issue for clients. ‘There’s so much in the way of emotion, depression and anger,’ Gillette said, because homeowners in default face limited options now that home sales have slowed and prices have softened
Nobody will ever shed a tear for me.
“The Vancouver-based Community Housing Resource Center’s four-person staff has been unable to handle the rising caseload after its full-time foreclosure counselor resigned two months ago. The center is referring foreclosure calls to two informational Web sites and a foreclosure advice line.”
I have no idea why there even needs to be such a thing as a foreclosure counselor. It seems to me, the solution is rather simple. Either earn enough money to pay the mortgage, or sell the house and move into an affordable rental. If you cannot sell the home, walk away. Do these people really need somebody to help them figure this out? Wow.
What has changed, Melick said, is freewheeling lending to people whose financial situations fit colorful acronyms.
And what HASN’T changed are the fr*ck as* PRICES which were a result of the freewheeling lending! So now this guy wants us to buy something at these high prices without a ninja loan? At these prices, I can’t afford it without a ninja loan, even if I was dumb enough. That’s why they HAD the ninja loans in the first place, yo.
This guy is a slick loan officer. He’s targeting the few responsible “deadbeats” (us), hoping to snare them into handing him some truly Prime FICO Grade-AAA paper (not that fake Moody’s stuff) to sell to the hungry food chain (taking a little cut for himself, of course).
No dice, buster.
test
Woohoo! My hometown area of Central Kitsap is mentioned in the HBB! I feel that we are now amongst the famous.
It really looks like median sales prices have finally peaked in the Seattle area as of last month. We are actually seeing minus signs in the YoY price stats now.
I think I turned off the italics?
“‘Quite frankly, you’ve got a lot of people owing more than what the houses are worth,’ he said.”
Okay, so knock the FB’s out of the equation…they’re either stuck in those houses, or if they foreclose, won’t be able to get another loan for years. And lending standards are tighter for everyone else trying to buy.
How much longer are we going to hear “the experts” say this should all pan out by 2009?
“‘Quite frankly, you’ve got a lot of people owing more than what the houses are worth,’ he said.”
And what’s wrong with that? If everyone got fixed mortgages, then this wouldn’t be an issue! You know that your monthly payments will stay the same for the next 15 or 30 years.
I probably couldn’t have sold my house for more than I paid until 2 or 3 years later (factoring in the 6% transaction fee I’d have to pay). When I bought my house (Sunnyvale CA) in 1989, we offered 10K less than asking and the buyer accepted it. We probably could have gone lower!
After I bought my home, putting 20% down, I don’t think I ever cared for one moment what it was “worth.” I don’t care now. I don’t plan on ever selling it.
“‘We’re seeing lumber at or below prices we’ve seen at any time in 50 years, when you factor in inflation,’ Schott said. ‘A year and a half ago, studs were running $320 to $340 per thousand board feet for green Doug fir. It’s averaging $150 to $160 now. It’s the most ugly pricing I’ve seen since 1980-81.’”
He’s a lumberjack, and it’s not ok…
He worries all night, and works all day.
“Shirley Little, incoming president of the Cowlitz County Association of Realtors, added that the wave of low-interest loans that had grown popular during the housing boom are taking their toll. After paying a small down payment, some home owners came to realize they couldn’t afford the high rates down the road and have been forced to give up their homes, she said.”
“‘The same buyers six months ago, a year ago, can no longer buy homes,’ Little said.”
Hmmm… they’re unable to afford the homes that were bought 6 to 18 months ago yet somehow she see’s the problem being new people cannot “buy and go into foreclosure.” Sigh…
Its definitely time to run for the hills. This tidal wave of stupidity hasn’t begun to run its course. Yes, it took me a while to accept it, but now I understand this will be like a tsunami; we’ll have wave after wave crashing on the shore doing their damage. (I love the fact that most of the people killed in a tsunami are looters hit by the 2nd wave; yes, I feel sorry for the innocents. But some people aren’t innocent.)
Got popcorn?
Neil
Good set of Northwest threads…
From the Twin Peaks of local boosterism, to overburdened foreclosure help lines and the smell of despair, all in the same locale.
I heard from a source today that there was a recent story in the local business journal suggesting that 12000 foreclosures are expected in the Portland metro area in the next 24 months.
I’ve been feverishly trying to find that report if anyone else has seen it.
I think NOD lists currently only show about 50 per week, depending on the week.
(wish I had more data, just thought I’d post this, given the thread)
I was born and raised in Vancouver Washington and the main problem is most people have moss growing on the north side of their heads!