I agree CR I hear a lot of people are looking at places in Nevada for the tax implications. People who live in CA seem to want to flock to Nevada after they retire. These are downwardly mobile home buyers looking to downsize. Downsizing will hold up the low end over the years and put a floor under prices while the mid-range and jumbo market and McMansions will languish.
Wife called earlier today to let me know that US Bank sent us a note reminding us that we have a zero balance on the CC and that we have $20K in unused credit. Heh!
Investors will probably set the price floor for low end single family homes and condos, but owner occupants will probably be more prevalent in the mid-range
Of course, the two will reach equilibrium with each other, so a price dip in one will lead to a price dip in the other.
Wife called earlier today to let me know that US Bank sent us a note reminding us that we have a zero balance on the CC and that we have $20K in unused credit. Heh
Got the same call! Why?! Let the good times roll...
Wow, I love having my opinion reinforced. I was just saying to a friend at work that we (owner-occupier) would have to pay at least 10% more than an investor using the 100-120 times rent formula. The investors are out in force in Tampa, FL on the low-end (30-100K) buying the future Sec8 housing but are leaving the middle (175-250K) alone due to prices still being about 20% too high. I will buy next year even if it continues to fall as I think inflation is out of the bottle so I might as well lock in depreciating money.
State and local governments were flush with tax revenue during the five-year housing boom. They pulled from bulging pools of property, income, and sales tax to expand education, law enforcement, health care, and infrastructure programs without needing to burden residents and corporations with tax hikes.
Now, what about that REO music?
Prices will have to go down on the REOs, as property taxes go up next year. There will be a dearth of tax collected revenues from lower sales on every imaginable item, including real estate and obviously a tsunami of tax protest from people trapped in The Ownership Society -- who are being crushed by declines in over-valued home values!
Re: The bad news at the pump has an upside for the Board of Equalization. The board estimates that the higher prices generate almost twice as much sales-tax revenue compared with five years ago. About $3.6 billion in sales tax from gasoline was generated in 2007, compared with $2.1 billion in 2003, when the average pump price was $1.88.
Maybe I'm crazy, but I'm making a short play with tight stops on UYG in the next few days. SKF seems WAY overpriced right now. In fact, most of the Ultrashorts (except for SRS which I remain unconvinced about) seem too high. I think the markets are due for a big up day or two. If I'm wrong, I'm out a few hundred bucks. Worth the risk, IMO.
We agree with Senator Schumer that in times like these it is important that we all work together to keep institutions like Indymac Bank safe and sound and that anything that can be done in this turbulent financial market environment to further improve the safety and soundness of any financial institution should be done and would be welcome.
Let's see. Who is better positioned to identify a value? Current investors (the investors of the last 5 years are BK so they don't bid), or homebuyers?
I am very tentatively considering buying some condos as rentals here in San Diego, and possibly a house or two.
There are some properties now that could work as an investment, but at this point I am happy to wait for at least another 4-6 months as the supply of REOs is increasing very, very quickly.
whoocouldnode:
DETROIT -- Chrysler LLC is expected to announce Monday the idling of a minivan plant near St. Louis and production cuts at other plants as U.S. sales of larger vehicles continue to falter, people familiar with the matter said.
IMHO, the tsunami of inventory to be released in the future, will need facelifts in order to be competitive. Thus is a facelift a better play on future value at a discount today, or do you wait until blood is in the street and get a killer deal from an unemployed carpenter and then leverage your dollar today by doing nothing?
"It really depends on the condition of the entire house," she said. "If you have completely updated your house but haven't done a half bath, and it's going to be a $3,000 project, I'd recommend you do that. If the whole house is outdated, then I'd stick with decluttering and cleaning."
Wife called earlier today to let me know that US Bank sent us a note reminding us that we have a zero balance on the CC and that we have $20K in unused credit. Heh!
I was stupid enough to call my credit card company once and request that they cut my limit by 75% just because I was worried what would happen if somebody stole it with that huge limit. They happily compiled.
The next month I get a letter from them congratulating me on the fact that due to my good credit my limit had automatically been raised 300%. =/
We made...the 2nd half is here and the CFC/BAC deal is a done deal.
no way. as I said, I have my own clock. "Hammer Time". it goes off at the start of second half 2008 which doesn't start until 9am eastern tomorrow (when the markets open)
For you out of the area folks: Here's the North San Diego County Coastal pecking order:
Oceanside residents wished they lived in Carlsbad.
Carlsbad residents wished they lived in Encinitas.
Encinitas residents wished they lived in Solana Beach or Del Mar.
Solana Beach and Del Mar residents wished they lived in La Jolla.
La Jolla residents wished they sold in 2005 or 2006.
Yes it's a mess here.
This is so discouraging. These numbers are still nonsensical.
Oceanside is an archetypal lower-middle-class/working-class community. I don't see how the residents there possibly afford to pay $360k for a generic tract home. I mean, how is this possible?
I make close to $200k per year and even I would be hard-pressed to take on a $350k mortgage, given that I have a wife and two children and am still paying down my student loans.
A $350k 30-yr fixed mortgage at 6.23% means a PITI payment of roughly $2,150 per month. (I am assuming that closing costs are borne by the seller and a $10,000 down payment -- no blue-collar worker living in Oceanside has a $70k 20% down payment.)
Property taxes on a $360k house are around $450 per month assuming a property tax rate of 1.5%. Let's say insurance and repairs run another $ 300 per month. That's $2,900 per month.
I just don't see how any blue-collar family can afford a $3,000 monthly housing payment. How is this possible?!?
I guess my condo in Redondo dream is to be put on hold for another cycle.
Just as an example, within 25 miles of downtown Dallas, $350k buys you a custom built new home on a half acre with enough left over for a concrete pond.
Alls I can say is that SD must be one hell of a nice place to live.
I dont know, the lack of move up buyers may mean this segment will have a second leg down as the entry level is killed by foreclosures and tighter financing.
@ was stupid enough to call my credit card company once and request that they cut my limit by 75% just because I was worried what would happen if somebody stole it with that huge limit. They happily compiled.
I just did same for similar reasons. Wonder if I'll also get an increase?
OT: Cause of ballooning US budget deficit not what you might think
The linked spending report from the US Treasury shows that monthly spending on Social Security and Medicare, along with the "Other Non-Defense" category spiked up since January. Defense spending has been essentially flat on a month to month basis since October 2007.
will writes:
I dont know, the lack of move up buyers...
My thoughts exactly. Whatever "recovery" in sales volumes happens - even if somehow hundreds of thousands of first home buyers come out of the woodwork - will be almost completely consumed within the excess inventory and REOs. There will be little moving up both because of this and the low/no equity problem.
This is musical chairs, and the music has stopped. I hope you didn't buy your chair based on a Neg-Am payment schedule.
But local projects, like maintenance work, pothole repairs and mowing may have to wait until gas tax revenues level out.
"Ours is an 18.5 cent flat tax. So it's not a percentage like our sales tax, just a flat tax. So when our consumption level goes down so do our revenues," says Andy Dietrick with the Indiana Department of Transportation Office of Communications.
The state is bracing for a $60-million loss in gas tax. As that trickles down, local counties like Clark are bracing for a long road of some bumpy rides.
There will be little moving up both because of this and the low/no equity problem.
This is musical chairs, and the music has stopped.
That's what I've been screaming about for quite a while now. You just can't emphasize it enough; it'll make this housing downturn the worst ever.
People used to scrimp & save for years to get into their first home. Once there, they relied on equity for trade ups. Well, now they have no savings, no or negative equity, and soon will have no investment returns too, all when it'll require real cash on the barrel to buy another home. Not to mention higher mortgage rates and less money (after food & energy) available to pay them.
How many 40+ types will want to go back into scrimp & save mode all over again?
Writing to you from the second half of the year, which began 15 minutes ago over here (see how advanced we are in Europe!), I´m afraid I have to tell you that things look quite as bleak as they did in the first half.
Will report again at the beginning of the first half of 2009...
"But JP Morgan says that "Higher-Valued Homes May Face Steeper Price Declines" (from Bloomberg, last Friday):"
Makes sense; the level of the market beneath them has already been hollowed out by subprime. The only backstop of value will be rental value. In the middle of a recession.
If the Congressional bailout passes, and banks have to assume 15% of losses.
A house that was purchased for $900,000 with a Countrywide loan now has a market value of $500,000. Would the current occupant/mortgage holder have to agree to refinance the house for the bailout to take effect?
So basically, the bank loses $135,000, and Congress gives Countrywide $265,000 via FHA, and the current occupant/mortgage holder takes out a new loan for $500,000?
Or does Congress give countrywide $765,000 via FHA or whatever and now FHA has to sell the home for whatever they can get?
How does this work in reality?
I can't see any good way for it to work. What am I missing?
"buying at prices above what most investors are willing to pay."
But they will be more picky about where and what they buy, leading to many houses just sitting until they are sold for much less. During the bubble people just bought whatever came on the market.
Asphalt costs are rising!
No wonder credit is tightening. Courts have just ruled that borrwers are illiterate and imbelcilic and not responsible for their contracts.
Mortgage Ruling Could Shock US Banking Industry - CNBC
We made...the 2nd half is here and the CFC/BAC deal is a done deal.
It isn't sold until it closes! Hopefully, these two buyers can get financing.
Whoohoo! The second half rebound is here, I can haz pony now?
I agree CR I hear a lot of people are looking at places in Nevada for the tax implications. People who live in CA seem to want to flock to Nevada after they retire. These are downwardly mobile home buyers looking to downsize. Downsizing will hold up the low end over the years and put a floor under prices while the mid-range and jumbo market and McMansions will languish.
OT,
Wife called earlier today to let me know that US Bank sent us a note reminding us that we have a zero balance on the CC and that we have $20K in unused credit. Heh!
rc writes:
It isn't sold until it closes! Hopefully, these two buyers can get financing.
rc | 06.30.08 - 4:55 pm | #
Or maybe they can pool & share...
Investors will probably set the price floor for low end single family homes and condos, but owner occupants will probably be more prevalent in the mid-range
Of course, the two will reach equilibrium with each other, so a price dip in one will lead to a price dip in the other.
Wife called earlier today to let me know that US Bank sent us a note reminding us that we have a zero balance on the CC and that we have $20K in unused credit. Heh
Got the same call! Why?! Let the good times roll...
Wow, I love having my opinion reinforced. I was just saying to a friend at work that we (owner-occupier) would have to pay at least 10% more than an investor using the 100-120 times rent formula. The investors are out in force in Tampa, FL on the low-end (30-100K) buying the future Sec8 housing but are leaving the middle (175-250K) alone due to prices still being about 20% too high. I will buy next year even if it continues to fall as I think inflation is out of the bottle so I might as well lock in depreciating money.
I guess Yahoo got my memo:
The Next Victim of the Real Estate Crisis
Expired
State and local governments were flush with tax revenue during the five-year housing boom. They pulled from bulging pools of property, income, and sales tax to expand education, law enforcement, health care, and infrastructure programs without needing to burden residents and corporations with tax hikes.
Now, what about that REO music?
Prices will have to go down on the REOs, as property taxes go up next year. There will be a dearth of tax collected revenues from lower sales on every imaginable item, including real estate and obviously a tsunami of tax protest from people trapped in The Ownership Society -- who are being crushed by declines in over-valued home values!
Re: The bad news at the pump has an upside for the Board of Equalization. The board estimates that the higher prices generate almost twice as much sales-tax revenue compared with five years ago. About $3.6 billion in sales tax from gasoline was generated in 2007, compared with $2.1 billion in 2003, when the average pump price was $1.88.
Report: Higher gas prices, less gas sold
Report: Higher gas prices, less gas sold - Sacramento Business Journal:
Maybe I'm crazy, but I'm making a short play with tight stops on UYG in the next few days. SKF seems WAY overpriced right now. In fact, most of the Ultrashorts (except for SRS which I remain unconvinced about) seem too high. I think the markets are due for a big up day or two. If I'm wrong, I'm out a few hundred bucks. Worth the risk, IMO.
Indymac Responds to Letters Sent by Senator Charles Schumer
We agree with Senator Schumer that in times like these it is important that we all work together to keep institutions like Indymac Bank safe and sound and that anything that can be done in this turbulent financial market environment to further improve the safety and soundness of any financial institution should be done and would be welcome.
Excellent.
Florida sues Countrywide Financial, CEO Mozilo: report
Who thinks this deals closes tonight???
Let's see. Who is better positioned to identify a value? Current investors (the investors of the last 5 years are BK so they don't bid), or homebuyers?
This is like buying WB on the dip to $35.
I am very tentatively considering buying some condos as rentals here in San Diego, and possibly a house or two.
There are some properties now that could work as an investment, but at this point I am happy to wait for at least another 4-6 months as the supply of REOs is increasing very, very quickly.
Nemo,
Senator Schumer...is an asshat.
Oh well. Next leg down I suspect.
Cheers,
Who thinks this deals closes tonight???
God, I hope so. The faster CFC sinks BAC, the better SKF will do.
warp10,
warp 10,
Every Star Trek junky knows you can't go past warp9 without repercusions.
Sheesh!
Oh wait!
Cheers,
forgive the spelling but:
whoocouldnode:
DETROIT -- Chrysler LLC is expected to announce Monday the idling of a minivan plant near St. Louis and production cuts at other plants as U.S. sales of larger vehicles continue to falter, people familiar with the matter said.
Chrysler Idles a Van Plant, Citing Need to Cut Costs - WSJ.com
To bad there's no stock to short cause this ones a no brainer....
..............
Dont the car numbers come out this week? or should I say this weak!
IMHO, the tsunami of inventory to be released in the future, will need facelifts in order to be competitive. Thus is a facelift a better play on future value at a discount today, or do you wait until blood is in the street and get a killer deal from an unemployed carpenter and then leverage your dollar today by doing nothing?
The Best Selling Strategy: Revamp Or Remodel
Topic Galleries -- Courant.com
"It really depends on the condition of the entire house," she said. "If you have completely updated your house but haven't done a half bath, and it's going to be a $3,000 project, I'd recommend you do that. If the whole house is outdated, then I'd stick with decluttering and cleaning."
"I'd stick with decluttering and cleaning."
Oceanside is pretty big and there are some rather large individuals that like it the way it is, one might be better off with the face-lift.
just sayin.....
..................................
Bidding wars are back!
OT and just my 2 cents. Before the holiday, are people more willing to have cash?
OT,
Wife called earlier today to let me know that US Bank sent us a note reminding us that we have a zero balance on the CC and that we have $20K in unused credit. Heh!
I was stupid enough to call my credit card company once and request that they cut my limit by 75% just because I was worried what would happen if somebody stole it with that huge limit. They happily compiled.
The next month I get a letter from them congratulating me on the fact that due to my good credit my limit had automatically been raised 300%. =/
We made...the 2nd half is here and the CFC/BAC deal is a done deal.
no way. as I said, I have my own clock. "Hammer Time". it goes off at the start of second half 2008 which doesn't start until 9am eastern tomorrow (when the markets open)
Thus, Hammer Time is T minus 15hours, 35min
I can't wait!
For you out of the area folks: Here's the North San Diego County Coastal pecking order:
Oceanside residents wished they lived in Carlsbad.
Carlsbad residents wished they lived in Encinitas.
Encinitas residents wished they lived in Solana Beach or Del Mar.
Solana Beach and Del Mar residents wished they lived in La Jolla.
La Jolla residents wished they sold in 2005 or 2006.
Yes it's a mess here.
This is so discouraging. These numbers are still nonsensical.
Oceanside is an archetypal lower-middle-class/working-class community. I don't see how the residents there possibly afford to pay $360k for a generic tract home. I mean, how is this possible?
I make close to $200k per year and even I would be hard-pressed to take on a $350k mortgage, given that I have a wife and two children and am still paying down my student loans.
A $350k 30-yr fixed mortgage at 6.23% means a PITI payment of roughly $2,150 per month. (I am assuming that closing costs are borne by the seller and a $10,000 down payment -- no blue-collar worker living in Oceanside has a $70k 20% down payment.)
Property taxes on a $360k house are around $450 per month assuming a property tax rate of 1.5%. Let's say insurance and repairs run another $ 300 per month. That's $2,900 per month.
I just don't see how any blue-collar family can afford a $3,000 monthly housing payment. How is this possible?!?
This is really discouraging.
359K for that dump?
I guess my condo in Redondo dream is to be put on hold for another cycle.
Just as an example, within 25 miles of downtown Dallas, $350k buys you a custom built new home on a half acre with enough left over for a concrete pond.
Alls I can say is that SD must be one hell of a nice place to live.
I dont know, the lack of move up buyers may mean this segment will have a second leg down as the entry level is killed by foreclosures and tighter financing.
@ was stupid enough to call my credit card company once and request that they cut my limit by 75% just because I was worried what would happen if somebody stole it with that huge limit. They happily compiled.
I just did same for similar reasons. Wonder if I'll also get an increase?
OT: anyone own TBT?
OT: Cause of ballooning US budget deficit not what you might think
The linked spending report from the US Treasury shows that monthly spending on Social Security and Medicare, along with the "Other Non-Defense" category spiked up since January. Defense spending has been essentially flat on a month to month basis since October 2007.
This was a surprise to me...
will writes:
I dont know, the lack of move up buyers...
My thoughts exactly. Whatever "recovery" in sales volumes happens - even if somehow hundreds of thousands of first home buyers come out of the woodwork - will be almost completely consumed within the excess inventory and REOs. There will be little moving up both because of this and the low/no equity problem.
This is musical chairs, and the music has stopped. I hope you didn't buy your chair based on a Neg-Am payment schedule.
But local projects, like maintenance work, pothole repairs and mowing may have to wait until gas tax revenues level out.
"Ours is an 18.5 cent flat tax. So it's not a percentage like our sales tax, just a flat tax. So when our consumption level goes down so do our revenues," says Andy Dietrick with the Indiana Department of Transportation Office of Communications.
The state is bracing for a $60-million loss in gas tax. As that trickles down, local counties like Clark are bracing for a long road of some bumpy rides.
FOG:
Yep. Now tell that to someone who thinks all of our fiscal problems can be solved by withdrawal from Iraq.
CR,
But JP Morgan says that "Higher-Valued Homes May Face Steeper Price Declines" (from Bloomberg, last Friday):
Higher-Valued Homes May Face Steeper Price Declines (Update1) - Bloomberg.com
There will be little moving up both because of this and the low/no equity problem.
This is musical chairs, and the music has stopped.
That's what I've been screaming about for quite a while now. You just can't emphasize it enough; it'll make this housing downturn the worst ever.
People used to scrimp & save for years to get into their first home. Once there, they relied on equity for trade ups. Well, now they have no savings, no or negative equity, and soon will have no investment returns too, all when it'll require real cash on the barrel to buy another home. Not to mention higher mortgage rates and less money (after food & energy) available to pay them.
How many 40+ types will want to go back into scrimp & save mode all over again?
Writing to you from the second half of the year, which began 15 minutes ago over here (see how advanced we are in Europe!), I´m afraid I have to tell you that things look quite as bleak as they did in the first half.
Will report again at the beginning of the first half of 2009...
All the best from Germany
"But JP Morgan says that "Higher-Valued Homes May Face Steeper Price Declines" (from Bloomberg, last Friday):"
Makes sense; the level of the market beneath them has already been hollowed out by subprime. The only backstop of value will be rental value. In the middle of a recession.
Let us know if they can get financing.
Question:
If the Congressional bailout passes, and banks have to assume 15% of losses.
A house that was purchased for $900,000 with a Countrywide loan now has a market value of $500,000. Would the current occupant/mortgage holder have to agree to refinance the house for the bailout to take effect?
So basically, the bank loses $135,000, and Congress gives Countrywide $265,000 via FHA, and the current occupant/mortgage holder takes out a new loan for $500,000?
Or does Congress give countrywide $765,000 via FHA or whatever and now FHA has to sell the home for whatever they can get?
How does this work in reality?
I can't see any good way for it to work. What am I missing?
Yep. Now tell that to someone who thinks all of our fiscal problems can be solved by withdrawal from Iraq.
Argento | 06.30.08 - 5:59 pm | #
When you find yourself in a hole, stop digging?
"buying at prices above what most investors are willing to pay."
But they will be more picky about where and what they buy, leading to many houses just sitting until they are sold for much less. During the bubble people just bought whatever came on the market.