2.2 million vacant homes for sale
Submitted by
CalculatedRisk on Thu, 07/24/2008 - 9:49pm (51 comments)
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What?! Nobody commented?
we need more bandos to solve this problem
Yeah but what about all the level 3 houses? Are they out of sight out of record keeping?
Pricing pressure, as far as the eye can see.
Population growth, the fact that land isn't being made anymore, the relentless need for Americans to live the American Dream of home ownership - all as reliable as the sunrise.
Things like vacancy rates or foreclosures - minor distractions for those who worry about hypothetical concerns at a theoretical level.
Because even as we speak, America is poised to finally surpass records which have been standing since the 1930s.
Open the windows, and fire up that old ticker tape, we are going to party like its 1933.
Increasing home-ownership has been one of the Bush-administration rallying points. It appears there's a 50-50 chance that when he leaves office the rate of home-ownership will be less than when he entered.
Check table 4 of the Census Bureau's release linked by CR.
From late in an earlier thread, but not to be missed.
Umm... National Australian Bank is writing down it's AAA-rated MBS conduits 90%.
NABs exposure to the US property market through the CDOs held in its conduits is relatively small $1.2 billion worth of structured finance assets. The money is in 10 collateralised debt obligations (CDOs) in two conduits (off balance sheet vehicles to which NAB provides liquidity).
To be specific, the 10 CDOs consist of two super senior strips and eight AAA senior strips. NAB has now determined, on a worst case basis, that it will recover half of the super senior CDOs and none of the AAA senior debt.
...a 100% loss on $900 million worth of AAA rated debt securities.
And to think WaMu and Wachovia just took 10% write downs. FNE/FRE have $5,000B of MBS. What clown estimated that FNE/FRE loss would equal $25B or so?
http://www.businessspectator.com...ocument& src=sph
dashingdwl | 07.25.08 - 1:39 am |
gee thanks pico. I was beginning to forget that post already.
The real story here is what the professionals in the home building industry are now doing en masse. They have been and are walking away from very large development projects wherever possible. Several multi $100 million dollar projects could NOT get funding in either the banks or near banks. Jobs have already been lost but, and here's the important part to the story, those that were holding out on the hope that this would turn quickly are walking away. So, new money won't be coming into the market by having new housing stock added to the marketplace. Zip. Zero.
Real declines will force massive further writedowns of Bank REO and Foreclosure portfolios. Thus, more capitalization will have to be raised in the marginally funded banks.
I have heard a rumor from a reliable source that the FDIC is expecting more than 100 Bank closures in the Midwest alone by the end of the year.
Asian Times article that points out that Bernanke's highly inflationary policies have damaged the US economy as much as the housing slowdown. (i'll add Congress' inflationary policies to the list, tho the article does not).
"Bernanke's Blighted Tunnel Vision"
Asia Times Online :: Asian news and current affairs
Seventy years ago, if you had trouble paying the mortgage you could take on boarders. Now thats ILLEGAL in most of suburban america. I imagine that the concept of boarders is beyond the ken of most middle-class suburbanites. (Unemployed uncle Eddie who sleeps in the attic doesn't count)
Mexicans probabley view this a little differently, especially if they are here illegally anyway. The concept ot the extended family has withered away while the myth of the "Normal" nuclear family helped drive the housing boom for over 50 years.
Rant on___It is illegal to run a business out of a residence where I live. Nonetheless I have been doing so for 17 years. Commercial rent overhead would put me out of business. Suburban zoning also drives an unnessary building boom for small businesses. It also make shopping without a car almost impossible. Our home business code is extremely archaic-it permits only "one phone, one desk, one filing cabinet" WTF. I set up and operate sound systems for concerts and special events. Ironically it is very quiet around my house-I do'nt test 50,000 watt pa systems in my yard-that would be disruptive and draw attention. In spite of this, most of my neighbors know what I do because the see me working at High(and low) Profile events. My point is suburban zoning is rediculous and has led us further into into a housing and CRE glut. Rant off
"what clown estimated that Fan/Fred losses would be 25billion?"
dashingdwl, If Congress had any b*lls at all, they would have told Paulson: "Sure , great, we'll bail out Fannie and Freddie, but we'll cap the losses at your 25 billion dollar estimate of the 'worst case scenario'."
That would have left Paulson stutterin and a-twitchin' for the rest of his days, 24/7.
"There came a time,he realized,when the strangeness of everything made it increasingly difficult to realize the strangeness of anything".....Lost Horizo
That Australian bank is awesome. Finally someone is marking to market.
Can we open Bank Accounts there, I wonder?
At_least_we_know_they're_honest_
And responsible when push comes to shove!
Unlike the "True Believer" American Bankers have spent too much time watching and reading "The Secret".
I do believe I do believe I do believe It's all ok It's all okay It's all ok I'll never face reality I'll never face reality
Wonder how many nervous breakdowns we'll get out of this by the time reality gets shoved up their a$$es.
More on the National Bank of Australia's rash telling of the truth about the impending 90% haircut on triple A MBS.
Apocalypse NAB
"But Stewart and Chaney have pulled the pin out of a grenade; theres no going back now."
"At_least_we_know_they're_honest_"
Yes, curiously honest like schumer was honest, and like Gimme Credit was honest today. All this honesty coming at us from every direction.
Conspiracy theorists might think that a madman over in Australia is using this "honesty" to light the fuse for a bigger explosion here. I mean... why start being brutally honest right now? And if you're that concerned with the ethics of it, why not tell white lies so that the explosion is drawn out and muffled?
A lot of asian money flows through the australian banking system. Might this have something to do with it?
Dispatch Special Agent Wilson at once. These Australian bankers must be interrogated until they are convinced of the correctness of our accounting.
For God's sake don't let blogosphere know about this.
Just before he leaves office, just as the armies of the world arrive on our shores, President Bush will say, "The National Australian Bank, they hate us for our freedoms."
Apocalypse NAB
Wow, 100% losses on 900 million, because US banks are only getting 45% recovery of mortgage value. I know that there was some fancy leverage going on, but back then I thought the mortgage would have some value and so the derivative would retain some value,...I am such a idiot.
And as I watch the response to the subprime debacle I am reminded, we're just starting to see the Alt A stuff coming.
Countrywide Loans Show Sector Frailty - WSJ.com
"Details that emerged earlier this week from Bank of America's purchase of Countrywide Financial help explain why that is the case. The deal's numbers show that big losses could still lurk in banks' closets.
If so, their loan portfolios are worth far less than the stated values, and reserves taken against possible losses are inadequate. And if bank capital is overstated, firms could again be forced into dilutive capital raising.
Turn to Countrywide -- and the huge amount by which Bank of America wrote down its assets. In second-quarter results out earlier this week, Bank of America said Countrywide's equity available to common stockholders, or its net worth, on a market-value basis at June 30 was just $100 million.
To put that in perspective, Countrywide had $172 billion in assets at the end of June. Plus, Bank of America paid $4.1 billion for the firm, once the country's biggest mortgage lender.
How could Countrywide's net worth be just $100 million? When a financial firm is acquired, the purchaser applies market values to all its assets and liabilities. Banks normally hold a big portion of their loans at historical cost with a reserve set aside for potential losses.
At Countrywide, this marking to market of its loan portfolio resulted in a $9 billion hit, which was on top of about $5 billion in reserves. This, along with some offsetting items, took common equity to $100 million from $8.4 billion.
The new market value was equivalent to about a 15% average mark on the firm's nearly $100 billion loan portfolio, David Hendler, an analyst at CreditSights, said in a research note. The mark was driven by low market values for home-equity, option-adjustable-rate mortgages and subprime assets.
Granted, such a mark is a point-in-time estimate based on all the assets being sold. In reality, banks offset credit losses over time with earnings. And most big banks wouldn't face anywhere near as severe a market-value hit."
Ok, let's get all the aussie slang out of our systems while the east coasters are still dozing.
Waiting: a little irony -- The secret was written by an australian lady.
What's PNW?
Australian Bank. I wonder how they came to the conclusion that they needed to cut value by 90%. Surely the big 3 raters hadn't downgraded them that much. But maybe these guys did:
http://www.egan-jones.com/publicdocs/Tiny_Firm_Gives_Ratings_Giants_Another_Worry_-_WSJ.pdf
We need to add Sean Egan to the Mason/Rosner/Roubini pile. Forgot about him. He was the one outfront telling us more than anyone how crappy all these securities were. Mr. Egan, had any talks with australian banks lately? Were you helping them with their brutal honesty?
How is that "chinese wall" you've got between your top secret analysts and the companies you rate working out for you?
So BofA wrote down the loan portfolio, okay. So now they have what they wanted: Countrywide's magic black box for making loans and servicing loans- which is what they wanted. So is being the number one servicer in Foreclosure USA a good thing right now? And do you want to make loans that get written down so severely?
Ken Lay says that's a big YES!
BTW- Why is the 9 billion dollar write down so popular? We've seen that number a lot. Some times they add two numbers to make it, some times they break a larger write down into two so that one of them is 9B, WTF?
PNW- could be Pacific NorthWest
SD: I think it has to do with Kabbalic Numerology. [grynne]
Ok, I think we've closed this bar down. Nighters.
My Aussie brothers have taken a FX hit on the buggers too, hence the 90% write down! NZ and Aussie have a common market and governments that take particular care with our banking structures.
Down here our reserve bank has told the banks to be ready for a 30% mortgage equity drop, so capital requirements have risen dramatically and if they can't they lose the bankster license...
2.2 million homes, huh. That would house about 6.6 million Chinese??? Maybe we should trade treasuries and dodgy paper held by the Chinese for empty houses here. Let em in!!(Someone has to replace all the Mexicans deported /imprisoned /voluntarily returned. Theres more to U.S. real estate than overpriced N.Y.C. skyscrapers.
Note: I resisted saying "Treasuries and other dodgy paper", but the line is getting thinner with every bailout.
And where is Jas Jain? I agreed with him, and although I found his rants repetitive at times, I miss his mantra-like "born and bred dopes".
Where the hell is everybody? Can a guy still get a beer around here? Lefty?
peAkcredit writes:
Down 25% over 5 years would be a very soft landing. Houses of GF in Riverside and of friends in San Diego and LA have been declining 3+%/month and are 25% down in the last 8 MONTHS.
NODs, preforeclosures, foreclosures, tax liens and bank owned REOS that I track in those 3 counties and 6 zip codes all continue to rise weekly, not level off or decline, they're all RISING, meaning the steeper 4%/month over month price declines of June and July, combined with a fall/winter sales slowdown, may result in another 25% off by Xmas.
What it is that the equity markets and the bank valuations can possibly "know" that would justify the discounting of both the flattening as well as the reversal down of the clearly rising foreclosure stats mentioned above is beyond imagination, unless they're discounting not only the future but also the hereafter.
I may be wrong in thinking that no amount of ongoing Ben-Hank-Sheila open-mouth-policy coverup and behind the scenes taxpayer looting can prevent this market from soon dropping 1250 points some morning as it begins to discount the reality of the damage caused by wreckless Fed policy aided by government and financial complicity.
But then I could be right.
peAkcredit | 07.24.08 - 11:29 pm | #
Shelia is not evil or stupid. She is just looking forward to the post November world.
On a yellow sticky attached to her monitor:
"Update resume. Add crisis management skills and ability to respond to fast moving events in a positive manner. Manage events to the benefit of possible future employers. See call list."
It's not that she is not interested in the truth. The truth is subjective if you understand her viewpoint. A girl like her needs to stay close to the center.
She is actually a revolutionary in pinstripes. The struggle in a male dominated profession alone makes it neccessary that she continues a certain "lifestyle."
Foreclosures double in second quarter...led by Cali, Arizona, Nevada.
U.S. Foreclosures Double as House Prices Decline (Correct) - Bloomberg.com
Reuters reports Europe wants the Fed to raise rates [hat tip]
From the not Reuters link -
'This one will be hard to top. Reuters reports that our European cousins want the Fed to raise rates. There has been no job growth this year as businesses shed workers. The unemployment rate is on its way to 6 percent. The declines in home prices are unabated. The financial system is strained to nearly the breaking point.'
Wow - the ECB really is the only adult in a room of whining children, isn't it? Again, doesn't mean that the ECB is correct, but having already seen what happened to Japan, the ECB is desperately trying to avoid the same fate through making the same mistakes. Not mention seemingly still remembering what happened in the 1970s to the industrial world in terms of inflation.
Whereas the Bush League seems to think that what happened to Japan was not really a problem - after all, Japanese car companies are still global players, aren't they? Japanese electronics companies are still world class too, and look at that Japanese savings rate - puts America's to shame.
And inflation? - just use some Republican price controls to defeat that, wearing a WIN button.
Oh, wait.
Never mind - let's return to our regular programming, since not watching TV for another afternoon will make the kiddies being really hard to put up with.
"From the not Reuters link"
Guilty as charged. Its a fair cop.
I thought the site deserved two clicks for bringing it to my attention. One to get thru the site to the primary source, the second for those of you sentmental or curious enough to click on.
Best,
I think we need some sugary upbeat comments here this a.m. Where is that delusional Sebastian?
tgif! Need.coffee.
"President Bush will say, "The National Australian Bank, they hate us for our freedoms."
And when McCain is asked for comment he'll call it the National Austrian Bank and extol their sausages.
National Australian Bank is writing down it's AAA-rated MBS conduits 90%.
Now that's a knife.
Anybody know is the 2 mil. homes in the report include REO homes? Or homes in foreclosure process and soon to be vacant? I suspect is doesn't, and the real number is more than double the number announced.
June durable goods is out. Looks reasonably good.
Bloomberg.com
"We have no appetite to drip feed increasing losses from this portfolio to the market over the next few years as the crisis plays out,''
NAB chief executive John Stewart
OK
at my desk
strapped in
let me know when to assume crash positio
Sorry:
- Bloomberg.com
Yankee | 07.25.08 - 9:00 am |
I went deep sea fishin last Friday. Talked with the Captain most of the day. He said the only difference between now and a a couple of years ago is there is a only a 2-3 week backup vs 3+ months a couple of years ago. He said he still charters 4-6 days a week consistently.
Heck the boat next to us at the dock had 40+ people going night fishing at 100 bucks a head that same evening...
Everbody said there has been zero problem adding fuel surcharges to fees...
And this is in one of the worst areas in SW Florida...
Chris
I give up. Can't distinguish between upper case i and lower case l. It's on bloomberg.
ratefink - very funny.
where does the figure 2.2 million vacant homes for sale come from?
That was a pretty poorly written article. It never mentions that the vacant homes include second homes, vacation homes not rented, etc., and that the normal vacancy rate has been in the 1.5 range.
I'm not disputing the thrust of the article, but I can see how when we eventually do reach a bottom, these idiots will miss it just as they couldn't see the top.
... but I can see how when we eventually do reach a bottom, these idiots will miss it just as they couldn't see the top.
Completely agree. The (so-called) experts have made a cottage industry out of drawing straight lines through the data. Very little thought.
It works most of the time. It even pays their bills.
I'm not disputing the thrust of the article, but I can see how when we eventually do reach a bottom, these idiots will miss it just as they couldn't see the top.
This is not like catching a fly ball. You won't want to catch this bottom...
Talking to some people on the street. The consensus was that the US peso was undervalued to the EURO and that housing will bottom within a few months. Seriously...
Allstate's 2nd Quarter net income dropped from 1.4 billion last year to 24 million this year. Investment losses were a large contributor to the drop.
Allstate reported net realized capital losses on investments were $1.2 billion on a pre-tax basis for the quarter, due to $1.1 billion of net losses related to dispositions, including change in intent writedowns, and $250 million of impairment writedowns.
Allstate said these writedowns were partly offset by net gains totaling $123 million on the settlement and valuation of derivative instruments.
Impairment writedowns totaled $250 million, comprised $205 million on fixed income securities, primarily related to residential mortgages and other structured securities, and $37 million on equity securities, the company said.
It reported 95 percent of the fixed income writedowns relate to impaired securities that were performing in line with anticipated or contractual cash flows, but which were written down primarily because of expected deterioration in the performance of the underlying collateral.
After-tax capital losses were reported as $788 million.
Allstate Quarterly Net Plunges 98 Percent - Commercial Insurance & Reinsurance - Property and Casualty Insurance News
How maney residential units are there for sale in the U.S. ?