DataQuick: SoCal Home Sales Increase, Prices Decline
Submitted by
CalculatedRisk on Mon, 08/18/2008 - 11:16am (130 comments)
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first?
pls, god of haloscan.
That said, would this be an indicator of shallowing of the drop in the index?
Or am I blowing smoke?
wait.. you mean if you put something on sale you sell more of it?! you gotta be kiddin me
So mortgages are still available, and enough people seem to be able to get them?
That's a good sign.
"What we're still not seeing is this level of distress spreading to more expensive or established neighborhoods"
Yes, but soon, you will be.
Cheers,
It takes foreclosures to convince everyone of realistic "values".
Amazing.
I'm sure homeowners across the Southland are reassured that bank owned properties are selling well. Want to sell? Turn your home into a REO.
In two years the median in Ventura County the median price went from $630k to $420k. This isn't avoiding falling knives, this is dodging friggin' laser beams.
supa-bull market is back
homedad43 writes:
That said, would this be an indicator of shallowing of the drop in the index?
No, just math artifacts. IMHO the data is too noisy to glean anything useful as to trends. We'll need some complete Q3 data before we can even attempt to project the bottom sometime in the future. Bear in mind even then the answer may be "ask again later."
"What we're still not seeing is this level of distress spreading to more expensive or established neighborhoods," said John Walsh, MDA DataQuick president.
Big distortion of the truth - if you look at high end neighborhoods, the median sale price PER SQUARE FOOT is most definitely declining.
In high end areas, you're simply getting a much nicer home today than you were 6 months ago. I know, because I'm currently searching in Pasadena, California and the same homes that are selling for $500K today are SO much nicer than the $500K home you could have gotten in February.
The high end is most definitely being affected NOW.
Tim K.,
Is $500K really representative of the "high end" in Pasadena?
I'm not saying I disagree with what you're saying in general, but is the $500K market a good example?
High end market in beach cities in the LA area and the fancier sections of the Bay Area are still holding up. Many still selling at around $1000/sq. ft.
The number of Southern California homes sold last month edged up to its highest level in more than a year as bargain hunters swept up foreclosure properties in affordable neighborhoods, a real estate information service reported.
Well... this is the right way to get liquidity back into a market.
Just think if it were up to Bill Gross these houses would still be selling at 10x incomes.
That said, would this be an indicator of shallowing of the drop in the index?
Just in general when you start seeing a substantial drop in foreclosures, then there's a glimmer of light at the end of the tunnel.
Honestly! Some people have more $$$ than sense! But then, markets are 10% economics and 90% psychology.
"It's worth what I SAY it's worth, dammit!"
my northern cal REa buddy say's he's slammed...
also has a bulk buyer.. completed 3 homes last 45 days.
OT: The terms "bailout" and "takeover" seem to be used interchangeably in the context of F&F problems. Are these terms really equivalent? I thought "bailout" meant that the government would inject some cash, leaving them as quasi-independent entities, whereas takeover meant "taking over" completely, which would include assuming their debt obligations. Any clarifying comments?
Here are the 20 or so homes for sale in 93012 priced $2m and up:
93012 real estate & 93012 homes for sale | Single family homes,Condos,Townhomes,Co-ops - REALTOR.com®
Basically priced 2-3x what they will eventually sell for. This is just that phase where the bagholders are refusing to accept that their $1m bag isn't worth $2m. Strangely (or not) the biggest cognitive disconnect is that in the bubble everyone knew that thee price to buy included some portion of the expected appreciation going forward. You had to pay up front a years worth of appreciation. Now on the backside of that same curve no one seems resigned to getting out in front of the price declines by sharing some of the expected depreciation. Even if you make a $1000 a day are you ready give three of those days to the county every month for property taxes?
I really don't see how anyone can call a bottom in housing.
House prices are still way too high, incomes & jobs are in jeopardy, inventories are sky high, mortgage rates are at 7.5% for Jumbos, down payments and income verification are again the norm and the average joe has zippo saved.
Even if we do see a bottom in prices, I still don't think that a recovery will follow for many years.
OT, but WTF else can I put this?
Investors’ Confidence in U.S. Capital Markets Drops by Wall Street & Technology
According to the survey of 1,000 U.S. investors, conducted by the Glover Park Group, 45 percent of respondents read financial reports "very" or "somewhat" often, but find the reports hard to use. Further, 72 percent of survey participants favor the design of a more user-friendly way of accessing and reading financial reports.
To improve their confidence in the U.S. capital markets, CAQ says, investors support the creation of an institute to enable auditing firms to share experiences and develop best practices for fraud prevention and detection. In addition, 63 percent of respondents said they would like to see enhanced levels of public disclosure to provide investors with more information when public companies change auditors, and 62 percent would like to see the creation of a single, uniform set of international accounting standards.
Hey Rob. You from Ventura? I think I have seen you post to the Star website before. Have you taken a look at the home prices in the Oxnard and Ventura beach area? Homes that sold for $500k in 99 are on the market for $3M plus. The disconnect from reality for the sellers is insane. I guess it must suck to admit you aren't a millionaire.
So Freddie with its "300+150 days" is missing out again. Bad luck I guess. But they will make it up 450 days down the road when prices will be 25-30% lower.
"Market activity seems to be saying that the Fed is on hold and the U.S. economy is in pretty bad shape," said Kevin Giddis, managing director of fixed income at Morgan Keegan & Co., in a research note.
"The proof is in the numbers and it is not just a domestic problem either," Giddis said. "We are in the midst of a global slowdown which is actually working in our favor. It strengthens the dollar and lowers oil prices."
The dollar gave back some ground against the euro Monday, while remaining in recent ranges against most other major currencies.
The disconnect from reality for the sellers is insane. I guess it must suck to admit you aren't a millionaire
They need to realize that having a million in debt does not equate to being a millionaire.
More pain to come.
ShortCourage - Well, as someone who makes just over $100K per year, $500K is about as "high-end" as it will ever be for me!
To more directly answer your question, I believe Pasadena is often quoted as a "high-end" market. 500K is probably the "low-end" of Pasadena, but as recently as 2000, 500K got you a really nice 3 bedroom house in one of the nicer areas of town (i.e. not in gang-shooting-land North-west Pasadena).
The average income in Pasadena decent zipcodes (i.e. 91106, 91107) is about $80K per year, so I don't think it's too far out of line.
So while $500K is not currently the "highest priced" Pasadena properties, I think it's a good measure of what the higher end median income of Pasadena should be able to purchase.
And based on the sales history data in places like Redfin, I believe I'm right - nearly all of the home sales going on right now are priced at just about $550K, because that's the most people looking in this area area are willing and/or able to spend.
I should add, that by no means do I believe that 500K is going to be the stopping point for Pasadena. It's going to drop lower, IMO to about $380K if it happens in the next year or so, or $420K if takes 3-4 more years for it to get there (inflation factor).
That's really where prices were, inflation-adjusted, based on the rent/income multiples we've seen in the past.
And the recent sales data seems to indicate we're marching right along to that number quite nicely. I think we'll hit it by the end of 2010.
That's really where prices were, inflation-adjusted, based on the rent/income multiples we've seen in the past.
remember to account for overshoot.
In an NYC wall street burb, two million gets you a 3500 sf colonial on 1/3 of an acre - with 30K/yr in property taxes. Stupidity.
That said, those $2 million dollar digs Rob Dawg posted look cheap from where I sit.
LowerMiddleClass writes:
Hey Rob. You from Ventura? I think I have seen you post to the Star website before. Have you taken a look at the home prices in the Oxnard and Ventura beach area? Homes that sold for $500k in 99 are on the market for $3M plus. The disconnect from reality for the sellers is insane. I guess it must suck to admit you aren't a millionaire.
Yes, same person. I live in Las Posas Estates. You are most correct about the Strand And Hollywood Beach and Shores. I even posted about one of them in Jan 2007 asking $129.70 per square INCH. 1128 sq. ft., 0.06 acre(s).
$129.70 per square INCH. 1128 sq. ft., 0.06 acre(s).
Those are almost iPhone prices.
Pretty soon, the comps will exclude non-foreclosure sales as they will distort reality.
JP
"remember to account for overshoot."
True - unfortunately that's a much harder thing to judge.
In the past, was the overshoot due to poor market communication? The last cycle in the 1990's was pre-real estate internet days. I'm wondering if the many years it took for people to start bidding up properties was slow JUST due to communication slowness, or was it due to some other factors, like banks gearing up to extend credit again?
In other words, will the overshoot be less this time?
Interesting Times writes:
$129.70 per square INCH. 1128 sq. ft., 0.06 acre(s).
Those are almost iPhone prices.
Damn wireless keyboard. That's $19.70 per square inch or $3.195 million.
Laughing aat the iPhone metric. Good one.
I think the overshoot is due to the speed of J6P learning process.
And if you've studied feedback theory, then you know that delay causes anything from overshoot to instability depending on the system.
So the question of "will overshoot be reduced" translates to "are people smarter now?" The overshoot in the upward direction provides an unequivocal answer, imho.
What is a foreclosure sale?
REO sold by bank?
REO sold by bank through a broker?
property sold bank on the courthouse steps?
Thanks in advance
--
The Vicious Cycle (falling prices --> falling employment --> falling prices...) will push California in depression by 2010.
Jas
In other words, will the overshoot be less this time?
HAHAHAHAHAHAHAHA!!! Thanks for the laugh!
Seriously, this time we're not just overshooting the current bubble, we're retracing gains made over the past few decades.
Watch out below!!!
Chinese algae-eaters can easily scrape algae off of flat surfaces. Catfish are also great algae-eaters and are ideal community members.
There is no bottom yet!
The question I'd really like to have answered is what percentage of these reported sales are immediately preceding another foreclosure. I've heard reports from a couple real estate brokers that ~80% of their recent sales are people that are planning to foreclose on their first home.
Think about it:
You're massively underwater on your recently purchased home, the house across the street is being offered for $250k less than you currently owe. If you walk away you won't be able to get another mortgage for 5-7 years. But if you buy another house prior to initiating foreclosure you still have a place to live while rebuilding your credit. For $250k in cash (~3 years of middle clss income) I'd gladly withstand the credit hit. Plus, everyone else is doing it so why not?
I suspect these recent surge in 'sales' will be immediately followed by another wave of NOD's & foreclosures. Consequences be damned...
JP wrote:
"I think the overshoot is due to the speed of J6P learning process. So the question of "will overshoot be reduced" translates to "are people smarter now?""
Thing is, as we've all been seeing, prices are set on the margin. So it doesn't take that MANY J6Pers to get smarter to affect the marginal purchasers, which, given the small number of sales going on right now, might have a significant impact.
It might very well be that the internet has effectively "smartened up" the J6P crowd in terms of SPEED, not necessarily intelligence.
Personally, I think it will still overshoot on the downside, but that may be more due to the influence of the internet of exposing the current housing sales prices, which cause the feedback effects to amplify on the downside.
So it's possible the magnitude might be larger on the downside - but it isn't necessarily a foregone conclusion that the duration will be equal or longer in length.
Re: California in depression by 2010
Those damn Californians wanted it all, they wanted high priced homes, bigger cars, more roads, cheap education, more growth with less taxation, more jobs and lower wages. They wanted a paradise without the cost, they want clean air, but lower taxes, they want cleaner water for more more growth, but lower taxes. Now they have to pay for the illusion and they don't want to! Too bad!
Jas - Some parts of Ca will see a depression by 2009.
I suspect these recent surge in 'sales' will be immediately followed by another wave of NOD's & foreclosures. Consequences be damned... -
Gavshire Hathaway
What consequences? That's the point. There are REWARDS for the behavior you are seeing. This barn door won't be open for long. all the smart horses are getting out of the burning building first.
"I really don't see how anyone can call a bottom in housing. "
Actually, calling the bottom in housing is quite easy.
Just wait until prices start to rise and you can see when the bottom was. So you buy a few percentage points after bottom? Big deal.
Prices are overshot on the upside due to greed. Prices are overshot on the downside due to fear. The internet will not significantly mute human psychology.
crispy&cole wrote:
"Jas - Some parts of Ca will see a depression by 2009."
That's a sufficiently vague statement I can see how you can reduce it to set of 1 person to force it to be true, even if it is not useful.
California is just like a failing bank. WWe sshould be taken over by the Feds until a buyer can be found. "North Baja" anyone? Oh, excuse me... "Baja del Norte."
Tim K.,
Noticed you didn't respond to my statement. You think I exaggerate? I'd argue that fundamentals support my argument.
Bottom Feeder,
"but lower taxes."
Are you serious or ignorant? CA has one of the highest tax rates in this country. For the last several years tax reciepts to Sacto increased some 40%. The idiots just went and spent it. Now they claim they have a deficit. Well they do but it's in the intelgence dept. not financial.
Cheers,
NAHB Chief Economist David Seiders. Our current forecast shows stabilization of sales during the second half of this year, followed by solid recovery in 2009 and beyond.
CR, do you have an opinion/forecast as to what "recovery" will look like in terms of sales for new and existing homes ?
Think about it:
You're massively underwater on your recently purchased home, the house across the street is being offered for $250k less than you currently owe. If you walk away you won't be able to get another mortgage for 5-7 years. But if you buy another house prior to initiating foreclosure you still have a place to live while rebuilding your credit. For $250k in cash (~3 years of middle clss income) I'd gladly withstand the credit hit. Plus, everyone else is doing it so why not?
- Gavshire Hathaway
Sounds good to me. Then once the "buy and bail" folks get settled into their cheaper house and let the bank have the expensive one, the bank can then sell the REO to a first-time home buyer using a $7500 tax credit. Mission accomplished! hehe
Tim K - are you trying to sell a home you are underwater on?
at some point soon scared money sitting in the bank is going to want to buy falling property because the nerves cant stand it any longer. Bit by bit that makes a difference and the bottom will be formed.
The alternative to that kind of reality is ww3 and return to the stone age.
I suppose the money i have as opposed to the money you dont have is on a wager that we dont get no stinking stone age quite yet.
Demographics are another reason to expect house prices to continue to fall. Just how are retiring baby boomers going to afford the upkeep and taxes on all these McMansions?
We have so many factors adding to the negative feedback loop.
Those damn Californians wanted it all, they wanted high priced homes, bigger cars, more roads, cheap education, more growth with less taxation, more jobs and lower wages. They wanted a paradise without the cost, they want clean air, but lower taxes, they want cleaner water for more more growth, but lower taxes. Now they have to pay for the illusion and they don't want to! Too bad!
You just described the quintessential Fool's Paradise. Alas it encompasses more than just California... a lot more in fact.
but it isn't necessarily a foregone conclusion that the duration will be equal or longer in length.
It's certainly possible that it will be equal or shorter. However, I'm not optimistic. There is a lot more rot to be removed from the economy, imho.
Bottom Feeder writes:
Re: California in depression by 2010
Those damn Californians wanted it all, they wanted high priced homes, bigger cars, more roads, cheap education, more growth with less taxation, more jobs and lower wages. They wanted a paradise without the cost, they want clean air, but lower taxes, they want cleaner water for more more growth, but lower taxes. Now they have to pay for the illusion and they don't want to! Too bad!
And they differ from your average American how?
We have so many factors adding to the negative feedback loop.
Oh no, the feedback loop nazis are going to be all over you now.
I highly recommend this sobering and well researched article from Saturday's San Diego North County Times.
http://www.nctimes.com/articles/2008/08/16/business/z49597e3f40b4acfc8825749700767894.txt
Seems a condo conversion project appeared headed for foreclosure until a dozen units suddenly sold. The prices averaged $381 psf vs. $144 for comps. And only the developer's units managed to sell, not lower priced units in the same complex listed for re-sale.
Zero or near zero down mortages provided by the usual suspect- Wamu.
In the market I live in prices have declined about 25% from peak. What I have noticed is that over half of those buying "distressed" foreclosed properties here are speculators, that plan on renting. Since rents are still only covering a little over half of mortgage, taxes and insurance, these are not sustainable investments. The market will not have bottomed until these people stop buying. Also these are people that have big cash reserves so they qualify for mortgages. I guess we will have to just wait for them to lose their money before this kind of speculation dries up.
K Hovaninan having some problems with a big development - see the first two stories:
Bakersfield Bubble
worried writes:
at some point soon scared money sitting in the bank is going to want to buy falling property because the nerves cant stand it any longer. Bit by bit that makes a difference and the bottom will be formed.
Uhhh... no. Sorry. The down cycle is not symmetrical with the up side. We pulled forward a huge number of demographic entré buyers and credit is much tighter and there is collapsing appetite for investment property. the small numbers of new buyers aging in are dwarfed by details like a retiring boomer generation as well. There is no pent up demand.
Options Chick says Blackstone to crash:
In response to the stock's lackluster price action, speculative traders are loading up on bearish options. Last Friday on the Chicago Board Options Exchange (CBOE), investors bought to open 1,000 puts on BX, compared to just 16 calls. The security's single-day put/call ratio on the CBOE was a lofty 62.5.
Option Activity Alert: Put Volume Swells on The Blackstone Group L.P.
There is no pent up demand.
Additionally, we have a huge pent up supply. Prices will fall below replacement cost causing land prices to get crushed even further.
The deflating U.S./global asset markets are much like Churchills Russia: a riddle wrapped in a mystery, inside an enigma. Who is driving delevering? asks the Financial Times, and the answer comes back, all of us; yet it is hard to see it except in the headlines or to fix it, given a lineup of 6.8 billion suspects. Accustomed to the inevitable credit expansion spawned in the bowels of WWII finance, investors wonder why levered government agencies, banks and hedge funds must sell assets, raise capital or in the extreme, meet the markets grim reaper in bankruptcy court.......... PIMCO - Investment Outlook Bill Gross Mooooooo August 2008
Gross:
With Fed Funds having been lowered from 5¼% to 2%, it would have been logical to assume that the price of mortgage credit would go down as well and that the price of homes would at least slow their current descent. Not so. As Chart 2 points out, the yield on a 30-year agency mortgage-backed loan has actually risen since the Fed somewhat unexpectedly began to lower Fed Funds in early September of 2007. Add to that of course, the increased fees, points, and total spread that an actual homebuyer pays to finance his purchase now as opposed to then, and it is obvious that homes are not the bargains that starving realtors claim they might be. Financial asset prices, as well as those for homes, are really the discounted present value of what investors believe those assets will be worth far into the future. When the discount rate in this case a 30-year mortgage rises faster than the expectations for home prices themselves then the price of a home falls. 7% + all in yields for current home financing, in contrast to prior periods of monetary easing, are lowering, not raising the discounted present value of an existing home. Blow them up? Well, yes, I suppose if we could. But absent that, lowering the cost of mortgage credit via the omnibus housing/GSE bill now placed before the Congress and the President is the best way to begin the long journey back to normalcy.
Bill Gross has some nerve. How is socializing the problem going to have a positive result.
The best solution is lower housing prices. If reckless borrowers and lenders lose money so be it.
In the alternative, perhaps we should seize 30% of every billionaires wealth to pay for the bailout. (note: Bill Gross is a billionaire)
In a lot of places in this country, houses shouldn't sell for more than $30-35 per sf.(total sf). Banks would never lend more than 10-15% over what the builder price is, if it weren't for Fannie, Freddie and idiots trying to compete with F&F. All this garbage about 3x income makes me sick. Try to finance something else (besides houses) that's 3x your income and see how much fun you are going to have at the bank.
I've heard reports from a couple real estate brokers that ~80% of their recent sales are people that are planning to foreclose on their first home.
I haven't personally seen one example of this. Until I do, I will consider it urban legend. There may be some rare instances of it, but I really don't credit the average distressed seller as having enough fore-sight or ability to pull this off.
New house = decent credit + modest down payment + income, now-a-days.
Most distressed sellers have none of the above.
I can't speak to the veracity of the 80%, so it could well be urban legend. That's why I would desperately like to find out if its true.
CalculatedRisk: how many of these sales are banks buying back their own junk? I've read anecdotal evidence that it compromises up to 40% of volume. If so, this "spike" in volume is not meaningful in terms of whether we're finding a bottom, because these houses are going to come back onto the market
Additionally, we have a huge pent up supply. Prices will fall below replacement cost causing land prices to get crushed even further.
Angry Saver
Exactly. CR started talking about 750k excess homes and all along i've been talking about needing to work off 4 million. So much of "housing demand" was things like parents buying 3/2s in San Luis Obispo just for a kid to go to Cal Poly. What a racket. Buy 2001 for $250k, pay the kid to be their manager, collect cash positive rent from the other two bedrooms and 4 years later sell for more than the cost of the education. 'Scourse if you bought in 2006...
Anyway anecdote aside the US is either massively overhoused and overretailed or we need a monster influx of population which would overwhelm infrastructure. No win.
GH - its true...80% I dont think its that high...but its true!
"Bill Gross has some nerve."
And some forehead. Look at that thing. I showed a pictures to my kids once, and they cried because it frightened them so. I think he should be arrested for indecent exposure.
Bond Guru Bill Gross on the Housing Crisis - US News and World Report
That forehead is gross.
...it's a FIVEhead!
or we need a monster influx of population which would overwhelm infrastructure. No win.
That's what that idiot Greenspan said, only he left out the "no win" part.
Out of curiosity, are going to pay this "massive influx of population" more than the already skilled population we have here?
Bill Gross would make a great zombie. Can't miss that headshot...
Is that a squirrel perched up there?
WAS that a squirrel perched there is the correct form AB...just sayi
Anonymous Bosch writes:
or we need a monster influx of population which would overwhelm infrastructure. No win.
That's what that idiot Greenspan said, only he left out the "no win" part.
Damn Grennie has been stealing my sthick for years and always screws up the punchline.
Out of curiosity, are going to pay this "massive influx of population" more than the already skilled population we have here?
Real or nominal dollars? [ducks]
Seriously, the required influx and demographics to fix housing would cost more than is rescued/preserved. That's not to say cost impacts will be spread evenly and thus not considered. We won't get new immigration wave this time. The extant populace is too savvy after the lessons leaned from past open borders experiments in the modern world.
Here's something to consider whenever you hear somebody call a bottom in housing:
The S&P 500 was priced at over 1500 in the year 2000. Eight years later, the S&P 500 is still almost 20% lower despite record low interest rates and all other sorts of economic stimulus plans.
If you buy an asset at bubble highs, the best you can hope for is low returns. In most cases, you will lose money in the short term and never see a positive return against inflation.
I used to have a thing about my forehead as a kid but you guys are pretty funny:-) Even so Gross does not look so bad to me - its the attitude that is a bit odd i think anyway. Dont most people look pretty weird if you really analyse them? One of the grossest things about the USA is all of this face surgery etc surely?? That is just so yucky. Who gives a fuck what you look like? surely something else other than that really counts?
Oh no, the feedback loop nazis are going to be all over you now.
ac
LOL
(embarrassed)
...............
Aruguably the SPX & INDU broke their lower trendlines of the pennant /fromed since 7/15. So it's just hold on for the ride now.
WAS, energycon? Is Gross a was? As in DTG. Have a bit of forbearance with me, (I'm a CR shutin.)
I'm sure I have a simplistic view, Rob, but it seems to me that until we start earning more than we're spending by borrowing, we're never going to crawl out of the shitquagmire.
I'm for sending Vlad the Impaler to Wall Street. 30K heads on pikes would be a good motive to "encourager les autres."
pimco:
Given the outlook for a further decline in house prices, there is simply not enough cash on the sidelines willing to absorb banks asset sales and provide the necessary new capital. Valuations will have to go even lower. As this occurs and contaminates other segments of the U.S. economy, we are likely to witness a long-lasting change in the institutional configuration of the U.S. banking system, with a highly differentiated impact on bond and equity holders.
Some smaller and medium-sized banks will be unable to find partners to recapitalize them and enhance their balance sheets. They will fail; the Federal Deposit Insurance Corporation will step in to protect eligible deposits and equity and bond holders will take another hit. Other banks will fare better. Due to their valuable core businesses, they will find partners to finance them directly or through mergers and acquisitions. Bond holders will do better while equity holders will continue to face downside.
Pimco a house of nuts
As is usually the case, Dawg's comments cannot be emphasized enough.
DEMOGRAPHICS: Boomers are retiring, household size trend is reversing, homeownership already below 2002 levels and dropping.
CREDIT: Credit availability expanded for decades, the boom being the blow-off top. That pendulum has a long ways to swing back.
...as well as...
EQUITY: You mean "negative" equity.
INCOME: If you're not in the top ranks, you're poorer now than in 2000 and prospects are getting worse.
SAVINGS: You're kidding, right?
INVESTMENTS: Say goodbye to stock & bond portfolio valuations.
PENSIONS: HAHAHAHAHA!!!
SOCIAL SECURITY: Talk to me after the GSEs, FHA, PBGC, FHLB & FDIC have all become bail-out basket cases.
Now, anyone thinking that housing prices will stop at pre-boom levels is suffering extreme anchoring bias.
Man, this market is dangerous. One of the guys I work with was thinking of renting a house out in Conoga Park.
Took a look at it on Saturday. The house screamed HELOC. Pile of debris on the side of the house with galvanized pipe sticking out from the copper repipe. New swap cooler on roof. New sod (sod lines still visible), turning brown. Unfinished holes from repipe job on side of house.
Garage repairs half finished. Brand new kitchen, washer and dryer.
They wanted $2000 security and $2000/mos. Told him to be careful. He just told me the prop mangement co wanted 680+ credit. I laughed. Apparently the place has been on the market for months, empty.
Just amazing.
Cheers,
I've heard reports from a couple real estate brokers that ~80% of their recent sales are people that are planning to foreclose on their first home.....
I'm calling shenanigans... If 80% of the houses traded now are shysters looking to get a second house and foreclose on their first one America is FAAKED ! ! !
I think that Jas would agree that we're not that corrupt.
................
Now, anyone thinking that housing prices will stop at pre-boom levels is suffering extreme anchoring bias.
tj & the bear
Touche....
but I love knives!!!!
WAHHHOOOO ! ! ! ! !
............
Teaching financial literacy to mortgage professionals.
I would have thought they should be literate already. Apparently not.
This is from craigslist sfbay area.
craigslist | Page Not Found
CONTRA COSTA COUNTY
EMPLOYMENT AND HUMAN SERVICES DEPARTMENT
Request for Interest (RFI) # 359
FINANCIAL LITERACY TRAINING
The Contra Costa County Employment and Human Services Department (EHSD) announces Request for Interest (RFI) # 359 seeking an organization to provide financial literacy training for laid-off individuals.
The selected contractor(s) shall guide and support laid-off mortgage industry individuals in becoming financially literate. The Contractor shall design and deliver financial literacy information and services through a series of workshops. These courses will teach individuals to develop a plan to create financial stability through an economic downturn. This workshop series will serve a minimum of 25 laid-off workers. The Contractor will be paid up to $5,000 to instruct workers on the techniques that will help them analyze their current financial situation, create a financial plan, and downsize their debt. All expenses will be charged to the National Emergency Grant. Projected start date for this training is October 1, 2008 and end date is September 30, 2009.
I know what you mean, worried.
The facelift craze doesn't always work out so well.
Ok Bitches,
Taste this: NRG Energy Inc. rose 5.5 percent to $37.15. Billionaire investor Warren Buffett's Berkshire Hathaway Inc. took a stake in the second-biggest power producer in Texas, based on a regulatory filing that disclosed equity investments at the end of the second quarter.
Now taste this: Investors chase tangible performance, i.e, they pay for future value and in this post subprime implosion era, performance will me measured by a dividend check or interest payment -- and no bullshit will be tolerated. Warren is buying into future value and paying a huge price to look for future income, because he needs to reduce his liabilities and cash burn!
"I think that jas would agree that we're not that corrupt."
Corruption has got nothing to do with it.
Just a good business decision.
Theoretically, non-recourse loans are just a lease option to buy with a credit waiver.
"surely something else other than that really counts?
worried"
Absolutely, but, it is more fun finding people's glaring weaknesses and exploiting them. I'm sure Bill's ego is much bigger than his Tenhead, but it is easiest to pick the lowest hanging fruit.
Quincy,
I somewhat agree, but mostly agree that this is the problem with america. A handshake means nothing anymore. Lenders might have been writing options but that doesnt mean they were options, just stupid lenders...
That being said I still dont believe that 80% of sales are sick faakers as described...
Its criminal and if the loan on the original house was a refi it is not a no-recourse loan. I hope they go to jail.
.......
"Warren is buying into future value and paying a huge price to look for future income, because he needs to reduce his liabilities and cash burn!
Taste Of Reality"
Warren has a bunch of cash and doesn't know where to put it. Sometimes, he acts like a motivated buyer, IMO.
"With Fed Funds having been lowered from 5¼% to 2%, it would have been logical to assume that the price of mortgage credit would go down as well and that the price of homes would at least slow their current descent."
Sorry, Bill, but you can't lend it if you don't have it.
Swedish Chef,
My buddy just bought a house. He asked the guy why the interest rate on the second note (80-10) was higher. The guy couldnt answer him. Honest to god the guy had no idea why it was higher.
Sad.
............
The recent buyers are nothing more than dead-cat-bounce knife catchers - pretty typical in slow-moving RE cycles. Max did a great job last week exposing the shadow inventory problem and the reality is that there is basically infinite inventory in much of Ca (both denominator and numerator moving in the wrong direction)
So these knife-catchers buy, thinking they are getting a great deal compared to 2006 prices, but wave after wave after wave of REO's will continue to wash up on shore for months and years to come, drowning all these "unfortunate" specuvestors with more depreciation until they bleed out and their properties wind up as even more REO inventory. Cash-flow is still nowhere near positive so they can only be thinking of upside appreciation!?!
Meanwhile the GSE's implode, taking out a good 90% of current financing and the recent buyers will seem like gurus of bad-timing and poor decision making.
Bill Gross ONLY talks his book. His advice or recommendations are never objective market commentary.
That said, I believe he gets the Fed's & Treasury's ear. I hope he loses a lot of money.
"I hope they go to jail."
We are going to be forced to pay for the housing they had, and you want us to pay for their future housing AND food!?
"He asked the guy why the interest rate on the second note (80-10) was higher. The guy couldnt answer him. Honest to god the guy had no idea why it was higher."
I think the best answer is "The interest rate on the second is higher because two is a bigger number." At least, that was what some mortgage broker told me, and I believed him. After all, it is his job, and he is the expert.
Gross is living in total terror of the Business Week article that foresees double digit inflation next year.
What he sees is the death of Pimco as bonds turn into old maids due to galloping inflation.
I imagine that it appears to be terrifying to see that the policymakers are doing nothing, leading to a policy of inflation as the default to an intelligent attempt to manage a soft landing preserving the value of the dollar and of bonds.
What I see is darn near no attempts to stabilize the housing market, no real attempts to force a big dose of medicine onto wall street, and no idea of how to stop the delevering and subsequent collapse of the dollar when gentle stimulation fails to revive a moribund economy.
What he fears is the policy response to a very stagnant economy in hangover phase, and well he should fear that nasty monetary policy disaster. First you get asset deflation, followed by necessity inflation.
Someday this war's gonna end...
Sorry, Bill, but you can't lend it if you don't have it.
Not to mention that banks are now much more concerned with the "return of capital" vs. "return on capital".
fuckin' a bubba....I mean Allen...
Ciao
MS
An investment strategy adopted by the U.S. agency that insures retirement benefits for about 44 million people is likely riskier than acknowledged and needs stronger oversight, according to congressional auditors.
Auditors say U.S. pension agency plan needs watching
| Reuters
Uh-Oh
Darth Toll writes:
The recent buyers are nothing more than dead-cat-bounce knife catchers..."
and will continue to be dead-cat-bounce knife catchers until they arent.
After all, it is his job, and he is the expert.
Edzachary!
...........
anonymous
uh oh indeed. The economic impacts of this mess can possibly be measured. I'm afraid of the social impacts as more and more of people in the 'safe' upper middle class discover that they've been pwn3d.
I think I read somewhere that this is the class of people who start revolutions.
But absent that, lowering the cost of mortgage credit via the omnibus housing/GSE bill now placed before the Congress and the President is the best way to begin the long journey back to normalcy.
That will just drive up the cost of other forms of credit.
It's astounding that virtually all of our problems have been caused by markets artificially overpricing assets, and yet people like Gross are arguing that the solution to our problems is simply more of the same.
The man belongs in an institution for the criminally insane.
"We need to inflate away the problems caused by attempting to inflate away our problems for the past 10 years."
"I think that Jas would agree that we're not that corrupt"
I think you're looking at people making basic survival decisions. Too many bills to pay, bad mortgage and worrying about the future economy. Add on to that the fact homes are worth 30% less and I have a hard time not seeing more people make this decision.
I would.
One of the worst parts of Gross's plan to socialize housing losses is that it will further indebt future generations of U.S. citizens. Also, since the source of government borrowing will largely come from abroad, Gross's plan ampounts to nothing more than the selling of America to maintain ficticious asset values.
That kind of thinking is disgraceful. Billionaires looking for handouts.
What Gross fears most is a low return, low inflation environment.
Pimco's fees are outrageous and can only be masked via a significant inflation component. In addition to high fees, Pimco's flagship Total Return fund is notoriously tax INEFFICIENT.
We'll find the bottom when there is nobody left to sell. That will mean the next buyer will have to 'bid up' to entice a seller.
Not one minute earlier. It's pretty much the definition of the term.
ac,
Hell, it won't even lower mortgage credit costs. The market'll teach'em that in short order.
What Gross fears most is a low return, low inflation environment.
Pimco's fees are outrageous and can only be masked via a significant inflation component. In addition to high fees, Pimco's flagship Total Return fund is notoriously tax INEFFICIENT.
That, and the fact that the Wall Street parasite can't exist without artificially overpriced assets to sell to the rest of us.
That's how they make their money - selling us something for a dollar that's maybe only worth 70 cents.
They rely on the Federal Reserve to create the distortions in the monetary supply that allows them to do this.
Now they're screaming for the government to start assiting in creating such distortions via the tax system so they can continue to bleed the rest of the economy of wealth by forcibly dumping overpriced assets on us.
BTW I'm not arguing that Wall Street is inherently parasitic, only that they've become very much so in recent years.
What Darth Toll said, etc.
In my little beach town 15 miles from downtown San Diego what seems needed now is house buyers that actually want to live in the house they buy. The 'distressed properties' on my street are the same houses that have turned over time and again since I moved in 9 years ago.
angry saver,
In your heart of hearts do you really believe that debt will ever be repaid in money of equivalent value.
One of the biggest fallacies the boomers have labored under is that somebody else can pick up the check.
They are the ultimate bagholders.
Most of the younger folks intuitively know they are screwed, only the boomers refuse to acknowledge their stupidity. Not just in a Jas Jain sense, but in an ultimate, gee, life isn't fair sense.
Someday this war's gonna end...
AC,
If we eliminated the Fed sponsored inflation, wall street would be 1/4 of its current size and that 25% would earn 25% of what they currently earn. No joke.
The majority would be far better off without inflation.
"In my little beach town 15 miles from downtown San Diego what seems needed now is house buyers that actually want to live in the house they buy. The 'distressed properties' on my street are the same houses that have turned over time and again since I moved in 9 years ago."
We live in a beach town, too. There's a big (for our own) luxo condo building just down the street from me. They've sold 22 of the 70 units -- mostly the biggest ones with the best views.
The others they're offering at frequent weekend-long "$130,000 off" sales. Their market for the remainder: well off people from the San Joaquin Valley who want a vacation home on the water. Because nobody around here is buying. If they can sell any of them, I expect a lot of them to be bought as "investments."
Allen M,
In your heart of hearts do you really believe that debt will ever be repaid in money of equivalent value.
Equivalent value, no. But with interest, yes.
The baby boomers are screwed. If you choose to spend more than you have now, then you will necessarily be able to spend less in the future. No if, ands or buts. That part is a choice made by the baby boomers and is fair imo. Kicking the problem onto future generations is wrong imo and will weaken our country going forward.
with interest.
Howls of derisive laughter.
you do have the rest correct;-}
I remember when I was young they called bonds "certificates of consfiscation"
That day shall return.
Meanwhile, back to our scheduled recession, after all I have no idea if this will be enough to break the dollar in this decade, or the next.
If O-man drops massive tax increases, and massive health care benefits on the populace, we could theoretically stagger through this crisis with some value left to the dollar. How much is anyone's guess.
Someday this war's gonna end....
6 county SoCal bank REO inventory has risen from 64200 on 7/27 to 108900 today 8/18, up 70% in 21 days.
July REO sales at 44% of 20329 total 6 county sales gives 8863 estimated July REO sales, or 12.3 months of remaining bank REO inventory, vs. 9 months inventory (64274 bank inventory 7/27 vs. 7143 June REO sales) on 7/27. Bank pressure on prices is getting worse.
GF sold her 1000 sqft Escondido home in July '06 for 385k, drove past it last month and found it vacant. Zillow recently priced it at 288k, and it sold last week at 175k, down 55%, without ever being listed, no doubt another example of bank price pressure.
Told her Churchill's line to his mum from location in the African Boer wars: "There's nothing as exhilarating as being shot at and missed". Unfortunately, all of our friends and most everyone else in SoCal has been hit, and my REO tracking says it's headed way lower.
OT: Some optimism
Renewable Power's Growth in Colorado Presages National Debate
Renewable Power's Growth in Colorado Presages National Debate
DENVER -- When Colorado voters were deciding whether to require that 10 percent of the state's electricity come from renewable fuels, the state's largest utility fought the proposal, warning that any shift from coal and natural gas would be costly, uncertain and unwise.
Then a funny thing happened. The ballot initiative passed, and Xcel Energy met the requirement eight years ahead of schedule. And at the government's urging, its executives quickly agreed to double the target, to 20 percent.
Doc - Colorado ought to be way ahead of the alternative energy game. We've got tons of sun and tons of wind.
yeah, let's all scream value and invest into RE.
The question I'd really like to have answered is what percentage of these reported sales are immediately preceding another foreclosure. I've heard reports from a couple real estate brokers that ~80% of their recent sales are people that are planning to foreclose on their first home.
Gavshire, I seem to recall Tanta explaining why this isn't that easy. The buyer has to make various statements in order to get the new loan, and if they are lying, it's fraud. This didn't matter during the boom, but banks are being more careful now. This is from memory, so I don't pretend I know what I am talking about.