What's left to be said? Houses are still 50-70% too expensive based on fundamentals in places with the largest manias. The price declines will last throughout the next decade. National unemployment (U3) will reach 10% by 2010 (ten by ten is my new slogan). And we'll see a fundamental realignment of political associations (new ones) before this ends. Perhaps California will split in two. Major events will happen.
Wagner says it's creating "Asian inspired homes in a serene community with a distinctive ZEN motif."
I looked at a few renderings - designers are having a tough time giving garage doors that genuine oriental quality and, by the sound of things, the FBI may be in thr serenity mssing wit thr Zen.
you mean when the seller gives stuff to the buyer it distorts the price and increases the risk? Has anyone told this to the "non-profit" down payment assistance providers yet?
Quelle suprise! You mean, the seller offered deals and didn't record them, the appraiser just made up the price for what the agent wanted the house to sell for without regard to the market, and the builder didn't report any of this to the bank...who just never even looked at the specifics of the loan because it wanted the fees and was going to turn around and foist it off to securitization and investors in 30 days?
At least they stopped after a while. It's hard to find new things to say about the corruption that brought us this crisis. Every revelation is just a further indictment of the financial system that created this mess.
chimajoe writes:
Mel- Don't forget to add Bush to the list....
chimajoe
Pelosi is guilty of enabling Bush-- evil doers need co-conspirators and silence to accomplish their misdeeds. Obviously,evangelicals, Paulson, BB, Colin Powell, Chertoff, Brownie, the Republican party, many Democrats, etc. can be added to the list of helpers. I pick Nancy because I foolishly expected her to play the cards on the table. I am now more cynical than ever.
Mel, I have some bad news for you. DAP was "created" before the evil doers got in office.
P.S. I am not sure though if Nancy Pelosi voted for the creation of FHA.(It has been a while)LOL
Nancy Pelosi is Tommy D'Assandro's daughter, a Baltimore/Md politico of the 50s-ish, that my family loved to hate. He was supposed to be corrupt in the extreme--my family thought so anyhow. When I found that out, I went around muttering for weeks. Tho I must say, I don't know what exactly he is supposed to have done.
My developer buddy was willing to throw in a car or a wide screen tv, but never got a bite on his houses. These very nice houses are basically done and just sitting there, for more than a year. I told him a long time ago he should slash his prices and he was just getting mad at me, so I shut up.
People who already bought really hate it when you cut prices, even a little. It's a slippery slope, started with adding upgrades, no prob with that right? Increases the value of the house (maybe). Then on to wide screen tvs, boats and the like. I noticed those incentives a while ago, but they seem to have gone away. And these didn't seem to work too well either. (S. Fla)
Lots of ads saying no down payments, no closing costs, last only a week. That is probably true, as the DAPs are going away soon.
They could, of course, just migrate under the table.
Broker writes:
Mel, I have some bad news for you. DAP was "created" before the evil doers got in office.
I believe DAP was originally used by charities, then today's crooks stopped regulating. Sometimes a plan is okay until abused---seems FEMA and the FDA have had troubles under this regime due to lack of financing and incompetence--and political winking.
I wonder what those forclosed homes im S. FL will be worth after if Faye hits . There am sure there will be a big fight between the lenders (owners ) and companies .
The thing that nobody point out is that higher comps inflated by incentives for the builders' homes had a direct correlation on increasing the cost of lots. This increased stock value significantly, since the homebuilders owned way too much land. The SEC should hammer them for this fraud and so should shareholder lawsuits.
Faye is only a tropical storm and the chief honcho forecasters have no idea where it's going at the moment.
Hub used to work for hurricane center, and works in weather for NASA now. Many tracks for each model.
Your point is well taken tho. If we get a really powerful storm it will not only be homeowners vs insurance companies, it will be banks vs insurance companies. Probably the insurance companies will win, as the banks will be fragmented, and reluctant to press claims or spend money to do so, and the insurance companies know all about how to deny claims, with lots of law firms to back them up.
I think most condos probably still have insurance. The rub may come next hurricane season, when more and more do not.
Lawyerliz writes:
Nancy Pelosi is Tommy D'Assandro's daughter, a Baltimore/Md politico of the 50s-ish, that my family loved to hate. He was supposed to be corrupt in the extreme--my family thought so anyhow. When I found that out, I went around muttering for weeks. Tho I must say, I don't know what exactly he is supposed to have done.
Like the Daley's in Chicago - father & son.
Irony is folks love them but ONLY so long as the potholes continue to get patched and the garbage picked up on time. Miss a day and you are done.
Note to Nancy - get the garbage picked up pronto or you too will become an asterisk.
If we can prove FHA is a profitable gov. organisation, then we should nationalize everything. Can you imagine what a "workers paradise" this country would be?
What Elvis said: exactly. I do ask "what about appraisals?" and if such incentive packages were reported as the actual house price that would help drive the comps to a point beyond reason - as did happen.
The thing that nobody point out is that higher comps inflated by incentives for the builders' homes had a direct correlation on increasing the cost of lots.
The main problem I see with "incentives" is that the general public does not understand that these perpetrate fraud. Often "fraud" in the strictly legal sense, but also just plain "fraud" in the gimmick sense-- where some buyer actually thinks & believes that he's getting a "free" car if he buys from Scamarama Builders thru their inhouse lender.
The sophisticated folks here may scoff at the notion that anybody would be so naive as to think that the car price wasn't included in the sales price, but I'm tellin' yez-- to a lot of buyers, particularly 1st-timers, this seems like a reasonable & legitimate variation of "incentives", just like the coupons they use at the grocery store, or the "buy a sweater, get a free pair of socks" deal at Penney's. Since such deals often really are legitimate good deals in the world of retail sales, people just don't realize that in a home sale/purchase, the same type of "free stuff" deal is bogus & fraud-ridden.
Regular folks don't realize the chain of events that happens from the "free car" deal-- the impacts on the other comps, or that they're being suckered into upholding the comps for a development, (for a while). Or that they're assisting in possibly defrauding the end lender/investor.
All they know is that they're sitting at the closing table with more legal docs on it than they've likely ever seen in their life, and the naive buyer's assumtion is "surely all this must be perfectly legal & aboveboard cuz otherwise how could this big fancy builder get away with anything less?".
Do these folks realize that the end lender may never see the details of the "free car" disclosed?-- hell no.
Here's a perfect example of this: Today's "Home" section of today's (8/16/08) Virginian-Pilot (the main Virginia Beach/Norfolk newspaper) runs an article headlined "Chesapeake Homes' Special Offer: Purchase a house, get a new car". This is a news story-- not an ad-- the Home section is a real section of the paper written by reporters, tho of course most of its ad space is all RE agencies & mortgage brokers. The "new car" (& I note they didn't say "free", but "new") is a SmartFor Two, made by Mercedes-Benz, valued at $13,990.00.
In sum, the article states that Chesapeake Homes has 7 local housing developments of SF & townhomes, many priced "in the sweet spot in the market"..."between $180K & $250K". A buyer must "go to contract by Sept. 30th" to get the Smartcar.
"Chesapeake Homes will issue checks at closing. The new homeowners will then deal directly with Smartcar..." says a company spokesperson.
The point being, this is supposed to be a news story-- but nowhere in it was any question raised about whether this "new car incentive" was gimmickry at best, and/or possibly fraud at worst.
Also, I'm wondering about the timing-- the buyer must go to contract by Sept. 30th-- the same deadline as for DAP programs. Could Chesapeake Homes be calling the Smartcar checks some form of DPA?
In central Fla the builders are advertising like crazy and even telling buyers that the assistance will go away by Oct 1st, so buy now or you will be out of luck.
What will be builders do with their inventory once the assistance goes away?
I agree with zuzu, most buyers wouldn't have a clue they were doing anything wrong.
Hi Liz-- thanks-- I love this blog & have learned so much from it, but as a non-professional here must say that many, many homebuyers are genuinely, totally, and completely befuddled by the homebuying process-- and we often make a lot of bad choices out of plain garden-variety ignorance and optimistic trust, rather than from "predatory borrower" greed.
I wish some of the folks who blame "dumb borrowers" would put as much energy into agitating for one universal clear & understandable loan app-- with examples, and maybe a quick math lesson for people such as I who do not and never have thought of things in 1/8th of a percentage point terms. But simplifying the documents means less opportunity for flimflam profits, so it ain't agonna happen.
Here in Norfolk in the same "Home" section of the paper, the builders are advertising the Oct. 1 DAP deadline like crazy also.
Franciscus Homes is touting something called My Stimulus Rebate as "the free gift funding of up to $25,000 is "INSTANT EQUITY"... "And here's the best part... the $25,000 is a grant that NEVER HAS TO BE REPAID!"
Here's another ad from The Dragas Companies: "If You Need Help with your down payment... act quickly. Help disappears October 1, 2008."
You asked the "free $25,000 grant money!" question-- what ARE these builders gonna do with their inventories, on October 2? Cut price by $25K?--- hah!
Since some downpayment is required, cutting by 25k or 50k will not be helpful since some downpayment will be required. I think the builders are panicing (even more than before).
I think that you could really grind the price down before the deadline, if you had excellent credit and nerves of steel. After that, people will just have to save. . .
Alas zuzu, there are oodles of disclosures required, some of them even understandable, but no one reads
them.
the hub and I made lots of mistakes when we bought our first house, but we sold in 18 months to move to Miami, and made 18%, lucked out in the price appreciation in '72. I was so ignorant that I didn't know I was ignorant. That's how you start out, I guess. My mom had never bought a house, my grandparents had bought the house I grew up in in maybe 1915 or so, and my in-laws had only bought one house, so no help on the family front. And of course, no internet. I'm sure there were books on mtges, but I didn't realize I should consult them.
"I was so ignorant that I didn't know I was ignorant."
-- lol!!
yup!-- that's me, & I'm not completely gormless & have a college degree & wear shoes & all, but gads!--when I started reading all the detailed info on homebuying, I felt like my mind had melted into swiss cheese on a Reuben.
It really ticked me off, too-- tho I knew as the buyer it was my responsibility caveat-emptor style to have some idea of what in hell I'm doing, I also felt it was beyond absurd to expect the average person in the USA to have a genuine working knowledge of all the many many elements in homebuying from understanding mortgages, to FICO scores, to even deciphering the terms of the buyer's agent contract.
Schlubbing around looking for a house to buy is hard enough-- having to learn all the esoteric ins & outs of about 8 different people's jobs is a bit much to put on top of that.
And then I really got mad when I read somewhere that only the USA uses "discount points" in mortgages, and also, that in Canada & some other countries, mortgage enquiries do not count as "enquiries" on your credit score. (Apparently, in some countries, buying a house can be a relatively simple transaction--!)
On the builders & down payments, I looked up the 2 builders I named above, Franciscus & Chesapeake Homes, on the VHDA website, & it seems they've both already gotten a couple of million dollars each for "downpayment & closing cost assistance" from the SPARC program-- a Virginia housing program to "help first time homebuyers" buy affordable housing. I sure hope that Smartcar check isn't coming out of that pot of money.
I'm seeing this on new-construction condos as well -- they offer to throw in a scooter or a tiny car, or just say, well, we might have five thousand lying around to help with closing costs. Crap, I have an econ phd, and that's a problem because I naively expect things to have clear prices.
I'm also hearing that in home closings, buyers are now finding more leverage to extract repairs from sellers, which means effective prices may be falling more quickly than we think.
first?
What's left to be said? Houses are still 50-70% too expensive based on fundamentals in places with the largest manias. The price declines will last throughout the next decade. National unemployment (U3) will reach 10% by 2010 (ten by ten is my new slogan). And we'll see a fundamental realignment of political associations (new ones) before this ends. Perhaps California will split in two. Major events will happen.
Short hope.
Wagner says it's creating "Asian inspired homes in a serene community with a distinctive ZEN motif."
I looked at a few renderings - designers are having a tough time giving garage doors that genuine oriental quality and, by the sound of things, the FBI may be in thr serenity mssing wit thr Zen.
you mean when the seller gives stuff to the buyer it distorts the price and increases the risk? Has anyone told this to the "non-profit" down payment assistance providers yet?
Quelle suprise! You mean, the seller offered deals and didn't record them, the appraiser just made up the price for what the agent wanted the house to sell for without regard to the market, and the builder didn't report any of this to the bank...who just never even looked at the specifics of the loan because it wanted the fees and was going to turn around and foist it off to securitization and investors in 30 days?
I'm shocked...SHOCKED!
Appraisers, credit raters, and Pelosi all have one thing in common--enablers of criminal bullshit.
I'm sure they were just toasters.
At least they stopped after a while. It's hard to find new things to say about the corruption that brought us this crisis. Every revelation is just a further indictment of the financial system that created this mess.
Mel- Don't forget to add Bush to the list....
chimajoe writes:
Mel- Don't forget to add Bush to the list....
chimajoe
Pelosi is guilty of enabling Bush-- evil doers need co-conspirators and silence to accomplish their misdeeds. Obviously,evangelicals, Paulson, BB, Colin Powell, Chertoff, Brownie, the Republican party, many Democrats, etc. can be added to the list of helpers. I pick Nancy because I foolishly expected her to play the cards on the table. I am now more cynical than ever.
Mel, I have some bad news for you. DAP was "created" before the evil doers got in office.
P.S. I am not sure though if Nancy Pelosi voted for the creation of FHA.(It has been a while)LOL
This whole banana republic we have here is based on fraud no surprise here.
Nancy Pelosi is Tommy D'Assandro's daughter, a Baltimore/Md politico of the 50s-ish, that my family loved to hate. He was supposed to be corrupt in the extreme--my family thought so anyhow. When I found that out, I went around muttering for weeks. Tho I must say, I don't know what exactly he is supposed to have done.
My developer buddy was willing to throw in a car or a wide screen tv, but never got a bite on his houses. These very nice houses are basically done and just sitting there, for more than a year. I told him a long time ago he should slash his prices and he was just getting mad at me, so I shut up.
People who already bought really hate it when you cut prices, even a little. It's a slippery slope, started with adding upgrades, no prob with that right? Increases the value of the house (maybe). Then on to wide screen tvs, boats and the like. I noticed those incentives a while ago, but they seem to have gone away. And these didn't seem to work too well either. (S. Fla)
Lots of ads saying no down payments, no closing costs, last only a week. That is probably true, as the DAPs are going away soon.
They could, of course, just migrate under the table.
I think I spelled D'assandro wrong.
Delassandro??
Broker writes:
Mel, I have some bad news for you. DAP was "created" before the evil doers got in office.
I believe DAP was originally used by charities, then today's crooks stopped regulating. Sometimes a plan is okay until abused---seems FEMA and the FDA have had troubles under this regime due to lack of financing and incompetence--and political winking.
I wonder what those forclosed homes im S. FL will be worth after if Faye hits . There am sure there will be a big fight between the lenders (owners ) and companies .
The thing that nobody point out is that higher comps inflated by incentives for the builders' homes had a direct correlation on increasing the cost of lots. This increased stock value significantly, since the homebuilders owned way too much land. The SEC should hammer them for this fraud and so should shareholder lawsuits.
Faye is only a tropical storm and the chief honcho forecasters have no idea where it's going at the moment.
Hub used to work for hurricane center, and works in weather for NASA now. Many tracks for each model.
Your point is well taken tho. If we get a really powerful storm it will not only be homeowners vs insurance companies, it will be banks vs insurance companies. Probably the insurance companies will win, as the banks will be fragmented, and reluctant to press claims or spend money to do so, and the insurance companies know all about how to deny claims, with lots of law firms to back them up.
I think most condos probably still have insurance. The rub may come next hurricane season, when more and more do not.
Should have said every model has a different track. (Sometimes they coincide, a good thing)
interesting article
I cued the Sweater Song
Having listened as long as I possibly could, I can report that I am, officially, not a Weezer fan.
=w= !!!
Lawyerliz writes:
Nancy Pelosi is Tommy D'Assandro's daughter, a Baltimore/Md politico of the 50s-ish, that my family loved to hate. He was supposed to be corrupt in the extreme--my family thought so anyhow. When I found that out, I went around muttering for weeks. Tho I must say, I don't know what exactly he is supposed to have done.
Like the Daley's in Chicago - father & son.
Irony is folks love them but ONLY so long as the potholes continue to get patched and the garbage picked up on time. Miss a day and you are done.
Note to Nancy - get the garbage picked up pronto or you too will become an asterisk.
If we can prove FHA is a profitable gov. organisation, then we should nationalize everything. Can you imagine what a "workers paradise" this country would be?
What Elvis said: exactly. I do ask "what about appraisals?" and if such incentive packages were reported as the actual house price that would help drive the comps to a point beyond reason - as did happen.
The thing that nobody point out is that higher comps inflated by incentives for the builders' homes had a direct correlation on increasing the cost of lots.
Very true...here is the result:
401 Authorization Required
The main problem I see with "incentives" is that the general public does not understand that these perpetrate fraud. Often "fraud" in the strictly legal sense, but also just plain "fraud" in the gimmick sense-- where some buyer actually thinks & believes that he's getting a "free" car if he buys from Scamarama Builders thru their inhouse lender.
The sophisticated folks here may scoff at the notion that anybody would be so naive as to think that the car price wasn't included in the sales price, but I'm tellin' yez-- to a lot of buyers, particularly 1st-timers, this seems like a reasonable & legitimate variation of "incentives", just like the coupons they use at the grocery store, or the "buy a sweater, get a free pair of socks" deal at Penney's. Since such deals often really are legitimate good deals in the world of retail sales, people just don't realize that in a home sale/purchase, the same type of "free stuff" deal is bogus & fraud-ridden.
Regular folks don't realize the chain of events that happens from the "free car" deal-- the impacts on the other comps, or that they're being suckered into upholding the comps for a development, (for a while). Or that they're assisting in possibly defrauding the end lender/investor.
All they know is that they're sitting at the closing table with more legal docs on it than they've likely ever seen in their life, and the naive buyer's assumtion is "surely all this must be perfectly legal & aboveboard cuz otherwise how could this big fancy builder get away with anything less?".
Do these folks realize that the end lender may never see the details of the "free car" disclosed?-- hell no.
Here's a perfect example of this: Today's "Home" section of today's (8/16/08) Virginian-Pilot (the main Virginia Beach/Norfolk newspaper) runs an article headlined "Chesapeake Homes' Special Offer: Purchase a house, get a new car". This is a news story-- not an ad-- the Home section is a real section of the paper written by reporters, tho of course most of its ad space is all RE agencies & mortgage brokers. The "new car" (& I note they didn't say "free", but "new") is a SmartFor Two, made by Mercedes-Benz, valued at $13,990.00.
In sum, the article states that Chesapeake Homes has 7 local housing developments of SF & townhomes, many priced "in the sweet spot in the market"..."between $180K & $250K". A buyer must "go to contract by Sept. 30th" to get the Smartcar.
"Chesapeake Homes will issue checks at closing. The new homeowners will then deal directly with Smartcar..." says a company spokesperson.
The point being, this is supposed to be a news story-- but nowhere in it was any question raised about whether this "new car incentive" was gimmickry at best, and/or possibly fraud at worst.
Also, I'm wondering about the timing-- the buyer must go to contract by Sept. 30th-- the same deadline as for DAP programs. Could Chesapeake Homes be calling the Smartcar checks some form of DPA?
In central Fla the builders are advertising like crazy and even telling buyers that the assistance will go away by Oct 1st, so buy now or you will be out of luck.
What will be builders do with their inventory once the assistance goes away?
I agree with zuzu, most buyers wouldn't have a clue they were doing anything wrong.
Hi Liz-- thanks-- I love this blog & have learned so much from it, but as a non-professional here must say that many, many homebuyers are genuinely, totally, and completely befuddled by the homebuying process-- and we often make a lot of bad choices out of plain garden-variety ignorance and optimistic trust, rather than from "predatory borrower" greed.
I wish some of the folks who blame "dumb borrowers" would put as much energy into agitating for one universal clear & understandable loan app-- with examples, and maybe a quick math lesson for people such as I who do not and never have thought of things in 1/8th of a percentage point terms. But simplifying the documents means less opportunity for flimflam profits, so it ain't agonna happen.
Here in Norfolk in the same "Home" section of the paper, the builders are advertising the Oct. 1 DAP deadline like crazy also.
Franciscus Homes is touting something called My Stimulus Rebate as "the free gift funding of up to $25,000 is "INSTANT EQUITY"... "And here's the best part... the $25,000 is a grant that NEVER HAS TO BE REPAID!"
Here's another ad from The Dragas Companies: "If You Need Help with your down payment... act quickly. Help disappears October 1, 2008."
You asked the "free $25,000 grant money!" question-- what ARE these builders gonna do with their inventories, on October 2? Cut price by $25K?--- hah!
Since some downpayment is required, cutting by 25k or 50k will not be helpful since some downpayment will be required. I think the builders are panicing (even more than before).
I think that you could really grind the price down before the deadline, if you had excellent credit and nerves of steel. After that, people will just have to save. . .
Alas zuzu, there are oodles of disclosures required, some of them even understandable, but no one reads
them.
the hub and I made lots of mistakes when we bought our first house, but we sold in 18 months to move to Miami, and made 18%, lucked out in the price appreciation in '72. I was so ignorant that I didn't know I was ignorant. That's how you start out, I guess. My mom had never bought a house, my grandparents had bought the house I grew up in in maybe 1915 or so, and my in-laws had only bought one house, so no help on the family front. And of course, no internet. I'm sure there were books on mtges, but I didn't realize I should consult them.
Live and learn.
"I was so ignorant that I didn't know I was ignorant."
-- lol!!
yup!-- that's me, & I'm not completely gormless & have a college degree & wear shoes & all, but gads!--when I started reading all the detailed info on homebuying, I felt like my mind had melted into swiss cheese on a Reuben.
It really ticked me off, too-- tho I knew as the buyer it was my responsibility caveat-emptor style to have some idea of what in hell I'm doing, I also felt it was beyond absurd to expect the average person in the USA to have a genuine working knowledge of all the many many elements in homebuying from understanding mortgages, to FICO scores, to even deciphering the terms of the buyer's agent contract.
Schlubbing around looking for a house to buy is hard enough-- having to learn all the esoteric ins & outs of about 8 different people's jobs is a bit much to put on top of that.
And then I really got mad when I read somewhere that only the USA uses "discount points" in mortgages, and also, that in Canada & some other countries, mortgage enquiries do not count as "enquiries" on your credit score. (Apparently, in some countries, buying a house can be a relatively simple transaction--!)
On the builders & down payments, I looked up the 2 builders I named above, Franciscus & Chesapeake Homes, on the VHDA website, & it seems they've both already gotten a couple of million dollars each for "downpayment & closing cost assistance" from the SPARC program-- a Virginia housing program to "help first time homebuyers" buy affordable housing. I sure hope that Smartcar check isn't coming out of that pot of money.
I'm seeing this on new-construction condos as well -- they offer to throw in a scooter or a tiny car, or just say, well, we might have five thousand lying around to help with closing costs. Crap, I have an econ phd, and that's a problem because I naively expect things to have clear prices.
I'm also hearing that in home closings, buyers are now finding more leverage to extract repairs from sellers, which means effective prices may be falling more quickly than we think.