MW writes:
I think everyone should take a look at this positing at the Prudent bear Chatroom:
Those of you who are thinking that it will all be fine in the near future may want to take off the uber-bull (sorry for the mix-up)
costume and read this sober tale.
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MW | 10.12.08 - 10:36 am | #
This is what I tell anyone thinking about buying a house. In southern califonia, d.r. horton and another company are promoting 'home sales weeks' this month.
--
I must have been on my optimistic streak when I forecasted 25M under water about a year ago. Once an area has price decline of more than 20% from the peak the foreclosures seem to bring it to 40% down, from the peak, over the next 12 months or so. Sacramento area is a good example.
Right now, the fastest declining metro (tracked by Radar Logic) is San Fran at 45% Annual Rate for all the sales that have originated since June 2008 and have completed. L.A. is next with 34% and San Jose at 33%. Yes, all three are still the most expensive of the 25 metros and falling at a faster rate than all others. Coincidence? CA is sinking fast into depression.
Noble writes:
"Story on bloomberg - Fannie and Freddie told to buy 40B in troubled mortgages. This is outside of TARP. No idea on what prices will be paid."
This is what's scary, it smacks of desperation and a lack of explanatory detail, as does the GM annoucement.
I'm getting that unseen unmoved mover feeling. Kind of like when you see emergency vehicles appearing everywhere and yet there's no announcements on the official stations. Frightening.
I feel sorry for Stockton. I lived & worked there in the late nineties. The independent bookstore there had a rough time of it, and finally closed.
Two anecdotes from yesterday:
- A friend who teaches a beginning pottery class that always fills up is getting word that there is only one signup, and that the class likely won't happen.
- I was at Barnes and Noble buying Green Collar Jobs, by Van Jones, Building a green economy strong enough to lift people out of poverty — Green For All
and the clerk, a woman in her fifties who cheerfully volunteered that she "used to have a real job!", told me that they weren't hiring for the Christmas season, that they would just make do with who they had.
And a blog that I've never heard reference of, but which seems good: The Automatic Earth
I recently saw a house that was listed for $450K . This is in an area in which a real estate ganet wrote to me:
I recently did a broker price opinion on a bank owned home. The loan balance was close to $500,000.00. My price opinion was that is was worth $175,000.00. I understand the appraiser didnt think it was worth that much.
Now this house is listed in (drum roll)... $650K. I asked the owner is this a misatke and here is her answer:
Yes, that is the price. It is over priced for todays market but as we are not at all anxious we have priced the home at the value it was some years ago - One never knows.
Yes, that is the price. It is over priced for todays market but as we are not at all anxious we have priced the home at the value it was some years ago
What a moron and or a liar. If one is not anxious why overprice a house in todays market
Doug Noland is "hope" mode...the ultimate bear is trying to find some perspective in this mess:
This is the first all-encompassing global dislocation of contemporary finance, impacting virtually all economies, markets and asset classes. The media is now all over the Wall Street and banking crisis. I am of the view, however, that the collapse of the hedge fund industry has moved to the forefront that it is now at the epicenter of global market upheaval. To watch silver lose more than 20% of its value today in intraday trading; to see the collapse in energy prices; to see the entire commodities complex absolutely routed; to view global currency markets in complete disarray, with double-digit intraday drops in the Brazilian real and Mexican peso; to witness major currencies such as the Australian and Canadian dollars suffer precipitous declines; for benchmark Fannie Mae MBS yields to surge 62 bps in three days; to see Brazilian dollar bond yields jump almost 200 bps in four sessions; for global equities indices to suffer rapid double-digit drops throughout both the developed and emerging markets; to witness a 1,000 point intraday swing in the DJIA. All the favorite trades are blowing up, and the leveraged speculating community is in a panic de-leveraging.
I also hold out Hope that the Trillions of reserves held by global central bankers will provide some buffer to stem financial system collapse. In particular, I am Hoping that China, India, Russia, Brazil and the Middle East have today sufficient reserves to somehow avoid a 90s style financial and economic meltdown. I am Hoping that demand from China, India, Asia and Latin America will help offset inevitable economic downturns in the U.S. and Britain and, hopefully to a lesser extent, Europe. I am hoping that the collapse in energy and commodities prices is more a reflection of acute financial market dislocation rather than a harbinger of synchronized global economic upheaval. I am hoping there is more substance to the dollars rally than simply an unwind of bearish dollar bets. And I am hoping that with large capital infusions our deeply impaired banking system will retain the capacity to finance a much less robust but at least functioning U.S. economy. I really Hope everything is not as dire as it appears.
And then some people just bought their home right out without paying interest. Those may have lost "equity" - as you call it - but as Krugman nailed a while back, these people look at their house as a place to live, not an ATM card.
Maybe if people were more pragmatic in their lives and learned to save, well, they wouldn't be in this mess like all the others.
The real story here is VELOCITY of price declines. We are seeing real estate crashes in the prime bubble markets now. This includes the highest end areas which now appear to have the greatest velocity downward. Generally speaking, real estate crashes tend to overshoot more to the downside and faster than the upside. This time is no different, and I suspect worse.
With credit markets frozen, the drop will be astounding.
Westside of Los Angeles is just starting to get pummelled....
I live in Lee County. Very nice neighborhood. On my street there are 10
houses. Peak price was 325,000. At this time of these 10, 7 are for sale at ave
price of 175,000. Not even a whimper from the buyers. 3 of them will soon be REO's. It continues to deteriorate here.
I think that it is important to the owners and whether they will pay their mtges, is how much they are underwater. What I am telling people, is if you are less than 50k underwater and can make your payments, continue to do so, especially if you have a low fixed rate mortgage. You will live to break even. This fades out as you hit 100k underwater. Then it looks pretty hopeless to me, and my advise is to walk, or if it becomes available go for a cram down. I can't see that the 100k underwater people will ever break even. Ever being defined as the next 15 years. Or more.
People who bought in 08 are far less underwater, and far more likely not to have exotic mortgages than those who bought in 07 and 06.
I used to tell people to pay extra on their mortgages, even if was only $50 per month. I don't tell them that any more, since it is likely it is money thrown down a black hole.
Bought my house in 2007. Recent sales show prices down about 27% leaving me underwater. However, as long as I have a job, I can eat the loss and stay put, no desire to move elsewhere.
McCain wants to make me whole with a new mortgage even though I can make my payments, yeah! More bread and circuses. Can't pass it up if it becomes law.
While I feel sorry for most of Sacramento, I can't say the same for the neighbors that are across the alley from me. They're professional flippers and bought a 3br/2ba built in the '30s for close to $600K in '06 and have put a lot of money in it. I suppose they're upside down at least $200K now. I'm still hoping they lose it. They're not nice people and schadenfreude has bitten me. FWIW, they only planned to live in it for 5 years and flip it to move into a house in the foothills. Best laid plans, eh?
I am amazed by the sense of entitlement of fellow citizens have regarding their homes.
Those who bought in 2006, should they not account for the value of living in the house for two years, before determining they are under water?
You bought a house for 300K in 2006. You been living in the house for 2 years. Say you could rent it for $1500/month, that means you used the house for 36K [1500 X 12 X 2 = 36,000] of its value. What you still owe is 300K - 36K = 264K, and not 300K.
It am stunned by the psychology of the people that living in the house should be free.
To determine if they are under water, the outstanding mortgage today should be the reference point, and not what you originally paid for it.
Right now, the fastest declining metro (tracked by Radar Logic) is San Fran at 45% Annual Rate for all the sales that have originated since June 2008 and have completed. L.A. is next with 34% and San Jose at 33%. Yes, all three are still the most expensive of the 25 metros and falling at a faster rate than all others. Coincidence? CA is sinking fast into depression.- Jas
Month over month especially this time of year are more noise than data. Houses didn't lose 45% last year and almost surely won't lose 45% over the next 12 months. Extrapolation is not analysis.
I "purchased" my home in 2006. I actually inherited my Mom's mortgage but had to refinance it into my name when she passed. I took enough cash on the refi to pay off all my other debt. My loan is for 129K, at this point I'm above water by maybe 20K. At the time of the loan they appraised for 210K. I'm one of the lucky ones in this area (Florida panhandle). What's not lucky is I have an ARM getting ready to reset in February and need to refi out of it. It was the only loan I could get as I had a work history with a year blank (taking care of my Mother full time after her stroke). I'm sure I'm not the only one in this boat...
My aunt and uncle raised table grapes in manteca for decades.Beautiful soil.They sold the land ,except for an acre around the farmhouse in 2005 to a developer.Too old to keep farming and big medical bills.They got GOOD $ for the land,but the land is now useless for farming and the neighborhood will be a slum in no time.
"The only reason most people had $250K or more to put down on their homes was from selling their existing homes"
True sometimes. Not always. In my case, it was cold hard cash. Real money, not pretend/paper money, which I could have withdrawn from the bank and held in my hands. Earned and saved. Now gone. Now we're so deeply underwater on our fixed-rate CA mortgage that we can't even see the surface.
Kristina, try going FHA. Start now, it's very slow.
What determines your reset? LIBOR?
1 year t bills? What is your margin?
Can you do a guesstimate as to how much it would reset, using the index as it is today? Just for a guesstimate? It might be that it doesn't go up so much, at least for now. If it's LIBOR, yick.
Calculated Risk writes:
Noble, I've sent that article to Tanta - and I'm hoping she feels up to writing something. The article doesn't seem to make sense.
Tom Stone writes:
My aunt and uncle raised table grapes in manteca for decades.Beautiful soil.They sold the land ,except for an acre around the farmhouse in 2005 to a developer.
The story of Calif Tom, actually the story of the West Coast the last 40 years with massive development of AG property turned into ugly developments of every possible description.
As much as he worried about his neighbors, Cantrell never thought he would become a casualty of the housing crunch. He was a retired Navy man with a solid pension. He had a job in construction management and, with his impressive work ethic, was making $250,000 a year, plus a hefty bonus. His credit rating was in the 700s. So in 2006, he bought a $670,000 house, then spent $100,000 to add a pool and miniature golf course in the back. It seemed sensible enough at the time.
Yeah, a mini golf course in your back yard is always an eminently sensible addition to a humble American home.
Update on the Norwegian story
Norway will issue up to $60 billion in bonds which it will lend to Norwegian banks with mortgages as collateral. Keep in mind that Norway has a population of less than 5 million so the equivalent per capita amount for the US would be $3.6 trillions.
The reason they're doing this now is that Norway is a small market so banks rely heavily on the international market for liquidity.
Interesting post CR, this is pretty much what I have been seeing here in Sonoma with investor picking up the foreclosure bargins. Investors buying property that was selling for 85K in 99 now paying 300K today and thinking they got a bargin because it was orginally sold in 06 for 500K! Not only that they have to put in 50K worth of rehab.
The shell game continues.
DTCC Addresses Misconceptions About the Credit Default Swap Market
New York, October 11, 2008 The idea that the industry lacks a central registry for over-the-counter (OTC) credit default swaps (CDS) is grossly misleading and has resulted in inaccurate speculation on a number of matters, including the overall size of the market, its role in the mortgage crisis, and the size of potential payment obligations under credit default swaps relating to Lehman Brothers. The extent to which such speculation has fueled last weeks market turmoil is difficult to determine. The facts are these:
Noble writes:
Story on bloomberg - Fannie and Freddie told to buy 40B in troubled mortgages. This is outside of TARP. No idea on what prices will be paid.
My thoughts - why not dump financial toxic waste to Americans who now are stakeholders in F&F.
Their objective is to socialize the losses from wanton greed onto middle class Americans.
BOL in the United Socialist State Republic of America banana republic courtesy of George Bush and the bananas.
As someone who has wanted to buy a home for years in a middle class Los Angeles neighborhood I've actually paid a price for everyone else's stupidity. The price being a diminished quality of life stuck in an apartment (I'd rather not be here).
Things have been looking up these days with big declines in the housing market, and a changing psychology about pricing.
So I really have a hard time feeling sorry for all these people underwater.
Liz, I'll try to find that out, my copy got destroyed (long story involving rainwater and cats) The mortgage was a disaster from the beginning, my attorned that was handling the Title, closing and probate managed to lose it twice, delayed funding of it by losing it,and mishandled the payments to creditors so badly one check ended up in his own account with BofA instead of paying off my CC debt with them. The panhandle is not known for it's competency...I do know there was a cap as to how much it could be raised in one reset and I don't recall Libor being involved in the reset.
Hi there DTCC! Where have you been all my crisis and why are you putting forth this data now? hmm, mm, mm:
eported estimates of the size of the credit default swap market have so far been based on surveys. These surveys tend to overstate the size of the market due to each party to a trade separately reporting its own side. Thus, when two parties to a single $10 million dollar trade each report their side of the trade, the amount reported is $20 million, which overstates the actual size by a factor of two since both reports relate to a single $10 million contract. When examining the outstanding amount of actual contracts registered in the Warehouse (not separately reported sides) as of October 9, 2008, credit default swap contracts registered in the Warehouse totaled approximately $34.8 trillion (in US Dollar equivalents). This is down significantly from the approximately $44 trillion that were registered in the Warehouse at the end of April this year
payment calculations so far performed by the DTCC Trade Information Warehouse relating to the Lehman Brothers bankruptcy indicate that the net funds transfers from net sellers of protection to net buyers of protection are expected to be in the $6 billion range (in U.S. dollar equivalents).
"You can buy a 1,600 square foot house for $100,000 in Cape Coral.
I'm seriously considering buying."
Owner Earnings | Homepage | 10.12.08
There are some deals in the Cape if you hunt around. I will say this...the under 100k listings for that area are still rising. I have been loking at land and prices on 1+ acre tracts are kinda stuck here in Charlotte County. I just need to give it more time...
i never thought about using the equity in a house. you bought a house to be a home. altho i think during late 60s early 70s my dad was buying equity and taking over payments? long time ago and not sure but it was still to make a house a home. those were different days tho
OK, let's hear opinions on the housing market change over the next 6 and 18 mths. My opinion is that the next 6 months will see the largest % decline and homes sold, extending to all areas of the country. Despite all the noise of trying to do something about foreclosures, now is when they will accelerate in earnest as it's now in the financial inst. interests to come clean and claim their gov't windfall.
I'm surprised by the chart showing that only 3% of the buyers from 2003 are underwater. I would have expected much more. Maybe they aren't counting HELOCs and other second mortgages.
In the city the prices have not declined much. The metro area has 5 rural counties around SF that are part of Radar Logic's designation of SF Metro, the fastest declining area in the country for the latest 2-3 months of data.
City prices will get hit big-time once the depression is in full swing in 2009 or 2010. The Scam Market (NASTYQ!) will be down more than 75% and that will hit the Bay Area where it hurts the most.
Depression is coming, make no mistake about it, folks. And, as usual, CA (and not CR) will lead the way!
Excellent article by Luigi Zingales on how to deal with the mortgage problem - it gets around the issue of taxpayer handouts and moral hazard. Would be great to get you/ other poster views on this solution
"Comrade Kristina writes:
Liz, I'll try to find that out, my copy got destroyed (long story involving rainwater and cats) The mortgage was a disaster from the beginning, my attorned that was handling the Title, closing and probate managed to lose it twice, delayed funding of it by losing it,and mishandled the payments to creditors so badly one check ended up in his own account with BofA instead of paying off my CC debt with them."
With all due respect Kristina, I find life is only so dramatic for those who make it so.
Your story didn't hold water initially, even less so now.
--
"I'm surprised by the chart showing that only 3% of the buyers from 2003 are underwater. I would have expected much more. Maybe they aren't counting HELOCs and other second mortgages."
invisible hand,
They may be looking at mortgage dates and not necessarily the date of purchase. Just a posibility.
What, with all due respect, I don't really care if you believe my story or not. I lived it. What reason do I have to fabricate it? There is not one business or government facility in this town that is competent, period. Anyone that lives in Florida already knows this.
There is not one business or government facility in this town that is competent, period. Anyone that lives in Florida already knows this.
Comrade Kristina | 10.12.08 - 11:54 am | #
Exactly, if they were compentent, something would actually be YOUR fault.
i think they are building here,i know they are building cre. lots and lots of hotels motels here and eating places we got them all chili's is finishing up. what im afraid of is that the snow birds wont be going to fl for a long time. we're losing jobs 200 this month,99 next month. and in 09 one company is closing and moving to mexico. of course they are auto related so they might close earlier. i afraid that we are just behind the rest of country and when it hits...well i dont know.
What, as a result of the mishandling of my mortgage that particular lawyer fired half his staff. Two seperate checks were "lost" for over a month that were supposed to have been sent to creditors...The thing that put the lawyer over the edge was the "lost" mortgage, his underlings actually gave me my check before it funded. In other words he was out almost 20K of his own money until it did fund. Amazing how quickly it got "found" after that. I had to go back and refill out every form the first time it was lost, the second time they miraculously found it stuck in a pile of other "lost" mortgages. But hey, if it makes you feel better, yeah it was my fault for moving here in the first place, shoulda just let Mom die in a nursing home I suppose...
Hard to say where RE will bottom. My original target was 2002 levels. Mortgage rates are still low, but the deal killer is FICA score and 20% down
required. Most potential buyers come up
short on both counts.
Not only is my neighbor underwater, he keeps on pouring more money into the house! All I can imagine is he's trying to get rid of all his money so his former wife gets nothing in the divorce settlement. Either that, or he just has way too much money. I can't figure it out. But the constant construction and noise from work on the house the last two years is driving me crazy.
i got a question. what happens to insurance claims (like from ike)if the property was behind or in foreclosure. i know the lien holder is protected. so what happens?
Christina, my mail always gets here on time, my job always runs fairly smoothly, people are almost always helpful and polite, my mechanic always fixes the car on the first try...
--
Month over month especially this time of year are more noise than data. Houses didn't lose 45% last year and almost surely won't lose 45% over the next 12 months. Extrapolation is not analysis.
Rob Dawg,
The seasonally worst period had not begun reflected in the data. Also, THE YoY DECLINE for all 25 metros is THE FASTEST RATE EVER. The same applies for SF, SJ, LV, LA, DC, Miami and Phoenix. Actually, these areas listed are leading the over-all US decline.
Things ARE getting worse whether one looks at YoY or the latest 2-3 months.
What? writes:
Christina, my mail always gets here on time, my job always runs fairly smoothly, people are almost always helpful and polite, my mechanic always fixes the car on the first try...
Real estate always goes up. Goog always goes up. We've hit the bottom. It's a great time to buy.
The first half, legislating an equity sharing cramdown for underwater mortgages, would definitely work. I have seen it work in situations closely akin to the one Zingales cites as a model. It works on the homeowner's side very simply. The trouble is on the other side, where the MBS holders are holding the mortgages sliced into tranches.
The second half, on how to sort out the bad MBS paper and line up the holders of the MBS so that the equity sharing cramdown can be imposed exceeds my technical ability to analyze. The principle seems sound, but here the devil is in the details, which are beyond my skill set. I would be interested in reading reactions from the technically proficient on this blog.
What I do know, though, is that Zingales's very reasonable call for Paulson to finally listen to some economists and implement a workable plan pronto - "tomorrow is too late," he says - is unrealistic because it is impossible under the actually existing political disaster known as the Bush Administration.
We need these plans, like Zingales, but the biggest problem right now is the politics.
It is a mistake to reduce politics to the small "p" politics of partisanship, elections, campaigns, lobbying, etc. All that stuff is real and unavoidable, but politics also exists on another level, Politics with a capital "P," the level on which big shifts happen and true leadership is exercised in moments of crisis - think the Declaration of Independence and Constitution, Lincoln during the Civil War, FDR during the depression and war, Eisenhower keeping the US from going to war in Vietnam 1954-56, JFK in the Cuban Missile Crisis.
Zingales's plan might be great. To implement it, or another plan that might be as good or better, will require a major political shift and leadership that we know we do not have now and won't have until January 2009.
Whether we will have that Political leadership in January 2009 is something that we might have different opinions about, and we won't know until it happens . . . but we ought to be thinking about what is needed Politically as much as we think about what need in terms of economic policy.
The latter (economic policy plans) without the former (Political leadership) will get us nowhere.
That's when I bought my house, felt at the time I was overpaying 5-10%. Rationalized it because the neighborhood and schools were right, and the home was clearly a notch above similarly priced homes. Have done some remodeling (no putt putt golf courses or pools however) and figure at this point, if I had to sell, I mightget back in the ballpark of what we paid for it in 2003. So the underwater part is large, certainly six figures. Oops.
However, I didn't plan to buy a home to make money, flip, or keep up with the McJones. I just wanted a nice place for the family. I never wanted to move again. And unlike many in this part of the midwest, I never desired a second/vacation home 3-5 hours away on the lakes.
It would be nice to have a little larger plot of land, because I think victory gardening, home raised livestock, root cellars, storage barns, outdoor bathrooms, bomb shelters, and reinforced perimeters, etc. are about to make a big comeback...,
In a few years, we might be telling our children about how important it was for us to hang a 50 inch plasma teevee on the wall, or watch a Blu Ray Batman movie on the monitor in Mom's Escalade on the way to the cabin on the weekends, or go out to dinner when you felt bored, or didn't want to have to go to the trouble of putting the dishes in the dishwasher. Shame.
Has anyone seen my tinfoil hat? Did Wachovia get this money from the gov?
The National Republican Congressional Committee, trailing its Democratic counterpart considerably in cash on hand, has secured an $8 million loan to spend on House races during the last few weeks of the campaign, according to sources.
The NRCC reported $14.4 million in cash on hand as of Aug. 31, compared to $54 million in the bank for the Democratic Congressional Campaign Committee. As it did last cycle, the NRCC is procuring its loan from Wachovia Bank, sources confirmed.
Politics with a capital "P," the level on which big shifts happen and true leadership is exercised in moments of crisis
The arguement can be made, though not by me, that Bush/Paulson have displayed great leadership. Leadership in pursuit of political idealogies that may or may not conform to your own but leadership just the same.
You can grow a lot on a small plot of land. Look up french cottage gardening, square foot gardening, or think about intensive gardening in "layers" with larger plants over smaller ones. It's pretty easy to squeeze quite a it into a small plot, veggies under fruit trees, etc. Many plants don't need as much sun as you might think, and some do better in shade, even. Saves water, too.
Chickens don't need a lot of room and are great for eggs.
In LA, I was pretty sure we'd go back to 2002 prices, reaching 2003 or so this winter and then drifting down to 2002 levels over a couple more years. That was my projection/guess a couple of weeks ago.
Now? I can't even guess. I believe we're going to crash through 2002 levels over the next 12 months. So much less credit. So much less money for downpayments from the market crash. So much less employment. So much panic and uncertainty.
I have no idea where the bottom will end up on the Case-Shiller chart. 1998? 1996? Probably not lower than 1996 . . . but today I just have no coordinates from which to make a guess.
Remember there are not enough wealthy elite to buy all the poorly constructed homes that lay in wait for flooding, fire and hillside collapse on the "California Riviera".
And if the actors go on strike, goodbye Hollywood...I won't miss it. It would be hilarious if they decided to to go on strike, that is one comedy I would like to watch!
Anonymous writes:
"The arguement can be made, though not by me, that Bush/Paulson have displayed great leadership. Leadership in pursuit of political idealogies that may or may not conform to your own but leadership just the same."
Sorry, I just don't see that. I've toyed with scenarios in which Bush or Bush/Paulson are getting exactly what they wanted. I don't buy it. They would have to be super geniuses, the most clever and crafty politicians who ever lived.
All the evidence points to them being the most incompetent crew to have ever inhabited the White House.
Everything they have touched has been botched. Their party is about to be thrown out of power. This is not Margaret Thatcher starving the beast to destroy it.
If we could get some idea where the bottom will be, I think that would help restore some confidence. The worst thing is sinking without feeling you know where the bottom will be. I wonder if the nerds or geeks with their computers and formulas could not spend some of their time doing reasonable calculations on this topic. Roubini, not a geek, originally thought the market would go down 40%. He has changed that to 50% since we are already at 40%. Some stocks of course like Morgan Stanley and Royal Bank of Scotland are down almost 90%. We need some credible calculations of how much further down we will have to go.
I used to tell people to pay extra on their mortgages, even if was only $50 per month. I don't tell them that any more, since it is likely it is money thrown down a black hole.
Indeed. I was making two additional forward principal payments on my mortgage every month as recently as a few months ago. Not paying anything additional now, in preparation for the possibility of walking-away. Normally I wouldn't much care what my house was worth, since I bought it for the long-run (to raise my family in), but now that I'm being expected to bail-out the banks, I am going to stick them with another foreclosure. I may even plan to go buy it back on the courthouse steps.
We need some credible calculations of how much further down we will have to go.
That would depend on how you define credible. I think house prices are only halfway to their bottom and the DOW has another 20-30% farther to go from where they are now. Any calculations that agree with me I would call them cerdible. Any that don't, I would call hogwash
To Cobra...Always enjoy your thoughts from southern FL. My mother sold her place off Winkler road near Cypress Lake in mid 2005 for over 152K. A nice 1700 sq. ft. 2br/2ba on the 14th green. It has now been sitting with a for sale sign for over 6 months and a listing price of 100k.
In my neighborhood prices would need to drop more than 50% from present levels to be in the 4x income range,median family income to median price home.However the local economy...uurrrkk...is construction,tourism,Agriculture (high end wine and pot mostly,then dairy) and Gov't.And LOTS of exotic loans resetting the next few years.70% of purchasers used "affordability products" in the peak years.Oh yeah Helocs.Da Bottom? somewhere in the '95-'96 range seems likely,not corrected for inflation.
My take on the whole Bush situation is that Cheney/Rove and pals had all of this planned out pretty well, but then they lost control of Congress in 2006, which took away their ability to control the timetable. If they had held the Senate, they probably would have been able to stall the pain until 2009, when the incoming Democrat would get crucified.
to What
you're an incredible douche bag, seriously dude people do run into lots of issues getting things done right. I don't live in florida but have to deal with floridians daily with my job and you would have to look long and hard to find a less educated group of white trash inbreds.
In June of 2007 gave a chat to some "investers" on the current real estate and equity environment. I told them that
I thought that a credit tsunamic lurks on the horizon. And that RE & E were likely to go to pre-credit bubble levels
of 2002. I was laughed out of the room.
At this point it looks like I was wildly optomistic.
Money quotes from the Prudent Bear link offered upthread (crispy&cole | Homepage | 10.12.08 - 11:03 am | # ):
October 9 Bloomberg (Neil Unmack): The $50 trillion credit-default swap market is a walking zombie after investors lost money on contracts linked to Fannie Mae and Freddie Mac bonds even when they were bailed out, according to UniCredit SpA. The U.S. governments seizure of the mortgage companies prompted an auction of their debt so that traders who bought and sold default protection could settle contracts. The price for Fannie senior debt was set at 91.5 cents on the dollar, resulting in a loss of about $25 billion for investors who sold protection, UniCredits Philip Gisdakis said. If you put on the right trade -- that banks will be bailed out -- and you end up making a huge loss when you are right, you will simply stop using these instruments because they are unpredictable. The market, in its current form, is a walking zombie.
October 10 Bloomberg (Shannon D. Harrington and Neil Unmack): Sellers of credit-default protection on bankrupt Lehman Brothers Holdings Inc. will have to pay holders 91.375 cents on the dollar, setting up the biggest-ever payout in the $55 trillion market. An auction to determine the size of the settlement on Lehman credit-default swaps set a value of 8.625 cents on the dollar for the debt Based on the results, sellers of protection may need to make cash payments of more than $270 billion, BNP Paribas SA strategist Andrea Cicione said No one knows exactly how much is at stake because there's no central exchange or system for reporting trades.
lawyerliz:
Likely I am stuck with them, as they'll never sell the house with all the money they need to get out of it. The striking thing to me is their desperate attempts to make the house appealing to those who might be in the market to buy. They've put many thousands in just outdoor work not including any work on the house. New fences, considerable landscaping, putting up a shed that matches the house, etc. My main troubles with them is that they leave all their construction rubble in the alley and they were the primary obstruction to our getting a very large (city owned) tree removed from the alley that hangs over our garage and back yard. It is leaning at a 15 degree angle over our property and is now showing stress cracks in the trunk. The city arborist first said it would be no problem to remove, but these neighbors complained that they wanted the shade the tree provided, so the tree isn't going to be removed. I've already told the city that any damage that results from this tree falling on our property is their responsibility up to and including replacing our garage and car if it falls and destroys both. If it also drags the power lines onto our property (it straddles the utility lines as well), they'll have an even bigger problem on their hands. If there was a way to sue the neighbors I would do so, but I'll do my best to subpoena them to appear in court to explain why they wanted the tree kept (our city is notorious in not settling claims and forcing owners to sue). The tree has already damaged our shed beyond any hope of repair. Luckily, I have much photo evidence of the damage done by the tree and its current state.
BTW, the neighbors are also trying to hide the stress cracks by putting a planting area around the tree and installing some large ferns to obscure the damage.
A couple of years ago on the HBB I predicted that we bottom at 1997 prices, adjusted for inflation. The dollar lost almost 22% of its purchasing power from 1997 to 2007 based on government numbers, or conversely, things cost about 28% more in dollars over that ten year period. Ignoring what happened to the dollar in 2008 (which was probably big), my prediction would be for a bottom at about 28 percent over 1997 prices.
Yeah, Jas, I think Shiller sez 32% off, but I think stuff is actually going for 50% off right now. Maybe it won't be reported for a while. I think that we are actually at or close to a bottom, at 50% off give or take 10%. Vultures active again.
Subject to my normal caveat: not including the towers. Those will be 80-90% off, due to maintenance assessment problems.
Careful Corey before you buy back on the courthouse steps. In Florida, if you buy under the same name, you can get saddled with the debt again. Don't know what the situation is in other states. Form a corporation and buy under the corporate name. Might be a downside taxwise to that. Plz consult a good real estate atty and tax guy before you do this. Are you that much underwater?
Hire an atty who knows about the law of nuisance. The twist here is city property vs private. Trouble is, it is expensive. There are a fair amount of tree cases in Fla, and I presume, elsewhere.
I assume you have put the county on written notice of what might happen with the power lines.
You might want to call the power company, and it is at least possible that the power co owns the land or has an easement. I think if you persist, the power co will do something, because it's their responsibility to take care of the lines.
I know (from talking to family and friends) outrageous behavior on parts of people they and I know in SoCal. These people would never be foreclosed but for huge equity extraction to spend on all kinds of things. Reading in papers, or blogs, is one thing and knowing people who are going thru the same brings it close to home, as they say.
A coworker in my sons office (an accountess) bought a so-so foreclosure home for $350K in SF Valley (not in a nice part) very recently. Of course, she got a deal because it had sold for $600K in 2007. Another accountess bought a $670K condo in 2006. My son, of course, rents close to his office. He is in much better financial shape (after working for ten years) than the partners he works for and who have worked for 20-40 years. Most people have very bad spending habits.
Loved the qualifiers on that link regarding the 'clearinghouse' - all the "major CDS dealers" had the "vast majority" of contracts registered - what kind of half assed strucutre is that, if you are in you get to cherry pick what contracts you register?
That is close to meaningless without mandatory registration of all contracts by CDS dealers in the warehouse, and also the mandatory participation of all CDS dealers...WITH capital adequacy requirements met on a daily basis. Otherwise its an industry PR group.
--
" thought that a credit tsunamic lurks on the horizon. And that RE & E were likely to go to pre-credit bubble levels of 2002. I was laughed out of the room. At this point it looks like I was wildly optomistic."
Dummy,
I would have laughed out of the room for the reason you mention at the end.
Think of 1995-198 prices as the best case scenario.
Most of Debt-Free America's clients are people who earn up to about $60,000 a year, and that hasn't changed with the current crisis, Symington said, although the company is seeing an increase in the number of seniors and young adults.
Almost all of them come in with the same tale.
People bought into the idea that their homes would always be their saving grace, that the value would keep going up, Symington said. It made them super-confident in their spending, and then the spending got out of hand. And now the market has backed off, and there's nowhere for them to turn.
.
Going to a cash budget is really where people should be heading now, Symington said. The only thing most of us can really take control over is our personal spending. You have to cut out the fluff. I wish I had the golden key that could unlock everybody's troubles, but there isn't one.
BWAHAHAHA Twenty-dumbthings going to a cash budget!! BWAHAHAHA
BR-- thanks for Zingales'link--will re-read it more carefully. Tho must say most "housing rescue" plans focus solely on re-working bad mortgages.
None seem to address the "other" elephant in the room-- how to incentivize people like me-- wannabe homebuyers-- to get us to risk buying a home-- now, in a probably declining market.
It's just unfair that newbie homebuyers wind up as the final bagholders, in this fiasco. Where's our "backstop", like Wall St's getting? Some incentive to help protect us from assuming the entire risk-- alone-- of buying a declining "asset"?
Even if the stop-foreclosure programs work, there's still a glut of inventory already on the MLS, plus the shadow. The sooner those homes are bought up, by people who can afford to pay an affordable mortgage, the better for all of us.
Affordable housing agencies have a (sortakinda) existing model of a buyer-incentive program-- they offer "soft" second mortgages for up to 20% of SP, forgiveable annually over a period of 10 years.
I've floated this idea here before & had no specific replies, so will ask again--if the objective is to quickly get houses sold & off the inventory, then why can't we do a kind of buyer-incentive program, e.g., "and if you buy a house now, & it does decline 20% in value within say 2 years, then we'll forgive that 20%, incrementally, over 5 or 10 years."
Call it a "backstop-the-buyer" trickle-UP incentive-- Is this idea even vaguely workable, or not? Thoughts, anyone?-- thank you.
lawyerliz writes:
Careful Corey before you buy back on the courthouse steps. In Florida, if you buy under the same name, you can get saddled with the debt again ... Are you that much underwater?
Did not know that, Liz. Thanks for the tip. I am certainly underwater, although it's difficult to know by exactly how much. Bought the house for $382K in May 2007. Current loan balance is $355K. The house would probably sell for around $310-320K today, but I'm not sure because there are so few transactions. Some homes in my neighborhood have been for sale for as long as I've lived here.
It's doubtful that I could actually re-purchase it on the courthouse steps since the bank would take title instead. This is merely wistful thinking on my part. In reality, I would probably be better off just not paying my mortgage, fighting foreclosure, living rent-free for as long as possible, and then walking away. I am not really "that kind of person" but I don't much like the idea of being the only one left holding the bag after the banks get their bailouts and irresponsible homeowner/borrowers get their cramdowns. Call it a "bailout by personal initiative".
If the Government and banks wanted to reward responsible homeowners rather than irresponsible ones, they could offer discounted mortgage principal buy-downs. For example, as a homeowner you could pay cash to buy-down your principal at, say, 75 cents on the dollar. $7500 buys $10K in mortgage principal on an existing loan. This would encourage people to buy down their mortgages: money would flow into the banks [recapitalization] and get some people above water [home equity]. Probably would not hurt the MBS market either.
But of course they'll never do that. They know that responsible people will continue to pay their mortgages anyway, for the most part. So there's no incentive to help them. Which is why eventually people like me will just get fed up and look for ways to stick it to them.
Everything they have touched has been botched. Their party is about to be thrown out of power
...
I thought the republicans WERE thrown out of power in 2006, before everything went to hell in a handbasket. By looking at CR's chart, the Dems didn't seem to want to stop the bubble from stretching even thinner.
Corey-- yours is exactly the type of practical, and do-able, trickle-UP ideas I'm on about.
A variation on your idea-- let's say you want to sell your underwater house. Well, now that we taxpayers are gonna have some "ownership"/power over the lenders, why can't we make them eat half of the diff between the balance of the note & current FMV, & then have some other entity, like HUD or FHA, offer forgiveable soft seconds on the remaining half, to incentivize a buyer to jump in & buy it?
lawyerliz couldnt bank,mortage holder write down/off a property that was destoryed as in hurricane ike. houstin had 5k in foreclosure galvaston had over 300. so couldnt they take if off their books? if they did how would it affect the borrower. and i hate to say this.how would we know if they did. not only off their books but off their taxes too.
"freddie suspends foreclosure for ike victims." so at the end of 90 days they are behind 4 months! great! if their lien holder get their insurance money,they cant do repairs what a mess!!
I wish I had your neighbors. I paid 100% cash for my property only to have some redneck idiot build a stucco S***house on the hill next door. Just because he was a carpenter he thought he was an architect - Not! The front of the house is in the back; the only thing you can see from the street and my property is a big ass garage door and his pick-up truck (because who uses their garages to park their cars?); and after five years its still not finished! He refuses to do any landscaping and cries poverty as an excuse for being just too lazy to finish anything. We've planted over fifty trees in last five years, and pray to tree gods every morning to please grow!
I know its hard but look on the bright side. At least they are adding value and not acting like leeches on the community. And someone who buys, improves and holds for five years is not a "flipper" - at least where I come from.
But I feel your pain. Hard to be happy when the jerks live next door.
Lender is a coinsured. Check gets make out to the both of you. After Andrew, bank held money and gave it out as repairs were completed. Foreclosures weren't a problem then.
Ike people need to call their lender. They also need to know if the insurance companies are actually paying claims, which was not such a problem when Andrew hit.
There is a statute right now, which needs rules which permits write downs, but it's not compulsory. The statute has no rules and regs right now so I don't know if any lenders will cooperate.
Don't have time to read the rest of thread at the moment.
Corey--you aren't that much underwater, but my standards. Why not make your payments for a year or so and see what develops to help? Get the wife & mistress to help out!!
Regarding a 650K listing of a house possibly worth less than 175K, Yal wrote:
Now this house is listed in (drum roll)... $650K. I asked the owner is this a misatke and here is her answer:
Yes, that is the price. It is over priced for todays market but as we are not at all anxious we have priced the home at the value it was some years ago - One never knows.
The real loon must be the agent who agreed to take the listing. Dreaming doesn't cost the owner anything, assuming the owner doesn't really plan to sell. And assuming nobody questions those mushroom varieties too closely.
I'd like to see the same plot for Northern California. I bet that it peaks in 2005 and not 2006. That's just a plot of people who "bought". What about people who refinanced?
Sucks to be someone who put 250k down, and now stands to lose all of it. People would be stupid to put any cash down on a house now. Let it level out for a year.
Dang, and I can only hold my breath for like 30 seconds.
first!
darn ...
last..for now
I think everyone should take a look at this positing at the Prudent bear Chatroom:
Those of you who are thinking that it will all be fine in the near future may want to take off the uber-bear costume and read this sober tale.
404 Not Found
Some more bad news for California golf course communities:
Bakersfield Bubble
MW writes:
I think everyone should take a look at this positing at the Prudent bear Chatroom:
Those of you who are thinking that it will all be fine in the near future may want to take off the uber-bull (sorry for the mix-up)
costume and read this sober tale.
404 Not Found snsa=A#M744199
MW | 10.12.08 - 10:36 am | #
Here is the link again if there is a problem:
404 Not Found
Story on bloomberg - Fannie and Freddie told to buy 40B in troubled mortgages. This is outside of TARP. No idea on what prices will be paid.
WOW! Any thoughts on this CR?
I think after the third time, we get it.
Sometimes you need to wait a while before you go spamming.
It doesn't make it so obvious.
This is what I tell anyone thinking about buying a house. In southern califonia, d.r. horton and another company are promoting 'home sales weeks' this month.
"Money Talks" it says "Goodbye"
So, if the builder can afford to let the houses go for 40% off, what kind of profit margins were they making?
--
I must have been on my optimistic streak when I forecasted 25M under water about a year ago. Once an area has price decline of more than 20% from the peak the foreclosures seem to bring it to 40% down, from the peak, over the next 12 months or so. Sacramento area is a good example.
Right now, the fastest declining metro (tracked by Radar Logic) is San Fran at 45% Annual Rate for all the sales that have originated since June 2008 and have completed. L.A. is next with 34% and San Jose at 33%. Yes, all three are still the most expensive of the 25 metros and falling at a faster rate than all others. Coincidence? CA is sinking fast into depression.
Jas
More Stockton pai
Here's the bloomberg link
Fannie, Freddie to Buy $40 Billion a Month of Troubled Assets - Bloomberg.com
Pablo:
No spam here, just making sure the link was a good one.
YouTube
- Broadcast Yourself.
Noble writes:
"Story on bloomberg - Fannie and Freddie told to buy 40B in troubled mortgages. This is outside of TARP. No idea on what prices will be paid."
This is what's scary, it smacks of desperation and a lack of explanatory detail, as does the GM annoucement.
I'm getting that unseen unmoved mover feeling. Kind of like when you see emergency vehicles appearing everywhere and yet there's no announcements on the official stations. Frightening.
I feel sorry for Stockton. I lived & worked there in the late nineties. The independent bookstore there had a rough time of it, and finally closed.
Two anecdotes from yesterday:
- A friend who teaches a beginning pottery class that always fills up is getting word that there is only one signup, and that the class likely won't happen.
- I was at Barnes and Noble buying Green Collar Jobs, by Van Jones,
Building a green economy strong enough to lift people out of poverty — Green For All
and the clerk, a woman in her fifties who cheerfully volunteered that she "used to have a real job!", told me that they weren't hiring for the Christmas season, that they would just make do with who they had.
And a blog that I've never heard reference of, but which seems good:
The Automatic Earth
I recently saw a house that was listed for $450K . This is in an area in which a real estate ganet wrote to me:
I recently did a broker price opinion on a bank owned home. The loan balance was close to $500,000.00. My price opinion was that is was worth $175,000.00. I understand the appraiser didnt think it was worth that much.
Now this house is listed in (drum roll)... $650K. I asked the owner is this a misatke and here is her answer:
Yes, that is the price. It is over priced for todays market but as we are not at all anxious we have priced the home at the value it was some years ago - One never knows.
I'd like to see that negative equity chart extrapolated over the last 20-50 years and the same for negative equity in auto loans
If people over pay for homes they should expect to be under water
Yes, that is the price. It is over priced for todays market but as we are not at all anxious we have priced the home at the value it was some years ago
What a moron and or a liar. If one is not anxious why overprice a house in todays market
California is also facing a Screen Actors Guild strike that may be as bad or worse than the Writer's strike.
The vote is in about a month, about residuals and internet again.
Don't forget Boeing machinists are still on strike affecting many subcontractors, and it is a fundamental difference over outsourcing of work.
If one doesn't have cash to burn, don't buy a house is my advice. Otherwise, go for it!
Gold got taken out this week, how low can it go ?
Doug Noland is "hope" mode...the ultimate bear is trying to find some perspective in this mess:
This is the first all-encompassing global dislocation of contemporary finance, impacting virtually all economies, markets and asset classes. The media is now all over the Wall Street and banking crisis. I am of the view, however, that the collapse of the hedge fund industry has moved to the forefront that it is now at the epicenter of global market upheaval. To watch silver lose more than 20% of its value today in intraday trading; to see the collapse in energy prices; to see the entire commodities complex absolutely routed; to view global currency markets in complete disarray, with double-digit intraday drops in the Brazilian real and Mexican peso; to witness major currencies such as the Australian and Canadian dollars suffer precipitous declines; for benchmark Fannie Mae MBS yields to surge 62 bps in three days; to see Brazilian dollar bond yields jump almost 200 bps in four sessions; for global equities indices to suffer rapid double-digit drops throughout both the developed and emerging markets; to witness a 1,000 point intraday swing in the DJIA. All the favorite trades are blowing up, and the leveraged speculating community is in a panic de-leveraging.
I also hold out Hope that the Trillions of reserves held by global central bankers will provide some buffer to stem financial system collapse. In particular, I am Hoping that China, India, Russia, Brazil and the Middle East have today sufficient reserves to somehow avoid a 90s style financial and economic meltdown. I am Hoping that demand from China, India, Asia and Latin America will help offset inevitable economic downturns in the U.S. and Britain and, hopefully to a lesser extent, Europe. I am hoping that the collapse in energy and commodities prices is more a reflection of acute financial market dislocation rather than a harbinger of synchronized global economic upheaval. I am hoping there is more substance to the dollars rally than simply an unwind of bearish dollar bets. And I am hoping that with large capital infusions our deeply impaired banking system will retain the capacity to finance a much less robust but at least functioning U.S. economy. I really Hope everything is not as dire as it appears.
PrudentBear
Noland:
"I really Hope everything is not as dire as it appears."
And what if it is?
"Even the buyers who paid $391,000 last October have clearly lost money and with a 10% downypayment are close to being underwater."
Catching falling knives is a dangerous sport.
CR- downypayment ?
all those media pundits cooing about a bottom need to have their noses pushed into this chart.
And then some people just bought their home right out without paying interest. Those may have lost "equity" - as you call it - but as Krugman nailed a while back, these people look at their house as a place to live, not an ATM card.
Maybe if people were more pragmatic in their lives and learned to save, well, they wouldn't be in this mess like all the others.
The real story here is VELOCITY of price declines. We are seeing real estate crashes in the prime bubble markets now. This includes the highest end areas which now appear to have the greatest velocity downward. Generally speaking, real estate crashes tend to overshoot more to the downside and faster than the upside. This time is no different, and I suspect worse.
With credit markets frozen, the drop will be astounding.
Westside of Los Angeles is just starting to get pummelled....
http//www.westsidermeltdown.blogspot.com
I live in Lee County. Very nice neighborhood. On my street there are 10
houses. Peak price was 325,000. At this time of these 10, 7 are for sale at ave
price of 175,000. Not even a whimper from the buyers. 3 of them will soon be REO's. It continues to deteriorate here.
jas-
i lived in the bay area for 20 years (no longer do), so your comment caught my attention.
fired up realtor.com and did a quick search in san francisco - looks to me like prices have to come down at least another 50% from where they are now.
scary ass 900 sf row houses in the mission are still $500k+...should be more like $50k, you cant even go out after dark in the neighborhoods.
Don't forget to streach and get the most house for your money
I think that it is important to the owners and whether they will pay their mtges, is how much they are underwater. What I am telling people, is if you are less than 50k underwater and can make your payments, continue to do so, especially if you have a low fixed rate mortgage. You will live to break even. This fades out as you hit 100k underwater. Then it looks pretty hopeless to me, and my advise is to walk, or if it becomes available go for a cram down. I can't see that the 100k underwater people will ever break even. Ever being defined as the next 15 years. Or more.
People who bought in 08 are far less underwater, and far more likely not to have exotic mortgages than those who bought in 07 and 06.
I used to tell people to pay extra on their mortgages, even if was only $50 per month. I don't tell them that any more, since it is likely it is money thrown down a black hole.
Hysteresis will tear the shorts to pieces.
As for housing, the thermostat is OFF.
Wow, a pretty good Econ for Dummies explanation of what is going on now, from an article a year ago:
Are we headed for an epic bear market? - MSN Money
Bought my house in 2007. Recent sales show prices down about 27% leaving me underwater. However, as long as I have a job, I can eat the loss and stay put, no desire to move elsewhere.
McCain wants to make me whole with a new mortgage even though I can make my payments, yeah! More bread and circuses. Can't pass it up if it becomes law.
While I feel sorry for most of Sacramento, I can't say the same for the neighbors that are across the alley from me. They're professional flippers and bought a 3br/2ba built in the '30s for close to $600K in '06 and have put a lot of money in it. I suppose they're upside down at least $200K now. I'm still hoping they lose it. They're not nice people and schadenfreude has bitten me. FWIW, they only planned to live in it for 5 years and flip it to move into a house in the foothills. Best laid plans, eh?
I am amazed by the sense of entitlement of fellow citizens have regarding their homes.
Those who bought in 2006, should they not account for the value of living in the house for two years, before determining they are under water?
You bought a house for 300K in 2006. You been living in the house for 2 years. Say you could rent it for $1500/month, that means you used the house for 36K [1500 X 12 X 2 = 36,000] of its value. What you still owe is 300K - 36K = 264K, and not 300K.
It am stunned by the psychology of the people that living in the house should be free.
To determine if they are under water, the outstanding mortgage today should be the reference point, and not what you originally paid for it.
God help us!!
I think you are stuck with those nasty neighbors for a loooonnnng time. Too bad.
Right now, the fastest declining metro (tracked by Radar Logic) is San Fran at 45% Annual Rate for all the sales that have originated since June 2008 and have completed. L.A. is next with 34% and San Jose at 33%. Yes, all three are still the most expensive of the 25 metros and falling at a faster rate than all others. Coincidence? CA is sinking fast into depression.- Jas
Month over month especially this time of year are more noise than data. Houses didn't lose 45% last year and almost surely won't lose 45% over the next 12 months. Extrapolation is not analysis.
I "purchased" my home in 2006. I actually inherited my Mom's mortgage but had to refinance it into my name when she passed. I took enough cash on the refi to pay off all my other debt. My loan is for 129K, at this point I'm above water by maybe 20K. At the time of the loan they appraised for 210K. I'm one of the lucky ones in this area (Florida panhandle). What's not lucky is I have an ARM getting ready to reset in February and need to refi out of it. It was the only loan I could get as I had a work history with a year blank (taking care of my Mother full time after her stroke). I'm sure I'm not the only one in this boat...
This morning's thread music comes from my previous life, before the internet, as 'The Edge' on the BBS scene.
YouTube - U2 - Sunday Bloody Sunday: Live Red Rocks
It seems fitting.
The only reason most people had $250K or more to put down on their homes was from selling their existing homes.
Framing this as they "lost" 250K is ridiculous, when 200K of that amount was from bubble appreciation.
Norwegian gov't just announced that they would offer banks up to $60 billion in loans because of the credit crisis.
My aunt and uncle raised table grapes in manteca for decades.Beautiful soil.They sold the land ,except for an acre around the farmhouse in 2005 to a developer.Too old to keep farming and big medical bills.They got GOOD $ for the land,but the land is now useless for farming and the neighborhood will be a slum in no time.
Paulson moves the DOW 1000 points. No solid plan before open, down 500, solid plan up 500
And what if it is?
Long united must divide.
Long divided must unite.
Thus has it ever been.
Noble, I've sent that article to Tanta - and I'm hoping she feels up to writing something. The article doesn't seem to make sense.
Best Wishes.
A house is a place to live in. It is not an ATM. It should not (primarily) be an investment.
If you don't want to live there for 20+ years, don't fucking buy it. Because you just might HAVE to live there for 20 years.
"The only reason most people had $250K or more to put down on their homes was from selling their existing homes"
True sometimes. Not always. In my case, it was cold hard cash. Real money, not pretend/paper money, which I could have withdrawn from the bank and held in my hands. Earned and saved. Now gone. Now we're so deeply underwater on our fixed-rate CA mortgage that we can't even see the surface.
Kristina, try going FHA. Start now, it's very slow.
What determines your reset? LIBOR?
1 year t bills? What is your margin?
Can you do a guesstimate as to how much it would reset, using the index as it is today? Just for a guesstimate? It might be that it doesn't go up so much, at least for now. If it's LIBOR, yick.
Calculated Risk writes:
Noble, I've sent that article to Tanta - and I'm hoping she feels up to writing something. The article doesn't seem to make sense.
My weak analysis:
Exurban Nation: Step 13a sub-para 11 of the NWO
CR is right, the article is a mishmash and muddled. Let's hope Tanta is feeling better and can add some clarity.
Tom Stone writes:
My aunt and uncle raised table grapes in manteca for decades.Beautiful soil.They sold the land ,except for an acre around the farmhouse in 2005 to a developer.
The story of Calif Tom, actually the story of the West Coast the last 40 years with massive development of AG property turned into ugly developments of every possible description.
That story about Manteca has me laughing...
As much as he worried about his neighbors, Cantrell never thought he would become a casualty of the housing crunch. He was a retired Navy man with a solid pension. He had a job in construction management and, with his impressive work ethic, was making $250,000 a year, plus a hefty bonus. His credit rating was in the 700s. So in 2006, he bought a $670,000 house, then spent $100,000 to add a pool and miniature golf course in the back. It seemed sensible enough at the time.
Yeah, a mini golf course in your back yard is always an eminently sensible addition to a humble American home.
ROFLMAO. "A fool and his money are soon parted."
You can buy a 1,600 square foot house for $100,000 in Cape Coral.
I'm seriously considering buying.
Underwater... in a class 4 rapids.
Good luck with that.
Update on the Norwegian story
Norway will issue up to $60 billion in bonds which it will lend to Norwegian banks with mortgages as collateral. Keep in mind that Norway has a population of less than 5 million so the equivalent per capita amount for the US would be $3.6 trillions.
The reason they're doing this now is that Norway is a small market so banks rely heavily on the international market for liquidity.
Interesting post CR, this is pretty much what I have been seeing here in Sonoma with investor picking up the foreclosure bargins. Investors buying property that was selling for 85K in 99 now paying 300K today and thinking they got a bargin because it was orginally sold in 06 for 500K! Not only that they have to put in 50K worth of rehab.
The shell game continues.
To rescue underwater home owners shouldn't we be talking about the distribution of scuba gear?
Sounds like a job for FEMA.
Next bright idea out of Washington is likely to be minimum pricing on home sales.
I am trying to be sarcastic, but events are deflating the value of sarcasm these days. It is in desperate need of a bailout.
The only buyer I know is snatching up all he can find in the poorer neighborhoods for Section 8 rentals.
Owner, I wouldn't be in a big hurry.
OT CDS
DTCC Addresses Misconceptions About the Credit Default Swap Market
New York, October 11, 2008 The idea that the industry lacks a central registry for over-the-counter (OTC) credit default swaps (CDS) is grossly misleading and has resulted in inaccurate speculation on a number of matters, including the overall size of the market, its role in the mortgage crisis, and the size of potential payment obligations under credit default swaps relating to Lehman Brothers. The extent to which such speculation has fueled last weeks market turmoil is difficult to determine. The facts are these:
DTCC › DTCC Addresses Misconceptions About the Credit Default Swap Market
Noble writes:
Story on bloomberg - Fannie and Freddie told to buy 40B in troubled mortgages. This is outside of TARP. No idea on what prices will be paid.
My thoughts - why not dump financial toxic waste to Americans who now are stakeholders in F&F.
Their objective is to socialize the losses from wanton greed onto middle class Americans.
BOL in the United Socialist State Republic of America banana republic courtesy of George Bush and the bananas.
As someone who has wanted to buy a home for years in a middle class Los Angeles neighborhood I've actually paid a price for everyone else's stupidity. The price being a diminished quality of life stuck in an apartment (I'd rather not be here).
Things have been looking up these days with big declines in the housing market, and a changing psychology about pricing.
So I really have a hard time feeling sorry for all these people underwater.
Liz, I'll try to find that out, my copy got destroyed (long story involving rainwater and cats) The mortgage was a disaster from the beginning, my attorned that was handling the Title, closing and probate managed to lose it twice, delayed funding of it by losing it,and mishandled the payments to creditors so badly one check ended up in his own account with BofA instead of paying off my CC debt with them. The panhandle is not known for it's competency...I do know there was a cap as to how much it could be raised in one reset and I don't recall Libor being involved in the reset.
Hi there DTCC! Where have you been all my crisis and why are you putting forth this data now? hmm, mm, mm:
eported estimates of the size of the credit default swap market have so far been based on surveys. These surveys tend to overstate the size of the market due to each party to a trade separately reporting its own side. Thus, when two parties to a single $10 million dollar trade each report their side of the trade, the amount reported is $20 million, which overstates the actual size by a factor of two since both reports relate to a single $10 million contract. When examining the outstanding amount of actual contracts registered in the Warehouse (not separately reported sides) as of October 9, 2008, credit default swap contracts registered in the Warehouse totaled approximately $34.8 trillion (in US Dollar equivalents). This is down significantly from the approximately $44 trillion that were registered in the Warehouse at the end of April this year
payment calculations so far performed by the DTCC Trade Information Warehouse relating to the Lehman Brothers bankruptcy indicate that the net funds transfers from net sellers of protection to net buyers of protection are expected to be in the $6 billion range (in U.S. dollar equivalents).
"You can buy a 1,600 square foot house for $100,000 in Cape Coral.
I'm seriously considering buying."
Owner Earnings | Homepage | 10.12.08
There are some deals in the Cape if you hunt around. I will say this...the under 100k listings for that area are still rising. I have been loking at land and prices on 1+ acre tracts are kinda stuck here in Charlotte County. I just need to give it more time...
Chris
i never thought about using the equity in a house. you bought a house to be a home. altho i think during late 60s early 70s my dad was buying equity and taking over payments? long time ago and not sure but it was still to make a house a home. those were different days tho
OK, let's hear opinions on the housing market change over the next 6 and 18 mths. My opinion is that the next 6 months will see the largest % decline and homes sold, extending to all areas of the country. Despite all the noise of trying to do something about foreclosures, now is when they will accelerate in earnest as it's now in the financial inst. interests to come clean and claim their gov't windfall.
"however hard, we need full nationalization of the banking system in the UK and all over Europe."
Pls tell me if the above statement from a central banker(EU) friend of mine is a joke or reality ?
I'm surprised by the chart showing that only 3% of the buyers from 2003 are underwater. I would have expected much more. Maybe they aren't counting HELOCs and other second mortgages.
--
nullpointer,
In the city the prices have not declined much. The metro area has 5 rural counties around SF that are part of Radar Logic's designation of SF Metro, the fastest declining area in the country for the latest 2-3 months of data.
City prices will get hit big-time once the depression is in full swing in 2009 or 2010. The Scam Market (NASTYQ!) will be down more than 75% and that will hit the Bay Area where it hurts the most.
Depression is coming, make no mistake about it, folks. And, as usual, CA (and not CR) will lead the way!
Jas
CR,
Excellent article by Luigi Zingales on how to deal with the mortgage problem - it gets around the issue of taxpayer handouts and moral hazard. Would be great to get you/ other poster views on this solution
RGE - Finance & Markets Monitor
I'm surprised by the chart showing that only 3% of the buyers from 2003 are underwater.
They will be soon enough.
"Comrade Kristina writes:
Liz, I'll try to find that out, my copy got destroyed (long story involving rainwater and cats) The mortgage was a disaster from the beginning, my attorned that was handling the Title, closing and probate managed to lose it twice, delayed funding of it by losing it,and mishandled the payments to creditors so badly one check ended up in his own account with BofA instead of paying off my CC debt with them."
With all due respect Kristina, I find life is only so dramatic for those who make it so.
Your story didn't hold water initially, even less so now.
--
"I'm surprised by the chart showing that only 3% of the buyers from 2003 are underwater. I would have expected much more. Maybe they aren't counting HELOCs and other second mortgages."
invisible hand,
They may be looking at mortgage dates and not necessarily the date of purchase. Just a posibility.
Jas
What, with all due respect, I don't really care if you believe my story or not. I lived it. What reason do I have to fabricate it? There is not one business or government facility in this town that is competent, period. Anyone that lives in Florida already knows this.
Am I the only one that finds the lack of a coherent message from the G7 disconcerting? What's the plan, Hannibal?
Hi again DTCC - maybe people don't understand because you have kept derivatives markets "notoriously opaque":
OTC dealers and traders resist calls for increased regulation
There is not one business or government facility in this town that is competent, period. Anyone that lives in Florida already knows this.
Comrade Kristina | 10.12.08 - 11:54 am | #
Exactly, if they were compentent, something would actually be YOUR fault.
i think they are building here,i know they are building cre. lots and lots of hotels motels here and eating places we got them all chili's is finishing up. what im afraid of is that the snow birds wont be going to fl for a long time. we're losing jobs 200 this month,99 next month. and in 09 one company is closing and moving to mexico. of course they are auto related so they might close earlier. i afraid that we are just behind the rest of country and when it hits...well i dont know.
Ahhh, the joy of catching a falling glowing hot ember.
They saw this all coming and now they want to blame poor people and ACORN for bringing down the entire world economy? Please!
FDIC was asleep at the wheel at best, or was totally complicit in defrauding and ripping off our country:
Liars, and the Lying Lies They Are Telling You « Your Mortgage or Your Life…
They lie like rugs!
What, as a result of the mishandling of my mortgage that particular lawyer fired half his staff. Two seperate checks were "lost" for over a month that were supposed to have been sent to creditors...The thing that put the lawyer over the edge was the "lost" mortgage, his underlings actually gave me my check before it funded. In other words he was out almost 20K of his own money until it did fund. Amazing how quickly it got "found" after that. I had to go back and refill out every form the first time it was lost, the second time they miraculously found it stuck in a pile of other "lost" mortgages. But hey, if it makes you feel better, yeah it was my fault for moving here in the first place, shoulda just let Mom die in a nursing home I suppose...
When Captain America throws his mighty shield. Those who chose to oppose his shield must yield.
"You can buy a 1,600 square foot house for $100,000 in Cape Coral.
I'm seriously considering buying."
Owner Earnings | Homepage | 10.12.08
Check out this listing for 70K, 1400 sqft in Lehigh Acres.
Bird's Eye View of 2535 Sunniland Blvd, Lehigh Acres, FL 33971 - Zillow
Hard to say where RE will bottom. My original target was 2002 levels. Mortgage rates are still low, but the deal killer is FICA score and 20% down
required. Most potential buyers come up
short on both counts.
Pls tell me if the above statement from a central banker(EU) friend of mine is a joke or reality ?
Thakshin | 10.12.08 - 11:50 am | #
Does he joke around like that a lot? I bet not. So what do you think?
MW writes:
Noland:
"I really Hope everything is not as dire as it appears."
And what if it is?
Someone could post a Don Meredith video singing 'Turn Out the Lights, the Party's Over'. I con't find one.
Not only is my neighbor underwater, he keeps on pouring more money into the house! All I can imagine is he's trying to get rid of all his money so his former wife gets nothing in the divorce settlement. Either that, or he just has way too much money. I can't figure it out. But the constant construction and noise from work on the house the last two years is driving me crazy.
He doesnt joke around a lot.
If thats true why the F are we discussing falling house prices etc ? The problem is 10000X more severe ?
i got a question. what happens to insurance claims (like from ike)if the property was behind or in foreclosure. i know the lien holder is protected. so what happens?
Christina, my mail always gets here on time, my job always runs fairly smoothly, people are almost always helpful and polite, my mechanic always fixes the car on the first try...
Just saying...
--
Month over month especially this time of year are more noise than data. Houses didn't lose 45% last year and almost surely won't lose 45% over the next 12 months. Extrapolation is not analysis.
Rob Dawg,
The seasonally worst period had not begun reflected in the data. Also, THE YoY DECLINE for all 25 metros is THE FASTEST RATE EVER. The same applies for SF, SJ, LV, LA, DC, Miami and Phoenix. Actually, these areas listed are leading the over-all US decline.
Things ARE getting worse whether one looks at YoY or the latest 2-3 months.
Jas
Hard to say where RE will bottom.
Very hard. Consumer de-leveraging will come fast. Many say the DOW is 6-12 months ahead of the economy
What? writes:
Christina, my mail always gets here on time, my job always runs fairly smoothly, people are almost always helpful and polite, my mechanic always fixes the car on the first try...
Real estate always goes up. Goog always goes up. We've hit the bottom. It's a great time to buy.
bp
Zingales plan is interesting.
The first half, legislating an equity sharing cramdown for underwater mortgages, would definitely work. I have seen it work in situations closely akin to the one Zingales cites as a model. It works on the homeowner's side very simply. The trouble is on the other side, where the MBS holders are holding the mortgages sliced into tranches.
The second half, on how to sort out the bad MBS paper and line up the holders of the MBS so that the equity sharing cramdown can be imposed exceeds my technical ability to analyze. The principle seems sound, but here the devil is in the details, which are beyond my skill set. I would be interested in reading reactions from the technically proficient on this blog.
What I do know, though, is that Zingales's very reasonable call for Paulson to finally listen to some economists and implement a workable plan pronto - "tomorrow is too late," he says - is unrealistic because it is impossible under the actually existing political disaster known as the Bush Administration.
We need these plans, like Zingales, but the biggest problem right now is the politics.
It is a mistake to reduce politics to the small "p" politics of partisanship, elections, campaigns, lobbying, etc. All that stuff is real and unavoidable, but politics also exists on another level, Politics with a capital "P," the level on which big shifts happen and true leadership is exercised in moments of crisis - think the Declaration of Independence and Constitution, Lincoln during the Civil War, FDR during the depression and war, Eisenhower keeping the US from going to war in Vietnam 1954-56, JFK in the Cuban Missile Crisis.
Zingales's plan might be great. To implement it, or another plan that might be as good or better, will require a major political shift and leadership that we know we do not have now and won't have until January 2009.
Whether we will have that Political leadership in January 2009 is something that we might have different opinions about, and we won't know until it happens . . . but we ought to be thinking about what is needed Politically as much as we think about what need in terms of economic policy.
The latter (economic policy plans) without the former (Political leadership) will get us nowhere.
I'll hold up my hand for 2003.
That's when I bought my house, felt at the time I was overpaying 5-10%. Rationalized it because the neighborhood and schools were right, and the home was clearly a notch above similarly priced homes. Have done some remodeling (no putt putt golf courses or pools however) and figure at this point, if I had to sell, I mightget back in the ballpark of what we paid for it in 2003. So the underwater part is large, certainly six figures. Oops.
However, I didn't plan to buy a home to make money, flip, or keep up with the McJones. I just wanted a nice place for the family. I never wanted to move again. And unlike many in this part of the midwest, I never desired a second/vacation home 3-5 hours away on the lakes.
It would be nice to have a little larger plot of land, because I think victory gardening, home raised livestock, root cellars, storage barns, outdoor bathrooms, bomb shelters, and reinforced perimeters, etc. are about to make a big comeback...,
In a few years, we might be telling our children about how important it was for us to hang a 50 inch plasma teevee on the wall, or watch a Blu Ray Batman movie on the monitor in Mom's Escalade on the way to the cabin on the weekends, or go out to dinner when you felt bored, or didn't want to have to go to the trouble of putting the dishes in the dishwasher. Shame.
Has anyone seen my tinfoil hat? Did Wachovia get this money from the gov?
The National Republican Congressional Committee, trailing its Democratic counterpart considerably in cash on hand, has secured an $8 million loan to spend on House races during the last few weeks of the campaign, according to sources.
The NRCC reported $14.4 million in cash on hand as of Aug. 31, compared to $54 million in the bank for the Democratic Congressional Campaign Committee. As it did last cycle, the NRCC is procuring its loan from Wachovia Bank, sources confirmed.
Politics with a capital "P," the level on which big shifts happen and true leadership is exercised in moments of crisis
The arguement can be made, though not by me, that Bush/Paulson have displayed great leadership. Leadership in pursuit of political idealogies that may or may not conform to your own but leadership just the same.
Crying,
You can grow a lot on a small plot of land. Look up french cottage gardening, square foot gardening, or think about intensive gardening in "layers" with larger plants over smaller ones. It's pretty easy to squeeze quite a it into a small plot, veggies under fruit trees, etc. Many plants don't need as much sun as you might think, and some do better in shade, even. Saves water, too.
Chickens don't need a lot of room and are great for eggs.
While we seem to be in the blame game, how much of this problem can be laid at the WTO financial services agreement?
On home price projections/guesses:
In LA, I was pretty sure we'd go back to 2002 prices, reaching 2003 or so this winter and then drifting down to 2002 levels over a couple more years. That was my projection/guess a couple of weeks ago.
Now? I can't even guess. I believe we're going to crash through 2002 levels over the next 12 months. So much less credit. So much less money for downpayments from the market crash. So much less employment. So much panic and uncertainty.
I have no idea where the bottom will end up on the Case-Shiller chart. 1998? 1996? Probably not lower than 1996 . . . but today I just have no coordinates from which to make a guess.
And they said prices would never go down in Santa Barbara...what a load Beautiful Santa Barbara Blog
Remember there are not enough wealthy elite to buy all the poorly constructed homes that lay in wait for flooding, fire and hillside collapse on the "California Riviera".
And if the actors go on strike, goodbye Hollywood...I won't miss it. It would be hilarious if they decided to to go on strike, that is one comedy I would like to watch!
Anonymous writes:
"The arguement can be made, though not by me, that Bush/Paulson have displayed great leadership. Leadership in pursuit of political idealogies that may or may not conform to your own but leadership just the same."
Sorry, I just don't see that. I've toyed with scenarios in which Bush or Bush/Paulson are getting exactly what they wanted. I don't buy it. They would have to be super geniuses, the most clever and crafty politicians who ever lived.
All the evidence points to them being the most incompetent crew to have ever inhabited the White House.
Everything they have touched has been botched. Their party is about to be thrown out of power. This is not Margaret Thatcher starving the beast to destroy it.
If we could get some idea where the bottom will be, I think that would help restore some confidence. The worst thing is sinking without feeling you know where the bottom will be. I wonder if the nerds or geeks with their computers and formulas could not spend some of their time doing reasonable calculations on this topic. Roubini, not a geek, originally thought the market would go down 40%. He has changed that to 50% since we are already at 40%. Some stocks of course like Morgan Stanley and Royal Bank of Scotland are down almost 90%. We need some credible calculations of how much further down we will have to go.
I used to tell people to pay extra on their mortgages, even if was only $50 per month. I don't tell them that any more, since it is likely it is money thrown down a black hole.
Indeed. I was making two additional forward principal payments on my mortgage every month as recently as a few months ago. Not paying anything additional now, in preparation for the possibility of walking-away. Normally I wouldn't much care what my house was worth, since I bought it for the long-run (to raise my family in), but now that I'm being expected to bail-out the banks, I am going to stick them with another foreclosure. I may even plan to go buy it back on the courthouse steps.
We need some credible calculations of how much further down we will have to go.
That would depend on how you define credible. I think house prices are only halfway to their bottom and the DOW has another 20-30% farther to go from where they are now. Any calculations that agree with me I would call them cerdible. Any that don't, I would call hogwash
To Cobra...Always enjoy your thoughts from southern FL. My mother sold her place off Winkler road near Cypress Lake in mid 2005 for over 152K. A nice 1700 sq. ft. 2br/2ba on the 14th green. It has now been sitting with a for sale sign for over 6 months and a listing price of 100k.
In my neighborhood prices would need to drop more than 50% from present levels to be in the 4x income range,median family income to median price home.However the local economy...uurrrkk...is construction,tourism,Agriculture (high end wine and pot mostly,then dairy) and Gov't.And LOTS of exotic loans resetting the next few years.70% of purchasers used "affordability products" in the peak years.Oh yeah Helocs.Da Bottom? somewhere in the '95-'96 range seems likely,not corrected for inflation.
really good book (i liked it)
really good book(i liked it) called Grow it by richard w langer. i had to hunt for it at library site. i got it and four others by him.
Corey
Ditto on my thoughts.
My take on the whole Bush situation is that Cheney/Rove and pals had all of this planned out pretty well, but then they lost control of Congress in 2006, which took away their ability to control the timetable. If they had held the Senate, they probably would have been able to stall the pain until 2009, when the incoming Democrat would get crucified.
to What
you're an incredible douche bag, seriously dude people do run into lots of issues getting things done right. I don't live in florida but have to deal with floridians daily with my job and you would have to look long and hard to find a less educated group of white trash inbreds.
In June of 2007 gave a chat to some "investers" on the current real estate and equity environment. I told them that
I thought that a credit tsunamic lurks on the horizon. And that RE & E were likely to go to pre-credit bubble levels
of 2002. I was laughed out of the room.
At this point it looks like I was wildly optomistic.
They did at least buy my dinner.
Money quotes from the Prudent Bear link offered upthread (crispy&cole | Homepage | 10.12.08 - 11:03 am | # ):
October 9 Bloomberg (Neil Unmack): The $50 trillion credit-default swap market is a walking zombie after investors lost money on contracts linked to Fannie Mae and Freddie Mac bonds even when they were bailed out, according to UniCredit SpA. The U.S. governments seizure of the mortgage companies prompted an auction of their debt so that traders who bought and sold default protection could settle contracts. The price for Fannie senior debt was set at 91.5 cents on the dollar, resulting in a loss of about $25 billion for investors who sold protection, UniCredits Philip Gisdakis said. If you put on the right trade -- that banks will be bailed out -- and you end up making a huge loss when you are right, you will simply stop using these instruments because they are unpredictable. The market, in its current form, is a walking zombie.
October 10 Bloomberg (Shannon D. Harrington and Neil Unmack): Sellers of credit-default protection on bankrupt Lehman Brothers Holdings Inc. will have to pay holders 91.375 cents on the dollar, setting up the biggest-ever payout in the $55 trillion market. An auction to determine the size of the settlement on Lehman credit-default swaps set a value of 8.625 cents on the dollar for the debt Based on the results, sellers of protection may need to make cash payments of more than $270 billion, BNP Paribas SA strategist Andrea Cicione said No one knows exactly how much is at stake because there's no central exchange or system for reporting trades.
lawyerliz:
Likely I am stuck with them, as they'll never sell the house with all the money they need to get out of it. The striking thing to me is their desperate attempts to make the house appealing to those who might be in the market to buy. They've put many thousands in just outdoor work not including any work on the house. New fences, considerable landscaping, putting up a shed that matches the house, etc. My main troubles with them is that they leave all their construction rubble in the alley and they were the primary obstruction to our getting a very large (city owned) tree removed from the alley that hangs over our garage and back yard. It is leaning at a 15 degree angle over our property and is now showing stress cracks in the trunk. The city arborist first said it would be no problem to remove, but these neighbors complained that they wanted the shade the tree provided, so the tree isn't going to be removed. I've already told the city that any damage that results from this tree falling on our property is their responsibility up to and including replacing our garage and car if it falls and destroys both. If it also drags the power lines onto our property (it straddles the utility lines as well), they'll have an even bigger problem on their hands. If there was a way to sue the neighbors I would do so, but I'll do my best to subpoena them to appear in court to explain why they wanted the tree kept (our city is notorious in not settling claims and forcing owners to sue). The tree has already damaged our shed beyond any hope of repair. Luckily, I have much photo evidence of the damage done by the tree and its current state.
BTW, the neighbors are also trying to hide the stress cracks by putting a planting area around the tree and installing some large ferns to obscure the damage.
Crying on the inside?
YouTube -
Go on with the flow.
Joe Schmoe;
A couple of years ago on the HBB I predicted that we bottom at 1997 prices, adjusted for inflation. The dollar lost almost 22% of its purchasing power from 1997 to 2007 based on government numbers, or conversely, things cost about 28% more in dollars over that ten year period. Ignoring what happened to the dollar in 2008 (which was probably big), my prediction would be for a bottom at about 28 percent over 1997 prices.
And now, even that is looking optimistic.
Excellent Idea, bp.
And I have experience similar things, in South Florida, but rarely.
My experience is that many attys and title companies in the non-metropolitan counties are just not up to snuff.
Sorry, Panhandlers, but I think the reason is that you don't experience weird stuff every day that I had to overcome when I was doing closings.
Kristina is in Florida remember? The state that loves to Screw Up Elections. And we are in a statistical dead heat now. (Groan)
--
"BOL in the United Socialist State Republic of America banana republic courtesy of George Bush and the bananas."
km4,
We all would have to get used to and adjust to life in Gangistan & Dope Land. There is no avoiding the reality on the ground.
We have a bad econo-political system and this crisis is bringing that reality to more and more people.
Jas
Yeah, Jas, I think Shiller sez 32% off, but I think stuff is actually going for 50% off right now. Maybe it won't be reported for a while. I think that we are actually at or close to a bottom, at 50% off give or take 10%. Vultures active again.
Subject to my normal caveat: not including the towers. Those will be 80-90% off, due to maintenance assessment problems.
Careful Corey before you buy back on the courthouse steps. In Florida, if you buy under the same name, you can get saddled with the debt again. Don't know what the situation is in other states. Form a corporation and buy under the corporate name. Might be a downside taxwise to that. Plz consult a good real estate atty and tax guy before you do this. Are you that much underwater?
Hey, we are all just guessing, If this group had not have pulled a Coup and bailed out Wall St. we would know alot more today than we knew last week.
Crossbuck.
Hire an atty who knows about the law of nuisance. The twist here is city property vs private. Trouble is, it is expensive. There are a fair amount of tree cases in Fla, and I presume, elsewhere.
I assume you have put the county on written notice of what might happen with the power lines.
You might want to call the power company, and it is at least possible that the power co owns the land or has an easement. I think if you persist, the power co will do something, because it's their responsibility to take care of the lines.
That will be $100.
--
lawyerliz,
I know (from talking to family and friends) outrageous behavior on parts of people they and I know in SoCal. These people would never be foreclosed but for huge equity extraction to spend on all kinds of things. Reading in papers, or blogs, is one thing and knowing people who are going thru the same brings it close to home, as they say.
A coworker in my sons office (an accountess) bought a so-so foreclosure home for $350K in SF Valley (not in a nice part) very recently. Of course, she got a deal because it had sold for $600K in 2007. Another accountess bought a $670K condo in 2006. My son, of course, rents close to his office. He is in much better financial shape (after working for ten years) than the partners he works for and who have worked for 20-40 years. Most people have very bad spending habits.
Jas
Agreed, Jas.
But they are learning!!
Coinz
DTCC,
Loved the qualifiers on that link regarding the 'clearinghouse' - all the "major CDS dealers" had the "vast majority" of contracts registered - what kind of half assed strucutre is that, if you are in you get to cherry pick what contracts you register?
That is close to meaningless without mandatory registration of all contracts by CDS dealers in the warehouse, and also the mandatory participation of all CDS dealers...WITH capital adequacy requirements met on a daily basis. Otherwise its an industry PR group.
--
lawyerliz,
Yes, punishment seems to be the best way of learning for most people.
Scam Lovers lead the parade. I equate America's Scam Lovers to you know what. They couldn't figure out the looting by the "insiders" taking place?
Jas
--
" thought that a credit tsunamic lurks on the horizon. And that RE & E were likely to go to pre-credit bubble levels of 2002. I was laughed out of the room. At this point it looks like I was wildly optomistic."
Dummy,
I would have laughed out of the room for the reason you mention at the end.
Think of 1995-198 prices as the best case scenario.
Jas
One look at a map to see where Manteca is and I immediately lost sympathy.
I paid $725k for a fixer in one of the best parts of W.L.A. in Late 2006. The fixers are now selling for $750k.
Now regarding the $100k I spent updating the place.......hey, at least I'm not "underwater"!
Credit squeeze literally hits home as card limits
I've never seen it like this so many people who are so upside down they can't meet their obligations, Symington said.
Most of Debt-Free America's clients are people who earn up to about $60,000 a year, and that hasn't changed with the current crisis, Symington said, although the company is seeing an increase in the number of seniors and young adults.
Almost all of them come in with the same tale.
People bought into the idea that their homes would always be their saving grace, that the value would keep going up, Symington said. It made them super-confident in their spending, and then the spending got out of hand. And now the market has backed off, and there's nowhere for them to turn.
.
and...
Going to a cash budget is really where people should be heading now, Symington said. The only thing most of us can really take control over is our personal spending. You have to cut out the fluff. I wish I had the golden key that could unlock everybody's troubles, but there isn't one.
BWAHAHAHA Twenty-dumbthings going to a cash budget!! BWAHAHAHA
BR-- thanks for Zingales'link--will re-read it more carefully. Tho must say most "housing rescue" plans focus solely on re-working bad mortgages.
None seem to address the "other" elephant in the room-- how to incentivize people like me-- wannabe homebuyers-- to get us to risk buying a home-- now, in a probably declining market.
It's just unfair that newbie homebuyers wind up as the final bagholders, in this fiasco. Where's our "backstop", like Wall St's getting? Some incentive to help protect us from assuming the entire risk-- alone-- of buying a declining "asset"?
Even if the stop-foreclosure programs work, there's still a glut of inventory already on the MLS, plus the shadow. The sooner those homes are bought up, by people who can afford to pay an affordable mortgage, the better for all of us.
Affordable housing agencies have a (sortakinda) existing model of a buyer-incentive program-- they offer "soft" second mortgages for up to 20% of SP, forgiveable annually over a period of 10 years.
I've floated this idea here before & had no specific replies, so will ask again--if the objective is to quickly get houses sold & off the inventory, then why can't we do a kind of buyer-incentive program, e.g., "and if you buy a house now, & it does decline 20% in value within say 2 years, then we'll forgive that 20%, incrementally, over 5 or 10 years."
Call it a "backstop-the-buyer" trickle-UP incentive-- Is this idea even vaguely workable, or not? Thoughts, anyone?-- thank you.
Nice, Mary. Good choice for thread tunes.
lawyerliz writes:
Careful Corey before you buy back on the courthouse steps. In Florida, if you buy under the same name, you can get saddled with the debt again ... Are you that much underwater?
Did not know that, Liz. Thanks for the tip. I am certainly underwater, although it's difficult to know by exactly how much. Bought the house for $382K in May 2007. Current loan balance is $355K. The house would probably sell for around $310-320K today, but I'm not sure because there are so few transactions. Some homes in my neighborhood have been for sale for as long as I've lived here.
It's doubtful that I could actually re-purchase it on the courthouse steps since the bank would take title instead. This is merely wistful thinking on my part. In reality, I would probably be better off just not paying my mortgage, fighting foreclosure, living rent-free for as long as possible, and then walking away. I am not really "that kind of person" but I don't much like the idea of being the only one left holding the bag after the banks get their bailouts and irresponsible homeowner/borrowers get their cramdowns. Call it a "bailout by personal initiative".
If the Government and banks wanted to reward responsible homeowners rather than irresponsible ones, they could offer discounted mortgage principal buy-downs. For example, as a homeowner you could pay cash to buy-down your principal at, say, 75 cents on the dollar. $7500 buys $10K in mortgage principal on an existing loan. This would encourage people to buy down their mortgages: money would flow into the banks [recapitalization] and get some people above water [home equity]. Probably would not hurt the MBS market either.
But of course they'll never do that. They know that responsible people will continue to pay their mortgages anyway, for the most part. So there's no incentive to help them. Which is why eventually people like me will just get fed up and look for ways to stick it to them.
joe shmoe
Everything they have touched has been botched. Their party is about to be thrown out of power
...
I thought the republicans WERE thrown out of power in 2006, before everything went to hell in a handbasket. By looking at CR's chart, the Dems didn't seem to want to stop the bubble from stretching even thinner.
Corey-- yours is exactly the type of practical, and do-able, trickle-UP ideas I'm on about.
A variation on your idea-- let's say you want to sell your underwater house. Well, now that we taxpayers are gonna have some "ownership"/power over the lenders, why can't we make them eat half of the diff between the balance of the note & current FMV, & then have some other entity, like HUD or FHA, offer forgiveable soft seconds on the remaining half, to incentivize a buyer to jump in & buy it?
anonymous 2:20p
i have often thought watching congress at working that maybe they needed a hostage negotiator. never had guts to call.
lawyerliz couldnt bank,mortage holder write down/off a property that was destoryed as in hurricane ike. houstin had 5k in foreclosure galvaston had over 300. so couldnt they take if off their books? if they did how would it affect the borrower. and i hate to say this.how would we know if they did. not only off their books but off their taxes too.
"freddie suspends foreclosure for ike victims." so at the end of 90 days they are behind 4 months! great! if their lien holder get their insurance money,they cant do repairs what a mess!!
Crossbuck:
I wish I had your neighbors. I paid 100% cash for my property only to have some redneck idiot build a stucco S***house on the hill next door. Just because he was a carpenter he thought he was an architect - Not! The front of the house is in the back; the only thing you can see from the street and my property is a big ass garage door and his pick-up truck (because who uses their garages to park their cars?); and after five years its still not finished! He refuses to do any landscaping and cries poverty as an excuse for being just too lazy to finish anything. We've planted over fifty trees in last five years, and pray to tree gods every morning to please grow!
I know its hard but look on the bright side. At least they are adding value and not acting like leeches on the community. And someone who buys, improves and holds for five years is not a "flipper" - at least where I come from.
But I feel your pain. Hard to be happy when the jerks live next door.
Thought this was a dead thread. If it's not.
Lender is a coinsured. Check gets make out to the both of you. After Andrew, bank held money and gave it out as repairs were completed. Foreclosures weren't a problem then.
Ike people need to call their lender. They also need to know if the insurance companies are actually paying claims, which was not such a problem when Andrew hit.
There is a statute right now, which needs rules which permits write downs, but it's not compulsory. The statute has no rules and regs right now so I don't know if any lenders will cooperate.
Don't have time to read the rest of thread at the moment.
Corey--you aren't that much underwater, but my standards. Why not make your payments for a year or so and see what develops to help? Get the wife & mistress to help out!!
lawyerliz
thank you for information.
Regarding a 650K listing of a house possibly worth less than 175K, Yal wrote:
Now this house is listed in (drum roll)... $650K. I asked the owner is this a misatke and here is her answer:
The real loon must be the agent who agreed to take the listing. Dreaming doesn't cost the owner anything, assuming the owner doesn't really plan to sell. And assuming nobody questions those mushroom varieties too closely.
I'd like to see the same plot for Northern California. I bet that it peaks in 2005 and not 2006. That's just a plot of people who "bought". What about people who refinanced?
Sucks to be someone who put 250k down, and now stands to lose all of it. People would be stupid to put any cash down on a house now. Let it level out for a year.