"And finally - and probably a very important point - homeowners with negative equity, who manage to avoid foreclosure, will be stuck in their homes for years."
And others who want to sell cannot, because most cannot get qualified to buy. Even if you have plenty of equity, you are likely going to stay in your house unless you have to go and sell to a small pool of buyers.
... In other words, the bankers who created the synthetic CDOs knew exactly what they were doing. These were not simply investment products created out of thin air and designed to give their sales people something from which to earn fees although they were that too.
They were specifically designed to protect the banks against default by the most leveraged companies in the world. And of course the banks knew better than anyone else who they were.
...
If the list of defaults full and partial gets to nine, then a mass transfer of money will take place from unsuspecting investors around the world into the banking system. How much? Nobody knows, but its many trillions.
It will be the most colossal rights issue in the history of the world, all at once and non-renounceable. Actually, make that mandatory. ...
O/T
I watched Congress berate the automakers for paying thier employees well. They also asked the
CEO's to work for a dollar a year. Why no outrage
about Citi bank's pay scale ? is Citi's CEO working
for a dollar ?
the more I read about those synthetic CDO's the spookier they seem. Kudo's to RE. That piece Michael Lewis last week referenced strange aspects of these instruments. The charity angle, how cute of the structured finance designers.
sporkfed writes:
I watched Congress berate the automakers for paying thier employees well. They also asked the
CEO's to work for a dollar a year. Why no outrage
about Citi bank's pay scale ? is Citi's CEO working
for a dollar ?
Didn't your mother ever teach you not to bite the hand that feeds you?
CR, if you are right, it's sure bad news for Realtors. But I don't have a good feeling about the SFHs being purchased by investors. SFHs are are generally not worth it as rentals unless you buy below market, and are lucky enough to have excellent tenants who are willing to overpay and do their own repairs, which is really a reach.
Even in ideal times it's not easy to make a go of being in the SFH rental business, for all of the reasons that being a landlord is hard, plus the problem of no on-site management and getting repairs done when things are not co-located. The only time I have ever seen it work out is where you have significant appreciation in addition to positive cash flow. And I doubt that very many of the new crop of investors have the patience to wait for appreciation.
If they are investors, they are likely buying REOs for cash flow - not appreciation, unlike the speculators in recent years - and these investors will probably hold the properties for a number of years too.
As a real estate investor I can say that this is not my experience. I've looked in certain portions of SoCal (Ventura, San Berdoo) and prices have still not come down enough to be justified by current cash flow never mind projected future lower cash flows. The "investors" out there now are still all about appreciation expectations.
If REO transactions are "real" sales can we go back in time and subtract the previous transaction? Why not? There's a disconnect here for which I have no easy answer but counting REO sales as sales makes the issue relevant.
I disagree with the assessment that investors in sf homes are going to hold on to them for some time because of the rental income. At least in my neck of the woods (N. Cal) current sales prices are still too high to make them good cash flow investments. Mortgage, taxes, and insurance still exceeds rental income. Prices will likely have to fall another 25% to create a break even investment.
I think these people are still buying to flip and when they finally realize that game is over, the slow bleed will force them to sell for a loss.
I don't know about that slow turnoever. A lot of these knife catchers were buying under FHA w/ 3% down. They may be going back to the bank sooner than you think.
* 10 Republicans Who Should Go Away
* Changing the Failed Strategy of the Religious Right Into a Winning Formula That Helps Heal Our Country
* The Religious Right's War on Christmas Began Centuries Ago
* It's Time for a War on War on the "War on Christmas"
Read all the columns »
President-Elect Barack Obama's transition team is reported to be deeply divided over whether to offer a post to Monica Lewinsky, the former White House Intern whose intimate relationship with President Bill Clinton led to his impeachment.
Until now, Lewinsky was one of the few high-profile figures from the Clinton Presidency who had not been recruited for the incoming Obama team. Mr. Clinton's brother Roger is another, though on Friday there were rumors he would be named ambassador to Spain.
I think the real estate story of the next year is the demise of the move up buyer, creating a squish down in the middle to higher end markets.
The "property ladder" chain relies on someone selling a entry level house and using the equity for the down payment on a bigger better house. But try to find any entry level property sale creating any profit for the sellers. Its just banks or short sales.
I agree with previous posters about rent covering cost of SF rental homes. I've seen quite a few (a large majority of) landlords with poor cash flow which makes me believe that these investors expect appreciation. Since it doesn't look like that is forthcoming any time soon, I would expect another round of foreclosures onthese types of sales.
CR, thanks for the great RE articles today . They seem to best less frequent I guess the RE stuff is being overshadowed by the other wild things going on .
Former Zimbabwe President Mugabe today said the U.S. humanitarian crisis was far worse than he could have imagined and expressed dismay that President Obama and his government refused to acknowledge the problem even existed. "The entire basic structure in education, healthcare, feeding people, social services and sanitation has broken down," Mugabe told a news conference. "These are all indications that the crisis in the U.S. is much greater, much worse than we had ever imagined." Mugabe was part of a delegation that was denied entry into the U.S. last week to assess the crisis.
"nades writes:
I believe that the babyboomers are just starting to retire now. So for the next 7-12 years it will be downsizing for them."
Why downsize when you own an 8000 square foot house? Cleaning and maintenance are fun, and, since you are retired, you have plenty of time to do it. I think many baby boomers will want to move up to 12,000 square foot homes, so they can clean and upkeep more. Fun. Fun. Fun.
Using REO sales as an indication of the housing market is like using garage sales to gauge the furnature and appliance industry. REO's are priced to sell - if they don't sell, the bank lowers them week by week until they do. Unlike regular homes, all REOs eventually get sold.
I don't think there are many people here in San Diego buying REOs to rent.
I have explored this idea myself, but even with the drastic declines in prices lately, and even if you can get the best available rate, I have not seen a single property that looks to be a good rental.
I don't know where you are but here in CA a realtor gets sued and/or loses their license for being misleading--in any way shape or form.
Markar | 11.24.08 - 6:51 pm | #
Good luck with that. Here is the complaint form from the California Dept of Real Estate.
In my experience they are woefully understaffed. This has been a classic "captured agency" and enforcement is generally restricted to just a few dozen bad actors each month, in a state which had, at peak, over 500,000 licensees. True, not all practiced - but still - even by 2006, IIRC there were some 640,000 transaction statewide for those 1/2 million licensees.
If REO transactions are "real" sales can we go back in time and subtract the previous transaction? Why not? There's a disconnect here for which I have no easy answer but counting REO sales as sales makes the issue relevant.
Commissar Rob Dawg | Homepage | 11.24.08 - 6:47 pm | #
REOs are counted in statistics if they are listed for resale. In So.Ca, these are 40-50% of all lstings. I believe trustee sales are not included in these statistics.
Boomer move-downs may come soon. Many older boomers may find out that they are ushered into retirement sooner than they hoped. If you're say 55-62 years old, at the top of the pay scale for your job, and would be near the end of your career when the economy recovers, why would a struggling employer not cut you first?
This is not to say Idon't feel bad for these people, because i do. But this will add to the problem if one of these "second half recovery" dreams doesn't come true soon.
Moving is fun because you get to swear like a sailor, yell at your family, and break family heirlooms. Oh, yes, and you lose most of your friends in the process. Who wouldn't want to move?
Using REO sales as an indication of the housing market is like using garage sales to gauge the furnature and appliance industry. REO's are priced to sell - if they don't sell, the bank lowers them week by week until they do. Unlike regular homes, all REOs eventually get sold.
BDiego | 11.24.08 - 6:58 pm | #
And on the bankrupt list include Levitz and Wickes, two of the largest and most well-established "furnature" (sic) chains in the country.
Dude - when just about 1 out of every 2 houses (OK, OK, 9 out of 20) is a distressed sale, the principle of substitution (look it up) will tell you that damn STRAIGHT a buyer will be "using REO as an indication."
The boomers won't be downsizing. Their children will be homeless and unemployed and will be showing up with their worldly posessions jammed in their cars shortly.
I can safely say as a tail end boomer that if you are a boomer and you haven't retired already then you probably won't. I've said many times - boomers as a group will die with their boots on - tossed cold and stiff from their cubicles on to the mail cart like in Python's Grail "Bring out your dead" skit.
Scooby(Unrated) writes:
The boomers won't be downsizing. Their children will be homeless and unemployed and will be showing up with their worldly posessions jammed in their cars shortly.
Scooby | 11.24.08 - 7:03 pm | #
Already happening at my place - except my house is about 1400sqft, built in 1915 and has enough closet space for the typical family in 1915 (one set of clothes for winter and one for summer - what more do you need?).
"Why downsize when you own an 8000 square foot house? Cleaning and maintenance are fun, and, since you are retired, you have plenty of time to do it. I think many baby boomers will want to move up to 12,000 square foot homes, so they can clean and upkeep more. Fun. Fun. Fun."
I'm turning mine into low income apartments. With bunks I can house 30 people, with guaranteed income from Obama. That leaves one bedroom for the unemployed housecleaners..er kids, and one master BR for me.
Hey, you want a real non-finance no-shit J6P uninformed interpretation of that graph (such being myself):
Too much inventory at too high a price. Been lurking here for awhile, and actually have a moment to stink up the den (pun intended for what follows).
If Xanauhoodidnood industries puts a real good sales pitch on turds, and everyone races out to buy the turds without smelling the product, then those of us (like my dumb J6P ass) gotta share in loving the massive overproduction of turds? Do I get "A TURD in every pot." Seems like that's what I'm a gettin'. I'm such a dumbass for renting all those years (including now) because I thought I remember some silly little Dutch Tulip thingy from history. Damn, I was actually thinking of buying a house. How much debt do I have? ZIP. I hate owing money. Sure, short term floats are fine; such as putting 50% down on a car with the other 50% financed through my Credit Union which I'll pay off in less than 2 years. I do maintenance religiously and drive 'em till they die.
Really, just J6P here...Don't ask me how I found this site but I luv it and its a great source to use in interpreting all the info out there.
Sure would like to visit the Tip Jar, but I feel like I'm gonna need every worthless penny to buy TURDS.
The other half and I were looking for a house a few years back. The agent we had totally pissed us off and we just gave up for a while and then moved for other reasons later on.
But anyways, the agent right, we had a price range, I have worked construction most of my life so we were looking for a fixer. The agent kept showing us stuff that was 10k out of our range. We would ask about listing we would see in the paper, no no, look at this one, it's only 12k more, you can finance it...
And there's still a bunch of them that haven't cashed out their equity holdings yet...
Basel Too
satan too....
I think this isnt being priced in to the future value of the market.
If there is a constant selling of equities for the next 10 to 20 years it could be brutal.
I'd argue baby boomers were the first group to be able to actively invest and manage money in the market. A lot of my friends parents plan on working an extra 5 years because of this latest meltdown. Imagine if there is still no growth in 10 years.
And the real indignity for those about to retire, who find themselves ushered out of the employment market, is that when they are forced to jump back in, they'll likely be going from a $100k salary to a $20k salary.
Dont know if any of you ever look at the Fed's survey of consumer finances, but you can segment a group by age that is close to the baby boomers. You'll see that many have NO savings and plenty of debt. And then there are the ones with piddling savings. Many of these are currently being turned into the former group as their 401ks become 200.5ks and their home values sink like stones.
And the data there is still 2004, which was just off the peak of real estate, and approximately where national prices are back to. But of course, bubble markets are well below that now and heading lower. So whatever you see in 04, the housing component of wealth will be well below in 2007, data for which is released shortly. And for stocks, well I think everyone knows here where values are back to. (1997ish)
By 2010, when the next SCF comes out, housing will only be three years lower, and stocks, you'll be lucky if you are back to today's values.
There seems to be some cloudy thinking about what market price means. "REO's are priced to sell - if they don't sell, the bank lowers them week by week until they do. Unlike regular homes, all REOs eventually get sold." And that leads to the conclusion these prices are not real market price! Sorry that is the real market price, not the bubble prices when individuals refused to sell without appreciation on their investment.
I'll be 70 in a few months, and my wife is not far from it. Selling and moving are horrible, exhausting hassles. We like where we're living.
We're our own bosses, not at the mercy of some landlord. Public transportation close by. Great library system and good shopping.
You have to live somewhere - why not here? Aging in place is a movement that's catching on. I bet a lot of people are in the same situation that we are in.
As I am only 23, and my father is 63 and my mom is disabled (expensive medical care) it really worries me that I may have to step in to help my parents...I can barely support myself at the moment =
I'd argue baby boomers were the first group to be able to actively invest and manage money in the market.
Yep, I would say (without any support) that the bulk of the 1980s-1990s runup in the equity markets was the mass retail of stocks to the boomers. All that money coming out without any buy support from current generations is gonna be ugly.
Eventually is right. However banks have been sitting on the REO properties trying to weight it out. They havent resold to anyone but the bank that held the note.
What Pavel said. I'm 63 and semi-retired; my wife is a few years younger and planning to retire in a couple of years. We've been in our home since 1985, and appreciate our community more than ever. Our older neighbors aren't leaving either. IIRC, according to AARP, the majority of retirees age in place.
Some of us did sell our stock before the crash--but one of my neighbors is postponing his retirement because he didn't sell in time.
From what I'm seeing, banks are trying to hold back the flood. Look at the CW REO charts if you disbeleive.
Now locally in Sacramento, one bank has decided to not release the REOs but rather rent them out via a property management firm. This is pushing down the lease/sqft ratio which is screwing up the newly-made investors here.
Investors are easily 50% or more of the market in the central valley. They are banking on appreciation as only the slummiest areas at basement prices generate a minute return. Remember, these asshats are what started the downfall here in the first place.
But thank goodness these investors are buying for future appreciation and not RoI or they'd be screwed - right? eg
Pre-foreclosure!!!!!top quality finishes throughout. 10Ft ceilings on first floor with vaulted and tray ceilings on second floor. Marble and granite in all bathrooms. Sold as is. short sale-lender approval required. Please allow 30 days for response. *Broken pipes, water damage. Home is not livable in current condition because of severe mold. Offers will most likely have to be cash.***
[unquote]
It's a McMansion up as a short-sale (so not an abandoned foreclosure), and they let the pipes break???
And they still expect to get well over $100/sq ft???
If you look closely at the various graphs CR has posted today, you'll see that the annual sales rate for existing homes is the same as in 2000, while the listed inventory is about three times higher. And, as someone (Dawg?) noted above, today's inventory doesn't include a very large number of homes that would be listed if their owners thought they had more than a snowball's chance in hell of selling (certainly not so in 2000).
So why shouldn't prices be much lower than in 2000?
We all have fears, but should fear stop of from acting the way we should be acting. The recent bailout just passed. I still see people living in their fantasy world. A world of dreams of which they think they can live forever, what they dont see is that they are just lying to themselves. First of all lets look at this bill, and its tax breaks Bows and arrows for children. WOW! That sounds very serious. On refrigerators too! Oh my God that is really going to help us. These greedy people in Wall Street are getting away with this. People the government is allowing them to run this government. Not the citizens who work endlessly from pay check to pay check. Or just want a standard home and decent living for their families and children. We are not giving our children a good future. We are giving them one full of debt and hyperinflation. What we dont see is that things are going to get worse because the people on Wall Street once they get their bailout will most probably ditch and run off or find some other way to rip off the world. Who knows but it is said when congress passes a law when they themselves say its flawed and needs improvement and I hope it will work. Okay what is going on here? If its flawed should you not fix it? Improve on it? Nothing comes good from hasty rash decisions? Didnt we learn that in Iraq? We are giving more and more power to individual people and it seems to me this is starting to become the end of our democracy. Our freedoms which are giving to us by the constitution maybe the best piece of legislature we have is being comprised by people who have failed to understand the meaning of this grand work of art and are turning it and twisting it into a dictatorship. A Presidential empire, the senate has proven useless time and time again. The house is partially composed of corrupt politicians and the ones that do know the right things to do are far too few. We are falling to see the end of our own demise people.
NAR data is always reliable
I like cherry turnovers.
illiquid house=priso
Home Sweet Debtor's Prison.
"And finally - and probably a very important point - homeowners with negative equity, who manage to avoid foreclosure, will be stuck in their homes for years."
And others who want to sell cannot, because most cannot get qualified to buy. Even if you have plenty of equity, you are likely going to stay in your house unless you have to go and sell to a small pool of buyers.
Looking at these statistics, what jumps out at me is that it's a really great time to buy or sell a house.
Tom Barrack (Colony Capital) one of the world's largest real estate investors - Watch this video - *****
Video - CNBC.com
sell now, ain't gonna be any better tomorrow
Yeah, technically I should have said "NAR data are always reliable", but most people don't know that.
A very interesting take about the potential triggering of defaults on trillions of dollars of synthetic CDOs
I posted it yesterday but thought it is worth a repost.
A tsunami of hope or terror?
A tsunami of hope or terror? - Alan Kohler - News - Business Spectator
... In other words, the bankers who created the synthetic CDOs knew exactly what they were doing. These were not simply investment products created out of thin air and designed to give their sales people something from which to earn fees although they were that too.
They were specifically designed to protect the banks against default by the most leveraged companies in the world. And of course the banks knew better than anyone else who they were.
...
If the list of defaults full and partial gets to nine, then a mass transfer of money will take place from unsuspecting investors around the world into the banking system. How much? Nobody knows, but its many trillions.
It will be the most colossal rights issue in the history of the world, all at once and non-renounceable. Actually, make that mandatory. ...
O/T
I watched Congress berate the automakers for paying thier employees well. They also asked the
CEO's to work for a dollar a year. Why no outrage
about Citi bank's pay scale ? is Citi's CEO working
for a dollar ?
CalculatedRisk,
You said you support the inclusion of REO sales into reported sales.
However, do the REO listings appear in reported listings?; or would the resulting 'inventory' be misleading
Realtors are paid to be misleading. At least that is my experience with them.
the more I read about those synthetic CDO's the spookier they seem. Kudo's to RE. That piece Michael Lewis last week referenced strange aspects of these instruments. The charity angle, how cute of the structured finance designers.
Yeah, technically I should have said "NAR data arrrrrrr always reliable", but most people don't know that.
Nemo | Homepage | 11.24.08 - 6:30 pm | #
Fixed it for you, matey.
sporkfed writes:
I watched Congress berate the automakers for paying thier employees well. They also asked the
CEO's to work for a dollar a year. Why no outrage
about Citi bank's pay scale ? is Citi's CEO working
for a dollar ?
Didn't your mother ever teach you not to bite the hand that feeds you?
My dog bit the door to door data salesman on the datum.
Good news for commodities.
CR, if you are right, it's sure bad news for Realtors. But I don't have a good feeling about the SFHs being purchased by investors. SFHs are are generally not worth it as rentals unless you buy below market, and are lucky enough to have excellent tenants who are willing to overpay and do their own repairs, which is really a reach.
Even in ideal times it's not easy to make a go of being in the SFH rental business, for all of the reasons that being a landlord is hard, plus the problem of no on-site management and getting repairs done when things are not co-located. The only time I have ever seen it work out is where you have significant appreciation in addition to positive cash flow. And I doubt that very many of the new crop of investors have the patience to wait for appreciation.
If they are investors, they are likely buying REOs for cash flow - not appreciation, unlike the speculators in recent years - and these investors will probably hold the properties for a number of years too.
As a real estate investor I can say that this is not my experience. I've looked in certain portions of SoCal (Ventura, San Berdoo) and prices have still not come down enough to be justified by current cash flow never mind projected future lower cash flows. The "investors" out there now are still all about appreciation expectations.
If REO transactions are "real" sales can we go back in time and subtract the previous transaction? Why not? There's a disconnect here for which I have no easy answer but counting REO sales as sales makes the issue relevant.
I disagree with the assessment that investors in sf homes are going to hold on to them for some time because of the rental income. At least in my neck of the woods (N. Cal) current sales prices are still too high to make them good cash flow investments. Mortgage, taxes, and insurance still exceeds rental income. Prices will likely have to fall another 25% to create a break even investment.
I think these people are still buying to flip and when they finally realize that game is over, the slow bleed will force them to sell for a loss.
I don't know about that slow turnoever. A lot of these knife catchers were buying under FHA w/ 3% down. They may be going back to the bank sooner than you think.
Exit --
Fixed it for you, matey.
Blargh! Arrrrrsome.
Realtors are paid to be misleading. At least that is my experience with them.
Ministry of Truth | 11.24.08 - 6:39 pm | #
I don't know where you are but here in CA a realtor gets sued and/or loses their license for being misleading--in any way shape or form.
HuffingtonPost.com:
* 10 Republicans Who Should Go Away
* Changing the Failed Strategy of the Religious Right Into a Winning Formula That Helps Heal Our Country
* The Religious Right's War on Christmas Began Centuries Ago
* It's Time for a War on War on the "War on Christmas"
Read all the columns »
President-Elect Barack Obama's transition team is reported to be deeply divided over whether to offer a post to Monica Lewinsky, the former White House Intern whose intimate relationship with President Bill Clinton led to his impeachment.
Until now, Lewinsky was one of the few high-profile figures from the Clinton Presidency who had not been recruited for the incoming Obama team. Mr. Clinton's brother Roger is another, though on Friday there were rumors he would be named ambassador to Spain.
Great analysis.
I think the real estate story of the next year is the demise of the move up buyer, creating a squish down in the middle to higher end markets.
The "property ladder" chain relies on someone selling a entry level house and using the equity for the down payment on a bigger better house. But try to find any entry level property sale creating any profit for the sellers. Its just banks or short sales.
The turnover rate above long-term median indicates that many people still can buy either with cash or mortgages.
Another ignored piece of the puzzle is that consumer credit just hit a record HIGH: Not One Cent: Consumer Credit Hits Record HIGH, Belying “Credit Crunch”
There's more to real estate than California.
This guy seems to do OK as an investor.
Money quote (approximately): 1 week in buyer needs 550 FICO. 2 weeks in, a job. 3 weeks in, breathing.
I agree with previous posters about rent covering cost of SF rental homes. I've seen quite a few (a large majority of) landlords with poor cash flow which makes me believe that these investors expect appreciation. Since it doesn't look like that is forthcoming any time soon, I would expect another round of foreclosures onthese types of sales.
I believe that the babyboomers are just starting to retire now. So for the next 7-12 years it will be downsizing for them.
Scary prospect.
I believe that the babyboomers are just starting to retire now. So for the next 7-12 years it will be downsizing for them
And there's still a bunch of them that haven't cashed out their equity holdings yet...
President-Elect Barack Obama's transition team is reported to be deeply divided over whether to offer a post to Monica Lewinsky
(((((snark alert)))))
CR, thanks for the great RE articles today . They seem to best less frequent I guess the RE stuff is being overshadowed by the other wild things going on .
Former Zimbabwe President Mugabe today said the U.S. humanitarian crisis was far worse than he could have imagined and expressed dismay that President Obama and his government refused to acknowledge the problem even existed. "The entire basic structure in education, healthcare, feeding people, social services and sanitation has broken down," Mugabe told a news conference. "These are all indications that the crisis in the U.S. is much greater, much worse than we had ever imagined." Mugabe was part of a delegation that was denied entry into the U.S. last week to assess the crisis.
"nades writes:
I believe that the babyboomers are just starting to retire now. So for the next 7-12 years it will be downsizing for them."
Why downsize when you own an 8000 square foot house? Cleaning and maintenance are fun, and, since you are retired, you have plenty of time to do it. I think many baby boomers will want to move up to 12,000 square foot homes, so they can clean and upkeep more. Fun. Fun. Fun.
Using REO sales as an indication of the housing market is like using garage sales to gauge the furnature and appliance industry. REO's are priced to sell - if they don't sell, the bank lowers them week by week until they do. Unlike regular homes, all REOs eventually get sold.
Define "retirement"
BWAHAHAHAHAHA
nades writes:
I believe that the babyboomers are just starting to retire now. So for the next 7-12 years it will be downsizing for them.
I don't think there are many people here in San Diego buying REOs to rent.
I have explored this idea myself, but even with the drastic declines in prices lately, and even if you can get the best available rate, I have not seen a single property that looks to be a good rental.
I don't know where you are but here in CA a realtor gets sued and/or loses their license for being misleading--in any way shape or form.
Markar | 11.24.08 - 6:51 pm | #
Good luck with that. Here is the complaint form from the California Dept of Real Estate.
In my experience they are woefully understaffed. This has been a classic "captured agency" and enforcement is generally restricted to just a few dozen bad actors each month, in a state which had, at peak, over 500,000 licensees. True, not all practiced - but still - even by 2006, IIRC there were some 640,000 transaction statewide for those 1/2 million licensees.
If REO transactions are "real" sales can we go back in time and subtract the previous transaction? Why not? There's a disconnect here for which I have no easy answer but counting REO sales as sales makes the issue relevant.
Commissar Rob Dawg | Homepage | 11.24.08 - 6:47 pm | #
REOs are counted in statistics if they are listed for resale. In So.Ca, these are 40-50% of all lstings. I believe trustee sales are not included in these statistics.
So who wants to move anyway.
Boomer move-downs may come soon. Many older boomers may find out that they are ushered into retirement sooner than they hoped. If you're say 55-62 years old, at the top of the pay scale for your job, and would be near the end of your career when the economy recovers, why would a struggling employer not cut you first?
This is not to say Idon't feel bad for these people, because i do. But this will add to the problem if one of these "second half recovery" dreams doesn't come true soon.
"So who wants to move anyway.
dryfly"
Moving is fun because you get to swear like a sailor, yell at your family, and break family heirlooms. Oh, yes, and you lose most of your friends in the process. Who wouldn't want to move?
Using REO sales as an indication of the housing market is like using garage sales to gauge the furnature and appliance industry. REO's are priced to sell - if they don't sell, the bank lowers them week by week until they do. Unlike regular homes, all REOs eventually get sold.
BDiego | 11.24.08 - 6:58 pm | #
And on the bankrupt list include Levitz and Wickes, two of the largest and most well-established "furnature" (sic) chains in the country.
Dude - when just about 1 out of every 2 houses (OK, OK, 9 out of 20) is a distressed sale, the principle of substitution (look it up) will tell you that damn STRAIGHT a buyer will be "using REO as an indication."
The boomers won't be downsizing. Their children will be homeless and unemployed and will be showing up with their worldly posessions jammed in their cars shortly.
Define "retirement"
I can safely say as a tail end boomer that if you are a boomer and you haven't retired already then you probably won't. I've said many times - boomers as a group will die with their boots on - tossed cold and stiff from their cubicles on to the mail cart like in Python's Grail "Bring out your dead" skit.
But the good news is that you might get RIFed.
Go long tent manufacturers.
...just met a family selling their house in Anaheim for $505,000; they did a remod last year that put the house value at $545,000....
the same home sold 2 years ago for $650,00 and 3 years ago for $800,000...
lot of activity for one house...
President-Elect Barack Obama's transition team is reported to be deeply divided over whether to offer a post to Monica Lewinsky
Well, she was an important mouth piece in the Clinton White House
"with their worldly posessions jammed in their cars shortly.
Scooby"
Downloaded songs and one old couch don't take up much room. Although 5 bastard children might.
Scooby(Unrated) writes:
The boomers won't be downsizing. Their children will be homeless and unemployed and will be showing up with their worldly posessions jammed in their cars shortly.
Scooby | 11.24.08 - 7:03 pm | #
Already happening at my place - except my house is about 1400sqft, built in 1915 and has enough closet space for the typical family in 1915 (one set of clothes for winter and one for summer - what more do you need?).
We're set for the new reality.
"Why downsize when you own an 8000 square foot house? Cleaning and maintenance are fun, and, since you are retired, you have plenty of time to do it. I think many baby boomers will want to move up to 12,000 square foot homes, so they can clean and upkeep more. Fun. Fun. Fun."
I'm turning mine into low income apartments. With bunks I can house 30 people, with guaranteed income from Obama. That leaves one bedroom for the unemployed housecleaners..er kids, and one master BR for me.
Hey, you want a real non-finance no-shit J6P uninformed interpretation of that graph (such being myself):
Too much inventory at too high a price. Been lurking here for awhile, and actually have a moment to stink up the den (pun intended for what follows).
If Xanauhoodidnood industries puts a real good sales pitch on turds, and everyone races out to buy the turds without smelling the product, then those of us (like my dumb J6P ass) gotta share in loving the massive overproduction of turds? Do I get "A TURD in every pot." Seems like that's what I'm a gettin'. I'm such a dumbass for renting all those years (including now) because I thought I remember some silly little Dutch Tulip thingy from history. Damn, I was actually thinking of buying a house. How much debt do I have? ZIP. I hate owing money. Sure, short term floats are fine; such as putting 50% down on a car with the other 50% financed through my Credit Union which I'll pay off in less than 2 years. I do maintenance religiously and drive 'em till they die.
Really, just J6P here...Don't ask me how I found this site but I luv it and its a great source to use in interpreting all the info out there.
Sure would like to visit the Tip Jar, but I feel like I'm gonna need every worthless penny to buy TURDS.
We may be heading back to the extended family sharing a house, as was largely the case until post-WWII.
Homebuyer: 35-45
Parents: 65-80
Post HS-/College Kids of owner: 18-30
Kids of owner and grandkids of owner: 0-18
Everybody liked having that era over, and they afford to live alone.
A depressed recession (LOL) will likely end that for many families.
Its kinda funny how things work out.
The other half and I were looking for a house a few years back. The agent we had totally pissed us off and we just gave up for a while and then moved for other reasons later on.
But anyways, the agent right, we had a price range, I have worked construction most of my life so we were looking for a fixer. The agent kept showing us stuff that was 10k out of our range. We would ask about listing we would see in the paper, no no, look at this one, it's only 12k more, you can finance it...
And there's still a bunch of them that haven't cashed out their equity holdings yet...
Basel Too
satan too....
I think this isnt being priced in to the future value of the market.
If there is a constant selling of equities for the next 10 to 20 years it could be brutal.
I'd argue baby boomers were the first group to be able to actively invest and manage money in the market. A lot of my friends parents plan on working an extra 5 years because of this latest meltdown. Imagine if there is still no growth in 10 years.
Fugly....
And the real indignity for those about to retire, who find themselves ushered out of the employment market, is that when they are forced to jump back in, they'll likely be going from a $100k salary to a $20k salary.
Dont know if any of you ever look at the Fed's survey of consumer finances, but you can segment a group by age that is close to the baby boomers. You'll see that many have NO savings and plenty of debt. And then there are the ones with piddling savings. Many of these are currently being turned into the former group as their 401ks become 200.5ks and their home values sink like stones.
And the data there is still 2004, which was just off the peak of real estate, and approximately where national prices are back to. But of course, bubble markets are well below that now and heading lower. So whatever you see in 04, the housing component of wealth will be well below in 2007, data for which is released shortly. And for stocks, well I think everyone knows here where values are back to. (1997ish)
By 2010, when the next SCF comes out, housing will only be three years lower, and stocks, you'll be lucky if you are back to today's values.
So, as for retirement, ya. Goo ruck.
There seems to be some cloudy thinking about what market price means. "REO's are priced to sell - if they don't sell, the bank lowers them week by week until they do. Unlike regular homes, all REOs eventually get sold." And that leads to the conclusion these prices are not real market price! Sorry that is the real market price, not the bubble prices when individuals refused to sell without appreciation on their investment.
"So who wants to move anyway."
I'll be 70 in a few months, and my wife is not far from it. Selling and moving are horrible, exhausting hassles. We like where we're living.
We're our own bosses, not at the mercy of some landlord. Public transportation close by. Great library system and good shopping.
You have to live somewhere - why not here? Aging in place is a movement that's catching on. I bet a lot of people are in the same situation that we are in.
As I am only 23, and my father is 63 and my mom is disabled (expensive medical care) it really worries me that I may have to step in to help my parents...I can barely support myself at the moment =
I'd argue baby boomers were the first group to be able to actively invest and manage money in the market.
Yep, I would say (without any support) that the bulk of the 1980s-1990s runup in the equity markets was the mass retail of stocks to the boomers. All that money coming out without any buy support from current generations is gonna be ugly.
all REOs eventually get sold.
syvanen
Eventually is right. However banks have been sitting on the REO properties trying to weight it out. They havent resold to anyone but the bank that held the note.
....
weight = wait. I'm more dumber today than usual!
weight = wait. I'm more dumber today than usual!
I dunno, maybe you got it right the first time. All those properties are going to weigh on those banks until they sink in the TARP pit.
mykillk, " I may have to step in to help my parents...I can barely support myself at the moment"
Don't feel like the lone Ranger, this is becoming more and move the case!!!!
Help, my home value has fallen and I can't get up.
What Pavel said. I'm 63 and semi-retired; my wife is a few years younger and planning to retire in a couple of years. We've been in our home since 1985, and appreciate our community more than ever. Our older neighbors aren't leaving either. IIRC, according to AARP, the majority of retirees age in place.
Some of us did sell our stock before the crash--but one of my neighbors is postponing his retirement because he didn't sell in time.
From what I'm seeing, banks are trying to hold back the flood. Look at the CW REO charts if you disbeleive.
Now locally in Sacramento, one bank has decided to not release the REOs but rather rent them out via a property management firm. This is pushing down the lease/sqft ratio which is screwing up the newly-made investors here.
Investors are easily 50% or more of the market in the central valley. They are banking on appreciation as only the slummiest areas at basement prices generate a minute return. Remember, these asshats are what started the downfall here in the first place.
But thank goodness these investors are buying for future appreciation and not RoI or they'd be screwed - right? eg
Jim,
I believe the multigenerational model is preferable...full disclosure, we cover three generations with four people by choice.
Just found on a Chicago NW suburban MLS:
[quote]
$474,900
4 bed, 4 bath/1 half, 3600sf
23 S Elm St
Pre-foreclosure!!!!!top quality finishes throughout. 10Ft ceilings on first floor with vaulted and tray ceilings on second floor. Marble and granite in all bathrooms. Sold as is. short sale-lender approval required. Please allow 30 days for response. *Broken pipes, water damage. Home is not livable in current condition because of severe mold. Offers will most likely have to be cash.***
[unquote]
It's a McMansion up as a short-sale (so not an abandoned foreclosure), and they let the pipes break???
And they still expect to get well over $100/sq ft???
If you look closely at the various graphs CR has posted today, you'll see that the annual sales rate for existing homes is the same as in 2000, while the listed inventory is about three times higher. And, as someone (Dawg?) noted above, today's inventory doesn't include a very large number of homes that would be listed if their owners thought they had more than a snowball's chance in hell of selling (certainly not so in 2000).
So why shouldn't prices be much lower than in 2000?
We all have fears, but should fear stop of from acting the way we should be acting. The recent bailout just passed. I still see people living in their fantasy world. A world of dreams of which they think they can live forever, what they dont see is that they are just lying to themselves. First of all lets look at this bill, and its tax breaks Bows and arrows for children. WOW! That sounds very serious. On refrigerators too! Oh my God that is really going to help us. These greedy people in Wall Street are getting away with this. People the government is allowing them to run this government. Not the citizens who work endlessly from pay check to pay check. Or just want a standard home and decent living for their families and children. We are not giving our children a good future. We are giving them one full of debt and hyperinflation. What we dont see is that things are going to get worse because the people on Wall Street once they get their bailout will most probably ditch and run off or find some other way to rip off the world. Who knows but it is said when congress passes a law when they themselves say its flawed and needs improvement and I hope it will work. Okay what is going on here? If its flawed should you not fix it? Improve on it? Nothing comes good from hasty rash decisions? Didnt we learn that in Iraq? We are giving more and more power to individual people and it seems to me this is starting to become the end of our democracy. Our freedoms which are giving to us by the constitution maybe the best piece of legislature we have is being comprised by people who have failed to understand the meaning of this grand work of art and are turning it and twisting it into a dictatorship. A Presidential empire, the senate has proven useless time and time again. The house is partially composed of corrupt politicians and the ones that do know the right things to do are far too few. We are falling to see the end of our own demise people.
Lower turnover = lower prices?