From Investment News, by Bill Gross:
The U.S. housing market’s grim reality
Well, not so fast — at least for some of them, it seems. Home prices, as measured by the Chicago-based National Association of Realtors, have gone down by 2% nationally over the past 15 months, and there’s fear in the air that it could get worse.
It most assuredly will.
The problem with housing, however, is not the frequently heralded increase in subprime delinquencies or defaults. Of course, write-offs, collateralized-debt-obligation price drops and even corporate bankruptcy of subprime-mortgage originators and servicers will not help an already faltering U.S. economy. But foreclosure losses as a percentage of existing loans will be small, and the majority of homeowners have substantial amounts of equity in their homes.
Because this is the reality of the U.S. housing market, analysts and pundits now claim we’re out of the woods: The subprime crisis is or has been isolated and identified for what it is — a small part of the U.S. economy.
It will not be loan losses that threaten future economic growth, however, but the tightening of credit conditions that, in part, are a result of those losses. To a certain extent, this reluctance to extend credit is a typical response to end-of-cycle exuberance run amok. And if one had to measure this cycle’s exuberance on a scale of 1-10, double-digits would be the overwhelming vote.
…
No one really knows the amount that homes must fall in order to balance supply and demand, nor the time it will take to do so, but if one had to hazard a conclusion, it would have to be based in substantial part on affordability statistics that, in turn, depend on financing yields and home price levels in a series of different scenarios as outlined in the accompanying chart.The chart shows the amount that home prices or mortgage rates (or a combination of the two) need to decline in order to revert back to affordability levels in 2003, a year that might have been the last to be described as a “normal” year for home price appreciation.
Since then, annual gains of 10%-plus have been the rule, whereas average historical estimates provided by Robert Shiller may have suggested something on the order of 4% to 5%. By that measure alone, homes likely are 15% to 20% overvalued (three years x 5%+ annual overpricing).
If mortgage rates don’t come down, home prices need to decline by 20% in order to reach prior affordability levels. If rates do come down, home prices will drop less.
31,911 on gsmls as of 4/16
My prediction was to reach 32,000 on april 17th – I think I’m going to make it!
Predicting and Rhyming, what can I do with these skils??
KL
Every market requires sponsorship to continue its advance. Currently this market demands strong, qualified, sustained buying. A spurt here or there will not, in any manner, help restore this crumbling foundation. Ultimately, the tightening of credit will prove be the most significant, negative, factor for this market.
Totally off topic.
“We have found that graduate students in general are cheating at an alarming rate and business-school students are cheating even more than others,” concludes a study by the Academy of Management Learning and Education of 5,300 students in the United States and Canada.”
“Many of these students reportedly believe cheating is an accepted practice in business. More than half (56 percent) of M.B.A. candidates say they cheated in the past year. For the study, cheating was defined as plagiarizing, copying other students’ work, and bringing prohibited materials into exams.”
http://spotlight.encarta.msn.com/Features/encnet_Departments_AdultLearning_default_article_SurveyMBAsAre.html?GT1=9279
Did everyone make it through the storm OK?
jb
I live in southwest Hoboken, had to take a personal day today, a nice 3 ft moat surrounding my building, six flooded out cars outside my window I can count, about a 30 yard long oil/gasoline slick floating by as we speak. I see RE prices in this part of Jersey soaring as we speak.
My mother and her $10k a year taxes for her small home in prestigious River Edge had flooding in the basement. Sewage also backed up. That is what everyone considers a half a million dollar home in Bergen County…
From Marketwatch:
New York factory activity rebounds only slightly in April
Manufacturing activity in the New York area rebounded only marginally in April, the New York Federal Reserve Bank said Monday.
The bank’s Empire State Manufacturing index rose to 3.8 in April from 1.9 in March. The index had plunged over 20 points in March to its lowest level in two years.
The index remains just barely over zero, the level which indicates expansion.
The gain in April was below expectations. Economists were expecting the index to rebound to 7.6.
…
The new orders inched higher to 3.9 in April from 3.1 in the previous month. Shipments fell sharply to 8.7 from 18.5 in the previous month.
Unfilled orders sank further into negative territory, slipping to -8.3 in April from -8.1 in March.
The prices paid index rose again in April to 40.5 from 30.2 in March. This is the highest level in eight months.
The employment index fell to 5.4 in April from 11.4 in the previous month.
From MarketWatch:
March retail sales rise 0.7% on gas, clothing
U.S. retail sales increased 0.7% in March, led by higher spending for clothing, gasoline and building materials, the Commerce Department reported Monday. It was the fastest increase since December’s 1.1% gain, but was largely due to higher prices, not higher volumes. Retail sales were slightly stronger than the 0.6% expected by economists surveyed by MarketWatch. In addition, sales in February were revised higher to a 0.5% gain from 0.1%.Gasoline station sales rose 3.1% in March, as prices soared. Excluding gas, retail sales rose 0.4%. Motor vehicle sales rose 0.4%. Excluding autos, retail sales rose 0.8%, slightly lower than the 1% gain expected.
Some pictures/videos from Hoboken..
http://hoboken411.com/archives/6531
Saturday night I attended a party celebrating the refinishing of a friend’s basement in Nutley. It had flooded this summer during a bad storm and they came home to 18″ of water. They had the french drains redone and put in new sump pumps.
It reflooded again on Sunday. They called out the fire dept to pump out the water. Since they were home this time they saved the furniture and computer.
Rachel
Saturday night I attended a party celebrating the refinishing of a friend’s basement in Nutley. It had flooded this summer during a bad storm and they came home to 18″ of water. They had the french drains redone and put in new sump pumps.
It reflooded again on Sunday. They called out the fire dept to pump out the water. Since they were home this time they saved the furniture and computer.
Nothing like deja-vu…
Quite a few reports of flooded basements..
http://www.baristanet.com/2007/04/now_a_lakeside_view.php#comments
My basement took some water in as well. Not ‘flooded’ though, a thin stream of water came in from the floor edge and ran right into the sump pump.
From the WSJ:
Fremont Find Buyer for Loans,
May Also Sell Subprime Unit
By KEVIN KINGSBURY
April 16, 2007 9:05 a.m.
Fremont General Corp. announced it has found a buyer for $2.9 billion in subprime mortgage loans and said that same unnamed institution is in exclusive talks to buy most of Fremont’s residential real-estate business and assets.
The news send Fremont’s shares sharply higher in premarket trading, jumping to $8.90 from Friday’s close of $7.05.
The price tag of the loan sale wasn’t disclosed, though Fremont expects to record a pretax loss of about $100 million on the deal.
If the talks are successful, the buyer would acquire Fremont’s subprime residential loan-servicing platform, some of its subprime origination platform, all mortgage-servicing rights, servicing advances, residual interests and mortgage-backed securities.
Corzine’s new tax plan was supposed to limit property tax increases to 4% per year, but allowed for waivers.
The Star Ledger surveyed 193 North and Central Jersey towns:
– 70 Came in under 4% (36%)
– 14 Came in at 4% (7%)
-109, the majority, Elected to use waivers and came in above 4% (56%)
I just got into the office – took me an hour and 45 minutes to get out of Hoboken. The bus I was on was actually flooding the water in south Hoboken was so deep.
Not sure if someone else posted this, but it looks interesting…
U.S. Homebuilders Face Bankruptcy Risk in ’08, Lawyers Say
http://www.bloomberg.com/apps/news?pid=20601103&sid=aXqHEXUKrjqY&refer=us
“There is no sword over the industry’s head yet,” said Greenspan today at a conference of the American Bankruptcy Institute in Washington. “That doesn’t mean the industry is not wounded. Instead, the breaking point could come in 2008 or 2009.”
And here’s another one that shows the impact on home-related industries –
PIER 1 PULLS PLUG ON 60 STORES
http://www.nypost.com/seven/04132007/business/pier_1_pulls_plug_on_60_stores_business_.htm
Pier 1’s Chief Financial Officer Charles Turner announced the closures yesterday during a conference call with investors and analysts. The company also said its loss for the fourth quarter ended March 3 widened to $58.7 million, or 67 cents a share, from $9.98 million, or 11 cents, a year earlier.
On Monday, Elliott Associates said in a letter the company was cutting costs at a “glacial pace” and should close as many as 300 unprofitable stores. Pier 1, based in Fort Worth, Texas, said March 29 it fired 175 workers.
From BusinessWire:
Fitch Report Details Drivers of Early U.S. Subprime Defaults
While rising mortgage defaults are to be expected during a housing market downturn, the sharp rise in U.S. subprime mortgage defaults is notable. In a new report, Fitch Ratings analyzes the trends in collateral attributes that contribute to early default in subprime mortgages underlying RMBS.
Generally there is a lag between a slowdown in home price growth and a rise in mortgage defaults. However, Fitch found that the severe response of the 2006 subprime vintage to the cooling housing market is attributable to high borrower leverage and the widespread use of stated income loan programs.
After studying the collateral attributes of early payment default (EPD) loans and comparing them to loans that did not default in the first 12 months after issuance, Fitch found that Fair Isaac Corp. (FICO) scores have become less significant as an early default indicator when other high risk loan attributes, such as piggyback second liens or loans with no-income verification, are present.
“While FICO scores continue to be highly predictive measures of relative credit risk for loans with similar characteristics, FICO scores play a lesser role when additional risk layers are added,” said Glenn Costello, Managing Director, RMBS, Fitch Ratings. “In the case of the 2006 vintage delinquencies, additional risk layers that are factoring into the sharply higher delinquencies include high combined loan to value ratios (CLTVs) and stated income loan programs as borrowers with higher FICO scores tend to be highly levered.”
In addition, loans made for home purchases have become a much larger percentage of subprime originations as opposed to refinances, which historically made up a majority of subprime pools. “The added risk from the higher leverage and stated income feature is driving up default rates for purchase loans,” said Suzanne Mistretta, Senior Director, Credit Policy, Fitch Ratings.
Fitch found that Fair Isaac Corp. (FICO) scores have become less significant as an early default indicator when other high risk loan attributes, such as piggyback second liens or loans with no-income verification, are present.
So it really is different this time. Could it be that the exotic Alt-A loans will fare much worse than the “vanilla” fixed-rate subprimes?
jb
A link to the report:
http://www.fitchratings.com/corporate/reports/report_frame.cfm?rpt_id=322546§or_flag=3&marketsector=2&detail=
The Bound Brook area around I-287 Exit 12 is an absolute mess (from what I saw while crossing the bridge over the canal on Rte 287. I did drive around the Raritan Canal area y’day for some fun (was careful) and saw a few cars lying in the middle of the road half-submerged; the drivers paid the price for being a trifle too adventurous.
Storms like this make a car with manual tranny worthwhile; half-clutch, moderate revs and drive at a constant, slow speed through water. Trying to blast through is a recipe for disaster.
Imagine the frustration of realtors propping up a home for open house to find a flooded basement….so much work.
James Bednar Says:
So it really is different this time. Could it be that the exotic Alt-A loans will fare much worse than the “vanilla” fixed-rate subprimes?
Would you rather have:
1. A borrower with marginal credit at time of application but know for sure they’re making enough to pay for the loan.
2. One with decent credit at time of application but have no way of knowing if they can cover the expense. Most likely they don’t.
I’ll take number one
Did everyone make it through the storm OK?
Through the storm AND managed to fly out this morning to Greenville, SC. Was actually smooth considering it was a 1 seat-aisle-2 seat plane.
But landing in sunny Greenville took two attempts due to wind. The captain was about to land and just yanked the plane into the air. Upon the second attempt we were followed by fire trucks.
I think I sweat about as much as it rained yesterday.
Rich
Some flood info:
http://www.erh.noaa.gov/showsigwx.php?warnzone=NJZ004&warncounty=NJC031&local_place1=Clifton&product1=Flood+Warning
Ok, so I went on this little trip to South Florida (some of you already know that because this is probably the third time I’m posting about it and some of you probably don’t care but I’m gonna say it again anyway so shut up you face :)) and didn’t have that much time to really feel out the market there. I didn’t really notice a significant amount of “for sale” signs but then again, a lot of the communitiies in the Weston/Ft. Lauderdale area are closed and not accessible unless you’re a resident or visitor. We happened to view one of them called “Savana” because of friends who live there and it is beautiful. For those of you not familiar with the area, Weston is a relatively new area developed in the last 15 years or so on the edges of the Everglades. It is clean, new and attractive and was incorporated with another town that existed much longer and has older homes.
The older homes that are accessible are rather bland and unattractive and all have the same look more or less. They look sort of like concrete boxes if you ask me and almost every backyard area has a screened in enclosure so you don’t get attacked by mosquitos, bugs and snakes (and probably the occasional gator). I really can’t see the draw other than the beautiful closed communities because it’s constantly hot, humid, flat and non-descript. If you like tropical weather all the time, then this is the place for you. The white collar jobs are not as plentiful and you have to commute to Miami to make any kind of money.
Factor in taxes, community fees and relative prices and you might as well stay in NJ unless you’re moving to somewhere in the sticks of Florida and then you’ll get a bargain. And as someone stated on the weekend discussion, it appears as though your taxes are based on purchase price. UGH!! And one more thing: Our friends send their kids to Catholic school, not Public and the tuition is somewhere around $4,300 per year. I don’t know what discounts they get for additional family attending. I’ll take a pass on South Florida.
Now, we did talk to a few other people down there and one couple is high-tailing it back to the Boston area after 6 months in Florida because they hate it. They said they found the people to be superficial and can’t take the heat anymore. Another couple we met, (I talk to everybody) ironically enough from Oradell are moving to the Raleigh, NC area after a one year stint in Florida because the cost of living is just as bad as NJ. I keep hearing about the Raleigh/Durham area that’s why I was asking questions about it on the weekend discussion thread. That’s all, just my 2 cents…. again. :)
Another couple we met, (I talk to everybody) ironically enough from Oradell are moving to the Raleigh, NC area after a one year stint in Florida because the cost of living is just as bad as NJ.
You know, there is a word to describe these folks, they are called “halfbacks”.
jb
JB,
I’m naive, what are “halfbacks”? :)
OT: http://www.somcosheriff.org/sales_images/8187.mht
sheriff sale of way to many giant fishtanks…
#26
In the past, no one has understood why I don’t particularly like Florida. I have lots of family who live there (Palm Harbor, Tierra Verde Island, Sarasota) and my parents used to own a co-op in Pompano Beach. There are so many other places I would prefer to live than there. I like having four seasons – I lived in Los Angeles for 3 years and really missed that.
On the other hand, an aunt and uncle of mine retired to Newport, RI and I never could understand why they picked there. I have recently come to understand their choice. First of all, they bought a big victorian walking distance to downtown Newport for $182,000 in 1992 (like everywhere else, real estate prices have gone up since then but no more than here for a typical house). Secondly, there is so much to do there even in the winter. There are always art shows, concerts, cultural events going on. It is a college town (Salve Regina University) and close to URI. In the summer, there is the beach. It does get crowded with the weekenders from Boston so you do have to deal with that. It is close to Boston and because it is surrounded by water, they don’t get as much snow as further inland.
Sorry to sound like a commercial for Newport but going south might not always be the answer.
to=too
I was out doing open houses while my house was being shown yesterday. Every cancelled open house is now on my “suspicious basement list.”
sheriff sale of way to many giant fishtanks…
Those tanks are worth a small fraction of the judgement amount.
That said, I could use another 150g. Maybe I’ll take the day off, don’t tell my wife.
jb
Rich, aren’t those landing fun? Had one of those from Buffalo to Boston once. I could smell fear on myself all day at a client meeting.
I just had a fun NJDOT interlude..three hours in the car trying to get to work.
I gave up after making it only 5 miles and ending up in someone’s cul-de-sac, and it wasn’t so bad getting home.
Thank heavens for W******a in Lawrenceville. Wonderful bank manager there let me use her office’s bathroom. Eyed me in that suspicious NJ manner, but pointed the way… I love NJ.
#19 JB,
That Fitch report is so key for the true state of the RE industry right now, it’s amazing… i thought this was the key quote:
“the cooling housing market is attributable to high borrower leverage and the widespread use of stated income loan programs.”
As Fitch is saying, this meltdown has nothing to do with Fico score or income level… and everything to do with the level of debt that has been accumulated during this housing-mania.
Willow [30],
We go to Newport at least twice a year. Great town. You are right about summer weekends. If you go, better stay within walking distance of town. IMO, one negative, the beaches.
I’m naive, what are “halfbacks”? :)
People who move from the northeast to Florida and then move “half back” to the Northeast (i.e. the Carolinas).
It’s a growing phenomenon. People, especially retirees, get fed up with Florida’s heat, hurricanes & the high cost of housing in many areas. They move to the Carolina’s where the weather is a little less tropical & the cost of living is better.
RentinginNJ,
Thanks for the explanation.
#17 looking in ny
So if smaller regional builders face short term issues, but the big boys will not be in trouble until 2008, it makes sense to think that ‘Local Yokal Builders LLC’ is in deep water right now.
#6tbw Please remind your Mom to Vote Yes tomorrow on the school budget, a vot of yes will gurantee her prtoperty value in prestigious River Edge.
Please also remind her that the BOE put in a last minute request for yet anotehr bond referendum, this to buy property from the old Cherry Hill Church, rigth next to Cherry hill School, for only $895,000 we can buy this property and add parking and maybe a play ground.
This came up in just the last 1 week,and so it was not in the regular issue of the school informaiton paper, they sent out a special version of the paper the other day informing every body, of course no time for discusiion or
dissent. But hey its for the kids, and tell your Mom, that it is only an additional $29 over the next 10 years.
Only $29, the $265, the $300 plus $150, and so on and so on, and thats how the average house in River Edge how has a 10k a year property tax bill.
bbb: I heard about the property Cherry Hill wants to buy. Every year the schools want more, more, more, more and more. Where does it end??? They always have their hands out and the young people in the town keep voting yes. Unreal.
That house on Van Saun Ct, not on the market yet, but I can imagine the builder will ask around a million for it. You would think a house that big and that much money would have Anderson or Pella windows. nope…not even close. Windows don’t even have full screens. The person who buys that house is a fool.
but hey, the house has the signature “bigwindow” to showcase the Home Depot chandelier.
#41 They young people vote yes, because for the most part they are not sophisicated enough to know any better.
The BOE tells them either VOTE YES, or watch your property values decline.
They are like Stepford Rrobots when you try to talk to them. They will say things like we are so glad we bought when we did, other wise we could nto afford to live her now, we haev to spend on the schools, its for our kids.
When you point out to them that our kids will nto be able to afford to live there, thero eyes simply start blinking, or they walk away.
The BOE does not want people to think. SPend more money, and watch the scores go down.
The property at Cherry Hill is all of a sudden and I do not for minute belive it just happened. I think they were neogiating to buy it for quite soem time, and they are rushing it in to get approved at the last minute.
So I have give up on River Edge, its too scary now, the people are in complete denial and clueless and the elected officials are just as clueless.
When I am ready I will go to Oradell, the taxes are high, but at least the elected representatives appear to understand what is going on .
#44 tbw Also please take a look at the delighful 8 new condos that are being built on KKR, between the dentist and the KOC.
The “historical” societ made a determiantion thet an old hosue was we,, historic, so the builder could nto tear it down;take a look it is absolutely bizzare.
bbb: yes, I saw the condos on Kinderkamack Road. Basically, a 1700’s era home has modern condos directly in back of it. Very odd looking. Whoever ends up with the end unit condo will be looking at the backside of the 1700s era house. At least the builder fixed up the historic home though.
Can anyone please give me the sale info on GSMLS number: 2347015
I know it went under contract awhile ago, I was just curious on what the final sale price was. Thanks.
athos
No bottom in sight, NAHB Homebuilder Confidence falls.. From MarketWatch:
Subprime meltdown shakes builders’ confidence
WASHINGTON (MarketWatch) – Tightening lending standards in the subprime mortgage market have shaken the confidence of U.S. home builders, according to a survey released Monday by the National Association of Home Builders.
The Wells Fargo/NAHB housing market index fell from 36 in March to 33 in April, the lowest level since December. Builders were significantly more pessimistic about future sales than they were in March.
The index shows that about one-third of U.S. builders are optimistic about the housing market.
The index sank to a 15-year low of 30 in September. A year ago, the index was at 51. It peaked at 72 in June 2005.
Economists surveyed by MarketWatch expected to index to fall to 35 in April.
…
Market conditions deteriorated in all four regions of the country. In the South, the largest region for building, the market index fell from 40 to 37, the lowest since the regional data was first broken out separately in 2004.
In the West, the second biggest region, the index dropped to 35 from 37. In the Midwest, the index tumbled to 22 from 27, the lowest since December. In the Northeast, the smallest market, the index slipped to 38 from 39.
…
The current sales index dropped from 36 to 33, future sales fell from 50 to 44, and buyers’ traffic fell from 28 to 27.
athos,
$550,000
jb
From Bloomberg:
U.S. Homebuilder Confidence Index Falls to 33 in April From 36
An index of U.S. homebuilders’ confidence fell to the lowest level of the year this month amid concern that an increase in mortgage defaults is resulting in tighter lending standards that are discouraging would-be buyers.
The National Association of Home Builders/Wells Fargo index of sentiment fell to 33 from 36 in March, the Washington-based association said today. A reading below 50 means most respondents view conditions as poor.
According to today’s report, single-family home sales have fallen this month and builders’ outlooks for the next six months are at the lowest level since October. That, along with rising defaults on subprime mortgages and excess inventory levels, suggests a greater drag on construction this year.
“The tightening of mortgage lending standards in connection with the subprime crisis has shaken the confidence of both consumers and builders,” David Seiders, chief economist at the NAHB, said in a statement. “While we still expect to see some improvements in housing market activity beginning later this year, the downside risks and uncertainties surrounding that forecast are considerable.”
#46 tbw Actually the first 2 units will be facing it, not only facing it, but it will literally be at their front door.
As far as fixing it up, I think that is debateable. He gutted the entire inside, and sided the back and sides; there are only windows in the front of the house.
Also the county had no interest in it,a s they did not deem it historical.
#48 Thanks jb
athos
bbb: do you know what the fate of that house will be? Is the builder selling it? Is it going to be a condo “clubhouse”?
I think I may need to borrow Clot’s cheese grater..
Kids want to get pregnant’
Girls as young as 14 are refusing to use birth control, according to the executive director of Famcare for Cumberland, Salem and Gloucester counties.
Instead, they’re looking to get pregnant.
“Thirty years ago, everyone used to want to prevent a pregnancy,” Kimberly Mckown-Strait said Friday. “Now, we actually have adolescents seeking a pregnancy. They actually want to be pregnant.”
…
“I think it has a lot to do with peer pressure within their social circle,” she said. “(Girls without children) get teased by other girls.
“They say things like, You’re a lesbian.'”
Strait added it’s not just girls feeling the pressure.
“Sometimes, we see males who come in. They’ll say, There’s a lot of pressure on me to get a girl pregnant,” she said.
ugh.
#52 tbw His plan is to rent it. I am not surprised.
I do not posiibly see how any one could want to buy it, it has absolutely no property, no space for a small deck or patio, or even a spot for a barbecue.
I’m sorry, but I think the famcare woman is just being defensive after getting attacked.
I guess it’s possible that some segment of 14-15 year-old girls want to get pregnant, but really, how many?
Also, the teasing thing is just ridiculous. It’s telling that the reporter didn’t seem to try and find any of these girls who think pregnancy and child rearing is such a great deal.
hmmm, I don’t see it on the MLS yet. Will be interesting to see how much the old house rents for.
You know people are funny – we blame everybody and everything for our mistakes….
Last night I was watching News.. About LI residents getting flooded:
One Lady-Homeowner Quote: ” It is horrible – my house s flooded. Nobody have to be forced to live like this – in a flooded house”…
So Bear with me here – She was forced to buy a house in the flood zone???
I mean – since when people are completelly obliviouse – we still have choices… And one of them is buying a house is a flood zone.
P.S. out of all places I looked at in my house search, few month ago (ended in vain – just too expensive here) Manville was actually better priced for better homes. I was seriously considering making an offer, but than a colleague from work menthioned that the bigger part of Manville is Flood Zone… Today Manville was isolated by Flood waters, all bridges in our out are flooded and police and National Guard were evacuating people from flooded houses. There was 5 un-occupied houses for sale in the flood zone in Manville…..
I am glad I did not made an offer on the house there….
Young girls wanting to get pregnant isn’t new news, it’s been happening for a while. Being pregnant is glamorized in some cultures and in the media, combine that idealized perception with “true love” and a need for unconditional love of a baby & there you go.
watch this & pass it on-> http://www.paperdinero.com/BNN.aspx?id=144
New Today! Heebner: “Home Prices Decline at Least 20%”
The always colorful Ken Heebner, portfolio manager for the Boston-based CGM Realty Fund, talks at length about his outlook for the nations housing markets. Heebner see the greatest home price decline since the Great Depression coming with at least a 20% decline.
Originally aired on: 4/13/2007 on Bloomberg
Running Time: 12 minutes 1 seconds
#58 AL Be Patient, prices will come down. I feel your pain, but our patience and perserverance will be rewarded.
#57 tbw He has not finished the inside yet. He is going gangbusters to get those condos done. They went up incredibly fast.
He is now in the process of pulling down the other old white house, and another 4 condos will go there. He expects to have all eight on the market this Spring.
He is a one truck builder, so I imagine he wants to get rid of them quickly.
I’m just curious who the 1/3 of homebuilders are that are optimistic about the housing market.
Willow (30)-
Florida is nasty. It’s the home office for America’s rednecks, and Miami reminds me of Los Angeles circa 1989.
Grim (53)-
Just another sign of the decline of Western civilization.
Starting over,
I cancelled an open house based only on the fact I didn’t feel if was fair to chase my homeowner out of his house yesterday, in that weather, with almost no chance of getting a client in there. It was a condo without a basement.
I got a call from another office that was cancelling an open house I was sending a client to. She cancelled at the homeowners request, again they just did not want to leave their home.
KL
RR: There are plenty of legitimate reasons for cancelling. I am certain that many explained the many cancelled signs that I saw yesterday. But, in my (admittedly limited) experience, I have never heard of a seller volunteering that they have a wet basement. I’m just added the cancelled open house factor to other signs that raise my suspicions: like musty smells (or lots of airwicks) or the freshly painted floor of an unfinished basement
“A leading member of the Senate Banking Committee is drafting legislation that aims to assist mortgage borrowers now facing foreclosure, sources familiar with the work said Monday.”
“Sen. Jack Reed expects to have the legislation drafted in the next few weeks and is seeking input from community groups who help troubled borrowers, a source familiar with the plan said.”
http://money.cnn.com/2007/04/16/real_estate/bc.usa.subprime.congress.reut/index.htm?postversion=2007041615
from cnn money article:
http://money.cnn.com/galleries/2007/real_estate/0704/gallery.new_real_estate_tools/index.html
any opinions on
http://iggyshouse.com/ for sellers
and
http://buysiderealty.com/ for buyers
this looks interesting to me when i am ready to pull the trigger.
From Bloomberg:
U.S. Foreclosures Double as Refinancing Gets Tougher
The number of U.S. homes entering foreclosure in the first quarter doubled from a year earlier as property prices stagnated and owners struggled to refinance mortgages.
Owners of 168,829 homes in the first three months of 2007 received notice that lenders had filed for foreclosure due to failure to pay loans or liens, Foreclosures.com said today in a statement. That compares with 83,154 homes in the same period of 2006, the Sacramento, California-based research firm said.
A four-year high in mortgage payment delinquencies and the failure or sale of 50 subprime mortgage companies, which provide loans to people with poor or limited credit histories, have made credit less available. The inability of homeowners to refinance their debt has added to the rise in foreclosures.
“A lot of folks have been borrowing and borrowing and borrowing to stay out of trouble,” Foreclosures.com President Alexis McGee said in an interview. “Now that there are less borrowers in the marketplace, where are they going to go? Unless lenders step up and offer money to these people, they’ll be locked out.”
got some flooding in my basement. the silver lining here is you know exactly what walls and cracks need fixing for the next biblical downpour.
My next-door neighbor in Montclair has had her house on the market for nearly a year. An open house was scheduled for yesterday and the realtor called in the late morning to cancel, on the theory that no one would show up because of the weather. My friend said she would stay home in case anyone showed up. Seven couples (only one of whom had a realtor with them) came to look at the house. Yesterday was a great day for checking on leaky roofs and leaky basements. Fortunately, my neighbor has neither. No offers, though.
I heard a segment on Bloomburg Radio today, an interview with a guy from PIMCO. He says that the hedge funds are buying the assets of some of these failed mortgage companies, sometimes as low as 30 cents on the dollar.
Now that’s a fire sale
Richard, I am so curious – what neighborhood in Westfield do you live in? Obviously you don’t have to give your address but could you say which elementary school district? I’d love to know which one was in such high demand.
#67
I went to an open house last year and there was standing water in the basement. I couldn’t believe it! I don’t think they had a sump pump and they definitely didn’t have a dehumidifier. Needless to say, the house is still on the market with only slight reductions. Without the water problem and if it had a garage, it would be a great house to buy. This is it:
http://www.realtor.com/Prop/1078549412
My other pet peeve is people who are trying to sell their houses with smelly basements – all they would have to do is buy a dehumidifier to get rid of the smell. Our basement would sell if we didn’t have the dehumidifier (although the standing water down there yesterday didn’t help).
#67
I went to an open house last year and there was standing water in the basement. I couldn’t believe it! I don’t think they had a sump pump and they definitely didn’t have a dehumidifier. Needless to say, the house is still on the market with only slight reductions. Without the water problem and if it had a garage, it would be a great house to buy. This is it:
http://www.realtor.com/Prop/1078549412
My other pet peeve is people who are trying to sell their houses with smelly basements – all they would have to do is buy a dehumidifier to get rid of the smell. Our basement would smell if we didn’t have the dehumidifier (although the standing water down there yesterday didn’t help).
went down to the basement, thank god my sump pump is working!!!! This was it’s first test in eight years, since we moved in. What a relief.
things are moving fast on the real estate front. Wife and I are partnering up with some family members to buy back an old family farmhouse, which is being sold by a bank, after it was foreclosed last January. Even though the price is listed at $220k, our realtor friend thinks that if we lowball for $150k, cash offer, with proof of funds, that we should be able to get it, since the bank will be forced to accept. If there are other offers, why would they be “forced” to accept a lowball? Anyone?
Nobody’s forced to take a lowball.. They can always list it with an agency to get some interest.
Prof (76)-
The words “force” and “bank” are mutually exclusive. That bank will wait ’til hell freezes over until an offer meets their expectations (smart or not).
However, if you come strong (cash, no contingency, fast close), you should get a good deal. Banks aren’t in the hero business, either.
Good luck to you!
Gold $700 this week.
SAS
thanks clot,
the bank has a realtor. The first open house was on Saturday, and apparrently it is showing horribly. A builder tried to flip it, and ran out of cash with the place unfinished.
Our realtor friend says that in this instance, she wouldn’t be surprised if the bank jumps on our offer now so they can cut their losses, and so they won’t have to cut the grass all summer, or finish what the builder started.
any info on mls # 2311922 in berkeley heights?
thanks.
From Reuters:
Top bank regulator says subprime borrowers trapped
The mortgage investments that helped fuel a recent U.S. housing boom now have many troubled borrowers trapped in loans that they cannot afford, a top bank regulator will tell Congress in a hearing on Tuesday.
While mortgage investments added liquidity to the market in recent years this also has put dangerous distance between the lender and borrower, Sheila Bair, chairman of the Federal Deposit Insurance Corporation, is due to tell a Congressional hearing on the subprime mortgage crisis on Tuesday.
Will this FDIC (a.k.a. bank) plea make a difference?
Troubled and trapped.
Where was troubled and trapped when people lost a good chuck of their retirement savings in dot.com? Is it too late for a troubled and trapped pitch for people who made bad investments seven or eight years ago versus two or three years ago?
“Many subprime borrowers could avoid foreclosure if they were offered products that allow for affordable mortgage payments,” Bair said. “Restructuring their loans into more affordable products, especially 30-year fixed rate mortgages, would bring them back to good standing, allow them to repair their credit histories, and dampen the impact that foreclosures may have on the broader housing market.”
Is this lady on crack? If these people could have afforded a 30 year fixed in the first place, don’t you think they would have taken one out? All these loans are arms with low teaser rates because that was the only way the deal would get ever done. 30 Year fixed is not more affordable on a monthly basis.
.
http://tinyurl.com/24fdll
71 – You said your neighbor’s had the house on the market for a year. How much has it dropped? We’re actually looking in Montclair, but not until the Fall – when we anticipate prices dropping about 75k from what they are now.
Plus, how’s the house?
ps – Our absolute ceiling is 375k (please resist the urge to laugh).
Prof (80)-
Make sure you can insure this place before you get bound to a deal.
Unfinished houses that builders have abandoned are big red flags for insurers.
Also, if you intend to borrow any money to finish this place, get that lender’s blessing in advance.
Frustrated (86)-
No wonder you’re frustrated.
Why don’t you just start rooting for thermonuclear war?
Prof (80)-
Also, you should at minimum do a title abstract for yourself…and possibly purchase title insurance (many people who purchase with no financing erroneously believe this is an unnecessary nuisance).
Many builders who cut-and-run on upside-down rehabs leave behind a trail of mechanics’ liens and other nasty stuff that doesn’t necessarily get resolved by the foreclosing party.
flooding, no flood insurance, no more house ATM…
nice.
Taxpayers in stormy states allowed extra time to file
http://www.marketwatch.com/news/story/irs-allows-taxpayers-stormy-states/story.aspx?guid=%7B47F733F8%2DA37C%2D42F7%2DBF4A%2D67DD3F2E0009%7D
The Internal Revenue Service announced Monday that residents of storm-battered areas will have two extra days after the April 17 deadline to file their tax returns this year.
Calif. mortgage defaults hit near-10-year high
http://money.cnn.com/2007/04/16/real_estate/bc.usa.subprime.californiadefaults.reut/index.htm?postversion=2007041618
Defaults up 148 percent from last year, driven by stagnating home prices, resetting adjustable loans.
April 16 2007: 6:48 PM EDT
SAN FRANCISCO (Reuters) — The number of mortgage default notices sent to California homeowners last quarter rose to its highest in nearly 10 years as home prices stagnated and rates on adjustable loans pushed higher, a report released Monday said.
Mortgage lenders filed 46,760 notices of default from January through March, marking an increase of 23.1 percent from the previous quarter and 148 percent from the year-earlier period, according to a report by DataQuick Information Systems, a real estate information service.
The first quarter’s default level was the highest for the most populous U.S. state since the second quarter of 1997. It came amid a sharp rise in defaults on mortgages held by subprime borrowers, or borrowers with blemished credit, across the United States.
The low introductory interest rates on many such mortgages have been expiring, replaced by much higher rates that have made monthly mortgage payments too expensive for numerous households to maintain. Additionally, their options for refinancing their mortgages have been limited because home prices in many markets have been largely flat or slipping.
Many analysts say a surge of foreclosures is in the making and that it will weigh an already sluggish housing market, hitting such homebuilders as Pulte (Charts), D.R. Horton (Charts) and Centex (Charts) and maybe slowing the broader economy.
“Defaults tend to happen after a certain length of time and today’s activity reflects a peak in the number of home loans made back in the summer of 2005. Additionally, the loans being made back then were riskier because of the subprime activity, as well as higher appreciation rates. It’s easier to make a loan when the security for that loan is going up in value than when values are flat,” said Marshall Prentice, president of DataQuick.
Riskiest loans inland
Most mortgages in California that went into default in the first quarter were originated between April 2005 and May 2006, and their median age was 15 months.
According to DataQuick, mortgages were least likely to go into default in Marin, San Francisco and San Mateo counties, three affluent coastal markets with a tight supply of housing that has helped prevent home prices from slipping.
4 new real estate tools
The likelihood of default was highest in inland Sacramento, Riverside and San Joaquin counties, where prospective first-time home buyers rushed in during the housing boom in search of relatively affordable housing.
Squeezed from pricey coastal markets, many Californians moved to such interior areas and used adjustable-rate mortgages to purchase houses in scores of new home developments. They now are facing higher interest rates on their loans and rising mortgage payments, while home values in those markets decline.
“It’s hard for me to say whether or not the damage is done in those areas,” said economist Alan Gin of the University of San Diego’s Burnham-Moores Center for Real Estate.
“It probably won’t be until 2008 before we seen some improvement,” Gin said, referring to California’s default trend. “I anticipate the Federal Reserve will cut interest rates in late 2007 and into 2008, and I expect that will help give some support to the housing market.”
Group Trying to Keep Borrowers in Homes
Monday April 16, 6:46 pm ET
By Marcy Gordon, AP Business Writer
Regulators, Execs Agree on Goal of Keeping Distressed Borrowers in Homes, FDIC Chairman Says
WASHINGTON (AP) — A high-level group of federal officials, bankers and mortgage industry executives meeting Monday agreed on a goal of keeping deserving borrowers with high-risk mortgages in their homes at a time of rising foreclosures, a key banking regulator said.
http://biz.yahoo.com/ap/070416/risky_mortgages.html?.v=1&.pf=loans
clot #91
thanks for the tips! There’s about 50K worth of work that needs to happen. We will definitely need to take your advice on the insurance and title fronts. It’s a pre-war farmhouse with some really beautiful wood detailing throughout. Used to be in my wife’s family until about ten years ago, and one of her uncles sold it off. Needless to say he disappointed the rest of the family. Anyways, it has a billiard room that at one time had a custom billiard table made out of slate with ivory inlays, the kind that they don’t make anymore. The guy who bought the place didn’t want the pool table, got tired of waiting for it to be moved, so he took a sledge hammer to it!
#43: I think P.J. O’Rourke calls that window the “Yuppie Scupper.”