The Age of False-Bottoms in Real Estate is Here
The Anatomy of a Housing Market at a Potential False Bottom
I do a significant amount of work for distressed funds and thought this research would be interesting to share. This is only the San Diego MSA but most other MSA’s in the state look very similar. Mark
I was on CNBC several weeks back with Erin Burnett and she asked if there was any chance for the Case-Shiller to suddenly spike one month in the near-term. I said ‘no major spike — but there absolutely will be price leveling and even rising in some the hardest hit MSA’s’. It’s time to revisit this.
In my April 30th report entitled ‘Housing (bottom) Update’ I highlighted the reasons why some of the hardest hit MSA’s might do well over the near-to-mid term:
- artificially depressed supply through gov’t and bank-specific foreclosure moratoria;
- artificially low rates and temporary tax benefit;
- foreclosure mix-shift creating an artificial skew higher in reported median and average prices;
- And fleeting seasonal demand.
Essentially, everything is artificial and so should the bottom that comes out of it. I have been looking for this false bottom phenomenon to play out for months and believe it is here.
The San Diego MSA is a perfect example of a market experiencing a false bottom. It is a very interesting and unique market that I believe will show a bottom in reported house prices as soon as the next Case Shiller report. It may even report a decent sized increase in median and average house prices.
San Diego MSA – The Anatomy of a False Bottom
San Diego is not unlike most other hard hit MSA’s. Prices are down significantly, sales have increased year-over-year creating excitement and speculation, and the majority of the sales are happening at the low end. The mid-to-upper end is languishing. For various artificial and temporary reasons, there is only a couple of months supply at the low and literally ‘years’ of supply at the high.
San Diego total sales are hovering around 3k per month. This is up sharply from the lows of 18-months ago when prices were still near the highs and all of the exotic loans went away suddenly creating a sudden and violent sales trough.
But sales are nowhere near robust in a historical context especially when considering that median house prices are down 44% from the peak and rates are at historic lows. If this market was truly on the mend, sales would be much higher especially now, during the peak season. Sales actually dropped 10% from April to May.
Some will argue that low sales reflect low inventory, which I do not necessarily agree with. But, if that is the case we should see a price surge in the near-term that proves it.
Prices have also fallen sharply in the past 18-months. The sudden fall coincides perfectly with the sudden loss of all exotic loan programs in Q3 2007. Please note the series of events that took place during the dramatic house price slide from over $500k in June 2007 to a low of $280k in Jan 2009.
The 2008 surge in foreclosures shown below kept this market over-supplied in all of 2008. This accounts for much of the relentless home price slide through the end of 2008 as pictured above. Then, foreclosure moratoria beginning in Q4 2008 (below) kept foreclosure-related resale supply at a bare minimum…much less supply than demand for low priced properties.
When you combine a median price decline of nearly 50% with artificially low rates and a genuine lack of supply through moratoria, it will create support — and it did. But as noted in the first chart showing sales counts, it has not created a surge in sales.
The average present value of properties entering the REO supply pool as shown in our data below, revealed a price turn in March. We highlighted this in our April report entitled ‘San Diego Housing Market Alert’.
But because REO resales only make up only about 35% of total sales vs roughly 60% statewide, they are not as much of an influence over pricing as in other hard hit MSA’s around the nation. This may point to the loss of exotic loan programs as more of a problem for this market initially than foreclosures.
But even with foreclosure-related sales running lower than the statewide average in this market, they will still influence prices. And the shift in the value mix of properties entering the REO resale pool to higher priced properties will influence median and average house prices going forward.
Shown below — the low priced band (blue) is shrinking relative to total new REO supply from the upper price bands. As this higher priced property mix is resold, it will have the effect of lifting median and average values. In other MSA’s where the percentage of REO to total housing is much greater, the mix-shift has a much greater effect.
The following chart of monthly bank owned properties is the last look available at the pool of REO resales before they are listed with a Realtor and resold. These data are unique and totally proprietary to ForeclosureRadar.com and The Field Check Group.
At the Notice-of-Default stage, the mix shift is even more pronounced and occurred earlier. This is because the REO chart above is made up of loans that may have gone into default as long ago as a year — during the heart of the Subprime implosion. Subprime loans were lower in loan amount attached to lower priced homes generally.
The Notice-of-Default mix-shift chart below shows real-time monthly loan defaults containing a much greater number of higher loan amount Alt-A, Jumbo Prime and Prime loans on higher priced homes.
Much More Supply Coming
But before you get too excited about the prospects of San Diego real estate and put in an order for a pool of REO’s to flip or notes to work out, a wave of foreclosures is coming.
In the past three months alone, Notice-of-Trustee Sales are back at near peak levels of 2500 per month. An NTS is the second stage of foreclosure that comes 14-60 days prior to the property being taken to the courthouse and sold.
With most loss mit and mortgage mod plans known to servicers now, there is little reason to file an NTS unless in fact the property has a good change of going to foreclosure. With San Diego sales at about 3k per month, 2500 NTS per month could cause a serious supply/demand imbalance that must be absorbed for this market to become and remain healthy. This will be especially difficult considering that the peak sales season ends in August and Notice-of-Defaults (two charts down) that feed NTS, have also surged recently. Judging by the flow, recent NODs will feed foreclosures perhaps through the end of the year — that is as far out as we can see.
This NTS surge is especially troubling considering that foreclosure related supply only presently makes up approx 15% to 20% of total housing supply and Ma and Pay Organic homeowner make up the rest. With 3000 monthly sales and supply coming at a rate of 75% of total sales, that does not leave a lot of demand for organic sellers. First timers and investor can’t carry this entire market on their own. Organic sellers must be able to sell and re-buy in order to keep demand stable and strong.
Notice-of-Defaults – the first stage of foreclosure that occurs after a borrower misses 3-4 payments — have surged in the past five months. The dip down in 2008 was solely due to a CA moratorium law — SB1137 — that had the effect of kicking the can down the road.
There have been more new Notice-of-Defaults each month for the past five months than properties sold. NOD’s turn into foreclosures within 5-8 months — this is not a great sign. The new mortgage mod initiatives had better work well.
Mid-to-High end Trouble
Mid-to-high end loans and the home attached to them are where the real trouble lies in the near-term. The two charts below show the monthly new loan defaults and foreclosures for mid-to-high end properties.
Mid-to-high end NOD and foreclosure counts stand between 35% and 40% of total counts but account for only about 20% of total sales. This means that foreclosure-related pipeline supply is 100% greater than demand in this segment. This is a major supply/demand imbalance that will bring serious trouble to this market over the near-term. Especially considering that this particular foreclosure related supply only makes up approx 10% of total mid-to-high end supply with Ma and Pay Organic homeowner once again making up the rest.
In this market segment especially, first timers and investors have little impact — organic sellers need to be able to sell and re-buy in order to keep demand stable and strong.
This will promote significant house price and rent compression over time that may put in jeopardy the low-price housing stability seen today.
Jumbo REO has also been held artificially low due to moratoria. With only 300-400 units entering the resale pool each month since the moratoria kicked in and more exotic and longer-term loans left over from the bubble years, the mid-to-upper end market has not gone through the same tragic price melt-down as the lower end — yet.
Lastly, third party professional investors/buyers at San Diego courthouse foreclosure sales have not stepped up what they are willing to pay like the retail buyer has. Price declines in this segment have decelerated and may show stabilization soon, but after only one month it is too early to call.
With rents tumbling and the primary purchasers at the courthouse foreclosure auctions being professional investors, I think this chart is very telling.
Bottom Line: Headlines are about to get wild, as the age of false bottoms in real estate is upon us.
At Field Check Group, we do highly granular work on every CA MSA and other states upon request.
Best Regards,
Mark Hanson
Mark@TheFieldCheckGroup.com
Data provided to Field Check Group Real Estate & Finance by ForeclosureRadar.com
June 4th, 2009 at 9:27 pm
Great work, as always!
Thanks for sharing your excellent analysis…….
June 5th, 2009 at 3:01 am
Awesome post, thank you for sharing your insight.
June 5th, 2009 at 6:10 am
MM,
Where did you post this report entitled ‘Housing (bottom) Update’ ???
Looking through your archives, I don’t see it…
4-7 — CA Foreclosures About to Soar…Again
4-10 Forward Look at Defaults, Foreclosures, Banks and Housing
4-15 — Near Real-time CA Distressed Resi Whole Mortgage Loans & Property Valuations
4-21 San Diego MSA Housing Report — Severe Supply/Demand Imblance
?? where ?? april 30?? ‘Housing (bottom) Update’ ??
5-7 Mark Hanson -Special REO Investor Report
5-12 April Foreclosure & Servicer Tracker Report
5-25 CA Home Sales – More Buyers (and sellers) Needed Now – Organic Sales Dead for Past 18-Months
5-28 – Potential Consequences of 5.5% Mortgage Rates
5-29 – ‘The Day After’ the Interest Rate Spike
6-5 Beware Real Estate False Bottoms
June 5th, 2009 at 6:31 am
MM,
The report:
4-21 San Diego MSA Housing Report — Severe Supply/Demand Imblance
Has the highest number of comments (179).. (on your new site)…due to the fact, no other report in almost 3 weeks.. I was even kidding about.. in one of my comments:
ex_owner_now_renter Says:
May 5th, 2009 at 7:23 am
5 articles in april…and none in the last two weeks? Is it getting better, or (MM) r u moving again?
Are you holding out on us?
June 5th, 2009 at 6:33 am
Excellent information and analysis!!!
Very impressive. Thank you!
June 5th, 2009 at 6:46 am
“Prices have also fallen sharply in the past 18-months. The sudden fall coincides perfectly with the sudden loss of all exotic loan programs in Q3 2007″
I predict.. as far as I can see.. that will see this in June 2012:
“Prices have also fallen sharply in the past 36-months. The sudden fall coincides perfectly with the sudden loss of all FHA loan programs in Q3 2008 – Q3 2011″
June 5th, 2009 at 6:48 am
Can you say STAGGGGGGGGGGFLATION 10 times really quick?
June 5th, 2009 at 8:17 am
Question for Mr. M – With regards to your graphical representation of %of REO by price point and NTS by price. It seems to me that all homes in excess of the 225K price point has either stayed stable or actually decreased, as is the case in the 650K+ area over the last couple of years. Are you suggesting that this is about to change? From a selfish standpoint, I’m waiting for the move up area to implode. Is it just going to take another year or so, before we see the % increase for these higher end homes? Thanks for your work!!
June 5th, 2009 at 8:22 am
ex owner now renter – what are you referring to when you say there is a loss of all FHA programs in Q3 2008 and beyond? I believe the % of FHA loans as a percentage of loans has increased from 2% a couple of years ago to 25% today.
June 5th, 2009 at 9:09 am
housingrealist,
Unless you think in today’s market or next couple of years prices are going higher, and the FHA loans are rock solid, and the economy has turned the corner.. I would imagine that the new (FHA) buyers, will not blame anyone when they get laid off, and not blame anyone but themselfes, when their home that they bought to live in goes under value, will simply walk.
June 5th, 2009 at 9:20 am
AND……………………
The surge in interest rates aint gonna help!
June 5th, 2009 at 10:03 am
PRINCIPAL REDUCTIONS
June 5th, 2009 at 10:23 am
Javagold.. you’ll get it when you loose (forclose) your house!
June 5th, 2009 at 10:25 am
Take responsability for your action! stop beging and blaming banks, like it’s not your fault! Be a man like Partyboy!
June 5th, 2009 at 11:25 am
Thanks Mark for another excellent factual analysis. For those who have not seen his you tube videos from last year…. you should. They can be found under Mr. Mortgage. His analysis was “right on” then as it is now. This housing/foreclosure issue is HUGE and most people do not see what is probably coming. This week, Jim Cramer called another housing bottom…and recommends you go out and buy a house, like he’s going to do. Sounds like he’s trying to create one that doesn’t exist, and probably won’t until well after 2012/2013.
June 5th, 2009 at 12:16 pm
Wonton.. r u still there? Do blame yourself, for not buying a home few days ago, cause you’re greedy and waiting for rates to go up, so you can get a cheaper price..AND NOT HELPING THE (70% consumer based) ECONOMY … I thought it was a place for you live in not an investment, and nothing wrong with 450K home…if you can afford it… (I CAN’T BUY NOW, CREDIT JAIL) ..but what’s your excuse? GREED MUST BE ALIVE EVERYWHERE!
June 5th, 2009 at 12:43 pm
Where’s the other greedy *potential buyer*..David The Renter?… GO HELP THE ECONOMY AND BUY A HOME… the economy now waits on people like you… OBAMA IS COUNTING ON YOU… and gave you $8000 incentive..
June 5th, 2009 at 12:44 pm
Am I entertaining enough for you WoW in California… I’m still waiting for your INPUT (something with substance? maybe)
June 5th, 2009 at 2:30 pm
Ex-owner, Any chance you can take the edge off? Remember this is a professional website Mr M uses to market his services…
June 5th, 2009 at 2:37 pm
ex_owner_now_renter
can you please stop spamming Mark’s blog with your inane comments?
June 5th, 2009 at 3:30 pm
ex_owner, you need help.
June 5th, 2009 at 3:31 pm
Would you say that by the end of July, we can look back a couple months and see a flood of foreclosures on the market?
June 5th, 2009 at 3:45 pm
I’m sorry I didn’t like this show the first time it played, do we have to watch it again !?!
June 5th, 2009 at 4:00 pm
Unknown: it’s SPELLED: I N S A N E
Show Spelled Pronunciation [in-seyn] Show IPA
–adjective 1. not sane; not of sound mind; mentally deranged.
2. of, pertaining to, or characteristic of a person who is mentally deranged: insane actions; an insane asylum.
3. utterly senseless: an insane plan.
This site has been calling about BALANCE REDUCTIONS for two years!! THAT’S INSANE!! (by the government of course… go talk to your bank, if they do it..great!.. but STOP STEALING OUR TAX MONEY.. from my generation, my kids’s generation, and their kid’s generation)
NOTHING PROFESSIONAL ABOUT THAT! YOU DON’T LIKE THE COMMENTS.. THEN DON’T GIVE THE PEOPLE AN OPTION TO POST!
June 5th, 2009 at 4:20 pm
Wonton, I don’t need help, the “Supply and Demand” model that we have in place for housing needs help, or buyers. You guys want to fix the problem? I’m all ears… but don’t tell me the PR is the solution… MORONS!
There are tones of forclosures now – go work with a real estate that’s in cahoots with the Bank’s REO division, and he’ll take you to properties that don’t even have a FOR SELL sign!
June 5th, 2009 at 4:25 pm
Yay for graphs!
I also have a couple thoughts about the graphs. I really like them. However, I’ll put two cents in to suggest that some of the points that are made in four busy graphs could be illustrated more clearly in one or two. For example, a line graph with 5 lines: 1 for the avg price of each tranche, and the 5th, thicker, line showing the avg sale price across all tranches. Alternatively, a bar graph where each bar is comprised of 4 colors, with each color representing a tranche, which makes it easy to see the changing weight of the components within the aggregate figures.
I can’t quibble too much, since you give great information for free, but increased clarity also increases the value when the private clients pay you. There are probably lots of business school students armed with the latest graphing software that can do it for you, if you don’t want to go back to school yourself.
June 5th, 2009 at 4:26 pm
SINCE some of you can’t even buy with an 8000$ incentive, 18000$ in cali, for a new home…and waiting on rate hikes/further price drops.. why not let ex-owners come back (and soon prime/alt a) after 1 year in CREDIT JAIL, and repaired credit… you’ll get a true price bottom very soon!
Cause it doesn’t serve the (greedy) banks? Then let TIME TAKE COURSE, and stop the INSANITY with (gov) PRs!!!!!!!!! ASK THE BANKER FOR ONE!
June 5th, 2009 at 4:26 pm
And adding to the more vibrant parts of the debate:
Inane’s a different word from insane. And so’s inane!
June 5th, 2009 at 4:29 pm
Thank you Andy, English after all is my 3th language.
June 5th, 2009 at 4:36 pm
Unknown-
ex_owner_now_renter likes to bait people into flame wars on this great informational site that MM runs.
If everyone in the village, ignores the village idiot, he has no platform to stand on.
I myself will not respond or comment to his rants anymore.
June 5th, 2009 at 4:39 pm
WoW… 3th comment from you, and nothing worth a substance to add..AGAIN!
June 5th, 2009 at 6:43 pm
Intresting article since I just read this in an SD newspaper. You can’t believe anything anymore to do with real estate- thanks for clearing it up-BTW I live in SD
EX- stop changing every post to be about you-YES EVERY post, no matter what it is about- is consummed by you. You sound bitter- maybe you should be-fixing your situation isn’t going to fix the nation. Please I beg you to stop.
BTW its 3RD- not 3th.
June 5th, 2009 at 7:32 pm
Your article states that there will be a huge influx of upper tier homes coming soon and no buyers for them. Then the article ends with “Lastly, third party professional investors/buyers at San Diego courthouse foreclosure sales have not stepped up what they are willing to pay like the retail buyer has. Price declines in this segment have decelerated and may show stabilization soon”
So which is it?
I’m in the market for a 750k-850K house. Should I buy now, or wait? How long should I wait?
Thx.
June 5th, 2009 at 7:46 pm
I’ll stop.. but I beg you guys as well (before it’s too late) to stop the (gov) PR bullshit!
Keep in mind, I’m not the ONLY ex_owner_now_renter.. There are millions like us…that are learning the hard way…and millions more that will learn as well
All of you that think that think Banks, lax gov regulation, FRAUD, GREED, and the last 30 years had nothing to do this… is about to get a RUDE awakening!
June 5th, 2009 at 7:54 pm
Sharon:
I don’t think Jim has anything up his sleeve.
The one thing I can say, after watching his stock picks over the years, is that he can make a wonderful contrarian indicator, when he indicates – like he did earlier this week.
June 5th, 2009 at 8:00 pm
Mark,
Thank you so much for your research.
This coming Thursday, I believe the government is scheduled to auction off about 300 billion in Treasuries. I wonder if we will see another spike in interest rates like we did last week on Thursday.
I hope that Mr. Geither’s trip to China was as successful as is being reported, but I have my doubts.
June 5th, 2009 at 9:09 pm
Mark,
Wow that is some serious research!! Could you please explain why my clients have written 5 offers for Single Family Homes in the subs of SD in the 425k-469k range and been bid out of everyone, by about 10k. And can you tell me why my investor clients bidding on homes in the 200k-230k of Oceanside, chula vista, San marcos are up against multiple offers.?? And could you please maybe make a positive comment on the wonderful time it is for first time buyers to being to afford a home with crazy low interest rates.
June 6th, 2009 at 1:32 am
@SistaSue – this was obviously some serious research because you missed the whole point that this is a false bottom brought on by:
a) artificially low interest rates
b) moratoriums on foreclosures by .gov
c) ‘green shoots’ chicanery on behalf of the fed/nar/banks and d) the impending alt a/option arm (high-end) implosion thats just beginning to happen (if you went to college and you took at least lower division macro/micro economics you would see know what a ‘lag period’ is..)
e) not mentioned but implied: median income/median house price discrepancy (ma and pa sales/move up)
f) not mentioned but obvious: highest unemployment rates since the the GD (how do you pay your mortgage when you have no income and your FIRE industry job is…toast?)
Couple of cliches that ring true: the exception never disproves the rule and correlation is not causation.
June 6th, 2009 at 8:29 am
Can Sue explain why there were multiple offers in 2005?
June 6th, 2009 at 8:37 am
We bailed out GM for $50B (probably saved 300K jobs), AIG for $180B and counting. We have spent easily 2 Trillion for all the various TARP, guaranties schemes.
So another 3 Trillion to bailout housing is not an issue. The reason why the Gov has not done so is politics. Just look at the replies on this forum. There is a lot of animosity over “bailing out irresponsible homeowners”. But as the housing rot works its way, “responsible homeowners” who are now faced with unemployment are looking for bailouts. So it is a matter of time before bailouts are acceptable.
Geithner recently made a special trip to China and the whole purpose of his trip was to assure the Chinese. In the end Chinese and US officials came out with a statement on confidence in US$ and US Treasuries and a commitment to US$ as global reserve currency. In short Geithner’s visit to China is a visit to our bankers (China)telling them that US is going to issue another 2 to 3 trillion in debt and not to panic.
June 6th, 2009 at 8:49 am
Hi Sista – I would say the range to $500k will remain strong through the season because artificially low rates to $417k WERE low and supply has not made it yet. But more supply than present demand is coming. Question is – will the demand remain strong after August and in the face of tremendous supply from the foreclosure pipeline. You are strong now because of…
* artificially depressed supply through gov’t and bank-specific foreclosure moratoria;
* artificially low rates and temporary tax benefit;
* foreclosure mix-shift creating an artificial skew higher in reported
* median and average prices;
* And fleeting seasonal demand.
not because the macro housing market is improving.
June 6th, 2009 at 9:22 am
I see that Dr Housing Bubble has come around to PRs for the same reasons Mr M has been arguing (link below). This is somewhat surprising considering DrHB’s usual denunciation of bubble buyers.
My guess is that some (incl DrHB) are starting to realize that most of those left standing are the economy. It may be time to throw them a bone.
http://www.doctorhousingbubble.com/loan-modifications-another-taxpayer-bailout-to-the-housing-industry-mortgage-modification-default-rates-over-50-percent-over-4-percent-of-subprime-loans-first-payment-defaults/
June 6th, 2009 at 9:28 am
Mark, your “sold to 3rd party” chart says something different to me than it does to you. It says to me: fewer sales to investors at auction happened because fewer sales at auction happened…period. I assume your chart is volume, not price, and national, not local. You did a lousy job of telling us what it even is.
June 6th, 2009 at 9:31 am
And please don’t tell me that is investor prices paid in SD. I don’t believe for one minute that investors reduced their average prices coincidentally at the same time moratoria were in place. It doesn’t add up.
June 6th, 2009 at 9:33 am
Mark,
I repeat to you and the rest of gang favoring (gov sponsored) PR.. (I have no problem with the Bank doing the PR)…
- I want my credit (ex_owners that lost 2008,2009) cleaned ..REMOVE my forclosure record! I’ve had 750 points before, and no other negative spot… so I can buy a home! BE FAIR TO EVERYONE!
June 6th, 2009 at 9:35 am
Sista can you tell me how many of your first time home buyers are actually qualifing for those low rates and how many of them actually buy and are not out bid by your investor clients.
CV and Oceanside were way over priced especially eastlake. Anyone out bidding by 10k is a fool and I hope to god they are not doing it because some realtor told them it would be the only way to get the house.
June 6th, 2009 at 9:44 am
TomH
“3 Trillion to bailout housing is not an issue”
I think 785 billion that chinese have vested.. they’re already worried.. 1.8 trillion deficit..already worried… Where to get 3 trillion? BORROW/PRINT? DO YOU KNOW THE IMPACT OF THAT? HYPERINFLATION~DOOM SCENARIO
June 6th, 2009 at 10:32 am
I hate to say this, but I think prices will take off from here. Anyone waiting till 2012 to buy to find prices tripled by then. Median no doubt will be well over a million $$. Just my opinion.
June 6th, 2009 at 3:42 pm
Mark,
Excellent post. What you said about median prices being pushed up due to higher priced properties is EXACTLY what I have been telling everyone and they have been laughing at me.
It’s a sad day in RE when the only thing people are buying homes for is to make money. That’s not what it’s meant for.
I truly truly hope…from deep down in the bottom of my heart that flippers and people out to make a buck on RE fry in Hell. I mean that.
June 6th, 2009 at 4:35 pm
Noz, right on man. I hear ya!!
June 6th, 2009 at 5:43 pm
Mr. Mortgage
Just saw you quoted on the FRONT PAGE of Yahoo Finance !!!!
Now that you are the Big stage start pushing the principal reductions is the only solution….you will win a nobel prize
June 6th, 2009 at 6:51 pm
Why worry about buying a home!,credit reports or housing bottoms,intrest rates are going to go up and home prices are going to come crashing down.The government’s reinflation project is at best a D+ which is barley passing,when investors lose faith in government’s balance sheet then support for the housing market goes away and prices go to Rock Bottom!
June 6th, 2009 at 8:29 pm
Javagold, I might have missed your previous posts. Are you currently an owner struggling to pay your mortgage? You seem to really want a principle reduction.
June 6th, 2009 at 8:37 pm
Wow, SistaSue is dense – must be a blond real estate agent by the way she admits to reading the article, but missed the whole point. Even the title of the article would have answered her question in short order. Thank you, Throwspoop for breaking it down for her into a simple outline. Hope her brain made it all the way to point (f) without overheating. (Is my disdain for RE agents too obvious?)
June 6th, 2009 at 10:00 pm
Mark gets props from Alan Abelson in this week’s Barron’s.
UP AND DOWN WALL STREET
No Bottom in Housing
By ALAN ABELSON
Housing faces another big wave of foreclosures. Jobs report: no cause for celebration.
cheers!
June 7th, 2009 at 7:19 am
Thanks Mark interesting data. Speculation in
RE is still prevelant and pushed by the gov’t! Your false bottom looks very similar to Japan RE market which after the initial downdraft had a bit recovery which exhasted the buyer pool then plunged another 40 to 50% down in prices.
June 7th, 2009 at 7:42 am
MM,
While I disagree with the (gov sponsored) PR which I know you favor , I also want to thank you for your work.
June 7th, 2009 at 12:29 pm
Mr. Mort:
I live in San Diego in the ‘college area’ with many rental signs up for the student turnover season. The signs might be up for a long time if Sacramento cuts back college funding. A for sale sign across the street has been up for a year versus a house 4 doors down recently sold at 400k (person-to-person), looks like the seller got out just in time, the buyer and the remaining seller are about to get whacked (again).
Your work is stupendous, as usual.
June 7th, 2009 at 8:22 pm
I think people need to realize that the entire city of San Diego is an an amusement park for adults… Gas Lamp, Coronado, Pacific, Ocean, Mission beaches, Phillip Rivers?
As such, the RE market in SD will track Six Flags discounts and promotions very closely. Once Magic Mountain is two-for-one, you can be assured we’ve bottomed.
(BTW, Mark, I noticed you did not approve my comment including a link to the Dr Housingbubble Blog. I find this act as pretentious as a 4-year old girl named “Taylor” having a fit on the Hotel Del Coronado pool deck)
June 7th, 2009 at 9:13 pm
Good work, Mark. With 9700 homes for sale, down from over 23K a year and half ago, and 9-30 offers on most homes, the 4K pendings/month could easily be 8k – 15k/month. There is insatiable demand on homes up to $300K.
Higher interest rates are going to kill our market.
San Diego Realtor Schahrzad Berkland
June 7th, 2009 at 9:37 pm
Pretentious = nickname Benzy
Wife, Mercedes
Fav hotel, Del Coronado of course.
See ya at the Ritz Carlton next time you drive up the coast to Half Moon Bay.
June 8th, 2009 at 6:44 am
Questioner — sales to 3rd parties at trustee sale are surging…highest on record in every courthouse in the state. That is because moratoria have kept foreclosure related supply at a minimum.
With respect to doing a lousy job — the clients who get my research know what it means. I select one of several reports each week to put up on the blog. I am not going to tailor it for retail distribution. Sorry you are unhappy. Which part of San Diego do you live in?
June 8th, 2009 at 6:50 am
Benzy — I did not see that. The system must have done that. Will fix.
June 8th, 2009 at 3:47 pm
RE: #37
“37SistaSue Says:
June 5th, 2009 at 9:09 pm
Mark,
Wow that is some serious research!! Could you please explain why my clients have written 5 offers for Single Family Homes in the subs of SD in the 425k-469k range and been bid out of everyone, by about 10k.”
A, Because your clients are idiots (please feel free to convey that to them) for being on the market at this time…and B, because they are in a sea of idiots just like them. Most such idiots will get burned very badly in the coming years, of that there is little doubt.
Although, I have heard quite a few stories of RE agents/Realtors or as I lovingly refer to them, real-turds/real-tards, actually recommending to their clients to “bid over the asking price” on various foreclosures, bank owned/REOs, and even regular old for sales…and here I thought a realtor/agent was supposed to look after their clients’ best interests first and foremost. My friend, who has been to numerous open houses in Corona as well as northeast Orange County, has heard such absurd recommendations from the listing agent as well as a couple of agents that they are acquainted with.
“Well if you are interested, you should definitely bid over asking because there is a LOT of interest, blah blah blah.” Did someone forget to reset these idiots’ programming after the meltdown? They are still using the same BS from the peak days! My friend loves to enlighten them as to the ridiculousness and stupidity of their comments.
“Ummm, if there’s sooooooo much demand, then why has this house sat for months at the ‘great’ price? Why are there dozens, if not hundreds, of foreclosures on the market within the same subdivision, division, neighborhood, zip code, etc.?”
Complete absurdity out there, and any realturd recommending someone should overbid in these market conditions should be put in prison, or better yet, exiled to Antarctica to sell property there.
“And can you tell me why my investor clients bidding on homes in the 200k-230k of Oceanside, chula vista, San marcos are up against multiple offers.?? And could you please maybe make a positive comment on the wonderful time it is for first time buyers to being to afford a home with crazy low interest rates.”
LOL, same answer as before. Because there are plenty of suckers out there willing to lose their money. But as they say, a fool and his money (in this case, their equity) are soon parted. And I love that last line…you’ve still chugging the NAR Koolaid, ain’t ya? I love their recent ads BTW…freaking hilarious. “It’s always a GREAT time to buy real estate!” HAHAHAHA!!!
June 8th, 2009 at 4:23 pm
Too Bad Mark’s work attracts the bottom feeders like the previous poster.
““Ummm, if there’s sooooooo much demand, then why has this house sat for months at the ‘great’ price? ”
Shows you don’t know what you’re talking about. If a house sits on the market for months at a certain price, a magic day doesn’t come along when all the sudden several offers arrive. Several offers arrive soon after the latest price reduction makes several shoppers decide it’s an attractive proposition.
There sure is a lot of vitriol out there among the renting ‘class’ .
As I mentioned before, I bought in 98, sold in 06, and will be buying this summer. When I move in about 10 yrs, if I’ve lost equity, it be from the gravy I made earlier. I guess I am an idiot, anybody who buys now is an idiot, just ask the expert, Steve-O. Got your cap on backwards and your shorts half-way down, do ya?
June 8th, 2009 at 4:47 pm
Arnold Layne….
So does having made money in RE make you superior to everyone else? Your sh*t doesn’t stink or what?
Are you one of those “had it all planned out” back in ‘98 and was just waiting till ‘06?
As much as there is vitriol among some in the “renting” class…there sure is a lot arrogance among the “owner-debtor” class.
Get off your high horse.
June 8th, 2009 at 4:55 pm
My comment was directed at only one person who decided to class everyone buying now as idiots. Got it? Including the ‘class’ comment.
I have rented most of my life. I’m not a genius, oracle, or seer of the future, but not an idiot either.
June 8th, 2009 at 5:02 pm
This whole RE thing and the majority of charlatans in it has put a very bitter taste in my mouth. Probably the same goes for many others.
Your comments were pretty broad bud….perhaps you should narrow it down because things like “There sure is a lot of vitriol out there among the renting ‘class’” sure seems broad to me. Correct me if I’m wrong.
I despise people who buy property to make money….truly despise. Not because I can’t do it…it’s a not very hard to do…but it’s so low brow.
June 8th, 2009 at 5:18 pm
Actually, I will expand the class comment, although originally meant to poke at Steve-O who wrote such an enlightening missive. There is a group of perennial renters, who do hang out on RE groups, who complained all the up in RE prices, and now complain even louder all the way down. Sure there was lots of chicanery, from the individual buyer to Alan Greenspan to Angelo Mozilo. But, really, let’s not demonize people who want to buy a house now. Sure it’s great renting, letting the landlord keep up the repairs etc [mine even put in AC and remodeled the shower!] but still some want to buy now or soon. If the next wave of foreclosures is as big as expected, little ol me won’t be responsible for keeping prices unreasonably high.
take care….
June 8th, 2009 at 5:58 pm
Noz.. CNBC, realtors, and and many others… tell everyone, that buying a home, is the biggest investment one can make. We as a society, believe(d) that.. so when your investment is down (just like many financial talk shows on the radio.. you hear all the time…you’re down 50%!.. how long does it take to recover? don’t stay with the same position/stocks.. to call them, as they can help re strategize..blah..blah)
Because of the last 30+ years, due to inflation they may have been right, but many are walking up..but the Ponzi scheme is ending! A home should be place afordable on one salary (not two), where a family can live in…and I strong believe where going back to that notion.. and it won’t stop until we’re all on the same page, and GREED/FRAUD is removed for now(GREED will come back later.. after many years.. just under a different theme..as bubles will always hapen, and people still don’t learn from them)
In regards to hyper inflation coming I strongly thing it will not, but one of the two posibilities (pick your weapon.. for those that are still greedy!)
- deflation (past/current)
- stagflation (more borrowing/printing.. higher interest..still deflating stocks, homes)why..because the BIG UNEMPLOYMENT and cut in salaries.. that’s why.. no afordability to support your reflation in homes!
In any event prices have a lot more to go down! and stay down for a while, until GREED is removed from our generation!
June 8th, 2009 at 6:00 pm
sorry about my grammar, didn’t spell check, and typed pretty quick.. I see some errors! ouch
June 8th, 2009 at 6:06 pm
The 64K question is… why are the Banks that used TARP money ready to pay it back already to the government?
a.) They don’t want anymore regulations, CEOs want their big pay?
b.) Now that they’ve sold more stocks, after many financial stocks went up 100% to 400%, since march 9th they can aford it?
c.) Their financial situation is much better than anticipated/stress tested?
d.) Do they want to pay it back, let stocks drop again, and do TARP 2 (or really same one, but borrow again, repeat? another bounce, sell some more, pay it back?
d.) Any other ideas?
June 8th, 2009 at 6:18 pm
Ex Owner Now Renter…..
For God’s sake, use your spell check…….I hear you, and sometimes even agree with you…Sadly, many of the lenders are using the TARP money to buy servicers. Today, one of my servicers that I deal with told me that they are closing, because B of A is buying them! Ken Lewis has big ones!!!
The banks are having fun right now, with our money.
June 8th, 2009 at 6:38 pm
loanmodchick,
I’ll start doing the spell check… but good point!
So when do they start lending in bigger volume? (I thought that was the purpose for the TARP..maybe I’m naive to believe that..)
June 8th, 2009 at 6:53 pm
Ex Owner Now Renter-
I dont’ think the lenders will start lending in bigger volumes.
Again, sometimes, I do agree with you. I too, thought that was the purpose of TARP …OBAMA……ONE BIG ASS MISTAKE AMERICA!
The bond market is crashing……let’s see what plays out. In my opinion, it won’t be pretty. Rising rates? Lower housing prices.
Lower housing prices, more walk aways. More walk aways, more foreclosures….We are rats on a wheel.
June 8th, 2009 at 7:01 pm
Noz,
I’m not really sure what this site’s purpose is. Some like me, thought at first someone doing nice free analysis.. unbiased
Some of the services provided by it, it’s for *investors*, and *banks* as I’m quickly learning, and probably for a fee. (I understand that)
On the other hand it could be the biggest front on the PR fight at the *right time*, (but surely not by the banks, but will be pushed it on the government~tax payer..so banks don’t loose)
June 8th, 2009 at 7:20 pm
loanmodchick,
It will be interesting to see what happens when the 8,000 (DP) treat is taken away.
June 8th, 2009 at 7:21 pm
ex owner now renter~
Sweetheart…..you can clear a room, can’t you?
Mark’s research is awesome. It is, of course, up for debate.
PR’s are necessary Sorry they weren’t doing them when you owned your home.
Stop being such a narcissist.
June 8th, 2009 at 7:29 pm
loanmodchick,
I would argue against that, and say “remove forclosure from credit” is necessary, or give everyone 100K-500K money that could be used toward buying a home, or spend it in the economy would be necessary.
Or that a PR is something that the bank must do! (not the rest of tax payers)
I’m not narcissist… but a fighter for those that can’t fight! While you’re sweat as well, I believe you’re part of the PR gang favoring the gov intervention, correct?
June 8th, 2009 at 7:33 pm
I like how “prudent” renter Noz considers the vitriol directed at a broad group all of a sudden offensive now that it’s directed at his renting class instead of HELOC-tapping toy-hauling bubble buyers, especially when Arnold’s comment was directed at Steve-O’s emotion filled asinine diatribe.
The fact is, Noz, any participant who made money by selling at the peak is in fact better than you and I, as determined by the very metric this site is about- real estate finesse.
And, consider that if the “prudent” did in fact have deep and intimate knowledge of the RE Bubble and it’s impending burst, then they would have made a small fortune from it.
Arnold did, you didn’t. He wins.
June 8th, 2009 at 7:55 pm
Ex Owner Now Renter-
I believe that foreclosures on credit reports will be no big deal in 2 years…….
After all, our “New Great One” has to save the economy, and Turbo Tax Geitner, is a part of it and he has to save face too.
Hang in the Sweetie, your credit scores will come back sooner than later! Did you mean to say I am sweat as well, or sweet as well? You confuse me with your spelling. C’mon baby cakes…….slow down, take a breath, and put your words together and spell right. I know you have something to say, and I really am hearing you……just slow down and use your words correctly. Half of us are right in the future of the housing market, and the other half is wrong. This is a forum of debate, not personal attack. PEACE.
June 8th, 2009 at 8:16 pm
Benzi,
I guess some that are better informed of others, or maybe older, maybe better educated, or had a better circle of friends, or maybe bought the house for investment only and sold at the peak! Nothing wrong with buying low, selling high..right?
What I don’t understand, as per MM, the PR should be done for all those that bought homes from 2003-2007…is that it means there were 4 bubble years, why wasn’t it stopped in 2003? or maybe 2004? If government didn’t see it (or didn’t want to stop it), or banks wanted to make more commissions WHILE IT’S HOT.. how can we blame the bubble buyer (some young, like me in their 30’s, some older that finally jumped in with what ever saving they had..and now loosing)
What lesson do we learn, if (gov sponsored) PR goes through? Does everyone that refi and pulled out cash during bubble years get the PR too? No damage to credit, get to keep the house, no lesson learned .. however everyone else (renters, homeowners without a balance, pre 2003/post 2007 buyers) gets to learn a very good lesson.. buy a home and REFI to 200% of value, don’t make payments? The hate, and riots that will start, will make a joke out of housing, and our credit system. The hyper inflation that could start because of it, could be with us 3 to 5 to 10 years? Our super power status GONE!
People make mistakes, we supposed to learn out of it, right? Rent, save, pay down rest of debt, and hopefully get another try at it… those that haven’t participated in the bubble get 8K to go buy one… maybe prices will still go down some more, but I find it hard to believe we’re all speculators? Are we? Are we all greedy? Nobody left to buy to live in it?
This will end very bad, if gov sponsored PR goes through…picking who get rewarded… keep in mind, H4H didn’t work, bankruptcy didn’t pass, why?
It doesn’t make sense politically, nor economically to have gov sponsored PR.. if anything.. let the ex-owners come back sooners (including those that are going to foreclosure now.. alt a/prime..cause remember after foreclosure.. their credit is trashed too!)
June 8th, 2009 at 8:18 pm
loanmodchick, I meant sweet as sugar!
June 8th, 2009 at 8:50 pm
Ex Renter Now Owner……..
I love emotional men. …Again, and I can’t say it enough… I hear you…….Yes, some will win and some will lose.
Some will get lucky (ie loan mods) and some will not and lose their homes to foreclosure. H4H is a joke.
Daily, I am calling Washington, the CEO’S of the banks and raising my voice. If you only knew who many times these loans were sold and resold….
WE MUST fight back!! TOGETHER we can make a difference. Pick up the phone. Call your senator, congressman, or whomever. Need some phone #’s? What state are you in, my dear, misundertood, Ex Renter Now Owner? I will be happy to provide you phone numbers!
Want to call some bankers? Ken Lewis? Jaime Dimon?? I have their numbers…….And yes, Government saw this coming, an no, they didn’t care. They are in bed with Wall Street…everyone is, or maybe was swinging from the rafters. They partied like we only did in our dreams.
June 9th, 2009 at 12:43 am
Benzy,
Instead of owning a home, I saved. For the most part, I’ve saved more than my friends have made from their purchases.
The difference is…I don’t have to work full time if I don’t want to…but I do to make and save and spend even MORE money. I take vacations throughout the year much more so than any friend I know who owns a home. I go out more and enjoy having A LOT more disposable income. And I didn’t have to wait over 8-10 years to reap rewards.
There are more ways than one to skin a cat. I guess someone who’s too narrow-minded would only think building wealth can be done by owning a home….aka…you. That’s the only metric you know….unfortunately.
In the last 8 years I’ve saved close to half a million dollars. So tell me…house poor, renter rich…who wins?
June 9th, 2009 at 8:44 am
Noz, we’re all independently wealthy moguls of personal finance on the internets.
June 9th, 2009 at 9:28 am
Benzy…the difference between you and I is that I never claimed I’m wealthy..but your arrogance got the better of you.
June 9th, 2009 at 9:59 am
Just to be totally clear, can you guys explain what you mean by government sponsored PR? If I owe $500,000, you want the government through Judges to tell the bank to magically change my principle to $400,000… depending on affordability?
June 9th, 2009 at 10:03 am
Noz, let’s address your post.
YOU write:
“the difference between you and I is that I never claimed I’m wealthy”
After YOU write:
“I don’t have to work full time …make and save and spend even MORE money… vacations throughout the year …enjoy having A LOT more disposable income…saved close to half a million dollars..”
Is my point taken? Good.
Then YOU write:
“your arrogance got the better of you.”
After YOU write:
“My wife and I make well over six figures.”
Noz, it surely appears that you feel insecure because of your renter status. I say this for a variety of reasons, one being the tell tale act of flexing your imaginary financial situation on the interenet, and secondly this revealing collection of posts written by you:
“So does having made money in RE make you superior to everyone else?”
“I despise people who buy property to make money….truly despise.”
“you don’t own a damned thing..the bank does.”
And my favorite:
“From deep down in the bottom of my heart that flippers and people out to make a buck on RE fry in Hell. I mean that.”
Noz, it’s blatantly obvious that you’re bitter as all hell for being a renter and don’t have nearly the financial fortitude that you claim.
June 9th, 2009 at 10:24 am
Benzy,
Good luck with that “internet emotions detection system” that you seem to have perfected…you better patent it before anyone can do what you do. I’m sure we’d all love to be armchair experts like you are.
If I didn’t know any better, I’d say you’re projecting your own issues and insecurities onto others here.
Sorry you couldn’t save as much as me….try a little harder.
June 9th, 2009 at 10:47 am
Noz, this is the internet. I just saved 500k while you were away.
June 9th, 2009 at 10:51 am
Benzy,
Your bitterness is showing….if you need any tips on how to say, just give a shout out.
June 9th, 2009 at 10:52 am
Benzy,
Your bitterness is showing….if you need any tips on how to save, just give a shout out.
June 9th, 2009 at 10:53 am
By the way, since this is the internet, thanks for your worldly advice and insight…I’m sure we could all do with more of where that came from.
Keep up the excellent armchair wisdom!
June 9th, 2009 at 11:03 am
Sure Noz, here’s my shout out. I’m always down for a little lunch time fiction. How did you save 500k?
June 9th, 2009 at 11:07 am
Very simple….put away close $60k a year in savings for the 8 years. That’s how.
Hope that piece of fiction goes down easy for ya.
June 9th, 2009 at 11:21 am
Could you be more specific, Noz? The vagueness infers you’re lying.
Actually, many things infer that you’re lying. But let’s address the vagueness.
June 9th, 2009 at 11:45 am
Benzy,
You really are dense aren’t you. However, you are good at doing research so dig up my old posts and the pieces will fall right into place for ya.
But for your muddied brain, I’ll re-iterate…we put away close to $60K a year….on top of our expenses, rent, and spending money for vacation.
Oh and I forgot to mention, this doesn’t include my retirement money. I know it’s a bit much for your brain to wrap around all this stuff…I mean how can someone who doesn’t own a home save so much…Oh Me Gosh.
Since I don’t consider myself rich…but you do…I don’t see it as a big deal.
But really…what you believe is completely irrelevant.
Thanks for playing.
June 9th, 2009 at 11:49 am
Thanks, Noz. I’ve wrapped my brain around it, finally!
You are the first person I have ever heard of who claims to have a half a mil in the bank, deep six figs of income he doesn’t even need, and yet it still so insecure that he must get approval from anonymous posters on the internet.
You’re like A-Rod posting to a fantasy baseball forum. Or someone claiming to be A-Rod.
June 9th, 2009 at 12:11 pm
I don’t want or need approval from anyone….especially dolts like you. You’re the one pressing issue probably because you’re scratching your head asking why you’re such an idiot.
Brush up on your arithmetic skills…perhaps you’ll finally figure it out. It’s really very very simple…well…for most people at least.
June 9th, 2009 at 1:22 pm
Everyone spends money differently and so I suppose there isn’t a right or wrong way of doing it, within reason. Me personally, going back 8 years, say in 2001-02, if I had an extra $5000 month on top my total expense including rent and toys and vacation…. I would have bought a home. Then it would have been fun watching guys like ex_owner paying 3 times as much for a similar house only a few years later.
June 9th, 2009 at 1:42 pm
WONTON:
That’s fine…you are right..everyone has a different approach. No argument there. But I’m not the one saying one is better than the other.
Timing and luck are everything. I could have bought years ago or buy now after prices have come back down to what they were back then…or even lower.
The last 8 years for us have been saving years…we didn’t really have much to begin with…we saved all this time. Now we are ready if we want to buy. And waiting for the right time with money in had is hopefully where we will be in the next year or so.
June 9th, 2009 at 2:14 pm
I know Noz, I wasn’t implying that there was anything wrong with your decision. I just wished I had your kind of money 8 years ago
)
June 9th, 2009 at 2:20 pm
Believe me Wonton, it would have been nice for us too. I was in the same boat you were in back then.
Are you looking to buy now or still waiting?
June 9th, 2009 at 3:17 pm
Hi MM and all,
There’s a poster over on Mish’s board who has been spot on regarding much of this recent economic downturn and is a commercial real estate broker.
He’s saying if you really want to buy RE that the time is coming, but to wait until rates are at 18%, and bring cash. He’s also predicting values will be 50% to 60% down from where they are now in the less hard hit MSA’s.
Is that likely in your opinion as well?
June 9th, 2009 at 3:26 pm
Noz, I am looking to buy but I’m not in a rush. I would love to own a house but I don’t HAVE to have one, so therefore, I won’t get into a bidding war with someone or fall in love with a house that is over my budget.
Hopefully, prices will fall another 10% or so by the end of this year. That would be great for me as I hope to buy before year end. I’m looking for homes under $400,000 in the Anaheim area, and right now it’s difficult to find one that’s nice without having to fight someone over it.
June 9th, 2009 at 7:57 pm
Hi Mark,
your charts, are like, totally GRANULAR dude!
June 9th, 2009 at 8:02 pm
Mark, just to let you know, your site doesn’t work well with Firefox.
June 9th, 2009 at 9:01 pm
Mr Wonton, just to let you know, you will need to provide specific information to be useful. Imagine if you called Dell customer service with ‘my computer doesn’t seem quite right today’.
With specific information, maybe someone on the list can help you.
It works fine for me.
Mr Firefox
June 9th, 2009 at 9:24 pm
Wonton.. very funny! Help me stop laughing..
June 9th, 2009 at 9:27 pm
Wonton, you can even buy now? When the heck will you be able to aford? I told you I may buy faster than you do (again)!
June 9th, 2009 at 10:26 pm
Wonton:
I hear you. Same here. The selection out there is pretty pathetic right now. I can’t even imagine what was running through peoples’ minds during the “Stupid” years while outbidding each other.
June 9th, 2009 at 10:36 pm
All kidding aside.. we need to go back to basics. Wonton, buy what you can aford, don’t make the mistake I did… but to think bottom is at end of 2010, time will proove you otherwise.. make sure you’re ok with living in that house.. for a long time, and that your job is safe!
June 10th, 2009 at 6:33 am
Yes Yes…price is going to keep falling….
O C’mon give me a break. All these sites like patrick..and yours go over examples from two,three places from california, las vegas, florida etc and try to generalize it.
95% of the country is not in Sanfransisco, las vegas of near the florida beach and price has been stable over the last few months.
Try buying a house in midwest, norteast, south etc and you’ll see that pices are flat or in most case steadily increasing.
June 10th, 2009 at 8:08 am
Arnold, I have both firefox and internet explorer, so I use explorer when I get on here. A few times when I used firefox, the page is cut off. For example, right now the last message is 114 from “really”. If I use firefox, I might see your message 109, as the last message and even your message is cut off mid way. Then nothing after that. If I continue to use firefox, I would think that the board is dead and no one is posting after yours…
June 10th, 2009 at 8:26 am
Back to my 64K question… on why banks are paying back the TARP $?
a.) They don’t want anymore regulations, CEOs want their big pay?
b.) Now that they’ve sold more stocks, after many financial stocks went up 100% to 400%, since march 9th they can aford it?
c.) Their financial situation is much better than anticipated/stress tested?
d.) Do they want to pay it back, let stocks drop again, and do TARP 2 (or really same one, but borrow again, repeat? another bounce, sell some more, pay it back?
Looks like I’ve got my answers:
a.) Another Missed Opportunity: Obama Retreats on Wall St. Compensation
b.) Citigroup expects to convert into common stock a total of $58 billion of preferred stock and trust preferred securities, assuming full participation in the swaps.
d.) ..will be this fall…
June 10th, 2009 at 11:07 am
“Wonton, buy what you can aford, don’t make the mistake I did… but to think bottom is at end of 2010″
I’m trying not too, ex_owner. I too think the bottom won’t come until the end of 2010, but you never know for sure. So I will keep on looking and buy when the right time comes… if ever:))
June 10th, 2009 at 2:21 pm
Use the tax code to encourage investment, and I think we will all be surprised with how quickly a bottom forms! We will see housing move from weak hands to strong hands, similar to what takes place in the stock market during times of uncertainty!
June 10th, 2009 at 5:39 pm
SistaSue’s clients are snapping up “Single Family Homes in the subs of SD in the 425k-469k range” and outbidding all comers – HOORAY!!
First of all SistaSue, please tell us how many of your clients you sold similar homes to 4 years ago for $700K. I bet they are ecstatic now regarding that purchase. Great job SistaSue! And your clients are GENIUSES! What an investment!
Let’s check back in a few yrs when these same homes are selling for $350K and see how SistaSue’s new clients are feeling then.
June 10th, 2009 at 6:05 pm
Wonton, see the same issue with Firefox; paste the URL into IE and it works fine.
Maybe Mark’s webmaster will take up the challenge.
June 11th, 2009 at 9:51 am
Regarding future alt-a and option arm resets, those loans have high margins that can cause the rates to spike when reset. To avoid some refinance issues or potential defaults, the servicing lenders could offer a simple modification at a reasonable cost to lower the margin before the loans reset.
June 11th, 2009 at 2:38 pm
Noz and Benzy,
Thanks for the bantor. I enjoyed reading it all. It’s true that all of us can be internet wealthy but some of the people here probably are in fact well off. I am now in a rental after a lesson in real estate and it is not too hard to save quite a bit by renting. $60k a year seems like a lot, but two decent incomes and no kids (assumption) could make that possible. My wife and I certainly don’t make enough to save $5k a month but we have two kids and two car payments and are saving around $3k a month. When you don’t have property taxes, car payments, home maintenance and credit card debt to deal with, saving happens a lot faster than many people probably realize, myself included.
June 11th, 2009 at 5:23 pm
Really – I would hazzard to say that most of the people who read this blog reside in a bubble state. If you live in Kansas why are you even reading this blog? I would imagine your homes simply sell at cost + labor, land is damn near free!
June 11th, 2009 at 7:36 pm
SistaSue..are they chinese by any chance?
June 12th, 2009 at 10:07 am
I am also an ex-owner now renter & ,although I don’t like the idea of irresponsible people getting a break, the smart move for the banks right now is principal reduction. With high end homes ready to implode & most of those owners able to pay, principal reduction may be the only thing that keeps them from walking away. I think that most people would stay if the bank met them half way between what they owe & current market value, because most people at the high end are more concerned about their credit and usually have more invested in the home. They would accept a deal & stay, saving both the bank & owner money. If the banks let all those homes turn to vacant REOs, it will cost them much more in the long run. My cousin just purchased a bigger, nicer place prior to letting her overpriced home go back to the bank. She is a CPA so she knows her credit will take a hit, but she already has her new home secured. She had no idea that her place would be so devalued when she bought it and walking away is the smart thing to do now. She doesn’t feel obligated to honor her commitment & endure such a loss when she feels betrayed by the entire financial system. I would imagine many high end owners echo her sentiments.
June 12th, 2009 at 10:54 am
Sold2Soon,
I too am an ex owner now renter but I don’t agree with you that PRs would save the bank’s more money. It would have helped me, and I would have stayed if they would have split the difference on the underwater amount. But in a lot of cases, PMI should help to offset some of the losses they are taking and once they start offering PRs, everyone (and I mean EVERYONE) will have a hand out, not just people who are on the verge of walking. Even though they would likely save money on situations such as mine, they would lose money overall. And really, all they care about is the big picture, not individual loans or situations.
June 12th, 2009 at 11:14 am
Awww, poor Arnold Layne took my comments personally and decided to retort with a childish personal attack. Methinks you’re a tad too sensitive, Arny. What’s the problem – did the disparaging realtor comments cut a little too close to home?
Guess what, Mister “I’m no Idiot” as you optimistically (and inaccurately) describe yourself – I’m not a renter but an owner. Mortgages paid off, however, and properties bought during the mid 90’s bottom, among a few others inherited.
You speak of class, pissant, as if you know something of it? You are right about me being a bottom feeder though – I will be cherry picking quite a few prime properties in the coming years. Good luck with your purchase this summer, I wish you nothing but the best!
June 12th, 2009 at 11:30 am
As for me, I will wait & see how far those high end homes drop. I would love to own a “mcmansion” with property & a view on the outskirts of town for around $300k. It will be way more house than I need & be more to clean, heat & cool, however, with the money I save, I will hire a maid & convert to solar to reduce energy costs. Or maybe I will just buy a couple of 3bd 2bth with cash at that point. HA! Just a fantasy for now, but may become reality if the banks continue on their current path.
I have watched the house down the street foreclose twice, then short sale. Sold for $560k(2005), $450k(2007), 374k(2008) then last month for 235k(asking $269k). This house sold for $260k new in 2001. Homes around $200k are encoutering bidding wars here & this one sold for $30k under asking at $235k. Shows where the cutoff is in rent return/investor properties.
June 12th, 2009 at 2:03 pm
Sold2soon… you’re probably an ex_owner cause you’ve sold close to the top? If you feel bad – just give back your profit to the new owner that you’ve sold to…and I hope your CPA sister doens’t get busted for fraud.. (GREED IS STILL ALIVE!)
PartyBoy.. you’ve got it.. and I’ve mentioned it too before… once someone gets a PR..everyone will want one! Banks will not do it – AND the gov (us ~ taxpayer) can’t and won’t!
June 12th, 2009 at 2:18 pm
It’s going to be hilarious to see your CPA sister (I mean cousin) walking for the second time in two years! her credit should/will go to 300!
June 12th, 2009 at 2:24 pm
Anyone buying a home 1 year or less prior to stoping payments/forclosure on their previous primary home should be investigated!
June 12th, 2009 at 6:16 pm
EX-
everyone may want a PR but everyone wouldn’t get them -just like loan mods. Keep in mind the only ones getting mod is the ones who aren’t paying (and possibly the stupid)- that hasn’t caused a huge influx of non payers. PR is between the banks and the buyer not you- if your government gives the banks money to fund them- then hate your gov’t.
BTW- how do u know sold2soons cousin committed fraud? I know someone who did the same thing- thats the banks fault- you don’t let people commit crime and then cry “crime”.
1 question and don’t get mean – isn’t all this so called money the bank would lose- just on paper? Are they claiming the intrest payments in the future as profits?
June 12th, 2009 at 11:22 pm
I don’t understand why people believe we should give current homeowners principle reductions? Why the hell should they be given freebees for making a mistake they most likely went into head first?
June 13th, 2009 at 12:12 am
Again with the PR stuff. Seriously, you really want to give the government the power to force banks to lower principles? Just exactly where do you think this right comes from?
Again, I don’t have a problem with banks voluntarily lower principles. I wouldn’t like it, but I’d respect their right to do so. But they should not be forced.
June 13th, 2009 at 7:38 am
I don’t think the gov’t should have gotten involved at all. Too bad they did – they just made it worse. PR is between the banks and the buyer only. However, the gov’t gave the banks money because they supposedly didn’t have any. That money is not being spent the way it was intended.
Look I am for anything that will help the economy- If someones got a better idea then lets hear it.
June 13th, 2009 at 7:46 am
Wonton.. I want the bank to make that decision for themselfes.. and leave the gov (us~taxpayer) out of it!
Ideas? I think we need to let free market dictate, it has always worked out… maybe Wow in California… can bring some input?
June 13th, 2009 at 8:04 am
“I want the bank to make that decision for themselfes.. and leave the gov (us~taxpayer) out of it!”
ex_owner, I agree with you on this. Absolutely!!
June 13th, 2009 at 8:59 am
Hi MM,
I concur with your results. I cannot understand how the general public can think we are out of the woods, when we still have a huge wave of unemployment to hit us and have yet to see the next wave of loan re-sets to hit the market.
Also, since May 1st of this year, wholesale lenders are controlling the appraised value of the properties that they are trying to sell, refinance, or dump by “owning” appraisal management companies. This is why there are multiple offers. The banks are controlling the “appraised list price”, then let the feeding frenzy go crazy. This rule that has happened since May 1st is the new HVCC compliance rule. Its intent was to keep brokers from being able to pick and choose the appraiser they want to use. What has happened is brokers now have to use appraisal management companies. So the banks bought the major appraisal management companies, and have shut the door on any other companies being excepted on their list, along with individual appraisers………..the result, the banks are controling their loss margin.
Yikes!
Appraiser LB
June 13th, 2009 at 11:27 am
I don’t like the idea of PR, however I see it as a necessary step to end this crisis more quickly so we can begin a recovery. I certainly don’t want the government involved because then there would be no control over who qualifies & I don’t think they should hand out PR like government cheese. Sure everyone would want PR, but the banks could set strict standards on who qualifies. It would stop many in the high end homes from walking away. The losses in this segment will be much greater. There are less high end buyers to purchase the wave of REOs, unless they do as my cousin did, securing her new home before walking from the first. I’m not condoning her actions, just explaining that people with money & good credit have options. Fraud is not a concern because she followed expert advice from someone who did it 15 years ago & is still walking the streets unscathed. Is it fraud, probably. Will she get caught, pobably not. I used to get upset about all the fraud, bailouts & blame, but now I would just like it to end so I can buy a home & get on with my life. If “strategic PR” will help end this mess, then I am all for it. I’m tired of seeing dead lawns & vandalism. I don’t want to buy a nice home surrounded by rot & decay, so keep people from walking away if they can afford to stay. Most upside down owners are victims of the system, not criminals. I don’t feel sorry for the ones who lose their homes, but I don’t blame them either, they are merely pawns in this game. Regardless of their morals, if the banks let people who can afford to stay walk away, the housing crisis will be much worse than we have seen and it’s effects on the economy will be greater than we have already experienced, IMO.
June 13th, 2009 at 3:01 pm
Sold2soon,
If it’s ok to buy another home, before or just about to forclose on existing home.. then I say it’s ok to let ex-owners come in sooner! That will be your quick fix (VOLUME OF BUYERS), not the gimicks that the “ones can pay” do.. remember without volume, this “supply and demand” model.. IT’S GOING DOWN further(in price).
The 8k, soon 15K (gov intervention).. it’s going to run out, get us broke, and interest rates only going higher!
The reason PR doesn’t work, it’s two reasons:
- everyone will want one (and stop payment to get one)
- the people that would get the PR have learned nothing (we’re going down to a bigger hole..down the road) and the rest of the nation may completely act unexpectedly toward credit, and contribute to ruin our system further(what ever is left of it).. no one will ever pay down a mortage, cc, car payment..etc.. WE’RE DONE!
June 13th, 2009 at 3:04 pm
I’m not advocating to reduce the 3 year wait on FHA loans to 1 year (even though it may make sense..)… because that that would keep the prices high, and they need to go lower!
June 13th, 2009 at 3:47 pm
Ex- why 1 year for FHA? you aren’t buying now are you? you just said the prices are still dropping. That makes no sense. You are against PR because you wont get one-you are against anything that doesn’t benifit you specifically. geez just say it.
“the people that would get the PR have learned nothing (we’re going down to a bigger hole..down the road) and the rest of the nation may completely act unexpectedly toward credit”
Really you don’t think they have learned anything? the ones that are left in this are the responsible ones-they are still paying- they got caught up in some sort of bankers/investors greed fest.
- I am sure if thier lender disclosed that they let everyone qualify and in 3 years those same ones will default leaving the street a ghost town- the responsible ones would not have bought.
Just keep in mind that only solving your problem will not help the masses or you in the long run.
June 13th, 2009 at 4:33 pm
Government involvement is necessary in this case. It should have been an oversight regulator from the start so shady homeowners, Realtors, and Wall Street types didn’t do what they did.
Of course the problem is this:
In this country, people are too stupid or lazy to demand oversight and BE INVOLVED in the process….as any proper functioning democracy should be run. The biggest problem is that the corruption is at the top too. Let’s not think for a moment that government officials and groups were in the dark about Wall Street, Main Street, and the whole thing. They just sat back and collected the fees, taxes, and monies gained on RE.
People in this country are constantly whining and bitching about how they are getting shafted….yet they do nothing about it. Nothing. And then when the government gets involved, we whine as to why they are getting involved.
So what the hell do people want in this country? If you all care some much about getting the job done right, get involved and start these organizations and groups that you claim you have a right to since this is a “Free” country. Change your government…drastically…not simply by voting one day every 4 years and think that’s it.
But of course, we’re all too lazy to do that now aren’t we…we want everything to be on autopilot….and guess who will do that for you? The government.
Again…principle reductions MUST NOT HAPPEN. People who are over their heads need to lose their homes. And prices MUST come down.
June 13th, 2009 at 6:07 pm
bought at the wrong time- I agree with you, only the responsible ones are left & throw them a bone before they are gone too.
ex-owner-
I agree that prices need to drop further, especially at the high end, but that will occur due to tighter lending practices and the fact that most people can’t qualify for a “traditional” loan.
I wouldn’t have a problem with the banks excluding a buyer’s foreclosure, if they can qualify otherwise.
I am just worried that this next wave of foreclosures is going to be a tsunami and how will that affect our failing economy? If the banks can stop it or even blunt the impact they should. Instead, they will wait until it is too late & ask for more money from us, the taxpayers.
June 13th, 2009 at 6:49 pm
noz can you clarify this :
“Government involvement is necessary in this case”
“The biggest problem is that the corruption is at the top too. Let’s not think for a moment that government officials and groups were in the dark about Wall Street, Main Street, and the whole thing. They just sat back and collected the fees, taxes, and monies gained on RE.”
so you want the gov involved- even tho they are corrupt?
no really i am not being sarcastic, i think i am too stupid and lazy to understand. (ok that was sarcastic)
June 13th, 2009 at 8:07 pm
“I don’t feel sorry for the ones who lose their homes, but I don’t blame them either, they are merely pawns in this game”
They’re players in the game.
June 14th, 2009 at 2:11 am
bought at the wrong time:
I said government REGULATION…not government MONEY.
Government is compartmentalized. Not all people in the government are corrupt of course.
The current situation in housing, banking, and money has gotten so out of hand that a certain amount of exposure of the inner workings of the corruption scheme has peeped through.
This has exposed the bankers, the RE industry, Wall Street, people on the street, and government’s own action/inaction and charade it plays with everyone through the biggest of all scams…the Fed.
People in this country ARE lazy. This sh^t is going down in front of their faces yet we don’t see an uproar, we don’t see people on the streets demanding change…not just through piss-ant ways like voting. That’s a joke.
This is due to two reasons…one being that a good portion of the population are cut from the same cloth as the corrupt bastards in these industries and organizations. So for them this crap only helps them get wealthier quicker.
The other reason is somehow the current mental structure of people is they simply don’t care…they want everything to be done for them without thought or effort…i.e. lazy. Yet when it is done, it’s not what they want…yet they don’t want to become involved to fix the problems.
Nothing in this country is going to change or get better until people really stand up for what they believe in with conviction and real effort. Democracy is a hard gig to run…it’s a full time job for every person in a democratic country. This ain’t no democracy I can tell you that.
June 14th, 2009 at 6:56 am
Mark,
Any opinions about the impact of (yet another) 90 day CA moritorium?
July 5th, 2009 at 8:56 am
Mark,
phenomenal insight. You took everything that I was thinking and more and spelled it
out graphically and in a well written manner. Sacramento has really shown a false bottom side of things as we have 57% homes sold in under 30 dom’s. My buyers have written as many as 40 offers before they could actually get an acceptance. Demand is high and inventory in that range is low but my belief has been due to moratorium only. I have several reo broker friends that say they are getting several new listings in the coming months and if they are all plopped on out market will revert to 1 year ago when inventory was saturated sale to list price was below list. Prices have still dropped without an abundance of inventory. 18 total million + sales in placer county this year and price per square foot 224 while list prive per square foot 400 range. High end foreclosures are coming still. High end sellers traditional cannot compete with that disrepancy in price per square foot. Lastly at some point the banks will have to allow those who short sold a property to buy again or we will run out of buyers completely. As it is some that are in the market should not be. In the 80’s people short sold and bought again. Jobs are hard to come buy and those that are nervous about work won’t buy. I have had more than one client lose their job after purchase or take severe salary decrease. If they foreclose on an FHA loan I originated it is on me as an originator. My rating or companies rating with HUD goes up and we can put in jeopardy of losing our abity to do FHA 70% o our companies closing now. I don’t think most originator understand this. Thank you for your wonderful posts. I will be subscribing.
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