patrick.net

Different Sean - we certainly are not seeing a tranparent open market place where all the information are known.

Skibum

Great article. I can see this happening here but I doubt so many people will be able to hold out as in the past. With all the neg-am loans and whatnot, who's going to be able to sit on their overpriced $hitbox after the loan adjusts?

skibum said:
many Realtors â„¢ are still whispering in their ears that the market will bounce back in a season or two.

This is usually the newbie realtors who got into the game after 1999. These are your "eight year veterans", who only rode the boom years and have no idea what a housing slide looks like. They only know how to talk the happy talk - and are themselves hoping that everything will be booming again so they can keep up their own tasteless overconsumption.

The respectable, experienced realtors seem to be quietly telling sellers to sell now for 10% below peak, or wait and sell at 25% below peak in a year or two. Of course, they still maintain a cautiously upbeat tone in public, to avoid spooking the few buyers that are still out there.

SP

Claire,

As far as I can tell, the elapsed time between reset and a given property coming to market as REO is shaped by too many variables to submit to a good estimate.

We're fond of presenting the delinquency, default, foreclosure, REO scenario here, but there's also workouts, short sale, bankruptcy and jingle mail to consider, any combination of which can screw up your time line.

Six months sounds as good an estimate as any, I guess, but I'm not sure I expect that March spike to show up intact in October - it may be somewhat diffused by then.

svcausguy Says:
Different Sean - we certainly are not seeing a tranparent open market place where all the information are known.

well, not that, no, but there can be more to creating a stable social settlement than transparent markets -- the stock market is reasonably transparent but regularly booms and busts. Housing is being exploited too much as a commodity or income-producing asset these days, in my book. It's not illegal, of course -- altho it would be in my workers paradise...

e.g.

The New Money Pit: Housing Bust Gets Worse
It started with subprime mortgages. Now owners of McMansions are defaulting, and the effects of the housing bust are beginning to ripple through the economy.

By Daniel Gross
Newsweek
Sept. 10, 2007 issue - Walking through the gated community of Black Mountain Vista on a hill in Henderson, Nev., Thomas Blanchard offers a guided tour of real-estate woe. A row of stucco duplexes that recently sold for as much as $500,000 sit empty. "That's a repo," the real-estate agent says as he stands in front of 678 Solitude Point Avenue. Then he points to the adjacent houses, where yellow patches blot the spartan lawns and phone books lie on front porches, their covers bleached from weeks under the desert sun. "No. 680, repo; 684, repo. Those two at the end, repo."

Three years ago, this Las Vegas suburb was teeming with modern-day prospectors armed with low-interest mortgages, all hoping to strike it rich in real estate. Now, what started with the subprime-mortgage mess and subsequent credit crunch are turning communities like Black Mountain Vista into luxury ghost towns. Buyers who got in over their heads are being forced to abandon their homes, leaving behind empty McMansions on the California coast and see-through condominium towers on Miami Beach. Real estate is turning into a money pit, sapping the fortunes of home buyers, hedge-fund managers and house painters alike. The really bad news? This is only the beginning. [...]

http://www.mercurynews.com/ci_6982565?nclick_check=1

Tax perk costs Santa Clara County
ENDING PROPERTY TAX BREAK CONSIDERED

Bruce,

I was also thinking that the pain from Feb, March, April and May's resets would all be coming into play in September 08. I guess maybe Jan 09 might be the time to start thinking about buying a house, but I'm wondering if the goverment/market will have come up with another solution that will help the poor FB's by then and ruin our chances.

Claire,

I think I prefer watching the builders' monthly opinion poll. It's been a good leading indicator, perhaps one of the best. No false signals so far and a five to six month lead in the bargain.

If we find ourselves in a Japan-style deflation, however, all bets are off for my plan and back to the drawing board.

BA Craigslist ShortSaleOMeter rises to 80 listings for Sept. 21&22. On the other hand, I finally ventured out to an open house this weekend, and it was hopping.

I was also thinking that the pain from Feb, March, April and May’s resets would all be coming into play in September 08.
The Presidential election is going to be wild. I am predict that the first candidate to recommend public floggings for specuvestors that owned four or more "primary residences" will win...

The Presidential election is going to be wild. I am predict that the first candidate to recommend public floggings for specuvestors that owned four or more “primary residences” will win…

This is America. And speculation is not a crime here.

Losing speculators should be allowed to fail. That's it.

And speculation is not a crime here.
Peter, there may be a little bit of fraud involved if the specuvestor owned four or more "primary residences" (see Casey Serin)...

Peter, there may be a little bit of fraud involved if the specuvestor owned four or more “primary residences” (see Casey Serin)…

Me bad.

Juggling (3) "primary residences" is perfectly fine. (I'm doing so myself) BUT... 4 or more might be pushing it a tad. I mean, c'mon let's not get greedy here!

"luxury ghost towns"

"see-through condominiums"

Good. Good stuff.

This is WAY OT here, but does anyone else find the UAW impending strike against GM completely asinine? So we have US automakers tanking, doing the worst they've done in history, barely able to stay afloat. Then we have the UAW union pushing for more more more and planning a massive strike. I have no love for the GM (or other US automaker's) management at all, but I find this whole move completely suicidal. So, let's watch the UAW bring down the last legs holding up the US auto industry. We will finally no longer be able to buy US autos. Good riddance.

BTW, isn't one of the major reasons the US automakers are in such dire straits precisely because they've given too much to unions already? The employee buyouts, pensions, health coverage, etc etc.

Okay, now I'll duck before DS posts...

This is America. And speculation is not a crime here.

Quite the opposite. Speculation has come to be viewed as one of the highest callings in the land. After all, money made on the value created by others is certainly an easier and faster route than creating it yourself. The best buck is a fast buck!

And, once you have bet your way to the top, you can play on America's historical deference to the wealthy. We as a culture are not concerned how you made your fortune. Our, my, personal desire to climb in the moneyed ranks, to be viewed in a positive light from those above, this will drive me toward your goals. The fruit of our relationship does not need to address the difficult questions regarding the populace and how to create long term value. (Well of course your fortune was built upon them, but you left their ranks long ago and I shall be leaving soon too.) Those concerns are important, but only so much as you and I can continue to accumulate wealth. And we deserve this, for we are the root of all great things in the modern age, we are Investors.

Ghosts never had it so good! No more dank haunts for me!

DinOR -

Just think of all the shoddy cosntruction the ghosts will have to put up with though!

So we have US automakers tanking, doing the worst they’ve done in history, barely able to stay afloat.

I am a fan of Alan Mulally, Ford will be great!

@DinOR,

That gives me a great idea for the next great reality TV show:

Ghost Hunters meets Flip that House --> you get,

Ghost Flippers.

Claire,

LOL! I can't imagine it will be all that long before they are unfit for this life OR the next?

Skibum,

I don't think your post is too far off topic. Homeowners, management and unions all share one thing, human psychology. It's hoarding behavior, pure and simple. In times of perceived scarcity people tend to hold out for the most they can get, even at their own expense, and they will do so until their internal logic has completely and totally collapsed.

The "fraud" aspect may prove interesting:

Many people in areas where the FHA relief loans are feasible may not apply because applying will reveal the fraud from the prior loan

Some lenders may be very willing to reshedule debt or cooperate in a short sale to dissolve a fraud tainted loan

We may see lawsuits from FBs who fork-tongued their loan apps, claiming that the lender was negligent for granting the loan without proper proof.

does anyone else find the UAW impending strike against GM completely asinine?

Yep

"Ghost Flippers"! Love it!

Tune in as our paranormal research team attempts to update this 2006 "vintage" McMansion!

Seriously though, there are a few web sites that seem to specialize in abandoned/neglected flips and that are already looking scary.

Btw, UAW always goes on strike when the company can least afford it.

Headset,

But who would they bring the class action suit against? Many of those guys are already belly up. Then again that hasn't stopped anyone before!

So, DinOR

Are you going to add a 4th to your 3 stages of house? You know, your "starter", "dream," and "final?" Perhaps you can put "forclosed" after dream, but before final?

But who would they bring the class action suit against?

Whoever is currently servicing the load. Some are trying to hold Wachovia responsible because assets they purchased were from companies old enough tp have profited from slavery.

Headset,

Absolutely! As ColoradoBear points out, it no longer matters "how" you get there at all! I think I shall call this phase... the "walk away and start over" home?

DinOR - Sorry, for the curiosity, but did your daughter go ahead and buy the in-laws house?

If people walk away from their mortgage obligations, how long is it until they can buy another house currently - and do you think that tiem lag will get shorter or longer?

"Whoever"

Whoever indeed. I worked at FleetBoston during what Savage described as "rape-a-nation". Problem solved. Proceed.

Because of the parity - Canada is now losing out on outsourcing to China - when do you think businesses are going to realize that outsourcing to China is not really as cheap as it seems - all I keep thinking is - "you get what you pay for..."

Claire,

No apology needed whatsoever! Here's the real skinny. In the short time they've had their (perfectly fine) home on the market so much has transpired it looks like a cork on the ocean! With Jumbo completely stalling our rinky-dinky local market has come to a standstill. Now the listings in the 250k to 400k range are all competing for buyer attention.

When they first listed they were EASILY the most sensible home in the price range. Now, as each new listing comes on the market (ever lower in price) their home is getting lost in the noise. Brand new homes (with more modern amenities) are now priced BELOW what they're asking!

And I'm fine with this. A silver lining after all!

DinOR - thanks for the update - I was absent for a while, so I suspect I have missed a lot - I wasn't sure whether it had all become a done deal a long time ago. Are you keeping quiet through this all for the sake of family peace? How are the in-laws?

BTW, isn’t one of the major reasons the US automakers are in such dire straits precisely because they’ve given too much to unions already? The employee buyouts, pensions, health coverage, etc etc.

Well, part of this agreement is GM attempting to offload its healthcare liabilities. And as they point out, the executive bonuses at GM are going up and up every year even while the company struggles.

GM also has many wholly owned subsidiaries and factories around the world, including in cheap labor countries (e.g. GM Daewoo). Hence, the profits in Australia, where GM is the premier local manufacturer (followed by Ford, also a subsidiary of its US parent), flow back to the US.

There are some countries where healthcare is automatically provided for free all the time no matter who you work for, or whether you are working or not. To expect GM to live up to its healthcare commitments is not asking too much in a country where employers are expected to subsidise healthcare.

There is a wage difference with some of the Japanese car companies operating inside America -- if their employees belong to the UAW, there is a chance of addressing that issue due to the universal presence of the union.

There are other reasons car sales are slow these days (hint: soaring property prices) which is a failure of the market system in general.

Otherwise, it is hard to beat cheap labor countries at their own game if you want to have a strong local manufacturing sector -- you cannot compete with cheap labor by slashing wages and conditions to the point where your own workers are earning a 3rd world wage. (And the large multi-national auto makers have several fingers in the offshoring pie to boot.)

"The workers, united, will never be defeated!" -- Just my 2c

Everyone should take this blip from Ben for what it is - an opportunity to get your house in order (pun intended). If you are holding real estate as a short term investment, sell if you can. If you an ARM owner, refinance NOW. If you are neither, try your best to get a job that will last through the recession, increase your cash position and look at getting a home in the community in which you have always wanted to live around 2011.
The Carter years are returning. Stagflation is coming. Start preparing today.

DinOR

Btw, UAW always goes on strike when the company can least afford it.

And this time that may be what GM management wants. GM is saddled with overcapacity, high wages, and $51 billion in unfunded health care obligations. They are few, if any, financially and politically acceptable remedies under the current framework. GM doesn't have much to lose by scapegoating the UAW, "Everybody knew the automotive industry was in bad shape. Their strike kicked us when we were down and they put us under." (While quietly ignoring the fact that they *agreed* to these obligations in the first place.)

And I think the union is going to find surprisingly little public support outside of the die hard ranks. Two Job Joe and Jane Nurse no longer see the typical UAW member as their working class compatriots. These guys are fighting over wages and benefits the average worker can only dream about. It's greedy pig versus even greedier pig, nobody cares.

Greedy wall street vs. foolish home buyers vs. absent or negligent 3rd parties, the politics, the finger pointing, the name calling, it's all so familiar. :)

Skibum

My dad has been in the auto industry for 25+ years and business has been crappy for years. He thinks the auto manufacturers are deliberately trying to break the unions. They keep running at a loss and telling the unions that they can't afford their demands. I haven't talked to my dad about it lately, but I bet if I asked he'd say this strike is what the auto manufacturers want.