WatchAlthough there are many alternatives, but I like this one the best:
Millions of used house owners with negative equity have been salivating at the chance of dumping their overpriced abodes as soon as the market returns to normal. A lot of them are baby boomers waiting to retire. As the banks are artificially reducing inventory, driving prices higher in this dead-cat bounce, more and more of these "pent-up inventory suppliers" are realizing that they are pretty close to breaking even, or can get out with a small loss. I predict that that there is a whole slew of short-sales coming back, just in time for the end of the high season. These will be a strong competition for the bank REO's, causing banks to dump their shacks for deep discounts.
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Mountain View, CA
bmwman91's website
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The next catalyst:
Well, I am working on one right now. I put a bird feeder into my apartment's back yard. The goal is to get TONS of birds to feed there. I will then work caffeine and laxatives into the feed so that they fly all over Mountain View, shitting on everything. Surely that will cause house prices to crater as all the people with expensive leased cars flee in terror from the white rain that could break the terms of their lease!
Alternatively, I could probably just gorge myself on super burritos for a week straight, overload the sewage system and drive everyone out once they cease to have functional septic infrastructure. It'll be a little messy, but worth picking up a 4/3 on a quarter acre in Mountain View for $100.
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Virginia Beach, VA
Call it Crazy says
They have to report the account status every month to Experian/Equifax/TransUnion I think. Is that information public? (not names and account #'s, but do the credit bureaus have to make the stats public I wonder?) That is probably the source.
I'd just like to throw it out there that I work in a Loss Mitigation department, and these loan modifications are a joke. Almost every sale I approve (I do short sales) is being sold by someone who already had a modification previously.
Point being, whatever percentage of loans in delinquency that are "working" on a retention option (mod) versus a liquidation option (SS or Deed in Lieu) is quite large. The bulk of those loans will end up as short sales eventually. Half the people trying to get a mod don't qualify. They either run deficits of income in the thousands of dollars every month (hopeless) or they are strategic defaulters who fax us in the same package every month hoping to get another 90 day bump out on their F/C sale date. They know if we have them active in Loss Mitigation, they can press for us to postpone F/C again and again. (and the banks do it because a SS will always bring in more $ (less loss) and that won't change until prices start to rise and stay that way)
Eventually these hopeless souls, or the scammers, are going to find their way to liquidation one way or another, be it REO, Short Sale, or Deed in Lieu. We've long past the point of people who truly need help, and we're just getting dipshits who are experiencing buyer's remorse, or a-holes with $10k a month net income with expenses of $6k, who are incredulous why we won't approve their short sale when they could easily afford 2 more homes and still be able to have money left over each month.
For instance, we have a guy who bought a home in July of 2012. He signed the papers in July. He applied for "assistance" in August after making 0 payments, claiming he wants a better interest rate because other people called in and got their's lowered to 2% (the initial HAMP rate that's only realy in effect the first 5 years, and most people don't qualify for anyway) This douchebag is already unable to pay and hasn't made one payment. Whoever qualified him for this loan should be throttled.
I have another short sale that just fell through because the buyer lost their job right before closing. Seriously people....rent a fucking house. Unless you're sitting on PILES of excess cash (enough to at least get you and your family through 12 months of job searching with no income....and that's AFTER your down payment is paid) then don't sign the contract.
IMO anyone who bought a home post 2010 should be banned from Loss Mitigation. If you didn't read the paper, or turn on the news, for 3 years from 2007-2010 and don't have a handle on this whole homebuying process, and the pitfalls therein, you are too stupid to deserve assistance. Shouldn't there be a statute of limitations on "I didn't think I'd lose my job" or "I didn't think I wouldn't be able to sell it for a profit in 12 months" bullshit??
Now, if your're in FL, NJ, or NY, that's a different story. I have some accounts that are almost 60 months past due. The person bought the home, paid 10 payments, and skipped the next 60....yes, FIVE YEARS paying nothing, and the courts are letting them play us like a fiddle. Can you imagine paying a total of $25,000 to get a home in Queens for 6 full years? Hell of a rent. (and they are nowhere near being evicted...could have some people hitting 7-8 years of squatting EASILY in Jersey or NY before they eventually lose "their" home)
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HRHMedia says
I only pay my tax accountant $200 to do my taxes, and he has a CPA. Why do realtors deserve more than that? My accountant actually works pretty hard for his money.
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CA is out of money, I think that will have a significant impact.
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jhurio says
Right, by hook or by crook, the Realtor/Bankster cabal will make sure that no one goes un-raped.
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dunnross says
They don't. The Realtor® should get $6 an hour, $6.50 an hour if they blow you, wash and wax the car and run to get you cigarettes.
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What about HELOC-bombs? Along with the housing market boom, the HELOC boom began in the early 2000's. Most of these HELOCs were interest-only loans for the first 10 years, which then become 15-year fully amortizing loans.
However, most of these folks probably refinanced their houses in the mid-2000's. With houses appreciating six-figures a year, who wouldn't? Realistically, some of these HELOC bombs may start going off next year, but they won't peak until around 2016-2018.
I guess my only question is, how many houses are still sitting on a HELOC bomb, and how many have already defused their bombs?
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Mountain View, CA
bmwman91's website
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CL says
Which, so long as the US government exists and is functional (I use that word loosely), they always will. The only way we will see a total and complete housing implosion all across the board will be if the entire nation's economy implodes. It is all rigged to extract every last cent out of us working class folks, and history has shown that the extractors do not stop until the entire system comes crashing down on itself. This isn't some prophecy of doom and gloom. It is just repetition of history.
I think that a more likely scenario that will help things correct in the SFBA will be the reduction or elimination of FHA loans of up to $726k. Even that isn't terribly likely, but it is a hell of a lot more likely than having the banking system go down without the rest of the nation going with it. Honestly, there really is a lot of money in the SFBA. Couples pulling $200k+ are in the 75th percentile. So, feeling like you can't afford shit on a very nice salary isn't all that surprising. 1 in 4 couples make more than $200k annually, and I wouldn't be surprised if there are not enough houses for 1 in 4 couples. Add to that the fact that a lot more than 1 in 4 couples are willing to borrow themselves into oblivion to get a house here (and most importantly, there are still ways to do that), and there's no light at the end of the tunnel.
I think that the SFBA RE "correction" is basically over. As many have noted on here, the only way that SFBA house prices will crater is if the entire regional economy totally implodes, in which case there will be a lot less reason to want to be here. This is NOT a good excuse to join the others and borrow yourself into oblivion too since, if you aren't comfortable with it now, you still won't be even knowing that it's a hopeless rat race around here. Your options are to rent close to work/around schools, have a long commute or move away entirely. Sorry, but there's no "buy a cheap house in the area you totally want, close to work with awesome schools." It's best to accept it and stop hoping for something that will never happen.
Yes, there are all sorts of good logical reasons for things to be different. Much of the frustration comes from having a system that is VERY openly rigged against "responsible middle class" people that is making it difficult to accomplish something that we are all told to do from birth in this country. Well, it's entirely our choice whether or not we are miserable about it. I used to do it to myself, but life's a lot better now that I see it for what it is and don't give a fuck. It's wrong on many levels, and it's a reality that self-inflicted misery will not change. Wait and save up more money, learn to enjoy renting or move away. I doubt that prices will have any meaningful gains in the next 5 years since even a system this badly rigged will have a hell of a time dealing with the endemic structural rot within it. Yeah, we'll see seasonal oddities like this year, but prices will probably be flat for all intents and purposes. So, wait & save is the strategy to employ if you want a house here. It is what I am doing, while also working the logistics on a move to Seattle.
Oh, and increasing interest rates might help. This isn't so much because it hampers borrowing power, but because it may start to attract investors to other money making venues. Right now, RE is all the only "safe looking" cash flow investment with decent return on it with the world economy and markets looking to be on the brink of disaster.
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Goran_K says
Hehe. I thought he got a change of heart and became duckhead. :)
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Laguna Beach, CA
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jhurio says
Are there many sideline buyers? If they're waiting on the sidelines because prices are too high, how will "higher" prices push them off the sidelines? Rising interest rates will make the "affordability" factor even more acute.
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Kent, WA
John Bailo's website
I saw an article yesterday that said home builders were ramping up for new construction...of rental houses! These would be brand new dwellings for immediate leasing.
This is the sort of thing that a lot of people would want...short term commitments, but yet a full house, not a small apartment with no yard.
And it is also the sort of market introduction that could kick out the bottom from high priced older home rentals...the kind you pay top dollar for but the appliances don't work and the roof leaks.
More Builders Are Turning to New Market: Rentals
http://www.cnbc.com/id/47875221
I have always thought that what many people want really is neither a boxy 1-bedroom "urban" condo in the city, or a 4-bedroom blunderbus with high maintenance fee in the suburbs, but a kind of more upscale trailer park. A neighborhood of low cost rentals, smaller homes, but with space between them and some common parkland nearby and access to roads and bus or rail line. Close to rural parks and with a town square type mall nearby.
That's all we need.
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San Jose, CA
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Goran_K says
Rising prices will only get the sidelined-sellers to put their houses on the market, and there are a lot more pent-up sellers than pent-up buyers right now.
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jhurio says
Then they shouldn't be crying crocodile tears to get help from Fed. They are manged by crook professionals - pretty much what AF said.
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Call it Crazy says
there are sellers out there making up multiple bids without proof to encourage higher prices.. and there are buyers making multiple bids on multiple homes with only intent to buy one .. each party inflating prices...
once you get a less emotional market place, and more prudent buyers .. you will see second leg down..
you know.. where were all these multiple bids and pend up buyers when we had a more rational home market... 1980 to 2000 ?
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Scottsdale, AZ
robertoaribas's website
shizlor, that is the post of the month, maybe of the year on here!!!!
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The people that are still holding out probably aren't much at liberty of taking the loss. That is to say, if you are living month to month and just scraping by to pay your monthly nut, thinking that peak prices are coming back (or needing a return much closer to peak levels to be solvent) you're not going to wake up tommorrow and say fuck it, just short sale the thing and be done with it. Just think of all that leverage that built up to get to the peak, do you really think we've worked thru that thus far? The boomers are oftened referred to as the "bulge in the python". The first boomers have barely begun to hit retirement age, this will be a tough pill to swallow for many. What has changed? We've used five more years worth of petroleum, piled on a ton more debt, and been lucky to have just semi-stabalized and slugged along. Now, you might anecdotally look at your own personal situation, or some of those in your sphere, and say things aren't that bad, we're doing good for ourselves. As a whole, the 315 million are still tapped, over worked, under paid, buried in debt and of negative net worth. You'd have to be insane to think that house price go up from here. Smells like a big fat trap to me.
Sorry for the tangent. I just don't believe there is this large swath of mortgage debtors watching for seasonal price spikes to escape. Then they'd be in the same shit situation and out on the street. Those people will squat it out as long as possible, return to lender, and the banks will lean on the tax payer to slowly bleed out the inventory. If they had to mark to market and realize these losses, how many are still solvent?
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dunross,
The Fortress is "different". However, for the Rest of Us who are not in The Fortress, I think that the most likely outcome is not 'another down leg' but instead a very slow downward grind, year after year, etc., so slow and gradual that many will not recognize it for what is.
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dunnross says
They don't... the realtors should give you a chinese menu of services to choose from, just like your auto mechanic, with fixed prices for each service.
This way each buyer and seller can decide exactly what areas that want help with and what areas they can do for themselves..
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HRHMedia says
Based on what I'm see locally, I believe you are right... until these shadow houses clear the market, the direction of the housing market isn't going up...
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Mountain View, CA
bmwman91's website
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You guys just aren't listening. My army of caffeinated defecatory bomber birds will smash housing prices in a volley of white terror. Only those that smear the blood of a realtor above their front door shall be spared.