patrick.net

I see some of these bank owned listings with stipulations such as "buyer pays closing costs", "sold as-is", and "no offers less than asking price acceipted." Also, the auctions seem odd as well. This, to me, is just more evidence that there is a still a large downside to the real estate market, before capitulation. All of the manipulation by the Fed is also postponing the enevitable, and prolonging the agony.

Perma,

I also attended one of the auctions in February. Much the same as what you described. Many re-auctions, over and over again. Not sure if it was because the buyer balked afterwards or because the reserve price was not met. In many cases, the price was indeed lower upon re-auction.

I think it's a couple of years too early to consider the auctions. I noticed that they are starting to have housing auction shows on TV. I expect this to gain in popularity. I'm expecting homes in East San jose in the 95127 area to dip under $200k in the next 3 years. I'm talking about the built in 1955, 3 bd 1 bath 996 sq ft house. This house would be under $100k almost anywhere else in the country. I figure double that for being in the Silly con valley. I read somewhere that there are currently 22 homes like that selling for under $400k right now. $400k is still a lot of money and a person with 20% to put down would probably not want to find themselves in that hood during this upcoming recession/depression.

One of the artciles today did a very good job of discussing the greed and fear components of the financial markets. So, in a weird week of Wall Street ups on bad news, what does an unemotional examination tell me?

1. Seeking Alpha had a very good statistical study of probable housing prices. At its mostoptimistic, the 10% we have already lost is as far as we will go. This can be argued only form the perspective that the Fed is trying its best to place a floor under housing prices.
At its worst, and equally improbably, we lose 85%.
The most likely scenario is a 40% loss. That's a lot.
A 40% loss in housing alone would trigger a recession lasting 30 months with unemployment heading to 10% And a total GDP contraction of around 3%.

But housing isn't alone. We are getting a credit crunch beyond just housing. Faith in complex instruments has been shattered. Valuations are impossible to determine and UBS statement of spinning of its mortgage debt unit and focusing on core banking will be echoed everywhere.

We also have high oil prices. Arguably they are solely the reult of the Feds inflationary policey, but they are not.

Fear aside, the market should be pricing a recession, and the fact it is not seems to me we are seeing some powerful moves by large players who lead everyone into commodities then run over to equities then run back. It just looks like momentum plays while they deleverage.

Becasue anything other than world market contraction simply does not make any sense.

The article the other about Taleb was very interesting. What is funny about Black Swans is how similar it is to betting the long-shot in horse racing. While MR. Taleb made a pile of money during the Russian default, he only did so because the orchestrated bailout of LTCM put money on the table.
If everyone has now adopted the practice of far-out-of-the-money-puts for the improbable-but-large-payday, who will be able to afford to pay the long shots? I think we are already seeing that items like CDS are not worth the premiums anyone is paying for them. And not even the FED can bailout a marget segment with a notioanl value of 45+ trillion.
Simple counter-party surveilance is telling finance people that the pockets of their partners are no deeper than their own. Which is thin in an over-levereaged market conracting. The Darwinian game now is to live just longer than the other guy who goes belly up so you the (now smaller) group of remaining funds/hedgies/banks can grab the real asstes of their now dead partner.
Again, this is a game of dep pockets. Even if you bet the winner, you may not be paid.
Caveat Emptor.

Overnight (March 31 to April 1), there is a 30% jump in inventory search results in the Fortress (Cup/LosAltos/Saratoga) area in my saved searches on Zip realty. Prices seem all over the place, but there are some noticeably lower asking prices in the new bunch of listings.

Is it just the "spring bounce" or did something happen?

I have a friend who lives in livermore and had bought a home for about 270K around 2003. It was appraised to 470K around 2005. Now it's appraised to 250K. One of his neighbour has maxed out equity to 450K. He is ready to walk away although, his equity has gone to other investments. I am sure he is waiting for the bailout or he will walk away and buy a home on his wife name. Either way he gains.

sa,

Therein lies the problem. Just being under water on your mortgage can't be the sole determination. Hell, Bill Gates probably over paid for his home! Should he be eligible? LOL.

The only way I could get on board is to have a "Uniform Application For Mortgage Relief Benefits Form" that takes into account the borrowers complete financial profile. Only fer chrissakes let's make it like FICO scoring where certain determining factors are PFM (Pure F@cking Magic!)

Obviously it would be tied closely to your last two tax returns. (This eliminates the Liar Loans) If you lied there, don't look for relief here. Make this "form" a mandatory requirement for anyone seeking to re-finance, period. Make it a lengthy and painful process (kind of like a VA Loan) with TONS of supporting documentation.

Your FHA REFCO (Refinance Score) will determine what (if any) payment relief you may get and what portion of the deficient payment will be added to the back end of your loan and whether or not (in certain cases) where you will be asked to vacate the property immediately and the PROPER procedure for completing your Deed-In-Lieu. Since the process will be somewhat secretive relief filers won't know if they're getting a free ride on some payments or a visit from the sheriff.

This will keep the "throw your hat in the ring filings to an absolute minimum. We will tabulate your scores and have your answer with 90-120 days. In order to qualify you must remain current on your mortgage payments. Your filing this request does not in any way excuse from your contractual obligations.

SP,

I would hold off on an assessment of the market. It's more or less typical for inventory to creep up through the "spring selling season." It's really a matter of how much of that crap moves. I have noticed in the areas I'm tracking that, even though there are occasional under agreements, it is a LOT slower than I would have expected - as in 1-2 homes UA per week, despite being in the "prime" spring market.

And this is in the ultra-Fortress...

SP,

I didn't see a bounce with the abruptness you describe, but I did not check cupertino and saratoga. I did however see a 40-50% gradual increase in listings in some other fortress cities over the last 2 months.

“spring selling season.”

April is the cruelest month. :)

There is so much inventory that I have stopped looking.

There is always the fear of missing out on buying a better house for the same money. :)

dinor,

As complicated as it can get with all details to be worked out for bailout, this person is waiting to see the details of the plan. My belief is, a bailout wouldn't help this person much. Prices have gone down over 40% and a bailout will mostly have provisions of govt getting back any appreciation on the house. He still stands to benefit by walking away and all the equity he has taken out, he can buy the house in same neighborhood cash down!!

sa,

Oh I'm sure of it! With as jaded as the avg. American housing-consumer has gotten over the last decade no one among us can account for their every contingency plan.

Hell, half of these people had a back-up plan going in. "If it continues to go through the roof I'll..."

A. Cut the lawn
B. Rent it out
C. Flip it
D. Rent it out (but claim as "primary residence")
E. Do a lease/option
F. Torch it and blame it on the Earth Liberation Front

Additionally, perhaps in 2004/5 one could have gotten away with buying a new home BEFORE selling the old home but I don't see that in today's credit environment? I don't know the particular situation but the only way a guy could put the "new" home in his wife's name alone is if she QUALIFIED on her own! Any joint app. would show a credit report and a VERY recent foreclosure. Not happening.

Oh and I forgot, they WON'T KNOW what the "details" of the plan are! I would make it so you can file to "see if you qualify for benefits" *not "this is what we're offering" (see if you can "shoe horn" yourself into that description)

That's absolutely paramount! We need to make it clear up front that only a certain percentage of filers will get relief (of the portions they're visioning) Again, "PFM".