patrick.net

camping says

but like the other thread said, the banks control the game. If they control the game, they aren’t going to lose.

Ok, I am waiting for a link for that extra-ordinary thread that CONCLUDED that "banks control the game". Don't tell me that extra-ordinary thread is no different from this very thread - different people making different arguments, some of them are valid and some of them are not. I am not disagreeing that banks have enormous influence over govt policies. But they cannot control the market. If they could, you wouldn't see foreclosures (or banks failing) in first hand.

camping says

As far as holding properties, I’m not necessarily talking about the banks foreclosing and then owning them, I’m talking about the banks just delaying the foreclosure.

And delaying foreclosure does not mean delaying for "a few years". Keep in mind that owner is not paying mortgage for to-be-foreclosed home. So bank is getting nothing from it, UNLESS they foreclose and sell it.

camping says

Read the thread titled: “Fixing the rules: Per request from Patrick.” Angrish, in particular, made some good points.

Actually I followed the thread very closely. Many made interesting comments. But nobody based their argument that banks can hold properties "a few years" to avoid loss. Banks don't have that kind of infrastructures to hold properties for that long time.

Some Guy says

WillyWanker says

Some Guy says

It’s just tearing you guys up that a black man became president, isn’t it?

Uhmmm, the guy is a MULATTO. His mother was WHITE, his father was a BLACK MUSLIM. That makes him a half~breed, MULATTO. It’s just tearing you guys up that a MULATTO man became president, isn’t it? And that his mother had the outrage to be white.

Dude, that’s just stupid. Are you mentally retarded? What exactly is 'stupid' about that, moron? Are you too much of an idiot to not know the difference between a Mulatto and a black man? Or are you so angered by Obama's white mother that you can't even get your head out of your ass? Please advise.

Considering you questioned my ability to read you should you should probably read a little better yourself. From the other thread: Angrish said: @SoCal, they let the people sit in those houses. They create squatters. The house isn’t abandoned, just the person “squatting” in it doesn’t pay for it anymore. The lawns and the windows and everything will still be fine. Some people have brought up loss of cash flow for banks. That’s more than compensated for by setting a 0% rate for them to borrow at from the Fed and 5% rate they can lend to the treasury at, all for doing nothing more than signing some papers. No more work needed. Cash flow continues unabated, just from a different source. The absence of property taxes will just make the state bailouts bigger. And we can keep printing while people are willing to buy our debt. I thought that was about to break a month or so ago, but it looks like the worse things get, the more the confidence in (or last resort attitude towards) US debt grows. All good arguments people, but I’m still looking for that one invariant, that they can’t fool. ------------------ Although it does not explicitly state "for a few years," it's clear that the above logic can be applied long term.

camping says

Considering you questioned my ability to read you should you should probably read a little better yourself.

Straw man argument. I asked you to read the article because it was very clear that you were putting words in my mouth without reading it. camping says

Although it does not explicitly state “for a few years,” it’s clear that the above logic can be applied long term.

LOL! I still fail to connect between your argument of bank delaying foreclosure for "a few years" until home values go up again (which in turn allows bank to foreclose eventually, kick out "squatter" and sell it in higher price), and that specific discussion which eventually ended in following comment.

I think I’m probably not gonna say this again. But I agree. This can’t continue. What I’m looking for is that simple causal process that will break something. Logic you say? Well set axioms, set rules, and show me a logical progression that leads from here to a contradiction of those axioms, thereby implying that this “can not” go on forever. I went short on the home builders in 2006, and banks n 2007. We all saw the exuberance. But now we don’t see as much because it’s happening behind closed doors. The game is being fixed. This is why we’re discussing things here. Pre-2008 was easy, the rules weren’t changing. Now they are, and in the face of this fact, we’re trying to see (1) What has changed and (2) How will that eventually fail. I guess that’s about as clearly as I can put it. I’m not saying this will go on forever, but I’m unable to find a convincing logical progression that’ll show me how it’ll end.

Some Guy says

And in 2004, there were 14,104 sales. So no, 8,000 is not “bubble” levels of sales. It’s actually 16.1% below average.

Irrespective of 2004/2003 sale numbers, it is a stretch to conclude that just because sale number of 2009 is same/similar to 2003 therefore Bay Area housing market will behave same way as it did in 2003-2007.

P2D2 says

Some Guy says

And in 2004, there were 14,104 sales. So no, 8,000 is not “bubble” levels of sales. It’s actually 16.1% below average.

Irrespective of 2004/2003 sale numbers, it is a stretch to conclude that just because sale number of 2009 is same/similar to 2003 therefore Bay Area housing market will behave same way as it did in 2003-2007.

Talk about straw man arguments. Where did I say it was going to behave the same way as it did in 2003-2007?

P2D2 says

camping says

Considering you questioned my ability to read you should you should probably read a little better yourself.

Straw man argument. I asked you to read the article because it was very clear that you were putting words in my mouth without reading it. camping says

Although it does not explicitly state “for a few years,” it’s clear that the above logic can be applied long term.

LOL! I still fail to connect between your argument of bank delaying foreclosure for “a few years” until home values go up again (which in turn allows bank to foreclose eventually, kick out “squatter” and sell it in higher price), and that specific discussion which eventually ended in following comment.

I think I’m probably not gonna say this again. But I agree. This can’t continue. What I’m looking for is that simple causal process that will break something. Logic you say? Well set axioms, set rules, and show me a logical progression that leads from here to a contradiction of those axioms, thereby implying that this “can not” go on forever. I went short on the home builders in 2006, and banks n 2007. We all saw the exuberance. But now we don’t see as much because it’s happening behind closed doors. The game is being fixed. This is why we’re discussing things here. Pre-2008 was easy, the rules weren’t changing. Now they are, and in the face of this fact, we’re trying to see (1) What has changed and (2) How will that eventually fail. I guess that’s about as clearly as I can put it. I’m not saying this will go on forever, but I’m unable to find a convincing logical progression that’ll show me how it’ll end.

While Angrish said he doesn't think it will go on forever, he also can't find a reason why it will stop and no one provided a valid one. I don't understand why you think a few years equals forever (not what you said, but what you are implying by citing this conclusion). I'm not saying it will go on forever, just long enough. One of your initial posts in this thread was to disprove the fact that low inventory is because of sales, and your justification is that banks aren't foreclosing. Well, if they did this for the past year, why is it such a stretch that they will do it for another year (thus several years)? We've had 3 month moratoriums by the fed and now CA, why is it so impossible for you to imagine them doing a 1 year moratorium when it starts getting bad again?

As far as I am concerned, we should nationalize the health care system, just what we did with banks. Financial crisis exposed us to concept of "too big to fail". Similarly health care crisis shows us that that american health care system is "too important to fail" and hence what president should do is that instead of relying on Nancy chudasi and Henry fucked, just pass a decree and nationalize the health care system. Fire the CEOs of health insurance companies and doctors who demand too much money. You can get doctors who are equally good and charge 50 % less from developing countries. If we can do this in engineering why not in medical field. 1200 dollar in emergeny room bills for simple cough and fever and 1 hour of hospitalization, should tell you that more than financial system, it is the american health care system that is seriously broken.

Some Guy says

WillyWanker says

What exactly is ’stupid’ about that, moron? Are you too much of an idiot to not know the difference between a Mulatto and a black man? Or are you so angered by Obama’s white mother that you can’t even get your head out of your ass? Please advise.

Jesus Christ. Did you get dropped on your head when you were a baby? I would “advise” you to jump off a bridge because you are too stupid to live. Or better yet, take your white sheet and burning cross and shove ‘em up your ass.

I don't know if your retardation was caused because your mother and father are brother and sister or because your father banged your head against the headboard each night in lieu of bedtime stories~~~regardless your condition would make you an ideal candidate for euthanasia. Just think of it as doing the world a favor, asswipe. As far as I am concerned, you can go and sit on 0bama's flag pole and 'advise' him on policy while gyrating lewdly. Just don't assume I care about your past, present or future. But thanks for sharing.

I thought this was a housing forum ...

camping says

Talk about straw man arguments. Where did I say it was going to behave the same way as it did in 2003-2007?

So please elaborate what you meant with following statements when you compared 2009 with 2003

2003 was part of the bubble era. If we are seeing sales numbers similar to that, it leads me to believe that there are obviously a lot of people out there buying right now. If they are buying now even in a terrible economic environment, why would you expect buying to stop when the economy actually starts doing better?

Please just tell me where I said anything about the market behaving like the period of 2003-2007, not just 2003, but the 2003-2007 period.

camping says

One of your initial posts in this thread was to disprove the fact that low inventory is because of sales, and your justification is that banks aren’t foreclosing.

Incorrect. I said banks are not listing their foreclosed homes (what is known as "shadow inventory") at the same pace as they did in past. Foreclosures are happening. And I posted SF Chronicle link for foreclosure database. This link is available for more than a year now and I monitored this database in regular basis. The numbers are increasing - sometime in slow pace, sometime in faster pace. So far I have never seen numbers are going down. Just to give a comparison, in Santa Clara County there were 400+ foreclosure at the same time last year. Currently there are more than 5200. On the top of that, now there are good number of foreclosures on those areas where people never saw foreclosure in past. Example, Palo Alto (including 94301), Los Altos, Cupertino (including Monta Vista), Woodside, Belmont, Mission district in Fremont. camping says

Well, if they did this for the past year, why is it such a stretch that they will do it for another year (thus several years)?

Well, it is nothing unusual for banks to listing the property 3-6 months after repossessing it. Let me put it this way - banks are lousy when it comes to handling real estates. They never had good infrastructure to handle it in efficient manner. However, it did not matter in past due to three reasons 1. In past, volume of foreclosures were pretty low compare to regular housing market. Therefore, a few foreclosures did not make any impact in market. 2. As the home value increased over time (some places modestly, some places rapidly), the 3-6 months delay (or even more) delay to list/auction foreclosed property did not have impact. 3. In pre-bubble era, 20 or 10% downpayment (of non-toxic standard loans) used to cover the loss anyway. So banks did not have much to lose. But it is different time and different situation now. In some areas foreclosure volume is much bigger than regular housing market. As banks are lousy to handle foreclosed properties, they are simply overwhelmed with the foreclosures with this magnitude. This sheer volume worked against them another way - in some neighborhood multiple properties are foreclosed from same bank. So if they are listed at the same time, they would start competing against each other. As an example, let's assume in Rivermark (Santa Clara) there are five foreclosures and all are from Wells Fargo. Wells Fargo simply would not want to compete those properties against each other. So they need to stream line the foreclosed properties in such a way (probably in staggered fashion) so that competition does not happen. And they are not doing very good job (and they never did in past). This problem is more prevalent in new constructions where multiple loans were issued from same bank at the same time (remember the name Countrywide?). I know a guy who works for a bank in SF and developing software to track foreclosed properties (and their relevant information) in more efficient manner. The last news is: they are still working on it. :) So far I have seen anywhere between six months to one year delay for listing foreclosed properties. But it does not surprise me, considering the volume of foreclosures. camping says

We’ve had 3 month moratoriums by the fed and now CA, why is it so impossible for you to imagine them doing a 1 year moratorium when it starts getting bad again?

Well, I am not trying to imagine anything at this moment. If I want to, I could imagine lots of hypothetical scenarios. How about this one: multiple asteroids will drop in neighborhoods where there are too many foreclosures and will destroy all the properties. Banks will collect insurance from insurance company. End of story. No foreclosed property in market, home value goes up. Or may there will be an earthquake. Basically, there are infinite possibilities to "imagine". I would like to see some facts on ground (or atleast some kind of rumors leaked from banks that they are trying to hold those properties forever or long enough). Moratoriums are band-aid solutions from lawmakers to keep citizens and local govts happy. Some banks actually resisted the idea. For example, Bank of America negotiates clouded legal waters

As four U.S. senators joined the chorus of political leaders and activists calling for a foreclosure moratorium, Bank of America continued to resist requests that it voluntarily adopt such measures on Countrywide Financial Corp. loans. "We understand the concerns that have been raised," Bank of America spokeswoman Shirley Norton told Legal Newsline on Tuesday, "and believe there are better alternatives for our customers and communities than broad moratoriums."

camping says

Please just tell me where I said anything about the market behaving like the period of 2003-2007, not just 2003, but the 2003-2007 period.

Ok, may be I misinterpreted you. And I am sorry for that. But please elaborate your point about 2003 and 2009 comparison. I would like to hear it.

Bass, On “Health Insurance Portability and Accountability Act” (HIPAA). >>Which basically was the frame work for a health care system with “Huge” technical, administration and logistical specification. HIPAA streamlined and standardized all the billing codes and other administrative aspects of the health insurance industry. This is a great improvement. What is wrong with that? http://en.wikipedia.org/wiki/HIPAA

>> No, it’s obviously the white supremacist forum. Waay to many wingnuts here lately. In fact, there is a huge surge in wing-nuttery all over the web the last 4 months or so.

That's a pretty cool Chronicle link. Thanks. If banks do a bad job of managing properties, what are they going to do with a flood of them? Your long paragraph talks about how slow banks are, yet you find it unreasonable that they may take years to unload foreclosures if they are flooded with them. Not to mention that they have devoted a ton of people to work on "re-working mortgages" now, so they are probably even slower. I personally do not think they are in any rush to unload properties. As you said, they may have to stagger properties as well. Well, if they have 5 in one area and each takes 1 month to sell, then you have a delay of 5 months for the last one, no? Again, if there is a flood of foreclosures, they will stagger them over a longer period of time, which could take several years. As for the 2003 / 2009 comparison, that was in context which is above. In short, it was related to how everyone thinks we're in the crapper, jobs are being lost left and right, yet there are still a decent number of sales going on. If/when the economy picks up, I would think sales would pick up even more. We've only spent like $60B of the $800B+ of the stimulus package and there may be second stimulus package. I think all of that money is going to do something (inflationary).

>> your questioning the actual implementation. Bogus, I did no such thing Anyway, let us talk HIPAA cost and put some numbers on it. Here is an example from a web search: # The complete HIPAAsuite with all the listed modules is $25,000 for the server and one client. # Each additional client is $2,500 # The yearly maintenance fee that guarantees upgrades and service is 20% of the sale price # Price includes data base licenses by IBM. Doesn't seem all that onerous to me. Say you have five doctors in a medical building, buy a server license and some clients, The cost should be pretty managable,. The yearly upkeep is 5k/year per server and $500/year per client. HIPAA is not rocket science. It's just a few thousand billing codes and a database. What's the big deal? Any simple PC can handle this workload, no big iron required. I think the complaints about HIPAA are dishonest. It is just Clinton-did-it-so-it must-be-wrong talking. >> And so much for medical privacy. Bogus again. HIPAA strengthens privacy. Bottom line: Any small business needs an accounting and customer database system. HIPAA is an effective and standardized system for accomplishing what everyone needs in any case. HIPAA creates a big market and creates competition among software vendors. That's how we get efficiency of scale. It's all good.

Some Guy says

WillyWanker says

I don’t know if your retardation was caused because your mother and father are brother and sister or because your father banged your head against the headboard each night in lieu of bedtime stories~~~regardless your condition would make you an ideal candidate for euthanasia. Just think of it as doing the world a favor, asswipe. As far as I am concerned, you can go and sit on 0bama’s flag pole and ‘advise’ him on policy while gyrating lewdly. Just don’t assume I care about your past, present or future. But thanks for sharing.

This is why cousins shouldn’t marry.

No, you are proof of why your parents should not have been allowed to reproduce. Abortion would have been a blessing for you.

Some Guy says

pkowen says

I thought this was a housing forum …

No, it’s obviously the white supremacist forum.

Funny how pointing out 0bama's Mullato heritage has riled you into a frenzy. The fact that his mother was white is something you just can't handle. BitterMuch?

camping says

Your long paragraph talks about how slow banks are, yet you find it unreasonable that they may take years to unload foreclosures if they are flooded with them.

Because I am debating against the argument for reason for delay (not the outcome). Initially you alluded to point that bank would hold properties because they don't want to sell them (to keep inventory artificially lower). I am saying that it is not that they want to, but they have to - because most likely they don't have infrastructure to unload faster. In addition, moratoriums are slowing down foreclosures (hence repossessed properties coming back to market in slower rate). camping says

As you said, they may have to stagger properties as well. Well, if they have 5 in one area and each takes 1 month to sell, then you have a delay of 5 months for the last one, no? Again, if there is a flood of foreclosures, they will stagger them over a longer period of time, which could take several years.

You have to ask yourself, why there is staggering? Because there are there are already too many foreclosed properties in the market, and some of them from very same bank. And if there are too many in market, that defeats your initial argument that banks are intentionally not listing foreclosed homes in market. I don't think anybody would care (except bank itself) if certain foreclosed properties are taking one year to come to market. You have to see how many foreclosed properties are already in market. Rapid inventory will depress the home value in faster rate, and slow increase of foreclosed properties will do it in slower rate. That's the only difference. In the end, what matters is the market trend. So far it's only downwards and no sign of going upward.

camping says

n short, it was related to how everyone thinks we’re in the crapper, jobs are being lost left and right, yet there are still a decent number of sales going on. If/when the economy picks up, I would think sales would pick up even more. We’ve only spent like $60B of the $800B+ of the stimulus package and there may be second stimulus package.

First, just sale volume (and nothing else) is not a good metric to gauge market. Even in worst housing market, there will be certain amount of sales. You have to look at the underlying factors for sales. In 2009 32% sale volume is driven by foreclosure sale. What was the number in 2003? It was definitely not 32%. In fact if there are more foreclosed homes in market, there will be even higher volume sale - probably even higher than 2004/2005 numbers. It does not demonstrate that health of the market is positive. BTW, in 2002-2003 Bay Area was indeed in bad shape. Unemployment in hitech sectors were pretty high. So today's scenario is not exactly same, but not all that different either. However, people's mentality was lot different. In 2003 people used to consider real estate is a safe investment - after losing money on stocks and evaporating stock options. So people were willing to buy house, even if they were expensive. But today not many people think same way. Today's volume of sale driven by different mentality - opportunity to grab foreclosed properties in cheaper price (at least cheaper than two years back).

Most of what you said contradicts itself. The banks don't have the means to unload foreclosures, but the market has too many foreclosures, but they are staggering their foreclosures, and they aren't doing it to keep inventory lower, yet rapid inventory will depress home values faster. You are correct the difference is the rate of the drop in home values. My current view (changes from time to time) is that a slow drop in home values will be offset by inflation and higher mortgage rates to the point where buying in the near future if you can get a deal may be a better option than waiting until 2012.

camping says

Most of what you said contradicts itself. The banks don’t have the means to unload foreclosures, but the market has too many foreclosures, but they are staggering their foreclosures, and they aren’t doing it to keep inventory lower, yet rapid inventory will depress home values faster.

It is not contradiction, but the complexity of the current situation. - Yes, banks don't have means to unload foreclosures in faster rate. - Yes, market has too many foreclosures. - Yes, they are staggering their foreclosures. - Yes, they are not doing it to keep inventory lower. - Yes, rapid inventory will depress home value faster. It's the complexity of current housing market. And I don't think anybody can describe it with simple one liner. So, where is the contradiction?

camping says

y current view (changes from time to time) is that a slow drop in home values will be offset by inflation and higher mortgage rates to the point where buying in the near future if you can get a deal may be a better option than waiting until 2012.

Any given day I would prefer higher interest rate + smaller principal than lower interest rate + bigger principal. Because in later case, the risk is much lower - especially in this volatile time.

If they don't have the means to unload foreclosures, then how does the market have too many foreclosures? They got there somehow. If they are staggering foreclosures, then they are doing it to keep inventory lower (avoid competing with themselves) to avoid depressing home values. Similarly, if they know rapid inventory will depress home values, how can you say they are not doing it to keep inventory lower?

Speaking of bad health bills, it is the Republicans that do those: from paul krugman columns today: "Meanwhile, Mr. Bush claimed to be against excessive government expenditure. So what did he do to rein in the cost of Medicare, the biggest single item driving federal spending? Nothing. In fact, the 2003 Medicare Modernization Act drove costs up both by preventing bargaining over drug prices and by locking in subsidies to insurance companies." An NO, you cannot just say "paul krugman is a liberal, and therefore what he says is invalid". You have to argue with the facts.

P2D2 says

camping says

y current view (changes from time to time) is that a slow drop in home values will be offset by inflation and higher mortgage rates to the point where buying in the near future if you can get a deal may be a better option than waiting until 2012.

Any given day I would prefer higher interest rate + smaller principal than lower interest rate + bigger principal. Because in later case, the risk is much lower - especially in this volatile time.

I agree smaller principal + higher rate is much preferred. But you may not get that. With a slow drop you may only get slightly lower principal and much higher rate. My concern: $700k house now w/ 5.5% rate versus 2012, $650k w/ 8% rate.

camping says

My concern: $700k house now w/ 5.5% rate versus 2012, $650k w/ 8% rate.

The above statement defies the long term trend of housing market. When interest rate goes up, home value adjusts accordingly. The whole issue boils down to affordability - how much mortgage people can pay per month.

P2D2 says

camping says

My concern: $700k house now w/ 5.5% rate versus 2012, $650k w/ 8% rate.

The above statement defies the long term trend of housing market. When interest rate goes up, home value adjusts accordingly. The whole issue boils down to affordability - how much mortgage people can pay per month.

Not true: http://mysite.verizon.net/vzeqrguz/housingbubble/

Can we just get rid of posts that have no factual content and consist only of name-calling? I'd be for it. (SomeGuy, good restraint there.)

camping says

If they don’t have the means to unload foreclosures, then how does the market have too many foreclosures? They got there somehow.

LOL! There could many many many reasons for too many foreclosures. Let me try to think one of them - they are not selling? ;) In redfin I can show property where bank is reducing price $25K every month for last six months. camping says

If they are staggering foreclosures, then they are doing it to keep inventory lower (avoid competing with themselves) to avoid depressing home values.

Effect of staggering is lower inventory than it is supposed to be. But basic purpose of staggering is to avoid having similar properties from bank in same neighborhood (not lowering the inventory). camping says

Similarly, if they know rapid inventory will depress home values, how can you say they are not doing it to keep inventory lower?

It boils down to what they want to do with foreclosed home. From bank's point of view, a foreclosed home is trapped money which they cannot invest anywhere else (lost opportunity). Time goes by, they lose the opportunities to do so. In addition, the foreclosed inventory is not owned by one bank that they can control the whole market. There is always multiple banks competing with each other. So there is always a rat race - a typical behavior of market.

P2D2 - above, you said: banks are not doing it to keep inventory lower and also said: banks don’t have means to unload foreclosures in faster rate. Maybe the President of ZipRealty has ulterior motives for saying this, but if it is true, it seems to contradict your points. Quote: ... And that's only part of the challenge. As banks take possession of more foreclosed homes, not all of those are listed — sometimes because they are holding back inventory so they don't flood the market. "I do know that banks are holding onto inventory, and what they're doing is they're metering them out at an appropriate level to what the market will bear," says Pat Lashinsky, chief executive of online brokerage site ZipRealty. He says this strategy has paid off for banks — even if it also pushes a full housing recovery further out. "By not flooding the market, they were getting better pricing on the homes that they owned," Lashinsky says. "And instead of people coming in and offering less than what the prices were, they were ending up in multiple-offer situations and getting more for the homes." http://www.npr.org/templates/story/story.php?storyId=106113137

camping says

Not true: http://mysite.verizon.net/vzeqrguz/housingbubble/

How exactly the above chart draws relation between interest rate and home value? Yes, interest rate factors into inflation, but not always. You should compare above chart with interest rate chart. Couple of things to note - Sometimes home value peaked (in early 80s and late 80s) while interest rate started climbing up. My conclusion is that it is the similar perception, as you are saying now ("buy it before interest rate goes up"), that drove the price up, only to fall farther down (and fall was spectacular in late 80s SF bay area). - Although sometime interest rate was lower (especially mid 90s), home value did not increase accordingly. My guess is that it is related to median income.

Yes, and median income is generally related to inflation.

camping says

Maybe the President of ZipRealty has ulterior motives for saying this, but if it is true, it seems to contradict your points.

Well, I never doubted about ulterior motives of people from real estate industry. :) And I can't count enough how many times I disagreed with them.

camping says

Yes, and median income is generally related to inflation.

Again, not all the time. In last 10 years median income did not increase (in real term or actual dollar value), although 2005-2008 inflation was pretty high. Same argument goes for early 80s. median income chart Inflation charts Because there are other factors like GDP. In addition, different demographics have different curves - depending on local job growth (e.g hitech job growth in bay area in last 90s).

I thought we were talking about long term trends; now you're picking very short periods to compare.