patrick.net

Speedingpullet, I would suggest being a highly paid manager, or a movie star, have you considered being rich?

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sarcasm off

allah Says:

I don’t pity them one bit. They took a gamble with the odds mostly against them and they lost. Equivalent to going to vegas with your nest egg on black and it comes up red…. would you feel sorry for them? You cannot pity the stupid. People do stupid things every day, and some of them die because of it.

Calling the plight of the FB sad doesn't necessarily mean I pity them. It's a sad example of the state of American culture: lack of financial prudence, inability to save money, living off of debt, always being the "victim" who is not at fault. I don't feel sorry for them at all, but I do get extremely depressed about the state of affairs in this country.

HARM,

I especially liked this:

With

Linden Labs in SF was hiring quite a few people recently after getting a big infusion of new VC.

http://lindenlab.com/employment

I don't know if they're still hiring animators/modelers. Disclaimer: I generally dislike the business model of this segment of the games sector, but lots of VCs seem to disagree with me.

skibum,

You know in a way I do see what you're saying. What makes it worse for "Joe" is that he will absolutely knock himself out trying to make good on his obligation. No matter how ugly it gets and at whatever the cost.

Mr. Specuvestor on the other hand.........

Maybe his renters (if he has any) could be suckered into entering a lease to buy option with him, if they too cannot get credit to buy a house on their own, it would ante up some cash to bail out some of the houses. Is this the guy that put all the leverage onto just one house and said he would let that one go and save the others? Or how about putting the houses in an IRA, then if they are repossed and some debt forgiven, then the IRS couldn't tax him on it? Is that possible?

I don't own, can't afford to own, and plan not to own until the market crashes or my husband moves out of CA for a different job.

Claire,

I still consider doing some form of lease option from time to time. In most cases they are a bad deal. They'll promise to keep you at today's LOW LOW price and YOU get to "keep" the profit! Uh, no thanks. Besides the amount of your "deposit" just so happens to have a direct correlation to the amount of their arrears! So why would I bail you out? I would just let it slide towards inevitable foreclosure and just pick it up from the bank if so inclined.

The only way I will consider it is to have two appraisals done at the END of the lease period.

Wow. And I though "Jeff" from SDCIA was in a big hole:

http://www.creonline.com/wwwboard/messages/24397.html

DinOR -

I know lease to own is not a good option - especially in teh current market - hence I'm still renting, but I was commenting on the guy with the 14 houses - if I was him, I would probably have at least one renter that would be stupid enough to fall for it. But reading some of his posts, he's not planning on selling any houses, in fact his goal is to own 20.

Pause, dove, probably a HOLD not a PAUSE. We won't see any rate hikes for a while I think.

Well is it time for the black helicopters? I'll take my money drop now please.

LILLL, chill.

It seems almost as if each time Ben made a statement along the lines of "We're going to look at the data, and decide then what to do", people interpreted it to mean a pause was coming. I think he could justify a hike based on inflation numbers as well as to send a "yes, I really do mean it" signal to the market.

Pause, dove, probably a HOLD not a PAUSE. We won’t see any rate hikes for a while I think.

I don't think so..... I think after they pause (if they do), inflation is going to strongarm the markets and they will have to continue raising in September.....but what do I know.

The Fed action makes me really worried that we are headed straight towards inflationary times, or worse yet, stagflation. It's hard to fathom how BB can continuously say his decisions are "data driven," and yet he pauses in the midst of very concerning indicators pointing towards inflation. He may be hanging his hat on the poor jobs numbers, but that only points to stagflation, especially given the recent volatility of crude oil futures. Once again, savers are f%#ked!

Surfer-X Says:

Speedingpullet, I would suggest being a highly paid manager, or a movie star, have you considered being rich?

Sadly, Surfer X, it appears I may very well be rich in a few weeks.

My mom died in early june, and as an only child of a single parent I have the double-edged advantage of being her sole inheritor. After selling her flat in London I would be able to buy pretty much whatever I want.

Still, the money is nothing compared to not having my mum around any more. And having to travel back to the UK to clear out her sweet little place in 90 degree heat, and deal with probate lawyers and estate agents, getting death certificates etc. Meh

Claire,

I only tinkered with the Lease/Option as a way to "accelerate" the price correction. Probably wouldn't consider using this with an FB (remember they lied like a black dog to get the loan in the first place) so how could they have any credibility going two or three years out? We've already seen ample evidence these guys are living from hand to mouth.

I'd prefer to work with a RE perma bull that was so convinced that RE will do nothing but appreciate he's running red lights to get down to your attorney's office!

This way, you'd be into the home of your choosing (paying about 1/2 to 2/3rds what his PITI is) getting the place just as you like it knowing all the while that comps are softening by the day! There's no saying our "perma bull" may not try to wriggle out of the contract but if he does just make sure it's written so he has to "CTC"! (Cut the check).

Stagflation cometh? (Reminder, this thread is FBer psychology, the last one is Inflation)

Still, the money is nothing compared to not having my mum around any more.

Very true, sorry to hear of your loss.

The one thing I wouldn't like with the lease option is that you'd have a bitter, unhappy person who knows where you live. So, I guess someone who doesn't care too much about such things, or who already has a collection of such people could go for something like that.

Off topic

Surfer-X Says:

Very true, sorry to hear of your loss.

No worries, mate - you weren't to know.

Its the reason that I started reading housing blogs - for a little insight into what to do with the cash..

I guess its just a confirmation of old adage "be careful what you wish for, because it may come true".

speedingpullet,

Lost my mom due to cancer 11 years ago --very sorry to hear that.

requiem,

Lost a post there some where but all I can say is wether you buy 2 years down the road from some FB after making 9 counter offers (each successively lower) or do a lease/option none of us "bubble-sitters" are going to be racking up any brownie points. Who cares?

Dinor,

Point taken, I was thinking of the.. uh.. karmic effects.

Sorry to hear that SP, I lost my father the same way.

Off topic:

Thanks guys :-)

Sorry - I didn't mean to hijack the thread!

But what about now? The Fed has paused. All everyone is going to hear over the next few days is how the Interest rates will “no longer be rising”.

The FED pausing is not going to stop interest rates from rising. It may even have the reverse effect due to inflation fears which is what I think is going to happen.

Yes, even the delectable Ali Velshi on CNN was musing that, rather than calming nerves, its just going to make everyone jumpy until the next meeting in september.

George, you may be right, but wouldn't it be simple enough to change tack and use “get your loan now before inflation rises any further”?

Well, no matter what happens, your FB can rest easy knowing he still has his car/SUV to sleep in. Whoops --maybe not.

and today, Bendover bent over.

requiem,

Karmic effects are exactly what is pounding FB's, specuvestors, flippers and all the other lazy people that want 200K/500K+ over what they "paid" 2 years prior for just occupying a residence! This is a time for them to consider "their" karma, not for us to worry so much about ours.

As much fun as we have at flippers and specuvestors expense it really has been rank and file folks, your co-workers, friends and neighbors that have done the brunt of the damage. We also have fun with "equity extraction" but more of late it feels like "equity extortion"! Look, I ran my cc's up to their max limit and I KNOW you don't expect ME to pay them! Hence the stalled and sputtering market. Flippers had TV shows so we tend to focus on their folly.

Speaking of delving into the mind of the FB has anyone else noticed the recent battle cry of "it's the flippers that created all this mess"!

I'd even heard one Portland "luxury loft" builder (third major project in 4 years) say that the slowdown is attributable to the speculators! Really? Is that so? Then why do you have a full time realt-whore in your model taking app's with a grand down? Why did you put on events like wine and cheese "lotteries" to see who would get first crack? Your entire sales model (and building) is made to cater to flippers!

I can't wait for Portland to have it's very own "Dark Tower of Financial Doom"!

Lenders have been putting the pressure on fence-sitters with the “get your loan now before rates rise any further” tactic. Though completely divorced from reality (Mortgage rates have actually dropped in the past few months), I’m sure it scared more then a few people into buying sooner rather then later.

That tactic would have been smart 3 or 4 years ago. There just aren't that many people left who can afford a fixed rate mtg, who don't already have one.

The market's up-cycle went like this:
1. Demand catches up with supply in the late '90s as the economy booms and the market starts picking up ('97-'00).
2. Fed starts lowering rates to soften tech crash, making mortgages more affordable and fueling the boom ('01-'03).
3. Frenzy takes hold as home buyers are convinced that they will be "priced out" and flippers begin leveraging their equity gains. Potential sellers hang on to properties because real estate "always goes up," limiting supply. Creative financing becomes the norm, fueling demand. ('04-'05).

The down cycle will go like this, IMO:
1. Inventory climbs while prices stabilize. A few overleveraged flippers are forced to unload properties at a loss, adding to supply. ('06).
2. Creative financing starts to bite, forcing homedebtors to sell to get out of their ARMs. Potential buyers are less frenzied to buy and are more willing to wait things out, limiting demand. Foreclosures and fire sales become more common ('07-'08).
3. Lenders need to liquidate massive inventory and need to slash prices in order to do it. Many FBs send in their keys, rather than face foreclosure or remain in "upside down" loans. Many move away. ('09-'10).
4. Market bottoms out. There are no more real estate radio shows. Nobody talks abour real estate at dinner parties. Nobody even goes to dinner parties. Disgruntled FBs grouse about California's high taxes, smog, traffic, crime, earthquakes and decaying infrastructure. People let their houses fall into disrepair. Local economy sucks. Inventory liquidation continues, along with natural increases in supply (deaths, divorces, job losses and job changes). Inventory stays at relatively high levels. Nobody shows up to probate sales. ('11-
12). This is the time to buy.

Just a guess.

Speaking of delving into the mind of the FB has anyone else noticed the recent battle cry of “it’s the flippers that created all this mess”!

Hopefully that has enough momentum to kill any attempt to bail out FBs. (Not that the builders have no responsibility of their own, but as the saying goes, "the enemy of my enemy is useful".)

Kinda sucks but it seems the Feds are going to do whatever it takes to keep this Ponzi going for as long as possible.

Too late. Look at the last interest rate cycle--the fed started raising rates in Nov, 1998 in order to slow down the stock bubble. They stopped raising rates in May, 2000. By that time, it was far too late for a "soft landing" of the NASDAQ. The Fed eased like crazy to limit the fallout, but it was too little too late. The NASDAQ finally hit rock bottom in'03. The fed lowered rates for the last time in June of '03.

Then the fed started raising rates to contain the housing bubble. After 17 straight hikes, it is pretty clear that the bubble is finally turning over. But at this point, pausing or even dropping rates in a "counter-cyclical" move will not save the housing market.

Glen,

Uh... I'd say, uh... I'd say that about wraps it up! I'm not really a doom and gloom guy but the way you describe the unraveling sounds about right! Also I believe your calls on the upswing were spot on. Many people get the time frames all wrong. Many "homeowners" seem to want to cram the whole chronology from bubble inception to implosion between 2004 and 2005. So basically the free money leading up to that was "A ok". Everything else (in their minds anway) was perfectly normal up until those damn flippers "took over". It didn't happen that way.

I wish I could give proper credit but someone here said it best. When the cost of money is high, there's plenty of land. When the cost of money is cheap, we're running out of land!

SHTF,

do you mind leaving an email here, because I have some questions regarding the biz that you are in, would really appreciate your input.

Back to the housing front, Ben has lived up to his reputation. However, a rate pause is not going to save the bubble, it is just going to prolong it, so that everyone suffers longer.

Even without further rate hikes, people are still not going to be able to afford houses 8-10x their income. Such a pause is going to give a false hope to the FBs, which means, they will hang on to underwater propertiesl until they have absolutely exhausted ALL their personal financial resources. That's how people get into more and more negative zones in their housing equity.

Too bad that this will be a drawn-out process. God bless CA.

DinOR:

Thanks. If I'm right, then I will be the only bidder at a probate sale of nice spanish style 2 bedroom sometime around 2012 or so... So I'm ready for a long wait.

I forgot one more signal that the bust has reached a bottom: most of the Patrick.net readers will have capitulated and bought in around 20-30% off of peak prices (but still 20-30% above where they could buy in 2012). Patrick.net will become much less popular than the many new homedebtor victimology blogs which should be flourishing by then...

George,

we will have a hard landing, the result is almost out of the hands of the Fed.

However, Fed can decide whether we have a fast forward hard landing or a slow-motion hard landing. Looks like we are opting for the latter.

OO says,

"However, Fed can decide whether we have a fast forward hard landing or a slow-motion hard landing. Looks like we are opting for the latter."

Damn, What's a vulture to do? I do want to wait that long to pick through the string of FB carcasses.