patrick.net

They are dreaming that prices will go up.

Call it Crazy says

Well, if they can't afford to pay their mortgages, they sure as heck aren't worrying about the 1099 they might receive on the shortage...

Right, but as prices fall there is a point at which the fence-sitters will default too. The goal would be (maybe) to keep them in until eoy, and then they will be less likely to default (strategically).

Another effort to trap existing homeowners?

This article looks to be from March 2012 by looking at the comments date and I have seen Dr. Housing Bubble on this site. :-)

http://www.doctorhousingbubble.com/shadow-inventory-2012-foreclosure-pipeline-no-payments-for-three-years-midtier-los-angeles-orange-country-real-estate/

I am very interested in this mystery.

Call it Crazy says

that is the BIGGEST unknown

It most certainly is! 1.) The data and real numbers are being held back somehow. 2.) They really don't know themselves.

Looks like they just gave up in Vegas. The point of this article is they think the banks had sloppy paperwork in their unbridled greed: “Banks are fumbling. In their zeal to earn billions, they had sloppy paperwork,”

http://www.vegasinc.com/news/2012/jan/29/new-law-has-stalled-not-stifled-foreclosures/

I keep trying to think of different words to use in the search engine, 'housing is the the most manipulated market in the world' came up with this technical article from April 2012.

http://www.wealthwire.com/news/economy/3015

In Summary: 1.) Low interest rates have not worked, this must have someone scratching their head. 2.) Vacant homes, trillions pumped into the system with only low end demand. 3.) New home sales and construction tanked. 4.) The low inventory is: "So in truth, the bailouts were about giving too big to fail banks full control of manipulating the market and stunting market forces. That seems to be rather clear."

I'll keep looking.

This is conjecture on my part, but I think banks are already struggling to meet capital requirements imposed by Basel III (deadline 2013). I don't know which banks are required to meet these new capital baselines but BofA,Citi etc are all selling assets to raise capital. Therefore, they are also going to try and not do anything that causes them to lose capital (such as recognizing losses or being forced to mark to market). Therefore, they'll only trickle out as little inventory or as much as inventory as their books can handle. I don't know what would force their hands to move quicker, but the current environment certainly doesn't seem to have anything that will require them to move.

Call it Crazy says

There you go!!!! You got your answer.....

Yes, it has to be laws regarding banking accounting that is allowing a non performing asset to be held on the books.

Call it Crazy says

Unfortunately, our wonderful government has let the banks basically get away with accounting fraud so they can stay in business. If the banks had to truly mark these assets to the current values, they would be bankrupt!!

Right, I was just thinking that, political corruption too.

Well, Patrick's housing blog has probably saved me another couple hundred thousand dollars on this side of the bubble ;-)

Just have an irritating wait.

Thanks!

The funny thing is even with half the inventory of last year, this Spring bump is pathetic. Sales are down, and the "sold" pricing is actually starting to go downward, that's how messed up this market is. Even with anemic supply, it's still not a frenetic market like the banks expect.

I don't believe that banks are waiting for prices to go back up. As I said in a previous thread, they are evil but they are not that stupid. In the real estate crash of the early 70s and again in the late 80s, prices home didn't recover for a decade. And this downturn is widely recognized as worse.

For a bank, having over valued houses sitting in their asset column might hurt their quarterly numbers less than having them in their liability column, but it still hurts their numbers. When house payments are not made, they lose income and they are losing a lot.

I kind of understand why a bank would not foreclose (not having to book the liability, not increasing their capital requirements) but I do not understand why they would hold onto a house that has completed the foreclosure process. Once foreclosed the property has to be moved to the liability column.

I wish I had better and more data.

Biff

Biff Baxter says

I do not understand why they would hold onto a house that has completed the foreclosure process

But, again, wouldn't putting that on the market lower prices in that 'hood? And if so, will the fence-sitters bail too?

I guess I wonder if they are at least trying to extend it until eoy, because then the people who might add to that downward pressure (millions) will have a large reason to stay put.

If only they can make it until eoy....

So, now what do they do? Create an artificial shortage to trick would-be defaulters into thinking it's turning around. Then, as it drops again in later this year, it will be too late to start the defaulting and the fence-sitters will have been paying and some will have been buying up the inventory that IS on the market.

Another trap? AND, another sign that they won't extend the forgiveness?

Goran_K says

The funny thing is even with half the inventory of last year, this Spring bump is pathetic. Sales are down, and the "sold" pricing is actually starting to go downward, that's how messed up this market is

Data? Link?

It's not working. I know there are certain markets that may be always popular bubble or not, but just look at pending sales. Down. Look at the sold prices for the "spring/summer bump", very weak rise.

What happens during Winter when demand usually plummets because everyone is either in a house, or signed into a one year lease?

Goran_K says

It's not working. I know there are certain markets that may be always popular bubble or not, but just look at pending sales. Down. Look at the sold prices for the "spring/summer bump", very weak rise.

I haven't seen that data. Here's what I see for April.

http://money.cnn.com/2012/05/22/real_estate/home-sales/index.htm

I haven't seen any data on the spring/summer bump yet. Especially since we're not even in summer yet.

Call it Crazy says

I know you're trying to make yourself feel good because you are in the market to buy a house in New Jersey, but come on, using an article stating information from the National Association of Realtors..... you're really reaching for some good news.... The NAR spins data worse than the government...

lol--I already asked for the data from Goran. Crickets. If you have data showing something else, I'm all ears. But my data beats your no data.

Call it Crazy says

OK, Here's your chart. Someone else posted this a few days ago. Look closely at the Spring bumps the last three years, each one is less than the previous. I drew the red line to "help" you understand.

Well, if you actually look at the graph, contra costa county median price is up 2.6% YOY. sales are up 3.7% YOY, price/sq. ft is up 1.3% YOY.

So, I'd call that a fail.

Call it Crazy says

Man, you never give up.... you wanted data proving that this year's Spring bump is smaller than previous years.

I did. And you gave me data showing this year's bump is LARGER than last year's bump. That's why I call it a fail.

Call it Crazy says

I give you the data you asked for, now you are spinning it again off into another topic... count your losses and move on...

Your data proved my point. So, thanks...

tatupu70 I have you on ignore, have for about a month or so, couldn't stand trying to slog through the pro-bull/pro-bear arguments you and another individual were engaging in (trying to clear the clutter so to speak). I can only see your post if someone quotes you, so I'm not purposefully slighting you, I just can't see your post unless someone else quotes you.

There is plenty of data on Redfin for the cities I am shopping in. Inventory down, sales down, and recently within the past few weeks, the median sold price is now starting to drop, somewhat early for the Spring/Summer rally. Housing is still trying to reach bottom despite the banks and gov't intervention.

That chart is very telling. It's what I'm seeing here in my area too, the spring/summer bump is already fading away.

Call it Crazy says

I just gave him my last piece of data for his target area... I give up... I wish him good luck as his new investment goes underwater in the coming years..

Yeah I wish him and other home buyers luck in the coming market. I don't have any ill will towards people who own homes, looking to buy (I am myself) or tatupu70 as an individual. I just don't have the time to slog through the bear/bull trolling that constantly goes on here, so I ignore him, and others who tend to get too emotional about the whole thing.

here's data for a city I'm looking in:

Homes for Sale Apr '12 : Prev. Month : Prev. Year
# Homes for Sale 69 down 18.4% down 53.4%
# Homes Sold 25 down 45.1% down 3.4%
Median Sold Price $512K down 2.1% down 7.6%

The previous month, the middle column figure for "median sold price" was up 3.4%, which is amazing to me. Now it's one the way down again, and it's barely June.

Call it Crazy says

OK, try this, here is your target city of Scotch Plains... now show me how you can spin the data from 2012....

Seriously. I didn't spin anything. I just pointed out what the data actually was since you didn't bother to look yourself.

The Scotch Plains chart you posted is zillow home values. That dataset is notoriously unreliable. You'd be better off posting sales prices--which are down 3.9% YOY. So you're right. Sales are up 75% YOY though, and prices certainly appear to be continuing to rise, so I wouldn't expect the bump to be over.

Call it Crazy says

It's really, really sad but some people are so heart set on buying no matter what the data tells them... the rose colored glasses must be really dark...

See--I would say the exact opposite of you. You seem hell bent on telling everyone that buying is a horrible idea no matter what the data says. I happily rented when the data said renting was the better option in the late 2000s. I only seem like a housing bull when compared to the average poster on pat.net

Appraisers Are Corrupt says

Oh my word...... it looks like prices are cratering!

How would you know, you posted zillow home values?? How about posting the same chart using actual sales prices?

It is nonsensical to look at localized house price data over a couple month time, and declare an inflection point. Nothing but noise. Filter out the noise,,,,,look at interest rates, they have been declining for 30 years. The question you need be asking yourself is, where do they go from here?

Down.

Housing Prices Are Cratering says

Down down down we go! lmao

absofuckinglootly. I don't care if it takes another half decade of bank corruption and interest rates rising, I'll wait here in California for what I think is a decent deal.

Just discovered even Boston is more 'cratered'. (Redfin)

There are virtually ZERO homes in South Orange County, California that are below $400,000. Almost all the homes I have searched for are in "Pending Offer", it almost seems like the market has gone crazy overnight.

Jaz5, it has because the banks are holding back from foreclosing across the country. Almost makes me wish I would've gotten a bubble house, I could have saved 3-4 years of salary just squatting, or "negotiating" a loan mod. It's just a credit score anyway.

jaz5 says

"Pending Offer",

'Pending Offer', yeah right. Take this example below, I have seen this plain, sad, bank bile listing since June 9, 2011 when it was first listed. 9, price changes, 'pendings', and relistings later it is 'sold' at a foreclosure auction (whatever that means) Then it's relisted again in April 2012. 3 more price changes, relistings, and a 'Pending' and VOILA! I get the privilege, honor, and respect of being able to purchase this beauty again just yesterday!

http://www.redfin.com/CA/Tarzana/18601-Collins-St-91356/unit-D24/home/4059423

If I were a bank, I'd dump repos as quickly as possible so that other banks would have to let go of their repos for lower average prices.

All I know is, all those homes underwater from 2004-2009 didn't suddenly just "cure" for some reason, and seeing as sales from 2009 to now have been at their lowest levels since before the bubble, they didn't get absorbed either. The homes are there, but not on the MLS.

Goran_K says

All I know is, all those homes underwater from 2004-2009 didn't suddenly just "cure" for some reason, and seeing as sales from 2009 to now have been at their lowest levels since before the bubble, they didn't get absorbed either. The homes are there, but not on the MLS.

That's why, if you can force the remaining suckers to stay through EOY, the tax albatross may nudge a large percentage over to the "resigned to be screwed" side.

Keep in mind that most people don't even know that they'll be taxed on the forgiven debt, much less that the provision expires this year.

CL says

That's why, if you can force the remaining suckers to stay through EOY, the tax albatross may nudge a large percentage over to the "resigned to be screwed" side.

Keep in mind that most people don't even know that they'll be taxed on the forgiven debt, much less that the provision expires this year.

You may be right about your original theory, but what is the result for house prices? If people are forced to stay in their homes, that means less inventory/supply. Typically resulting in higher prices.
Another issue is that if something changes where all of these people cannot make their payments and start defaulting, the banks will just go back to the gov't and ask/force them to extend the tax forgiveness.

Call it Crazy says

My guess is, it won't be the banks asking for the extension. I would bet Obama will extend it so he can "buy" some votes for November...

Either way it would make this thread moot.

DAMN! I missed it. Never thought about the 1099 possibility.

We've seen all the different forecast for the coming % decline in home values. If an individual thinks the decline would be ~20% then offer less than 20% of the asking price or wait for 30%

CL says

Keep in mind that most people don't even know that they'll be taxed on the forgiven debt, much less that the provision expires this year.

Is that true? Wow, this could really bite some people.

E-man says

Then why the hell are you looking & making offers on houses?

I haven't made an offer in a few months, and that was a lowball offer for the neighborhood (about 10-15% below market). I ended up walking away because of black mold.

Goran_K says

Is that true? Wow, this could really bite some people.

Partly anecdotal, but many people I know seem to be in a holding pattern, waiting to decide what they should do. They don't seem to see the urgency.

Plus, I figure most people aren't very sophisticated regarding finance and such under normal circumstances, and these aren't normal.