patrick.net

I want MORE foreclosures! And sell them. Quick. Get those non-paying squatters out of "their" houses. Get that garbage off the banks' books and let's get on with a REAL economic recovery.

gameisrigged says

I want MORE foreclosures! And sell them. Quick. Get those non-paying squatters out of “their” houses. Get that garbage off the banks’ books and let’s get on with a REAL economic recovery.

AMEN! Meanwhile, the renters and the 80% of homeowners who aren't underwater on their mortgages are letting the govt. steal our money to give to the 20% who made bad real estate decisions.

Most loans are not owned by the banks. They are owned by investors throughout the world. Are you going to fine them? Good luck with that!

HousingWatcher says

Most loans are not owned by the banks. They are owned by investors throughout the world. Are you going to fine them? Good luck with that!

I'm talking about the 9 years worth of shadow inventory that the banks need to unload. What's stopping them from doing it is that they're just dragging their feet. Investors owning the loans is not what's preventing it.

Banks are cheating families and ruining neighborhoods. Below is a map representing about 40,000 homes in the city of Los Angeles that are in some state of foreclosure. Several thousand are bank-owned and many of them are left abandoned — a blight on our neighborhoods.

And none of these publications can understand going from $200K to $600K plus was not sustainable. Blight is the price you pay for the stupidity of buyers who believed and still believe $600K prices are viable.

Do I have this right, logically arguing with myself? My conclusion is we bleed slowly:

Why can't we legislate a rule to force banks to disclose stats on their shadow inventory? The counterargument would be that it'd be another case of the gov't encroaching on private industry. Though how about a middle ground - to disclose it as a temporary measure so we can get ouf of this mess?

But if it does happen, that tanks the economy - which might not be bad in the short term. Then again, elected officials would probably run away from such a bill since they'd likely be risking their jobs due to the voter backlash.

It would be heroic though?

Gameisrigged, the banks are facing future basel 3 capital requirements. They are zombies and can't take a loss or put the inventory on the market or they will be massively insolvent, more than they are now, lol. And if you want a house in LA you need to wait it out. If you buy a massively overpriced house you could regret it later. It is a crapshoot, really. Buy a manufactured home or just rent and save the rest.

Thomas, maybe the buyers were stupid, but the scam was thought of by the banks. At Basel 2 in 1997, off balance sheet banking was allowed. That doomed the world to easy money real estate loans.

GaryA says

Gameisrigged, the banks are facing future basel 3 capital requirements. They are zombies and can’t take a loss or put the inventory on the market or they will be massively insolvent, more than they are now, lol. And if you want a house in LA you need to wait it out. If you buy a massively overpriced house you could regret it later. It is a crapshoot, really. Buy a manufactured home or just rent and save the rest.

*yawn* Meanwhile they are posting record profits and paying their employees huge bonuses. I call b.s. - There will be no real recovery until all the leverage is unwound. It MUST happen. It is not a choice.

You would think that it must happen. But sometimes you wonder "when?". Australia is talking about having loans where you never pay the principle. It is like renting but paying more, lol. How long can that last? Maybe decades, maybe not.

GaryA says

You would think that it must happen. But sometimes you wonder “when?”.

Yes, one certainly does wonder. The sooner the better, in my opinion.

GaryA says

Thomas, maybe the buyers were stupid, but the scam was thought of by the banks. At Basel 2 in 1997, off balance sheet banking was allowed. That doomed the world to easy money real estate loans.

Going overboard on bubble mentality of the public. Looks like the public doesnt want to take the blame for their own faults. There are people out there who still think prices will go back to 2005. Pretty insane mentality. The banks were not the ones who spewed out ridiculous insane reasons justifing inflated RE prices. People even today on this Patrick's board and many other places are trying to justify these inflated prices in so called fortress areas of the Bay Area. Oh its Silicon Valley, so its different here, never mind all the contrary facts that dont support high prices even here. 20-30 years of past experience is ignored and rewritten to suit their own greedy mentality.

I have yet to see how banks created all the public hype in RE. Want make a difference.. start by crucifying crap out of the Real Estate Industry like the NAR / CAR and their drones ! Where the heck is the investigation on the NAR? NAR is the third largest lobby in Congress, and these guys were getting away with complete lies and fiction piped into the public. But no one even today is raising a question regarding their behavior.

thomas.wong1986 says

I have yet to see how banks created all the public hype in RE. Want make a difference.. start by crucifying crap out of the Real Estate Industry like the NAR / CAR and their drones ! Where the heck is the investigation on the NAR? NAR is the third largest lobby in Congress, and these guys were getting away with complete lies and fiction piped into the public. But no one even today is raising a question regarding their behavior.

Not only do they not question the real-estate industry, the media (all owned by a handful of giant corporations) continue to print the drivel that comes out of these clowns' mouths as though it were news, completely ignoring the conflict of interest of quoting high-level executives in the NAR on the state of the real-estate market. That's like chickens asking the fox if it's a good time to come out of the henhouse.

thomas.wong1986 says

I have yet to see how banks created all the public hype in RE. Want make a difference.. start by crucifying crap out of the Real Estate Industry like the NAR / CAR and their drones ! Where the heck is the investigation on the NAR? NAR is the third largest lobby in Congress, and these guys were getting away with complete lies and fiction piped into the public. But no one even today is raising a question regarding their behavior.

The NAR didn't create this mess. They have always and will always promote the good and ignore the bad aspects of housing. That's their job. They've been doing it long before the bubble and they will continue long after... It's not like the hype all of the sudden started in 2004.

Banks forgot that they need underwriting standards and gave loans to anyone with a heartbeat. That was a much larger cause of the housing bubble...

Nomograph says

gameisrigged says

I’m talking about the 9 years worth of shadow inventory that the banks need to unload.

I think you’ll find that the bulk of this “shadow inventory” consists of half-finished developments in highly undesirable desert and swamp areas (AZ, NV, and FL) where there are no jobs.
If you think there’s a large “shadow inventory” of housing in coastal California or other highly desirable areas, your going to be rather disappointed.

If you are talking Beverly Hills, Malibu, Brentwood, nice parts of Santa Monica... Sure there's not alot of shadow inventory. But try driving anywhere in the San Fernando Valley in "middle class" neighborhoods... even "upper middle class".. and you can't tell me there aren't loads of shadow inventory. Just look at all the homes with dead and dying lawns sprinkled throughout neighborhoods. Either they are on the brink and can't afford to take care of their lawns.... and the home will be foreclosed on soon.. Or homes are just deserted. When i was driving around Granada Hills, Woodland Hills, Northridge... that's what saw alot of.. so yes theres a lot of shadow inventory I've seen with my own eyes.

Nomograph says

gameisrigged says

I’m talking about the 9 years worth of shadow inventory that the banks need to unload.

I think you’ll find that the bulk of this “shadow inventory” consists of half-finished developments in highly undesirable desert and swamp areas (AZ, NV, and FL) where there are no jobs.

What is your evidence for this statement? I have already seen huge increases in inventory in areas in Los Angeles county that I watch. Are there going to be a ton of foreclosures in San Marino? No, I doubt it. If you consider everything that's not the absolute cream of the crop to be "undesirable areas", and are holding out for one square block in the absolute best neighborhood in California, then yes, you probably will be disappointed. Otherwise, I think you're just grasping at straws and wishing for yesterday.

One other thing... The CONDO market in los angeles is what is really in the dumps and will be for YEARS to come... I have no worries at all about condo prices increasing at all in the near term. That's where the biggest glut of inventory in Los Angeles exists... 90+% of people living in los angeles couldn't afford stand-alone homes in Los Angeles in 2005-2007. So lots of condos popped up and sold for ridiculous $400K+ for 2/2 1500 sq foot... and they were basically just converted apartments.

THE MET a large "luxury" condo complex in Woodland Hills for instance is bursting at the seams with inventory... But most people aren't gonna to buy these because so many owners are in default or not paying their HOA's that it's a little scary...

Stand alone houses are still hard to come by in the los angeles market... I think inventory will increase in the next few years though when people feel like they aren't selling at the "bottom" anymore.

PERSONALLY.. I'd much rather buy in 2 years when i have hundreds of nice homes to choose from in my price range.. (even if they are on the median 10% more expensive). Then start fake bidding wars on a dozen or so FIXER-UPPERS that have sat on the market forever the past few years.

gameisrigged says

Anyone else find it slightly ironic that the person claiming speculation in multiple properties doesn’t exist in California, IS a speculator buying multiple properties in California?

An investor is not the same the same thing as a speculator. One obvious difference is that an investor will buy cash flow properties whereas a speculator is banking on the appreciation...

thunderlips11 says

People are channeled into speculation in order to get a return because the Fed is keeping interest rates for savings (investment) too low for way way way too long.
Raise the Rate to 5% ASAP!

Why would you want to discourage investment when we are just barely starting to recover from a recession?

tatupu70 says

An investor is not the same the same thing as a speculator. One obvious difference is that an investor will buy cash flow properties whereas a speculator is banking on the appreciation…

Doubtful the general public can understand either, the savings rate is close to zero. They been too busy gambling their savings on so called "investments" over the past 10 plus years and little to call their own.

tatupu70 says

gameisrigged says

Anyone else find it slightly ironic that the person claiming speculation in multiple properties doesn’t exist in California, IS a speculator buying multiple properties in California?

An investor is not the same the same thing as a speculator. One obvious difference is that an investor will buy cash flow properties whereas a speculator is banking on the appreciation…

Sure. Whatever gets you through the night.

thunderlips11 says

We are NOT recovering from a recession. You had two-three quarters of a bear market rally. Real unemployment, measured by the same formula we used in the 1980 recession, has it in the high double digits. The “new” post 1994 formula, has it almost at 10%.

OK-if we're NOT recovering, then raising rates is the last thing you'd want to do... Unless you like unemployment and recession.

gameisrigged says

Sure. Whatever gets you through the night.

huh? that's the best response you could come up with?

tatupu70 says

gameisrigged says

Sure. Whatever gets you through the night.

huh? that’s the best response you could come up with?

In a gadda da vida, baby.

thunderlips11 says

T70, I understand your point, it’s orthodox economics and it should be working. What I’m suggesting that maybe we should do something counter-intuitive, since this seems to be a Credit-driven, Malinvestment Crisis unlike anything we’ve experienced since the Great Depression.
Low interest rates force those who would normally invest more conservatively into more speculative financial products in order to generate similar returns.
Again, Japan found itself in similar straits in the early 90s and low interest solutions haven’t panned out for them, and don’t seem to be helping here, either.

Fair enough. I think it is helping here though. We definitely have a ways to go, but I think it's hard to argue that things aren't better now than they were 1 year ago. Companies are adding workers instead of laying them off, wages are up, businesses are making profits, consumer confidence is up.

And I'd still argue that however we got to this point, the treatment is the same. You need to increase demand and investment first to lower the unemployment rate. It's much easier to unwind when you have profits to offset the losses.

Finally on interest rates--when rates are low, it almost always corresponds with low inflationary times. So you really don't need high returns. If someone chooses to pursue speculative, risky financial products I wouldn't blame low interest rates. I'd agree that if you are analyzing an investment by some multiplicative formula of risk and return, low rates will lower the bar on what real returns you'll accept--thereby allowing riskier investments, but it will also allow for much more conservative investments with lower returns as well. I didn't do a very good job of explaining that, but it doesn't seem to me that lower rates should necessarily increase the risk of your investments.