patrick.net

skibum,

Thanks for sharing that. The e-mails she received were pretty clear. Overwhelmingly Americans favor a bail-out at all costs. Even the tradionally conservative BA residents agree prudent savers and tax payers in general are in the best position to take the hit and are in ways responsible for the run-up, melt-down and after-math.

"If Headset thinks they’re @$$holes “I” think they’re @$$holes. "

Thanks, DinOr.

On thread. Last week I was looking at a new "coastal" home (bottom floor 3 car garage, 2 stories on top of that) that had an elevator installed, adding $25k to the cost of the house. The sales trend now is for "lifetime homes" that you keep till you die. The elevator is for when you are old and decrepit.

Realtor comment was "$25,000 barely affects the monthly payment."

When I politely told him I was a cash buyer (coastal VA is much cheaper that coastal CA), his demeanor became outright rude. He must miss the "howmuchamonths" who did not consider price.

I am biding my time watching the prices fall.

RealtWhores can soon use a new, ridiculous pitch: "Buy now, while you can still qualify for the bail out!"

Heaset,

You're kidding right? A built in elevator? Let's set the add'l 25k aside for a minute. Do these "lifestyle" homes have a built-in bedside urinal, crematorium and mausoleum "all-in-one ultimate package"?

Elevators need maint. Considering it will be SHOT by the time you're actually old enough to need it (requiring a complete overhaul) it will run you about $1,500 per use. A bargain I'd say.

I’m wondering if all the mortgage products characterized as “purchase money transactions” are full recourse loans, while home equity loans are non-recourse loans. If so, there is a terrible amount of loans out there that I’ve seen from deed records that fall into this category, and the exposure to full recourse loans is far larger than I thought.

apostasy,

You are correct. We've had a number of discussions about this and I've posted a thread or two on the subject, like this one. Basically, HELOCs and refis are NOT proctected by no recourse as "purchase money" mortgages are (at least that's the case in CA). And since practically everyone in CA has refi'd or HELOC'd (or both) over the past 7 years, most FBs are truly "F'd".

However, even if you are one of the few rare original purchase money borrowers and mail the keys to the lender, you still have to pay taxes on the "forgiven" amount of the mortgage (difference between what you still owed on it and what they can auction/sell it for later + foreclosure costs). However, Congress is already proposing legislation that would forgive this.

The sales trend now is for “lifetime homes” that you keep till you die. The elevator is for when you are old and decrepit.

I see the next "growth area" in real estate is to outfit these "lifetime homes" with an elevator stop to the sub-basement, straight into your boomer-a$$ coffin.

Once this feature is tripped, the house then automatically sends your 50 year mortgage document to your descendents via certified mail.

Hot off the press...
Case Shiller Home Price Index for SF Bay Area was down a full point from January to February, but don't worry, the (futures) markets are predicting a slowing rate of depreciation in the coming months (about 4+% for the coming year). Remember, if the first derivative does not contain good news, go to the second derivative :-)

In the press release, the PR people try to restrain Shiller, but he cannot resist:
While some cities, like Miami, Charlotte and Dallas, alternate between modest monthly price gains and declines since this time last year, other cities have exhibited persistent monthly declines since last spring, such as San Francisco and Boston yielding negative monthly returns since May of last year.
StumpTown is showing some resilency :-)
Seattle and Portland, while still showing diminishing annual returns, showed price increases of 0.5% and 0.1% in February, respectively.

Please Note: my demonizing renters post properly attributes the 15 year mortgage man (SP). While I liked the Dumb, Dumber, Dumbest anti-bailout expose, I still think her comment about marginalizing certain individuals who opt-out of the American nightmare to be the highlight of the column.

Hey DinOR,

Looks like we're on the same page! Let's patent the idea and write up a business plan for a startup! How does "Life Cycles Home Products" sound?

RealtWhores can soon use a new, ridiculous pitch: “Buy now, while you can still qualify for the bail out!”

Or to paraphrase the folks at DR Horton, "Buy now, while you can still fog a mirror."

DinOr, Skibum,

The guy who thought up the "life cyle homes" probrably thought he had a marketing coup.

You sure flushed his toilet.

Is the "life cycle" sales trend (single story - or elevator, wheelchair ramp capable, sit down shower, etc) happening in your areas?

skibum,

This must be a purely reactionary move on the part of the builders. More and more people are waking up to the fact that they now own more home than they could possibly EVER need and are deeper in debt than they EVER imagined?

So... how do we sell them yet another home? (Lord knows we've done everything else?) Hey I'VE got it!

How about this? A "cottage sized" home or adjoining cottage sized homes with a sink a wheel chair can get under, wide hallways and a bathroom equipped for the elderly. THERE. Problem solved.

An elevator. An elevator. Sheesh.

"Or to paraphrase the folks at DR Horton, “Buy now, while you can still fog a mirror.”

Hey, dead people vote in Chicago, maybe they can buy houses there as well.

However, even if you are one of the few rare original purchase money borrowers and mail the keys to the lender, you still have to pay taxes on the “forgiven” amount of the mortgage (difference between what you still owed on it and what they can auction/sell it for later + foreclosure costs).

No! Please HARM, let they FBers at least have this solace. If you are in this group, there are no tax conseqences in the PRK. Don't believe me, here is what Ms. Pender has to say:
-- Non-recourse loans. If you default on a non-recourse loan, you could be subject to tax on capital gains, but you won't be taxed on the cancellation of debt.
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2005/06/05/BUGG5D3FNS1.DTL&type=printable

I'm actually only half-kidding about the bail out as marketing tool. Somebody will hop on that bandwagon. I'll set up a goog alert for "buy now" and "bail out".

Headset,

Sadly Oregon is turning a lot of the single wide mobile home parks into industrial use or "high end" (God I'll be glad to hear the end of that) condos. We have a model community called Senior Estates complete with a playable 18 hole course and 800-1,000 s/f single level homes. Close enough to Portland for grand kids (and the VA Hosp) but it made too much sense so I guess I'll just have to wait for "high end" lifestyle homebuilders to go belly up for that.

Can someone PLEASE come up w/ a perverted and insulting version of "high end" before I lose my fricken mind? Please. Extra points for including some sort of "alternative lifestyle" reference.

Pedaphile Place?

Crown Vic Village?

Trophy Wife Terrace?

Skibum

Our local paper occasionally mentions the housing problems. Usually, the next day, they mention that the East Bay will not be hit as hard because of our robust economy. Hard to know what to believe.

A more objective housing information source seems to be www.ft.com

Entitlement Estates? "Where luxury living and freeloading off the next generation come together"

Want some laughs? Go to realtor.org and check out the unveiling of their upcoming "public awareness campaign" commercial for realtor.com (on the front page, click on the movie). The irony, which I'm sure escapes them, is that their ad touting the greatness of their realtor.com site compares themselves to a big box home store (Home Depot, Lowes), stores not known for their great service.

Entitlement Estates

LOL!

* Prop 13 protected
* Reverse mortgage approved, after bailout of old I/O loan

O.K! Now we're getting somewhere!

Wow, now I have several to choose from. At any age, what (with the exception of Peter P's sprawling master bath) does the average American male give a rip about granite flooring and Brazillian Cherry hardwood counter tops? Or er.. uh whatever.

Especially when he's an old dude? This makes almost no sense to me. I thought the "Self-Actualization" phase was supposed to be about higher pursuits, (not playing Suzie Homemaker?) WTF is up?

Perver-city?

Another good one. Reminds me of a Guns n Roses song:

Take me down to perver-city
where girls so young, they got no T.....

Ah, thank goodness that those Mortgage Brokers are such well trained professionals.

Seriously.

"Ah, thank goodness that those Mortgage Brokers are such well trained professionals."

After looking at your link, I wonder if those "professionals" do their own personal banking at the liquor store.

SFBB,

Can you say, the blind leading the blind?

Starting to worry? Very decisive screen name for yet another dedicated mortgage "professional". There IS no profession there.

Seriously, now we find brokers selling products THEY don't understand. That buyer is thanking his lucky stars he actually read the loan documents. How many other people did this broker screw?

Hysterical posts as always! I guess the sellers NEED the 435k just so they can walk (net of comm. of course). Is an “extra” 5k going to make you or break you? That’s a serious question? This is what we’ve lowered ourselves to? C’mon, bum me a cigarette man!

Never is appraised value mentioned nor the fact that the “extra” 5k will cost you 20k over the life of the loan. Those buyers, they’re such pussies aren’t they?

DinOR,

There are mostly sheeple on that site. I study the psychology of sheeple; they are a very interesting crossbreed, that is why I decided to write the sheeple's guide. I figure maybe I can steer some of them into the right direction.

Even if there was an appraisal, it is meaningless. Seems these sellers are trying to squeeze some more blood out of the buyer, but I bet the buyers agent is getting a cut of that anyway. The agent claims with regards to the seller, "this is what he NEEDS to net after paying off everything so he cant budge." This guy is either selling to pocket the money or he is selling to buy another house (McMansion?). If he's selling to pocket the money, then he doesn't "need to" get that extra $5k; if he is selling to buy another house, unless the house is $10M and he needs it ALL for a down payment, he can add that $5k to his new mortgage. When real estate is moving from strong hands to weak hands, it's usually the weak hands that "need" the extra $$. Of course this guy could be a distressed owner that has ATM'ed his house to death; which in that case he shouldn't be playing with an offer that could potetially be his highest offer and even though he'd be shy $5k, the sting could be much worse!

I don't believe that it is the seller that is asking for the extra $5k; I think the agent is just working with the sellers agent to get that extra $5k, otherwise the agents would agree to take the $5k out of the overall commission. For the buyers agent to even suggest that he "needs" to have that is silly!

That article does however show how a realtor "needs to" get a sale. :)

Is there a service of some sort that numerically impaired folk can hire to look over a mortgage doc before it is signed?

Maybe this will be a growth industry after the fallout.

But then, maybe it is not a case of ignorance, but of wanting it now if the payments are in reach. Easy Credit Store mentality.

"Even if there was an appraisal, it is meaningless"

Yes it certainly would be. It would only come back whatever the sellers wanted it to be anyway. Now that you mention it, appraise-whores are probably out of a job regardless. They sold what little "integrity" they might have had back no later than 2003. After that it was so out of control there was no saving their situation.

As far as the seller's "needs" well all I can say is how does it feel to "need"? Clown doesn't realize that after 2 years that will have been THE biggest mistake of his life.

I am actually surprised at the magnitude of the drop in existing home sales. Shouldn't the number of transactions start stabilizing now ? Do they include short sales etc or only sold by a Realtor ?

Eventually the transaction number would settle down to a range. (But prices will keep going down.) We all know what the spinmeisters would do, once that transaction number stabilization happens. But those poor souls are not getting that chance.

I read the Mortgage Broker link above:

http://www.brokeruniverse.com/grapevine/thread/?thread=390760

I don't understand the second reply - why does a 50/30 have to be an ARM? Does it just define the amortization scheme, not the interest rates?

Eventually the transaction number would settle down to a range.

We all know that it cannot drop below zero.

I think sales will stabilize after more price-cuttings. Otherwise, the Mexican standoff will continue. The spinmeisters will soon realize that buyers are really their best friends.

David, The King Of Liars, said today that bad weather was partly responsible for the drop in sales. That's accurate. Last month, every time I stepped outside to buy a house or two, them damn clouds just killed my desire to be rich. I really hate it when that happens.

I think sales will stabilize after more price-cuttings. Otherwise, the Mexican standoff will continue. The spinmeisters will soon realize that buyers are really their best friends.

The stabilization you allude to may only be transient. One more ratchet on the sticky downward phase of the market. We haven't seen the full effect of the subprime mess, and the Alt-A resets won't happen full-force for a while. The overall economy seems to be at a tipping point, too. More and more indicators looking bad, while the dow continues up. Sounds similar to the period prior to previous recessions.

David, The King Of Liars, said today that bad weather was partly responsible for the drop in sales. That’s accurate. Last month, every time I stepped outside to buy a house or two, them damn clouds just killed my desire to be rich. I really hate it when that happens.

Well to be fair, he was referring to national numbers. The East Coast really was trampled in Feb and March. Who can forget the Valentine's Day JetBlue Fiasco at JFK. Or the freak storm exactly 1 month later that swept from the midwest to the east coast.

More and more indicators looking bad, while the dow continues up. Sounds similar to the period prior to previous recessions.

Maybe. But this time many companies reported good earnings. The strong global economy and weak dollar are working in favor for many US companies. (It's not all positive I know, but weak dollar also has SOME advantages.)

Learned it the hard way. All my puts are worthless now. I am still short on homebuilders though.

Let me try to take a positive spin on all of this.

We know that this whole property boom was funded by credit, and mostly credit from foreign money. Compared to stock bubble, a property bubble, as long as the money is not spent on flipping the SAME OLD house, the property bubble is better for all of us in the longer run. Why so?

I always feel happy when I see out-of-state investors take on credit to invest in BA's infrastructure, roads, office buildings, new houses, as long as it is NEW and incremental on top of what we already have. Because when the credit bubble bursts, the person who poured in the money take a hit, but his money stays. You won't tear down the building, he will just have to sell the building at a loss which means the next owner can rent out the building for a cheaper cost to lure more businesses.

The same thing applies for the entire US. If we are in a building boom now mostly on foreign credit (which we may pay back in cheaper USD in the future), then whatever that credit funded will get to STAY here. I don't mind if someone takes on a huge credit to tear down a shack and build a brand new McMansion (even though not to my taste) down the street, because after all, he bears the risk but I get to enjoy a newer neighborhood. Going forward, if we have plenty of brand new McMansions with no occupants, that means our kids will have a great quality of life funded by the FBs.

However, using foreign credit to buy EXISTING homes does nothing good for us, none at all. It doesn't fund new infrastructure. If somehow we can change the tax law to steer hot cold lukewarm money into funding NEW projects instead of flipping existing homes, a property bubble is really not a bad thing in the longer run.

Who can forget the Valentine’s Day JetBlue Fiasco at JFK. Or the freak storm exactly 1 month later that swept from the midwest to the east coast.

The Valentine's Day storm may have affected March closings (though not by a huge amount), but the latter storm you refer to certainly had NO effect. Existing home stats are recorded at closing, which is usually 1-2 months after the purchase agreement, which is a week or two after the offer, which is days to weeks after the house probably got listed.

I also recall that January weather was unseasonably mild on the East Coast. Out here, there was no rain (and hence, sadly, no snow in the Sierras) in January. In fact, the weather has been remarkably rain-free out West all winter. I don't see how "weather" has had a serious negative impact on home sales.

If weather was really to be blamed, perhaps God was not on their side.

I have to side with Big Brother on one thing, I think our doctors are underpaid.

I have no problem with doctors making $500K median, as long as they do their job and stay clear of influence from the evil drug companies. I think our society is not rewarding doctors enough, compared to other professions like "high finance". A lot of those "high finance" paper pushers are liberal arts major and don't even have a clue with advanced maths.