Thursday Open Thread
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32 comments:
Lead story from the PI this morning:
The foreclosure 'rescue' trap:
As rising interest rates and growing debt push more families into financial trouble, people on the brink of foreclosure are increasingly falling victim to scams.
Also, I have another question. Are all those home remodel shows going to disappear with the evaporation of profit/interest? I hope so.
The foreclosure 'rescue' trap
As rising interest rates and growing consumer debt push more families into financial trouble, consumer advocates and state investigators warn that people on the brink of foreclosure are increasingly falling victim to scams.
Today's PI article details the story of 61 year old Kurt Hilderbrand, an easy mark who was a slave to his mortgage payment and allegedly lost "the biggest purchase you'll ever make" to a shyster. As the credit bubble and housing bubble simultaneously deflate, we will inevitabley see a lot more of this type of activity.
Kurt Hilderbrand worked hard for a decade to make his monthly mortgage payments, but a recent failed business dealt him the final blow: He was six months behind on payments and weeks away from losing his three-bedroom house.
Hilderbrand was so desperate to hang on to his Bellevue home that he struck a deal to sell it and lease it back -- with an option to buy later.
It didn't work out that way. The 61-year-old salesman said he was threatened with eviction and ended up owing more than had he allowed his house to be auctioned off in foreclosure.
LOL! 1 minute and 2 seconds apart! Sick minds think alike.
WaMu in 'very difficult' revenue environment
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B335E1840%2DF012%2D453E%2DAD6E%2DD8E1910719EE%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo
WAMU is my personal bank. I was making a deposit two weeks ago when the teller pushed a 5.6%, 18month CD w/ one "bump" (can lock in a new, higher interest rate at any time but only once).
I went back yesterday to buy one, but they'd dropped the rate to 4.79.
might not mean anything, just an observation.
Just FYI-
Watermark CU has a special 9 mon CD at 5.5%. One "bump" allowed. Nice to see a local bank getting into the game.
Wamu and other's have been offering high returns on CD's since the summer. It just couldn't possibly be because they needed more resources to cover this foreseen slight recession, could it?
If CD's start giving a decent return, there's something very wonky going on elsewhere...
No kidding sick minds think alike... It's not always a sexual predator or carpet cleaner that comes to the door... Now, you have to worry about the dreaded foreclosure demons.
Second Home Madness:
"Might the ersatz nature of McMansions' actual quality be a metaphor for the "quality" of the entire housing boom/bubble? The "glue" which holds the entire shoddy structure together is cheap and easy money, and as long as that spigot flows freely, then 7-bedroom "vacation homes" will continue to be built (and filled with cheap imported furniture). But if--and it is a big if, for perhaps the Fed and the bond market can manage to keep money cheap and easy for decades to come--if the money spigot should ever close, then owners of 7-bedroom McMansions throughout the country may find their real estate wealth has the same durability of particle board left exposed to the weather."
http://www.oftwominds.com/blog.html
Here's the latest from Schiller:
U.S. real estate crash could cause global ripples
"There is a serious risk of worldwide recession coming up in the next couple of years because of the turning of the real estate market," said Mr. Shiller, speaking at the annual congress of the International Union for Housing Finance (IUHF) in Vancouver.
"And housing finance people should be thinking creatively now about what to do about this," Mr. Shiller added.
Asked how he saw a housing crash in the U.S. playing out to a worldwide recession, Mr. Shiller said declining consumer confidence would likely be a key factor.
At the moment, a common real estate story nearly worldwide is that of the neighbour who sold their house for well above asking price, generating 'can you believe it?' shakes of the head and a comforting impression that prices can only continue their steady climb, Mr. Shiller said.
"If the new story is that 'our neighbour thought his house would sell for $1-million but he couldn't sell it for $600,000,' then that would be a big hit to confidence," he said.
I am not looking for the housing market to suddenly turn back up on a dime. Too much inventory to work through. Some of that inventory will drop off as sellers cancel their listings (or they expire) as they were unable to sell at prices that are no longer available. These are the ones who didn't have to sell, didn't have to move, didn't have a bad mortgage to refinance, but were willing to sell at inflated prices and didn't pull it off.
Synthetik,
Regarding the post at 1205, do you want to start, or shall I?
E
I am not looking for the housing market to suddenly turn back up on a dime.
Good thing there Larry, because unless you have a time-machine to go back a few years, the phrase 'turning on a dime' might be all your clients have left in their HELOC's overleveraged homes when the Repo men start taking all their goodies away.
I'd start leasing that 8- series Beemer if I were you...
Larry,
Inventory will continue to build. There is just too many zany loan products out there, and too many people bought property at high multiples to income. It was fun while they could bank the appreciation, and pay less than the prevailing interest rate. Unfortunately, the game has turned.
People can't support homes at 8X income, to say nothing of 13-15X income.
The panic is right around the corner. Regardless of your thesis in yesterday's post, where you posited that the FED will save us and homes will become a screaming asset, once again, the FED can't save us from this mess. The FED is washing its hands of our inevitable torment.
In order for someone to attempt to sell to capture the "inflated prices," they must believe we are in a bubble, otherwise they would just hold. If they beleive we are in a bubble, they would have to believe they weren't nimble enough to navigate the bubble, and they are about to get royally screwed.
Why would they pull the home off the market? People normally pull homes off the market at this time of year.
Tell us, Larry, just how many people did you shoe-horn into overpriced homes with kinky financing? How does it feel to be part of the problem?
It's over, pal. Here is some good advice: don't trumpet too much that you were a boomtime real estate agent. My guess is there are pitchforks and torches in the future for those that caused this mess.
E
Quoting Larry here...
I make no predictions about a so called bubble. I make it my job to know the markets that I play in. However, let's say the bubble pops next week......my property still exists, the land still has value, my rent still gets paid and my mortgage payment remains the same. And, if it does pop, the fed will have to lower rates again in the face of a bad economy and rates on ARMs will head back down. I DO NOT HAVE TO TAKE ANY ACTION.
Uhmm... sure, but does your rent still get paid? Why should a renter spring for your overleveraged property, especially when they can saunter down to a foreclosure auction and pick up somebody elses hovel for dimes on the dollar?
Uhm, and I don't get where you think the Fed is some benevolent force that will bend over backward to insure people are able to HELOC their life for a Plasma and Jetski.
And not taking any action? Okay, what if you're divorced, what if there's an illness, what if your job moves, or you're out of a job? What if? What if? It doesn't take much imagination to figure out the reasons people are forced to sell. And once one 'forced seller' sells on the block, the flood gates are open and there's no amount of ARM twisting and Fed benevolence to save your sorry unimaginative arse...
I just took a little jaunt into my old neighborhood in Kirkland (not downtown) and was amazed at the number of houses for sale just in my little drive. Almost every block had at least one for sale sign up, and several had multiple. Mixed in with these were at least three different lots that were either proposed or in-construction multi-unit developments. There is apparently a huge amount of inventory on the market (or soon to be) in Kirkland.
I only saw two "sold" signs, both on run-down houses right next to each other, about a block from a proposed multi-unit. Yet another condo project in waiting, perhaps?
Larry,
You are a wonderful example of how people have a misplaced faith in the FED. It is this faith that keeps the entire bubble up.
Once that faith ends in disillusionment, the entire house of cards will collapse in a very rapid, and disorderly fashion. The dollar, stocks, bonds, and housing will hold hands and jump off the cliff.
Once the FED lowers rates AND makets yawn, the jig is up. No amount of cutting or jawboning will prop them back up. The long, LONG overdue recession will cleanse the markets of bad businesses, bad debt, low margins, and the bubble mindset.
A 30 year bull run isn't going to end in anything other than tears.
...and you will still have to look at your mug in the mirror. Poor bastard.
makets = markets
If I make $70K/yr, and I bought a house for $900K, but I shoehorned myself into it with some financial exotica, do you think I give a rat's ass if the FED cuts rates?
If my $900K house is now worth $820K, and the bank is coming at me with my ARM adjustment, THE LAST thing in the world I care about is the FED pausing or cutting the overnight rate by 25bp. I only care about finding some SOB that is dumber than I am (Larry, what's your phone number?), so I can unload my house. Chances are, with the MSM running a bubble story every day, that will be hard to do.
I will need to find some money, and find it PDQ. Eventually, my bluff will be called and the holder of my TD will repo the house.
Once the great lie (RE ALWAYS goes up) is exposed for what it is, no amount of marketing or financing will save us.
There are just too many exotic loans out there that will never be paid. Too many people bet their entire future on a lie.
Homes sell for 2-3X income - not 10-15X.
State revenues projected to rise by $412 million
ChangMook Sohn, the state's chief economist and director of the bipartisan council of legislative and administration leaders, said the real estate and construction boom is slowing down, although not as much as nationally.
He called it "a noticeable slowdown" in Washington's torrid housing market, but said he expects the construction industry will at least maintain its current strength as builders put up new condos and apartment complexes.
Job growth, now running at an annual rate of about 2.7 percent, is outpacing the national average of 1.3 percent and includes new hires in the high-paying sectors of aerospace, construction, software, and business and professional services, he said.
Over 40,000 jobs have been added in the last year. with the Seattle area leading the way, Sohn said.
"Unusually strong" consumer spending continues, causing tax collections to grow faster than real personal income as people tap into home equity and credit to make consumer purchases, Sohn said.
That's not sustainable, he said.
Buyers finally telling it like it is, and taking control of their financial future. This is from the New York Craigslist. The link is at the end of todays bits and buckets on thehousingbubbleblog:
-----------------------
250K Buyer ready to buy
Serious buyer ready for purchase of 3 bd., finished basement, detached house, preferably in Westerley. (No welfare neighborhoods).
Obviously, for this price (250K), I don't need a big house. However, anything that remotely resembles a bungalow WILL NOT BE CONSIDERED.
And no, I do not need these things:
- Free car thrown in.
_ Marble countertops and other "upgrades".
- 6 months of mortgage paymensts paid by seller, or some silly lease-to -own deal where the buyer gets scammed into paying more.
I am not an idiot. I know the RE market is tanking and inventory is swelling and qualified buyers have been non-existent for the past 6 months and it will not get any better for sellers in the future. I have eyes. I can see all the unsold homes in the neighborhoods. And new construction is just sitting there empty.
So don't waste my time. I can READ and google any research I need about the RE market, or simply walk around the neighborhood.
If anyone is willing and ABLE to sell a house like the above described, is not underwater financially because they recently bought an overpriced home with an I/O or ARM and is willing to live in reality, email me pix of what you have.
Thanks.
*this is in or around Staten Island
I felt bad about Eleua's harsh tone toward Larry. Being bullish doesn't deserve harsh treatment, IMO. He plays it even-handed on his blog posts, but the comments seemingly give his true self away, including gems like these:
how come the bubble that you dopes have touted for 5 years still hasn't popped?
They are all in over their heads whining to me about the bubble. Although, I suspect, many were just born 2 years ago.
I tried to give him the benefit of the doubt, but the guy's apparently just trolling here. Fits in with the fact he's apparently spamming several other blogs with the same posts trumping his book.
"How come the Bubble that you guys have touted for 5 years hasn't popped yet".
Oh, where to begin?
First, 5 years? now there's an exxageration for you. I think most people have thought for 5 years that homes were too expensive, but it's only been the last year or so, when word began to get out about all te funny money money this was built on, that people started screaming "BUBBLE!!!"
Now even the slow-to-catch-on media and Senate are screaming "BUBBLE!!"
Second, interesting he should choose 5 years as the starting point, as the general consensus is becoming that the last 5-6 years of appreciation will be wiped off the top.
So, it looks like, even though nobody was talking about it 5 years ago, in hindsight a lot recognize that the past 5 years have been bubblicious and have to go.
Yippee!
And yes this Larry guy is all over all the blogs, not just this one.
Here is a interesting selling technique:
http://seattle.craigslist.org/kit/rfs/
209108302.html
"This home would have sold for over $500K just a few months ago - it will go up again soon..."
Are they ranting about their loss or trying to make you believe you getting a deal?
LHR,
Yes, I was pretty harsh toward Larry/anon. Normally, I don't like that kind of exchange.
Why the harsh tone?
Larry is part of the problem. Meshugy is not. 'Shug bought a home near the top of the market, and he is probably a bit nervous. 'Shug is fundamentally intelligent, and he will likely sell his house when things get pretty bad.
Larry introduced himself when he went spamming and pimping his book. Not that writing a book is bad, but his book is one of those classic books/seminars/programs you find at the tops of markets. Anyone that follows that type of advice is going to be ruined.
That is what pisses me off!
Yes, we are all adults, but good people trust the "experts" and think they can all hit a grand-slam at their last trip to the plate.
Larry is emblematic of what is wrong with this bubble. Snake-oil salesmen appear, prey on the nerve-wracked dreams of people that want to have what they perceive others having, and ruin lives.
Then these locusts move on and never face any type of judgment for what they have wrought.
So, I wanted to preempt any good vibe he might have by being the pied-piper of financial easy-street. For two decades in the business, he sure doesn't understand economics. He thinks that bubblenomics are real economics - DEAD WRONG!
Let's look at his 20 years. That takes us back to 1986, which was 2 years after the big 80s real estate ramp began. It has gone unabated to now, with a minor pause in the early 90s.
That's not much history. It's like listening to the same album over and over, and claiming you are a music expert.
Unfortunately, Larry Nusbaum, Larry Kessler, Tom Vu, The Kiels, and all the other people that are shoehorning people into homes they will never afford get a pass.
Why am I so emotional about this?
If I truly had a black heart, I would care less. There are real people out there, that I care deeply for, that believe the crap that foments this bubble. These people won't listen to reason, as they only see dollar signs. They look at me and think that I "have mine" and they "want theirs." However, they don't understand why the market goes up, or why it will go down. You should NEVER buy an investment without knowing how you will win, and how you will lose. Knowing the fundamentals that move your investment is crucial, yet montebanks like Larry show up and say that it is all so easy.
Where were these guys back in '93? '83? Why do they only show up at the tops?
Momentum is easier to sell than fundamentals. They know what they are doing.
That, my friend, is why I bitch-slapped Larry all over this forum. If The Tim wants me to stop, I will, but I look at it as a public service.
Had Larry just presented himself as a RE bull, and not pimped his book, I would have treated him with the dignity that he would have been due.
I hope that helps.
E
Eleua:"Tell us, Larry, just how many people did you shoe-horn into overpriced homes with kinky financing? How does it feel to be part of the problem?"
1. I don't sell loans.
2. I don't broker houses/homes
3. I am not rooting for housing to crash (like most of you)
4. I don't want people to get hurt.
5. I make nothing on my book (I have given more away than sold)
6. I am not posting form a bunker (like some here)
matt: "Uhmm... sure, but does your rent still get paid? "
1. vacancies are falling
2. rents levels are increasing.
3. people who are not buying or walking away from their houses have to live somewhere
Can't have it both ways, matt
"Had Larry just presented himself as a RE bull, and not pimped his book, I would have treated him with the dignity that he would have been due."
I am not a bear or a bull. I see crdit issues galore, not a housing bubble. If a housing bubble comes, why would I or you care?
GOT AN ACTION PLAN? WHY THOBSESSION WITH BUBBLES, ESPECIALLY IF YOU DON'T OWN?
Larry,
How many times have you used the term "real estate always goes up" with your clients?
Are you the only real estate agent in the entire universe that does not use that term?
GOT AN ACTION PLAN? WHY THOBSESSION WITH BUBBLES, ESPECIALLY IF YOU DON'T OWN?
Oooh, all caps. You really told us. If you had bothered to read any of the comments posted here over the last few weeks before coming in and presuming to know everyone here, you would know the answer to your questions already. Instead, you chose platitudes and stereotypes. And I'm supposed to consider your opinion worth a damn? Sorry, you blew that when you shilled for your book on your first post.
Larry,
Bubbles, and the pain they cause, are not restricted to those that participate. Innoscent bystanders get hurt when bubbles burst.
The housing bubble IS the economy, and once the damage manifests itself in the economy-at-large, millions will be ruined.
Yes, real estate agents will point to the finance industry, and the finance industry will return in-kind, but both are a sinister duo that fleeced mid-America and bankrupted us in the process.
People that distribute propaganda and get-rich-quick schemes are particulary culpable for the mess we have made.
Real estate books, like the DOW 36,000 books that were published 6 years ago, are financial poison.
people who are not buying or walking away from their houses have to live somewhere
Yes, and they can do it anywhere from 30-60% of what they would pay for PITI. They would also have eliminated their exposure to depreciation, maintenance, and real estate fees.
Now that our summer selling season is behind us, it is amazing just how many vacant homes that didn't sell are now up for rent. People here don't want to hold a vacant house over a long, damp, cold, dark winter.
FLLs have eyes as wide as dinner plates when they see a stable, young, professional family looking in the rental market. They will kiss any amount of ass to get them into their house. Stable payments by civilized people beats the hell out of Section 8, drug dealers, heavy-metal vomit parties, USNavy party pads, and your garden variety deadbeat.
I realize that Arid-zona is on the opposite cycle.
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