August 26, 2006

HousingPanic Stupid Question of the Day


Crack dealers make money regardless of your personal well being. Arms dealers happily sell arms to both sides of the conflict.

So, is the NAR now changing their tune because their den of thieves made money off of you when prices were skyrocketing (and they were telling you to get in before it was too late), and now they'll make money off you you as prices crash (and they tell you to sell at any price)?

32 comments:

Mark in San Diego said...

Brokers make money on way up and way down. . .remember when people sold Pets.com for $2 a share? . . .brokers don't care!. . .just as long as you trade and buy and sell. I am not defending them, but they are NOT financial advisers, they are just like used car salemen, so beware!

Dogcrap Green said...

What is a Real Estate Agent suppose to do?

Of course their trying to make a sale happen.

Geez... I think I'll write a blog about the evil shoe salesman selling tennis shoes at a 400% market up.

Now there is a bubble story....

borkafatty said...

Nize Notes:

OT: Who Owns All the Mortgage-Backed Securities?


As signs of real estate collapse become all the more obvious, the big question has to be "Who owns all the mortgage-backed securities?".

Total market value of all outstanding U.S. MBS at the end of the first quarter of 2006 was approximately $ 6.1 trillion, according to The Bond Market Association.

Think about that, a $6.1 trillion debt sector where the underlying collateral is declining in price. Wall Street has sold these securities to every nook and cranny of the investment world. There are going to be huge MBS portfolios that will be underwater once the foreclosures start. It is going to damage retirement plans and much more. We trust you don't own any of this stuff.


6.1 TRILLION in funny money..that is enough to make even Bill Gates say WTF!

Anonymous said...

Absolutely!I have been saying for 6 months that realtors will be out front to counsel sellers that the market has turned and to lower their price.

Realtors live by transactions, and not transactions == zero income.

Doing a little game theory, if the realtor convinces the seller to drop 20% on the McMansion (600k *.2 = 120k in this example) to get it sold, they (the realtor) "lose" only $7200, but at least keep an income. But the seller loses 120k. Whos side are they on?

Anonymous said...

Following up to my previous post:

The realtor would get 36,000 at a 600k selling price, but now gets 28,800 at a 480k selling price. Sure they take a 20% cut to, but its better than no income (and not a 120k capital loss that is difficult to write off)

Anonymous said...

Let's face it - realtors would rather turn over properties faster, They don't pay for that, you do.

A positive effect could be that now that the going is tough, the dishonest realtors leave the market, leaving the ones who have been honest all along. I fired 5 and only found one to be honest. Let's hope some changes happen.

East of LA said...

yes, his allegiance is to the people in the biz. treat that as a postulate if you will.

his admission of a "hard landing" is not a warning to would be buyers... its a reality check for realtors and their selling clients.

Anonymous said...

sell $500,000 condo to a sucker earn 3% = $15,000 (for a couple hours of work)

help sucker sell the condo for $400,000 24 months later, earn 3% or $12,000 (plus the other realtor earns 3% too)

Total realtor gain: $27,000.

Total sucker loss: $139,000 + other fees + negative monthly cash flow

Anonymous said...

For those of you who were not of age in the late 90s, a post-bubble RE market is characterized by both dramatically lower sales volume & lower prices. I would expect the drop in sales volume to be worse this time around, as there will be far more potential sellers that will be upside down.

Anonymous said...

RE 9:22, meant early 90s.

Anonymous said...

Again with the "it's the realtor's fault".

Since when do realtors control the market? The greater fool buyer has caused the price to increase via demand. The buyer was convinced to buy by using the cheap money received by the mortgage company. The mortgage company's rates are a reaction to rates controlled by the Federal Reserve. Greenspan controlled the Fed, so let's blame the realtors. lol.

I think everyone should move into a tent in the city park. The whole housing thing is overrated:{}

Anonymous said...

seriously, who in their right mind will be out buying today, unless it's lowballing at 50% off?

Anonymous said...

RE: The mortgage backed securities

The $6.1 trillion is just the start. These MBS are also used to secure derivatives contracts, often at leverage ratios of 20:1. In a cascading default crisis the problem could easibly be much larger that $6.1T.

The Federal Reserve is rumored to have a slush fund of $10B to $20B available to "clean up" defaults and maintain orderly markets. What happens if the defaults exceed the Fed's ability to handle them? Now the picture gets interesting...

Anonymous said...

Anon 9:45:00 PM :

Some areas are still affordable and didn't boom. No boom, no bust. Stagnate, maybe.

Our area averages under $170k for a 15 year old 3/2 with a 2 car garage on 1/3 of an acre. Renting a comparable property would cost the same as the payment on buying. Why rent in that case? I hated hearing my fellow apartment dwellers through the wall. Yuck!

Anonymous said...

Since when do realtors control the market?

They find a seller that wants to sell below market value, buy the property themselves, and flip it for a profit, running up prices. duh

Anonymous said...

Getting real about the real estate bubble
Fortune's Shawn Tully dispels four myths about the future of home prices

http://money.cnn.com/2006/08/24/real_estate/pluggedin_tully.fortune/index.htm

Heres an article that hits home

Anonymous said...

http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1156542610726&call_pageid=968332188492&col=968793972154&t=TS_Home

Anonymous said...

Tiny URL of the Toronto Fraud
http://tinyurl.com/jbc3u

Anonymous said...

10:31:18 PM Anon,

LMAO! Since when do agents buy houses! They're mostly broke dick losers with poor credit. I know many, many agents. Most live in substandard housing themselves, some are renters! The nationwide average sales per agent is 7 houses! Less than .05 percent own real estate investment property.

Anonymous said...

Hey, crack dealers come from an old and honorable history, leading all way back Leroy of Mesopotamia.

Now as for realtors, there is solid evidence for the act of bestiality with a mule!
After the act, the mule killed itself out of same!

Anonymous said...

Sounds like lending institution will be changing their tune shortly.

Remember the Saving and Loan of the 1980.

Goto Yahoo and look at the CFC message board under topic " Davisr2000"

http://messages.finance.yahoo.com/
Financial/
Consumer_Financial_Services/
threadview?m=tm&bn=3223&tid
=27493&mid=27493&tof=2&frt=2

keith said...

last anon - on the mortgage lenders, I think we're going to be looking at 50%+ drops in their stocks as well. I need to get busy next week shorting more of them, beyond my CFC put which is up 110% so far

I'd be especially interested in the firms that hold the loans themselves vs. commoditizing them, and also ones that have used aggressive accounting to book revenue on loans that might not be paid to them in the end

wish someone would just give me the research and tell me which ones to short.

I am worried about smaller companies though as some will be acquired so I'll focus on the larger ones first

Anonymous said...

Trust me, I'm a licensed real estate professional. By the way, are you wearing pantyhose ?

Anonymous said...

Perhaps the biggest reason to be skeptical about a real estate crash is that the country has not really suffered through one before. Not since the Depression has the combined value of residential real estate fallen over the course of a full year. Homes seem to be much less vulnerable to crashes than other assets, because people rarely sell them in a panic.

It will be interesting in about 14 months, what will take place.

http://www.nytimes.com/
2006/08/27/weekinreview/
27leonhardt.html?
ei=5088&en=ef2151ba207da17b
&ex=1314331200&partner=rssn
yt&emc=rss&pagewanted=print

Anonymous said...

The downturn in the US housing market will force businesses to slash 73,000 jobs a month in the new year and could be more damaging to the world economy than the dotcom crash, economists have warned.

After official figures last week showed that the number of new homes sold in July was 22 per cent lower than a year earlier, while prices were almost flat, fears are mounting that the 'orderly' housing slowdown predicted by the Federal Reserve will become a full-blown crash.

'Things do seem to be getting worse very quickly. Freefall is a strong word, but I think it's the right one to use here,' said Paul Ashworth, chief US economist at Capital Economics.

http://observer.guardian.co
.uk/business/story
/0,,1859024,00.html

Small Ball said...

I agree with those who say that now the Realtors don't care if the bubble bursts - they just want to get houses selling again.

Their goal now is to get the market moving again: down isn't as good as up, but it's better than sellers not willing to drop prices and buyers saying "not for me, thanks."

Look for the NAR and Realtors on a local level to make it a goal to "get the message to sellers" that the party's over and prices have to come down to make a sale happen.

Anonymous said...

Random replys:

- Your right, real estate agents don't set prices. But they are like the sell side analyst's during the dot com bomb. Their main interest is in keeping the "deal flow", not whether the "investment" makes any sense at all for you.

- Similar to used car salesmen, many RE agents are living at the edges, esp. being new to the field. They use credit in order to appear successful. But, like many people who go into sales, they are optimists, and believe the market will continue to go up, and are willing to take on interest only no money down mortgages for "flipper" properties of their own. That's why you find many with 3-5 of their own houses to sell. If a bartender and cocktai waitress can have 5 investment properties, why can't they? I also know people who got their RE license so they can be "in on" these "deals".

Anonymous said...

So they're saying "sellers must be more realstic about prices" and "buyers will return once prices have fallen 5%." What will they say next year when prices have fallen 10% and are still falling? What will they say when Wall Street acknowledges the magnitude of this crash?

Anonymous said...

% of the transaction paid NOW

They make money either way so long as there are transactions

Sell for 300k? Great! I make $18k.
Sell for 200k? O.K. I still make $12k.

Your 100k loss in value means I make 6k less for my involvement.

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