When I started HousingPanic last year, it was to formulate and debate the housing bubble theory - was there a bubble, how big was the bubble, what could have caused the bubble, what would the fate of the bubble be?
Well, I think our theory has been or now is being proven with cold hard facts.
The late great housing ponzi scheme is over, it is unraveling, it is unwinding, it is all downhill from here.
So, my question dear reader is this:
Can we accept that the housing bubble is over, and that the housing crash is now firmly underway?
October 05, 2006
The late great housing bubble ponzi scheme - is ANYONE beyond the NAR, REIC and Harvard still doubting that there's a housing crash underway?
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64 comments:
I am not convinced. Everyday there is another house in my neighborhood being listed for more than houses 6 months ago. Sellers are not reducing prices enough to matter, and everyone thinks their home is worth a boat load of cash, and they fully expect to get it. No foreclosures here, still a lot of flippers and condos being completed. No evidence of a bubble. And I am one that is hoping that there would nbe some major price corrections for over a year now, but it is just not happening on any significant scale.
The boom ended. However, we are seeing a soft landing and there will be a return to normal price appreciation soon.
Foreclosures are up but homes are still selling. Cheap money remains readily available.
Upper bracket homes have traditionally taken 1-2 years to sell. For the past 2 years they've been selling in 1-2 months in our market. This year those homes have been sitting on the market with 0 prospects and 0 sales.
A crash is coming, but not as fast as feared. When rates hit 9% the overall market with drastically slow.
The markets that had unrealistic price appreciation of Tampa, Phoenix, San Diego etc. Are going to get creamed regardless of any other factors. Mid-America should weather the storm much better.
15% is in the bag for 2007. A 15 % loss, that is :)
anyone who posts as anon should be seen as a member of the REIC by the way. sometimes likely the same poster (poser) pretending to be many people
If you want any cred at HP, you need to sign in. Otherwise, what you say will be taken with a grain of salt
They've been putting money back on sale again, but it looks like the Average Joe is already so tapped out, and the prices still so high, that it really won't matter, other than to the re-fi's...
My neighbor , a mortgage broker, insits that the market will get much better next year with appreciation for years to come.
Put home on the market and is moving into his new home next month. Nothing but CHA-Ching in real estate baby !!!
Probably no Christmas gifts to buy in 07. I think he is comitting financial suicide.
Well my neighbor just sold her house, she owed $110,000 she bought it for $60,000 in 1993. Some Cambodians just bought it for.
$200,000 IN CASH!!
she had it on the market for $230,0000 to $250,0000.
market time 2 weeks.
So Borka, what is it that your neighbor is moving up to that isn't going to eat up her profit and leave her exactly where she just was?
"Well my neighbor just sold her house, she owed $110,000 she bought it for $60,000 in 1993. Some Cambodians just bought it for."
Cambodians? Better hurry up and sell as your value just took a 20% hit.
I dont care if houses go up another 100k in 2007, Ive noticed how the housing market can change instantly and I wont be the one holding the bag when tshtf. I gave up at 250k, that same house could go to 500k and I still wont buy. I have 3 kids to raise and they cost me enough already.
"Well my neighbor just sold her house, she owed $110,000 she bought it for $60,000 in 1993."
There seem to be a lot of anecdotes whereby long-tenured owners owe more than the original purchase price. I would have thought after 13 years the outstanding mortgage would have been $30-$40K?
How much equity extraction has gone to investment, and how much has gone to consumption? I guess thats the $64,000. question (or these days the $640,000. question).
Interesting.
Keith question?
When the greatest shorting opportunity of a lifetime is coming what will you be shorting?.
I have some cash laying around that i am interested in trying the market. Do you have any tips on that.
and if so where do i start.
thank you
That's it, I'm off Ben's blog for good. I am so sick of getting filtered, delayed, whatever. Here you go, check this out. Party girl/loan officer.
So Borka, what is it that your neighbor is moving up to that isn't going to eat up her profit and leave her exactly where she just was?
-----I am sorry i dont know what you mean?
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Cambodians? Better hurry up and sell as your value just took a 20% hit.
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They seem to be a very nice family. I gave then a very nice welcoming gift..a nice cake my wife baked with candles shaped like shot gun shells
..you think they understand where I am at.
So Borka, what is it that your neighbor is moving up to that isn't going to eat up her profit and leave her exactly where she just was?
------------------
sorry i get it..Well she needed a third bedroom for a new child on the way...You want to here some funny shit tho..she has been looking at new homes in other towns and STICKER SHock..so she will have $90k to put down..But! she has not taken into account her taxes are going to double..and she is looking at $400,000+ homes.
Mind you She was just crying how she got layed off from work bla bla bla..and looking at 400k homes...best of luck i say.
Mort,
I do not know who has to be more desperate the mortgage' or the mortgagor "party chick" in the case of that sleazy advertisement.
I guess she is good looking or she would not get ANY business.
What does she do if her buyer is another party chick?
I guess if she is older than a DC Page then no matter.
It's a new paradigm... yadda yadda.
I have my honda and tent ready, I'm moving to Hooverville (Greenspanville?) The next bubble is going to be in parking and camping spaces. I'm ready!
This is the great question Keith! I think it is still way too early to tell. I believe you will be proven correct but it is still a bit early...let's see the inventories during July 2007. I have been monitoring from Cyprus but will be in Dubai this month. Oh yes......(From visits) it is the mother of all bubbles. Thank God my company is paying the rent while there. I hope to return to Washington State in 2010 and hopefully that will be a trough.
infidelwoman,
Yeah, a new low for lenders, sheesh! This does not sound like the type of person I would want to handling personal finance information (or anything else, for that matter, yikes!). Maybe she should work on a cash only basis?
If you want to see this meltdown accelerate into overdrive, let the tax structure change to no longer allow 100% of mortgage interest, 2nd mortgage Home Equity loan interest or property taxes be included in the Schedule A calculations for Federal Tax. My guess is that the property tax level will have the biggest bullseye painted on its back since it is easier to sell to the masses that those folks who live in pricey high tax areas are the ones who will need an "adjustment" with the thinking being that if they are rich enough to live in a high propterty tax area, they are rich enough to forego as big a income tax rebate from Uncle Sam as they've been enjoying for the past several years. This will be a GWB I deal where it is "read my lips, no new taxes" then in the small print below that statement, but there will be new "fees" and smaller deductions and a roll back of allowance percentages, etc. etc.
anon 2:44:20,
you are one of America's failure. if you've got nothing to bring to the table or can't intelligently carry a healthy conversation about real estate - just f'ck off. we've got no use for you. i wish people like you will be shipped to north korea so that they can use you or your brain as an experiment for nuclear weapons.
Borka, That makes 4 or 5 comments so far, give it a rest once in awhile.
My favorite is how everyone in the MSM is still convinced that a bubble that took 5 years to form will be corrected by a few percent and in less than a year. Haven't they looked through previous housing corrections and seen that housing takes 5-7 years to correct on average.
And heck, the DOW took 6 years to get back to its peak. And the Nasdaq is still sitting at about 40% of its bubble peak of 2000 and probably won't get back there till 2015 or so....15 years! And doesn't the housing market move slower than the stock market. No one EVER things a crash will last as long as it does.
The housing crash will acclerate into 2007 as interest rates rise (post election of course), defaults rise, and as regulators begin to force banks to tighten their lending standards (already under way). All this happening as flippers rush to get out, etc. I think we're in for a good drop in 2007 followed by several years of flat to down prices probably another 5 years, heck maybe longer.
I've been watching for several weeks the inventory level in Costa Mesa CA. Basically I go to realtor.com, enter Costa Mesa CA under "Find a Home" and look at the number that returns.
There's been a lot of fluctuation in the number lately. Three days ago, for "All properties", the number was 562. Yesterday it was 532, and today it's 543.
Something's fishy here: monthly sales have been around 30 lately (vs ~70 last year), so fluctuations of 10's per day is a pretty large amount. What gives? (And no, I'm not REIC, just an anonopussy.)
Borka, That makes 4 or 5 comments so far, give it a rest once in awhile.
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Here is 6 STFU! And finish me off I am not paying you to speak.
"borkafatty's girlfriend." who is she - kendra?
There is no housing bubble! Prices are as high as ever, and if you buy a new home with an option ARM you will be rich beyond your wildest dreams in a few short months! Do not delay. If there is a housing bubble, it is not crashing. It will never crash. Thank you for your time.
And you wonder where that rash came from?.
That is one ugly wife you got there..
thank christ for Brown paper bags.
Long term rates are being brought down so that when all of the ARMs reset it has little impact. Did you think the government was going to let these idiots drown? Please. The goverment will manipulate the markets until it's literally impossible to do so. Right now they can manage this mess. Something has to break down for the housing market to collpase. Something BIG, like Freddie Mac becoming insolvent. That's what you HP'ers are betting on....it ain't gonna happen any other way.
Keith - your blog posts and readers are idiotic and idiots. Look at all the above comments and tell me if you think this is a smart lot.
Keith - your blog posts and readers are idiotic and idiots. Look at all the above comments and tell me if you think this is a smart lot.
Lighten up fuzzball it does not have to be all doom and gloom you know..after all a little fun goes a long way.
"Keith - your blog posts and readers are idiotic and idiots. Look at all the above comments and tell me if you think this is a smart lot."
I'd agree that there are a lot of duff commentaries.
So, fair enough.
Though, why haven't you selected to register and elevate the discussion. That's not a criticism, but an observation.
???
Keith - your blog posts and readers are idiotic and idiots. Look at all the above comments and tell me if you think this is a smart lot.
Yes, the blog readers are a smart lot.
The NAR, REIC, and Haahvaahd denial of the bubble is much the same as denying the Americans are in Baghdad. The truth should be obvious to everyone, but what can you say? It is your job to say what you are paid to say, not to tell what you are actually seeing. If you believe what you see on your mainstream media is the truth, I have a slightly used palace which I can sell you, because the bubble has not started in Iraq yet.
Guest Blogger Stephen Colbert on Housing
Hi, this is Stephen Colbert of the Colbert Report. I've been bugging Tim for a while now about doing a guest post here at his blog, and he finally got me all set up with an account yesterday. It was a bit odd when we spoke on the phone - he mumbled something about oil prices and black helicopters and then the line went dead. I hope he's OK.
Anyway, he wanted me to talk about housing. I've been reading up on housing and this so-called "housing bubble" and I have a few thoughts on the subject.
First of all, housing can't be "in a bubble". Houses are much too big for that or bubbles are much too small - take your pick.
Second, those who are calling it a bubble are mostly people who don't own a house and they just want the bubble to pop so that prices will come down and they can afford to buy one.
read it all here.
http://tinyurl.com/e6gp2
The bubble blog with attitude!
I mentioned two months ago that the plywood companies in northern minnesota stopped buying logs from the loggers.
Then I updated it one month later that they were laying off 25% of its workforce.
I just found out today they laid off everybody and the governor of minnesota is going to talk to the canadians to see if they will keep the plant in operation.
( They are canadian owned plants)
The plants make the plywood used to make housing and the yards are full of logs as far as you can see.
I know of someone that works in one of these yards and he says their selling the plywood cheaper than it costs to make and the loggers are still working only because they are piling up logs out in the woods.
Anyhow, this is a house of cards!
The same thing is happening in Colorado according to the Denver Post.
Now if only concrete and roofing materials would drop...
Salt Lake Real Estate
Mort said: That's it, I'm off Ben's blog for good. I am so sick of getting filtered, delayed, whatever. Here you go, check this out. Party girl/loan officer.
Mort, I'd be checking the adam's apple, might be a male mortgage guy in drag, trying to feed his family...
I believe the slide has just begun.
90% of the population doesn’t believe there will be a crash, so most new listings going on the market (even here, in OC) at the 2006 high price. Some are 6% over the high. This has produced many listings that are over $1M.
Real estate agents tell me that the visitors have stopped coming to the homes.
Open houses used to attract many people. Now, only 4 or 5 neighbors are viewing the homes; no potential buyers. On some open house days, there are a couple buyers and no neighbors. The agents don’t understand. They tell me that I sold at a good time.
I personally know some of these agents, and I don’t like what will happen to these people. The ones that I know have been in the game for a long time.
Prices are coming down. The only houses that are selling are those with lower prices, and the buyers are offering 7% less than the asking price. They settle at about 5.5% less than listed.
It is common for the MLS price and the price shown on ‘fliers’ to be outdated. Often, the agents will say the price has dropped. They also say "make an offer."
Sometimes I visit open houses. I end up talking to the lonely agent. They say there are buyers, but the homes must have a “wow” impression when visitors arrive, or they need to be appropriately (low) priced. Some of the homes are vacant.
There are some listings where I rent. The signs have boxes to contain fliers. Lately, in the past month, these boxes have not been replenished, and they remain empty.
As I have noted in previous posts, the bottom 10% of he market is where the action is. Of course there are sales that fall outside of this rule. Some buyers see a house that they want (has a bunch of ‘wow’) and negotiate from the listed (high) price.
I know some people in $1.2M and $1.4M homes who are trying to sell. They have been very reluctant to lower their prices after investing thousands of dollars to fix-up the house for sale. They have all dropped their price. One is now under $1M. It's been a long time. There have been no offers of any kind. I remember that during the last housing slump, there were some callers that wanted to use the information they gained from some late-night sales shows. They would ask about co-owning or buying part of the house. They were looking for desperate owners. This type of buyer is (so far) non-existent.
For you sellers out there, let me mention one more thing. I have known some sellers that said they listed their house. Their house never showed up on any R.E. search engines (Realtor.cm or Homeseekers.com), even after months. They were only listed on the agent’s web site. If they are not shown on the search engines, I would think they won’t sell. If you are a seller, find your listing on the web. If it’s not there, fix it.
Prices have definitely dropped, but you could look at the upper 90% of the listing and convince yourself that everything is great.
they are piling up logs out in the woods.
Yea, too bad there were no hurricanes this year, never mind the housing starts went down. ):
Here in Orange county Calif, we've got robust demand from: Illegal aliens.
I work for a small mortgage brokerage, and we have been ordered (yes, ordered) by the gov't to give mortgages to illegal aliens, and I'm not kidding. People with made up names, no documents of ANY kind, and in some cases no bank accounts, no credit histories, and false SS numbers.
In order to "qualify," they can use (No doc, stated income of course) income figures for as many as EIGHT people in as many as two "households" in order to get ONE house for all of them!
The gov't is paying a direct subsidy of about 11 percent on this somehow, I don't even understand it yet.
YOUR TAX DOLLARS AT WORK, FOLKS. Maybe you can't afford a house, but your taxes are buying them for illegals.
buybonds - your outlook gives me some hope. I have been reading this blog for the past 2 years. I am looking to buy in one specific town, but prices are still out of control. I agreee that many people are unaware that their homes will not fetch what they are expecting. This downward slide seems like it is going to be slow and not as deep as I had hoped. I am looking for all the reasons to hold off from buying, because at this time all my 500k can afford is a sh#t box.
jt
Thanks for the link salt lake mortgage guy, I commented anonomously because I didnt have any proof, I heard about all this by word of mouth and I have friends and relatives that work for the logging and plywood companies. They took out huge mortgages in the last three years and now their getting laid-off indefinatly, and for northern minnesota you cant find another job to make those kind of payments.
When I go visit our friends they are all freaked out about what they're going to do. they cant sell because it seems like half the town is for sale already. Then comes the words "I'll just give it back to the bank" I feel for them because they'll have to start all over again with nothing.
The fed left the interest rate too low for too long!!
You want proof that this whole thing is going to fallinto a big crevasse read this.
Dont just skim it read the hole thing.
http://tinyurl.com/k69fd
I'm not a college ejumicated guy but heres what really chaps my ass!
Mostly because I have alot of friends and family in this plywood and logging buissnes that are going to get destroyed by all this.
Why does a plywood plant that makes say 100k pieces a month, with 200 employees need to then hire 200 more employees so they can produce 200k a month, and then when everything slows down they fire all 400 workers? It pisses me off! Everything worked just fine before, now everyone is f-cked! How is anybody suppose to work, make a living, raise children? They have enough plywood stacked in warehouses for two years, TWO YEARS!! Who can sit and wait for their job for two years before your bankrupt or foreclosed on? I already know its not going to be a good christmas when I go home to visit.
rant over.
Thanks anan for link:http://tinyurl.com/k69fd
I believe what it says, but am more than frustrated as I do not see the end in sight with housing. I am sick of feeling poor with over 450k cash and unable to afford a decent home. I will wait, or may lowball in my range.
jt
muhammed wrote:
"there is no housing bubble."
mauhammed...muhammed...muhammed. you know that smoking pot is against your religion.
When I see a 2 bedroom 1/1 bath listed for $150k instead of $600k, then I'll believe the market is corrected.
Trans World Financial - Orange County
I am a mortgage broker here in Orange County, California. this is from my wholesale reps in the business. About a year and a half ago my reps from WAMU and COUNTRYWIDE said that up to 80% of their pipelines were filled with Option Arm Loans. Most of the ones getting these loans were coming off interest only loans who could not afford a fully amortized loan so they needed to do the option arm loan. I would guess that all the people that are coming off the short term interest only loans can only afford the option arm because their payments are have gone up too much for them to bear.
If only the National Association of Realtors could see what kind of loans are being done or have been done in the last 3 to 4 yrs they would ALL shout at the top of there lungs CRASH!
The last time we had a housing boom was in 1989. it crashed for 6 yrs. No one wants to talk about the type of loans we have today compared to then.
In 1989 the most aggressive loan we had my have been the FHA at 97% LTV. Unfortunately most could not qualify for that here in Orange County because the loans were too high. But in Riverside County almost everyone could. Where was the largest foreclosure rate back then? Riverside County.
Today, we have:
Neg Am Option Arm Loans, (Bombs)
Interest Only Loans
Stated Income/Stated Asset Loans
NO DOC LOANS
100% financing
125% financing
why doesn’t the REALTORS LOOK AT THIS? BECAUSE THEY ARE IN THE BUSINESS OF SELLING HOMES! Even on the news today, Realtors will say the market is cooling or stabilizing but never will they say that it is declining because they will never sell a home. No Realtor in the world will admit this or they will never sell a home. remember, we have 500,000 licensed real estate agents here in California.
500,000 PINK SLIPS COMING.
when I see the cost of owning equal to or less than the cost of renting, then I'll know we've seen a correction
when we're back to the historical mean, I'll know we've seen a correction
when people can put 10% down, get a 30 year fixed and have payments less than 24% of income, I'll know we've seen a correction
until then, just a blip on the long long way down
This is a classic reply post:
FWIW, a real estate agent friend, who left IT to sell real estate in the formally hot downtown Jersey City market, has bought a hot dog stand. We run our four legged dogs together in the park and he was, formally, one of those always optimistic sales types. He said they have had hardly any customers coming into his office for the last six months, he is broke, and he needs to earn some money.
He also needs to sell both his Harleys fast to make is monthly nut.
JT, In a few years, your $500K will by the 3Br/2Ba 1850SqFt SFR in my zipcode that is presently listed for $650K and needs about $20K of updating. You'll easilly be able to get it for 450K and have money left over for updating (carpet, stove, fridge, paint).
I just spoke with my realtor buddy from outside Boston. he said it is dead. Homes that were 800k a year ago won't move at 600k this year.
Peabody, MA, a suburb north of Boston
I had two contractors ask me this morning if I had any work coming up for them, one a plumber the other an electrician. They said work was really slow and they were starting to worry. These same guys I couldn't get a return phone call for the past 5 years.
Just an aside I just talk to the electrician I mentioned earlier, about an hour ago and he told me he had lowered his prices by 25%, just to keep busy. He said things were getting worse week by week and he was really worried about keeping his bills up.
Why does a plywood plant that makes say 100k pieces a month, with 200 employees need to then hire 200 more employees so they can produce 200k a month, and then when everything slows down they fire all 400 workers?
Why? The money.
Was this a trick question?
muhammed wrote:
"there is no housing bubble."
mauhammed...muhammed...muhammed. you know that smoking pot is against your religion.
Thursday, October 05, 2006 8:20:21 PM
Ahh, but you do not realize - if you can say "The Americans are not here" you can also say "I have not been smoking pot" very easily. It is all a matter of spin. I can say "There is no housing bubble" to the people of Phoenix, and not lie. If I say "There WAS no housing bubble", that would be a lie. I hope the realtors ate many of the free donuts their company provided during the boom times because it appears now they will have to survive on their own body fat for a long while.
silverisgood said...
I don't give a crap what Wall Street says. People are cutting back on spending fast. Recession is unavoidable, and it feels like we are already in one.
Not according to the facts silver:
"The onset of cooler temperatures, a retreat in gas prices and exciting fall merchandise in stores combined to help pump up sales at department and specialty clothing retailers last month."
And, "specialty apparel sales were probably boosted in September by the combination of "weather, better pricing and great store displays, and by the huge dip in gas prices."
Salt Lake Real Estate Blog
when I see the cost of owning equal to or less than the cost of renting, then I'll know we've seen a correction
when we're back to the historical mean, I'll know we've seen a correction
when people can put 10% down, get a 30 year fixed and have payments less than 24% of income, I'll know we've seen a correction
until then, just a blip on the long long way down
So, since a lot of places still fall way below your standard you have to admit that "froth in the market" is limited mostly to the coasts? Recent articles in the Austin Statesman said that the average Texan pays just 19% of his income for PITI. That doesn't mean some are over extended (in all markets but not all buyers are overextended).
Phoenix? Most of the two income families, blue and white collar, can afford a home from $240-400,000. Prices have fallen for new and for investment homes so I think once the shakeout Phoenix will be okay. Lots of jobs. In my field, more jobs for me in Phoenix than Austin (and lower property taxes).
I think of moving back to California to be near my elderly parents (Los Gatos) but hey, I've checked rent and I can't rent a descent house for less than $2800 a month. My niece pays $1900 a month for a small duplex she shares with her mom and cousin and that is as dumpy as I could imagine living.
You can still buy a nice house in Phoenix for that and a mansion in Austin.
I heard somewhere that Cambodians are going to bail out the weak housing market. I forgot where I heard it. but it sounds plausible.
shakster:
see if you can convince the R/E mother. show her some charts that clearly shows that we are in a bubble period.
Hey, I bought a 1/1 for 150,000.oo which was a $38,000.oo short sale from a FB. (:
30 year fixed, mort $716.00 month.
Now, will it go to an appraised value of $80,000.00 or stay flat, that was my big gamble.
I am ready for a 15% haircut.
I see several people posting on this blog are either RE agents, brokers or loon officers. You guys have the nerve to come here and talk shit about FBs? Instead of fucking around on these blogs, I suggest tweaking the resume and doing the rounds on monster and careerbuilder. You might not get any legit bites but I know for a fact you will get a hit from some asshole hiring sales reps for Primerica. Antoher bunch of lying nutsacks. Right up you fucked alleys, no? Cheers bitches.
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