A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.
they want HOW MUCH?
When I had 500 dollars in bounced check fees in one month.
When I found the bubble blogs
I was commuting from Reno, NV to Livermore, CA because I could "afford" a house there! Three years.....It got so bad I hated the sight of my car! I did make a little bit when I sold it though (Oct 2003). No complaints there!
When inherited property that I literally could not give away in 2001, sold in 05 for more money than ANY sane person should have paid it. Then I knew that something had gone nuts!
After living in CA for 1 yearFall 2005I saw it all going up and up and up and thought, WTF. It's all going to come crashing down
A series of moments, big and small including moments of doubt until mid 05 but a sentinel moment was looking at the SF Chronicle Sunday Real Estate section in 2003 where the cover article featured a treehouse in Mill Valley for $750,000.
when my wife and i who live in norhtern va and both do very well could not afford a new home close to our work yet could afford to rent one.that was it.
Walking through a shopping mall know as Chandler Fashion Center in 2005 and KB Homes had a home sale display there. $339,000 for a 3 bedroom 1500 Sq foot in Chandler in Oct 2005. I went home and hit the web fully realizing we were in deep trouble. That same evening I found Housing Panic. I have a friend that paid $415,000 fro a 3 bedroom at the peak of the market in March 2006 in Chandler. She knows now she made a huge error.
The first time I saw the Shiller historical graph, and read his classic paper from a couple years ago. It crystalized right away.
Moment of Epiphany?I guess it was when people started quitting their jobs in order to splurge and live off of their HELOC!
It hit me first while I was finishing a tour in Ramadi Iraq last Aug. Watching Jim Cramer's famous melt down on CNBC "...THEY KNOW NOTHING!!!!" on the internet. Dow around 14K. Cramer said: people will soon be incentivized to turn in their keys and walk. When I got home a few weeks later to Vegas, I saw 1/4 of my neighborhood "For Sale", a small sub div of 1400ft2 town homes. All hell has broken out since then. I then ran into HP and have followed it since. I'm a new man with a new outlook on myself and America. It isn't a pretty sight. Thanks Kieth and buzz saw!
Summer 2005. As a young pup, I'd just gotten my first "real", permanent job. Salary 80% of local median, single, not bad. Figured I would like to buy a small house at some point in the next few years.So I go online and start doing intensive research, like I always do before I buy something big. I couldn't help but notice that, even in mountain West, houses were *expensive*!.I played along for awhile, believing the "houses are just expensive here because it's beautiful" line. But not for long. I dug deeper, and finally started seeing the phrase "housing bubble." A few days of reading blog posts, and I became the biggest housing bear in town.So it's been 2.5 years of research, watching, contrarian speculation (thanks SRS), and heavy saving. Too bad the War on Savers is on, but I'd rather be here than in debt and cashless.Now, to wait for the tidal wave to roll through my state. We can't hang on forever..
2005, when my wife and I put our first bid in on a house. We knew we'd have to bid high to be in the running, so we overbid by $100K. Not only were we outbid, the winning bid was so high we weren't even invited to counter.Realized then that the housing market had decoupled from reality. We've continued to rent, learn from Keith, Patrick, Mish, Schiller, Schiff & Rogers, and await the day when prices are back to historical means, so we can finally buy without angst.
Keith,It was in the Summer of 2005. My then wife and I were house hunting and our Realtwhore tried to tell us that we would one day be able to retire on the equity in our house. The mortgage broker at Country wide approved us for a monthly payment that was 75% of our take home income and recommended that we cash out our retirement accounts to make a 5% Downpayment on a house we couldn't afford. In searching for the evidence that confirmed what I hypothesized was a massive bubble I came across your blog. I read empire of debt and Mania, Panics, & Crashes and was convinced... It was my moment of clarity... To make a long story short, the wife left, we got divorced, she bought a new car, she bought a house, lost her job.....and I'm sitting on the sidelines in cash in Everbank waiting to pounce...Keith---Thanks for changing my lifeI owe you a beer.John in Fort Collins, CO30, No wife, no kids, and no debt.
When I saw the Housing Bubble Rollercoaster Video:http://tinyurl.com/33pnge
In 2004 my wife wanted me to HELOC the house to buy a new car. A little research and the ability to add two numbers together told me something was wrong. I began to read some of the housing blog websites and found many wonderful links to further reading.I purchased a used car and paid cash in 2004 and did not HELOC the house.By 2005 I scaled back on all spending and increased my savings.By 2006 I sought safe funds... Well at least funds that were not tied to MBS or the REIC.Now in 2008 I am making some more popcorn and watching the show.I know we will all feel some pain. Some more than others. My goal is to see my family through these troubled times.Thanks HP.
I was living in California a few years back, attending a world renowned university as a graduate student in the sciences. One of the faculty won the Nobel prize, and a party/reception was held for the department staff, students, and special guests. Several dozen of the world's greatest scientists from this and other area universities were in the room, and I was there striking up conversation.These luminaries had the ideas and ability to start businesses worth billions of dollars. They were working on well-funded projects which had the chance to revolutionize medicine, computing, materials, and energy. However, as the wine and cheese were passed around, all that the professors and students were talking about were their property values and their house flipping plans. I was sickened by this utter waste of human talent, and resolved to never buy a house until what is broken in this country gets fixed.
When I read the coming boom ahead by Harry Dent in 1992.
Today in San Francisco - up here for a week. . .forget NO BUBBLE HERE. . .the city of SF is full of condos on every block downtown - one 58 story one on Rincon Hill, and about 6 other 40 story places South of Market - all were "sold", but now my friends tell me people have walked away from deposits, and SF will join San Diego, Las Vegas and Phoenix/Miami in the condo glut race. . .just a bit late. . .and lots of job losses to boot - can we say 1000 layoffs at Yahoo?? . . .East Bay mortgage industry has been desimated. . .NOW I really think a depression is on the way when SF is crashing. . .will NYC be next??
when I could no longer afford my own house and my wages have been exceeding inflation, even true inflation.
When I heard that crackhouses in Compton were selling for $600,000
.When realtors became rockstars!Or at least they thought they were!.
.Living in Calif for 35 yrs and watching the meteoric rise of home values!Staggering ! .
knowing that units like mine were renting for $1300, when i saw one for sale for 400k
after reading patrick.net
I had an image in my mind March 2006. I saw and felt my wife and I in despair because we were losing our house (we hadn't even bought a house). At the time everyone in this state(Utah) was euphoric counting their paper profits and paving over every bit of fertile farmland they could get a hold of. I went the other direction and got prepared. Utah real estate is melting down as I type. Where ever that warning came from, I am grateful. I also found HP and numerous other sites and have been learning all I can.
Starting in 2004 speculators were buying up houses sight unseen in the most undesirable areas possible right next to freeways, dumps, sewage treatment plants, etc etc for top dollar.In 2005 Google and Zillow were just starting to come out with satellite maps which visually showed the new housing developments located in either the middle of nowhere or in the shittiest locations possible. Zillow also showed trend lines that were starting to go parabolicly upwards.As Cramer once said... PLOW THAT SHIT UNDER. 75% of houses built since 2004 aren't even worth the materials used to build them.
When Realtor 'counsel' was considered legitamate and of value.When my $64,700 25 year-old Seattle, WA paid-for former rental (renters bought it for me-thanks) condo sold for $366K in two days with multiple offers and no inspection AND I got to keep $250K gain FREE since it had been my pricipal residence at the time. Very Sweet. Thank you 43, for the free Corvette, you are still the Worst President Ever though.
it was when my friends bought a rental on 100% finance and the rent only paid 60% of the mortgage. They were convinced it was a good purchase.I asked when did they think they would stop subsidising the rent. THey looked at me and asked what I was on about. I explained that they were basically paying 40% more for the house than it was worth, and they still didn't understand.Then the told me 'house prices never go down', with a certain tone of voice and the incredulous look. Right then I knew we were in trouble.Did some research, and well have had 4 overseas holidays. lots of savings and they are still paying half the cost on the house. When I ask how the rental is, I don't get an answer...
> When I found the bubble blogsThat was also my moment of clarity. We thought about buying a house in Nov 2005. I like to research large purchases on the web first: The arguments on the bubble blogs were much more convincing than the advertising of the REIC - thanks, patrick.net!
I live in Chicago and make a decent living. In 2003 property prices were so high I couldn't believe it. I compared the price, property tax, insurance, etc... of a house and compared it with the median income and decided that "this just doesn't make sense". Well I could have bought a condo but didn't. Well in 2004 and 2005 prices went even higher but in the summer of 2005 properties were no longer selling very quickly. Out of all of my friends and co-workers that I know (about 23 in total), 18 decided to buy a property during the crazy real estate days. Five people decided to wait it out. I remember how in the past everyone would tell me "oh, you gotta buy a house or else you will be priced out forever", "real estate never goes down in value", "God isn't making any more land", etc... Well now the laugh is on them. I am a happy renter and will buy whenever prices come back to affordable levels.
When I found out about the crazy lending and appraisals ,I knew the housing market would crash .You can't use unqualified buyers on toxic low down loans and speculators to pump up a real estate market. These are not long term buyers as it should be for real estate . Some greedy punks changed the whole way lending has been done for decades ,and I would like to know how it happened and how the risk was not rated correctly .There was a lot of money in the market at the time looking for a yield ,so the market makers just created a place to park money in faulty loans using fake real estate values. The low interest rates stimulated the real estate market at first but than it took on a life of it's own with the faulty lending .I'm to to pissed to even talk about it anymore .
When a friend in Northern California bought his house for $210,00 in 2001, and then sold it in 2004 for $455,000. Not a flipper, didn't do any work on the house - it just doubled. His income didn't double, the rents in the vicinity didn't double but the house did.He's a bit like Keith in that he moved to Europe with his 'winnings'.
I was studying for my accounting class at Starbucks and surfing the net at the same time in 2005 reading those crazy renegades who dared mention "bubble" in regards to the market. I kept seeing Shillers name coming up so I actually pulled out my credit card and paid a couple bucks to download his old paper on the subject. That's when the "gut" feeling I had had for a year (despite my friends, who were bubblicious) crystalized and I KNEW I was right and what I should do.
When I realized that the 2/1 I live in, a house that by any reasonable standard is about the smallest that any single family residence should get, and is supposedly less valuable than 90% of the homes in my area, had a running value estimate on Zillow of $405K. Or put another way, on a 30-year-fixed, probably would've required upwards of $120K a year to make comfortably workable.When a small home with apparent lower value than 90% of the homes in the immediate area can't be afforded by probably 85-90% of the people living in that area, something had to be way too wrong.
It had to be when the price of houses here (Sacramento, of course) went up 50% in one year. I had just moved here, and that immediately set off bells and alarms. I then watched stupified as the prices doubled then went up another 50% by 2005, while hearing story after story about how I should buy now or be "priced out forever". Yeah, sure :) One of the bloggers here uses "50% decline by 2009" as their tagline. Now, they say that 50% was too conservative...
Bunch of little moments for me, not one big "aha!":It was when I found out how much houses in my old 'hood went for, and even though some of them were trashed out, they had multiple offers.It was when me & my coworkers were sitting around on our lunch breaks and we realized that we could never afford to buy in our neighborhoods at current prices, even with two steady paychecks coming in.It was when I heard people from California say that our house prices were so cheap, when they had nearly doubled from three years ago.It was when I kept seeing crazy teaser interest rates on junk faxes clogging up our office equipment.It was when I first got married, and our maid of honor tried to convince me to get a weird interest only mortgage so we could own a house, knowing full well that we were temporarily stretched to just afford our rent....and then she chimed in with "real estate always goes up, and you can always sell a house in Phoenix!"There is one thing I do kind of miss about the bubble, though. I miss watching those "Flip This Turd" shows with Armando in San Antonio and Sam in Atlanta. We'd tape a few of 'em, then drink up when they would spout some obvious bullshit like "I flip thirty houses a month!" We usually got hammered by the second show. Aaahhhh, good times, good times.......
When I started to see people with normal median paying jobs, living it up like millionaires.And asked myself...."how can they do that".Also when I started looking for a new investment property (have been investing in real estate for 15 years now) and realised that the returns were not what they used to be.It's then I realised that things are going to get bad.....
Like a poster before....I too bought in Northern VA. grew up there also. bought a condo built in '85 (Reston) for the orignal sales price, in 2000. Finally sold in 2006 at 3x the price...I was so nervous about doing it that I got online and found this blog (and others, but this one makes me laugh!) short story long....the blogs convinced me to sell....I honestly was in the other camp during the first half of 2005I crave the long posts on investest options from here on out. I fear its REALLY gonna get bad, but I hope it doesnt.....
When I saw an advertisement in our union paper from a connected realtor who had a special day to meet and try to sell us waterfront properties that were going to be built. The price was to be $289K, which I thought was outrageous as most were selling in the area for $100K less. As it turned out, 3 units were begun and flippers increased the price to $700K while still under construction. Well, only one was sold. The remaining 2 units were never completed and sit 3/4 to 1/2 complete, abandoned by the builders. The remaining lots are now for sale for $160K each, and in comparison a lot around the corner is up for sale for only $35K. They are hugh monsters and sit facing the water. It has now been about 2 years and the structures that were never completed are beginning to show signs of rot. Also, existing home sales in this "desirable" area are still way out of line and like most areas seem to be "For Sale" forever.
When my next door neighbor bought another neighbor's house for $395,000 as an "investment." An $80,000 (originally) concrete block home, never updated. He is trying to rent it out now for $1300/month in a market where new homes are not renting for $800 or less. SW Florida. Are you surprised?
In 2004 when the HELOC craze hit I first suspected that something had gone terribly wrong. It was obvious that it was not sustainable on the long run.
I had started a new job in the spring of 2007 in Minnesota. With in three weeks I had three people come to my cube and say "Hello! You are the new guy right? Want to buy my second home/investment property?" These are engineers not real estate mavens. But they were all acting like it.
When I saw the April,2005 issue of Elliottwave F.F. showing the cover of time magazine (A man hugging his home). After watching the housing market for a long time I knew this was the peak. I sold in July, 2005 and have been renting since.
About 6 months from now, when most deniers will start to believe.
When I found this chart in December 2006 while deciding if I wanted to buy a house in the UK: http://tiny.cc/MJfhOI called the top in England in March 2007. Some of my friends who had just bought thought I was nuts. We'll see...
In early 2006, in my town, my wife and me went out to look at homes for sale and no one had come by most open houses by late afternoon. We were the only one in many cases. This was a shock to us as when we purchased our current home in 2002, the activity was fast and you had to put a contract fast. In 2002, every house we looked at had a swarm of people. We stopped looking, and when searching online, found Housing Panic. That changed everything.
During the early months of 05, I was receiving numerous offers from the likes of WAMU for 125% loans up to 500K. Absurd HELOC Offers etc. etc., this prompted me to research local property values. It was during this time that I found web sites like Patrick Net, Bens Blog and later on HP and Peter Schiff. I had seen this sort of thing before in CA., albeit on a much smaller level. I had bought my house during 98 and saw nearly a 300% increase by spring of 05. By mid year I sold and got out of Dodge moving to yet another bubble area then moving once again to a level 1 area on the Orangzillo Scale. I still have not bought..
Listening to Bob Chapman (Google his name) calling the peak in real estate in June of 05. By December 06 was out of all RE. Kept our house and paid it off with the proceeds. We drive 16 to 19 year old cars and have NO debt.It was not until about a year ago when I discovered housing blogs.I thank God every day for my decision to sell. NO regrets. NO tennant headaches.
When I happened to wake at 1 am and checked on my kids upstairs looked out the front window to the street where an extension cord hooked up to a boom box and 5-6 kids were "crunking" in the middle of my street of my nice suburban hood. This is gonna be an interesting year up ahead.
Anonymous said... I had an image in my mind March 2006. I saw and felt my wife and I in despair because we were losing our house (we hadn't even bought a house). At the time everyone in this state(Utah) was euphoric counting their paper profits and paving over every bit of fertile farmland they could get a hold of. I went the other direction and got prepared. Utah real estate is melting down as I type. February 06, 2008 6:14 AMUtah's housing prices have become pretty close to Arizona's. 1500 sq ft, unfinished basement, (but of course granite and distressed wood floors) $320,000. Same house used to go for $150,000 in 2000.Kept driving around a few years ago and seeing all of these new McMansion palaces built on boulder rock piles on the side of the mountain selling for 700,000 to a million. I kept wondering Where is all this money coming from? Well, we know now there wasn't any extra money was there? (Utah is in first place for building oversized McMansions, due to the birthrate here, everyone must have 4,000 sq ft for their 6 kids)Utah is going to crash just like Arizona, and the commercial market is WAY overbuilt. It just takes Utahn's a little longer to figure things out. Usually about a year.. So that makes you ahead of your time :-)
When I read the front page of Patrick.net.
This may sound funny to some, but back in 1999 I thought real estate here in the bay area was over priced, (not in a bubble) and a recession would happen anytime.I thought we were at the top of the market back then because houses would sell at the very first open house. This was even before the scheme of "we're looking at all offeres on so-and-so date" which would generate a bidding war. Back then,(1999) I didnt think the real estate market could possibly go much higher or longer...Every year thereafter, the frenzy would get worse - I kept thinking prices would retract, but they didnt. Then we had 911. Suddenly interest rates went down and the housing frenzy went crazy!!At first, my husband and I just couldnt figure out how the heck people, especially young couples with kids were buying $750-900K homes here in Alameda. My husband kept saying, "what are we doing wrong".I knew buyers were getting adjustable mortgages. However, I didnt know just how warped the products were getting. I could not have ever imagined these were No-doc option arm, pic-your-payment 3/1 toxic loan products. Now it seemed loans were available in 31 flavors, just like ice cream...By 2003 most of the people we knew were all remodeling to the hilt, or buying new places. At parties everyone talked about how much their homes had gone up in value...By mid 2004 my husband said he wanted to "sell into the madness". We did and have been renting ever since, and will continue to do so until house prices come back in line with rents. This has been quite an adventure, and we all will have great stories to tell about how bad this bubble got before it burst.
Fort Collins John said:" The mortgage broker at Country wide approved us for a monthly payment that was 75% of our take home income and recommended that we cash out our retirement accounts to make a 5% Downpayment on a house we couldn't afford."I'm convinced we're on the way to Great Depression II...
About 4 or 5 years ago, my wife and I were looking at houses in central NJ. We went to an open house which was very nice (newly renovated) but all the rooms were very small. In master bedroom, you could barely fit btw the end of the bed and the wall. I went to the porch in the backyard and looked down the sloping (downward) yard to the bushes and trees and behind them there was barbed wire. My eyes wandered up from the barbed wire and there was a large wall behind the tops of the trees. I realized that behind the wall was the NJ Turnpike. The house was going for something like 400K. I imagine it increased dramatically since then and is now in decline.
Suspicious of the 100x return on equity I enjoyed over 6 years, and who had the money to afford $500k rowhouses purchased a few years earlier for $100k. Decided to sell and move in early '06. To lubricate the transaction, I wanted to put together a financing package for the buyer. I called a mortgage broker introduced me to a "no-doc" option-arm. I realized I could borrow MILLIONS, without the ability to repay! And it all made sense.
We live in rural MN and after the (really awful) house across the street from us went on the market for $325k in 2005, we laughed and laughed and laughed. Then it sold to a couple of out of towners looking for 'investment property'.I was shocked, but pretended to be a nice neighbor and found out that they had bought it on a three year ARM, intended to flip it, and said that everyone they know is into this 'as a hobby'.Right then, I knew that the market was ultimately doomed.House is currently foreclosed.
When we sold a condo in 2004, "our" realtor greatly (in my view) overpriced it. I astounded at his nerve and frankly, I thought he was crazy.He also suggested zero repairs, even though we had lived there ten years. During our time there, we had worked two insanely busy full-time jobs with a lot of travel, and the place was a little beat.It sold at full price in 6 hours. "Our" realtor's only comment? "Gee, we could have asked for even more!"Click!
Summer 2005:I was 28 and we were looking to buy our first place; a 1,200 sqft condo on Church St. in SF. It was listed at $495K, but our agent told us not to bother unless we were willing to pay at least $700K. We didn't bid as I couldn't believe that the place wouls sell for that much. It sold 3 days later for $900K!We remained renters ($1,400/mo rent control) saved heavily and worked our asses off. We now have credit scores above 800, a 7 figure joint income (and down payment) and have seen some very nice places that we would consider buying at pre-boom prices (30%-50% off peak).
Knew bubble was over when:I moved to Broward County, FL in late '05 and all anyone in the community could talk about was their house and it's high value and how values would continue to rise. We rented. At the time, married with 1 4 yo child and beginning at the bottom of a new career. I had left NYC and Wall Street because I knew the big banks were doomed to either major shrinkage or outright bankruptcy and dissolution. They were having a HUGE party that would end ugly with a MASSIVE hangover. EVERYONE tried to convince me to buy, even though the cheapest house was over 6 times my income. "It will only go up in value!" I heard that over and over again. One couple actually sat us down and gave us a lecture about why we should buy. I told them they should sell their house and rent. Of course, they thought I was insane. Everyone there thought I was insane. "You're RENTING???!!!"Then one day (summer, 2006), I saw a man with a sign standing on a corner pointing to a recent condo conversion (from apartments) and the sign advertised the condos for sale. I knew then that the bubble had popped. I asked around and found out that the owner of the units had bought the whole complex, then attempted a conversion to condos and way overpriced them (more than similar single family houses). A lot of people moved out and nobody bought. It was confirmed, the bubble had popped and I knew the air would be leaking out for years after that.
Bettin' on CountryFried:Wood's SRM Global Fell 30% in January, Adding to 2007 Losses http://tinyurl.com/yvvhz9
Reading Casey Serin's page really crystallized the fliptard problem for me.
I am an outdoors type of person. In Chicago when the summer comes I love to bike, jog, roller blade throughout this city. In 2003, 2004 and 2005 I would look at all of the developments that were going on in the city and in each year, prices went up astronomically. I couldn't believe that in my neighborhood some houses were selling for 1M and condos for 500K. I knew something was wrong and I tried to do research at the library and all I heard was optimistic/rosy predictions. I searched for "housing bubble" and I found all of these wonderful websites (i.e. patrick.net, shiller, mish, your website, etc...). God, back in late 2004 my wife and I were about to buy into this madness because we were scared that we would be left behind. Thank God for blogs and websites like yours Keith.
People were putting no money down to purchase their homes.
Anonymous (tour in Ramadi)...I'd be interested to know: what was yourviewpoint and belief view before and what is your new outlook. I find those shifts in perspectives one of the most interesting aspects of life.PKK grandma
When my landlord decided to sell the 60s era townhouse we were renting in DC for 2500/month (which was crazy in and of itself) for 600K (not including the 500/month HOA fees!!!). Funny story, when we were first looking at rentals our RE agent advised us that the place had been vacant for 3 months, so we offered 2000/month. Of course, the LL agent informed us that another party was interested and had offered 2100/month. Eventually, it was up to 2500/month and the bidding stopped. Yeah, I knew it was bull, but couldn't walk away as I lived outside the regions and needed a place ASAP. For this, and other reasons, I know despise all RE agents. In any event, upon moving to DC, I just couldn't figure out how all these other people, who were making significantly less than I, could afford these prices. Was it the world, or did I go mad? I then found Housing Panic and the other bubble blogs, which confirmed my suspicions - the world.
It came very slowly for me. In 2000, after the stock market had its melt down, I thought about buying a house since prices were bound to fall because of the trillions of dollars lost in the stock market. I waited and waited but to my surprise prices started going up. I thought prices would come back down quickly but they didn't. By then, mortgage payments would have been three times as much as I was paying in rent for a comparable place so I gave up looking at houses for a while. I've saved a ton of money while renting.Until I found this blog I thought I was the only person on the planet who was happily renting and waiting for the bubble to pop. The term "Bitter renter" is a fiction made up by the doomed owners of overpriced homes.
When I saw a 2BR 1940's shack in Bend Oregon sell for $324K (2005). An old man had died in the house, it smelled funky, it had green fixtures in the bathroom, dog piss carpet. That day was the top, the very top of the market.
.When prices were so Outrages and realtors would tell you, "Now is the perfect time to buy"!or"Home values only increase"!.
I always knew. Maybe I was early (read wrong), but my analysis was sound. 2001 was the 1st recession where real estate actually strengthened.I have to admit, all my training in finance: BS, MBA, CFA, CAIA. And, I was starting to believe that the Real Estate Matrix might be real.Then I saw Shiller on CNBC at the height of the boom (March 2005)while at a business conference on the East coast. *He* brought me back from the brink.On my way back to Los Angeles, I looked out of my airplane window, and saw the MASSIVE developments going up in Riverside County (50 miles east of LA). That was it, I knew right then and there the end was nigh.
I'd like to call BS on all the super intelligent crystal ball gazers posting here. I realized there was a big problem in May 2007 when my condo would not sell despite being priced for what had been the market price. Realizing you are in deep trouble is a huge epiphany.Some people posting here clearly DID do the research and stayed away. Good for you. However not taking any action - as in you have always been a renter - does not count as genius. If you sat out 1995 because prices were too high you are simply lazy (assuming you had a steady job and were reasonably tied to one area).I have a large six figure bank/trading balance because I try and fail but more often I win. I know now that buying that place when I did was pure idiocy but I have learned from it and have actually made money from the experience (short REIC and banks last year was a happy place to be).
New businesses spawning to profit from foreclosureshttp://youwalkaway.com/
125% LTV says it all
When my perpetually drunk and marginally employed cousin in Indianapolis told me about his new plan to make a living by flipping houses. Summer 2005
In 2003, my budget on a first home had been ratched up from an initial 400k (Mid Wilshire, Los Angeles) to 800k over 2 years.. literally outpacing my own imagination. The epiphany followed seeing an open house for a small 2BR, listed at 569k, rack up 18 offers in the first few hours, and ultimately sell for 929k!! I knew sensibility had escaped the market and the first thing i did when i got home was google the once mythical words 'housing bubble.'
When I saw that Shiller graph.
Early 1999, when I bought my place. A fixer-upper in the neighborhood I grew up in (I didn't grow up in the best place) was 50K where they were 40K in 1997.2005 for sure. The house my dad bought in '73 for 79K, put tens of thousands into a new garage, addition, etc, and sold in '89 for 69K, was market valued at $200K. The neighborhood is a dump, I don't care if 16 years had gone by, I wouldn't have paid 100K to live in that neighborhood.
Easy.When I noticed rents in my area steadily decreasing whilst at the same time, home prices were increasing. Thus skewing the P/E ratio. As someone once said, "It's the fundamentals, stupid!".
WHEN BEN DID AN EMERGENCY RATE CUT AND THE RATE ON YOUR ON YOUR (ING ORANGE) CD'S WENT TO 3%!!!YOU BOYS LIKE ORANGE RIGHT?DOPES
when i came to this site
While attending a Goldman Sachs Financials conferecne in NYC, somewhere in 03 or 04.CEO after CEO kept on repeating the same line: mortgages were a safe bet because homeowners did everything not to default.They were basing their strategy on past delinquency rates and not on the fact that they were now offering 0 down and ARMs like they never had before. I knew their data was garbage.I walked out of WFC to go get a chocolate chip cookie and right there near the table was a guy at the Bloomberg terminal jumping up and down letting us know how amazing he was for overweighting Sallie Mae.I couldn't help but wonder who the heck would be able to buy those homes from the boomers if the young are coming out of school full of debt!
I realized something was wrong when my girlfriend's mailbox was STUFFED with offers for home equity loans, propaganda from realtors, and junk mail from financial fly-by-night companies. And she had no job, no income, and $80,000 in credit card debt. These lenders did not seem to care.
When absolutely everyone I knew was getting a realtor's license, or buying property in far away places they had never visited, and eagerly touted real estate at all gatherings.
I never really had a singular moment of clarity but it all started coming together for me in late 2001 when I moved to a big house in north Scottsdale up near Troon. Prior to that I lived in an apartment and never heard a word about real estate other than the realtor flyers on the doorknob. Then I moved to that house and all anyone talked about was real estate, how they were going to sell for double what they paid, blah blah. I suppose I've read enough about bubbles and economic cycles at that point to recognize that a mania was beginning to take hold and it'd end ugly.In addition, even back in 2001, it was obvious that the whole neighborhood was living on credit. The next-door neighbors with his and her new Lexus's were always getting their cable and utilities turned off and I'd see repo man pounding on people's doors all the time. It was clear to me that people who were already so irresponsible with credit would REALLY get into trouble under the grips of a housing mania.
When I happened to wake at 1 am and checked on my kids upstairs looked out the front window to the street where an extension cord hooked up to a boom box and 5-6 kids were "crunking" in the middle of my street of my nice suburban hood. This is gonna be an interesting year up ahead.What is this crunking you speak of?
in 2005 I drove by a WAMU where they were advertising ZERO Down financing to buy a home. I put my house up for sale a few months later for $580K and it sold for $600K. I havent looked back since
Spring of 2005 and the start of housing bubble blogs. A year before that people were camping out and joining lotteries for the privilege of buying newly released homes in this bubble city. It's all people were talking about. It seems like a long time ago....
When my Manager (I work for a top Mortgage lender)--bought a house at the peak, and is now down over 200K. Even people with all the information didn't get it!!!
When i saw a little bungalo in a nice suburb of boston listed for around $450k in the 2004 timeframe. i mean, real piece of shit. for the life of me i couldn't understand how someone would think something so crappy was worth half a million dollars. i knew there was a bubble going on but didn't understand the mechanism as to what was driving it......and now i know: subprime, no-doc, option-arms, alt-a's, flipping, etc. i had never heard of any of this until about a year ago when i started coming to this site. thanks keith!
On day one in the mortgage industry in 2004. When my manager for an major subprime lender told us to push our appraisers to get MAX value. That's when my economics degree kicked in and I though...this will not last!
When I sold my 4 Bedroom house in February 2006 in Antelope for $412,000 within two hours (!) which I had bought in 2000 for $153,000. I sold to and "Investor whom I immediately rented it back from. He then sold it to a young Russian man in 2007 and I started paying him rent (cash only - met him every month in a parking lot to pay him) then suddenly in July 2007 there was a notice that the house would be auctioned off in November if the loan was not paid up to date. I am still living in the house and have not paid anyone anything for over 6 Months and now there is an offer to pay me $5,000 Cash for Keys to get out by March 1st. I contacted the bank to see if they would like me to rent from them, or let the house stand empty like the one next door, but... they say 'No, they are not in the rental business.!!!!" Maybe they should think about it.
Frank sais:"..and I'd see repo man pounding on people's doors all the time.">>>>>>>>>>>>>>>>>>>>>>>>>>>>Yeah, Frankie, you KNEW it was the Repo man because he was wearing a T-shirt with "Repo Man" printed on the front & Back.Feel free to keep up with the tall tales, because even though nobody here believes the crap you post, it still makes for an interesting read.HAHAHAHAHAHAHA!
I watched cnbc talk about real estate. I knew at that point they were speculating on my house. Sold 5 months later and moved out of CA.
Houses ALWAYS go Up.Dont't they?Help me understand...
I've been a remodel contractor for many years. Around late '03, I started noticing more and more of my customers staying at home while I was working on their house. Not just the wife and kids(old enough to work), but the able-bodied men of the house too. I couldn't believe how many people weren't working mid-week. I recall hearing a statistic back then, that only 15% of our population was working at any given moment. That wasn't surprising given my observations.A couple years later, my moment of clarity came. My friend, who had just bought a BMW and a monster plasma(not kidding)with a recent HEL, told me he had something he wanted to show me. He pulls $15K cash out of a shoebox, hands it to me, and says, "have you ever held this much money?!". Now that I look back, I'm pretty sure that was the exact moment the housing bubble jumped the shark.BTW, his foreclosure court date was a few months back. Don't know what happened. Don't give a f@#!
Actually for me it was in Sept of 2003 , when my aunt died, I listed her old 800 sq ft house on a 2300 sq ft lot in a Los Angeles barrio for $225000. I couldn't believe it. I just wanted it sold before they spray painted more graffiti on it. A car with a drunk driver crashed into the front door two weeks before I was ready to put it up for sale. Prior to that nobody wanted it for more than 50,000. When I sold it, the neighbors and I were literally in shock. I couldn't believe this old piece of crap sold for more than 200.00 per sq ft. bars on the windows and the whole bit. Drove by it a couple of months ago and I guess they must have given up trying to cover up the graffitti anymore, because it was all over the place.
In Moscow, the phallic structures that began to appear at the turn of the decade spoke for themselves. It was clear they were NOT made for living - so enter the age of "investment" (i.e. speculation) properties. When this bubble deflates, it could create some jobs for demolition squads.
After I had just sold my home the 1st day it was on the market, for the highest price ever obtained in the subdivision. They wanted to close so quick I had to rent an apartment. I then visited a mortgage broker who told me I could borrow TEN TIMES my income. This was 2003 and I KNEW we where in a bubble.
Real estate economics class @ UC Davis Spring 2006. I had never looked at how people borrow money. After learning from this class, and realizing people were getting loans whose payments were much higher historically as a percentage of their income, I was a little worried. By June of 2006, my 70+ year old tax accountant teacher talked to us about how a significant portion of his clients had mortgages that were 90% of income and that he has never seen that before. After going to blogs like this, and finding out other worrying signs, I was sure there was going to be a 10-20% decline in values. I was wrong, it is going to be worse.
Yeah, Frankie, you KNEW it was the Repo man because he was wearing a T-shirt with "Repo Man" printed on the front & Back.Feel free to keep up with the tall tales, because even though nobody here believes the crap you post, it still makes for an interesting read."Hmm, that's odd because hundreds of people who live in DC Ranch, Greyhawk, Troon, etc., have posted on my blog to verify that they also see repo men on a daily basis chasing people. Go see for yourself.They're pretty easy to spot. Any tow truck that is unmarked and the driver is banging on the front door. Unless you're completely brain-dead and can't figure it out.Sorry to hear that you're one of these people (you pretty much admitted that in your comment).
When did I know we were in a Housing Bubble?When I went to my doctor for bloodwork and he handed me a card and said he was selling real estate on the side and to call him if I was interested in selling.Or maybe it was when the janitorial lady in our office building came by one day dressed in a tacky business outfit and told us she was now selling real estate.
There's an article today in the AZ Republic about a Scottsdale woman who was arresting for embezzling $200k from the local PTA because she couldn't pay her mortgage.Pathetic.
We remained renters ($1,400/mo rent control)...a 7 figure joint income (and down payment)Something is wrong. I think you are lying about your income. 7 figure income means $83333/month. You are getting this money and at the same time renting for $1400? Sorry man, but I don't believe you.
Summer of 2005, when my running partner, who is a teacher, in the course of 6 months "bought" 8 houses in 4 different states (Nevada, Arizona, Texas and Idaho).No money down, 100% financing, neg am loans - total financed $1,800,000.Her husband was never quite on board, but she strong armed him into it.I would say that was when I had my lightbulb moment.P.S. They're still married, but he's not a happy camper. The homes are all rented - none of them cashflow - all have lost value - haven't been refinanced yet either. Total nightmare!
"I couldn't help but wonder who the heck would be able to buy those homes from the boomers if the young are coming out of school full of debt!"Much like they buy cars for their kids when they turn 16 and much like they pay for their kids to go to college or get married, the Boomers will all buy homes for their POS, self absorbed shit fightin' kids.
how about today when i did not buy an automotive gaskget like the one i bought in 2005 for 1.29 selling for 8.29 when there is low inflation reported over those years and instead bought heat resistant glue to repair the old one for 1.89 which i can also use in a dozen other places.. 1.29 was convience...
And she had no job, no income, and $80,000 in credit card debt.---------------------------------Why do you have a girlfriend like that? Dump here ASAP.
When I noticed Bob Toll telling everyone how great housing was and dumping his stock then I started googling housing crash and getting more hits everday until I found this one
I work in the title insurance industry and knew for sure in 2004 that the easier and cheaper it was to borrow money the larger the pool of buyers and consequently the more real estate prices rose. The low interest rates were not having a positive effect, instead they were fueling higher real estate prices. Plus I saw people adding in all their credit card debt into their loans and then maxing out their credit cards again. I watched CNBC to see if any of the talking heads ever brought this up and they didn't, especially Jim Cramer and Larry Kudlow.. I was forced to google key phrases for my housing bubble concerns and found HP. As I look back, I cannot believe how much we've been lied to by our government through this whole thing. That is the thing that pisses me off the most.
Reading the charts in " the new road to serfdom" in Harpers in 06 made it very clear to me.
When I began observing more and more homedebtors like this:Woman buckles in beer, not childA woman remembered to buckle up her case of Busch beer during a trip in St. Augustine on Super Bowl Sunday.But when it came to a one-year-old girl in the back seat, the woman seems to have forgotten, First Coast News reported.Police in St. Augustine say the woman, who identified herself as Tina Williams, ran a red light and swerved on the road before she was stopped.When an officer asked why the girl, who was in the back seat with her mother, didn't have a seat belt, Williams apparently said: ‘‘I don't know."http://tinyurl.com/yqurovSo you think that you live in a "superpower", huh? Wasn't the Detroit videos enough?
didn't buy because I would only go traditional 30 year fixed, and the payments were insane that route. thought I was poor because I didn't realize the insane loans people were taking out. started to really get it when I saw more info about the loans, and the case-shiller index. we were totally shocked when a realtor selling her own condo tried to push a NegAm on us, which I believe is even worse than interest only. at that time the bubble was getting more obvious because of a condo auction nearby. we knew she pulled the price for her place out of her arse because it was worse than the condos on auction across the street, but at a higher price.
when the fed went to 1%. I knew capitalism had screwed up big time. I remember reading that it was the gamble of all gambles!!!!!!!!!!!
For me, it was a combination of ...- Reading about people writing letters to house owners on why they should sell to them- Reading about the use of interest only loans- Being virtually priced out when I'm in the top 5-10% of earners in the USA
When I saw these huge places going up in OREGON, for crissake, and wondered who could possibly afford them, at 600-800K. I found out: Nobody could!
hey.. if i take the alternaqtor off of my old car and attach it to my tread mill bicycle how much peddling do i have to do to get the energy to power my tv and stove....er when i thought this..............
Fort Collins John:what is your wife up to now? curious as to how the people who made the wrong choices are coping?
I miss watching those "Flip This Turd" shows with Armando in San Antonio and Sam in Atlanta. We'd tape a few of 'em, then drink up when they would spout some obvious bullshitHave you noticed that all those people in open houses are either their friends or relatives acting like they're signing contracts and how committed to buy they are?I laughed another day when that Armando guy and his brother showed up in front a huge building and acted like they had bought the place to use it as office. They never went inside the place; they just kept looking from the outside, in the parking lot.It's all fake!
$15,700 kitchen counter tops.
When I logged onto Foreclosureradar.com, pulled up the map for Rialto and Fontana, and saw the sea of NOD's and REO's.That was early December.I found out about ml-implode on another forum, and found out about this one from there.
2005. My friend turns to me and says, "when the stupid people are getting rich, you know there is a problem."
Mid 2003.Housing prices no longer made sense on a PE ratio basis.Cost of owning just disconnected from reality.Let's just put it this way, a house that I almost purchased in 2001 for $180k, was now over $400k, in a mediocre town in Jersey.I said, you know what, something stinks around here. Now I understand it was the subpime slime.Danny
In early '05 I started looking at homes in PHX only to find myself affording ghetto homes or trailer homes. I could and did rent what amounts to my perfect place in a nice, stable neighborhood for $1K/mo, but to buy that home would have cost me closer to $1700 PITI (conservative estimate). "Why buy?" was my thought. And I figured if the common guy out there couldn't afford to buy a house, there was a problem. I heard all the same stuff, "RE never goes down", "You're throwing money out the window by renting" but I knew the bubble would pop. These idiots were ATMing their places, taking trips, buying cars and rubbing my nose in it the entire time. Who's laughing now - they are all under water in their homes.My rent hasn't gone up in two years and it won't this year either. I've landed a better job and I'm saving as much as I can. Funny thing is the agent I've been "working" with to find a house keeps calling me to tell me it's a great time to buy. Me thinks she can't pay her bills. . . I just keep telling her that I don't what to waste her time or gas money when I know the houses I'm seeing on MLS aren't "PERFECT" for me. It just pisses her off to know that I don't HAVE TO move. So I will take my time and look until the absolute perfect place comes along and then start my offers at 50% of asking. :)
When known morons in my town (high school dropouts who passed as construction workers) started building houses as GC's themselves and drove BMW 7 series and Bentley's. That was 2005. Today all those cars are gone and their McMansions are foreclosed. One guy lives across the street and he keeps his mexican slaves busy by letting them wash his car, probably for peanuts. Yeah it was tough wondering if conservatism was dumb at the time, but my quality of life is better now than it was two years ago ( as opposed to my neighbor, who is now a recluse), my house is paid for and I look forward to trips overseas every year thanks to my investments (not real estate). Bottom line there is no such thing as easy money or making money by the book except for peddling drugs, sex and inheritance.
Frankie says-"I never really had a singular moment of clarity."Finally Frankie speaks the truth.Repo Men don't knock on your door. They are all about the sneak attack. And with GPS and safety features like being able to unlock your doors and start your engine via sattelite if you lose your keys on new cars Repo Men don't need tow trucks to reclaim an asset. And if these homedebtors you claim were getting their Lexuses (Lexi?) repoed were such financial morons wouldn't they have just bought them with the home ATM and thought they had paid cash? Of course they would so who would have a lien against the car in the first place? Nobody. No lien no repo. QEDAdmitting you have a problem is the first step.
The Fed dropping the interest rate to 1 percent scared me. I read they were preparing for a 'deflationary' scenario. Spooky. Then, in 2003 early, I was in Phoenix at a cheap 'sell your garage junk' swap meet in Glendale. Amid all the garage sale junk, the old fruit, and beat up car stereos... There were two real estate booths. And two realtors in suits. I advised my parents to sell, and my sister not to buy. They both took my advice, and sometimes even thank me.
"75% of houses built since 2004 aren't even worth the materials used to build them."Wow is that the truth - and many of them look like a bunch of kit sheds from Home Depot piled up and stapled together. I have a hard time believing they won't fall down within 10 yrs, especially since many builders used unskilled illegal immigrants to build them instead of experienced skilled labor. They are all the same, too. I'm so sick of seeing "stainless steel appliances!!" in italics on MLS listings. My husband and I have decided that when we buy a house we will avoid anything built after 1997. Even GRANITE COUNTERTOPS!! won't sway us.
"Anonymous said... 2005. My friend turns to me and says, "when the stupid people are getting rich, you know there is a problem."February 07, 2008 2:23 AM"Correct! You win today's prize...An all expense paid trip to a 25-Life sentence at the the max security Federal Prison of your choice for Mortgage Fraud and High Crimes and misdemeanors.Your new Neighbors and possible new wife/sex interest will be Angie (he is the one with the jaundiced orange pallor appearance from renal failure) and George Jr. (the raving drooling stupid Texan who needed help in the bathroom that they did the lobotomy on who is respnding well to the thorazine and is regulalrly visited by vaguely familiar looking elderly people from Maine escorted by men in black suits driving black suburbans).F*ck America. You KNOW who YOU are.
"Anonymous said... And she had no job, no income, and $80,000 in credit card debt.---------------------------------Why do you have a girlfriend like that? Dump here ASAP.February 06, 2008 11:52 PM"Turn Her Out.We can make that $80K back in No Time depending on her stamina and also a tidy profit for ourselves.Doubt it? Ask the Mayor of Detroit who is currently under investigation and has publicly began begging for forgiveness.He must have gotten some counseling from Jackson & Sharpton the shakedown twins.Anyway, take her shopping and get her as* out on the street Right Away.
When I took a look at a small ranch for sale (south of boston), and the realtor told me, "I have to tell you, we just accepted an offer on the house". I then asked why she was still showing the house. She said "becuase the guy that made the offer has no money, and I can't figure out how he will get financing...". THAT put an end to my house hunting.
In 2004, when a person in the same group as me in grad school and her husband were looking to by a house. She just graduated and her and her husband were 75k+ in debt with credit scores of high 500s-low 600s (I know this cause she never shut up about it). Their combined income was ~80k. They bought a 200k house in the extreme exurbs for 1k down, saying that the equity they would make would save them from their debt.
My father-in-law has been successful in real estate for a long time: buy inexpensive rental units, fix them up a bit, enjoy long-term positive cash flow.I looked in my area (college town with lots of renters AND not a big bubble area compared to other regions) in order to find investment properties (to rent, not to flip!).I couldn't do it!There was NOTHING here that I felt I could get positive cash-flow on. Rental rates were way too low for me to make a profit: I'd have to pump money IN every month and SPECULATE that rising rates would let me do OK.No way I was touching that one!
August 2006...When the smaller houe behind me sold for 3x what I paid for mine in June 2000.
Getting on this post late, but...I realized it in summer of 2002. My house was rising in value faster than the payments themselves. When I sold it (2 days on the market) even my Realtor admitted that it "was not a healthy market" because it was too hard to find listings and buyers had become so desperate.Never, ever would have thought at the time that the mania could continue for 4 more years, though.
Youtube video "Our Economy Right Now" final words of Peter Schiff. "People think of rising house prices as wealth creation......You haven't created anything.......It's the same house....It's just a number it's not real wealth"Which led me to the best Housing Blog in the world. Thanks Keith
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