October 10, 2008

With credit frozen up, the stock market crashing, jobs in jeopardy, and home prices still in freefall, where are the buyers?


Illiquid.

Anyone trying to or needing to sell a home in the next few months will find out what "illiquid" means.

There will be no buyers, but there will be a record number of sellers.

Trust is gone. People can't get financing. The banks want downpayments that people don't have. Jobs are on the line. Even cash buyers will now wait for even lower prices.

For housing prices, get ready for the next leg down. On-the-brink 'homeowners' will simply walk away, while the banks continue to fail, and the REOs and foreclosures hit the market at shocking prices.

Now, it gets desperate. All sellers, no buyers.

You ain't seen nothin' yet.


31 comments:

Anonymous said...

Are the buyers following the two rules of Economics.

1) FEAR and GREED
2) Path of Less Resistance

What is the path of less resistance.

Are banks fearing to lend to buyers because with the global stock markets tanking many companies will need to tap into their cash reserve further weakening their credit rating.

As a result many companies will need to cut expense like jobs.

Without jobs how will the buyers be able to pay back the banks.

http://www.bloomberg.com/
apps/quote?ticker=.TEDSP:IND

TED SPREAD is currently at 4.23 basis points.

Anonymous said...

The illegals will continue buying. No seriously, they've been had by their own compadres in the mortgage business and it will keep on going.

Susan said...

Hrmm, I think it depends on the area. Here in San Diego, foreclosures (REOs) are experiencing bidding wars (as I've been involved in quite a few of them), most of them bidding upwards of 30K over asking price. REOs are flying off the MLS, short sales are taking their time and the other sellers are not selling if they don't have to. At least that has been my experience the past week to 12 months in North County, San Diego....and still going. The short sales are typically 3 to 4 on a "waiting list" per property (in the good school areas). Although, I've noticed having a 15 to 20 % minimum down payment is a must.

Anonymous said...

What cause the DOW to sink in the last couple minutes before closing.

Did it have anything to do with the lifting of the Short Selling ban.

May the Buyer beware.

http://online.wsj.com/article/
SB122351280409217645.html

The Securities and Exchange Commission's ban on short selling, which sparked a series of similar bans around the globe, was intended to be a "time out" and "restore equilibrium to markets."

By the time it expired Wednesday night, the general view was that it added to market confusion and didn't do much to halt the slide in financial stocks.

Anonymous said...

Should buyers ask the SEC to re-instate the short selling ban again.

http://www.ft.com/cms/s/0/
1099e554-9665-11dd-9dce-
000077b07658.html

GM and M Stanley share falls blamed on return of short selling

The return of short sellers to the US market after a near-three-week ban was blamed for a sharp drop in prices yesterday as General Motors and Morgan Stanley led stock markets sharply lower.

Anonymous said...

Will National City be the next to fail.

http://money.cnn.com/2008/10/09/
news/companies/national_city.ap/
?postversion=2008100915

The bank's not speaking about an unnamed source that claims National City has been looking for a buyer.

Anonymous said...

If there are any buyers out there currently thinking about buying a home perhaps you should as yourself the question why are Venture capitalists saying things like

"take a hard look at expenses they could cut"

"In 2000 and 2001, the companies that hunkered the fastest were the companies that survived,"

http://online.wsj.com/article/
SB122359422742921079.html

Sequoia Capital gathered the chief executives of its portfolio companies this week and told them to focus on becoming profitable and take a hard look at expenses they could cut, according to people who attended the event.

The technology industry, which had seemed immune to the financial crisis, is now getting squeezed on two sides: Established companies are struggling with slackening demand while venture capitalists are telling start-ups to cut costs and plan for a prolonged downturn.

Venture capitalists are running into trouble raising new funds and tech vendors are getting squeezed as businesses cut budgets, banks pull credit lines and consumers close their wallets.

Venture capitalists who have been trying to raise money in recent weeks say their investors -- including pension funds, endowments and wealthy individuals -- are retreating from new investments because of the credit crunch.

Benchmark Capital, a prominent Silicon Valley firm, recently sent a letter to its portfolio companies telling them that "financings as we know it just got a whole lot tougher."

http://news.cnet.com/
8301-1001_3-10061872-92.html

Silicon Valley venture capitalist Ron Conway sent a sobering e-mail on Tuesday to the 130 start-up companies he's invested in: now is the time to hunker down.

"In 2000 and 2001, the companies that hunkered the fastest were the companies that survived," said Conway in an interview with CNET News. "Get costs under control; make sure you have plenty of runway."

Anonymous said...

Did the Bailout Plan fail and did the coordinate rate cut make things even worst.

http://news.yahoo.com/s/ap/
20081010/ap_on_bi_ge/world_markets

Asian markets plunge after huge Wall Street losses

Asian stocks plunging Friday, with Japan's benchmark index plunging more than 10 percent.

Markets in Hong Kong, Australia, South Korea, Thailand and the Philippines were all down more than 7 percent. Shanghai's index was down 3.8 percent.

Anonymous said...

The buyer is here, baby. I'm just waiting for another huge quarter drop and a rotten xmas to pick a couple of oceanfront condos. I'm all cash since 2007 and sold at peak. Then I'll pick at the bones in emerging markets and Iceland.

Anonymous said...

Hrmm, I think it depends on the area. Here in San Diego, foreclosures (REOs) are experiencing bidding wars (as I've been involved in quite a few of them), most of them bidding upwards of 30K over asking price.

He who participates in bidding wars is a financial moron.

Sir Harold said...

Susan all due respect

what has sold in the last 2 weeks ?

this crisis really started 2 weeks ago

I know you are promoting your business on here but to tell us that short sales and reo's are selling like hot cakes is like telling us that the DOW is at 15,000

so where is your proof ?

who has the money outside of banks ?

banks buying them up do not count as we the taxpayer are buying them out anyway through this new 700 billion dollar plan

venetiancafe said...

Houses in better hoods of Phoenix metro area thaat are only 80% overvalued sell with a few hours to a few days. Houses that are 100+% overpriced don't sell at all or take months.

I've asked before: WHEN WILL PRICES IN ARIZONA COME DOWN TO PRE BUBBLE PRICES? I can't believe how low the prices are in parts of south Florida. What is going on here??????!!!!!!!!!!!!

Anonymous said...

I looked at Jumbo rate (what I'd need here in D.C. still!) and they were around 8-9% !!!

Ok, for that kinda rate the cost of homes is REALLY gonna have to drop- big time!

Or I'll just sit on the side & wait - sold at peak too :)

Afterthought said...

Ill buy houses for 20-25% of their peak price!

The market wouldn't be illiquid if the sellers lowered their price.

I know folks who are trying to sell houses for 30% of what they bought it for; why even list it?

bickerer said...

Of course this doesn't apply if your house is "special".

check it out now said...

The US Banks are under capitaized by -$50,000,000,000,000 because of the GOP Bush Regime and their network of robbers and criminals.

So, why are some people still voteing for McCain who remains in the same criminal Republican party?

Because God made many as*holes, stupid f*cks and idiots!!

I used to get mad when I saw a McCain lawn sign or bumper sticker. But now I just laugh!

Bwaaaaa!!!!!!

sundry vermin said...

Zillow shows prices ticking up this week. LOL!

nnj said...

Also, jumbo loan rates are way up. Wachovia is 8.125% and Wells Fargo is about 9.2%. Financing is harder to get and banks want bigger down payments (in cash, could you imagine...cash!!). If jumbo loans start at $417k, which still includes just about every house for sale today, who the heck is going to be able to buy?

Real fast: A house sold at
$500k and 10% down. A jumbo rate of 8.125% comes to about $3,340 per month, and that is ONLY the mortgage payment. A person earning $50k per year brings home about $4,170 per month. After income taxes this mortgage is already unaffordable.

I guess an expert in structured finance will be needed to figure out how this will work for the borrower.

Miss Goldbug said...

Sellers are dreaming if they think they'll sell for anywhere near their asking prices. Evaluation on stock and houses are exactly the same. Both are way overvalued.

I suggest everyone take Zillow snapshots of neigborhoods they would like to eventually live in because you won't believe your eyes when the drop happens.

December will be soooo ugly.

Miss Goldbug said...

Anon said:"The illegals will continue buying. No seriously, they've been had by their own compadres in the mortgage business and it will keep on going."


I dont think so. There is a sting operation going on right now across the country on illegals who are trying to purchase homes.

Deporting them when applying for mortgages.

Anonymous said...

Zillow shows prices ticking up this week. LOL!




I noticed this too!

tater said...

I agree with your thoughts, Keefer.

All that we hear from the CNBC cheerleaders is that we just need to unclog the credit markets. This is supposed to make it easier for Joe Six-Pack if the credit markets lighten up. And, in a NORMAL credit market, that assumption would be true. BUT, there is a MAJOR problem with this assumption. This assumption is based on the idea that we're in a normal credit environment, that Joe Six-Pack has
Number 1 - Good credit
Number 2- Sufficient Cash
Number 3- Confidence.

Why would Joe Six-Pack want to buy a house where he loses money, beginning at the day of closing? That's assuming that he has the sufficient credit with a lot of cash.

BOTTOM LINE: If Joe Six-Pack has no confidence, then there will be no rescue for this financial system. Consumer spending is the key, and that's directly related to consumer confidence.

Miss Goldbug said...

My question is how can people (especially in CA) who bought homes the last 10 years afford the property taxes now that their stock portfolios and retirement accounts are vaporizing before their eyes?

What kinds of investments will generate enough money to pay these property taxes of $4,000-15,000 a YEAR now that the markets are tanking?

Cynthia Maniglia said...

Expect to see a lot of ghost towns springing up in America.

The rich keep getting richer and the poor keep getting poorer.

Anonymous said...

.



Where the Hell do you think/


Credit frozen!

Market, 401, retirement tanking,


Home prices in a freefall!!!



I'm on the sidelines

No Frickin way I am Buying Anything Now!


Patience!!!!!!!!!!

.

Anonymous said...

Hey Guess What? Remember I have been using Croydon PA as a barometer of housing because the same 64 houses have been for sale without moving for the last 3 to 5 years? Well, it has finally happened.
The latest postage stamp rancher is being listed for only $115K and another house that was asking $209 is listing today for $187. It's dropping finally! Soon I expect under 100K.

Anonymous said...

same old/ same old in san deigo borrowerers nor realizing those houses not worth the down payments let alone the prices...........

Anonymous said...

yep... i figure it takes 1.3 milliom in the bank today to generate the money to pay the tax on a bum condo today...........10 mill in NYC







nyc

ny6c

Anonymous said...

I'm a mortgage banker up here in "we're different" Seattle and we still have 0 down loan options...shit's crazy.

Susan said...

I left a comment not too long ago about the San Diego homes and I'm surprised that people who don't live in the area are refuting my experience in this local area. I'm not a realtor, NOPE, no way. My husband and I have been looking for a home for the past 12 months. We've made over 12 offers on homes this year alone and have been beaten out by other bidders. I'm just sharing my experience. After each lost bid, I've look up the sold price and see how much we were beat out. That simple. We finally got an offer accepted by a bank foreclosure last week, 38% off peak price, but still had to offer 20K over listing...with multiple offers on the table, and highest and best countered. This deal included, new carpet, paint, new appliances and trimming of all the palm trees. I'm just sharing my experience. I'm not pushing "business" on to any of you...I'm quite surprised that many still want to shout doom and gloom when I know plenty of friends and family (some in the real estate buying business) buying properties. I'm just sharing what I see locally..

Sam said...

Susan I hate to say this but you were beaten out by other banks and you were being used as a shill

Watch this week for 70% drops in the high end markets

and 90% drops in the low end markets

why ?

because the banks are about out of business