Real Estate Crash thread

[kokomas]

This isn't the same chart, but it shows the same trend: residential real estate at an all-time high relative to GDP.
http://www.stls.frb.org/news/speeche...9_07.html#fig1

The rest of the speech is very good, too. It's too bad that Poole isn't with the Fed anymore, as he was essentially their single voice of sanity.

i met bill poole three weeks ago when he came through our office. i found his arguments to be very underwhelming but here is the main one, what do you think:

Poole: monetary policy is very stimulative right now and policy rates will need to be raised in the near future to avoid inflation. but the current fed will not do this in the next meeting or two because they have not signalled it strongly enough.

Me: (after the fact, I was more polite in person I hope): does anyone believe this to be true? i look at it like forest gump, monetary policy is as monetary policy does. i.e. you need to look at the transmission mechanisms of monetary policy to determine if it is stimulating the economy. So credit is tight so the borrowing channel is uncertain. equities and housing are weak so the wealth channel is not contributing. corporate investment is not super strong so companies are not providing help through any multiplier effects. the only channel that is stoking any growth is the weak dollar via the export channel. but overall please tell me how monetary policy is super stimulative when mortgage rates are 7%.



I was excited to meet him and left thinking that he is an inflation hawk without a cause. he said some stuff about house prices i should relate but i'm too drunk. if anyone cares i will try to enumerate his argument tomorrow. i should also say that the day after he spoke with us he made a public speech that was unabashedly more hawkish, like hikes were extremely imminent. also after he made his comments about fannie and freddie he backpedaled. I don't think he is the guy you want to be following, but rather he's too eager to make headlines in his post fomc afterglow.

[mud]

The rats are leaving the ship.


Wachovia CFO Wurtz to leave company

SAN FRANCISCO (MarketWatch) -- Wachovia Corp. said late Thursday Chief Financial Officer Thomas Wurtz will leave the company. Charlotte, North Carolina-based Wachovia said Wurtz will leave "after a successor is named to the role. The company will begin an immediate search for a replacement."

http://www.marketwatch.com/News/Stor...B9%7D#comments

[Toadman]

i met bill poole three weeks ago when he came through our office. i found his arguments to be very underwhelming but here is the main one, what do you think:

Poole: monetary policy is very stimulative right now and policy rates will need to be raised in the near future to avoid inflation. but the current fed will not do this in the next meeting or two because they have not signalled it strongly enough.

Fed wants to talk tough against inflation but not DO anything about it.

THE ROCK - The FED. - THE HARD PLACE

Not too sure just how stimulative monetary policy is, unless he's talking about the multi billion dollar de jeur bailouts that seem to be going on every week.

[liv2ski]

Doesn't seem to be happening. No way. They see a lot of value in the mortgage operations. I guess. Most watch it either wincing or jaws down to the floor. Just goes to show that some CEOs are egotistical numbskulls who refuse to admit a mistake, no matter how large.

The CEO of B of A hates wholesale lending. Remember, he closed B of A wholesale about 7-8 months ago and that was a well run outfit.
Frankly, with his attitude, I am shocked CW wholesale is still around. I want that company to FAIL

[timvwcom]

Looks like any predictions we've hit bottom already might have been premature... not that it's a surprise;

Federal Reserve finds deepening credit crisis

More banks are tightening lending standards on home mortgages and other consumer and business loans as a deepening credit crisis exerts a heavier toll on the economy.

The Federal Reserve said Monday the percentage of banks reporting tighter lending standards rose across various loan types in its July survey. In April, the central bank had found that the percentage of banks reporting tighter lending standards was already near historic highs.

The new survey, conducted in early July, found that about 75 percent of the banks surveyed indicated they had tightened their lending standards for prime mortgages. That was up from about 60 percent in the previous survey.

The Fed's July survey covered 50 banks which hold about 80 percent of the residential mortgages on the books of all commercial banks.

Out of this group of 50 banks, 32 said they were still originating so-called nontraditional home mortgages. Among these 32 banks, about 85 percent said they had tightened their lending standards, up from 75 percent who said they were tightening lending standards for nontraditional mortgages in the April survey.

The Fed defines nontraditional mortgages as interest-only loans and "Alt-A" mortgages that required limited verification of income.

The survey found that many banks had reported tightening their lending standards and terms on all major categories of consumer and business loans over the past three months.

About 65 percent of domestic banks - more than double the roughly 30 percent in the April survey - reported that they had tightened lending standards on credit card loans.

The current credit crisis hit with force a year ago with rising defaults in the market for subprime mortgage loans. The credit problems have since spread from subprime loans, mortgages provided to borrowers with weak credit histories, to other types of mortgages and other kinds of loans.

[meatdrink9]

Looks like any predictions we've hit bottom already might have been premature... not that it's a surprise;

Federal Reserve finds deepening credit crisis

There are still plenty of good programs out there. This lending debacle is why I got my loan officer's license in addition to my real estate license. I was having a hell of time with a particular lender I'd been using for years. Now finding someone to do business with is easy. My email inbox is stuffed with rate sheets daily and many of them are still willing to lend to investors and the stated income crowd. My little bro will be closing on a place in a couple of weeks (self employed, quasi-stated income) with a rate of 6.5%. I'm doing cash out refi's on places I paid cash for 6 month's ago for around 6.375 to 6.5 (as an investor).

I have worked with a couple of companies whose underwriters were just straight stupid or power-tripping. It's pretty crazy all the stuff some companies have wanted. Made almost no sense. One experience like that and no more going to them.

[Cosmic Suncloud]

JUmbwo PRimaty?

[montanaskier]

so I decided to take my house off the market and rent the damn thing for a year or two in hopes that this turns around. I dropped the price to 237k and still nothing. We can still buy a house here and own that one as long as that one stays rented and we don't go over a certain amount. Maybe in a couple of years this will all be over.

[ColMan]

Buy our oil and we'll buy your REO's:

http://www.nypost.com/seven/08102008...ity_123879.htm

Granted, this is being reported by a tabloid.

[skier666]

All figures based on Zillow, and we all know how accurate that is....but, it does give a good picture of what's going on in the SF Bay Area during the last year, and how microclimates equal to more than just unique weather.



You can also check out all the Bay Area sales/foreclosures (updated every Monday) to get real-time info on what's going on in the residential housing market...enjoy nerds!

http://www.sfgate.com/webdb/homesales/

http://www.sfgate.com/webdb/foreclosures/

[rideit]

Local news: Teton Springs has laid off all non-essential personnel, and has been sued by another 40 or so homeowners.
The claims vary, but pretty much they all claim that they were 'promised' significant returns immediately, and many of them claim that the in house lenders manipulated many of their stated incomes on their applications.
It looks like they are in pretty deep financial trouble.
Huntsman Springs has been effectively shuttered for now.
I would love to hear more about River Rim and Teton Reserve ans Saddleback.
All of these failing ventures revolve around upscale golf courses...so what do the large parcel (Mormon) landowners want to do over on the west-side of the valley?

Two MORE up-scale, million dollar home gated communities based on two NEW golf courses!
Yay!
(If any of you want a $3mil. home for $750K, call me in around a year or two! I PROMISE!)

[Lawless]

I have a buddy that was working on River Rim. They essentially stopped in their tracks. No more infrastructure going in. I do think there are some home sites that are ready to go and maybe even have some homes going up, but the master plan has been halted.

Even on this side, prices are starting to drop. Howeowners aren't happy thinking about getting less than $800/SF, but the second home market pretty much is in the process of collapsing here.

I'm living in a 3 bedroom condo that has been on the market for $725K and only 2 people have looked at it in the last 3 months.

[Benny Profane]

(If any of you want a $3mil. home for $750K, call me in around a year or two! I PROMISE!)

Uh, it, you know, never was worth 3 mil and never may be. 750 sounds a little high, considering.

[rideit]

Well, there were people who bought in at $3M, so, at that particular sales table, at that time, it was worth $3M.

(They will still sell @~$1M, eventually...just compare to what is available in JH, where prices really aren't budging too, too much)

[Ski pod sticker hero]

So I am looking at buying some resort property prefer 20 miles or less to lifts. Summit,Vail,Crested,Steamboat. I figure with 50% to100% percent decrease in price I should be able to get a small house on its own land for under 200 K. Stick framed, no assoc fees ,no trailers nearby. minimum .15 acre. Preferably garage too. By next year no problemo. I'll be stylin in 2000 sq feet w/ garage in Downtown Breckenridge. Under 200k, just watch, you cant polish a turd and we are all getting flushed.

How much is that kind of house in YT horsey country NY ville? I bet you could pick one up for under a 100k easy huh. Hows the skiing there? Crowds?

[timvwcom]

So I am looking at buying some resort property prefer 20 miles or less to lifts. Summit,Vail,Crested,Steamboat. I figure with 50% to100% percent decrease in price I should be able to get a small house on its own land for under 200 K. Stick framed, no assoc fees ,no trailers nearby. minimum .15 acre. Preferably garage too. By next year no problemo. I'll be stylin in 2000 sq feet w/ garage in Downtown Breckenridge. Under 200k, just watch, you cant polish a turd and we are all getting flushed.

How much is that kind of house in YT horsey country NY ville? I bet you could pick one up for under a 100k easy huh. Hows the skiing there? Crowds?

I'll take a few dozen of the "100% decrease in price" properties please...

[Benny Profane]

I'm holding out for the 125% decrease.

[montanaskier]

I live in Vail, I would love to know about any of these decreased value homes in this valley. Shit is expensive and isn't coming down. Most say homes are going for up to 10% below list but still VERY expensive. I have also seen home prices in Minturn go up (don't get me started on that deal). Stuff is on the market for longer but it isn't getting cheaper here.

[liv2ski]

I'm holding out for the 125% decrease.

It is early and my brain is foggy from 4 days of drinking in Cabo Mx, but how do you guys figure 100% decline in value?
I have seen stuff that sold for $650k now on the market for $450k, so that is a 30% drop. I think it will get to the high $300s before this is over next year, but that is mabe a 40% decline?

[woodstocksez]

I'm holding out for the 125% decrease.

No, Benny, those are the houses sitting on toxic waste. Got yer back.

[neck beard]

It is early and my brain is foggy from 4 days of drinking in Cabo Mx, but how do you guys figure 100% decline in value?

I'll be straight, not rude:

The guy that first said 50 to 100% had his brain switched off.

100% fall in price = free, $0, nuthin.

125% fall in price = the seller pays you some to take the house.

Tim and Benny were taking the piss out if ski pod sticker, and rightly so.

[timvwcom]

More indication this hole is getting deeper... Fuck!

US foreclosure filings surge 55 percent

WASHINGTON - The number of homeowners stung by the dramatic decline in the U.S. housing market jumped last month as foreclosure filings grew by more than 50 percent compared with the same month a year ago, according to data released Thursday.

Nationwide, more than 272,000 homes received at least one foreclosure-related notice in July, up 55 percent from about 175,000 in the same month last year and up 8 percent from June, RealtyTrac Inc. said. That means one in every 464 U.S. households received a foreclosure filing last month.

Irvine, Calif.-based RealtyTrac monitors default notices, auction sale notices and bank repossessions. More than 77,000 properties were repossessed by lenders nationwide in July, the company said.

Nevada, California, Florida, Arizona, Ohio, Georgia and Michigan had the highest foreclosure rates. Foreclosure filings increased from a year earlier in all but eight states.

The combination of weak housing sales, falling home values, tighter mortgage lending criteria and a slowing U.S. economy has left financially strapped homeowners with few options to avoid foreclosure. Many can't find buyers or owe more than their home is worth and can't refinance into an affordable loan.

As foreclosures soar, banks and mortgage investors are also facing a pileup of foreclosed properties on their books and are cutting prices dramatically.

[Benny Profane]

http://www.nytimes.com/2008/08/15/bu...15sell.html?hp

"Not long ago, such loans, which used to be known as second mortgages, were considered the borrowing of last resort, to be avoided by all but people in dire financial straits. Today, these loans have become universally accepted, their image transformed by ubiquitous ad campaigns from banks."

"“Calling it a ‘second mortgage,’ that’s like hocking your house,” said Pei-Yuan Chia, a former vice chairman at Citicorp who oversaw the bank’s consumer business in the 1980s and 1990s. “But call it ‘equity access,’ and it sounds more innocent.”"

[spindrift]

What do you figure the odds of this are?

http://www.reuters.com/article/ousiv...47783620080817

The U.S. Treasury is growing increasingly likely to recapitalize Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) in the months ahead on the taxpayer's dime, Barron's reported in its August 18 edition.

The weekly financial newspaper said that such a move could wipe out existing holders of the agencies' common stock, with preferred shareholders and even holders of the two entities' $19 billion of subordinated debt also suffering losses.

If it happens, that'll make some waves...

[timvwcom]

What do you figure the odds of this are?

http://www.reuters.com/article/ousiv...47783620080817

If it happens, that'll make some waves...

Hopefully IF it goes down, it does so after this current cheat-em-blind group is gone... I could've see them rescuing it on our dime, then selling it to Halliburton on the cheap.