Real Estate Crash thread

[Benny Profane]

And, for all of you who think the supposed "stabilization" of the housing market is a natural rise in the price cycle, read this and avoid spitting. The right side of your paycheck is keeping dullards and deadbeats in houses they can't afford, and Barney Frank thinks it's just fucking peachy.

http://www.nytimes.com/2009/10/09/bu...09fha.html?hpw

“F.H.A. has stepped into the void left by the private market,” Representative Maxine Waters, Democrat from California, said at the hearing. “Let’s be clear; without F.H.A., there would be no mortgage market right now.”

That was the case for Bernadine Shimon. Like many Americans, Ms. Shimon has recently been through some rough times. She lost a house to foreclosure, declared bankruptcy, got divorced and is now a single mother, teaching high school English in a Denver suburb.

She wanted a house but no lender would touch her. The Federal Housing Administration was more obliging. With the F.H.A. insuring her mortgage, Ms. Shimon was able to buy a $134,000 fixer-upper in August.

“The government gave me another chance,” she said.


Why the fuck 2 people can't rent for a while until they get their shit together is amazing. This woman, after bankruptcy, is spending half of her take home on a mortgage, and the U.S. government is supporting her whole hog. The culture of home ownership is like a fucking disease in our country. It severely maimed our economy a few years ago, and yet, we can't seem to kick the habit. We are fucked.

[mock vomit]

And, for all of you who think the supposed "stabilization" of the housing market is a natural rise in the price cycle, read this and avoid spitting. The right side of your paycheck is keeping dullards and deadbeats in houses they can't afford, and Barney Frank thinks it's just fucking peachy.

...

Why the fuck 2 people can't rent for a while until they get their shit together is amazing. This woman, after bankruptcy, is spending half of her take home on a mortgage, and the U.S. government is supporting her whole hog. The culture of home ownership is like a fucking disease in our country. It severely maimed our economy a few years ago, and yet, we can't seem to kick the habit. We are fucked.

Good article... but I have a couple comments? First, certainly not every borrower is like your example prior bankrupt lady purchaser. The large majority are more typical borrowers. They do talk about higher numbers (low to mid 20%s) of loans that have "faced serious problems"... but then later say the actual default rate has moved from mid 5%s to mid 7%s in last year. A rise of 2+ percent... perhaps not a shock considering the further lingering economy? I DO THINK that if this current malaise continues another full year or two, which IMHO is GREATER than 50/50 odds at this time, a bunch more shit WILL hit the fan... including for FHA as this article hints at! On the other hand, without the FHA being a big market player right now, that shit WOULD HAVE ALREADY hit the fan, and we'd certainly be in a much bigger hole now than we are.

Damned if you do, damned if you don't, or so it appears? Said another way... Detox is a bitch!

[Benny Profane]

Listen, I have lived a large part of my adult life in and very close to NYC, which is a place I heard recently described as one of the only in America that responsible, fairly high earning adults rent. Yeah, yeah, rent control and stabilization affects that market, but, still, It's a model a lot of Americans should accept - multi use, high density residential areas, instead of this ridiculous sprawl that has grown all over our country like a cancer. It's God-awful for the environment, and, as we are experiencing, highly damaging to our economy. I'm just stunned when I read about people like the examples thy use in this article - I mean, my head almost exploded when I read this: "“I knew in my heart I could not really afford the house, but they gave it to me anyway,” said Mr. Fullenkamp, 22. “I thought, ‘Wow, I’m surprised I pulled that off.’ ”" Holy Shit. I mean, a thousand bucks a month would get you a pretty decent rental for two in Denver, right? But the woman buys an utter piece of shit that she has to clean out the garbage from just to, you know "own". But, she doesn't fucking own it! IT OWNS HER! And I'm fucking paying for this stupidity!

Look at the chart in that article - for God's sake, over 30% of the loans backed by you and me in '07 (07!! one year into this crisis!) have defaulted. One third! And this is OK? Barney Frank can just fritter our deficit away with a little, 'well, hey, it's preventing worse times, so it's OK" bullshit. Fuck, HE isn't paying for it. He'll be rich until his last breath.

Fuck.

[skier666]

We do not rent to people with bankruptcies....its that simple.

...so maybe that's why Uncle Sam sold her a house instead.

But I agree with Benny on his adult rental theory, especially now. As someone who's closing on the sale of one place and then purchasing another, when adding commissions, fees, inspections, appraisals, etc....it really adds up. In a market that, in my opinion, will be stagnant for quite a while, I examined the rental choice, but my wife was against it....and she's the boss.

[powder11]

NYC is a shithole whether you rent, own or live in cardboard box.

[Benny Profane]

You are missing very much in life, young man. Very much.

[powder11]

You are missing very much in life, young man. Very much.

I'm sure you remember NYC in the 70's; welcome back!

[Benny Profane]

I drove a cab.

Are you American? It's the greatest American city, still. It's part of you, like it or not.

[jfost]

Living in the dorms was pretty fun, good to see some people never gave up the lifestyle...

[Spats]

The culture of home ownership is like a fucking disease in our country. It severely maimed our economy a few years ago, and yet, we can't seem to kick the habit. We are fucked.

But if all of us weren't in decades of debt slavery to banks, THEN WHERE WOULD WE BE?

We'd have a nation of people with the freedom to make their own choices in life -- and that doesn't make any money for Wall Street, so it must be discouraged at every level.

(The word "mort gage" literally means: DEATH PLEDGE.)

Our entire system of fractional reserve banking, fiat currency, constant low-level inflation, and tax breaks for home debt is designed to encourage debt slavery. Think about it: if you're not paying interest to a bank, you are useless to them -- so they make sure that savings is taxed, inflated away, and discouraged at every level, while debt is both tax-free and encouraged at every level.

Another example: did you know that capital gains on gold and other precious metals are taxed at ordinary income rates no matter how long you hold them? That's right, the capital gains rules are written to specifically exclude gold and silver -- because unlike every single dollar in our system of fractional reserve banking, gold and silver do not represent a debt to any bank, anywhere. And the bankers don't like that, not one bit.

[liv2ski]

Originally Posted by Benny Profane
The culture of home ownership is like a fucking disease in our country. It severely maimed our economy a few years ago, and yet, we can't seem to kick the habit. We are fucked.

Benny, most anyone of any real net worth likely made most of it from holding Real Estate for 20+ years. Real Estate allows you to buy a home in the price range you can responsibly afford with 3%-5% down. Say you bought a $200k home 20 years ago. That home today is worth $750k in many cases. As your earnings went up, you accelerated your payments so now after 20 years you have a free and clear home to live in for taxes, insurance and maintenance. Do that with a few homes over your lifetime, with tenants paying your PITI for you and in 20 years your in a very solid position.
Getting in over your head is dumb. Buying real estate is the smartest investment I ever made.

[Benny Profane]

Originally Posted by Benny Profane
The culture of home ownership is like a fucking disease in our country. It severely maimed our economy a few years ago, and yet, we can't seem to kick the habit. We are fucked.

Benny, most anyone of any real net worth likely made most of it from holding Real Estate for 20+ years. Real Estate allows you to buy a home in the price range you can responsibly afford with 3%-5% down. Say you bought a $200k home 20 years ago. That home today is worth $750k in many cases. As your earnings went up, you accelerated your payments so now after 20 years you have a free and clear home to live in for taxes, insurance and maintenance. Do that with a few homes over your lifetime, with tenants paying your PITI for you and in 20 years your in a very solid position.
Getting in over your head is dumb. Buying real estate is the smartest investment I ever made.

Sorry, and, I know you're talking perfectly good sense that worked for a lot of Americans since the end of WW2, but, I'm afraid those days have come to a halt. And, unfortunately, that is the thinking, that, again, is quite valid and made wealth for millions who were smart and responsible with their finances, but blew up the bubble, or, pyramid scheme, if you will, of the housing mania. I call it a pyramid scheme, because it was, in many ways. The top end of the market needed a strong stream of "starter" home owners to keep the buy-up possible, all the while these people in the MacMansions on the Hills made themselves into easy targets for the ambitious and greedy to look up to (baby, someday you'll be parking your Range Rover in front of something like that....). Enter the US government as a cheerleader with tax breaks and easy loans, and, whoops, irrational exuberance. Now, the only people left in the whole daisy chain is the friggin' government and delusional and kinda dumb buyers, who really really have to own a house, no matter what, because........uh....I don't know. Do they actually think they are going to see the appreciation since 1945 or so over the next 50 years? I don't think so. Anyway, you know, that appreciation, averaged out, especially if you delete the bubble years of '02-'06, isn't that hot, anyway. Unless you're rich anyway and bought in Aspen or Manhattan or the Hamptons. But, then, you wouldn't give a fuck.

There's two other problems in your argument. One, most have poisoned the equity in their real estate holdings with stupid easy HELOC debt, basically negating any appreciation - actually, now they're stuck under a debt water line way up there, and, if they're smart, they'll just walk away, which some are doing. The smart ones. Two, there's no way anybody got a home 20 years ago with 3-5% down, and started the ponzi scheme there. If that was the case, this bubble would have popped in 1988.

If you want to somehow envision the next decade, study Japan in the ninties. Yeah, we're different, but the similarities are striking, including the government reactions. It may be a lot worse, even. We are, after all, the largest economy in the world, and the largest debtor nation.

[meatdrink9]

With anything it comes down to smart decisions vs poor decisions. I can understand real estate. I can't understand the stock market.

Will real estate continue to fall in most areas? Maybe. Are interest rates going climb? More than likely. Will we see serious inflation due to all the fake money we're printing? Also more than likely.

I buy houses for less than the sum of the parts. You couldn't build the houses for twice what I pay for them. The deals just keep getting better. The average return we're seeing on new purchases of REOs turned into rentals is 15-20%. And that's paying cash. Imagine what you could do if it was still easy to leverage.

I'm actually noticing a mini-surge in buying in my location. I've talked to quite a few investors who are looking to protect against "hyper-inflation" and are moving in to real estate.

It's going to be interesting to see where this whole financial mess is 10 years from now, but I feel good about where I am and what I'm doing.

[grrrr]

Now that the reality that houses aren't going to sell before the "end of the summer", there are some serious discounts going on. There's a house near me that was trashed by renters, just sold for less than the lot would have cost 18 months ago. which is fine if you're going to rent it out or live in it, not so much if you're expecting it to appreciate. Prices are still falling.

I pay my last alimony check on February 1. February 15 I will be eligible to be a "first time buyer" again. I know prices will keep falling through the winter...will they stop falling in the spring?

[powder11]

I drove a cab.

Are you American? It's the greatest American city, still. It's part of you, like it or not.

NYC is kind of like taking acid. The trip is fun, fast and furious, but not something you're going to do every day or even rush back to anytime soon and the people who do are freaks.

[ass-to-mouth]

Will real estate continue to fall in most areas? Maybe. Are interest rates going climb? More than likely. Will we see serious inflation due to all the fake money we're printing? Also more than likely.

As long as real unemployment continues to stay around 15%-16%, I don't think inflation will become a major issue.

[XXX-er]

Realestate goes up and realestate goes down , its not a guaranteed slam dunk and a 200K house bought 20 yrs ago is only worth 700K when you actualy have the money IN your hand period

I sold out of realestate at THE peak ,made some coin ,5 yrs previous I would have had to throw in some cash to pay out the mortgage so I was happy to gcome out with $$ to follow a woman to a small mountain town ,due to laziness and indecision Its still in cash not the stock market or equities so I look like a fucking genius completely by mistake ... so I don't have to work

I might buy something again if the deal is right BUT when/where is the bottom?

[Platinum Pete]

I might buy something again if the deal is right BUT when/where is the bottom?

We're 62 pages into finding the bottom and I don't think anyone is closer to the answer to that question.

[XXX-er]

We're 62 pages into finding the bottom and I don't think anyone is closer to the answer to that question.

especialy the expurts ,the people who basicly got the world into this mess are now the people being asked all the time for a quote on if the recession is over yada yada but I can't see how they would know if they didnt see this all coming

too many domino's falling for anybody to know but I think its still going to get worse

the whole thing has zero effect on me

[Spats]

As long as real unemployment continues to stay around 15%-16%, I don't think inflation will become a major issue.

I think the upcoming lump of Alt-A and ARM defaults are the driving force here, and that employment is more the effect of monetary destruction than the cause. But you are correct that it's tough to inflate with unemployment so high: who's going to borrow the money into existence?

(Note: in a fractional reserve banking system, money is created when debt is issued, and money is destroyed when debt is paid back -- or defaulted on. I know you understand this, a2m, but it bears repeating, because most people never learn it even in college econ class.)

I think the main issue re: dollar strength or weakness isn't domestic money supply: it's the rest of the world's ability and desire to keep financing our trade deficit.

[Benny Profane]

http://www.pbs.org/moyers/journal/10...ef=patrick.net

[St. Jerry]

http://www.pbs.org/moyers/journal/10...ef=patrick.net

oh no, those big bad capitalists.

[Spats]

oh no, those big bad capitalists.

It's not capitalism, it's theft. These people have stolen TRILLIONS OF DOLLARS from you, me, and every other American. They have gambled with our money, kept the winnings, and made us pay their losses.

Until you understand that and do something about it, you will continue to have tens of thousands of dollars stolen from you, personally, every year.

Ever wonder why Hank Paulson, Jamie Dimon, and all those other executives are worth BILLIONS, yet you are poor? It's because they understand what they are doing, and you don't.

[ass-to-mouth]

DJIA hits 10,000!!! The recession is over!!! Wall St is ALWAYS right!!!

U.S. FORECLOSURE ACTIVITY INCREASES 5 PERCENT IN Q3
By RealtyTrac Staff

U.S. Foreclosure Activity Sets New Quarterly Record, Up 23 Percent From Q3 2008

IRVINE, Calif. – Oct. 15, 2009 — RealtyTrac® (realtytrac.com), the leading online marketplace for foreclosure properties, today released its U.S. Foreclosure Market Report™ for Q3 2009, which shows that foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 937,840 properties in the third quarter, a 5 percent increase from the previous quarter and an increase of nearly 23 percent from Q3 2008. One in every 136 U.S. housing units received a foreclosure filing during the quarter — the highest quarterly foreclosure rate since RealtyTrac began issuing its report in the first quarter of 2005.

Foreclosure filings were reported on 343,638 properties in September, a 4 percent decrease from the previous month but a 29 percent increase from September 2008. Despite the monthly decrease, September’s total was still the third highest monthly total since the RealtyTrac report began in January 2005, behind only July and August of this year.

“Bank repossessions, or REOs, jumped 21 percent from the second quarter to the third quarter, corresponding to jumps in defaults and scheduled auctions in the previous two quarters,” said James J. Saccacio, chief executive officer of RealtyTrac. “REO activity increased from the previous quarter in all but two states and the District of Columbia, indicating that lenders may be starting to work through some of the pent-up foreclosure inventory caused by legislative delays, loan modification efforts and high volumes of distressed properties.”

Nevada, Arizona, California post top state foreclosure rates in third quarter
Nevada continued to document the nation’s highest state foreclosure rate in the third quarter, with one in 23 housing units receiving a foreclosure filing — nearly six times the national average. Foreclosure filings were reported on 47,925 Nevada properties during the quarter, an increase of nearly 10 percent from the previous quarter and an increase of nearly 59 percent from the third quarter of 2008. Nevada REO activity in the third quarter increased 29 percent from the previous quarter and scheduled auctions increased 26 percent from the previous quarter, but defaults decreased 8 percent from the previous quarter.

Arizona posted the nation’s second highest state foreclosure rate in the third quarter, with one in every 53 housing units receiving a foreclosure filing, and California posted the nation’s third highest state foreclosure rate, also with one in every 53 housing units receiving a foreclosure filing during the quarter.

Other states with foreclosure rates ranking among the top 10 in the third quarter were Florida, Idaho, Utah, Georgia, Michigan, Colorado and Illinois.

Six states account for more than 60 percent of nation’s third quarter total
California, Florida, Arizona, Nevada, Illinois and Michigan accounted for 62 percent of the nation’s total foreclosure activity in the third quarter, with 579,541 properties receiving foreclosure filings in the six states combined.

With 250,054 properties receiving foreclosure filings during the quarter, California accounted for nearly 27 percent of the nation’s total. The state’s foreclosure activity decreased nearly 2 percent from the previous quarter thanks to a 10 percent drop in default notices, but scheduled auctions increased 4 percent from the previous quarter and REOs increased 12 percent from the previous quarter.

Florida foreclosure activity decreased less than 1 percent from the previous quarter, but the state still posted the second highest foreclosure activity total for the third quarter. Foreclosure filings were reported on 156,924 Florida properties, a 23 percent increase from Q3 2008. Default notices in Florida decreased 6 percent from the previous quarter while scheduled auctions increased 5 percent from the previous quarter and REOs increased 16 percent from the previous quarter.

Arizona posted the nation’s third highest foreclosure activity total in the third quarter, with 50,342 properties receiving a foreclosure filing during the quarter — a 5 percent increase from the previous quarter and a 25 percent increase from Q3 2008.

Nevada posted the nation’s fourth highest foreclosure activity total, with 47,925 properties receiving a foreclosure filing in the third quarter, followed by Illinois, with 37,270 properties receiving a foreclosure filing, and Michigan, with 37,026 properties receiving a foreclosure filing. All three states reported increasing foreclosure activity from the previous quarter and from Q3 2008.

Other states with foreclosure activity totals among the nation’s 10 highest were Georgia (33,385), Texas (29,838), Ohio (29,645), and New Jersey (18,108).

Report methodology
The RealtyTrac U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing reported during the month or quarter — broken out by type of filing at the state and national level. Data is also available at the individual county level for both Q1 2009 and March 2009. Data is collected from more than 2,200 counties nationwide, and those counties account for more than 90 percent of the U.S. population. RealtyTrac’s report incorporates documents filed in all three phases of foreclosure: Default — Notice of Default (NOD) and Lis Pendens (LIS); Auction — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank). If more than one foreclosure document is filed against a property during the month or quarter, only the most recent filing is counted in the report.

[Benny Profane]

The Nevada side of Tahoe is looking real sweet for BP's "retirement" home.