After an 1.8% drop in ‘07, the annual O.C. economic outlook from Chapman U.’s econ professors foresees an 8.1% drop in the median price of a resale single-family home in 2008. (This pegged to the Realtor number!) The profs write …
Over the 2001-06 period when home prices appreciated annually at double-digit rates, we argued vigorously that the economic fundamentals (i.e. income, job growth, and mortgage rates) did not justify the historically high levels of housing demand and home price appreciation. Since 2001, Orange County created about 119,000 payroll jobs. With the exception of 2003, however, most of the new jobs were in below-average salary sectors while the jobs lost in 2002 were in higher-paying sectors.
With sluggish income growth and rapid home price appreciation, housing affordability index deteriorated sharply since 2002. In 2006, a potential homebuyer with median family income of $76,300 needed 49.9 percent of family income to purchase a median single-family home, even after taking into account the tax savings of deducting mortgage interest and property taxes.
The recent decline in short-term interest rates will not remedy borrowers’ problems who are facing interest rate resets on their mortgages. Notices of defaults and foreclosures will continue to be around for a while. With weak housing demand and high level of inventory, our forecast calls for a decline of 8.1 percent in the resale single-family home prices in 2008.
The previous downturn in the housing market in the early 90’s was not short-lived. In Orange County, home prices declined for 54 months from the peak to the trough, decreasing 17.7 percent. It took another 51 months for the median price to reach back to its previous peak. A similar pattern occurred in many other regions of the state. Although there were significant job losses in the 90’s that sharply reduced demand for housing, in the current cycle, there is a different problem: a lack of housing affordability. Not only that, the job market is beginning to weaken considerably. The combination of these factors suggests that the county is facing a multi-year downward spiral in home prices.
(For other forecasts and to see what Chapman predicted last year, CLICK HERE)
Like I have been saying. It is all about affordability. It has seemed so obvious for so long, and stated well in the above column.
Interesting that it implies affordability at -8.1%. I guess Nanowest’s -48% prediction may not come to pass. And since when should the median earner be rewarded with the median home? Let’s just give away houses for free, since they no longer require sacrifice.
By the way….along with your resets going away, so do your additional foreclosures and new forced/fire sales……did you guys really think the government was going to let the housing market go into the toilet without doing anything…..really?!?…..
Truthi,
You need to read the article again and not try to twist to state what you think is a fact. It only states that they see a fall of prices by 8.1% and NOT that this will bring homes into the affordable range.
It clearly states that families that make a median priced income would need 49.9% of their income to purchase a median priced home in 2006. This flies in the face of what you had stated should be 36%.
No one is saying a median priced earner should be able to buy a median priced home. It is just saying that homes need to be more affordable.
Again I ask in the year you bought what was the ratio to median income and the median home price? Since I dont know when you bought I cant do the calculation for you. I can find the data if you tell me what year you bought.
Also again what was the price of your home vs. your income? How in line was it to the ratio in the last question and the ratio stated in the article?
If the differential is great, why should anyone expect anything different today?
What has changed?
Samson, all my examples used prices from 2007, not 2006. And your constant personal inquiries are beginning to grate on me. I have always, even on my very first home, used substantial down payments. Even on my first home, decades ago, I put down $51,000. On my last home, I put down $500,000. I can afford more home than I have even now because of this phenomenon. I know I will now hear about how “distasteful” I am being in discussing money, even though you have badgered me into it. Which reminds me: Graphrix was pattting himself on the back today at the IHB going on about how he never discusses his income or assets. I remind you, Graphrix, of your past offers to sell your house at its appraised value, which if I recall, you proclaimed to be in the $1.1 million range (or so).
SOB,
Dont be so naive. First of all it is from before July 30, 0f 2005. That may or may not help all 3 year arms but could hurt 5 yr. It wont help flippers, it will only help those that can afford the loans and are paying on time. Also does this involve all lenders or only certain ones.
What is to keep these lenders from selling these loans to banks that are not participating. I also have an assumption that there will be some conforming limits in relation to overall value of the loan.
Again you dont answer my question so I have my answers. Thanks!
Well, I guess someone already posted that. Well, you can read it again.
When exactly were these “good old days” when people didn’t stretch to buy a home in OC.
Please have “stretched” to buy homes in OC for the last 30 years: getting second mortgages, borrowing from family members for down payments, using adjustable rate mortgages, getting second jobs, keeping their car a little longer so they don’t have a payment, etc.
While you might never do any of the above, most people who own homes in OC do this, and have done this for some time.
It is the reality, deal with it.
The bailout also does not seem to help alt-A or prime borrowers with adjustable rates, who will be hurting equally bad with future rate increases. Especially in the more affluent areas of OC, most million dollar prime adjustable rates made later than 2005 are upside down and will be unable to be refinanced, and it does not appear that their rates will be locked. My impression is that the market unraveling will continue and this will help only a small percentage. What happens in several years when the rate lock expires? Prices likely will have moved sideways at best, and at worst these people will still need to foreclose and this pain will drag on into 2015. That will be great for nobody.
I am not naive, you are for thinking that the Fed’s won’t cram this down the throats of all the lenders. If GWB won’t do it, Hillary will.
You have to step back and see the larger picture. If the I-banks and the regular banks are forced to “realize” the potential losses on their portfolios all hell will break loose.
This is a “bailout” for these financial institutions, not the borrowers. When you finally realize this, you will understand why this great plan for those poor souls that might “lose their home” will pass easily.
SOB, don’t you also love that they don’t want to tap the IRA to buy a home? That was standard practice for decades. Now they don’t even want to eat out less.
I love how they are touting the fact that the freeze won’t help the people who can afford their loans. Pure comedy.
” Especially in the more affluent areas of OC, most million dollar prime adjustable rates made later than 2005 are upside down and will be unable to be refinanced, and it does not appear that their rates will be locked”
Where the hell did this come from? These people know diddly squat.
I love how they believe the freeze is going to magically solve all the problems in the real estate market. Pure comedy ;)
Do these silly little professor’s really believe that homeprices fell a mere 1.8% in ‘07? I guess its the same silly mathemeticians that think that ‘06 was the peak and not ‘05.
We are now 2 years into the slowdown, not 1. The median is not a very good proxy for estimating market performance. Median $/sq. ft is much better.
I would suggest that these professors walk outside of their ivory towers and into any OC neighborhood. Prices in many neighborhoods have fallen as much as 30% since their ‘05 peak.
caliguy2699 Says:
December 5th, 2007 at 3:08 pm
I love how they believe the freeze is going to magically solve all the problems in the real estate market. Pure comedy ”
No one is saying the freeze will magically fix eveything. It will most likely slowly stop the bleeding. Lets face it, you guys feel threatened by the reset freeze because you see your huge profits evaporating.
It will also help unfreeze the credit markets, because the biggest problem facing them was not actual defaults, but the fear of defaults and what was unknowable.
I think I missed something. What huge profits? As far as I can tell, the vast majority here just want to buy themselves a modest house without burdening themselves with huge amounts of debt and wacky loans. I don’t think that’s unreasonable at all. In fact, it was exactly what you could do right here in OC up until the boom really took off.
Check out the last time prices in OC started getting really unaffordable compared to incomes - that was in the late ’80s. Guess what happened right afterwards.
caliguy2699,
The vast majority on this blog are speculators. The few first-time buyers on the blog have a huge sense of entitlement and would not consider buying a “modest” house.
Shockg
Right on target !!!
shockg,
your reference to someone here as small time potato is funny.
Sick_Of_Bears Says:
December 5th, 2007 at 2:53 pm
When exactly were these “good old days” when people didn’t stretch to buy a home in OC.
—–
About 1996 was close to the last time…..before that? — darn near forever.
I remember when nearly EVERY young family with children could and did buy in nice areas w/o bogus financing.
Hey, I remember when they wouldn’t (and didn’t need) the wife’s income —- the mortgage company didn’t count it if she was childbearing years unless there was a letter declaring her intent to have no more children and continue working.
It needed to be believable or no go.
This is too funny……….three posts from the same person…..we’re witnessing a breakdown:
———
# shockg Says:
December 5th, 2007 at 3:39 pm
caliguy2699,
The vast majority on this blog are speculators. The few first-time buyers on the blog have a huge sense of entitlement and would not consider buying a “modest” house.
# usedtoreadtheregister Says:
December 5th, 2007 at 3:40 pm
Shockg
Right on target !!!
# buffy Says:
December 5th, 2007 at 3:41 pm
shockg,
your reference to someone here as small time potato is funny.
——-
A lack of supporters and she creates her own fan club !!!
she also order bush to carry out the “bail out”.
yes, I have huge sense of entitlement. If by that you mean that I will NOT pay your what you think your house is worth but what the market is telling me it’s worth. Right now, the market is telling me it worth a lot less than you think it is. If I wrong then too bad for me. But something, really, really tells me I’m making the right decision by not buying into the real estate ponzi scheme.
and she look like scarlett johansen.
I can’t believe they keep hammering away with the “they’re all the same person” mantra. I honestly think they don’t see how stupid that is. First, anyone with a brain knows it’s not true, and second, it is not an argument at all. It makes it look like they have nothing else.
I think Truthi, ROC, SOB, are all paid shill bloggers. Best to ignore them.
Ah, but they can’t. Just like you can’t.
She pays me $5.00 per day
Beachchic, I believe that Roc/Thruthi/Stayathomemom are all the same people, Shockg is just him and maybe could be a reincarnation of….Ken. Jimmy is one of a kind and is hanging low, must have seen a decrease in CDM and is in shock in the fetal position with a bottle.
she pay me $3 a day.
Hey, where is Stay_At_Home_Mom? We missed you!
Woohoo, the blog’s all ours! Partaaayyy.
Roger, FYI, I ran two cities median price per square foot from MLS data for 2005 through 2007. I didn’t run the whole OC, because the MLS couldn’t handle it and wouldn’t let me download more than about 2 cities at a time.
Aliso Viejo’s numbers were $384.50, $396.49, and $378.46. Laguna Niguel’s numbers were $411.96, $431.33, and $410.23.
It would seem the peak years in these cities was 2006 and the decrease has been between 4.5% and 5% so far this year. 1.8% sounded low to me too.
Also, I think 2005 can still be the peak despite these numbers. These areas sold a lot of homes early in 2005 and prices grew by about 20% during that time. Price per square foot could have peaked mid to end of the year and we’d still get these numbers.
If you get an adjusted loan and then sell during that period, would have to pay the differential on the lost interest? I think that should be part of the deal, especially if the prices shoot back (as if) according to the delusional bulls. Or better yet, the price should be adjusted downward to reflect the cost of buyer letting the seller stay in the home essentially renting from a future owner (who most likely could afford to live there anyway).
Ah, Truthi, or whatever you go by these days, you haven’t affected my opinion at all; therefore, you’re easy to ignore.
One can hope, beachchic.
Coupling this comment with the “enemies” comment really paints a stark and well a disturbing and a little bit of a sad picture.
# Truthiness Says:
December 5th, 2007 at 4:05 pm
Woohoo, the blog’s all ours! Partaaayyy.
Yes..party time you have vanquished your enemies, time to hi five yourself Roc.
I was under the impression that subprime problems don’t effect OC because there were that many people using them here and that only the cheap areas were effected.
I see the joke is lost on you Pattie.
Patricio:
Please re-read my comment. There is no money changing hands, that is the point. Here’s what the Fed’s don’t want:
- Rate resets, borrower stops paying
- Lender forecloses
- Certain CDO tranches have to recognize permanentlosses because the higher reset rates they were counting on for yield are gone forever
- Lender sells for less than the original loan amount due to depressed market
- Lender/CDO has to recognize permanent losses to principal
This plan has nothing to do with borrowers and everything to do with saving the skins of the lenders and/or investors.
THAT is why this plan will pass.
“This plan has nothing to do with borrowers and everything to do with saving the skins of the lenders and/or investors.”
What a cynical point of view. I agree completely.
“Sick_Of_Bears Says: … did you guys really think the government was going to let the housing market go into the toilet without doing anything…..really?!?…”
No. Gov will step in. When the housing price shot up unreasonably, Gov. did not do any thing to “protect” the home buyer because that’s what Bush’s Administration wanted: the ownership society. The more people “own” house, the better. Let the next Administration clean the mess. Just like he said about the Iraq war.
Good job.
Chapman predictions during housing boom were incorrect, too. It would be great if reporters would sit an open house on the weekends with real estate agents to get feedback from people that want to buy homes. Many are people that no longer want to rent homes and families that need more space. Consumer confidence is down because the media is reporting doom and gloom. Interest rates have gone down and inventory is plenty. This is a great time to negotiate with a seller or a bank. It is always better to make payments to something that you own. Live in your own home and stay there for 5 years. Stocks won’t shelter you from the elements.
“8.1% drop in the median price of a resale single-family home in 2008″ is reasonable and bearable. I am afraid that house price nosedives along with OC housing slump and local economy while foreclosure, unemployment, gas price, property taxes are skyrocket.
It’s really funny how shockg stereotypes all 1st time home buyers. I hope to be one within a year or so. I’m single and make decent money. I’m sure that I’m above average. I’ll have to look for a 2-bedroom condo if I’m lucky and it will have to be somewhere like Corona, Norco, or Murrieta for me to be able to afford even that. So I can speak for single first-time buyers. I don’t feel entitled, I feel disgusted. You have to make $120,000 a year as a single person to be able to qualify for a decent loan just to buy a small condo in OC. That is why things will continue to crash until more people can afford a small place to live. I guess if you’re all 50 and married making $200,000 as a couple then you’re fine. But believe it or not that’s not even a majority of Irvine, much less the rest of OC. I’m 31 and was priced out of the American dream in OC well before I was making any kind of money to buy real estate. Most people my age are in the same boat. Move to Arizona or Nevada I guess, that’s the solution.
The third bailout in 25 years. Real estate/banking isn’t an industry, its’ a welfare state.
“The third bailout in 25 years. Real estate/banking isn’t an industry, its’ a welfare state.”
Well said!
“The deal is completed. Lots of details here”
Nothing is agreed upon until the actual owners of the debt securities backing these loans agree to take reduced cash flows for 5 years AND forgoe their right or remedy in the case of default (forclosure) for 5 years.
Their lack of “agreement” may generate lots of business for the lawyers….
But if they have no choice but to agree?….. Well that will add a big additional unknown to the market will it not? This big unknown is political/regulatory risk. If you invested in these securities, and the government now comes along and unilaterally sticks it to you (reducing your cash flows and rights), will you not wonder what other unilateral edicts will be made in the future? Investors are not going to let themselves be put in this position again. This will add fear, and make it even less likely that people will want to invest in MBS debt structures in the future. Not the desired effect.
So where does this lead? It will force the mortgage market back to the old lending model with loans held on the books of originators/banks.
That brings up the next question. Even for those of you that are bullish on the housing/credit scenario….if you had say $20M in funds now, and you were going to invest in mortgages, what down payment would you personally demand? Put yourself in the lenders shoes for once. Lets make it even more meaningful to you. Lets say you have $500K saved, and you decide to invest it all by loaning it all to one homebuyer. How much DP will you want to protect your investment against possible declines in values paired with default. I personally could not imagine demanding anything less than 20% in today’s environment.
These are the sorts of things that happen at the margin when unintended consequences of these sorts of ‘plans’ play out. I am not saying the plan will kill securitization. But it will very likely diminish it because of the precedence it sets, and the fear and uncertainty about future regulatory interference. If the mix of loans shifts away from securitization, and back the the old school model…the outcome is obvious. Lenders who hold loans on their books whole will be more particular about the terms of the loan. You would be particular if it were your money. So will they. This is how credit tightens. It is not that credit disappears, and loans are not available. It is that loans are not available at the same terms, and with the same ease of approval as in the past. Basically, it is a reduction in leverage, on net.
The mistakes were are dealing with now were made 6 months to 3 years ago. They can not be corrected by action now. Action now will only distort the market, and produce unexpected results.
“Many are people that no longer want to rent homes and families that need more space. Consumer confidence is down because the media is reporting doom and gloom. Interest rates have gone down and inventory is plenty. This is a great time to negotiate with a seller or a bank. It is always better to make payments to something that you own. Live in your own home and stay there for 5 years. Stocks won’t shelter you from the elements.”
All I could draw from this posts were the following myths:
- Problems with the RE market are caused by the media.
- Now is a good time to buy.
- Families can buy and at OC prices just because they feel the hitch to do so.
- Stocks aren’t a better investment than RE is.
As for this plan helping creditors…I don’t think so at all. It helps NO ONE. It is nothing but posturing and political grandstanding so that those in power can point to their plan and say…”see we did something!”.
BRANTW well said watch how the truthis ignore your
post… why? they cant logically refute it
I would also argue that the extension of some of these 7%-10% rates could actually help with cashflow to these investors. These are people who, absent collateral declines, might have moved on to conforming rates, i.e. been accelerated.
Exuse me: “Prepayment Speed Assumptions”
Thanks for the intro rants. I hope I didn’t disappoint.
“You have to make $120,000 a year as a single person to be able to qualify for a decent loan just to buy a small condo in OC. That is why things will continue to crash until more people can afford a small place to live. I guess if you’re all 50 and married making $200,000 as a couple then you’re fine. But believe it or not that’s not even a majority of Irvine, much less the rest of OC”
Excellent points. The current price levels in many markets were driven up far above long term ratios of price to rent and price to income. The mechanism that drove up prices…..LEVERAGE. It is as simple as that. As leverage is taken away, prices will drop. As prices drop, leverage is taken away. There is nothing magical or mysterious about it. And the process takes a while.
Look at the ratio of prices to rents in OC (or anywhere is S. CA) in 93-96. THERE IS NO REASON WE CAN NOT RETURN TO THOSE RATIOS. NONE.
Actually go and do the math. Take those metrics and apply them to today’s market…. Start with rents and incomes…and multiply up. Things cost what people can afford. It is not more complicated than that.
I live in a part of the country where houses are cheap, and never really seem to increase in price. Thus, instead of making huge interest payments my mortgage is paid off and I invest after that. I have bonds that have lost value from this “subprime” mess. I will invest elsewhere now, and won’t trust any mortgage related bonds again. For others in the same boat, may I suggest Perth Airport bonds. Stable country, backed up by assets, protecting currency against inflation with high interest rates.
Alexander Hamilton (you know the $10 bill guy) noted that the popular vote should not always win, and used the example of debtors vs. creditors: debtors are usually in the majority (e.g. mortgage), but if they are allowed vote to erase their debt, the system crumbles.
shockg Says:
“The vast majority on this blog are speculators. The few first-time buyers on the blog have a huge sense of entitlement and would not consider buying a ‘modest’ house.”
It’s quite amusing when bulls cheer on government/Fed welfare for RE but yet accuse bears of having a sense of entitlement.
The one true quality of U.S. (not pure) capitalism: When you’re sucessful, you hide behind the veil of free market economics. When you’re in trouble, you demand social welfare.
I was going to challenge David Poggi’s math, but decided not to. His figures are a bit on the melodramtic side. An income of $120,000 at 28% DTI would allow for a housing outlay of $2,800 per month. That is enough for a three bedroom townhome in the very best towns in Orange County. Assumign he wants a two bedroom and were open to Rancho Santa Margarita or some such place, he could easily afford on a lot less than $120,000. It did make me misty though.
Tough to swallow the Bail-Out. I had the opportunity to purchase on a Loan if I lied about my income and chose not to. Until the Bail-Out, I thought my parents had raised a good person and my honesty would serve me right. I appear to be horribly wrong, all because I wouldn’t tell a little white Lie.
This whole thing has some incredible similarities to what the USSR did with Market/Price fixing which in the end hurt them quite badly. The issue was the loss of confidence in Contract Law from the International and Investment Communities. Borrowing in Russia halted because no one would lend them money except their own Government.
It seems to me we are endangering 200 years of Contract Law in America, I truly hope I’m wrong and that the powers at be understand and have a long term(20+ year) plan. Going from the worlds Largest Creditor Nation to its Largest Debtor Nation in ten years, than breaking Financial Contract Law seems imprudent to me.
I just cant lie on a contract, looks like I’m doomed. At least I have family and freinds who respect me, its a good compensation.
Best to Bears and Bulls alike, opposing views create discussion and knowledge no matter the tone.
Panic mode…
We obviously have a hard landing and the markets are in serious enough trouble, that again, the government needs to intervene in an effort to prevent a full blown meltdown.
Remember we were hoping for an orderly correction but now find ourselves in the middle of a full blown crises or worst.
Looks like the start of a, fix it as you go, patched up, Japanese style correction.
The silver lining in this correction is some of these prognosticators will look at affordability as an indicator of future price adjustments and if they are moral will warn future investors/buyers that the market maybe dicey when it becomes as it is now and the last 2 years or more. If not then they are the sharks and bubble merchants that most bears think they are.
RE bulls: Repent or go to your maker at your own peril!
I am not sure what assumptions MBS investors make as to the number of loans that remain post-fixed rate expiration (and this is of course important), but the basic idea guiding mortgage-backed securities (as stated by PIMCO) is:
“Because mortgage prepayments, defined as early repayments on mortgage bonds, typically accelerate when interest rates fall, MBS investors may need to reinvest their money in a low interest-rate environment. Conversely, when rates rise, prepayments tend to slow down, and the investor receives lower than expected prepayments when reinvestment rates are relatively high. To compensate MBS investors for this uncertainty, an anticipated level of prepayments, based on historical data, is factored into the price and yield of any MBS”
We are currently in an interest rate environment (even without further cuts) that would make a continued stream at 7%-10% above what a reinvestment rate would likely be. This assumes, of course, that maturities are not interfered with. I may be wrong, but I believe this would benefit MBS holders.
# BrantW Says:
“Look at the ratio of prices to rents in OC (or anywhere is S. CA) in 93-96. THERE IS NO REASON WE CAN NOT RETURN TO THOSE RATIOS. NONE. Actually go and do the math. Take those metrics and apply them to today’s market…. Start with rents and incomes…and multiply up. Things cost what people can afford. It is not more complicated than that.”
Brant, I think this assumes that supply is unlimited. We have 600,000 more people in OC than we had in 1990 and no more land. Since there are more people every year looking for a place to live and OC has significant advantages to Riverside or San Bernandino, people will pay a premium to live here and it will only get worse. That, I think is why in OC, at least, you can’t assume you can simple return to the affordability ratios of the mid 90’s.
Jayb\hub
Only because RE markets over-correct in both directions can I disagree. Prices will fall below what they should because that is the function of RE markets. They don’t react like stock markets. The real question for those concerned with values both current and future is can you recognize it when it happens? Can you step back and with callous evaluation say that things are under or over valued? The only way I know is too look at history and that being used we have more to fall. Try to enjoy the ride because stopping this cruise ship takes months if not years.
It’s a new world too. I wouldn’t hang my hat on history.
Sick_Of_Bears Says:
December 5th, 2007 at 2:33 pm
By the way….along with your resets going away, so do your additional foreclosures and new forced/fire sales……did you guys really think the government was going to let the housing market go into the toilet without doing anything…..really?!?…..
Now that these investors are getting screwed, what makes you think they will continue to invest in mortgages unless you have a lot of money reserves?
What makes you think that people are going to continue to refinance, cash out, payoff their credit cards, and start over again?
What makes you think that many people will be helped by these resets?
When people submit their application to stop the reset, they will be showing that they are making $10 an hour instead of the $30. (Can I say FRAUD-By the way, filling out a loan application falsely-1003-is a Federal Crime).
The bailouts assumes that people are not going to want to move, that people are able to afford the taxes, insurance, mello-roos, special assessments and basica keep of the house without having to cashout in a heart beat.
As a person who is looking for a house, I am happy the government got involved. Now I know this market will be screwed for the next five years (No, I am not lieing incase you are wondering Truthiness.).
I do loans and I do real estate and I know what is happening.
P.S. Truthiness-Have you made any offers lately, Spring is around the corner you know.
Yeah, once prices increase they are permanent. So was the price of oil. Seems it dropped 10% last week. Everything only goes up? I lived through the 90’s and watched RE drop 30%. I know it happens. Maybe this will be your moment of clarity! Until then you can drag as many people as you want into your delusion. You can make their house payments for them when they are hurting. Keep assuring them they can hold on a little longer and borrow more. Help is just around the corner. Try a little compassion and reality in the same dose instead of false hope. This is far from over and if you really cared you wouldn’t continue the charade.
Sorry for tirade, this all is a little dejavu.
I think Truthiness is a fictional character, like a rendition of one of the Phil Hendrie personages. Same with some of the others that have appeared on this blog …
Don’t know Phil Hendrie? Wikipedia; “The Phil Hendrie Show became renowned for its unique and controversial guests, those guests were not real people at all—they were fictional characters created and voiced by Hendrie himself.”
It was quite a funny radio show. New and otherwise unaware people would call in and get in heated arguments with his ‘guests’ … on and on it would go. Could it be that Truthiness, Ken, Mac, Jimmy, Johnson … are ‘voiced’ by Lasner or a register stand-in (or worse, a NAR ghost writer)? It makes more sense than the alternative …. that these are just semi-intelligent but fully belligerent people who have nothing better to do for HOUR AFTER HOUR EVERY SINGLE DAY than yak ill-informed RE market optimism.
PLEASE provide some useful content while you’re here ! We’d love to hear RELEVENT arguments for why and how “this all” will end well for those who bought since 04 - specifically those masses who couldn’t really afford to do so.
truthi your bloviating impresses no one with real intelligence you probably just googled “how to sound intelligent when talking about mortgage finance”… your blather said nothing… and proved even less
but it does give us a better understanding of why there was
a bubble to begin with… some people will believe anything
even if they dont understand it …. howd I do
TA TA
lookout, do you know without a doubt that this is true?
“Now that these investors are getting screwed, what makes you think they will continue to invest in mortgages unless you have a lot of money reserves?”
Nothing is guaranteed as to duration in mortgage-backed securities. Assuming that prepayment penalties are expired, and that there is no cramdown of principal (an important if), invesors could very well be better off to continue to earn these above-market rates of 7%-10%. There is never a guaranty that a loan won’t be paid off early, and in fact, most are. If you don’t have evidence to the contrary, you shouldn’t assume. I don’t believe that anyone is necessarily “getting screwed”.
rants, I actually have some experience in these types of securites.
Housing prices in OC are seen falling by 8.1% next year, according to Chapman, then could plunge another 28%.
Chapman University in Orange County concludes that California will plunge into negative territory for at least two quarters in 2008.
UCLA forecast says the slowdown will be longer and more severe than it previously projected, in part because the housing slump is destroying more financial jobs than expected. It now sees the loss of approximately 74,000 construction jobs and 25,000 financial jobs during the downturn.
California lost 15,800 jobs in October
Fannie Mae warned investors Wednesday that its losses would mount next year from bad home loans.
UCLA says “no recession”.
Truthi:
If no one is getting screwed, why is there at least to articles in the Wall Street Journal (not exactly a liberal paper) full of stories that one type of investment vehicle after the other are either in trouble or have gone under.
Further, what I meant to say is that no one is loaning unless they have a big downpayment and lots of reserves.
Oh, and read the Wall Street Journal. It seems like that hard money lenders have been very busy the last six months.
Dunno why?
One example given was a person calling up the hard money lender asking for a loan on his house and he has 60% equity. He cannot get a traditional loan due to income problems.
A hard money lender’s appraisal is sliced and diced before a final amount is given. Go figure.
Further, for you to even suggest that maybe nobody has been hurt just shows that your are not in the same city, let alone ball park.
And the highlight:
“Still, he projects the economy will remain sluggish for another couple of quarters before starting to rebound in the second half of 2008.
The forecast estimated the housing slump cost the U.S. economy a percentage point of growth this year, or one-third of the typical 3 percent annual rate of increase.
Leamer predicted U.S. housing prices will continue to drop, and levels of new construction will remain depressed, through 2009.
Even so, the housing drag on the national economy will “substantially abate” by mid-2008, with housing starts bottoming out by next summer to about 900,000 units, Leamer said.”
Then stop the delusion. People are getting hurt by your ramblings. Is this your intent? Seriously?
“If no one is getting screwed, why is there at least to articles in the Wall Street Journal (not exactly a liberal paper) full of stories that one type of investment vehicle after the other are either in trouble or have gone under.”
Most of these losses are from a combination of existing foreclosures and, more significantly, fear of the unknown. Since this stuff has been sliced and diced, and commingled with other forms of debt, no one knows what it is they have or how to value it.
Greg, go sit at the little kid’s table.
Truthiness Says:
December 5th, 2007 at 9:36 pm
UCLA says “no recession
These were the same morans (less Thornburg) that were calling for the housing market to slow and even reverse around 2002 and 2003.
Glad I did not listen to them.
Yes, if ecomists had a crystal ball, they would all be millionaires by now.
You see, what the moran forecasters did not realize early on was that the loans being given were untraditional subprime loans that had not been as widely available since the 1920’s. They called it wrong five years ago and they are calling it wrong now.
Who cares about bottoming out.
Chapman says housing will sit on the bottom for 5 to 6 years.
You won’t break even for a decade.
Go finance $600,000 or $700,000 on a home and watch it evaporate for years to come.
Or did you already do that?
Sorry, forgot to mention:
No trouble here, move on.
“Oh, and read the Wall Street Journal. It seems like that hard money lenders have been very busy the last six months.”
Lookout, the maximum LTV for hard money has always been 65%. This isn’t any knee-jerk reaction to events.
So Chapman sees a decline of 8.1% … great
I love these articles and reading Lansners blogs as well as another dozen sites and opinions on OC housing,
it’s headed down, even with the rates declining, I keep a close watch on some neighborhods in coastal OC, namely Laguna Beach and south Laguna Beach
Truthfulness.. you have far too much time on your hands,
your arrogance and spiteful insulting posts only serve to expose you weak self esteem. Everytime you post, you rid yourself of credibility.
You’re clearly capable of complex thought which is admittedly beyond the realm of some of the regulars on this board, but why continually demand to represent the more loathesome human characterstics is simply disgusting.
Your snobbish retorts are stereotypical for what makes people thing of orange county as the center of snotty fakes,
Truly, the only thing your being truthful about is how shallow and insecure you are, and how you’re spending far too much time posting on this board…
The high end IS finally starting to decline, it did this during the last downturn where the low end dropped first then it moved up to the higher end homes, luxury homes are largely on their own as the majority are cash purchases and for buyers in a completely different socioeconomic class altogether. The 1.5mm level is now starting to see distinct signs of pricing weakness expecially in areas where trading up using exotic mortgages resulted in defaults, and yes those are occuring in lovely Laguna Beach as well. But not many,
The real demon for housing is human sentiment, which has now turned darkly negative, and yes, the same mentality that got caught with their pants down buying at the top, will be the same ones that fail to get into the market and watch it roar away without them yet again.
Chapman or UCLA. It’s a crapshoot, isn’t it?
And your comments are superior and/or more gracious?
Truthiness Says:
December 5th, 2007 at 9:47 pm
“Oh, and read the Wall Street Journal. It seems like that hard money lenders have been very busy the last six months.”
Lookout, the maximum LTV for hard money has always been 65%. This isn’t any knee-jerk reaction to events.
My point was, 6 months ago, he would have gotten a loan no problem.
Now, he has to go to a hard money lender.
Well if you could spell moron I would feel more comforted. After countless imbibing of alchohol drinks I am more sure of the future than you and I am wasted you insiped bitch. Please go evaluate history of markets and you will get grasp on reality.
Greg, you are wasted. It was lookout who mispelled moron. And your mama’s an insipid bitch.
By the way, the freezing of rates is not a bail out.
Rather, it is screwing the investor of the loan(s).
A bailout is when Fannie and Fredding raise their conforming rates to $700,000.00.
Even with the freezing of the rates, that only means the obvious, people are in trouble (and they were able to prove it) which means that the rate increase will be the last nail in the coffin.
Let me see now, if a $300 or $400 a month is a killer, what would happen if, oh, lets say they need a new car. Or, what if they need a new roof, new plumbing, maybe someone gets sick and they take a hit of lower pay from EDD, or Workers Comp.
I know, I know, this never happens, but what if it does.
“The real demon for housing is human sentiment, which has now turned darkly negative”
That’s correct because people are finally realizing, the hard way; they can’t afford a home that’s well over their income.
Were seeing people attempt to buy at the top and fall flat on their face.
It reminds me of that classic experiment “Frankenstein” “We’ve created a monster”
I guess Truthi would play igor.
Sorry, with the number of alter-egos you have I may have been confused. Night-night.
???
I just can’t believe it!
The Govment steps up to the plate and a swing and a miss!
Remember thier proposition is to help the infinately stupid
and burn investors from ALL OVER THE WORLD!
This is the dumbest thing weve done since IRAQ.
Think it’s hard to get a loan now If anything is known.
Obviously this could backfire on us and drive down the price of homes even more. ( this is just my opinion)
As usual I’ll have to wait to see how this pans out.
I wonder how the investors will feel if they have to hold the bag on this stuff for 5 years only to have to write off a possibly greater loss.
Well its beer 30 now I’ll leave you all with
I WANT MY STUCCO BOX
Great video rants.
It is satisfying to see the smug bulls in the video so confident of their prediction of a 10% increase in housing, and how much they are dogging Peter Schiff about how ridiculous they think the whole ARM mortgage issue, knowing now how wrong they are as esteemed “experts”.
Just goes to show you how stupid experts can be. All you really need to do is know how to spew financial opinions similar to what everyone else is saying and you too can be an “expert”!
There is a bit of, I admit, a sadistic satisfaction that comes when you prove everybody wrong who is jumping on the bandwagon of “housing never goes down” telling you how stupid you are, when you finally prove to them who is the idiot.
This year, the bulls are changing their tone to: well okay, it didn’t go up, but it was due for a slight correction, and it still won’t fall much as it’s going to go back up once the government bails them out.
I don’t think anyone who is already a bull or anyone who is already a bear is really going to change their position based on discussion and arguments like these until the year(s) and economy pans out and we see who is eventually right.
I just know that I can’t wait until 2008-2009 to see what pans out! And in the meantime and I am saving up the “equity” in cold hard cash that I am saving by renting and investing it until the right time comes to buy.
By the way, I don’t believe that waiting to buy means that you are greedy, “looking to profit”. Can anyone tell me if any bear here will be looking to flip their property for a profit once they buy? It means that you are prudent, that you know how to save, and you know how to not buy something that is egregiously overpriced just because everyone else is. When you buy a car, do you buy a car that is priced over MSRP? Or do you try to bargain with the dealer to get the true market value? I think people are looking not to get ripped off and they are finally realizing what a rip off these prices are. AND more importantly, that housing does not “always go up” after being over inflated. This last truth however, is probably going to take a while for the general public to sink in. But once it does, look out below!
Amen, brotha Snacker.
Hey Greg,
If perchance you do go to the little kids table we might join you and help throw spitballs at the “teacher” :)
We are starting to see the real person with this Trutiness character .
Two Big clues from her posts:
“And your mama’s an insipid bitch.”
“I like rap music.”
A class act all the way around. Born angry.