Here's recent history of the Fed’s policy committee and its Fed Funds rate. Next Fed decision is June 24/25.
Late April’s homebuying dip smallest since July
May 9th, 2008, 12:01 am · 136 Comments · posted by Jon Lansner/O.C. Register columnist
Late April stats from DataQuick show a modest slowing in the depth of O.C.’s homebuying slump. Completed sales activity was down 31% vs. a year ago for the 22 business days ended April 22. If that holds, it’ll mean April had O.C.’s slowest rate of sales decline since July, just before the credit crunch zapped the ability to get easy mortgages.
But just 10 of 83 O.C. ZIP codes had year-over-year sales gains. (ZIP-by-ZIP data IS HERE!) Plus, April will certainly be the 31st straight month where O.C.’s buying pace failed to meet last year’s activity levels. (See chart of the losing streak above of how April would shape up, if trend holds for full month.)
Do note, though, the latest inventory stats from Steve Thomas of Re/Max that show O.C.’s pending deals rising in recent months to a level just below 2006’s buying patterns. That’s a hint that when many of these pending deals close in the coming months, O.C.’s homebuying losing streak may come to an end.
DataQuick’s median price continues to run near a half-million bucks, one-fifth less than last June’s peak. (How do other indexes see O.C. pricing? CLICK HERE!) And here’s a look at the rest of the market, for the 22 business days ended April 22, by key slices:
| Slice | Price | Vs. ‘07 | Sales | Vs. ‘07 |
|---|---|---|---|---|
| House | $563,000 | -21.8% | 1,355 | -22.0% |
| Condo | $390,000 | -15.0% | 484 | -37.8% |
| New | $525,000 | -15.8% | 146 | -59.8% |
| All | $509,000 | -19.2% | 1,985 | -31.1% |
May 9th, 2008 at 6:21 am
Per DataQuick, Single Family Median Home Price:
2006 ~ Monthly
$690,000 = Feb ~ Watts forecast 15% for SFH
$695,000 = Mar
$705,000 = Apr
$705,000 = May
$700,000 = Jun
$699,000 = Jul ~ Watts revises forecast to 11%
$685,000 = Aug
$680,000 = Sep
$665,000 = Oct
$660,000 = Nov
$665,000 = Dec
2007 ~ Monthly
$675,000 = Jan ~ Watts forecast 7% SFH
$675,000 = Feb
$695,000 = Mar
$720,000 = Apr ~ New Century Bankruptcy
$695,000 = May
$734,000 = Jun ~ Peak of Great O.C. Housing Bubble
$718,000 = Jul
$710,000 = Aug
$655,000 = Sep
$650,000 = Oct
$655,000 = Nov
$600,000 = Dec
2008 ~ Weekly ~ Monthly
$600,000 = 01/07 ~ Watts “Pent up Demand”
$595,000 = 01/15
$595,000 = 01/23
$583,250 = Jan
$585,000 = 02/07
$575,000 = 02/13
$575,000 = 02/22
$575.000 = Feb
$580,000 = 03/07
$575,000 = 03/14
$567,000 = 03/20
$570,000 = 03/26
$570,000 = Mar
$553,750 = 04/08
$565,000 = 04/14
$563,000 = 02/22
Per DataQuick, this loss represents a $171,000 reduction in single family home prices from the June 2007 high.
May 9th, 2008 at 6:25 am
Last month I lost 100,000 in the market.
This month I only lost 110,000.
Gee, I only lost 10 percent of what I lost the month before, things are looking great.
May 9th, 2008 at 6:33 am
It must be the bottom … again.
May 9th, 2008 at 6:52 am
Spring bumps and bailouts
False Hope: it springs eternal
Time is running out
May 9th, 2008 at 7:02 am
Notice that sales are increasing the most for single family homes, yet prices are doing the complete opposite. WHY? Because the bulk of the homes that are selling are distressed properties (comp killers). The best news is comp killers are not shrinking as a percentage of our inventory … in fact they keep increasing. This is compounding the problem and enticing people to “just walk away”.
I happen to know that a lot of people in Orange County are choosing to “walk away” because it no longer makes sense to pay their mortgage for a house that has negative equity and rising mortgage payments, when they can rent for half the cost.
May 9th, 2008 at 7:33 am
Grave Dancers
May 9th, 2008 at 7:44 am
As I recall, things were already becoming dramatically slower last year. I wonder how this sales number compares to the average for April over the last 20 years? Jon, do you have that number handy?
The question is clearly how long until we return to a normal rate of seasonably adjusted sales?
May 9th, 2008 at 7:57 am
Subtle signs. Let’s see if it continues.
lee
How do you know that most sales are distress sales? Has that been established of record?
Also, does a home appraisal take into account that certain comps are the result of forclosure/short sale? I have heard there is maybe some kind of equation that is used.Can they not simply choose actual sales of like size homes from a larger radius?
May 9th, 2008 at 7:59 am
Sensibull, based on history a normal spring season would be well over 4000 sales a month….. we don’t even half half normal spring volume….
http://lansner.freedomblogging.com/sales/
the best the permafools will be able to do for the next few years is compare everything to 2007…………….
in other news you gotta love the fools in congress…….. cram downs for people who are more than 60 days late on payments……. LMAO…….. why would anyone pay on time?……….. yeah i’m sure the banks will love that one…….. next time congress thinks up a plan maybe they should consider how debtors will respond…… they are going to end up crashing the whole system with idiotic plans like that
May 9th, 2008 at 8:05 am
Here is similar to OC good news from another California area:
http://www.sanluisobispo.com/news/local/story/350569.html
Obviously, OC isn’t the ONLY area where ASTUTE buyers are out picking up good buys.
May 9th, 2008 at 8:12 am
Slow and steady wins the race. SFRs are 68% of total sales, very nice. RealtorDaveE, you were right about getting dragged down by new home sales. SFRs are 68% of total sales, very nice. Don’t be fooled by the median. We have some excellent analyses from the bears on why it’s meaningless. And wow, take a look at that chart, THIS April had the biggest spike in years.
May 9th, 2008 at 8:14 am
Yesterday I went out on a limb & predicted what I expected these numbers to be (”Our prediction for tomorrow’s DQ OC medians“).
What we got is actually a bit better than what I predicted yesterday (Median’s actually $509k, down 19.2% y-o-y, I called for $508; down “a small tad below 20%. Sales 1,985, down 31.1%, I called for “right around 1900 total, off about 40% y-t-y.
That give some evidence to 2 things:
1. A Realtor in the field does have a certain intuitive sense of what was going on 2 months ago, when these closings went into escrow.
2. The market’s actually doing a bit better than I thought. Is this Realtor actually a bear?
In my post on SoCalRealEstateNews.com I also predicted modest improvement in DQs numbers in the coming months, which are “already in the can” (DQ closings enter escrow 2 months before announced).
But I also predicted that rising interest rates, low liquidity, seasonal trends and rising foreclosures will eventually push prices lower.
I hope I’m wrong on that, too.
May 9th, 2008 at 8:19 am
Another peculiar choice of words:
“slowing in the depth of O.C.’s homebuying slump”
That would imply a downward trajectory, which is NOT the case. I’ve noticed a sublte shift in you Lansner, since you put out your “number of Orange County houses for a US house theory”. Coincidence…or not?
May 9th, 2008 at 8:20 am
RealtorDaveE,
Please help us understand a couple of facts here. One, what percentage of sales are short sales, foreclosure sales, etc. Put another way, how many are “normal” resales?
Also, during the appraisal process, can an appraiser choose normal sales over distress sales for the appraisal, and if not, is there consideration given to the fact that the comp was not a “bonafide sale for value”?
Thanks
May 9th, 2008 at 8:22 am
Eventually, we’ll hit the bottom. There are definitely some more attractive prices out there, like the $170 per s.f. mentioned in the article. But most stuff is listed at only 25% off the peak price, rather than 40% especially in the better areas. When we get down 50% in the good areas it will be time to buy again.
May 9th, 2008 at 8:25 am
VOR, appraisers don’t have to use foreclosures if they have other good comps. If asked by a lender to grid them, they do but the lender can decide to use them or not.
May 9th, 2008 at 8:27 am
Geesh…How could you not buy…check out these deep disco’s in CDm and NewpCoast…
http://www.redfin.com/CA/Corona-Del-Mar/715-Heliotrope-Ave-92625/home/4727277
http://www.redfin.com/CA/Newport-Coast/28-Still-Water-92657/home/5929127
http://www.redfin.com/CA/Newport-Coast/10-Hidden-Pass-92657/home/5928421
Theres over a mil in losses for you there jimmy boy!
rrrriiiiiipp!
Tea and Krumpets anyone?
May 9th, 2008 at 8:31 am
This is part of a post from an appraiser “Katherine” a few days back:
“I currently work in Orange county as a certified residential appraiser and the decline is absolutely not across the board. Some municipalities have weathered the storm thus far with a minimum of short sales and reo activity. Some of them actually are ’stable’ at this point. Towns with desirable schools, good locations etc, have not been hit as hard as less desirable areas.
It used to be that when you sat down to analyze the data for an area, you would see perhaps an REO here or a HUD sale there. It was absolutely taboo to use one of these sales as they were never considered and arms-length-transaction. Unfortunately now, in some areas, they are driving the markets. Recently, I pulled sales for a SFR home and 15 fo the 19 sales in a 3 month span were either REO or short sales.”
She is obviously speaking of someplace like Anaheim.
May 9th, 2008 at 8:34 am
Thanks Thoughtful.
May 9th, 2008 at 8:39 am
Unfortunately, things are getting worse, not better.
Take a look at how prime borrowers are now in trouble.
this is a mess!!!
May 9th, 2008 at 8:43 am
OMG. Oil hit $126 a barrel today. I wonder what that is going to do to the OC consumer. We live in an area highly dependent on driving.
Can you say “RECESSION”?
May 9th, 2008 at 8:56 am
VOR and Thoughtful:
I’m curious as to why you think short sales and foreclosures should be designated differently in determining market value. Whether sold by a bank or an individual, each sale sets a benchmark for current market value. In many cases, REO properties will sell at or near the bottom of the pricing scale of a specific neighborhood, but why does that sale have any more or less value than a sale by an individual homeowner? In some cases, the pricing of REO properties is not at the bottom of the neighborhood’s pricing. I just got an REO listing from a client who priced it about $60,000 (approximately 25%) over the value that I recommended in my brokers price opinion; this list price is below the most recent closings (which were very limited) but substantially above the list prices of like properties that are currently in escrow and which will soon establish a much lower pricing scale for this neighborhood (as I recall, none were REO or short sales).
I can only speak directly to my experience with my clients, but they are serious sellers who don’t wish to be holding inventory for lengthy periods of time; their stated desire is to be in escrow within a month (it doesn’t always seem that way, though, given the example I just cited). They evaluate the activity and pricing of a listing every three weeks and reduce the price if necessary. Since my inventory is primarily from sub-prime loans in central OC, there have been some adjustments (less lately) but overall my inventory is moving at a relatively swift basis.
May 9th, 2008 at 9:08 am
I think it’s obvious that banks do not want to own property, and that they are not nearly as concerned in the equity of any one property as an owner would be. There are also hidden (or not so hidden) costs of repair and replacement. Simply put, they are attempting to dump the property asap.
May 9th, 2008 at 9:13 am
OC Native, that’s not my opinion, that’s the standard as I know it. The element of duress taints the sale.
May 9th, 2008 at 9:14 am
Let’s put something into perspective:
If you commute 200 miles per week (20 miles ea way, five times per week), and your vehicle gets 20 mpg, the cost breaks down like this:
200 miles @ 20 mpg @ $4.00 per gallon=$40.00 per week
200 miles @ 20 mpg @ $3.00 per gallon=$30.00 per week
Even though the price of gas seems high, it costs $40.00 per month more now than a year ago to commute. Not really a big difference.
May 9th, 2008 at 9:20 am
VOR, for most people I agree, not that big of a deal.
but that $40 per month is $500 per year and that gets amplified through our economy……….. $500 less you can spend………. $500 less when everything cost more to ship……. so the cost of goods goes up……
it’s the multiplying effect that really creates problems……
also tell the poor people starving around the world that keeping central bank rates artificially low is a good thing
May 9th, 2008 at 9:30 am
Thoughtful: ” asked by a lender to grid them, they do but the lender can decide to use them or not”
Is it in the best interest of the lender to use them or not? Given the current market - and if you were a lender using your own money - what would you do? Not saying that is the case - just curious as to why they would exlcude recent sales simply because they were foreclosure sales when they are the ones accepting the risk.
When it comes right down to it - a person bought that home for that price. Period - end of story.
But I do see what you are stating - they can choose either way. I am just curious as to why they would choose either.
May 9th, 2008 at 9:40 am
VoiceofReason Says: “If you commute 200 miles per week (20 miles ea way, five times per week), and your vehicle gets 20 mpg, the cost breaks down like this:
200 miles @ 20 mpg @ $4.00 per gallon=$40.00 per week
200 miles @ 20 mpg @ $3.00 per gallon=$30.00 per week”
So I guess you don’t drive on weekends or go on vacations. You don’t buy food or anything else that has to be transported. You probably don’t fly on planes either, ah?
Thinking that oil at $126 and food inflation is not going to impact the economy shows how ignorant some people in this country are. That’s why we are in this situation to begin with.
May 9th, 2008 at 9:48 am
Here’s an interesting item on reo’s. This is FHA guidance for appraising REO properties, but the underlying principal is the same as a standard appraisal:
Sales Comparison Approach
Typically, the Sales Comparison Approach is the most applicable approach to estimate the market value of a REO property. Appraisers may utilize sales comparables from other REO transactions only when such sales are deemed to be the best available for the market area and they meet all of the following criteria:
• located in the subject neighborhood or reasonable proximity
• comparable property subject to reasonable adjustment
• sold with a willing buyer and seller
• exposed to the market for a reasonable period
Inclusion of vacancy rates, rates of foreclosure and a discussion of foreclosure sales in the subject’s market area may be used as additional support for reliance on sales of other REO transactions.
Do not use distressed sales such as Sheriff Sales. These sales do not involve a willing seller nor are they exposed to the market under normal conditions. The resulting value indication derived from the use of such sales is not consistent with the definition of market value.
VOR is also right about the unknown condition of some REO sales.
May 9th, 2008 at 9:49 am
Not buying it, it’s in their interest to have an accurate value, period. using, high OR low comps are not how one arrives at an accurate value.
May 9th, 2008 at 9:50 am
Oh My … the Credit Crunch is not over! It showed its ugly face again this morning in AIGs quarterly earning release. It seems, the nations largest insure was recklessly striving for yield, and got caught this morning with its hands in the cookie jar. They invested huge sums of their reserves in mortgage slime. FOOLS!
“NEW YORK (AP) — American International Group Inc. stock took the largest midday loss among Dow Jones industrial average stocks Friday, after the insurer posted a disappointing first quarter and said it will raise $12.5 billion.”
“AIG reported a loss of $7.81 billion in the quarter, mostly due to losses on investments and swaps. The company will raise $12.5 billion to improve its capital position, primarily by selling new stock. Shares fell $3.89, or 8.8 percent, to $40.26.”
May 9th, 2008 at 9:55 am
hey folks,
Watch Dick Armey talking to Glenn Beck about the housing bailout.
Finally, somebody makes some sense.
May 9th, 2008 at 9:56 am
Still market losses, not credit losses. Still old news.
May 9th, 2008 at 9:57 am
Do any of you bears find NationalBubble.com embarassing?
May 9th, 2008 at 10:02 am
Under typical real estate appraisal guidelines, appraisers are supposed to exclude foreclosures, short sales, and other “distressed” sales and widen their search area for comps.
Realtors will also make a note in the property description on the MLS listing instructing appraisers not to use a particular listing as a comp due to the “distressed” nature of the sale.
Overall, this will lead to stable prices and the Bears that hope for “comp killers” are going to be very disappointed. The same thing happened in the 90’s decline.
May 9th, 2008 at 10:10 am
Foreclosure is the only best option. If you can not handle the heat, just walk away. No matter what the future is, you can not become a mortgage slavery for the next 30 years.
You are working hard, paying taxes, save every penny, and everything goes to the house. If you are losing your job or one of the income or divorce, you are history.
Can you handle the truth and painful reality?
May 9th, 2008 at 10:12 am
Bubble,
Comuting is consistantly the longest daily drive. It makes a good comparison. It doesn’t matter though, because it appies to all driving. The difference between 3 and 4 dollars per gallon doesn’t affect the average person that much, unless they drive for a living.
May 9th, 2008 at 10:22 am
To all the smartest people in the room: This blog could use more in-put like RealtorDave…He seems to be a true objective professional!
I find it interesting that the majority of folks on this blog debate the same thing day-in & day-out, minute-by-minute…Do some of you think you’ve discovered something new just because you woke up this morning? I’ve been buying & selling Coastal OC properties since 1976 (mid-level SFR & Condo’s). I’ve stayed in the NB, CM, LB & AV areas (no more than 5 to 10 min to Ocean). I’ve been thru many cycles like the one we’re in the midst of, (although this one is unique and more protracted) it takes numerous years to turn any real estate cycle.
What’s with this “Bulls & Bears” nonsense? This is not the Stock Market, which turns on a whim (where Big-Block-Traders move the markets)! If you really know what you’re doing, you’d relax and stop with the personal attacks as if you know something no one else has figure out (just ego not facts). The real estate market’s driving forces will take a long time to turn…and then, and only then, will we see a protracted recovery…NOT, a rocket-like shot off of some stock market “Bull or Bear” type-hype.
It’s simply about objective data and not quoting some agenda-riddle-hype-nonsense! When it turns, it will flatten on the bottom like all real estate trends have done. Meanwhile daily in–put will be just that “Daily”…not worth much in the big picture! Otherwise, yo- yawn, tedious & boring! It must be very difficult standing on a pinhead every day? I’ll check-in from time-to-time to see if anyone has anything truly insightful to say…
May 9th, 2008 at 10:33 am
Hey SOB … you don’t know what you’re talking about.
The deal has to make sense for the banks … they want to know everything about the neighborhood … including the distressed sales.
The banks are the one’s that want to be protected! And they won’t loan money to a borrower to buy an overpriced (appraised) home … that is, unless the borrower has enough down payment to overcome the premium in the non-distressed property.
Appraisals are not a game, were you can overlook other sales in the neighborhood. Though the business has been a joke from 2001 to 2006. That’s over. The banks want to be protected now, and an accurate appraisal is one of their means.
May 9th, 2008 at 10:42 am
lee,
I’ll go back to my original question. How do you know that “the bulk” of transactions involve distressed properties? And, how do you know what lenders require in their appraisals, especially since we apparently had a post by an actual appraiser? When you throw out statements as fact, it would help if you say where you got it.
May 9th, 2008 at 10:43 am
Another point for the SOB
Who are you kidding … that’s collusion! You can’t do that. The banks would stop loaning money!
May 9th, 2008 at 10:49 am
hanks for the kind words, Beachcomber. That’s my goal–I try to do my best.
I used to be a schoolteacher, too. So, children, let’s all calm down and take a deep breath. . . .
(Actually, a blog without lively debate gets boring, so don’t calm down too much! My blog could actually use a little more debate.
Now for a belated response to a couple of earlier questions:
Thoughtful,
Thanks for answering Voiceof Reason’s 2 Qs. Well put–things definitely vary, with newere construction, condos, & other starters having more REOs. OC as a whole isn’t influenced nearly as much as the Inland Empire, let alone much of Florida or Nevada, with much more new construction. In that regard, we really are substantially different.
VoiceofReason,
Sorry for the delay. I’m a full time Realtor and part time blogger–the work does tend to get in the way of the fun!
General comment re. REOs and Short Sales:
Short sales tend to go below market because agents and buyers tend to stay away from them because of all the grief you sometimes get from the overworked, undertrained negotiater for the lender that’s taking the discount. In addition, the seller/owner doesn’t care that much about the net. Unless the lender pre-negotiates a price, which they rarely have the time or inclination to do, short sales seem to go 2% to 6% below market in my experience.
REOs, my experience pretty much dovetails with OCNative’s, although I haven’t gotten any REO accounts in this downturn.
The exception is condition. If the lender’s willing to go for a modest “skin” job, a foreclosure should go at fair market value. If the lender/owner isn’t even willing to send a cleaning crew out, it will go for a lot less than it could have. People do not generally clean their home after moving due to an eviction, and homes tend to fall into disrepair when people don’t have the money to make the payment. In addition, unfurnished homes are harder sells. So, while REOs do go for market, the condition might make market lower than it would be for the same home with a motivated owner/occupant seller.
Hope that helps.
May 9th, 2008 at 10:52 am
Beachcomber and RealtorDave,
You two seem out of place here with your reasonable opinions. You should join the forums at irvinehousingblog.com, where the level of discussion tends to be a higher quality (even if the majority there are pretty down on the housing market) than the feverish drivel that gets posted in the comment section here.
May 9th, 2008 at 11:00 am
Dave…by-all-means, lively dabate is important! I live for it, in the logical factual world!
May 9th, 2008 at 11:03 am
Funny that we’re even talking about the comparable sales approach. Most uberbears say that the only way to value property is by how much profit an owner can make renting it out. Like anyone cares!
May 9th, 2008 at 11:04 am
Thanks DaveE
We can always use a little reality here.
May 9th, 2008 at 11:08 am
Hello! I’m back.
May 9th, 2008 at 11:12 am
Anyone else having problems posting? I dont seem to have a spam word anymore.
May 9th, 2008 at 11:12 am
Ah it worked that time! Hmmm….
May 9th, 2008 at 11:14 am
Here’s an interesting article. This is helping to aleviate the credit crunch and will help loosen the restrictions. This is what the big banks are doing right now, finding the stinkers repackaging them and selling them at 70 cents on the dollar to investors and Hedge Funds. Once they get an agreement with the home owner then the loan is performing and after it’s seasoned they can sell them again. This is what will start things moving again and break the foreclosure cycle.
http://www.latimes.com/business/la-fi-loanbuyer-2008may01,0,3521729.story
May 9th, 2008 at 11:16 am
Samson, me too. I think somebody’s messin with my cookies.
May 9th, 2008 at 11:19 am
“Most uberbears say that the only way to value property is by how much profit an owner can make renting it out. Like anyone cares!”
Actually, what you’ve just referred to is called opportunity cost … and you can’t ignore it.
May 9th, 2008 at 11:29 am
Great story, Alfalfa. Welcome back. Lee, is the reason you like the sales comp approach better now because the income approach would show HIGHER values at this time? Inquiring minds want to know.
May 9th, 2008 at 11:31 am
To those people with cookie problems — DO THIS
1) Type words
Then press “submit comment”
2) Then highlight entire text by holding left mouse button, dragging alone entire text.
3) Then single press right mouse button.
4) Then select cut
5) Then reload web page
6) Then single press right mouse button
7) Then select paste back in comments box
May 9th, 2008 at 11:33 am
Of course you can ignore opportunity cost. People always have and always will. We’re talking about your home, sweet home. I remind you that calculating opportunity cost is also a forward-looking endeavor with many assumptions.
May 9th, 2008 at 11:34 am
You’re soooo cool, Lee. Howdythink we’ve been doing it?
May 9th, 2008 at 11:37 am
Thoughtfull … some of the people here are having problems. I was trying to help them out.
BTW, is your real name Dick?
May 9th, 2008 at 11:39 am
Just kidding, good instructions. You could also do control+c and control+p instead of the “cut” and “paste” route. I was making fun of your sunglasses, relax.
May 9th, 2008 at 11:49 am
Lee & Samson,
Yeah, getting a post up is a bit of a nightmare right now. Thought it was my computer, but same problem on my 16 year old son’s “beast” (which, of coursse, is faster & better). Same problem whether I’m using Firefox or (God forbid!) Bill Gate’s Internet Infector, er, Explorer.
Like Lee, I copy every comment (actually I prefer “control C” to mouse clicks) before posting here, then post in a new window if necessary.
It seems like I get one post per window. The spam words are gone, I’m guessing that’s a courtesy for frequent flyers who don’t abuse?
Thoughtful, are you using a Mac or some other magical tool?
Jon, Jeff, or Diane, can you check with your tech people & let us know what’s going on?
Don’t make us take our scintillating discussion to that overused blog up the 5. . . .
Now, I’ll say a prayer, cross my fingers, copy the comment for safety, then click “submit” and hold my breath.
May 9th, 2008 at 11:56 am
thoughtless- in honor of your consistent grinding
on this blog.. I’ve found you a theme song….
http://www.youtube.com/watch?v=JW-3mIaajWM
May 9th, 2008 at 12:02 pm
Alfalfa, that was a really great article. It sounds like the going rate for performing loans is 70%-80% and lower for delinquent ones. The investors have definitely arrived.
May 9th, 2008 at 12:05 pm
Increased buying activity is not good news for those of you expecting dramatic price declines.
Foreclosures are beeing bought up with safe mortgages.
Seems the median is stabilizing (for those of you who think it is a reliable number).
Interest rates remain low and steady.
May 9th, 2008 at 12:09 pm
LOL rants…. that’s a good one…..
rants have you recently visited the thoughtless household with your ground breaking financial strategies?
http://consumerist.com/consumer/clips/snl-skit-dont-buy-stuff-you-cant-afford-252491.php
LMAO……… ok, you fools can get back to the ridiculous BS debate of comp killers….. and how REOs do not impact the housing market…. LOL …….
May 9th, 2008 at 12:27 pm
Lou Barnes rocks the house:
“The elephant in the room, who cannot be mentioned in polite company: we gave mortgages to a few million households with deficient long-term financial behaviors, hopelessly incompatible with home ownership.
That’s a hell of a thing to say about fellow citizens, but it is the case. “Subprime” by definition meant below the minimum standards of the FHA. Roughly $1.5 trillion will default: half of subprime and a like amount of the worst of Alt-A.
A year of all-out foreclosure prevention by traditional means has failed: recasting, forbearing, capitalizing interest, refinancing, canceling adjustment… all. The new measures include writing down loans to the level of fallen market value and refinancing the remainder. Fairness aside (deeply unfair to families who tough out this cycle), two realities will defy the new efforts. First, write-down/recast will leave these households still with no equity, no up-side to defend, and new monthly payments still higher than rent on equivalent housing. That ownership-rent gap has gaped throughout the cycle; the good news for a foreclosed family: replacement housing is cheap and plentiful.
Those in authority demanding foreclosure rescue, Barney Frank and most of Congress, joined by compassionate Americans, cannot conceive the financials of a 575 FICO subprime applicant. A dozen or more late payments, several defaulted loans, and a large mass of consumer debt outstanding; poor job stability (temporary, seasonal, intermittent, commissioned sales); also no money, no savings, retirement or otherwise, often tens of thousands in consumer debt, huge negative net worth… before purchase. ”
Url for his weekly analysis: http://www.boulderwest.com/news/index.html
May 9th, 2008 at 12:39 pm
Good stuff about foreclosures as comparables in an appraisal. I talked to a buddy of mine whose been an apprasier and he pretty much confirmed what Thoughtful posted. The key is sales used need to be an arm’s length transaction nat made under duress of anykind. He said a foreclosure could be used but it should be identified as such and adjusted for. He said the problem is that although appraisals must identify a foreclosure, BPO’s are held to no standard and can use any sale they want. I checked it out and found that a bogus BPO can undervalue a property by 20%. And this is the problem. The banks were being fed bogus BPO’s by bogus agents in order to knock prices down for a fast sale. My buddy told me that they are having BPO’s reviewed by apprasiers now and if it looks stinky they have a full appraisal done and try to identify sales that are not foreclosures to use as comparables.
May 9th, 2008 at 12:43 pm
In defense, the vast majority of the LOWEST subprime borrowers did NOT get 100% LTV loans. The cutoff was widely at 580. Exceptions? Probably, but FHA has been giving out loans to this type of borrower for many years.
May 9th, 2008 at 12:54 pm
Wonderful Pozzo, but Mr. Barnes didn’t mention that it was Mr Franks and his chort in Congress that opened up the lending standards to include Sub Prime and now they’ve got to do a CYA. But again it wasn’t just the borrower with the bow wow FICO, it was the flippers taking advantage of those programs to get several properties under control for very little money then try to flip them for as much as possible. When the maket stalled they just walked away and started the downward cycle. And they don’t care about a FICO because they have cash and can write the check. Thats what worries me, these creeps coming back in the market now and if things don’t pick up they’ll walk again. I think the banks are wise to this now though and may look at these guys alittle tougher.
May 9th, 2008 at 12:57 pm
SeekingAlfalfa
Why are you blaming the guys doing the BPOs. Listen, the brokers that inventory REOs, don’t do it to sit on the MLS for months at a time. Some of these guys are taking on 50+ REOs a month. They are interested in moving the house, then going to the next one.
Besides, the BPO is just an opinion, the asset manager who works for the bank ultimately makes the final decision on the asking price. The banks are overwhelmed right now, and are (finally) starting to accept lower bids.
May 9th, 2008 at 1:03 pm
If you follow the trend you can predict we are headed for another downfall in sales and prices.
May 9th, 2008 at 1:05 pm
Reeking Falfalfa and Snoughtful: Get a life man.
May 9th, 2008 at 1:07 pm
No matter your feelings on the FHA bill, this is a suprisingly candid story on where it stands:
“Acting HUD Chief Open to Compromise on Anti-Foreclosure Plans”
http://bloomberg.com/apps/news?pid=20601087&sid=a4kO2eqkpCNk&refer=home
May 9th, 2008 at 1:08 pm
Wow, that article sounds reeeaally interesting. Thanks for posting it Snoughtful.
May 9th, 2008 at 1:09 pm
I’m tellin’ my mom on you.
May 9th, 2008 at 1:23 pm
I thought YOU were my mom! I mean, gee, all the nagging and authority… See ya mom!!
May 9th, 2008 at 1:29 pm
Lee, the Asset Mgrs get bonus’ on closed sales so they have an interest in closing them fast too. BPO’s should never be used for anything except figuring a listing price. Other than that they are worthless. A BPO can use any sale just about anywhere as long as it’s in the same zip code and I have no idea why in the hell the banks would even look at one to detrmine value on a house. But one of the things my buddy whose been an appraiser for 30 years told me is that they are already reworking the Fannie Mae agreement to reign in BPO’s and they’ll be subject to a review just like an appraisal. And so what a house sits for 90 days? Maybe that’s a good thing to slow things down abit.
May 9th, 2008 at 1:33 pm
Pardon me if I don’t take an improvement from 50% to 30% YoY declines and continued price drops as a buy signal.
May 9th, 2008 at 1:50 pm
I have about $100,000 worth of credit on my master card and visa. I’m thinking it may be time to go and max out the cards……………I am sure that there will be a massive surprising to excuse credit card debt once we get the debt forgiveness programs going.
May 9th, 2008 at 1:54 pm
PLEASE CALL THE WHITEHOUSE AND RICHARD SHELBY!!!
Everybody who comments and reads this blog needs to take 60 seconds and call the Whitehouse and Richard Shelby’s office and tell them you support the Veto of the housing bailout. It doesn’t take long and it is hopefully a little more productive than our justified rants on this blog. We will pay for the estimated 33% of the homes that will enter this bailout program and still default. The Washington Post already wrote a piece about it.
Just pick up the phone and call. It’s easy.
The Whitehouse - 202-456-1414
Richard Shelby’s office in DC - 202-224-5744
May 9th, 2008 at 1:59 pm
Ya Know all this talk about appraisals and appraising gave me an idea. I looked up Apprasial jobs on google and found the Appraisal Institute. They have a career center so I checked. There are a lot of jobs for appraisers all of the sudden. I know alot of people in that business folded thier tents and vamoosed. And I don’t know what the job picture looked like a few months ago but somebody’s hiring. So if more apprasiers are being hired that may mean more lending activity. Right?
May 9th, 2008 at 2:01 pm
Thanks Lee and Thoughtful…I am having cookie problems……..let me try your method
May 9th, 2008 at 2:01 pm
Cool…
Thanks guys
May 9th, 2008 at 2:10 pm
By most measures, prices are still above the levels implied by the fundamentals.
Using a model that ties house prices to disposable incomes and long-term interest rates, analysts at Goldman Sachs reckon that the correction in national house prices is only halfway through.
They expect an 18-20% correction overall, or another 11-13% decline from now. But their models suggest that six states—Arizona, Florida, Virginia, Maryland, California and New Jersey, could see further price declines of 25% or more.
May 9th, 2008 at 2:20 pm
Bill, Garbage in Garbage out
May 9th, 2008 at 2:29 pm
Companies defaulting on their junk-rated debt and filing for bankruptcy in North America is running at its fastest pace in five years amid the slowing economy and contraction in credit markets.
So far this year, 28 “entities” have defaulted, according to Standard & Poor’s. The defaulted debt of the one Canadian and 27 US companies totals $18.4bn and exceeds the 17 defaults in the US for all of last year.
The surge of defaults in the early months of 2008 is the first leg of an extended period of high default occurrences that will characterise the rest of 2008 and 2009.
When the recession bcomes deeper and longer than expected and lending constraints worsen more markedly, the default rate could be significantly more pronounced and severe, possibly reaching 8.5 per ce