Foreclosures

[metta]

Fuel Prices Shift Math for Life in Far Suburbs

http://www.nytimes.com/2008/06/25/b...per&adxnnlx=1214863115-cQ78XtlNN383U8NOQdymvg

More than three-fourths of prospective home buyers are now more inclined to live in an urban area because of fuel prices, according to a recent survey of 903 real estate agents with Coldwell Banker, the national brokerage firm.

In 2003, the average suburban household spent $1,422 a year on gasoline, according to the Bureau of Labor Statistics. By April of this year — when gas prices were about $3.60 a gallon— the same household was spending $3,196 a year, more than doubling consumption in dollar terms in less than five years.

Credit crunch forcing US middle classes to live in their cars

http://www.guardian.co.uk/world/2008/jun/26/usa.creditcrunch

 

[metta]

Metta - the 50% figure is off the peak. Which was 2005 or 2006 in most areas.

yep....but my home did not double in value, even at the peak. if it goes down 50% from the peak, that means that my home will be worth less than I paid for it in 2002.

over the long term...i live in la county, so hopefully, my home will not drop like the ones that live farther out.

 

[metta]

^ ^ I'm really glad the city I just moved to is growing as rapidly as it is.

I'm also glad that they're putting in a big shopping center, grocery store, bank, pharmacy, etc. just around the corner from my neighborhood.

I don't know if any of them are foreclosures, but I've noticed three new realty signs just in my little neighborhood.

Congratulations on your home!

Not very many people can get a home at 27 yrs old in Calfiornia, unless they have the financial help of family.

 

[tommyj]

Metta your home could drop below 2002 levels - but dont despair. If you intend on living there awhile it will eventually climb back above 2002 levels. A home is a shelter - not a piggybank as people have used it. I was way tired of hearing people brag about the equity (read riches) in their home.

 

[Kulindahr]

Metta your home could drop below 2002 levels - but dont despair. If you intend on living there awhile it will eventually climb back above 2002 levels. A home is a shelter - not a piggybank as people have used it. I was way tired of hearing people brag about the equity (read riches) in their home.

That reminds me of something a friend and I were talking about recently: I've worked for him as a contractor for expanding his house by adding a basement. The result is an increase in square footage of nearly 1200 square feet. The financial result is that his house is now worth about the same as when he bought it.

 

[metta]

I was talking to one of my friends yesterday, who teaches (in his spare time) economics as well as other business classes to students working on their masters. He told me that he thinks that the Bush administration messed up our economy so badly that he thinks that the next 20 to 25 years in the US will be slow to no economic growth. He told me that it will take a long time to repair the damage they have done.

 

[metta]

Today, I spoke with a friend that is a realtor. I asked him why the foreclosures where not selling in our development, when we still see the other listings selling for more money. He told me that when you buy a foreclosure, there may also be leins and other things that may come up that you would be responsible for in buying it. So it is an unknown risk.

One of the nice things about having an HOA, home owners association, is that the accociation forces the banks to keep up the homes and gardens. At first, the banks would just let everything go, but the association fines them heavily if they don't take care of it. And it seems to be working.

If you have an association, it is important to have a good one.

 

[metta]

Foreclosures to rise whoever wins White House

http://news.yahoo.com/s/ap/20080705/ap_on_el_pr/candidates_housing_help

Although most voters think the next president will have a "great deal" or "some" influence over housing prices, the reality is there is no quick fix.

The plans envisioned by Obama and McCain — and Congress — would deliver short-term help but are not a cure-all, housing experts said.

Long-term strategies are needed to prevent a repeat of the foreclosure crisis, experts said, and that must revamp the regulatory structure to improve oversight of players and borrowers in the mortgage finance system. The debate on such a broad overhaul has already started in Washington and will likely spill over to next president and Congress. Both Obama and McCain have indicated they favor tougher regulation.

 

[metta]

Bridgewater Study: Banking Losses to Hit $1.6 Trillion

Paul Kedrosky at Infectious Greed has a translation:

The expected losses from the financial crisis will reach $1600 billion. To-date financial institutions have so far announced only $400 billion. The pessimistic forecast comes from a confidential study by Bridgewater Associates ...​

It's hard to comment without seeing the study, but I'm sure this includes all losses including corporate debt, CRE and C&D debt, consumer debt, credit cards, etc. in addition to losses on mortgages.

 

[Jannus]

...I've worked for him as a contractor for expanding his house by adding a basement.

Thoreau said you should build castles in the air, then put foundations underneath them.

 

[metta]

expanding his house by adding a basement.

I did not realize that it was possible to add a basement on a home. I wish that I could add one to mine, but my sub-floor is concrete and it has bands of metal in it that criss cross so that in an earthquake, the entire home would move together. I was told by the builder that we were never to mess with the foundation becuase the tension on the metal bands would easily kill someone if we tried to drill through it. I did have a neighbor that managed to drill a little from the sink to the island to add a vegetable sink and they did not have any problem. They were very careful. I would not take that risk.

 

[metta]

Fannie, Freddie "Insolvent"

From Bloomberg: Fannie Mae, Freddie Losses Make Them `Insolvent,' Poole Says (hat tip Dwight)

Chances are increasing that the U.S. may need to bail out Fannie Mae and the smaller Freddie Mac, former St. Louis Federal Reserve President William Poole said in an interview. Freddie Mac owed $5.2 billion more than its assets were worth in the first quarter, making it insolvent under fair value accounting rules, he said. The fair value of Fannie Mae's assets fell 66 percent to $12.2 billion, data provided by the Washington-based company show, and may be negative next quarter, Poole said.

``Congress ought to recognize that these firms are insolvent, that it is allowing these firms to continue to exist as bastions of privilege, financed by the taxpayer,'' Poole, 71, who left the Fed in March, said in an interview.

And Fannie and Freddie are on page 1 of the WSJ: U.S. Mulls Future of Fannie, Freddie

The Bush administration has held talks about what to do in the event mortgage giants Fannie Mae and Freddie Mac falter ... The government doesn't expect the entities to fail and no rescue plan is imminent ... Treasury officials are nonetheless talking about what the government could -- or should -- do if Fannie and Freddie become so pressed that they are unable to borrow money and continue operating.​

The bad news just seems to get worse and worse.



​

 

[metta]

http://www.stus.com/review.php?rev=1

 

[metta]

A cartoon from 1993

From the Financial Times: US builders forced to sell off holdings (Hat tip Terry)

Demand for new homes on the outskirts of US towns has fallen spectacularly in the last three years, while foreclosures and speculative building have created a far greater supply of homes than there are buyers. At the same time, soaring fuel costs have made the long commute to work that much less attractive.

The result is that farmland close to cities that has often been the seedbed for new housing developments is becoming less valuable to builders, at the same time as farmers want more of it.
...
Lakewood Homes, a small mid-western builder, sold 290 acres of land in the Chicago suburb of Newark at $9,650 (€6,086, £4,831)) an acre in April, nearly 40 per cent below the $15,865 an acre the company paid for the land in November 2005, to a local agricultural investor. Now instead of hundreds of new homes, the land will yield a range of crops including corn and soyabeans.​

 

[metta]

It's The Stupid Economy!!!

http://www.comedycentral.com/videos/index.jhtml?videoId=176740

 

[metta]

House prices could fall for two years: Citigroup

Citigroup chairman Win Bischoff has warned that house prices in Britain and the United States are likely to keep falling for another two years.


The chairman of one of the world's most powerful banks told the BBC in an interview that he expects it will take two years for the markets to stabilise.
He also said he expected the credit crunch could continue through until 2009.
Bischoff told the BBC that there would be redundancies at the bank, which employs 12,000 people in Britain, and warned that some of them would be compulsory.

No further details were released of the interview which is due to be broadcast later on Saturday on the BBC News Channel

http://news.yahoo.com/s/nm/20080719/bs_nm/citigroup_housing_dc;_ylt=AvZE8hNxtxQKlNQczP0j8ZRZ.3QA

 

[Kulindahr]

House prices could fall for two years: Citigroup



http://news.yahoo.com/s/nm/20080719/bs_nm/citigroup_housing_dc;_ylt=AvZE8hNxtxQKlNQczP0j8ZRZ.3QA

I'm going to have to look into this. It's been almost eight months since my dad died, and mom is looking to decide when to sell the house. A realtor has told her that house prices here are starting to turn around, but I'm still dubious. What I know for certain is that since the downturn, not a single house or lot with a "For Sale" sign out in the area I frequent along the coast has sold -- and one reason is that buyers are waiting for prices to fall more (a "bungalow" on a cliff, with a darned good ocean view but far enough back to avoid the worst of the coastal wind, listed a year ago for $350k, hasn't drawn anyone interested in paying more than $220k, and yesterday someone told the owner and I that he'd be interested only if the price were $200k!).

 

[drhladnjak]

I'm going to have to look into this. It's been almost eight months since my dad died, and mom is looking to decide when to sell the house. A realtor has told her that house prices here are starting to turn around, but I'm still dubious. What I know for certain is that since the downturn, not a single house or lot with a "For Sale" sign out in the area I frequent along the coast has sold -- and one reason is that buyers are waiting for prices to fall more (a "bungalow" on a cliff, with a darned good ocean view but far enough back to avoid the worst of the coastal wind, listed a year ago for $350k, hasn't drawn anyone interested in paying more than $220k, and yesterday someone told the owner and I that he'd be interested only if the price were $200k!).

Two things:

1. Real estate agents only get paid if you buy or sell a property. At best, they're going to have a rosier outlook than most on the housing market because they have to be optimistic go-getters to earn their salary in a down market. At worst, they'll tell you what you want to hear (i.e., that it's always a good time to buy or to sell).

2. Fundamentally, a good or asset is only worth as much as somebody else is willing to pay for it. It doesn't matter how much the seller thinks it's worth or how much it used to be worth. If the price you can fetch for the property is $200-220K, that's its financial value today. That's the reality of the free market.

 

[thewiz]

It seems that over the past 10 to 15 years the "get rich quick schemes" have gotten many richer but also created many true crises. It is amazing that our economy has been able to survive.

All one has to do is look back to the "dot-com" bubble that went through the stock market during the Clinton administration. At the time, one could start a company on paper but so long as they added ".com" after the name, it hit the market and the stock price spiraled through the roof. I remember asking an old (long retired) banker friend if I was missing out and should put my savings into one of these companies.

He wisely told me that "in the end, one has to look at what the underlying assets of a company are; do they have bricks and mortar or do they have an internet address and some 19 year old college drop-out sitting at an expensive desk in a leased office someplace?" I luckily heeded his advice and did not invest because had I done so, it was right as the boom turned to bust.

We then had people realizing that they could refinance their houses and take cash out to live a lifestyle that they otherwise could not afford (and really couldn't afford anyway). Suddenly we had the balloon of "second mortgages" popping up across the country, fueled by banks and other groups that realized they could make huge interest returns and, in worst case, secured by property that would sell when put on the market.

When I moved to DC three years ago I did not buy for one reason: it looked too good to be true. People were buying houses and condos -- without any background research -- after walking through at an open house that had been previously unscheduled. Not only would they pay the asking price; they would get in bidding wars and price the property up $50 to $100,000! As a result, many were speculating that they could buy properties, throw on a little paint or some moldings, and resell the property at huge profits in weeks or months.

People flocked to these open houses (I attended many) and when I asked questions, they would usually be met with, "you better jump on board before the ship sails!" Well I didn't. I instead opted to rent for awhile and, at worst, perhaps have to buy someplace else. Fortunately I sold my house in Michigan at a profit but the market had never gotten so hot there as it was in the rest of the country. (And that house is now probably worth less than what they paid me for it!)

I am now looking at a condo that used to sell for $850,000. I have offered under $700,000 and also included the furnishings and parking space (that used to sell for $50,000 in addition to the $850,000). I believe they are accepting the offer.

While I blame the Bush administration, I also blame Congress, I also blame the banks, and there is blame for you and me as well; you can read history and see where people always flocked to the people that promised one could get rich quick. Whether it was the west with gold or the latest cures in the form of elixars at the turn of the century...people always try to take an easy way or the easier way and "make it rich." Some will certainly get rich but usually the majority do not.

 

[Kulindahr]

Blame for me?
Dude, if you knock a zero off those figures you're tossing about, I might be able to afford a thirty-year loan for a property in that range. The only thing I'm guilty of in the whole credit area is getting stuck with legal costs (the courts love to hand out fees and costs even when you've been acquitted) and medical costs (back side of an HMO-type setup: they can also require you to have procedures, and even after they pay 80% and the hospital picks up 90% of what's left, my emergency credit card doesn't have a limit high enough to cover what I'm stuck with).
My best contribution to the economy in terms of credit would be to shut my heart to all needs, stop being caring and compassionate, and similar measures to make sure that none of my time or effort goes to anyone but myself. It's sad that the example of those at the top becomes what a lot of people have to follow just to get by.