ArnoldCountry

Housing Decline Slowing? Wishful Thinking (Case-Shiller)

Well done... in my 30 years as a real estate broker I have seen difficult recessions and this is proving to be the worst that I have seen... but I am not a doomsday beleiver either. This will eventually pass... as they always do. However, I completely agree with you that the data is showing that we have further declines ahead and where it goes nobody knows. Aside from most who make their living selling real estate (I dont, I am involved in litigation now) who believe no better time to buy now (urgency - a sales tactic), we will see a bottom sometime and we will be there for a while... as history has shown. I would expect that we will see a blip up this spring and summer in sales but inventory will still climb as foreclosures continue to accellerate. We cant focus on just one number, but both... inventory climbing and sales.

Housing Conversation Needs a Dose of Reality

Well done... it seems the summary to what all are saying is it is time to avoid blaming the source of the problems but to let the natural course of events to run so we can get back to a normal market. All the interference with market fundamentals is most likely aggravating the situation. Solutions that are more geared on the overall economy, such as creating new jobs and stimulating overall economic actively is more responsible than these targeted bailouts which seem to aggravate the situation further. Housing needs to reset as well as several other industries. Its a mess, no question.

Niall Ferguson Dismisses Moral Hazard of Fixing Housing Mess

Tim's article is on the money... no matter how you feel about blame... put is aside. Every time you have a foreclosure, you increase the inventory by one and reduce the inventory of consumers who can buy a home by one. Normally, this is not a big deal. However, we have two supply sides to deal with... one the supply of housing is huge but the supply of buyers is getting smaller.

The greater good of society is to put blame aside and focus on the problem. As much as everyone wants to focus on blame... just remember, your home values continue to plummet because the inventory is getting bigger and fewer buyers. Keep your eye on the problem.

Housing Crisis Is Key to Economic Recovery

Great article! Best I have seen in some time. Thanks for the reality check!

You Want to Save the Housing Market? Don't Fight Foreclosures

I find your aritcle factual... but missing one very important glaring point. Our government and mainstream media cannot tell us the truth. If Obama were to come on the television today and state that the government was not going to do anything, foreclosures are a necessary correction and all of these folks underwater would be better off walking from their houses and become renters, the financial markets would completely collapse in a month.

It reminds me of Jack Nicholson in a Few Good Men... you can't handle the truth!

Truth is, they are trying to contain a disaster and try to bring consumers back to buying homes, using credit and buying goods to stave off a collapse.

In my practice, I tell consumers each day that are in an underwater house that they are struggling to pay for of which their lenders offer little to no assistance... what are you fighting for? You can make a home anywhere, home is about people and families, not brick and mortar. If you are hurting watch out for your family first, if you have to walk from the house and rent for cheaper because it is in your families best interest, just do it. The credit hit will be for a few years and when you recover you will be able to buy a similar home in the future for about half what you owe on your current place.

However, you will never hear that kind of advice coming from our government or mainstream media. Instead you hear about personal responsibility. Dont shame these folks, their personal responsibility is to provide for their families, the rest can be cast aside.

Real Estate: Apocalypse Now

I think the analysis by Tim and Mr. Tan are extremely sound. One big problem with analysis is that it is a view of the past. Tim is one of my favorite contributors on here but I think even he would say that what will come to all of us in the future is, at best, an educated guess using the past and current data to assist with that guess. In some ways we have all created a perfect storm with this crisis. The combination of Wall Street, lending methods, guidelines, building, regulation, securities, insurance, and most anything else you can think of have all worked together to create this situaiton. The past tells us that when we hit bottom we will stay at bottom for a while, how long is anyones guess. My best guess at this point is that we are going to be in this perfect storm for a while and when the storm ends, we will hit a period of calmness and sometime we will recover. I have great respect for the opinions of many of the authors on here and whether I agree or disagree with any of them, they all make interesting points which help me craft my own opinions of which I make decisions on. I thought this was a good article in articulating good data to me. I liked it... but Tim still makes one hell of a great case. I suggest we take a look see each month on how this is all going. If you like roller coaster rides, this housing crisis wins.


On Feb 21 01:42 PM TKO wrote:

> Your interpretation is compelling at first sight, but I believe you
> are looking at the wrong variables here. When I choose to buy a home,
> I will look at my income level and determine the 'band' of home prices
> I can afford. We all need to live in a home, one way or another,
> and we will most often choose a home that is most desirable out of
> the homes in the 'band' of prices.
>
> The view that homes are investment vehicles are totally wrong. They
> should be viewed more as an alternative to rent, which is an expense.
>
>
> As for a better graph of the real estate picture: static.seekingalpha.co...
>
> I give credit to Tim Iacano for his article: seekingalpha.com/artic...
>
>
> If we take a totally different angle and compare median home prices
> to median household income, and factor in a historically low interest
> rate at this current time, real estate almost seems undervalued.
>
>
> The truth lies somewhere between your interpretation and Tim's interpretation.

Foreclosure Moratoriums: It's Time to Get Real

I somewhat agree but I do take exception to the personal responsibility statements. What about corporate responsibility? I equate many of these products to the wares of "snake oil salesmen". We have all lost sight of the old statements "a sucker is born every minute", "if it is too good to be true, it most likely is." These statement have not come about by the housing crisis, they have existed as long as there have been salepeople. The public, for the most part, have been snookered again by salespeople. A combination of wall street, lenders, loans officers, real estate salespeople all have played a part in taking advantage of suckers. Did they sign the loan documents? Yes. Did they read them? No. Every salesperson and corporate officer of those entities knew they would not. Are there abusers? Sure. Are there stupid people who beleived they could own a McMansion while having an average job? Sure. But do not lose sight... corporate greed created the products and sales peoples (snake oil salesmen) peddled them to people who were suckered. This is a time tested process.

Foreclosure Moratorium List Grows

They cannot write down the principal balance because it is not the banks loan it is the securities that were issued of which that loan is in the pool. Pooling and Servicing Agreements prohibit that type of modification. It is way more complicated then the discussions let on.

I can't way to see this miracle solution coming from the Obama administration on solving this mortgage/real estate crisis.


On Feb 13 04:42 PM cadoggy wrote:

> I can guarantee you that 'the plan' will be more of the same: Loan
> modifications aimed at reducing interest rates just enough to squeeze
> every penny out of borrowers without pushing them over the edge into
> foreclosure.
>
> The people who receive these modifications will default again within
> 6 months with a 50% probability.
>
> Principal write-downs are the only way to encourage underwater borrowers
> to stick around and it makes sense financially too.
>
> Consider a home that was purchased for $250k with 100% financing
> and it's now worth $150k. If you reduce the principal by $100k you
> bring the loan back to the reality of today's fair market value.
>
>
> On the other hand, keeping the loan amount at $250k but reducing
> the interest rate from 9% to 5% will effectively achieve the same
> net profits for the bank if the borrowers holds the loan for 10 years
> (which is likely these days).
>
> Plug 9% and 5% into any mortgage calculator and you'll see that the
> interest lost in 10 years is $100k.
>
> Why are banks so insistent on never, never writing down principal???
>

The Housing Bubble Isn't Funny Anymore

Making a sound business decision to no longer spend good money after bad makes one a deadbeat? If an investor invests in a stock and dumps his losses no one thinks about it. The decision for a consumer is if they do not want to stop their losses, they are allowed to walk away with the credit hit for a while. That is the law and it is lawful. Since, as this article points out, housing is going to drop another 20%, best to cut your losses and rent.

You may not like it but it is a sound business decision.


On Feb 04 08:44 AM Dr.Jackpot wrote:

> 90 % are paying their mortgage. The rest are deadbeats taking advantage
> of the situation to cop out at taxpayer expense.

Existing Home Sales Rebound

"The odds are that the distortion is likely to persist for some time..."

This is what makes Tim one of my favorite contributors on here. At least in California, lets not lose sight of the wave of foreclosures building due to the slow down required under the legislative changes in July. Also, lets not lose sight of the "shadow inventory" that exists of homes that have been foreclosed on but which have not been placed on the MLS yet. This "shadow inventory" is purposely there to skew numbers. Add those numbers into the inventory numbers and I bet the months of supply would double. I am actually pretty shocked to hear the chief economist of NAR actually use the "D" word (depression) as he has a tendency to act more like Mr. Rogers and declare its a "wonderful day in the neighborhood."

How Far to a Housing Bottom?

Only time will tell... regardless, it is not the bottom that is the problem but the period of time we will be at bottom. Historically, that has been for several years. It does seem like we are getting to that bottom. It just seems the perception that once we hit bottom good times return. That is far from the truth. Stagnation is just as bad.

Home Prices May Be Nearing Bottom, Bank Equities to Follow?

Lumber is cheap because the demand has dropped significantly with building stopped and remodels way down.


On Jan 14 06:18 PM Rhett wrote:

> Hoover, replacement costs are falling. Lumber, for example, is at
> its lowest price in years.

Home Prices May Be Nearing Bottom, Bank Equities to Follow?

You said: "I believe that real estate has gotten cheap enough that drive-by shoppers will increasingly stop in for a look, and when they do, the combination of price and mortgage cost will turn shoppers into buyers."

The only buyers are really investors, this does not make a market. You need mainstream buyers to come forth, but they can't. Unemployment is too high, many of the folks who would buy have lost their homes and have damaged credit, rent is still cheaper than buying, credit requirements are way too stringent and consumer sentiment is running too low. Its like having a great sale and no one is showing up. Which equates into even lower prices in the long run. Its the perfect storm.

Mortgage Cramdowns: A Disaster in the Making

Bankruptcy cramdowns are a good thing but it only assists those in trouble. If you have the ability to repay your mortgage or have sufficient assets, you will not qualify for a Chapter 13 reorg. Cramdowns have been used for years in secured transactions using very strict rules. Bankruptcy judges have been quite fair for decades on this process. It was allowed on principal dwellings until the 2005 bankruptcy reform.

Personal Responsibility and the Housing Bubble

At first, when I read this article, I thought it was a humorous piece, then I realize it is not. Being serious, I will address it. No question, it would be a better world if consumers were more educated on their finances and were given specific education in our schools regarding budget management and balancing their checkbook, but they dont. It would also be better that consumers should reject the closing pressure of being given a stack of legal documents an inch thick and given one hour to sign them. But they dont. It would also be better if the "educated" professionals around the consumers in the transaction, i.e. real estate agents, closers, mortgage brokers, lenders, explained the risks of what they are signing better. But they dont.

The entire gammit of consumer laws have been put in place because consumers are easy targets. Real Estate and Mortgage documents are way more complex than car documents or many other contracts yet consumer protections are required for those.

Buyer beware is alive and well. The first advice to all consumers based on this type of article is... do not trust anyone in the transaction, they are not protecting you.

Second advice, take all of your documents at a closing, do not sign them, take them home and read them for the several days it will take to understand them.

Third advice, all consumers should be required to take a debt counseling course BEFORE they buy to educate them on the pitfalls of the transaction.

Fourth advice, all consumers should be required to have the transaction reviewed by an independent party to advise them of all the negative aspects of the transaction.

That should get personal responsibility addressed properly and put a halt to this problem. Also will slow down transactions incredibly and more important... cause more than 50% of the transactions to be rejected.

Remember, the golden rule, he who has the gold makes the rules... the rules by real estate folks, mortgage brokers and lenders were bad. Personal responsibility would not be a discussion if they could not get those loans in the first place.