mderenthal

Does a ‘New Normal’ Include Millions of Homes Forever in Foreclosure?

Interesting, original article IGI.

Russ Roberts's 'The Price of Everything' Really Conveys How the Economy Works

Readers might want to check out Skousen's "The Making of Modern Economics - The Lives & Ideas of the Great Thinkers". Its a great overview of all of the major contributors to current economic theories, starting w/ Adam Smith up through current times, w/ interesting overviews on their contributions and bits and pieces of their personal lives as well to put a lot of it into context.

Existing Home Sales Going Strong

Be very careful in using data from NAR right now. I am a broker in Florida and little to none of my anecdotal experience agrees w/ much of anything that NAR has been reporting for the past 3 years. In this case, the run up to the original Nov 30 deadline of the $8k credit wasn't that big a deal for most qualified buyers who 1) opted not to rush their search to meet the deadline as their priority was on finding the best house at the best price, even if they missed the credit, and 2) they felt that if they missed the deadline that they could most likely negotiate an extra $8k off the price anyway once the supposed big rush of buyers died down. Yes, we're definitely seeing an increase in buying activity right now which is good news, but market is so extremely segmented that to report macro increases in buying activity is extremely misleading. Good homes in great neighborhoods are still moving at reasonable prices, and we're starting to see a trend of buyer's who are willing to pay over appraised value in some cases... only in a few, isolated, high demand neighborhoods though. The vast majority of our local markets are still spiraling downward in values as bank-owned and pre-foreclosure props are what's making up the bulk of inventory going under contract. And questions above of what happens to the housing "market" once the Fed stops propping up financing are huge. Where is NAR on this topic?

There Goes the Housing Recovery

Oh my gosh I don't think I've ever seen a more perfected use of the youtube link than TraderMark has done. Love it!

No, This Is Not a Recovery

As a real estate broker in Orlando I'm trying to make sense of it all... it seems to me that sentiments are improving among home buyers and the media (certainly related no doubt) but my limited understanding of macro economics has me feeling that most relevant economic fundamentals that drive housing demand (employment, ability to borrow / buyer liquidity, etc) are mostly in bad shape. My question - at what point does enough "consumer optimism" and government subsidization overrule what economic fundamentals would suggest is the real story?

Why Is It So Hard to Modify a Mortgage?

Traden4alpha and Aldebert nailed it. Look at the stats on the loan mods that have been completed and you'll see vast majority fail. I forget the exact numbers but I think its something like in excess of half of all loan mods are in default again w/in 9 months. And many banks are "negotiating" terms w/ upside down homeowners that should be criminal, that anyone w/ any lick of financial sense could tell you doesn't have a snowball's chance of creating a long term financial fix for either the bank or the homeowner. Why is this? Something called long term versus short term outlook is my guess. Same mindset that we're all now recognizing as having contributed to so much of the problems that we're all trying to find our way out of now. From what I'm seeing (residential RE broker in Florida working w/ a lot of upside down sellers right now) the banks are not doing loan mods w/ a 5, 10, or 30 year outlook, but probably something more like a 6 - 9 month outlook. Not an expert on this, but I'm guessing if banks can take steps (even if they lead to a short term fix) to keep a property out of the "non-performing asset" class on their books, it makes life a bit rosier for them for just a while longer. If loan mods were a truly profitable concept for them in the big picture, they would have already gotten better at it faster and we'd see loan mods taking place at a much faster pace. The idea that a $1000 payment from the gov is going to incent banks to push loan mods through faster is laughable. Makes my stomach hurt I'm laughing so hard (not really).

Four Points on the 'Great Short Trade'

That's some scary stuff Michael, but nothing I can argue against. I'm a real estate broker in Florida and the one positive I can point to is an increase in investor activity and first time buyers, but they are almost exclusively buying on price right now which will continue to push values down, until the numbers improve to the point of enough buyers participating to start driving values back up. Good old fashion supply and demand... and demand in this sense isn't simply folks who need a place to live, but folks who need a place to live and who can find the money to purchase and who are gutsy enough to get back into the market right now - and there's not enough of that happening. Housing has a ways to go I fear.