Did the market peak yet? This thread started in June 2005.

I like this guy:

D.R. Horton CEO: 2007 Is Going to 'Suck'

Link (http://www.forbes.com/feeds/ap/2007/03/07/ap3495962.html)

http://img181.imageshack.us/my.php?image=img0147editrz8.jpg


http://img181.imageshack.us/my.php?image=img0147editrz8.jpg

http://img181.imageshack.us/my.php?image=img0147editrz8.jpg


http://img181.imageshack.us/my.php?image=img0147editrz8.jpg

Not really surprising. :shrug:

another interesting 2 weeks

Beazer Homes is being investigated by everyone except Spitzer

http://biz.yahoo.com/ap/070328/beazer_homes_investigation.html?.v=4

Durable Goods Report is a total loss

http://biz.yahoo.com/ap/070328/economy.html?.v=6

it's really down .1% when you exclude transportation

Existing Home sales were down 8% year over year and not up 3.9% as the month over month numbers were hyped

new home sales were also lower than expected

At least this thing with Iran is driving down the rates on a 30 year fixed. if the 10 year note hits 4% i might call Countrywide again to refinance

At least this thing with Iran is driving down the rates on a 30 year fixed. if the 10 year note hits 4% i might call Countrywide again to refinance

No it's not (I wish it was). The 10yr is the same price today as it was 90 days ago. If anything, it's been mostly HIGHER during that time.

http://finance.yahoo.com/q/hp?s=%5ETNX

No it's not (I wish it was). The 10yr is the same price today as it was 90 days ago. If anything, it's been mostly HIGHER during that time.

http://finance.yahoo.com/q/hp?s=%5ETNX

You need to look at mortgage-backed securities, not Treasury bills or notes.

The price for them is higher now than it was 90 days ago, but not by much because there were two pretty big drops in the past week that cut out a lot of the price improvement.

You need to look at mortgage-backed securities, not Treasury bills or notes.

The price for them is higher now than it was 90 days ago, but not by much because there were two pretty big drops in the past week that cut out a lot of the price improvement.

Do you think that if the employment report next friday is as bad as expected, that overnight lending rates might go down?

Do you think that if the employment report next friday is as bad as expected, that overnight lending rates might go down?

I doubt it. I think a stronger indicator is going to be tomorrows PCE report which the Fed has preferred over Core CPI for a while now.

Nasty graphic of foreclosures in Newark, NJ:

http://www.nytimes.com/2007/03/27/nyregion/20070328_DEBT_GRAPHIC.html

Yikes.

That's a 6 year graph. Interesting, but not unexpected correlations too.

http://www.nydailynews.com/news/2007/03/28/2007-03-28_set_up_for_a_fall-3.html

http://www.nydailynews.com/news/2007/03/28/2007-03-28_set_up_for_a_fall-3.html


old news here. ever see the United Homes signs in the subway? Did you see the write up on Howard Beach in this Sunday's NY Times RE section?

more importantly, have you seen a for sale sign more often than once for every few blocks? I haven't.

Nasty graphic of foreclosures in Newark, NJ:

http://www.nytimes.com/2007/03/27/nyregion/20070328_DEBT_GRAPHIC.html

Yikes.

had newark on the news yesterday, i predict it won't be minority in a few years just like Park Slope gentrified in Brooklyn in the early 1990's.

Last year in a hispanic area of queens i read a sign on a mortgage broker's office that said that you don't need to pay a lot for a house. this is in an area where homes are like $500,000 and most people are on government assistance

old news here. ever see the United Homes signs in the subway? Did you see the write up on Howard Beach in this Sunday's NY Times RE section?

more importantly, have you seen a for sale sign more often than once for every few blocks? I haven't.

No, I don't read the NY times.

In the Bensonhurst area, there are still a lot of for sales sign and value is still holding a bit. As a buyer, it suck because I'm looking for a house.

i think we are in for a soft landing here. i don't see co-op prices going up anymore. Maybe a little over last year, but that's it. the spread between the price of a home and a co-op is getting too small. in forest hills some nutjobs are paying more for a 3 bedroom co-op than what they would pay for a house


if you wait a few years you can probably get a great deal in newark once it starts to gentrify

Funny. I came into this thread wondering if I would find the word "gentrify" used. Truly bizarre

Got some neat links:

A blog about how crappy real estate is now:

http://housingpanic.blogspot.com/

A portfolio manager for Pimco Mutual funds sold his house and now rents and he tells why:

http://www.pimco.com/LeftNav/Global+Markets/Global+Credit+Perspectives/2007/U.S.+Credit+Perspectives-+5-2007.htm

A sad story of a house flipper:

http://iamfacingforeclosure.com/


Some really good reading!

As a buyer, it suck because I'm looking for a house.

I've been looking for months as well. I can't find anything in price range worth buying that I like. I'm looking in my hometown and there's just not a lot out there. I made a bid on one house but I can't get the seller to come down on the price enough. I need them to come down at least 15k and they'll only drop by 7k. They want to keep it on the market to see if what they can get. I think it might be a little over priced as well based on comparables (not an exact science, I know).

We close on our house this morning. I'm not so paniked about all the talk of how the bottom may not be here yet. You never want to buy at the bottom (because you get the kind of situation LHO is in). We got a decent deal, decent financing (6.25% on the first trust) and the seller is covering closing costs. Seeing how mortgages rates are beginning to creep up, I'd be happier with a slightly higher selling price and a lower interest rate than the opposite.

However, there are two things that have me a bit concerned. Post-inspection, the sellers agreed by Addendum to have a licensed contractor do some window repairs and provide receipts and invoices. I have been told that the sellers elected to do the repairs themselves.

Second is we are having HW floors installed starting right after we close. We have a decorator's agreement to have him start the demo after we leave the walk through, so he'll be able to advise us of sub-flooring damage prior to signing the final papers. He has 21 years in the industry, and will be able to tell us if any damage was reasonably known by the sellers and not disclosed.

Over all of this is the representation by the seller's agent that they are not willing in any circumstance to put money in escrow "for anything". Whether that means they are willing to provide seller's credit instead I don't know, but that's not the impression I got. So I anticipate some back and forth at closing. Neither party is going to walk, but I feel like there might be some issues that make closing take longer than it should.

We close on our house this morning. I'm not so paniked about all the talk of how the bottom may not be here yet. You never want to buy at the bottom (because you get the kind of situation LHO is in). We got a decent deal, decent financing (6.25% on the first trust) and the seller is covering closing costs. Seeing how mortgages rates are beginning to creep up, I'd be happier with a slightly higher selling price and a lower interest rate than the opposite.

However, there are two things that have me a bit concerned. Post-inspection, the sellers agreed by Addendum to have a licensed contractor do some window repairs and provide receipts and invoices. I have been told that the sellers elected to do the repairs themselves.

Second is we are having HW floors installed starting right after we close. We have a decorator's agreement to have him start the demo after we leave the walk through, so he'll be able to advise us of sub-flooring damage prior to signing the final papers. He has 21 years in the industry, and will be able to tell us if any damage was reasonably known by the sellers and not disclosed.

Over all of this is the representation by the seller's agent that they are not willing in any circumstance to put money in escrow "for anything". Whether that means they are willing to provide seller's credit instead I don't know, but that's not the impression I got. So I anticipate some back and forth at closing. Neither party is going to walk, but I feel like there might be some issues that make closing take longer than it should.


Good for you! The best part of the market now (unlike 2 years ago) is that inspections for houses are a must. I made an offer on a house a month ago in Maryland for $40K less than asking price and it got accepted right away (the house was an estate sale). I made it contigent on inspection and appraisal. I paid $350 for a 2 hour inspection, but we spent an hour in the basement going over everything that was wrong with the house (water leaking in basement, cracked foundation on all 4 sides of the house, bad floor boards, termite damage, etc etc). I backed out of the deal and got my money back from escrow, but I did lose the $350. But to me, I'd rather lose $350 a couple of times and windup with a house that doesn't have any major issues than being stuck with a money pit.

I'll be buying again soon too (once something in a new neighborhood comes up), and I'll be putting in HW floors throughout too (minus the bathrooms of course). Good luck with your new place Josh!

A sad story of a house flipper:

http://iamfacingforeclosure.com/

How is this sad? The guy sounds like a idiot.

How is this sad? The guy sounds like a idiot.

The problem is that during the peak, you could be a pumpkin with the brain of a goat and make a fortune flipping. Other numbnuts heard about the guy in their office that made $200k in 9 months and jumped in the game. Too late of course.

The worst story I personally know about is a woman in my mom's office who liquidated her 401(k) ($1m+) to buy 5 condos and flip them. Let's just say she no longer can retire anytime soon.

GDP Growth for Q1Y07 = 1.3%

<font size=1>(Meanwhile China claimed nearly 11% GDP growth for the same time period. Even if they were fibbing by 200%, they still are growing at an incredible pace. Yes, I know their economy is nowhere NEAR as large as ours, but just stating a fact)</font>

My neighbor listed his house at $925k and sold it in one month for $950k.

We are 8 miles outside of NYC.

Needless to say I was VERY happy to hear the news.

My neighbor listed his house at $925k and sold it in one month for $950k.

We are 8 miles outside of NYC.

Needless to say I was VERY happy to hear the news.

I went into contract for my apartment in Manhattan yesterday at what I believe is an above market price considering I sold it without a broker. I close on my house in MA on Monday. Funny how there is still a strong bid for high priced real estate when everywhere else is crumbling.

Good for you! The best part of the market now (unlike 2 years ago) is that inspections for houses are a must. I made an offer on a house a month ago in Maryland for $40K less than asking price and it got accepted right away (the house was an estate sale). I made it contigent on inspection and appraisal. I paid $350 for a 2 hour inspection, but we spent an hour in the basement going over everything that was wrong with the house (water leaking in basement, cracked foundation on all 4 sides of the house, bad floor boards, termite damage, etc etc). I backed out of the deal and got my money back from escrow, but I did lose the $350. But to me, I'd rather lose $350 a couple of times and windup with a house that doesn't have any major issues than being stuck with a money pit.

I'll be buying again soon too (once something in a new neighborhood comes up), and I'll be putting in HW floors throughout too (minus the bathrooms of course). Good luck with your new place Josh!

This many issues should have been picked up during the showing. I would recommend learning from the inspections and trying to spot these issues to save yourself the $350.

This many issues should have been picked up during the showing. I would recommend learning from the inspections and trying to spot these issues to save yourself the $350.

Oh, I did and I will. This was my first ever home inspection, so I learned a lot. I had spotted some cracks before, but being a newbie I didn't know exactly what I was looking at. Now I know. :) Also, my brother in law gave me great advice. When you see a house you like on the internet and you're going to see it for the first time, walk right in the house and start in the basement. :)

I went into contract for my apartment in Manhattan yesterday at what I believe is an above market price considering I sold it without a broker. I close on my house in MA on Monday. Funny how there is still a strong bid for high priced real estate when everywhere else is crumbling.

It does make sense that the outer lying areas will decrease first while manhattan etc will still stay strong.

A little like SF which remains strong, yet outer areas are starting to see larger drops in price.

I went into contract for my apartment in Manhattan yesterday at what I believe is an above market price considering I sold it without a broker. I close on my house in MA on Monday. Funny how there is still a strong bid for high priced real estate when everywhere else is crumbling.

How did you go about FSBO'ing it? I'm curious because I'm considering doing that when it's time to sell. I just can't see paying a 6-figure commission which comes out of my own pocket. At some point, the commissions far outweigh the work that goes into selling a property IMO. Thx.

How did you go about FSBO'ing it? I'm curious because I'm considering doing that when it's time to sell. I just can't see paying a 6-figure commission which comes out of my own pocket. At some point, the commissions far outweigh the work that goes into selling a property IMO. Thx.

I thought it would be a cinch to do. List on the NYtimes.com, have open house and watch the offers roll in... The offers certainly came but from unqualified buyers who liked to waste my time. It was a lot harder than I thought and I think being present at your own open house will deter people. Also, if you are talking about a 6 figure commission you are obviously selling your place $1.75mm or up and at that range you may not find a buyer who wouldn't want to use a broker. I quickly started offering 3% to a buyer's broker (very tough to generate traffic if you don't) which defeats the main benefit of FSBOing it in the first place. In addition, brokers from Corcoran and Elliman are prohibited from showing apartments with total commissions less than 6% so you lose out on all those buyers.

As for my story, I held about 6 open houses and ended up finding my buyer at a friend's wedding in Wilmington, NC who just happened to be sitting at my table. Two weeks later it was a done deal. I thought my apartment's real market value was $875k but I listed at $895k to create a cushion. I ended up selling it to my buyer at $845k with no fee which would have been a selling price of $900k with the 6%. I think I made out but definately gave some benefit to the buyer.

I would say if you have a Studio, 1BR or 2BR worth less than $1mm I would try selling it yourself as there are PLENTY of people who can afford it in Manhattan. Anything over $1.25mm I would definately have it listed with a broker as they will be able to tap into a network that you can't.

Honestly, if I had to do over again, I would list it with a broker I trusted (I had someone tell me my apartment would sell in the 7's). Since I left NY before going into contract I actually used a broker for a week (who was awesome by the way, one of the top brokers at Elliman and old college friend) but he allowed me a 10 day exclusion to get a deal done with a 4 person list I had provided him.

It does make sense that the outer lying areas will decrease first while manhattan etc will still stay strong.

A little like SF which remains strong, yet outer areas are starting to see larger drops in price.


i live in a suburb of NYC, 8 miles outside of the Lincoln Tunnel (midtown).

my neighbor 2 doors down just sold their house (went into contract) for $950k when the asking price was $925k. There were 3 offers, 1 at 875, and 2 at asking price. One buyer came up to $950k.

they bought the house in 2002 for $369k and put about $250k into it.

the house is 4 bedroom, 3 1/2 bath with everything new inside and is around 2,200sf.

Didn't all mortgage lenders suddenly get more particular to whom they will issue a loan?

While individual areas may not be as affected, I think the size of the entire pool of people that are capable of getting a loan has now shrunk (or at least the loan amount has shrunk), therefore, the real estate market in general has to have taken a hit. Not as many qualified buyers at the higher prices.

Or are my thoughts not even close to being right?

I just notice that in my area there are a lot of bank forclosure sales and auctions that did not exist 2 years ago. It went from a few every couple months to double digits every month.


As a side question to anyone here that may know, I know someone that is about to refinance a home that has dropped in value. When he bought it, he went for an interest only loan with a 3 year ARM, the ARM will reset this summer and the rate will jump about 2% (or so he says) so he wants to refi to keep the rate (his payment) low.

I think he put 5% or 10% down when he bought it. Let's just say that he is in worst case and the house is now worth BELOW the original buying price minus his downpayment. Lets say he paid $500k for the house, put $25k down and the house is now only worth $460K

Does he stand a chance in hell of getting a loan for $475k if the value is only $460k now? His credit is not perfect, maybe it's 650, hard to get a straight answer out of him, he has never missed a payment in the 3 years he has had the house though. Credit issues are from the past.

I think he is screwed and may be just stuck letting his ARM adjust up and be stuck with the payments.

I'd think most that were going for a 900K+ house wouldn't in general have problems getting a loan. It's all the subprime lenders that are getting hit hard.

Prices haven't dropped around here (los angeles) all that much, but sales volume and construction sure have... as expected, people are trying to dig their heels in and weather the storm. Still not sure how the correction is going to come... it might just be inflation outpacing home appreciation until home prices are more in sync with reality, and there might not be a huge price drop, who knows? All I know is that hardly anybody can afford to own a house here.

In addition, brokers from Corcoran and Elliman are prohibited from showing apartments with total commissions less than 6% so you lose out on all those buyers.

Darnit, between Elliman and Corocoran they pretty much have a stranglehold on the NYC RE market. :(

I'd think most that were going for a 900K+ house wouldn't in general have problems getting a loan. It's all the subprime lenders that are getting hit hard.

Prices haven't dropped around here (los angeles) all that much, but sales volume and construction sure have... as expected, people are trying to dig their heels in and weather the storm. Still not sure how the correction is going to come... it might just be inflation outpacing home appreciation until home prices are more in sync with reality, and there might not be a huge price drop, who knows? All I know is that hardly anybody can afford to own a house here.

People stop digging in their heels when they lose their job. Thankfully, the economy is doing reasonably well so we don't have a recession and troubles in the housing market. Some opine that higher rates are working as a regressive tax, with the less wealthy (who are most likely to have a ARM, especially a subprime one) paying higher rates than people who have 15-year fixed loans on the house they bought in 1995.

4KRG, your friend should stay put. If he's got a non-subprime ARM, it'll reset to LIBOR plus 2.25% putting his payments and rate somewhere around 7.5%, which is higher than average, but not ridiculous.

If he has a subprime ARM, it'll reset to LIBOR + his note rate, which could easily be 10% or more. At worst, the interest-only period will end as well and he'll be in for a huge shock.

We close on our house this morning. I'm not so paniked about all the talk of how the bottom may not be here yet. You never want to buy at the bottom (because you get the kind of situation LHO is in). We got a decent deal, decent financing (6.25% on the first trust) and the seller is covering closing costs. Seeing how mortgages rates are beginning to creep up, I'd be happier with a slightly higher selling price and a lower interest rate than the opposite.

However, there are two things that have me a bit concerned. Post-inspection, the sellers agreed by Addendum to have a licensed contractor do some window repairs and provide receipts and invoices. I have been told that the sellers elected to do the repairs themselves.

Second is we are having HW floors installed starting right after we close. We have a decorator's agreement to have him start the demo after we leave the walk through, so he'll be able to advise us of sub-flooring damage prior to signing the final papers. He has 21 years in the industry, and will be able to tell us if any damage was reasonably known by the sellers and not disclosed.

Over all of this is the representation by the seller's agent that they are not willing in any circumstance to put money in escrow "for anything". Whether that means they are willing to provide seller's credit instead I don't know, but that's not the impression I got. So I anticipate some back and forth at closing. Neither party is going to walk, but I feel like there might be some issues that make closing take longer than it should.

Back from closing. Things went well. Sellers did a good of job of getting the windows fixed and even did some other repairs that we didn't ask for but still appreciated.

Our hardwood floor guy did find some damage on the sub-flooring. He gave us a hard price of $600 to repair it, even if it costs him more to do (he needs to use a microbiotic on the water damage, urine damage and remove wood rot and relevel a section of the floor). At closing, I discussed the issue with the sellers and they were unwilling to split the costs. Seller even said if it was a dealbreaker then "fine". I actually thought this was a pretty stupid thing to say over $300 but kept my cool and said "Tracy, you have a truck packed up, a newborn, and a small dog ready to go to Iowa. I am not going to make you stay in a hotel for months until you re-sell this house. I'm just asking for you to consider it". They ultimately declined. My thought process was "this is just $300, sellers gave us $10k in closing credits, and closing costs were $2k less than our GFE." So I said that was fine and moved on. They were really pissy about it though, which bothered me a bit, but I wanted this to be a happy day, so I let it go.

Really happy with the house. We don't move in until two week when the HW flooring is installed. We have nice neighbors on one side and real uptight ones on the other. But it's a nice neighborhood miles better from this POS apt. we live in now.

That's why in the contract you always put in "Seller covers costs of $10,000 or 4%" or what have you. You don't have it say, "Seller covers all costs."

If you were short $2000 instead of giving the seller a break you could've had them pay some points so your rate would be under 6%.

And mortgage rates are not "creeping up", they've been on a long-term downward trend since June 2006.

But congrats on the purchase!

That's why in the contract you always put in "Seller covers costs of $10,000 or 4%" or what have you. You don't have it say, "Seller covers all costs."

If you were short $2000 instead of giving the seller a break you could've had them pay some points so your rate would be under 6%.

And mortgage rates are not "creeping up", they've been on a long-term downward trend since June 2006.

But congrats on the purchase!

My loan had zero points. In fact, that's my lender's tagline (seriously). Closing costs were still $11k, so the $10 got eaten up. The title company gave us a refund of our overage (we brought a check for the GFE) and we bought a table with it. I didn't mind that.

As for mortgage rates, I couldn't get our 6.25 today as I locked it in for. But our guy offers a no-cost re-fi, so if rates do happen to go below, I can re-fi.

It does make sense that the outer lying areas will decrease first while manhattan etc will still stay strong.

A little like SF which remains strong, yet outer areas are starting to see larger drops in price.


read on itulip a while ago that this was the pattern in past RE cycles

NYC is different that 75% of the market is coops and most require 20% down and they do an extensive background check so you can't buy in with 5% down and no cash to make payments if you lose your job

I was very surprised to hear about bad housing news today as being the reason for the stock market downturn. didn't think it would happen until august at the earliest

I'd think most that were going for a 900K+ house wouldn't in general have problems getting a loan. It's all the subprime lenders that are getting hit hard.



I know 3 people that bought $750k + houses with about 5% down and interest only loans with 3 year ARMs. I know one was a subprime.

I know someone in RE here in Northern VA that states most people in the 1 million dollar mcmansions around here did it with creative financing and are barley making the payments (2 high income family).

Around here, it's the people in the 3 million dollar and up houses that are the ones you speak of :)



4KRG, your friend should stay put. If he's got a non-subprime ARM, it'll reset to LIBOR plus 2.25% putting his payments and rate somewhere around 7.5%, which is higher than average, but not ridiculous.

If he has a subprime ARM, it'll reset to LIBOR + his note rate, which could easily be 10% or more. At worst, the interest-only period will end as well and he'll be in for a huge shock.

Bus, he said his rate would rachet up to 8%, I think he is at 6% now, not sure if he is telling the truth as his wife handles most of it and he is a bit clueless. One thing he told me for certain is that if his payment went up another $100 per month, he was headed for bankrupcy, that is how far in debt he is and how strapped he is with his current payment (I think he said his current payment was around $2600 month)

I should also mention that right after they got this home loan, his wife went out and bought a loaded Sequoia (about $40k?) and financed the entire thing.

He is worried that he is going to end up living in the damn Sequoia, his wife said selling it is NOT an option, stupid bitch :lol:

It amazes me how some people live -screwy- He has 3 kids too.

Pa., N.J. moving to aid subprime borrowersSome homeowners can't pay the increased payments on adjustable-rate mortgages.
By Harold Brubaker
Inquirer Staff Writer

Government help is on the way for some Pennsylvania and New Jersey homeowners facing unaffordable increases in monthly payments on adjustable-rate mortgages - sometimes called "exploding ARMs."
The board of the New Jersey Housing and Mortgage Finance Agency plans to issue $30 million in taxable bonds and will vote next week on rules for the program, which aims to keep subprime borrowers in their houses.

In Pennsylvania, the Housing Finance Agency is planning a similar refinancing program funded initially with $25 million to $50 million in taxable bonds. It is also developing a "workout" program for loans in which the remaining principal is greater than the appraised value of the house.

"That's going to be an instance when we have to bring in the lender and get them to bring their price down," Brian Hudson, executive director of the Pennsylvania Housing Finance Agency, said yesterday.

Hudson is scheduled to be in Philadelphia today for an announcement by state lawmakers of funding for a reserve to cover expected losses in the workout program, which involves riskier loans than the straightforward refinancings of adjustable-rate mortgages into long-term, fixed-rate loans.

State officials across the country are grappling with responses to high rates of mortgage delinquency concentrated among borrowers with poor credit, many of whom got mortgages with a low fixed rate for the first two years, followed by an adjustable rate for the rest of the mortgage. Many borrowers assumed they could refinance.

The share of subprime mortgages in Pennsylvania with payments at least 60 days late was 12.6 percent in February, up from 10.5 percent the year before. In New Jersey, the delinquency rate jumped sharply to 12.5 percent in February from 7.2 percent the year before.

"This program is absolutely necessary," Susan Bass Levin, commissioner of the New Jersey Department of Community Affairs, said yesterday.

Levin said final details of the New Jersey "Rescue" program were being worked out, but she said the idea was to get borrowers into a 40-year, fixed-rate loan.

She cautioned that "not all borrowers will qualify" and that the program would not lend more than the house is worth.

New Jersey residents making as much as $135,000 annually - depending on the county they live in - are eligible for the refinancing program. Bass said she anticipated offering interest rates of 6.75 percent and 7.50 percent, depending on bond-market pricing.

The challenge in such bailout programs is to help homeowners in a way that does not reward lenders for making bad loans.

Ohio, which is among the states hardest hit by the subprime delinquencies, launched a refinancing program April 2. So far, the program has set aside $5.6 million to refinance 43 loans, but it has not yet closed any, said Joel Ghitman, director of homeownership at the Ohio Housing Finance Agency.

The Ohio program is for a limited number of borrowers. "If they are already facing foreclosure, they are probably not going to be eligible for this program," he said.


This kind of shit pisses me off, taking my tax money and helping people who live beyond their means; what ever happend to being responsible for the decisions you make?

i really don't see the point since the ARM's will adjust to around 7.5% at current rates

a lot of people who got these a few years ago bought $350,000 homes with $7000 property tax bills on ARMs because that's the way they could afford it. Now that taxes are close to $10,000 for these homes a 6.7% fixed rate isn't going to help.

If NJ really wants to help, slash property taxes by 50%

This kind of shit pisses me off, taking my tax money and helping people who live beyond their means; what ever happend to being responsible for the decisions you make?

Time for me to buy a house!

Some good deals are finally starting to show up in my area and we have not been hit very hard by the housing crunch:

REALLY, IT’S TRUE!
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Quite simply, we will put 12 months worth of your actual Principal and Interest payments into a secure, independent escrow account and payment will be sent to you from this account each month. You may invest these many months of savings to achieve your other big goals; for example - buy a new car, take a vacation, or pay for college tuition.

It’s That Easy!
As you would appreciate, there are usual, reasonable and customary conditions that apply i.e. credit worthiness among others*. Consult your New Home Advisor, in the community of your choice, for all the simple details.

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Live Free for a Year, exclusively in a Keystone Custom Home. This is an extraordinary opportunity and we have other incentives we can customize to your particular needs.

For instance, we have designed an incentive program providing cash for closing costs or instead of the free payments for a year, you might choose to benefit from 6% off the total price of any home and 60% off all options with no limit to the number of options you can choose. The choice is yours!


So, no payments for a year and cash for closing costs! or 6% off and 60% off all options!

I have not seen a deal like this in a long time, the majority of the houses are 200+ (which is a little high for first time home buyers in this area) but I believe this is just the tip of the iceburg.

http://www.keystonecustomhome.com/promotions/

NJ got tough on subprime lenders a long time ago. Programs and rates for NJ borrowers are much different, and not necessarily better all the time.

Lateralus: This is no more a "deal" than 0% financing on cars was a deal. If I was buying a home I'd get my discounts the old-fashioned way: bargain hard.

read the small print and do the math. builders like gimmicks like this because they don't like to cut prices

i personally like to stay away from all new construction and my ideal is around 5 years old. i know that something like 95% of people never have any problems, but i think 5 years is a good age for any defects to show during an inspection that you might miss in a new construction

read the small print and do the math. builders like gimmicks like this because they don't like to cut prices



They do offer a 6% discount and that will be $12,000 on a 200k house that sold for 250-275k not more than 2 years ago. My point is that prices are really coming down in a lot of areas. I've been actively house hunting in this area for the last 5 years and this is the first I have seen deals like this.

They do offer a 6% discount and that will be $12,000 on a 200k house that sold for 250-275k not more than 2 years ago. My point is that prices are really coming down in a lot of areas. I've been actively house hunting in this area for the last 5 years and this is the first I have seen deals like this.

Yea, but I hate that builder crap. I'm shopping for a house right now and the builders will give you 200K in upgrades and crap, but they won't lower the price of the house by 30K. If they were to drop the house price, everyone else in the area that bought from them would go apeshit because they paid more.

I guess they figure neighbors don't notice upgrades like they do price changes. Plus once they lower the price, they can never go back...not until the market turns up again.

U.S. home prices fall for first time since 1991
By Rex Nutting, MarketWatch
Last Update: 12:51 PM ET 5/29/07

WASHINGTON (MarketWatch) -- U.S. home prices dropped 1.4% in the first quarter compared with a year earlier, the first year-over-year decline in national home prices since 1991, according to the S&P/Case-Shiller index released Tuesday.

A year ago, home prices were rising at an 11.5% pace. Prices have been falling for the past three quarters.

The Case-Shiller indexes cover three geographical areas. The national index is released quarterly, while the 10-city and 20-city indexes are released each month.

The 10-city Case-Shiller price index fell 1.9% year-on-year through March, while the 20-city index dropped 1.4%. The 10-city index has fallen nine months in a row, while the 20-city index has fallen for eight straight months.

All three Case-Shiller indexes show continued deterioration in home prices. Prices were falling or rising slower in most U.S. cities.

The national decline "is reaffirmation of the pullback in the U.S. residential real estate market," said Robert Shiller, chief economist for MacroMarkets LLC, and co-inventor of the index.

"This fall is consistent with the ongoing trend that has developed over the past year," wrote Goldman Sachs economists, who said they believe the Case-Shiller index is the best gauge of home values. "We remain comfortable with our forecast of house prices falling by 5% over 2007."

Falling home prices have squeezed many borrowers who have been able to extract equity from their homes or refinance their loan to avoid a sudden increase in mortgage payments as their adjustable-rate loan reset.

As a result of falling prices, foreclosures are rising nationally, especially in regions with a weak economy, such as the Midwest, and in the bubble regions of Southern California, Florida, Nevada and Arizona.

Thirteen of 20 cities in the Case-Shiller index have seen falling prices in the past year, led by Detroit (down 8.4%) and San Diego (down 6%). Home prices rose 10% in Seattle, 7.4% in Charlotte, N.C., and 7% in Portland, Ore.

Prices in Phoenix and Las Vegas, Nev., have fallen the furthest from their peak. After growing at a 49.3% pace in September 2005, home prices in Phoenix are now down 3% year-on-year. In Las Vegas, price gains went from 53.2% in September 2004 to negative 1.6% in March 2007.

Among other major cities tracked by the index, home prices are down 4.9% in Boston, down 4.8% in Washington, down 3% in Tampa, Fla., down 2.4% in Cleveland, and down 2.3% in San Francisco. Prices fell 2% in Denver, 1.9% in Minneapolis, 1.4% in Los Angeles and 1.1% in New York.

In addition to the price gains in Seattle, Charlotte and Portland, prices rose 2% in Atlanta, 1.6% in Dallas, 1.3% in Chicago and 1% in Miami.

The Case-Shiller index is considered a superior gauge of home prices compared to the median sales-price data released by the Commerce Department or National Association of Realtors, because it tracks multiple sales on the same property and is therefore not influenced by a different mix of homes sold in a period.

Unlike the price index produced by the Office of Federal Housing Enterprise Oversight, the Case-Shiller index does not include refinancings. And, also unlike the OFHEO index, it includes homes with mortgages larger than the conforming limit of $417,000.

The OFHEO index for the first quarter will be released on Thursday. Through the fourth quarter, home price gains had slowed to 5.9% year-on-year from 13.3% a year earlier. The OFHEO purchase-only index (which excludes refinancings) had risen 4.1% year-over-year.

Lehman Bros. economists said their forecast for a 0.5% gain in the first-quarter OFHEO price index remains on track. That would put the year-over-year gain at 4%.

<hr>

1.5% is not a cavernous drop, but it is interesting to see nominal price drops. I wonder how long this will continue.

1.5% is a national average. Just like in the early 1990's I think it was a 1% drop one year between 1989 and 1995 and in the same time some markets lost over 50% of their value. My mom bought an apartment at the very bottom of the NYC coop bust in 1994 at something like 80% off the original asking price of 6 years prior. Even in 1997 a lot of coops were selling for less than the salaries of the people buying them.

i've read stories in california at that time of nice neighborhoods losing 50% of their value in the early 1990's at the same time the national average was flat or up 1%

http://static.sky.com/images/pictures/1541526.jpghttp://static.sky.com/images/pictures/1541528.jpg

If the housing market is bad, like I've been told that it is, shouldn't that encourage the Fed to drop interest rates? Instead they are going up a bit. (I'm getting paranoid because I've been looking for a house for months so I don't want them to go up).

Also, what's the differene between subprime and prime mortgages? Is a prime mortgage something you have to ask/push for? Are rates negoitiable at all? (Or will they drop interest points if I beg). I was reading an article on CNN about prime mortgages and I want to make sure I get the best rate and overall mortgage.

If the housing market is bad, like I've been told that it is, shouldn't that encourage the Fed to drop interest rates? Instead they are going up a bit. (I'm getting paranoid because I've been looking for a house for months so I don't want them to go up).

Also, what's the differene between subprime and prime mortgages? Is a prime mortgage something you have to ask/push for? Are rates negoitiable at all? (Or will they drop interest points if I beg). I was reading an article on CNN about prime mortgages and I want to make sure I get the best rate and overall mortgage.


Go to Penfed.org and look at what they are offering, that should be your target rate if you are a credit worthy individual. Unfortunately rates are heading higher, luckily I was able to lock into a 5/1 Jumbo ARM for 4.875% with 0.875% points about 3 months ago for a closing last month.

If the housing market is bad, like I've been told that it is, shouldn't that encourage the Fed to drop interest rates?

Actually, lower rates are part of what started this whole real estate asset "bubble" that we may have seen over the past few years. Higher rates normally "cool off" situations like these. The housing market is not "bad"... it is simply correcting. (And unless you've got an unbuilt condo in Miami Beach, don't worry about al's 80% gloom-and-doom scenario: it's ridiculous).

But then... why is the Fed raising rates? It's got very little to do with the housing market. Simply put, inflation is on the horizon. When prices go up, interest rates rise (in short, to better compensate the people who are lending the money).

The economy might be slowing down according to today's GDP report but there's a slimy little nugger of info there that is throwing a wrench into things: the chain deflator, which showed inflation at an annualized rate beyond the level the Fed is comfortable with. This, to some, is indicative of possible stagflation (http://en.wikipedia.org/wiki/Stagflation), which is bad for everyone.

and when will the dollar start regaining some strength? or do we not care as it means we can export a lot more now.

stagflation (http://en.wikipedia.org/wiki/Stagflation)Whoo hoo! Stag! Everybody onto The Bus!

real estate question (didnt feel like making a new thread for this) but what is the advantage of owning vs renting when the market sucks?

i understand why people buy when the market is good or even decent for many reasons - tax deductions, gain equity, helps your credit, investing in yourself (in a way), and the obvious huge payday when the market goes crazy (like a few years ago).

but when the market sucks, why bother buying/owning? seems like its better financially to rent because the costs are way down.

what do you mean when the market sucks? like when real estate prices are down? sounds like the best time to buy

real estate question (didnt feel like making a new thread for this) but what is the advantage of owning vs renting when the market sucks?

i understand why people buy when the market is good or even decent for many reasons - tax deductions, gain equity, helps your credit, investing in yourself (in a way), and the obvious huge payday when the market goes crazy (like a few years ago).

but when the market sucks, why bother buying/owning? seems like its better financially to rent because the costs are way down.

I've always heard that if you're looking to stay in a house for a long time and can afford to buy, go ahead and do it. Long term, housing is a good investment most of the time, and as long as you can avoid envying your newer neighbors if prices in your neighborhood happen to fall, you should be fine just making your payments. And you get all the benefits of owning: not throwing your money away, etc.

However, if you're in a good rental situation (especially if you're under some form of rent control) and would over extend yourself to own something similar, or if you're not sure if you're going to move, I'd say don't do it. I live in SoCal, and to me, renting is a better option, because to own a similar place, my mortgage, not even including property taxes, would be double to triple what I pay in rent, and I can't easily afford that right now.

what do you mean when the market sucks? like when real estate prices are down? sounds like the best time to buy

true but if prices are going to stay stable (or go down) for awhile shouldnt you rent instead and save up alot more money? if you arent gaining equity, then renting seems better. costs less to rent (ie, make more money) and the big advantage to buying (prices going up) is gone.

real estate question (didnt feel like making a new thread for this) but what is the advantage of owning vs renting when the market sucks?

i understand why people buy when the market is good or even decent for many reasons - tax deductions, gain equity, helps your credit, investing in yourself (in a way), and the obvious huge payday when the market goes crazy (like a few years ago).

but when the market sucks, why bother buying/owning? seems like its better financially to rent because the costs are way down.

That's short term thinking. When buying a home, you must think of the long term implications.

true but if prices are going to stay stable (or go down) for awhile shouldnt you rent instead and save up alot more money? if you arent gaining equity, then renting seems better. costs less to rent (ie, make more money) and the big advantage to buying (prices going up) is gone.
costs less to rent is a relative thing i guess.

my previous house payment was about $1k a month because it was a 15 year mortgage. On a 30 year, I would have been less than 700. I couldn't rent a place that big for 700. On top of that, i rented out rooms so my real payment was a lot less

it still sounds like buying over renting is largely based on the assumption that the value will go up over the course of ~3-5 years. if not, renting seems way better.

true but if prices are going to stay stable (or go down) for awhile shouldnt you rent instead and save up alot more money? if you arent gaining equity, then renting seems better. costs less to rent (ie, make more money) and the big advantage to buying (prices going up) is gone.
Each situation is different (they have calculators to figure it out for your situation). You are basing your premise on some assumptions. Namely, that renting is significantly cheaper than owning. That is not always the case, especially when factoring in the tax savings. Furthermore, you seem to assume that it's obvious what the market is doing and going to do, such that you can easily "buy in" at exactly the right time (or close enough). If it were that easy, we'd all be millionaires.

Besides, even slow growth in RE prices can be a lot of money. My home has appreciated maybe 5%/yr for the 2 years I have owned. But, given that someone (a bank) has loaned me a lot of money for that investment, I have gained maybe $35k in equity, which is 2x the size of my original downpayment. Factoring in the tax savings and the roommate, I'm paying more than I used to renting, but have a much nicer house and have made some money.

Additionally, there's the intrinsic value of owning your home. You can do anything you want to it, you're not beholden to a landlord, etc. Of course, with that comes responsibility when your furnace dies, or the water heater goes out.

but when the market sucks, why bother buying/owning? seems like its better financially to rent because the costs are way down.

The point is to buy or own when the market sucks. The wost point to get into a market is when it is at its hottest (figure condos on Miami Beach in late 2004, early 2005). Paraphrasing Baron Rothschild, invest when there's blood on the streets.

Nice little video clip of Ft. Myers Flordia where a housing comany sold un-sold houses at auction which most of them went for 50% of the appraised worth.

http://www.winknews.com/news/local/7896352.html?video=YHI&t=a

500 Top foreclosure zip codes

http://money.cnn.com/2007/06/19/real_estate/500_top_foreclosure_zip_codes/index.htm

Nice little video clip of Ft. Myers Flordia where a housing comany sold un-sold houses at auction which most of them went for 50% of the appraised worth.

http://www.winknews.com/news/local/7896352.html?video=YHI&t=a

Fantastic. I hope some people got in on that.

Does anyone with NAR data access have the growth of value for those zip codes? It would be cool to compare the growth of value as well as the unemployment rate.

I closed on my apartment in NYC today. So happy to get from under 2 mortgages and most importantly getting away from a coop whose ineptitude was truly outstanding.

was it that bad? my maintenance is only up 10% or so over the last 4 years.
and they have the money for local law 11 work in the bank

NYC market is still pretty good

500 Top foreclosure zip codes

http://money.cnn.com/2007/06/19/real_estate/500_top_foreclosure_zip_codes/index.htm

Fascinating. My sleepy little town of about 25,000 has more than huge cities here in AZ like Phoenix, Chandler and Mesa.

was it that bad? my maintenance is only up 10% or so over the last 4 years.
and they have the money for local law 11 work in the bank

NYC market is still pretty good

This actually happened when they refinanced the mortgage that still had 10 or so years to get a lower rate:

Before Coop refinance
Reserves: $150,000
Mortgage (7.2%): $2,000,000
Line of Credit (8.0%): $500,000 available, $0 drawn
Total Assets: $150,000
Total Debt: $2,000,000
Net Debt: $1,850,000

After Coop refinance
Reserves: $650,000
Mortgage (6.2%): $3,000,000
Line of Credit (8.0%): $500,000 available, $0 drawn
Total Assets: $650,000
Total Debt: $3,000,000
Net Debt: $2,350,000

The Board was congratulated by everyone in the building on getting the interest rate lower although we ended up paying more interest than before on a net debt basis. One may ask what happened to that $500,000? Well the previous mortgage lender took it as a prepayment penalty . Just like that HALF A MILLION DOLLARS was wasted to save a point on interest. I raised this point before they actually closed and they couldn't back out becasue they agreed to pay $25,000 to lock the rate and were unwilling to lose that.

What the hell? Is a 33% prepayment penalty even allowed?

My only guess is it was some sort of guaranteed interest which is not unusual with commercial mortgages. So that $500,000 might've included a prepayment as well as 2 year's worth of payments.

I deal very rarely with small commercial but it was astounding how many places have this guaranteed interest as part of their terms.

What the hell? Is a 33% prepayment penalty even allowed?

My only guess is it was some sort of guaranteed interest which is not unusual with commercial mortgages. So that $500,000 might've included a prepayment as well as 2 year's worth of payments.

I deal very rarely with small commercial but it was astounding how many places have this guaranteed interest as part of their terms.

It was a type of guaranteed interest coupled with a traditional prepayment fee. To me it's money out the door to do a stupid refinancing. The problem is my Board will listen to experts or consultants or provider of services who have vested interests. The bank (as they told me the "expert") that did this mortgage said it was a better deal for them... unbeliveable...

500 Top foreclosure zip codes

http://money.cnn.com/2007/06/19/real_estate/500_top_foreclosure_zip_codes/index.htm
Unless I'm missing something, it seems really random to me.

Unless I'm missing something, it seems really random to me.

It just mean the shitty neighbors is getting hit the hardest, at least from the 4-5 zip codes I noticed in Brooklyn and Queens.

Unless I'm missing something, it seems really random to me.In California it appears that other than a few spots around LA and SD that appreciated due to speculators, most of California having foreclosure problems is in areas that people wanted to buy in the least.

These cities are generally far away from work and as the areas that were close to work appreciated out of many people's reach they decided it would be better to get in on a home that they could barely afford while they still could and spend a lot of time and money on commuting. Bad financing, no appreciation, or even depreciating values, and high commute costs brought them back to reality.

Ah - IOW, rich staying rich, poor getting poorer.

Ah - IOW, rich staying rich, poor getting poorer.

How do you figure that? Is it "the poor" buying condos in Miami Beach?

Talk to anyone here that mentions buying a place. "Oh, all the houses here are like $350,000 unless you want to live in the ghetto." Meanwhile actual median house values in the area are like $375,000.

If you're dumb enough to buy something you really can't afford, that has nothing to do with your income. People with all types of income buy real estate they shouldn't.

If anything, this helps the poor as it finally (may) make some areas more affordable.

What I meant was that most of the places poor people had bought haven't appreciated like the places richer people have bought.

What I meant was that most of the places poor people had bought haven't appreciated like the places richer people have bought.I don't think you can say that. It's when you bought, not really the price you bought. In fact, lower priced properties might have had a higher percentage gain.

And I think the areas in CA having problems are largely ones that were bought into later in the boom cycle. That's why they're the outlying areas, where land isn't scarce and new homes could be put up. How do you keep prices up when a builder is trying to dump a bunch of new homes they have sitting around and new homes can keep being built?

What the hell? Is a 33% prepayment penalty even allowed?

My only guess is it was some sort of guaranteed interest which is not unusual with commercial mortgages. So that $500,000 might've included a prepayment as well as 2 year's worth of payments.

I deal very rarely with small commercial but it was astounding how many places have this guaranteed interest as part of their terms.

it's a commercial loan

most coops in NYC have mortgages which probably won't be paid off for another 100 years

My local paper had an article about how the AVERAGE home price fell around here 9.4% from May 2006 to May 2007. I would say that matches with resales I have seen, although a little hard to make a direct compare.

I guess if rates continue to climb, prices will continue to fall. I am certain I will need to sell at the exact bottom of the market :) I will be sure to let you all know when that is :lol:

In today's NY Times, and I don't think the real surge in foreclosures has even begun yet

http://www.nytimes.com/2007/06/23/business/23bond.html?ref=business


$3.2 Billion Move by Bear Stearns to Rescue Fund
By JULIE CRESWELL and VIKAS BAJAJ
Bear Stearns Companies, the investment bank, pledged up to $3.2 billion in loans yesterday to bail out one of its hedge funds that was collapsing because of bad bets on subprime mortgages.

It is the biggest rescue of a hedge fund since 1998 when more than a dozen lenders provided $3.6 billion to save Long-Term Capital Management.

The crisis this week from the near collapse of two hedge funds managed by Bear Stearns stems directly from the slumping housing market and the fallout from loose lending practices that showered money on people with weak, or subprime, credit, leaving many of them struggling to stay in their homes.

Bear Stearns averted a meltdown this time, but if delinquencies and defaults on subprime loans surge, Wall Street firms, hedge funds and pension funds could be left holding billions of dollars in bonds and securities backed by loans that are quickly losing their value.

Bear Stearns acted yesterday after the hedge fund and a related fund had suffered millions in losses and after shocked investors had begun asking for their money back. The firm agreed to buy out several Wall Street banks that had lent the fund money, which managers hoped would avoid a broader sell-off without causing a meltdown in the once-booming market for mortgage securities.

The firm is, meanwhile, negotiating with banks to rescue the second, larger fund started last August, which has more than $6 billion in loans and reportedly holds far riskier investments. Those negotiations were continuing yesterday, and it was unclear whether they would be successful.

“We don’t think it is over,” said Girish V. Reddy, managing director of Prisma Capital Partners, which invests in other hedge funds. “More funds will feel the pain, but not many are as leveraged as the Bear fund.”

Nervousness about the souring subprime loans and rising oil prices sent the stock market plummeting. Already down almost 60 points, the Dow Jones industrial average fell sharply after the announcement of the bailout and closed down 185.58 points.

Shares of Bear Stearns closed down $2.06, to $143.75; the stock was down more than 4 percent for the week.

For Bear Stearns, the drama surrounding its two troubled hedge funds has given it and its prestigious mortgage business a black eye. The bailout was a major departure for the firm, which has long resisted putting too much of its own capital at risk.

But in this case, the stakes were too high. If lenders had seized the assets of the funds and tried to sell billions of dollars in mortgage-related securities at fire-sale prices, it could have exposed Bear Stearns and the market to substantial losses.

While the board of Bear Stearns never met over the funds, all of its top executives, including the chief executive, James E. Cayne; its presidents, Alan D. Schwartz and Warren J. Spector; and the chief financial officer, Samuel L. Molinaro Jr., huddled in meetings over the last few days looking to find a way to contain the crisis, according to people briefed on the discussions who could not speak for attribution.

Even Alan C. Greenberg, the 79-year-old former chairman, who spends less time these days on the firm’s matters but remains an active board member, became involved.

Yet, as Bear Stearns worked to manage the crisis, many on Wall Street speculated about how the firm could let the funds get in such a precarious position.

In fact, executives at Bear Stearns Asset Management had debated last summer whether to start the second hedge fund.

The first fund, the Bear Stearns High-Grade Structured Credit Fund — the one bailed out yesterday — was started in 2004 and had done well, posting 41 months of positive returns of about 1 percent to 1.5 percent a month. But investors were clamoring for even higher yields, which would require more aggressive bets on riskier mortgage-related securities and significantly higher levels of borrowed money, or leverage, to bolster returns.

The firm clearly had the expertise — it was a leader in underwriting and trading bonds and esoteric securities backed by mortgages. In addition, Ralph R. Cioffi, who ran the funds, had played a major role in building the Bear Stearns mortgage business.

So, in August, the Bear Stearns High-Grade Structured Credit Enhanced Leveraged Fund — the second fund that eventually had huge losses — was started with $600 million in investments, mostly from wealthy individual clients of Bear Stearns, and at least $6 billion in money borrowed from banks and brokerage firms. Bear Stearns and a handful of its top executives invested a mere $40 million in both funds.

The timing could not have been worse.

By the end of last year, housing prices in many areas were cresting and beginning to fall. The decline began to expose lax lending standards in the subprime market. Soon borrowers started falling behind on payments just months after they closed on their loans, forcing several large lenders into bankruptcy protection.

The Bear Stearns funds, like so many others, had invested in collateralized debt obligations, or CDOs, which invest in bonds backed by hundreds of loans and other financial instruments. Wall Street sells CDOs in slices to investors. Some of those pieces have low yields but they are easily traded and carry less risk; others are more susceptible to defaults and trade infrequently, which makes them difficult to value.

Last year, $316.4 billion in mortgage-related CDOs were issued, about 77 percent more than the year before, the Securities Industry and Financial Markets Association said.

At first, the Bear Stearns hedge funds appeared to weather the storm. But in March, the older fund registered its first loss. One investor, who asked not to be identified because he was trying to recover his investment, said that when he moved to get his money out, he was told investors had tried to redeem 10 percent of the fund.

By April, the older fund was down by 5 percent for the year, and the newer fund had fallen 10 percent.

Managers tried to protect the fund by hedging potential losses in lower-rated securities they held, but did not do so for higher-rated bonds, which also fell in value.

“They didn’t realize this was Katrina,” the investor said. “They thought it was just another storm.”

In May, however, more significant problems began to emerge. The Swiss investment bank UBS shut its hedge fund arm, Dillon Read Capital Management, after bad subprime bets led to a $124 million loss.

Also that month, Bear Stearns Asset Management filed plans to start a public offering of a financial services firm called Everquest Financial, which, to some, appeared to be little more than a place to park the riskiest securities Bear Stearns had invested in. (The firm has no plans for now to move forward with the offering, according to a person briefed on the firm’s plans.)

Perhaps the most startling development was a sharp restatement in April of the second fund. The firm revalued some securities and told investors that the fund was down 23 percent, not 10 percent as it had said earlier.

Shocked investors began contacting Bear Stearns, demanding to pull their money out. In May, the firm froze all redemption requests. This month, at least three Wall Street firms — JPMorgan Chase, Citigroup and Merrill Lynch — began demanding more cash as collateral for the loans they had made.

Fighting to save the funds, Bear Stearns sold $3.6 billion in high-grade securities. Meanwhile, its adviser, Blackstone, scrambled to line up a deal in which Bear Stearns would put up $1.5 billion in new loans and a consortium of banks led by Citigroup and Barclays would put in $500 million.

In return, the lenders would have their exposure to the funds reduced but could not make further margin calls for 12 months.

Some lenders, including Merrill Lynch and Deutsche Bank, balked and moved to sell assets. At one point Wednesday, nearly $2 billion in securities were listed for sale, although some banks, including JPMorgan, eventually canceled scheduled auctions.

By the end of the day, out of the $850 million in securities that Merrill had put up for sale, only a small portion actually sold.

In the wake of the weak auctions, several other lenders, including JPMorgan, Citigroup, Goldman Sachs and Bank of America, reached deals with Bear Stearns. At least some of the deals involved the lenders selling the securities back to Bear Stearns for cash, although the prices were not disclosed.

Bear Stearns is bailing one of the funds out because it is worried about the damage to its reputation if it stuck investors and lenders with big losses, said Dick Bove, an analyst with Punk Ziegel & Company.

“If they walked away from it, investors would have lost all their money and lenders would have lost all of the money,” Mr. Bove said. But “if they did that to everyone in the financial community, the financial community would have shut them down.”

Bear Stearns hedge funds going belly up, existing home sales down and Countrywide is now saying that good credit customers are starting to default in high numbers


http://www.nytimes.com/aponline/business/AP-Economy.html?ex=1343016000&en=31c90b05da452928&ei=5088&partner=rssnyt&emc=rss


http://www.nytimes.com/2007/07/25/business/25lend.html


http://www.mercurynews.com/markets/ci_6459906

Muhahahahahahaha. It's nice to be the guy who lists the repos of banks. In fact, I have one closing today.

Muhahahahahahaha. It's nice to be the guy who lists the repos of banks. In fact, I have one closing today.

Must be nice....

:lol:

I hope so, I'm ready to buy my first home but would rather avoid spending $300-$350K

Haven't you guys heard? The National Association of Realtors says this is a clear example that the housing market is recovering :beer2:

What's this I'm hearing about record-breaking number of mortgage defaults?

What's this I'm hearing about record-breaking number of mortgage defaults?

There's a record-breaking number of mortgage defaults.

We’re just going to pretty much parrot what we wrote three months ago: While a 102.4% year-over-year increase in San Francisco Q2 “Notice of Default” activity sounds quite dramatic, in absolute terms it still represents relatively few properties (257). Within the greater Bay Area, however, Contra Costa hit a record level of Q2 default activity (2,316 notices, up 219.4% year-over-year) as did Sacramento (3,840 notices, up 184.0% year-over-year). And Alameda isn’t too far behind (1,612 notices, up 148.4%).

According to DataQuick, “[m]ost of the loans that went into default last quarter were originated between July 2005 and August 2006. The median age was 16 months. Loan originations peaked in August 2005. The use of adjustable-rate mortgages for primary purchase home loans peaked at 77.8% in May 2005 and has since fallen.”

According to DataQuick, “[m]ost of the loans that went into default last quarter were originated between July 2005 and August 2006. The median age was 16 months. Loan originations peaked in August 2005. The use of adjustable-rate mortgages for primary purchase home loans peaked at 77.8% in May 2005 and has since fallen.”
It still blows me away that when rates were at historic lows, people went with ARMs. :lol:

http://www.bloomberg.com/apps/news?pid=20601087&sid=axilKLgGIXXQ&refer=home
Countrywide Financial Corp. CEO Angelo Mozilo"We are experiencing home price depreciation almost like never before, with the exception of the Great Depression,'' Mozilo said during the call. He said it would take all of next year for the mortgage market to "turn this battleship around,'' before demand rebounds in 2009.

The median U.S. home price probably will fall 1.4 percent to $218,800 a year, the first national decline since the Great Depression in the 1930s, according to Lawrence Yun, a National Association of Realtors economist.

There's a record-breaking number of mortgage defaults.

:lol:

From http://www.bloomberg.com/apps/news?pid=20601087&sid=axilKLgGIXXQ&refer=home (Bloomberg:)
Countrywide Financial Corp. CEO Angelo Mozilo"We are experiencing home price depreciation almost like never before, with the exception of the Great Depression,'' Mozilo said during the call. He said it would take all of next year for the mortgage market to "turn this battleship around,'' before demand rebounds in 2009.

The median U.S. home price probably will fall 1.4 percent to $218,800 a year, the first national decline since the Great Depression in the 1930s, according to Lawrence Yun, a National Association of Realtors economist.

So, I guess we are in for a depression then?

:sad:

So, I guess we are in for a depression then?

:sad:


There are lots of economic factors at work here, not just housing, but I would say a depression will probably never happen again. Serious recession is inevitable. I'll give it roughly a year after the Dems win the next presidential election :)

Hmm...I wonder how much Southern California homes will fall. 10% perhaps?

Wednesday, July 25, 2007
'It's Worse than the '90s;' Death of the "So-Called Soft Landing"
From the Sacramento Bee

Sacramento real estate broker Carey Covey has so much business these days he can hardly handle any more. Covey sells homes repossessed by the banks. And all signs point to a lot more of them coming onto the market..."It's steadily been increasing for a year," said Covey, a 20-year veteran of selling homes taken back by banks. "I think it's worse than the '90s."
...
Christine McCullough will lose her Natomas house to the bank in September...Last year the Sacramento County employee lost $1,800 in extra monthly consulting income that had made the 2005 purchase possible..."It was a bad time to buy," she said. "I shouldn't have purchased. It was just a bad time."

In San Diego, former El Dorado Hills resident Rachelle Agatha and her husband, Steve Cascioppo, began missing payments in June on a big house they bought three years ago. The trouble started last December when Cascioppo got a new job in San Diego. Selling a $975,000 house in a falling market proved impossible. So did simultaneously paying San Diego rent and an El Dorado Hills mortgage.

"It's been a nightmare," Agatha said. "We aren't like your typical deadbeat people who don't want to pay your mortgage any more. We make good money, and if we hadn't been relocated we wouldn't be in this position." Two weeks ago she, too, started a new job in San Diego, as controller for a health care firm. The El Dorado house is vacant.


From the Appeal-Democrat:
Housing bubble bursting in Yuba

Foreclosure activity is picking up the pace with Yuba County leading the state in its percentage increase in default notices, according to a report issued Tuesday. Second-quarter 2007 notices of default nearly quadrupled in Yuba County over the same quarter a year ago, according to DataQuick Information Systems....Default notices, the first step in the foreclosure process, went up 280 percent in Yuba County – the biggest county jump recorded by DataQuick. The 45 default notices issued last year rose to 171 in the second quarter. Foreclosures climbed from four to 84 in Yuba County during the same time period.
...
Falling home values also present a problem – particularly in pocket areas like Plumas Lake that have seen home values fall as much as $100,000 to $150,000, said Mann [president of Trinity West Mortgage]. “The value dropping as fast as it’s been has not helped the situation,” she said.
...
Yuba County’s median home price decreased by 10.4 percent in June 2007 compared with a year ago as the once-hot Sacramento housing market chilled, while Sutter County’s home prices were down 8.5 percent, said [DataQuick's Andrew] LePage.[B] “Sacramento is the weakest large market in the state,” said LePage. :banana:

From the Stockton Record:
San Joaquin County mortgage holders were among the most likely in California to fall behind on their payments as housing foreclosure activity continued to quicken in the second quarter....DataQuick...said San Joaquin County saw 1,983 defaults in the April-through-June period, more than three times the 604 defaults in the second quarter of 2006...There were 785 foreclosures in San Joaquin County in the second quarter, 12 times more than the 64 seen in the same period of 2006.
...
Stockton real estate broker Art Godi agreed that subprime mortgages - loans made to high-risk borrowers - are contributing to the flood of defaults and foreclosures. Payments on many of those loans are rising over time, and the borrowers can't keep up. "They were making loans that were about as liberal as we've ever seen," he said Tuesday. "In my 46 years in real estate, they were the most liberal terms I've ever seen. "And now what's happening, that's exacerbating the situation, is the pendulum swings the other way," Godi said. Now they're getting really cautious, and now the subprime lenders are fading out."
...
In June, the median sales price of the 539 homes and condos sold in San Joaquin County was $390,000, DataQuick reported. That's a drop of nearly 12 percent from the $443,000 median a year ago.


From the Modesto Bee:
Record numbers of Northern San Joaquin Valley homes were lost to foreclosure and sold on the courthouse steps in April, May and June. Staggering increases in mortgage default rates and foreclosures were recorded this spring....There were 1,547 houses and condos foreclosed on in Stanislaus, San Joaquin and Merced counties during those three months. That was more foreclosures than for any other quarter going back at least to 1988, which is as far as DataQuick's records go.

And the news is expected to get worse..."Since default notices continue to climb, that suggests that, unfortunately, we likely will see the number of foreclosures keep increasing through the rest of this year," said Andrew LePage, a DataQuick analyst.
...
The depth of the default crisis can be seen in today's Modesto Bee Classified advertising section, where two pages of legal notices (F-7 and F-8) announce the times and dates of more than 20 upcoming foreclosure trustee sales.


From the Fresno Bee:
The number of foreclosures in the quarter jumped to 1,380 in Fresno County and to 53,943 statewide -- a year-over-year increase of 158%. "This is unquestionably the worst I've seen," said Bill Pfeif, a 30-year veteran agent at Guarantee Real Estate in Fresno who sells lender-owned real estate. "Every week, the pace increases. "You just wonder where it is going to end."
...
Many carried adjustable rates that have climbed steeply as home prices have fallen, trapping some buyers. "People just crossed their fingers," said Patrick Duffy, a consultant to home builders. "They never planned for the worst-case scenario."
...
"In the hardest-hit areas, it's going to undermine the market, no doubt, though it's difficult to quantify the impact to home values," LePage said.
...
"I think a lot of potential home buyers see the foreclosure situation worsening and view it as one more reason to remain parked on the sidelines, so to speak, in hopes the market turns even more in their favor," said Andrew LePage, a spokesman for La Jolla-based DataQuick.


I Sold in late 2005 and i'm still renting! :banana:$$$$$$ :banana:

Hmm...I wonder how much Southern California homes will fall. 10% perhaps?

Depends on the market. A 10% hit around here isn't a big deal, but in a large area, it would be huge. And unlikely. That is a huge hit.

It still blows me away that when rates were at historic lows, people went with ARMs. :lol:

Same here. I'd be pissed at my real estate agent! :lol:

Depends on the market. A 10% hit around here isn't a big deal, but in a large area, it would be huge. And unlikely. That is a huge hit.

It's not that bad considering they used to double within a year. a $600,000 home would be $540,000.

but in a large area, it would be huge. And unlikely. That is a huge hit.

so unlikely that it has already happend :confused:

My local paper reported from May of 2006 to May of 2007 an average drop of 9.4% - close enough to 10 for me :)

Hmm...I wonder how much Southern California homes will fall. 10% perhaps?

West Palm Beach some homes in some communities have fallen 50%, there was a video of a auction of about 45 homes that on the average went for 150K while people in their neighborhood paid 350K just 2 years ago and they were pissed!

I've been preaching doom and gloom for the housing market and the economy for the last year or so and I'm glad I'm seeing some vindication! The worst is yet to come I assure you.

The only places I still see real estate going up is where they no longer have area to build like NYC, SF etc.

they are building like crazy here in NYC. condos are up around 28% year over year in manhattan. co-ops are flat to slightly down. in my part of queens co-op prices are up over last year, but it depends on location and your specific building. NYC population is going up and it's expected to rise by 1 million people over the next 20-25 years. averages out to around 25,000 people per year.

one of these days i'm going to look up some census data on a theory i have. i think that housing prices lag births. if you go to the mall the baby stores have a lot of people and i see a lot of pregnant people around, at least more than in the last few years. and a few years back it seemed a lot of people were getting married. i think the last big birth/marriage spike was in the 1980's.

people get married, buy a house. after the spike there is less demand so prices drop. people have kids they cut back on discretionary income for a few years so you might get a recession.

People aren't cutting back on discretionary income they are way above and beyond what they can afford; they are cutting back and/or eliminating saving for their retirement.

so unlikely that it has already happend :confused:

My local paper reported from May of 2006 to May of 2007 an average drop of 9.4% - close enough to 10 for me :)

Where do you live? What is your address?

I feel bad for people, but it sounds like a lot of people just didn't buy very sensible.

I'm just glad the two houses in my neighborhood sold in less then three weeks each to the same or more then we paid about 14 months ago, and the houses are comparable at best.

They're building like crazy around here in Orange County too - if anyone recalls going to a show at Irvine Meadows (or Verizon Amphitheater), hold on to those memories because the lease will be up next year, and Irvine Company is going to build over that entire area (and all the area around it - one of few open spaces left in OC) and fill it with homes and condos. I know that while sales have slowed down around here, the cost of homes really haven't (might have something to do with the fact that of all cities in America with a population of over 100K, Irvine is the safest city) - but I'm sure they'll drop a little here and there as more and more homes become available.

What's going to happen to rental prices?

I feel bad for people, but it sounds like a lot of people just didn't buy very sensible.

yeah but what about the people who bought property they could afford but dont get to enjoy any appreciation?

so unlikely that it has already happend :confused:

My local paper reported from May of 2006 to May of 2007 an average drop of 9.4% - close enough to 10 for me :)

I don't know what market you are in. I suppose you could have larger areas take that much of a hit, but the idea of a nationwide 10% drop would be huge. Nearly catastrophic, I would bet.

What's going to happen to rental prices?
Mine are finally going up. I use to believe that rental prices follow sales prices, but that doesn't seem to hold true. Rather than looking for a traditional 10% return on investment in a rental, so many people seem to be okay with getting 2-6% and betting on appreciation. You can do better with less risk in bonds and cds, but they still do it.

So, I would be that rents don't go up like real estate did. Not even close.

What's going to happen to rental prices?


depends on the market

friend of my wife bought two houses in florida a few years back, they are renting them out for 1/2 the mortgage that they pay every month. they hope to make money on capital gains.

Where do you live? What is your address?


I don't know what market you are in. I suppose you could have larger areas take that much of a hit, but the idea of a nationwide 10% drop would be huge. Nearly catastrophic, I would bet.

Check Loudoun County in Northern VA, just outside of good ol washington DC.

$600k houses are being found for $450k these days. The 9.4% was an average as the washington post reported, so there are plenty that have dropped more.

The area is pretty large, however, the run up in prices over the last several years has left plenty of room for a 10% drop :) I feel sorry for anyone that bought at the top on a 3 year ARM...

Then you have stories like this (places that are bubble proof)

http://money.cnn.com/popups/2006/biz2/newrules_bubbleproof/index.html

and the places not to buy now

http://money.cnn.com/popups/2006/biz2/newrules_wherenot/index.html

I found one of these do not buy here right now articles that listed the DC metro area as #8 or #9, I can't find that one again right off, but I beleive it. :)

yeah but what about the people who bought property they could afford but dont get to enjoy any appreciation?

True, I forgot about that. Hopefully a lot of people can start to look at it as a place to live first, and an investment second. I know I would love some appreciation, but am content having a place I like to sleep at every night.

True, I forgot about that. Hopefully a lot of people can start to look at it as a place to live first, and an investment second. I know I would love some appreciation, but am content having a place I like to sleep at every night.

:up: And in my area, where people can get a 3bd 1ba home for around $100K still, why people in their 20's and 30's are spending $200K+ for a home just dumbfound's me. The bank tells them they can "afford" it, so they do.

Like someone else said, all they're doing is forgoing retirement to do so. Dumb dumb dumb. I'm sure in 30 years we'll have a bunch of whiny brats who want government to help them be able to retire. What are they going to do when social security isn't enough to cover their 40 yr mortgage payment -ohbfrank-

why else wouldn't people be buying a $600 cell phone?


http://biz.yahoo.com/ibd/070731/tech.html?.v=1


Talk Of iPhone Cutback Sinks Apple Stock
Tuesday July 31, 7:00 pm ET
Patrick Seitz

Apple shares took a bruising Tuesday on an unconfirmed rumor that the company is cutting production of its ballyhooed iPhone handheld.
The stock fell 6.8% to 131.76 after New York trading firm Miller Tabak & Co. reported that Apple (NasdaqGS:AAPL - News) was reducing its production run of iPhones from 9 million to 4.5 million units. The firm also speculated that cuts might be coming to Apple's iPod production as well.

It marked the biggest one-day percentage drop in Apple's stock since April 2005.

Apple spokeswoman Natalie Kerris said the company doesn't comment on "rumors and speculation."

Several analysts who track Apple discounted the report.

"I don't think it's true," said Trip Chowdhry, an analyst with Global Equities Research.

Apple is a lightning rod for rumors because it's so secretive, says Shiv Bakhshi, an IDC analyst. "I don't believe there's any credibility" to the latest rumor, he said.

It is possible, Bakhshi says, that Apple is slowing production of a current model iPod music player that's going to be replaced by a newer model. That information could have been misinterpreted, he says.

Still, the appeal of the iPhone beyond early adopters and tech-savvy consumers is an open question. Apple shares have been roiled by other talk of less-than-stellar demand for the pricey combination smart phone, portable media player and Web browser. The iPhone costs $499 or $599.

Also, the New York State Consumer Protection Board on Monday wrote to Apple to complain about the iPhone's battery policy. It must be replaced by Apple when it no longer holds a charge, at a cost of $79 plus shipping. Users have complained about this online.

Apple shares fell 3% last week after AT&T (NYSE:T - News), the exclusive carrier of the iPhone in the U.S., said it activated 146,000 iPhones in the first two days of availability. That was well below analyst forecasts.

Shares rebounded a day later when Apple posted greater-than-expected sales and profit for its last quarter and said it sold 270,000 iPhones during its first 30 hours on sale. Apple and AT&T ended their quarters on June 30, and iPhone sales began late June 29.

In statements and comments by Apple executives when it released results, Apple said it expected to sell its one millionth iPhone this quarter. It reiterated its forecast to sell 10 million iPhones in 2008.

Meanwhile, a report from ChangeWave Research slated to be released Wednesday shows Apple having a big impact.

Apple is now the most in-demand cell phone maker among tech-savvy buyers, says the July 18-20 ChangeWave survey.

Of those planning to buy a cell phone in the next six months, 16% said they were likely to buy Apple's iPhone, up from 13% in April.

Motorola (NYSE:MOT - News) seems to have taken the biggest hit from the iPhone. It was the No. 2 choice among expected cell phone buyers in July, but its popularity has been falling.

"The iPhone is changing the game in the telecom industry," said Paul Carton, director of research at ChangeWave Research. "No company is bearing the brunt of this more than Motorola."

Research In Motion (NasdaqGS:RIMM - News) has been largely unaffected by the iPhone. According to the survey, 13% of likely buyers plan to get a RIM BlackBerry in the next six months, up from 10% in April.

ChangeWave polled about 3,000 members of it