Double dip in housing confirmed

[ASUG8]

http://money.cnn.com/2011/05/31/real_es ... hpt=hp_bn1" onclick="window.open(this.href);return false;

Home prices hit another new low in the first quarter, down 5.1% from a year ago to levels not reached since 2002.

It was the third straight quarterly drop for the S&P/Case-Shiller national home price index, which was released Tuesday.

Prices are now down 32.7% from their peak set five years ago.

"Home prices continue on their downward spiral with no relief in sight," said David Blitzer, spokesman for Standard and Poor's.

The index covers 80% of the housing market, and this month's report confirmed "a double-dip in home prices across much of the nation," said Blitzer.

The housing market went through a brief recovery period starting in mid-2009, recovering nearly 5% of earlier losses. After homebuyer tax credits expired last April, the slump resumed.

A separate S&P/Case-Shiller index covering 20 major cities also dropped during March, the index's eighth straight monthly decline.

[SDHornet]

http://www.signonsandiego.com/news/2011 ... san-diego/" onclick="window.open(this.href);return false;

Here is what was in our local paper yesterday. As expected, once the new home buyers credit ran out so did the minor upswing in home sales and home values. I got a kick out of all the folks telling me how I should jump on the bandwagon and take advantage of the new home buyers credit last year, I wonder where all those people went.

[ASUG8]

http://www.trulia.com/" onclick="window.open(this.href);return false;

I'm not sure how accurate this site is, but it shows us up 5.8% in median price year over year. We seem to be holding our own pretty well - when I'm out running I see a ton of people doing remodeling on their homes which is a good sign.

[93henfan]

http://www.trulia.com/

I'm not sure how accurate this site is, but it shows us up 5.8% in median price year over year. We seem to be holding our own pretty well - when I'm out running I see a ton of people doing remodeling on their homes which is a good sign.

Yeah, I'm about to put mine up for sale and I was surprised to see that Zillow (far from scientific, I know) has my house up $20K in value since the beginning of the year. I'm somewhat fortunate to live ten minutes from Dover AFB, which is growing pretty heavily right now with new C-17 squadrons and BRAC'ed units from other bases coming in at a steady rate. We have several officers living in our subdivision and the word of mouth helps. We're also a fairly established neighborhood (mid-90s) with trees and such surrounded by a bunch of newer, barren subdivisions that sprouted in the past ten years.

[89Hen]

BRAC'ed units from other bases coming in at a steady rate.

BRAC is going to play a big part in housing prices around me. They're moving a ton of people to Navy Medical in Bethesda. Homes within walking distance should skyrocket given how bad traffic will be around it.

[blueballs]

It is HARD to get a mortgage application to the closing table these days. As loose as things were during the bubble they are that tight now- too tight. Also, there is a shadow inventory out there of REO's that banks are just sitting on, either unwilling to market or unwilling to reduce the price on to sell. Those are bad things. There are LOTS of investors in the market scooping up distressed properties and rehabbing them to either lease out or flip. That is a good thing.

It is kind of ironic though that I had my best month since December 2007 in May and my business has been good since fall of '09 even though prices keep falling due mainly to the drip of distressed properties and mortgage underwriting that is anything but reasonable.

The SAFE act, tighter licensing standards for non bank originators which include a background and credit check, and the new Fed ruling on originator compensation have drawn a line in the sand as far as mortgages go. On one side you have the major banks with their rookie loan originators, or those who couldn't get a license because of their credit; and on the other you have the remainder of the mortgage brokers who have survived the market and the scrutiny of the new licensing. I am currently making a very good living turning around loans that have been turned down by rookies and idiots at the major banks but unfortunately the public is too ignorant to call a guy like me first unless a realtor can get them to. There are less and less of guys like me who are 25+ year veterans, with a good book of business, excellent credit, and own a business so my production has stayed good organically simply by surviving.

This unfortunately will last at least a couple more years which will endanger Obama's re-election chances in a big way.

The only good thing to come out of all this thus far is the fact that I can see the buyer, and market in general, returning to the old tenet we were all taught in business school that real estate is a long term asset and mortgages are a long term liability. It was when that thinking changed, coupled with a seemingly never ending flow of easy money through exotic mortgage products (which were securitized and sold as short term trades) that caused the problem.

[ASUG8]

BB - I'm guessing you're doing better from a unit volume perspective? I would imagine the overall cost of the homes you're doing might have fallen vs. past years, but the sheer number of flips/foreclosures have spiked.

Refi's have to be tougher as well - the guy who had a 70% LTV three years ago probably would have to get PMI today with some of the appraisals thereby negating the benefit from a lower rate (unless he/she parts with a pile of cash to get the loan value down).

[Ivytalk]

Blueballs: Glad to see your usual thorough response on matters of real estate! Some "expert" on GMA this morning predicted that the housing slump would last another 3 to 8 years.

[AZGrizFan]

This unfortunately will last at least a couple more years which will endanger Obama's re-election chances in a big way.

Silver lining in this cloud....

[blueballs]

BB - I'm guessing you're doing better from a unit volume perspective? I would imagine the overall cost of the homes you're doing might have fallen vs. past years, but the sheer number of flips/foreclosures have spiked.

Refi's have to be tougher as well - the guy who had a 70% LTV three years ago probably would have to get PMI today with some of the appraisals thereby negating the benefit from a lower rate (unless he/she parts with a pile of cash to get the loan value down).

From a unit volume perspective, we're doing about 30/month currently... my personal volume is averaging about 7 closings. Our volume has increased from 40 closings total in 2008 (my worst year EVER) to our current average of about 30 so we are growing and thriving. A lot of folks thought my business partner and I were crazy for starting a new brokerage business in January 2008 but we have been proven right for doing it and now stand poised to reap the rewards of our vision, hard work, and financial investment as we go forward.

I have only closed a handful of refi's in the past three years; due partly to what you pointed out, partly to the idiotic HVCC laws, and the fact that I have never done many refis- I focus on realtors and builders and do mostly purchases.

Nevertheless, I don't sell rates or fees to get business. I sell my experience, know how, service, and proven track record built over 28 years. Against the major banks it is an easy sell IF I ever get the audience but unfortunately a lot of folks are ignorant and just go to their bank for their mortgage without really stopping to think about who they want handling what is often the biggest investment they will ever make.

[blueballs]

Blueballs: Glad to see your usual thorough response on matters of real estate! Some "expert" on GMA this morning predicted that the housing slump would last another 3 to 8 years.

He may very well be right... like I stated earlier, the banks are holding a "shadow inventory," which consists of properties that haven't been put on the market yet in an attempt to keep prices somewhat stable (which actually lessens the banks' losses on these REO's even though it does the buyers and the overall market no favors). I have no clue as to how many properties this may be and it is certainly more in some areas than others.

When you factor what may be a long drip of these properties coming to market with the clusterfuck that is the whole "robosigning" and MERS deal about chain of assignments of mortgages- along with banks trying to sell distressed properties for more than what the market bears, then you have a slow absorption and a slow recovery to market balance.

I can state this without any reservation however. There has never been a better time to buy real estate than the current time. Prices are at 1990's levels and interest rates for 30 year financing are in the mid 4% range. If a person has good credit and good debt ratios or enough cash to buy the property outright, they are certainly in the driver's seat.

You would be amazed at how many deals I see where the property is an REO selling for less than $80k and the cost approach (appraiser's estimate to rebuild with lot value factored in) is in the $150k range. If you can find a good property in the right area (USDA eligible) you may be able to finance 100% of the sales price and all the closing costs into the loan and buy the home for no money out of pocket with a 30 year fixed rate less than 5% with no monthly mortgage insurance- these payments are routinely under $600/mo. You can't rent a comparable property for under $1000/mo.

[89Hen]

I have only closed a handful of refi's in the past three years; due partly to what you pointed out, partly to the idiotic HVCC laws, and the fact that I have never done many refis- I focus on realtors and builders and do mostly purchases.

I hate refis.

[travelinman67]

He may very well be right... like I stated earlier, the banks are holding a "shadow inventory," which consists of properties that haven't been put on the market yet in an attempt to keep prices somewhat stable (which actually lessens the banks' losses on these REO's even though it does the buyers and the overall market no favors). I have no clue as to how many properties this may be and it is certainly more in some areas than others.

When you factor what may be a long drip of these properties coming to market with the clusterfuck that is the whole "robosigning" and MERS deal about chain of assignments of mortgages- along with banks trying to sell distressed properties for more than what the market bears, then you have a slow absorption and a slow recovery to market balance...

Can't drive down a street in CA without finding vacant "shadow inventory" homes...easy to spot: Lawns/yards haven't been mowed/trimmed in over a year; broken windows boarded up; graffiti on door/garage. You won't hear any pols/economists/media discussing this due to the varying ramifications to the recovery. Yes, it temporarily stabilizes pricing, but eventually, they'll be sold, driving down surrounding values.
Sickening that when the values were being pumped up, BofA, JP Morgan, Citibank, WF, GS, etc...wallowed in the fat. When the jig was up, the taxpayers and property owners who pay their bills have ended up taking the hit, not the banks.
"Anger" doesn't even come close.

[kalm]

He may very well be right... like I stated earlier, the banks are holding a "shadow inventory," which consists of properties that haven't been put on the market yet in an attempt to keep prices somewhat stable (which actually lessens the banks' losses on these REO's even though it does the buyers and the overall market no favors). I have no clue as to how many properties this may be and it is certainly more in some areas than others.

When you factor what may be a long drip of these properties coming to market with the clusterfuck that is the whole "robosigning" and MERS deal about chain of assignments of mortgages- along with banks trying to sell distressed properties for more than what the market bears, then you have a slow absorption and a slow recovery to market balance...

Can't drive down a street in CA without finding vacant "shadow inventory" homes...easy to spot: Lawns/yards haven't been mowed/trimmed in over a year; broken windows boarded up; graffiti on door/garage. You won't hear any pols/economists/media discussing this due to the varying ramifications to the recovery. Yes, it temporarily stabilizes pricing, but eventually, they'll be sold, driving down surrounding values.
Sickening that when the values were being pumped up, BofA, JP Morgan, Citibank, WF, GS, etc...wallowed in the fat. When the jig was up, the taxpayers and property owners who pay their bills have ended up taking the hit, not the banks.
"Anger" doesn't even come close.

Monopoly capitalism.

[Wedgebuster]

I don't find this tough to understand, in fact I accurately predicted the real estate crash, and the credit crash for as much as three years in advance of when it finally came home to roost.

Bottom line, easy credit and sub prime lending leads to inflated real estate values, which creates more hype and attention to the market further ballooning a market that becomes a house of cards.

Real Estate is still to damn high, and will in fact take as much as 4-7 years to bottom out.

Back to the principles of real estate, home buying and speculating is two different things. Buy a home when you can afford it and consider it a long term asset opposite to paying rent. Buy an investment property when the market is either stable, stagnant, or down.


As you were gentlemen..

[D1B]

BB, if I needed to, can I purchase your mortgage services even though I live in Wisconsin?

You are top notch in my book.

[Ivytalk]

I don't find this tough to understand, in fact I accurately predicted the real estate crash, and the credit crash for as much as three years in advance of when it finally came home to roost.

Wedgebuster: Successful predictor of five of the last three recessions!

[blueballs]

BB, if I needed to, can I purchase your mortgage services even though I live in Wisconsin?

You are top notch in my book.

Unfortunately no... even though I have an NMLS # for both my company and myself and I aced the national exam, I am not licensed either as a company or an individual in Wisconsin.

I will be happy to review and "bless" any transaction you consider even advise as necessary.

[Wedgebuster]

I don't find this tough to understand, in fact I accurately predicted the real estate crash, and the credit crash for as much as three years in advance of when it finally came home to roost.

Wedgebuster: Successful predictor of five of the last three recessions!

IT: Successful biller of five of the last three billable hours.

[Ivytalk]

Wedgebuster: Successful predictor of five of the last three recessions!

IT: Successful biller of five of the last three billable hours.

You must have me confused with JoltinJoe!

[AZGrizFan]

He may very well be right... like I stated earlier, the banks are holding a "shadow inventory," which consists of properties that haven't been put on the market yet in an attempt to keep prices somewhat stable (which actually lessens the banks' losses on these REO's even though it does the buyers and the overall market no favors). I have no clue as to how many properties this may be and it is certainly more in some areas than others.

When you factor what may be a long drip of these properties coming to market with the clusterfuck that is the whole "robosigning" and MERS deal about chain of assignments of mortgages- along with banks trying to sell distressed properties for more than what the market bears, then you have a slow absorption and a slow recovery to market balance...

Can't drive down a street in CA without finding vacant "shadow inventory" homes...easy to spot: Lawns/yards haven't been mowed/trimmed in over a year; broken windows boarded up; graffiti on door/garage. You won't hear any pols/economists/media discussing this due to the varying ramifications to the recovery. Yes, it temporarily stabilizes pricing, but eventually, they'll be sold, driving down surrounding values.
Sickening that when the values were being pumped up, BofA, JP Morgan, Citibank, WF, GS, etc...wallowed in the fat. When the jig was up, the taxpayers and property owners who pay their bills have ended up taking the hit, not the banks.
"Anger" doesn't even come close.

Oh, cry me a fucking river. Don't lump those GSE's (and that's what those fuckers are, when considered too big to fail) in with the thousands of community banks and credit unions around the country who DID take massive hits when property values fell and people started walking away from their houses in droves because they couldn't use it as an ATM anymore. If I had a buck for every gutless motherfucker who had the ability to make his home payment but CHOSE not to because he/she was now upside down I'd be a rich man. This country (and this economy) would have been able to withstand the justifiable foreclosures and home losses, but when you add on the strategic defaults, the burden has become insurmountable and you're adding massive insult to an already almost fatal injury.

A “strategic default” is when a homeowner stops making mortgage payments even though they could afford to pay. The trend grew through 2008 and by 2009 JPMorgan Chase analysts found 60 percent of all defaults were strategic.

60 fucking PERCENT of defaults were avoidable....if THAT doesn't make you angry, then you're hopeless, because THAT, my friend, is what has driven this economy to the brink of a depression. Take 60% of the foreclosure portfolio off the market...what would that do to home prices? Reduce bank/credit union losses by 60%...what would that do to their balance sheets/income statements? You can "blame" the financial institutions all you want, but that's pure BS and you know it. The blame for this debacle we're still in (and will be for the next 8-10 years) lies squarely at the feet of the strategic defaulters and those advising them to do so.

The best thing this country could do would be to reinstitute debtors prisons.

[AZGrizFan]

He may very well be right... like I stated earlier, the banks are holding a "shadow inventory," which consists of properties that haven't been put on the market yet in an attempt to keep prices somewhat stable (which actually lessens the banks' losses on these REO's even though it does the buyers and the overall market no favors). I have no clue as to how many properties this may be and it is certainly more in some areas than others.

Wrong, wrong and dead wrong. At the MOMENT a financial institution takes a property into OREO, it must write down that loan to assumed sale value. And there's a limited amount of time that financial institutions can actually HOLD inventory as well. Believe me, the LAST thing I want on my balance sheet is millions of dollars of non-earning assets, and that's exactly what OREO is....a non-earning asset.

Here's another peak into the realities of OREO properties...the REAL crooks in this process are the realtors. We offered an OREO listing to a realtor at my credit union and she suggested we set the price at $55,000. We felt that was about $15,000 too low, and she balked and got all pissy with us because we wanted to start the price at $70,000 (we found out later she already had a buyer lined up at $55,000 and was going to make an easy commission). As soon as we put the property on the MLS at $70,000 we started receiving bids...it's now up to $84,000 and the bids are still coming in....so in part blueballs is right---it's a great time to buy...but there's plenty of other greaseballs out there trying to make a profit off this mess than just the evil bankers.

[Bronco]

"the REAL crooks in this process are the realtors."

Saying all Realtors are crooks is like saying all Mulatto's would make terrible presidents. I know a mulatto that would make a much better president than the one we have.

I just watched ABC news and she said "with the terrible economic news this week does this mean we're slipping back into recession"
Really slipping back...she needs to get out more and look around.

[AZGrizFan]

"the REAL crooks in this process are the realtors."

Saying all Realtors are crooks is like saying all Mulatto's would make terrible presidents. I know a mulatto that would make a much better president than the one we have.

I just watched ABC news and she said "with the terrible economic news this week does this mean we're slipping back into recession"
Really slipping back...she needs to get out more and look around.

No different than saying it's all the bankers fault.

[CID1990]

I don't find this tough to understand, in fact I accurately predicted the real estate crash, and the credit crash for as much as three years in advance of when it finally came home to roost.

Bottom line, easy credit and sub prime lending leads to inflated real estate values, which creates more hype and attention to the market further ballooning a market that becomes a house of cards.

Real Estate is still to damn high, and will in fact take as much as 4-7 years to bottom out.

Back to the principles of real estate, home buying and speculating is two different things. Buy a home when you can afford it and consider it a long term asset opposite to paying rent. Buy an investment property when the market is either stable, stagnant, or down.


As you were gentlemen..

Absolutely.

I refused to buy a new house a few years ago simply because I could not justify in my own mind paying 350K for a 2000 square foot box made of yellow pine, a concrete slab, vinyl and sheetrock. The materials alone aren't worth 25K and the Mexican labor certainly did not go over 50K.

THe upside of things is that the rental business seems to be strong. My renters in Charleston moved out a couple months ago. The management company listed the place for rent, and in two days we had 6 potential tenants fighting over the place. I think I'm going to raise the rent a little bit once the current batch of renters moves out.