Tuesday, March 27, 2007

'Dumping' Homes

From the Manteca Bulletin:

Three homes in Marsh Creek and Springtime Estates — two popular custom neighborhoods in East Manteca — reflect the new realities of home selling in the South County. The homes closed escrow this month but at selling prices $145,000 to $175,000 less than what owners had listed as the asking price. In one case, a home listed for $775,000 with similar amenities to one nearby that sold in late 2005 for $10,000 more ended up closing escrow at $600,000.

The market from top to bottom is being hit by what Realtors are referring to as a "dumping" of homes by owners who are trying to avoid huge jumps in their monthly loan payments created by a frenzy of zero down, sub-prime balloon-style loans that were made two to three years ago. The buyers accessing sub-prime loans were gambling home prices would continue climbing so they could refinance or sell before monthly payments climbed by upwards of $1,000 depending upon the loan.

Manteca now has 523 resale homes available with 75 sold so far this year. Compare that to last year at the same time when there were 381 active listings with 134 sold as of the third week of March. The difference is even starker from the week of March 22, 2005. There were just 78 available resale homes in Manteca with 149 sold in 2005 by mid-March.

"I think it is going to take two to five years for this to completely shake out the market," said Steve Roland of The Real Estate Group.

21 comments:

Patient Renter said...

""I think it is going to take two to five years for this to completely shake out the market," said Steve Roland of The Real Estate Group."

Somewhere, at this moment, David Lereah is dispatching a team of hitmen to take care of Steve Roland, for making such a wreckless and baseless claim. Good luck buddy.

ralphk said...

From Craigslist:

Investors Opportunity

Date: 2007-03-27, 8:25AM PDT

I need to Short Sale my home. It is a very desireable neighborhood and the home is in very good condition. This could be a great deal for the right investor. The first is $530,000 and the second is $66,000 The home comps for about $515,000 realistically.

His house comps TODAY for $515k. Upside down $81k TODAY. And this is an Investor's Opportunity...how?

Diggin Deeper said...

"The market from top to bottom is being hit by what Realtors are referring to as a "dumping"

One "dump" on the neighborhood probably doesn't hurt too bad. A couple of dumps will likely set a new price that will begin to take its toll. If the whole block "dumps" you want to make sure everyone turns off the gas and electricity because one or more of your neighbors will be so pi**ed off, they probably start ripping out the granite tile, hardwood floors, and appliances before they set fire to the place.

sf jack said...

Lereah is going to let Roland off easy.

Because the truth is that a shakeout is going to take 5 to 7 years, if not more in many place.

sf jack said...

"places."

patrick said...

nice... granite, stainless, all the "necessities" except good schools....

http://tinyurl.com/3bjnko

anon1137 said...

Beazer stock hit in wake of FBI probe

I was looking at a graph of the stock price of Beazer Homes since 2000 (when it traded for about $5) until recently (when it has traded in the low 70s) and the pattern looks strikingly like the NASDAQ index from 1995 to 2000.

Sippn said...

Do they have an In and Out in Manteca?

Sippn said...

AP - "Sales were down in every region of the country except the West, where sales rose nearly 25 percent."

From the same press releases that said "sales were down 3.9% (nationally)"

Sippn said...

Looks like Sac region is sub prime ground zero for growth in 2006... WSJ today

sf jack said...

Ground zero, indeed.

********

"Where Subprime Delinquencies Are Getting Worse

SUBPRIME MORTGAGES have been cropping up in surprising spots. Typically, these loans to home buyers with the weakest credit were concentrated in lower-income or economically depressed areas. But over the past few years, a large chunk of the subprime-loan market has shifted to higher-income metropolitan areas. In many of those wealthier areas, the delinquency rate has increased quickly. In the Sacramento, Calif., region, where the median household income ranks among the top 10th of major metropolitan areas, the portion of subprime mortgages delinquent for 60 days or more hit 14.1% in December -- more than four times the level a year earlier. Other parts of California, as well as sections of Florida and Massachusetts -- especially those areas where housing prices have surged -- also logged rapid increases in delinquencies."

See the map and table

The Wall Street Journal Online - 3/29/07

http://online.wsj.com/public/resources/documents/info-subprimemap07-sort2.html

Or:

http://tinyurl.com/2xwrat

ralphk said...

Not to worry. The Fed says the worst is behind us.

Sippn, I bet you knew it all along :)

From Inside ARM


Fed Says Subprime Mortgage Problem "Contained"

U.S. Treasury Secretary Henry Paulson said that *now* the Treasury was monitoring housing market developments closely but was encouraged by signs that the housing downturn was at or near a bottom.

While the subprime mortgage problem has been upgraded from “run amok” to “contained” – like some toxic goo from a ‘50s horror film involving radiation, ants, tight sweaters, and Model T’s – two top U.S. economic officials are still concerned with the current state of the mortgage market.

The government appears to be looking for someone, anyone, to blame for the fiscal mess left behind by the messy performance and collapse of subprime mortgages. Of course, when those same subprime mortgages fueled the inflation of one enormous housing bubble, the government seemed little interested.

U.S. Treasury Secretary Henry Paulson said that now the Treasury was monitoring housing market developments closely but was encouraged by signs that the housing downturn was at or near a bottom.

However, the Treasury chief said he had "grave concern" for the many Americans who will be adversely affected by the resetting of adjustable rate subprime mortgages.
Related Resources

ralphk said...

I've been waiting for this to show.

From CCR Newsline:

Defaults Up in Home Equity Loans, Steady Elsewhere, ABA Survey Finds

Some cracks were appearing in consumer personal finances in the fourth quarter but, overall, problems in the subprime mortgage market didn’t spread throughout the economy as 2006 drew to a close, according to a quarterly survey on loan delinquencies done by the American Bankers Association.

Credit card delinquencies remained stable in the fourth quarter, declining slightly to 4.56% from 4.57% in the third quarter, the survey of 300 banks found.

The drop came as delinquencies on home equity loans rose to 1.92% from 1.79%, a consequence of housing troubles, said James Chessen, the association’s chief economist, in a statement about the delinquency report. “It’s not a surprise to see some increase in home equity loan delinquencies, given the weaknesses in the housing market,”
Chessen said.

A composite of eight loan delinquency categories compiled by the association increased to 2.23% in the quarter from 2.12% in the third quarter, pushed up by increases in home equity, indirect auto loans (loans arranged through dealers), RV loans and marine loans.

Personal loan delinquencies remained at 1.91% in the quarter.

ABA surveys 300 banks each quarter on the number of loans they have that are 30 days or more past due to compile its delinquency report.

Sippn said...

Since you mentioned it, lets talk about it.

The way WSJ showed Sac #1 is in % growth in subprime lending - 10% groowth over 2005.

Currently about 12% of all loans here are subprime which actually puts Sac at less than the middle of the pack - its how its being measured.

There's plenty of areas with 20-25% subprime - thats where you will see the problems (like Stockton - 19%)

Sippn said...

I'm sorry, its change in delinquency rates, but same story, Sac in middle of pack, rustbelt cities at 25% delinquency.

Diggin Deeper said...

ralph

Saw the same article this morning.

Bigger picture is starting to show that subprime and its fallout, is starting to soak other credit areas as well. If the typical urbanite wanted it all and couldn't afford it, cheap money made those dreams possible. Not only did you take out a no money down exploding arm mortgage, the payments were so low you were able to buy that new car, join the tennis club, and buy new furniture, too. Now that payment on the note has risen dramatically, its getting harder and harder to make the rest of the payments on the debt owed. I've said this before...how prophetic is the TV commercial with the "Somebody please help me. I'm in debt up to my eyeballs" guy. Don't worry, be happy that subprime is well contained and will have no damning affect on the economy...until it does.

Diggin Deeper said...

sippn

You could take the states of Ohio, Pennsylvania, and Michigan combined and still not have the total population of California (illegals included). Anyway you cut it, California, even at 12-15% its a huge number based on population.

Sippn said...

yes but becasue of the population, its still a small % of the market.

I know, you want it both ways.

Gwynster said...

Is that you pot?

Diggin Deeper said...

sippn

So be it. You are quoting the numbers...I'm just responding. And I really have no agenda nor do I depend on the real estate market one way or the other. The tendancy to put Sacramento in its own little world is amusing. Almost every week the national news picks out Sacramento as being on the "watch list" for one thing or another. I guess time will tell.

Diggin Deeper said...

Credit Suisse sues three subprime lenders

http://news.yahoo.com/s/nm/20070330/bs_nm/usa_subprime_creditsuisse_dc_1

"NEW YORK (Reuters) - A Credit Suisse Group (CSGN.VX) unit is charging three subprime mortgage lenders with violating loan obligations and has filed lawsuits totaling over $30 million.

DLJ Mortgage Capital Inc., a Credit Suisse unit that purchases mortgage loans from lenders, alleges in separate suits that Sunset Direct Lending LLC and Infinity Home Mortgage Co. Inc. breached agreements to repurchase loans they originated.

DLJ is seeking nearly $24 million in buybacks from Sunset and $3 million from Infinity.

The suits allege that the lenders violated agreements to repurchase loans in the event of payment defaults. The suits cite clauses that require repurchases if borrowers are delinquent for 30 days within the first three months of the loan sale.

DLJ also filed suit against Netbank Inc. (Nasdaq:NTBK - news), alleging failure to provide both funds and information relating to purchased loans. The suit seeks $4 million in damages.

The three suits, filed in the U.S. Southern District Court in New York, likely represent a new chapter in the subprime mortgage crisis, where underperforming loans have threatened both lenders and the Wall Street firms that purchased them.

The Financial Times reported on Friday that a unit of Bear Stearns Cos. (NYSE:BSC - news) has filed a $70 million suit against a lender. A spokesman for Bear Stearns declined to immediately comment."

Now Wall Street wants to cover their *ss by suing the lenders for making bad loans. And they say its not going to spill over into other parts of the financial system or economy.