Wednesday, December 12, 2007

'The hype about the housing market is running out of gas'

From Inman News:

Tamara Dawn, a real estate broker in Sacramento, Calif., compiled statistics for Sacramento County which show that REO sales and short sales -- which are sales of homes in which the sale price falls short of what the homeowner still owes on the mortgage -- accounted for about 26.3 percent of total sales in the county from May 7 through Nov. 7.

A short sale can assist a homeowner in avoiding foreclosure and can be less costly for a lender than taking ownership of the property. Short-sale transactions can take more effort and time than typical real estate transactions, as they typically require extensive paperwork and can take weeks to receive a decision back from the lender on whether to approve or reject the terms of the sale.

REOs alone accounted for 22.5 percent of total sales in Sacramento County during the May 7-Nov. 7 period, and REO sales accounted for 35.8 percent of total sales in the county from Oct. 7 through Nov. 7.

As of Nov. 7, about 52.7 percent of all pending sales for the previous 30 days in Sacramento County were related to short-sale and REO transactions, while about 46.6 percent of all active listings on Nov. 7 involved short-sale and REO properties.
From the Sacramento Bee:
Hopes for an office tower and high-rise housing at Eighth and I streets downtown have been dashed again. The CIM Group, a Hollywood-based developer, has opted out of its plans to buy the parcel, raze the existing building and build a new one, says Rob Leonard, economic development director for Sacramento County, which owns the site. CIM's move follows a similar decision last year by Texas home builder D.R. Horton to abandon its plans for a 21-story "Library Lofts" project at the same site.

Leonard says CIM's decision was a "sign of the (weakening real estate) market" and an indication that CIM is focusing on other local projects, including a joint venture with CalPERS at the former John Saca high-rise condo site at Third and Capitol Mall.
From the Stockton Record:
A couple of top bidders in a no-minimum-bid auction of foreclosed homes nearly a month ago in Stockton are not only unhappy that banks didn't accept their bids or even negotiate a sale, they haven't gotten back thousands of dollars in deposits. "It was a waste of my time," said Lewis Stallworth Jr., a Stockton man who put in a top bid of $135,000 for a north Stockton house. "I feel like it was almost a scam. There's no use in going to an auction if they're going to act like that."
...
"I'm kind of sorry I got into this, to tell you the truth," [Mel] Schell said. "It's been way too long." Miller said the auction deceptively implied most bids would be accepted. Plus, several weeks after the auction is too long not to hear anything, she said. "It seems like sort of a fiasco," she said.
...
Dave Webb, a Hudson & Marshall partner, said...typically, either deals are to be made within 30 days, or deposits are returned quickly enough....But some of the large banks or asset managers don't move quickly, Webb said.
From the Redding Record Searchlight (hat tip Suzanne):
The nation's largest savings and loan closed its Redding office on Hemsted Drive on Monday. Washington Mutual's home loan center in Redding had four employees. One will be retained by the company, spokesman Greg Kischner said Tuesday. The company also closed its home loan centers in Chico and Yuba City, which had 11 employees between them, four of whom will stay on with Washington Mutual.
...
This is at least the second reported home loan business in Redding to close since September. National City Mortgage, also citing woes in the housing market, closed Sept. 26. The Churn Creek Road office had five employees.
...
In Shasta County, Benchmark Real Estate Mortgage, First Mortgage Corp., Frost Financial Mortgage, Santa Cruz Mortgage and Mission Hills Mortgage have closed.
From the Anderson Valley Post (hat tip Suzanne):
The Vineyards housing development in Anderson has lain relatively dormant for several months. The plan by developer Sanderson Communities entails 2,500 acres to contain 5,500 units in the hills behind Wal-Mart on Rhonda Road. No construction that requires building inspections has been done at The Vineyards since July.
...
Roger White, vice president of development at Sanderson Communities...said that houses on 95 lots would be ready for construction by March, but only a few houses would actually be built until the housing market improves. “The hype about the housing market is running out of gas,” White said. “People are still having babies and are still interested in this area.”
From the LA Times:
Gov. Arnold Schwarzenegger told social service advocates Tuesday that the state's anticipated budget shortfall -- already feared to be the worst since he took office -- has widened to $14 billion, according to people at the meetings.

That new figure indicates that the state's fiscal fortunes are declining even more rapidly than many leaders had expected. Less than a month ago, the Legislature's chief budget analyst calculated that California is on track to come up $10 billion short by June 2009, when the state ends its next fiscal year.

A $14-billion budget gap would translate to more than 12% of the state's budget if spending continues to rise as projected. Legislative Analyst Elizabeth Hill last month urged legislators to consider getting rid of state programs created in recent years, abolishing tax breaks, raising taxes and reducing benefits for the recipients of government programs.

27 comments:

SacramentoCrash said...

$14-billion budget gap plus $2 billion to fund the $40 billion unfunded state retiree liability = $16 to $17 billion shortfall.

And Gray Davis got run out of town for a piddly $10 billion shortfall.

From Warren Buffet:

"You can't turn a financial toad into a prince by securitizing it,"

On the issue of the securitized mortgages, Buffett said one can make more money "selling toxic waste to customers," but that doesn't mean it's a good idea.

"Wall Street started believing its own PR on this - they started holding this stuff themselves, maybe because they couldn't sell it. It worked wonderfully until it didn't work at all."

Now, "Wall Street is reaping what they've sown," Buffett said. "It will sort itself out over time with a fair amount of pain. We have an economy that can take it."

"In the last seven-eight years, the super-rich have gotten a huge break... It has been a marvelous, marvelous time to be super-rich." The catch: "Nothing trickles down."


______________________________________

- Bin Laden couldn't have done a better job of screwing up the economy that ol' Double Ewe.

- Wall Street whores make Mortgage whores look like angels.

- Peons don't have money to buy cheap crap from China.

He pretty much summed up how bad the underlying factors will cause a recession.

Tyrone said...
This comment has been removed by the author.
norcaljeff said...

Is anyone really surprised that those RE auctions are a scam? I've been saying it all along, and now they are not refunding deposits to winning bidders. How surprising?

What's with this stupid observation? "'The hype about the housing market is running out of gas'"
It ran out of gas over a year ago and the fumes ran out now. You can see people getting out of their car and pushing it now. It's over folks, and the Fed can't even save it. 2008 will be a real a$$ whopping. I'm seeing a recession sometime in late 2008. A year from now would be the time to seriously start looking for RE if you really need to get in. Anytime before then and you're really asking for trouble.

Jacob said...

In 06 I was thinking about buying in fall/winter 08 since I thought the market would have gone down a lot by then, but it hasn't crashed fast enough so now I am thinking fall/winter 09. We'll see...

The auctions are a scam of course. Shill bidders, non binding winning bids... Whatever...

paranoid renter said...

I get scared thinking of the crime rates that we're going to start seeing.

Has the world always been like this...are we just better at finding out how bad things are because we have tools like the Internet nowadays? If it were not for the Internet, I would have bought a house in 2004. But ever since then I've hearing stories of gloom and doom and they are now starting to come to pass.

Tyrone said...

From SacBee. Sorry if they ask for login. If you access from Yahoo News, after searching on 'Ameriquest', you can view them w/o login.

Mortgage fix eluded lawmakers in 2001

Ameriquest contributions

sacramentia said...

"If it were not for the Internet, I would have bought a house in 2004."

The Internet cost you a lot of money in this case. 2003 was the start of the market becoming truly irrational, but the sad irony is that the following 3 years was when the majority of the profit was made from the bubble. Pay attention to the smart money and get out when the dumb money catches on to a trend.

Think of the least intelligent person you know that is the most removed from the real estate market and economics, when they warn you about how bad the housing market is, it is time to BUY.

David said...

"Has the world always been like this...""

No it hasn't, the media used to actually tell you what was going on, the government wasn't running massive deficits, and we used to actually make things. All this has changed since about 1980.

HappyinSF said...

"The Internet cost you a lot of money in this case. 2003 was the start of the market becoming truly irrational, but the sad irony is that the following 3 years was when the majority of the profit was made from the bubble."

Sacramentia,
Uh, where exactly did PR indicate that he was flipper pond scum? Most people do not buy houses to live in for 1 year (2005 as we all know was the peak) and since we are below 2004 prices right now, the internet did in fact save him a ton of money and still counting!

Don't assume that everyone is a slimy, armchair, "flip this house" fanboy.

sacramentia said...

Hey Happy,

I guess I don't get the discussion on here sometimes. It goes between economic analysis trying to figure out the market cycles and jealously whining, and anger against those who called it correctly(or lucky?)and made some money. That part doesn't make sense to me.

HappyinSF said...

Sac, you are missing the point, PR wants to buy a house to live in..you jump on him saying he lost money. You are wrong. If he said I wanted to speculate in real estate in 2004 but didn't you would be correct in pointing out he could probably have had a successful flip in the last year of the bubble.

I also find it funny that you presume to tell anyone on this blog about the price trends during the bubble, you really should assume they know at least as much if not more than you do about every aspect of this fiasco.

Lastly, are you Sippn? Sippn for the most part disappears and you show up. It's totally as if he realized he needed a more "crash friendly" persona.

Gwynster said...

Thanks Happy, you saved me a lot of typing and you get extra points for the use of the term fanboy.

sacramentia said...

Happy -

No, I'm not sippn.

HappyinSF said...
This comment has been removed by the author.
HappyinSF said...

"The Internet cost you a lot of money in this case. 2003 was the start of the market becoming truly irrational, but the sad irony is that the following 3 years was when the majority of the profit was made from the bubble."

In other words, 2004 was a great time to buy.

"Think of the least intelligent person you know that is the most removed from the real estate market and economics, when they warn you about how bad the housing market is, it is time to BUY."

Every man, woman and child is following the housing market right now as it's the #1 news story and the root of all our ills.. so in other words..

NOW is a great time to buy.

O.K. I get it..I get it.

sacramentia said...

Happy,

not yet ... there are still many people that are saying the market will rebound soon and it is good time to buy...that this is the buying opportunity of a lifetime. Ask around I am not making this up.

HappyinSF said...

Realtors and desperate upside down home owners are saying that..

Then, are you saying when Realtors say it's a terrible time to buy it's really a good time? Yeah, I would probably agree that plainly that would be the bottom. But it has been clearly demonstrated that Realtors always say it's a great time to buy.. At least I tried to demonstrate it as clearly as possible.

HappyinSF said...

AgentBubble excluded of course. Whom, like everyone else on these boards, I would like to send my business his way in the next year or so..

G Spot1 said...

"not yet ... there are still many people that are saying the market will rebound soon and it is good time to buy...that this is the buying opportunity of a lifetime. Ask around I am not making this up."

Amen to that. I tell people I couldn't find anything to buy this summer and people look at me like I said I couldn't find a Christmas gift for my 3 year old newphew standing in the middle of Toys R Us. "But I thought it was a great market for buyers?" they ask in disbelief, thinking that I must be the most picky and irrational person they've ever met. Of course, the irony is that I would have lost MAJOR money if I bought this summer. Most people think bad housing market = good time to buy, period. When Joe Idiot starts telling you that "prices are sticky on the way down" and buying now is "catching a falling knife," then you should start looking....

Gwynster said...

G,

I get the looks too. So I ask them what they would buy and I invaribaly get "I couldn't afford to buy now" or "this 500k house but we'd need to sell our place at a 250k profit". Sometimes once the words leave their mouths, the lightbulb goes on and some times I have to connect the dots for them.

smf said...

I have more examples of people beliving that the prices can't go much lower, or that they will be back in 5 years, than those who say that they will never come back.

And this is among people who know about the bubble.

sacramentia said...

Happy-

Have you ever bought a house?

HappyinSF said...

Thank you, but I'm sorry, I'm not interested at this time, I live in San Francisco.

I am getting worried about prices falling any further though.. I've had an absolutely bulletproof argument for never moving to Sacramento for the last 6 years. Unfortunately, there are currently houses in the low 200's in areas we would actually live in. I'm worried prices are going to dip into the freaking 100's soon.

HappyinSF said...

So then, people who don't make a living in real estate are convinced there really is going to be a quick recovery then? To double digit appreciation? For reals?

Wow!

I guess I basically know 2 groups of homeowners in Sac, those who bought for like 80k (basically all boomers)and don't really care that much about the market right now.. I suppose these people might believe what the NAR tells them about a recovery because they are not looking to buy or sell right now.

The other group is the younger generation who I'm pretty sure are all upside down right now.. We don't talk real estate so I'm not sure what they believe.

Patient Renter said...

Happy, I think there's 4 groups.

Those who bought a long time ago, never re-fi'd, and therefore probably don't care what happens now.

Those who bought a long time ago, re-fi'd and are sweating bullets right now.

Those who bought near the peark and are sweating bullets right now.

And those who are still waiting to buy (like me) and are enjoying the show.

alba said...

those who sold at the peak.

BMac said...

what about 'homeowners' didn't you get?