Retrace all you want. The overwhelming majority of American homeowners are still doing fine. Which has always been my point.

 

And my point is that Primary housing has never been historically a spectacular investment class after factoring:

1. Property Taxes
2. Maintenance/Upkeep
3. Insurance
4. Carrying costs
5. Transaction fees

Which is why it was even more important to recognize the downside of buying into a bubble funded by easy money over the last few years.

 

Another effect of the sub-prime mess:



Politicians, regulators and financial specialists outside the United States are seeking a role in oversight of American markets, banks and rating agencies in the wake of recent problems related to subprime mortgages.

Their argument is simple: The United States is exporting financial products, but losses to investors in other countries suggest that American regulators are not properly monitoring the products or alerting investors to the risks.

"We need an international approach, and the United States needs to be part of it," said Peter Bofinger, a member of the German government's economics advisory board and a professor at the University of Würzburg.

While regulators in the United States have not been receptive to the idea in the past, analysts said that Europe and Asia have more leverage this time around. Washington might have to yield if it wants to succeed in imposing bilateral regulations on state-owned investment funds from emerging economies.

"America depends on the rest of the world to finance its debt," Bofinger said. "If our institutions stopped buying their financial products, it would hurt."

Banks and investment funds from China to France were recently hit with heavy losses after buying mortgage-related securities and complex financial products originating from the United States. In many cases, investors were caught by surprise because American rating agencies gave the products top ratings, leading buyers to believe there was little risk. International investors are also asking why American banks were allowed to give mortgages to home buyers who could not repay them.

http://www.iht.com/articles/2007/08/28/business/reg.php

 

"Delusional Borrowers" and Reality Checks

One of the things we've noticed--not to say beaten like a dead horse from time to time--is that in the last several years a lot of people who aren't very good money managers got much bigger loans that they could reasonably be expected to carry. A lot of people are out for the blood of these borrowers, demanding that they be "punished" for having done something powerfully dumb.

I am often reminded of this little gem, "Unskilled and Unaware of It: How Difficulties in Recognizing One's Own Incompetence Lead to Inflated Self-Assessments," by Justin Kruger and David Dunning. They argue:

I remain convinced that there's something wrong with blaming the financially inept for not realizing that they are financially inept, when those who are supposed to be financially ept--loan officers, brokers, financial counselors, advice columnists in business publications--spent the last several years refusing to tell them that they were financially inept.

Of course people who are in over their heads are surprised. They lacked the skills necessary to understand what "over their heads" might mean.

The study is found here: http://www.apa.org/journals/features/psp7761121.pdf

The post at Calculated Risk is here: http://calculatedrisk.blogspot.com/2...ty-checks.html

 

Wow. That's an incredible read.

Thanks Fibi

 

Home prices increased during the three months ended June 30, albeit only slightly, according to the latest quarterly report from the Office of Federal Housing Enterprise Oversight (OFHEO).

The OFHEO House Price Index (HPI) rose 0.1 percent compared with the first quarter of 2007 and 3.2 percent compared with the second quarter of 2006. The HPI includes data on houses purchased as well as those refinanced.

http://money.cnn.com/2007/08/30/real...ion=2007083011

 

We're not doing too bad here in the T-mec huh Silver? Seems to have stabilized...

 

The biggest issue are these investment scams that are now imploding. Bunch of idiots trying to get rich quick and are now hurting comps for everyone

http://www.nctimes.com/articles/2007..._158_25_07.txt

 

Hang on tight on your property. I have a feeling we are still heading south.

Funny how many knowledgeable people I know, told me that houses wont ever drop prices.

 

Over the long run they seldom do

 

President Bush on Friday outlined ways to help homeowners facing foreclosure — the administration’s first effort to deal with an expected wave of defaults fueled by the mortgage crisis.

The initiatives, which are not aimed at bailing out lenders or speculators, are designed to help homeowners with risky mortgages keep their houses. In remarks in the Rose Garden, Bush also discussed efforts to keep the problems from arising in the future.

“The government’s got a role to play, but it is limited,” Bush said. “A federal bailout of lenders would only encourage a recurrence of the problem.”

---

On Friday, Bush:

* Urged Congress to pass legislation that would give the Federal Housing Administration more flexibility to help mortgage holders with subprime mortgages.
* Pledged to work with Congress to reform the tax code to help troubled borrowers rework their loans.
* Called for rigorously enforcing predatory lending laws and strengthening lending practices.

http://www.msnbc.msn.com/id/20524454/

 

Just how are revisions to the tax code going to fix this problem? Are we now going to exempt subprime borrowers from paying taxes? I have no problem refinancing them into new loans - even federally backed loans, but they still need to pay what they owe. If they have penalty clauses in their current mortgages and their lenders are found to be "predatory", then the penalty should be voided.

 

Second, I'm going to work with Congress to temporarily reform a key housing provision of the federal tax code, which will make it easier for homeowners to refinance their mortgages during this time of market stress. Under current law, homeowners who are unable to meet their mortgage payments can face an unexpected tax bill. For example, let's say the value of your house declines by $20,000 and your adjustable rate mortgage payments have grown to a level you cannot afford. If the bank modifies your mortgage and forgives $20,000 of your loan, the tax code treats that $20,000 as taxable income. When your home is losing value and your family is under financial stress, the last thing you need to do is to be hit with higher taxes.

http://online.wsj.com/article/SB118857298191314712.html

 

^^ Thanks. That makes sense.

 

By Kevin Hassett Sept. 4 (Bloomberg)

http://www.bloomberg.com/apps/news?p...d=aqugDgCd4Rz0

 

^great idea

 

I forgot to mention, I was referring to the short term. They were expecting the prices to just stop going up, but never coming down again.

 

http://www.bloomberg.com/apps/news?p...d=antcNcyoXU5M

 

The McMansion may be shrinking.

With the nation's housing market in a slump and the mortgage market in disarray, many home builders are putting up fewer supersize homes and offering smaller floor plans. That seems to be what buyers suddenly want in an era of high prices and tougher financing.

"Financing has tightened down so much that many people aren't able to qualify for the larger houses," said Kathryn Boyce, an account executive in Northern California for Boston-based real-estate research firm Hanley Wood Market Intelligence. "Throughout the U.S. people can't afford what they previously did. Floor plans are going to get smaller."

Home sales have plunged over the past year, leaving builders saddled with excess inventory, especially of larger, more expensive homes. In July, new-home sales were running at a seasonally adjusted annual rate of 870,000 units, down sharply from 1.3 million in 2005.

More recently, turmoil in the mortgage market has made it harder for buyers to qualify for bigger loans. As lending standards get stiffer, lenders have cut back on mortgages exceeding $417,000. That's the maximum size loan that lenders can sell to Fannie Mae and Freddie Mac, the government-sponsored financiers that buy mortgages from lenders and repackage them into mortgage bonds for sale to investors.

All this is causing builders to redraw their blueprints. After reducing prices on their current inventories of unsold homes, the next step is to "start building to a new market. That new market is a lower price point at a smaller size. To the extent they can do it, they will," said Kermit Baker, chief economist at the American Institute of Architects.

Over the past three decades, prosperity and a demand for space to accommodate home theaters, offices, gyms and palatial kitchens has pushed up the average size of newly constructed single-family homes by nearly 45% even as the size of the average family has declined. Last year, according to the Census Bureau, the median size of a newly completed single-family home reached 2,248 square feet, up from 1,560 square feet in 1974.

The expansion continued into the first quarter of this year, with the median home size inching up to a near-record 2,302 square feet. But it slipped to 2,241 square feet in the second quarter, and many analysts think a broader decline may be in the offing.

Jeffrey Mezger, chief executive of Los Angeles-based KB Home, said the change has been "driven by data on what our home buyers want and what they can afford in a new home." Mr. Mezger estimates that the average size of a newly built KB Home today is 2,200 square feet, 200 square feet less than before the shift in sentiment took hold.

http://online.wsj.com/article/SB118955679788724507.html

 

....and to think I got a client 7 months ago 100% stated income stated asset loan to purchase a $838,000 house. Oh how the times are changing!

 

Bakersfield Bubble has been all over this story from the start. The little shoe-shine boy who got banks to loan him millions, then allegedly committed mortgage fraud all over California.

Little boy Crisp was the American Dream (and crash), on a much bigger scale than Casey Serin. I really liked the articles that fawned all over the kid for his expensive suits and private jets. But of course, it was done on debt, you fricking MSM idiots. And when the Ponzi Scheme ended, fruitcake pretend businessmen like this are the first to fry.

From waiter to flashy real estate developer to Convict #275820

Here's how he was described by the clueless Realtor.org idiots in 2005:

Bling is the thing: Crisp insists that his salespeople wear professional attire and be well-groomed. He buys luxury automobiles for his salespeople and has flown clients in private jets to view properties. “Image is key in this market,” he says. “Clients want to feel important and be with a real estate professional who’s successful.”

And here's how David Crisp is being written about today:

Crisp & Cole's businesses & homes raided by FBI

The FBI is saying little about the raids at the homes and businesses of the once prominent real estate duo Crisp & Cole.

Today's raids come as the California Department of Real Estate has a number of serious accusations against the once, high profile Bakersfield real estate team, Crisp & Cole. The DRE says it was an investigation, quote, "several months" in the making. The realtors could have their licenses suspended or even revoked.

http://housingpanic.blogspot.com/sea...p%20and%20cole

 

The corporate short-term commercial paper market could be finding its footing, weekly statistics from the Federal Reserve showed Thursday.

During the week ended Wednesday, the outstanding volume of commercial paper dropped by $8.2 billion to $1.917 billion, its fifth straight week of decline.

Commercial paper plays a key role in funding corporate American's operations. The volume figure measures how much commercial paper has been offered but remains unsold and the imbalance has been much greater in recent weeks.

By comparison, companies were unable to find takers for $54.1 billion in commercial credit the prior week. During August the totals sometimes stretched over $90 billion.

Earlier this week Treasury Secretary Henry Paulson warned that turbulent credit conditions have not ended and made clear that he is particularly concerned about the commercial paper portion of the credit markets.

Paulson indicated that he is monitoring the health of the commercial paper market to assess whether there will be further contagion from the wobbly subprime mortgage market.

The commercial paper market, normally highly liquid, began receiving intense resistance last month as worries about exposure to below-prime mortgages and other shaky assets took their toll on many corporate credit markets.

Commercial paper usually provides an easy way for companies to get short-term operating capital while avoiding formalities such as registering bond sales with the government. These assets tend to feature lower interest rates than longer-term bonds and often require little beyond the good name of the issuer to bring about a sale.

http://ap.google.com/article/ALeqM5g...lh6VyVICf-0qrQ

 

Bank run underway at Northern Rock in England

Crisis at Northern Rock

The British mortgage giant is getting a bailout from the Bank of England—raising questions about banks' vitality in Britain and across Europe

Just how serious the credit squeeze is becoming, not only in the U.S. but also in Europe, hit home late on Sept. 13 when news emerged that Northern Rock (NRK.L), one of the five largest British mortgage lenders, had been forced into a bailout from the Bank of England. In a conference call Sept. 14, Adam Applegarth, Northern Rock's chief executive said: "Frankly, life changed on Aug. 9, virtually like snapping a finger. Watching liquidity disappear on a global basis has been astonishing."

http://www.businessweek.com/globalbi...eek+exclusives

U.K. tries to stop a run on big mortgage lender, stocks sink

LONDON — Britain's financial authorities stepped in to rescue mortgage lender Northern Rock on Friday as the group, which has lent aggressively to home buyers, fell victim to the sharp rise in borrowing costs between banks. U.K. stocks sank on the news.

In Britain's biggest casualty of a global financial crisis sparked by U.S. mortgage defaults, queues stretched into the streets as customers waited to withdraw savings from Northern Rock branches, with some reports of fighting in its home town of Newcastle.

England's FTSE 100-share index was down more than 95 points, or 1.5%, to 6268.30 in late afternoon trading Friday.

The British central bank's support — the first time it has acted as lender of last resort in this way since becoming independent on interest rate policy in 1997 — puts a prop under Northern Rock, which has been hit by banks' reluctance to lend as they hoard cash to cope with the fallout from bad U.S. loans.

The British government said Friday that it has authorized the Bank of England to provide an unspecified amount of liquidity to Northern Rock, which had the biggest share of the new mortgage market in the first half of this year.

http://www.usatoday.com/money/world/...ish-bank_N.htm

 

Whiskers, your input please. What's the climate like in London right now? Is the BBC all over this?

 

Yes, The BBC is all over those red X's.

 

not showing red X's here!

pics:

http://bp2.blogger.com/_wFWqWIH-WFU/.../s1600-h/3.jpg

http://bp1.blogger.com/_wFWqWIH-WFU/.../s1600-h/2.jpg

http://bp3.blogger.com/_wFWqWIH-WFU/.../s1600-h/1.jpg

 

The company resorts to 20-percent or six-figure discounts on some of its properties this weekend, amid the worst housing downturn in 16 years.



http://money.cnn.com/2007/09/13/real...ion=2007091317

 

new construction here is starting to throw in all the upgrades....

I am waiting it out I see a yr from now a 600k house will be less than 400k because of inventory pile up , competition, market changes, and the inability to finance!

 

We got a great deal on ours, but I'm fully prepared to sit on a paper loss of $100k.

 

I wish I could see new construction here in south florida.

 

Sunbelt city in grasp of housing undertow

http://www.msnbc.msn.com/id/20798360/

 

Fed cuts rates by a half point
The Federal Reserve lowers the target on a key short-term interest rate for the first time in four years from 5.25% to 4.75%

http://money.cnn.com/2007/09/18/news...ex.htm?cnn=yes

 

Looking to help homeowners avoid foreclosure, the Democratic-controlled House on Tuesday moved toward expanding federal backing of mortgages well beyond limits favored by the Bush administration.

The House bill would allow the Federal Housing Administration, which insures mortgages for low- and middle-income borrowers, to back refinanced loans for tens of thousands of borrowers who are delinquent on payments because their mortgages are resetting to sharply higher rates from low initial "teaser" levels.

"The American dream is in peril for many families in this country as foreclosures rise and dreams shatter," Rep. Betty Sutton, a Democrat from Ohio, a state particularly hard-hit by the default wave, declared in House debate on the measure.

She called the legislation, which backers say could help an estimated 250,000 families, "a bold step forward on what is going to be a long road to fix this broken system."

The measure is Congress' first stand-alone bill in response to the mortgage-market tumult of the summer. The Senate last week passed spending legislation that includes $200 million to provide aid to nonprofits and other groups that offer counseling and information to help homeowners with high-priced mortgages avoid foreclosure.

House Republicans endorsed the overall thrust of the bill but sharply objected to a $300 million-a-year fund for grants for affordable housing, which would be financed from FHA revenues - a plan also opposed by the administration.

Rep. Pete Sessions, R-Texas, said the plan "levies a new stealth tax on the most modest homebuyers."

http://www.msnbc.msn.com/id/20837318/

 

Three quarters of housing markets - many in crashing Sun Belt areas - face price declines over next few years.

http://money.cnn.com/2007/09/19/real...ex.htm?cnn=yes

 

I wonder how many of those 86 markets have seen increases of 50% or more during the last few years?

 

 

^^^

I forgot, did most people who invested in dot-com's end up better off even after the bubble burst?

What was it, about $3 trillion lost in a matter of months?

 

Housing Market in Washington State Booming

 

I though it was 1 trillion, but still its a ridiculous amount of money. The difference, there was no collateral. You can live in a depreciated house. You cant do sh_t with a depreciated stock

 

While you can't so $hlt with them, if you have the certificates, you can wad them up several times and they get soft enough to wipe up after you $hlt