Due to the foreclosure moratoria, overwhelmed REO departments and a reluctance to take losses on bad loans, the foreclosure and disposition process is taking much longer than it should. In the interim, homedebtors facing foreclosures get to live rent-free in $1,000,000 properties.
Asking Price: $995,000
Address: 25 Rose Trellis, Irvine, CA 92603
Here It Goes Again — OK Go
Just when you think that you’re in control,
just when you think that you’ve got a hold,
just when you get on a roll,
here it goes, here it goes, here it goes again.
The foreclosure moratoria we have witnessed over the last year were sold as a way of keeping responsible homeowners in their properties. That is a lie. The truth is Responsible Homeowners are NOT Losing Their Homes, so the real reasons for the moratoria are different than what is stated.
From a political standpoint, foreclosure moratoria are an easy sell because more than half the population are homeowners, and it has a veil of compassion that plays well in the media. Politicians who embrace the moratoria are rewarded with support (not from us but from others.) However, the real reason for the moratoria is to save the banks.
Our banking system is insolvent. Anyone who reads real estate and financial blogs knows that. We are supporting zombie institutions in the hopes that if they can make enough money on the huge interest rate spreads they are enjoying right now that they may be able to revive themselves. The verdict is still out on that one.
In order to disguise the banks insolvency, the government, through pressure on the Financial Accounting Standards Board (FASB), is allowing banks to mark their assets to the value they want them to be rather than to what they are really worth. This provides the appearance of solvency.
To maintain the illusion, banks do not want to get many more data points that show their valuations to be an illusion. The easiest way to accomplish that is to avoid foreclosure and asset disposition because then they must recognise the loss. As long as they haven’t gone that far, the mark-to-fantasy accounting rules allow them to keep the loan on their books at fantasy values, even if the loan is not performing.
The avoidance of foreclosure will be an ongoing problem with high end properties because the losses on these will be so large. The high end, particularly in the beach communities, is so inflated that the drop to traditional valuations is going to cause catastrophic losses with the lenders. Obviously, they are in no hurry to incur or recognize these losses. The lenders are in just as much denial as the homeowners. If it wasn’t for those pesky defaults, they could maintain their denial for a very long time.
Foreclosure Record
Recording Date: 11/26/2008
Document Type: Notice of Sale (aka Notice of Trustee’s Sale)
Document #: 2008000552034
Foreclosure Record
Recording Date: 08/22/2008
Document Type: Notice of Default
Document #: 2008000401664
Today’s featured property was issued a notice of Trustee Sale around Thanksgiving of last year. The lender could have foreclosed at Christmas time (I could see delaying that one). This property should have been at auction in early January, but here we are in June, and the freeloading homedebtor likely still occupies this property (I don’t know for sure). I don’t know why they are trying, but it is for sale.
Some responsible buyer may bid on this property, although it is most likely going to be a foreclosure. Who knows, perhaps this homedebtor will be given a loan mod and allowed to stay in this place. The lenders can maintain their denial a bit longer that way.
Asking Price: $995,000
Income Requirement: $248,750
Downpayment Needed: $199,000
Monthly Equity Burn: $8,291
Purchase Price: $1,274,000
Purchase Date: 11/24/2004
Address: 25 Rose Trellis, Irvine, CA 92603
| Beds: | 3 |
| Baths: | 4 |
| Sq. Ft.: | 2,700 |
| $/Sq. Ft.: | $369 |
| Lot Size: | 4,500
Sq. Ft. |
| Property Type: | Single Family Residence |
| Style: | Other |
| Stories: | 2 |
| View: | City Lights, City, Has View |
| Year Built: | 2004 |
| Community: | Turtle Ridge |
| County: | Orange |
| MLS#: | S575838 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 2 days |
OPEN HOUSE ON FRIDAY 5/29 FROM 2-6PM. BRING YOUR BUYERS TO SEE THIS
BEAUTIFUL HOUSE. Opportunity Knocks! Spacious bright.A large lot in
such a great neighborhood within both Orange County and the City of
Irvine,area of Turtle Ridge.You must see this one. One Bedroom and one
bath for an office or guests.Large living room with fire place, formal
dining room, gourmet kitchen with granite counter. Hardwood flooring
downstairs and carpet upstairs.
This description illustrates how clueless realtors are to the changes in their marketing environment. They still believe the MLS is some kind of private communication between agents when in fact, it is now the primary way buyers find properties. Rather than take advantage of the medium, most realtors don’t even realize it is being used. If they did, perhaps they would not write such horrible descriptions and address comments to the other agents.
BTW, someone commented recently that I do not capitalize “Realtor” when it should be. If you think about it for a moment, you might see why I do not bother….
This is another pretender living the good life in Turtle Ridge. It is faux owners like this one that will bring down pricing in Turtle Ridge.
- This property was purchase on 11/24/2004 for $1,274,000. The owner used a $1,000,000 first mortgage and a $274,000 downpayment. That much was real enough.
- On 12/20/2005 the property was refinanced for $1,170,000 with an Option ARM with a 1.25% teaser rate.
- On 12/2/2005 he also opened a HELOC for $90,000.
- On 9/12/2006 Countrywide gave this guy a $533,250 HELOC. Brilliant.
- Total property debt is $1,703,250 plus negative amortization.
- Total mortgage equity withdrawal is $703,250 which includes the downpayment.
If this property sells for its current asking price, the total loss to the lenders will be $767,950 after a 6% commission.
IR –
1. The shadow inventory is real, and it’s huge. It’s not just a matter of mark to market. There’s real cash issues involved here. Imagine if 50% of those short sales turned into REOs overnight. The market would implode. Moreover, the banks would have to start paying taxes and association fees on those properties. A lot easier to keep the home in someone else’s hands while waiting for some of your current inventory to sell.
2. Why the capitalization on Realtor? I’ve never seen doctor, teacher, lawyer, accountant, busboy or garbageman (garbageperson?) capitalized.
3. Think your dates for the financing have a couple typos. 12/20/25, etc. Should be ’05.
I think the banks are more concerned about systematic losses in big-mortgage communities than anything else. JMO – The banks are allowing these over-levered, faux owners, to live rent free, not to avoid taxes and fees, but rather to protect other mortgages in the neighborhood.
“Think your dates for the financing have a couple typos. 12/20/25, etc. Should be ‘05.”
That is funny. I had to replace my keyboard over the weekend because the “0” key broke. I thought I had corrected all the missed zeros, but I missed those.
[quote author=”IrvineRealtor” date=”1243936286″][b]Updated MLS Irvine Closed Sales through [color=red]May 2009[/color][/b] [b][url=http://irvinerealtorsite.com/]here[/url][/b].
(previous years are at tabs at the bottom)
I show 184 closings for May, resale.
As a refresher:
[b]Yellow[/b] is still unconfirmed (no data reported yet)
[b]Blue[/b] is “suspicious” even though it is recorded.
[b]Green[/b] is confirmed.
Closed lease info has been updated through May, as well. 199 MLS leases, down to $1.55/sqft. average.
Thank you and good luck,
-IrvineRealtor[/quote]
thanks for the info.
My thoughts on these homes they are beautiful but who would want to pay $400 a month in HOA fees.
That is like a car payment. Why so high? Buying one of these now you would be so stuck with a depreciating assest for years to come. The continued foreclosures will force even more price reductions.
And what about the Mello Roos taxes? I bet they are extremely high. NO one in his right mind would buy this because the return is gone. jmo
Nice spreadsheet…thanks
While most of the down payments look pretty good – you still have to love the occasional turd like 5012 Yearling whose fauxowner bought at 495K on 1/6/2009 with a whopping $6,448 (1%) down payment.
This knife catcher was under water before the ink on the contract was dry. Get ready for the tax payer to take another 200K loss when the place drops to 300K and the FB goes A.W.O.L.
Amazing to see lenders still dabbling in these kinds of loans, but then again, since they get to gamble using the casino’s money – I suppose I shouldn’t be.
Who the hell was still offering loans for $500k this year with a 1% down payment?
Wells Fargo – FHA loan. (FHA limit is 3.5% so there must have been some seller concessions)
I’m more impressed with 73 Wellesley – purchased for $395K and financed for $403,492 courtesy of UniWest and a VA loan.
Indeed – very impressive.
I suppose they could market this deal as
“Buy 1 House And Get An 8000.00$ Credit Card With 30 Year Fixed Interest Rate Free”
or
“Buy 1 House And Get An 8000.00$ Pizza Party To Be Paid Off Over 30 Years at Fixed Interest Rate”
I forgot about the VA-they still give 0% down loans. Looks like they financed closing costs too. However, VA loans tend to be to trustworthy buyers, at least in theory, due to the military connection.
I’m using my $0 down VA entitlement when the time comes to buy. That’s going to be a huge help. Then I can responsibly spend all of my savings on fancy new furniture and cars to impress my fancy new Irvine neighbors, without a messy HELOC to buy all that stuff.
It’s refreshing to see people’s priorities realigning with the norm. During the bubble years, everyone spent their home equity to show off their material possessions. Such a bad idea. Taking on that kind of debt and risking your house? I could never imagine doing that. I’m glad to hear you’re instead sending the bill to the fed. 🙂
cash payments:
Jan: 10
Feb: 15 (1 being blue)
Mar: 13
Apr: 6
down payments 50-75%:
Jan: 9
Feb: 6
Mar: 12
Apr: 1
So is the Apr data incomplete as of now (>45 day escrows?) or are we seeing a slowing of big money?
Then again, I hate looking at month to month changes cause they’re volatile.
dafox – (laughing) April sales data are complete, but lack of time on my part has left the associated debt numbers incomplete. All of those must be manually entered, and include first mortgage (and adding seconds when applicable). I’ll get to it when I can, but fortunately have had other items on my plate that keep the bills paid.
Thanks,
IR2
how dare you pay your bills and not humor random strangers on the intarwebs?!
also, thank you for this data. its very enlightening. where do you get the loan info? there’s a few properties around me that I’m very curious about.
I receive access to public records via realist.com, as part of my membership dues. I think you can pay through other sources that will give you the same online access.
PM me if you have questions about specific addresses. I’ll see what info is available.
thx,
IR2
Irvine Realtor: thanks for the MLS info including the rentals. Question: Dan in Fla states that with REO banks pay HOA and property taxes. Is this true in Cal? If so, are the payments made in a timely fashion (monthly and annually) or in arrears at the time of sale in a lump sum?
This is true in CA. Seller, whether it be a bank, person, or corporation, is billed for ownership expenses (property taxes and HOA dues) typically through escrow in a lump sum. New owner takes over responsibility from date of recording.
For REOs, utilities are paid by the realtors directly to the service companies. They must be on during inspections, so that buyers may properly know if electric, gas, water, and electric are sufficiently operable.
Assignment of billing is specified in escrow instructions, and escrow holds a “buffer” amount of cash to cover the swing if title records early or late, which is refunded to parties after closing.
The reason Realtor should be capitalized is that it is a brand name. Excuse me, I think it is actually supposed to be REALTOR(R).
Realtor and teacher are not equivalent. Real estate agent and teacher would be equivalent.
But I agree with IR. If a realtor can’t write a description in human English, then they don’t deserve to be capitalized or even CAPITALIZED.
Realtard is actually the more appropriate term. I used that term with my wife a couple weeks ago and she cracked up.
One thing that fascinates me is that it seems like realtor is a “fall back” career. If you can’t hack it as a business analyst or accountant or engineer or athlete, you “fall back” as a realtor because it doesn’t really require many skills. And the sad thing is that some of these people actually make (made?) great money at it. I am very bitter about the real estate agency industry. I still don’t understand why I should have to pay more to buy a $400,000 house than somebody else has to pay to buy a $300,000 house. The realtard didn’t do 33% more work.
We need to break this industry. Hopefully IR’s plan will do it.
“Realtard” may be funny to some, but when you have a child or know a person that is developmentally delayed (code for MR), it’s not so funny. I think “realtor” is plenty derogatory on its own. Only those that are members of the NAR can use the term to refer to themselves.
I never use the term Realtard.
I always thought its a combination between Real+Tard 😆
Realtard doesn’t work for me either.
Realturd?
Agreed. Why can’t we, as a society, call everyone “Gods Greatest Creation?”
Realtard is hilarious (the first 7-8 times), and as it doesn’t refer to any delayed people i’m not really sure what your offended about.
Yeah I know a physician and a pharmacist that made more money doing RE than during the boom.
I wonder if it’s worth it for me to maintain an active RE license to a) do my own house transaction or b) help my friends out and steal business from these lower case r realtors.
Can I do this? or is there some conflict involved?
I’ll gladly work for food… i dunno about the $8k pizza party azdavidphx was talking about though.
c) when the masses are slobbering over real estate again, I will be one stap ahead of all the bandwagon jumping shrealtors. 🙂 🙂
spellcheck: step
You know, on many types of building projects, the standard architectural fee system is based on 6% of construction cost, including all engineering fees. Some architects charge even less, especially now with the dep-er-recession. This does not include the construction cost, but it is for the complete building, site and systems design.
To become an architect, it requires a MINIMUM of 5 years schooling and 3 more years work experience to simply obtain a license. And the 6% design fees include firms with principals with 20+ years of experience. Can someone explain to me how Realtards justify 6% fees for simply transacting ownership of a property? This is the same cost for a whole design team, trained and skilled to fully conceive, design, provide full construction documentation and supervision for the construction of this same building. ? Does this make any sense for the cost to re-sell the very same property?
I am going through a divorce. It involves sorting out ownership of over a million dollars of multiple assets. It will take two highly educated lawyers, a lot of time and fees, and be highly contentious. Total costs will be under one percent and it will be a ripoff.
If I sell my home, it will sort out ownership of a single million dollar real estate asset. It will take two slightly educated realtors, be quick, and be mostly agreeable. Total costs will be about ten times the divorce rate, and I will just shrug it off. Why is this?
I’ve often wondered the same thing. Seems like 6% should apply to one’s equity in a property, not the total sale price. Equity would be easy to determine. It’s what you get at the close of escrow. If you were to have no equity, an hourly rate (agreed to at signing of listing contract), kept track of by the r.e. agent as do lawyers, would be the fall back payment.
Wonder if there’s any support for the idea?
Dan: In Florida REO, are the banks required to pay the HOA on a (timely) monthly basis and prop txs on annual basis. If so, this would aid the condo assns which have large numbers of empty units not paying the fixed monthly costs covered by monthly dues.
Taxes are a yearly payment in Florida. As for HOAs and Condos, it depends on the association. The banks are the new owners…whatever any other owner is required to pay, they have to pay, or risk getting foreclosed on themselves.
Once a condo turns into an REO, yes they are required to pay the association dues, but they are under no requirement to pay as long as the borrower still owns the property (ie – during the foreclosure suit). I’m not sure how many banks are paying and how many aren’t.
Hi Dan,
Someone else may have posted this on the site somewhere already but this link:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=as5eaFiSGc5I
details the views of David Sokol on the housing situation. He is a Berkshire Hathaway exec who runs a large real estate brokerage (and an energy company). The short version is that he believes there is a shadow backlog of homes that doubles the official 10-12 months of inventory and that it will 2011 before the housing market will work through these issues. Does not say if he is a registered REALTOR.
Of course it should be caps …..*REALTOR* to reflect the contribution to the community.
From the last post, assuming you need 30% of purchase price for DP, CC, furniture, reserves, for this home would put you at $300k. At the income requirement, saving 10%/yr, it would take 12 years to save that $300k. How many people making $250k have $300k in cash…from savings? I see that amount only coming from asset appreciation, either in other real estate or stocks. Both of which people were riding like there would never be a drop.
SoFL at least is imploding. It is a slow bleed for the $1Mil + homes built in 06/07 to be FC’d. Some are listed for < 1/2 new price, with no movement. You have others listed for at or below 02/03 new prices. There was never enough income for residents to support the number of homes or their prices. There is a market for 2nd homes in FL, but I don't think it's for million dollar homes 30 minutes from the beach. How did BRCM's stock runup in early 06 (from 30 to almost 50) impact Irvine housing prices?
How many people making $250k have $300k in cash
Not enough to keep the charade going for much longer.
If you are making a quarter a million dollars a year, I would think you should be able to save at least 20% of that a year, if you are fiscally responsible. So, that should take six years, max.
Of course, few people are fiscally responsible.
Should be able to and actually do are different.
How much ‘savings’ is real put away of income vs. capital appreciation?
If your income is $250k, your fed tax bracket is 33% and your effective tax (on all income, not just the highest bracket) is 27%. Add 9.3% CA tax bracket (don’t know the effective tax) and your takehome is only 64% of $250k, or $160k. Basically, all I’m saying is the average citizen won’t be banking $50k of their $160k paycheck per year. Of course we on the IHB are a different breed!
20% of that? what’s THAT, pretax of 50k per year. after tax that would be closer to 30% of your take home pay, not impossible but not quite that easy either. 😆
I’m not sure why someone feels the need to capitalize “realtor.” There is no law that says that registered (or non-registered) trademarks must be capitalized. IR is just showing the respect to the designation that is deserved, that’s all (i.e., lower case and spelled correctly is plenty respectful). Many trademarks are used in non-capital fashion (see, e.g., adidas). As a trademark attorney, this I know.
In theory, one should be called what one wants to be called-the Mohammad Ali Rule. The NAR wants Realtor to be capitalized, therefore, you should do so, if you want to be respectful.
Of course, that assumes you want to be respectful towards the NAR and Realtors in general.
Great YouTube Video.
Is that Matt Leinart with the tongue thing going on?
Re: “the appearance of solvency” – there is another reason why it is the banks & govt interest to keep the party going …
http://www.moneycontrol.com/india/news/economy/us-banks-improved-earnings-to-continue-meredith-whitney/397498
“The long only money is coming in and long only money came in last year and they got their hands chopped off. You are going to see the same thing happen. The biggest danger we face here from a market perspective is having the retail investor shut out for a protracted period of time because they feel abused and lied to again.”
-Meredith Whitney, Wed, May 13, 2009
I completely agree with Meredith.
Mom & Dad already lost a small fortune, and just when they decide to get back in, out comes the floor again.
There’s gonna be a lot of very angry people.
The market crash during the Great Depression had three significant bear rallies. Each one took out a group of “smart money” investors. By the time the market had corrected 89% and found a bottom, retail investors were so annoyed that they stayed away for a generation.
And this is the longest bear market rally since….when?
Like I mentioned before, the govt is here to make sure that the rally will stick. ZIRP can do wonders for folks who are not making shit off the hard earned conservative savings. Add to the Treasury buybacks, Mark to Fantasy rule change (hell, you now have Congress on your end…the **nukular** ICBM…screw the bazooka), and you have a recipe for a bull market that’s made of paper bulls.
Oh well, as long as USD is the world reserve currency, you can’t do shit except to pay your freaking taxes and rent. Sux, ain’t it?
Maybe, but the way consumers are now saving instead of spending (savings rate jumpped from <0.1%> to over 5.0%) means the money has to go somewhere. And some portion of that will go into equities push stock prices higher. And, as the US dollar drops, US stocks become cheaper to foreign investors.
I’d bet on the upside of stocks – cheaper dollar, more savings, dramatic cost-cutting by companies equals future profits
Stocks went up because they dropped so low the fundamentals were there for some who went down on perception of the overall market conditions. Finding those stocks and buying them were the key to this rally. Some of mine had dropped 20 points which was way over sold. They are now half way back. As always valuation is the key.
But there are always stocks that are speculative in nature, those are gambling stocks for day traders. Really doing your homework before you buy anything will save you but most people do not and that pertains to RE as well.
Note: Meredith is discussing financial stocks in the article (ex. banks), not stocks in general
I do realize this but the general rule of valuations is the only way to buy. Of course finding the correct data is not always available and reliable. That is where the risk comes into play. When you evaluate a home comparisons to the surrounding areas pertain along with price per sq. ft. with impovements, past closing sales, ect. When I bought last I went to City Hall and looked at future building permits, school records, tax records to get a full view of the town I was investing in. The more you do your homework the better decision you can make. And this also pertains to stocks.
Meredith was in the middle of this and she read the signs and spoke out on them as well. Many saw the same thing but kept quiet she is famous for speaking out and being correct with her findings in banking which affected the entire economic environment.
From Calculated Risk:
NY Times: Foreclosures: No End in Sight
“In previous housing busts, foreclosures continued to rise until prices finally bottomed. And prices will fall – and foreclosures rise – for some time. There is no end in sight.”
I wonder what these people did with the 700K equity extraction…and they have been living for free at the property for the last 6 months. This gets me steamed!!!!
I never knew there was a class “how to game the system 101” in college. Seems like plenty of people signed up for it and learned the material rather well.
Everybody repeat after me…IT DOES NOT PAY TO BE RESPONSIBLE IN THIS WORLD!!!!!
Mainly because most americans are broke and the system rewards consumption and not investing.
The worst part is that if you have been saving money for a down payment on a reasonable house, in a year or two that money will be worthless. After hyperinflation the banks and delinquent homeowners will be able to sell or refinance the houses at new inflated prices and the stalling tactics they are currently using will actually pay off.
The government actually wants to inflate the economy (not sure they want hyper-inflation, but they want pretty sizable year over year inflation) in order to get out of the recession by giving people more money in their hands to pay off all the debts and start consumption. The problem is that this has never worked because it punishes the responsible (savers) and rewards the delinquents (debtors). In the end the people that could not make good decisions will end up sinking the rest of us even more.
For a case study, have a look at post Soviet Russia in the mid to late 90s where a few Harvard educated economists from the IMF tried to start up a consumer economy with inflationary policy. These are the same guys that are now in power in the US government.
Being a saver and responsible is a suckers game, because the old adage of nice guys never win is a universal truth.
Also, in Soviet Russia mortgage pays you principle.
Saw an article a few months ago about Russian running out and buying flat screen TVs and the like, to avoid Ruble devaluation.
At least it’s not so bad here that a flat screen TV is considered an investment!
u just gotta know the game and game the system. no laws need to be broke. Just understand the game and make your money.
What does ZIRP encourage?
I rest my case.
Obama is saving the Banks with the taxpayer on the hook. How’s that for looking out for the little guy?
Something’s wrong, very wrong with this country, when Pravda writes about the demise or capitalism in the U.S. = http://english.pravda.ru/opinion/columnists/107459-0/
Hey, look I capitalized Banks!
Of course Obama is saving the banks. He may charm you with that great smile, bamboozle you with his powerful orations, cry with you and get all choked up with anger over AIG bonuses, but in the end – he knows who calls the shots (his party) and who gets saved first (his party’s business partners).
The reality of the situation is that in order to fix this mess, a leader is needed who is going to make tough choices and piss off a lot of people while being reserved to having Historians make the final judgement. We are not going to get the right leader when all the candidates are more concerned with keeping their party in power than getting bogged down with the drudgeries of leading and making tough choices for the good of the country.
Obama is a member of a corrupt political party that masterfully hyped him up and packaged together together to manipulate the masses into walking away from their televisions for 5 minutes to go and punch a voting card.
People need to get away from this false-dilemma Democrat/Republican stupidity. I find it very ironic that this country was founded on the principle of independence, yet the voters take it for granted and dishonor the legacy every time they walk into a voting booth and vote for a modern-day Democrat or a Republican.
I’m not sure that you know what ironic means.
All that and no reference to KFC, I feel short changed.
KFC almost made the final cut.
It was either “walk away from their televisions” or “walk away from their bucket of KFC”. TV just happened to have won the day.
Don’t worry, KFC is not forgotton.
“…but in the end – he knows who calls the shots (his party) and who gets saved first (his party’s business partners)>”
His party and the other major party share a common business partner who owns them both: Wall St.
It’s a big club; these two parties.
They both talk a good talk and dish out the rhetoric to keep the people distracted, entertained, and focused on things other than the hookers, drugs, bribes, interns, parties, and other various corruption and waste. However, in the end, these guys all hang out at the same Golf Clubs and resorts, laughing their way to the bank while tending to the people’s business.
I’ve found the foreclosure timeline to be ~12mo from NOD to REO
http://spreadsheets.google.com/pub?key=pGy0BQU1PZ9DkdsiaqdkuEQ&gid=3
If you shift those numbers 12mo, they line up rather nicely – right up until the SBxxxx law got passed
http://spreadsheets.google.com/pub?key=pGy0BQU1PZ9DkdsiaqdkuEQ&gid=5
But right now, with people having NODs in October and no trustee sale yet, this old metric of timeline is completely out of whack.
also, as an anecdote: my mom owns a number of rentals in big bear. she said they post trustee sale info in the paper up there. Typically its 1-1.5pages.
last time she went up (a couple weeks ago): 4 pages.
According to the Federal Reserve, US household leverage, as measured by the ratio of debt to personal disposable income, increased modestly from 55% in 1960 to 65% by the mid-1980s. Then, over the next two decades, leverage proceeded to more than double, reaching an all-time high of 133% in 2007.
Aside from blogs like this and a few commenters I’ve seen on newspaper websites, I haven’t heard many people discuss the renter side of the Great Housing Bubble – how renters got squeezed out of buying a home and are still squeezed out, but that the collapse of the bubble will be beneficial to renters.
Mostly what I hear are newspaper headlines like “housing prices up” with an implication that rising prices are a good thing.
Do you think the average renter realizes that the collapse of the housing bubble is good for them?
Amazing isn’t it? It shows you the level of greed and selfishness that we have come to.
The headlines should read:
“The Next Generation Will Be Able To Live In A Home As Prices Continue To Become Affordable”
But no, like typical selfish pig-headed Americans, we eat our young and saddle them with our debt in a “I was here first” myopic fashion.
We haven’t even started talking about the mythical Social Security pile of gold that the boomers are about to gobble up for themselves and leave nothing behind but a huge tab to pay.
Man, it must be good to be a boomer. They were situated perfectly at the top of all the good bubbles and systematically benefitted at the expense of the rest of us who now have to work for our money while paying for their golden years.
My thoughts exactly, AZDavidPhx! I have a boomer friend who is receiving a state government teacher’s pension and social security, and meanwhile has stopped all payments on his house, while planning to expatriate to Costa Rica. At the same time, he’s bitterly complaining that Obama & the Democrats are making him pay for everything and taxing him to death, and how working hard doesn’t pay off (etc, etc). How nice it is to be a boomer, vote for social programs that will bankrupt us, then bail out of the country when the $#*^ starts to hit the fan, and then to act like a victim on top of it! If he’s such a victim, then what does that make us Gen Xers? It’s his generation that did this to us!!
Longtime owner, first-time renter here — well, not really, but I was an owner until early last year.
I didn’t sell out of shame, but it is easier on my conscience to be off the mortgage-interest-deduction welfare program. At one point I “enjoyed” $900 per month in federal tax deduction for needy homeowners assistance, what with living alone in a 1650-sq.-ft. home.
In short, I think the mortgage interest deduction is obscene, and an unhelpful boost to prices that makes renting too expensive relative to owning, thereby reducing labor mobility and hurting the economy.
There are other interesting issues with renting, beyond the government’s attempt to legislate behavior. I have just moved to Denver, and am amazed by the cultural attitudes towards renters. Both society and the market still assume that middle-aged renters are merely in transition to buying. Hence the downtown loft market is geared toward 24-year-olds, and there are few single-family homes for rent. Homes are cheap enough that only groups of college students will rent instead of buy. There are some high-end 5bdrm furnished McMansions in the Highlands Ranch stuccoburb to the south, for short-term executive types, but the 2-3 bdrm 1250 houses, which exist in great abundance near downtown, are mostly owned, not rented.
So the culture, and the market, don’t yet see much of a demand for rentals. We’re still in a model where anyone with a career thinks of himself, and is thought of, as a home buyer, not a renter.
Since I anticipate a Japanese-style housing deflation of 18-25 years, I intend to rent for the rest of my career, or until I can pay cash — no mortgage.
What I’m trying to say is that “better to rent” is not even a substantial minority opinion yet.
Nice to see someone else who elected to choose the Red pill. Congrats.
I have a friend. She has a neighbor. The neighbor rents a room in the home. I told the friend about the foreclosures/for sales/pre-foreclosures in her complex. So – A is renting a room from B. B is in pre-foreclosure and has been for months, hadn’t told A. B has now told A that he is taking care of the pre-foreclosure given the worried question from A after being given the heads up by my friend. NO evidence about this having had anything happen on the web-site where I get my info. I don’t know A so I’m not going to stick my nose in directly and say B is lying – maybe he isn’t. How can A make sure she doesn’t get evicted at short notice down in San Diego? My friend is worried about her friend A who is not as young as she used to be – being the main problem, and not exactly rich being a 2ndry one.
Your friend should call a legal aid office in her area to ask for advise. This is a legal questions that really needs to be answered by a professional in the local area. Never trust legal advise (even mine) when it’s posted on a blog.
The housing slump is not coming to an end and neither is the endless bullshit from the NAR:
Pending home sales rise 6.7 percent in April
“The number of U.S. homebuyers who agreed to purchase a previously occupied home in April posted the largest monthly jump in more than seven years, a sign that sales are finally coming to life after a long and painful slump.”
We had a season uptick off a recession low. Big deal.
from this site–“Sales of inexpensive foreclosures and other distressed low-end properties have even sparked bidding wars in places like Las Vegas, Phoenix and Miami. But the market for high-end properties remains at a virtual standstill. ”
All that is selling is the lower end and those catching the knife.
Just cleaning up the low end it sounds like.
In Phoenix, the realtors are going after gullible Canadians. It has made the local NEWS several times now.
We outsource our speculators. Gotta find knife catchers where you can, I suppose.
Quoting the last paragraph:
————————————————
“This is yet another positive indication that the bottoming process is forming,” Jennifer Lee, an economist at BMO Capital Markets, wrote in a note to clients. “Now if only prices would stabilize.”
————————————————-
And therein, my friend, lies the rub….
That little price stabilization elephant sitting on the living room couch that nobody wants to talk about when delivering housing sales spin as NEWS.
I like this new term of theirs: “bottoming process”. Wow! Sounds official! Anyone remember when these ghouls were calling bottom in ’06?
This time we mean it!
You might want to check out the discussion at http://seattlebubble.com/blog/ over the apparent increase in pending sales.
Last July, the North West MLS quietly changed the definition of “pending” to include offers that were “pending inspection” (these previously were called “subject to inspection” and ALSO short-sale agreements where the buyer and seller had agreed on a price, but where the bank had not yet responded to it. Most of these short sales are rejected, so it’s a little ridiculous to think of these as pending sales.
The threads are here:
http://seattlebubble.com/blog/tag/pending/
I had a boss sometime ago who took exceptional umbridge when anyone did not capitalize Realtor, or in it’s correct useage REALTOR when you don’t use the (c) after Realtor(c).
As well if you said “Real-A-Tor” instead of the correct “Real-Tor” he’d simmer a while.
I prefer the contracted ” ‘Tard ” but cannot use it in a professional setting.
My .02
Soylent Green is People (c)
what happened to the half million in cash withdraw and 6M of free rent and taxes?
Will the bank, the second, go after the borrower? Will the first doing a trustee sale, cause the second to accept it (loss all) and count as their single action?
I was foolish to work 50 to 60 hours a week for the last 20 years. I could of just borrowed money on houses, kept the cash and not pay back.
“I was foolish to work 50 to 60 hours a week for the last 20 years. I could of just borrowed money on houses, kept the cash and not pay back.”
You are not alone in that observation…
Hey IR,
I know that this question was probably asked before but what source do you use to find out what the original (or the current but that’s unlikely) lien was on the house? I know that it’s public information. I’m just curious on whether you’re paying $50 a pop for this title search. This looks like good information for a qualified buyer to find out how much leverage he has over a seller.
If the bank examiners are concerned about the value of assets they must also be concerned when a loan is non performing. There’s probably some crossover point where they must foreclose. I imagine if the person occupying the home makes sporadic payments the auditor can give the bank a pass for a while. If the bank is only servicing the loan I imagine that people that own the loan are pretty upset if they aren’t getting paid. Justice delayed is still justice denied. Can anyone in the banking industry shed any light on this?
testing in an old thread…