Life In The Fast Lane — The Eagles
During The Great Housing Bubble California’s homeowners were living life in the fast lane. Free money was readily available, and people were taking it and spending it with abandon. Some people got lucky and found the greater fool to bail them out, and some people did not. Today’s featured property was purchased with 100% financing at the top of the bubble from a HELOC abuser. Of course, the lender is left holding the bag.
Asking Price: $474,900
Income Requirement: $118,725
Downpayment Needed: $94,980
Monthly Equity Burn: $3,957
Purchase Price: $625,000
Purchase Date: 11/1/2006
Address: 819 Yorkshire, Irvine, CA 92620
| Beds: | 3 |
| Baths: | 3 |
| Sq. Ft.: | 1,481 |
| $/Sq. Ft.: | $321 |
| Lot Size: | – |
| Property Type: | Condominium |
| Style: | Mediterranean |
| Year Built: | 1998 |
| Stories: | 2 Levels |
| Area: | Northwood |
| County: | Orange |
| MLS#: | S540579 |
| Source: | SoCalMLS |
| Status: | Backup Offers Accepted |
| On Redfin: | 6 days |
upgraded: hardwood floors in formal living and dining rooms; beautiful
kitchen with white cabinets and black countertops; new stainless steel
appliances; tile flooring in kitchen and bathrooms; recessed lighting,
plantation shutters, closet mirror doors and organizers. Corporate
owned; easy to purchase; can close in 30 days.
Colons and semicolons: fancy.
Corporate
owned? Not according to the records. Perhaps she has a corporate deal where they will make up all the losses. I don’t know.
This property was purchased on 11/1/2006 with 100% financing. Now it is a short sale, and if it sells for its asking price (which it looks like it might,) the total loss on the property will be $178,594. Citibank will lose $125,000, the full amount of their second mortgage, and Wells Fargo will lose the remainder. Perhaps there is a corporate entity willing to pay off these lenders, or perhaps the realtor is making up the part about being corporate owned. Either way, it is a big loss for less than 2 years of ownership.
The subplot here is with the previous owners, the ones who were saved by the current owner. They lived like this:
- The house was purchased on 8/24/2000 for $295,000. There was a $235,920 first mortgage and a $29,200 second, and the owners put 10% down.
- On 9/9/2002 they refinanced for $265,000. No MEW.
- On 10/7/2004 they refinanced for $333,700 pulling out their downpayment plus about $40,000 spending money.
- On 11/21/2005 they opened a HELOC for $100,000.
These people were not as hardcore as some we have profiled, but they probably represent a typical family going about its business during the housing bubble. When they sold their property, they paid off their debts and had around $175,000 to spare. As you can see, the habit of mortgage equity withdrawal was reinforced by the market. I would not be surprised if they continued their somewhat subdued behavior in their next property. Why wouldn’t they? They got to live beyond their means for a time, and there were no repercussions.
There is a price to be paid for living in the fast lane. Californians are having their bills come due, and it appears as if they cannot pay them…
For anyone who believes we are anywhere near a bottom, look at the chart above (courtesy of Bubble Markets Inventory Tracking.) We are nowhere close to a bottom. It looks like we are having quite a rally in foreclosures.
.
He was a hard-headed man
He was brutally handsome, and she was terminally pretty
She held him up, and he held her for ransom in the heart
of the cold, cold city
He had a nasty reputation as a cruel dude
They said he was ruthless, they said he was crude
They had one thing in common, they were
good in bed
She’d say, ‘Faster, faster. The lights are turnin’ red.”
Life in the fast lane
Surely make you lose your mind, mm
Are you with me so far?
Eager for action and hot for the game
The coming attraction, the drop of a name
They knew all the right people, they took
all the right pills
They threw outrageous parties, they paid heavenly bills
There were lines on the mirror, lines on her face
She pretended not to notice, she was caught up
in the race
Out every evening, until it was light
He was too tired to make it, she was too tired
to fight about it
Life in the fast lane
Surely make you lose your mind
Life in the fast lane, everything all the time
Life in the fast lane, uh huh
Blowin’ and burnin’, blinded by thirst
They didn’t see the stop sign,
took a turn for the worse
She said, “Listen, baby. You can hear the engine
ring. We’ve been up and down this highway;
haven’t seen a goddam thing.”
He said, “Call the doctor. I think I’m gonna crash.”
“The doctor say he’s comin’, but you gotta pay him cash.”
They went rushin’ down that freeway,
messed around and got lost
They didn’t care they were just dyin’ to get off
And it was life in the fast lane
Life in the fast lane
Life In The Fast Lane — The Eagle
Morality question.
Regarding the previous owners of this home. IR outlines their HELOC and refi history. Did these people act in an immoral way? If not, what distinguishes them from homeowners who HELOCed and then could not sell and ended up in foreclosure? Is it just the success of the act that makes it moral or immoral?
I’m just curious what the consensus is on this.
To me, deep down morality is determined by how truthful one has been. It has less to do with the outcome of the behavior.
So, the previous owner and the current owner both could be moral or immoral depending on how truthful they have been.
The previous owner might have got away with this property. However, they might be caught up in another bigger mess by trading up to a bigger house.
My opinion:
Morality is not the framework under which financial decisions are usually judged, there is only foolhardy or conservative. I would say that given the moderate level of their HELOC withdrawal, they were neither overly foolhardy nor particularly conservative. The only certainty is that with that particular purchase, they were lucky.
Another discussion would be, should finanacial decisions be judged on a morality basis. I would say that the eventual repercussions of the truly foolhardy are generally severe enough that there is no need for us to judge them. But I’m really an anti-judging person in general.
But if I have to answer your question I would say that the previous owners actions were mildly immoral, but not overly so. Mildly immoral because they contributed their drop in the bucket to the house price run-up and unaffordability levels, not overly so because there HELOC withdrawal was less severe than others. I agree success or failure at the scheme should not be a deciding factor in the morality question. Bad timing makes you unlucky or stupid, but not less moral.
Personally, I try not to think about it in terms of morality or right and wrong. I look at their behavior and try to determine whether or not it is wise or unwise. Clearly, spending your home equity and ending up in the street is unwise, so their is no argument about the last owner. The earlier owner managed to do it without repercussion, so the argument can be made that it was wise, but it reinforces a behavior that could easily end in foreclosure and bankruptcy in different circumstances, so I would deem it unwise.
It is a bit like speeding. If you speed every once in a while, you will probably get away with it, but if you make a habit of it, you will end up with many tickets and the loss of your drivers license. There are a great many behaviors in life that can end up causing trouble in certain circumstances. These behaviors are all unwise, but are they moral? I don’t feel qualified to answer that one.
The prior owners took out money, but not so much that the property did not clearly support it. The fact that they netted an additional $175,000 at the time of sale indicates they were happily drinking the KoolAid, but not drunk on it.
I would not be surprised that most of this money went to pay off other bills. Yes, perhaps they were car loans or financed electronics or whatever, but so much of a household budget can be eaten up by interest. People who are forecolosed upon are bad with money. The consumer finance industry depends on such people.
You assume that these people were pocketing this money or spending it wastefully. I really doubt that they were that smart. This money just went to other banks. Do a little checking. The moral hazard that you want to assign to the dumb owners who lost there house belongs elsewahre.
Thinking about your comment concerning “the greater fool” that bailed out some of these fast laners, I had a question. I know there’s no easy way to track this, but how many of the people who went crazy on HELOCs and managed to sell their houses right before the crash turned right around and did the same exact thing right after the sale was final? That’s the part that scares me about the future: it’s not just that so many people drank the Kool-Aid, but that they kept making the same dumb mistakes over and over while convincing their friends that this was a good idea.
I am sure many sold at the peak due to dumb luck, but most of these people ended up putting the money into a larger home and probably continued their lifestyle of mortgage equity withdrawal. HELOC abuse is a patterned behavior. It seems unlikely that people would do this for five years and suddenly stop before their lender cuts them off.
I’d assume that unless these sellers moved down – maybe empty nesters downsizing or they were relocated to a less expensive market – that they probably would have ended up buying the bigger place with some mix of Option Arm/no downpayment.
It is unfortunate that money is one of the big taboos for people to talk about. I think many of the HELOC abusers would have seen their neighbors with fancy clothes, expensive cars, nice vacation etc and think they must really have the money to spend when in reality the neighbor was an abuser as well. I Live in NJ, where the market didn’t quite explode like Irvine and hasn’t fallen as hard I have definitely noticed that there seem fewer new cars, friends taking shorter/closer vacations, even though they are still employed with same jobs/same salaries. While I’m not necessarily looking to put everyone in a hairshirt and whip themyselves like the albino Monk in the Da Vinci code if there is a silver lining in all this if it causes people to prioritize what is more important and some honest dialog on living in means is a good thing if painful to get there.
Scott, this is an excellent point. I’m near you and the same behaviors are observable to me, too. Another sage comment a couple of days ago mentioned “$30,000 millionaires” and that is what I’ve noticed the most. There are lots of younger people who want things that older people (with greater earning power and larger savings/better assets) have, and they used HELOCs to finance that desired lifestyle. Bought a washer and dryer a few years ago and the installer told us many stories about new development colonials (FUGLY but ubiquitous around me) with vacant rooms and two nice leased vehicles, a new SUV (for the contractor husband; as a write-off) and a new minivan (obviously–YUCK!), lots of travel every summer, and other things that people like me–no kids (what’s a kid worth? $20,000 a year?)–can afford. My town has 150 homes for sale, no new developments (so almost all existing home sales), and 15 foreclosures and god knows how many coming down the pike in the next four to eight months.
I just looked at a water-oriented (deeded boat ramp and small beach–no water view) one acre (needs utilities and some aesthetic issues)–150,000; I’m gonna offer 50 grand, maybe less, or more likely, wait three more quarters before moving. I’d love to find a waterfront or waterview, but normally they’re developed and taxes are ridiculous, but that kind of situation normally goes for about 250,000 for a lot, when one is available–normally they’re in big, developer-oriented parcels.
Best wishes, IR and everyone else (especially my favorite commenter–Laura!),
Price
“large wrap-around private patio”
Well okay, just pretend the neighbors window isn’there.
Just like the high way noise, they argue that you become accustomed to it after a while.
You can. I used to live about twenty feet from the 405 back before they put up sound walls. The only time it was disturbing was when there wasn’t any noise.
Similarly, when living in Manhattan one gets used to almost constant siren blare.
An interesting question…So if foreclosures are skyrocketing, why is inventory shrinking? It looks like Irvine inventory shot up in Q2 of 2007 to over 1250 homes and has been declining steadily this year. It’s now down to 830, which is approaching its 2004 level. Is this a case of the basic numbers not really telling the whole story?
The Baron’s aricle thesis is that foreclosures are peaking now (or will soon). And these foreclosures are being gradually absorbed. New homes starts nationally are now down below a million per year (almost 40% below normal). New delinquincies (the number that foreshawdows future foreclosures) have been steadily declining for the last six months. They believe the pig is partially, but not completely, through the python.
If inventory continues to shrink, especially as a ratio to sales, doesn’t that mean we are gradually working our way through the crisis?
There is a certainly a lot of headwind, the economy, and especially more stringent (thank God) lending standards. But if you believe the inventory numbers, it appears that someone is buying all these new foreclosures.
So, how long can housing prices continue to collapse if inventory continues its downward trend?
I have read in many places that sellers are very fearful right now. I think some of them are simply unwilling to list their properties at those big discounts that would attract buyers enough to step up.
The housing collapse will continue as long as housing remains unaffordable. There is that huge disconnect between what the average wage earner can (really) afford and what the current average housing market price levels are at.
This is a bubble. Anyone who has actively participated in a market bubble understands that the unwinding takes a long time, especially when there is fear, in the form of inaction, driving the supply/demand. It will be a little like mini stale-mates all the way back down to that level of AFFORDABILITY.
Its a very interesting psychological question. I currently have two houses for sale (stupid me) and have elected to sell one or both because I believe prices still have further to fall. Carrying the houses is too expensive and I don’t want to rent the houses if I can help it. I’m sure many people are fearful to list now, but I wonder how many people either choose to (or have to) sell their house in the current environment.
Still, if we are really being deluged with foreclosures,it seems surprising that inventories are not going through the roof. It seems for us to predict the future, we would need to figure out the supply side of the equation (the future pattern of foreclosures + new housing starts + pent up demand from sellers waiting for a brighter day) vs. the demand side (buyers who would like to buy less those that can pay cash or get a loan.
Long term inventory trends(and prices)will tell us how this actually plays out.
“It seems for us to predict the future, we would need to figure out the supply side of the equation”. I believe that demand is driving prices right now. You’ve got TWO homes to sell. There are plenty others in your shoes. You’ve got all the people who have crashed out/burned and their credit is destroyed for another 7 or so years. You’ve got all THEIR properties being held by the banks and the banks are not stupid enough to flood the market all at once to try and unload all their properties… which would REALLY kill the comps… so that is why you see empty properties with no signs and no listings yet.
I know several neighbors who want to move but don’t want to sell “yet” until the market improves.
Pssst…. its STILL NOT AFFORDABLE and I just don’t see affordability changing in a couple more years. Wages are stagnant and you have huge daily inflationary prices in every day living expenses.
I doubt foreclosures leap immediately onto the market, but I haven’t seen statistics. I have seen plenty of anecdotal evidence of houses taking at least a quarter to get to auction, but I could be misguided as to the actual timing of the progression: (0) default notice; (1) foreclosure; (2) auction. Do owners often move out well before foreclosure? Do properties take more than a quarter to hit the market after foreclosure?
Unless you bought them between 2003-2006, you should be fine.
Otherwise, enjoy your bankruptcy.
I’ve seen some foreclosures come on the market very quickly. Others seem to have just disappeared. I did track one house from desperate attempt to sell by owner-renter, to short sale listing, to attempted purchase of short sale, and finally to foreclosure listing on MLS. 20 months the whole mess took. 12 of those months were between attempted short sale and foreclosure MLS listing. It was purchased very quickly but the list price was significantly below the market comps. This was also about 6 months ago.
In short – I suspect we still are just seeing the tip of the iceberg.
“In short – I suspect we still are just seeing the tip of the iceberg.”
Iceberg is a nice term to use. I can think of other piles that are more apt.
There are lots of foreclosures that are not being absorbed because they are not back on the market yet. It generally takes a couple months from foreclosure auction to re-listing.
To expand on what NoWowway said, here’s a possible scenario that fits all the info–
Almost no one is voluntarily putting their house on the market now because they can’t afford to. In the meantime foreclosures continue at high or even increasing levels. Foreclosures remain high, inventory overall goes down.
My guess is that the reduced inventory would still slow or halt the price drops even if much of the inventory was foreclosures.
I think this gets us back to the “shadow inventory” question. There are plenty of houses with an NOD that aren’t on the market. There are plenty of houses that made it through to foreclosure that are just sitting there, unlisted. Plus, there are all those people that aren’t listing their house that they want to sell because they’re in love with the value “on paper” and are hoping the market will come back to that level soon. (which, of course, it won’t)
Haven’t we only seen the tip of the iceberg so far? The majority of property bought in Irvine over the last few years would have to be Option-ARMs, and the resets will come in force over next year. I think for now these people are riding out their low payments, hoping for a bailout and market recovery (which won’t happen in Irvine) and will be forced to sell or walk away when their payment resets. I think that will be the main source of falling prices once that floodgate opens.
A few random observations:
a) listings are usually from MLS services, and there is ‘shadow inventory’ on REO that hasn’t been listed with the MLS.
b) Option Arms typically reprice/reset in 2 years, and heaps (that is the technical term) were written in latter part of 2006/early 2007, so we still have many mortgages that will explode. So these have yet to even show up as delinquent but will once as they explod. I assume it is still cheaper to make your minimum option arm payment than rent so it is rational to keep current until the reset.
c) Yes the recent delinquency rates seem to be stabilizing (at very high levels). Remember that there were billions of $ stimulus checks mailed, some of which may have been used by homeowners to stay/get current on the mortgage (curse these people not shoppoing at WalMart to help the Chines, oops I mean US, economy). So this stabilizing delinquency trend may be temporary. I’d also be curious, and don’t know, if one can track today’s 30-60 day delinquency to see how many in the cohort go to foreclosure and how many cure. I’d think in today’s world of negative equity fewer will cure, in the olden times defaults were probably due to job loss or illness so one either gets back on track with a new job or sold the house before it foreclosed.
IMHO we are probably a good part of the way – say 60% – on ‘popping the bubble’ price, but I’m not sure that we have started to have the cyclical downturn that you would expect given weakening jobs, slow income growth and rising rates. I’m also skeptical even if prices get back to normal ranges how many new renters/former owners will jump back in to buy especially as I think is inevitable some of the lenders start to hound these people for the amounts owed (I’m sure there are many people pitching to buy the unpaid debts for pennies on the dollar from the banks and pursue those claims).
Check out Mr. Mortgage’s posts on the cure rate question. He’s basing it on the more public info of the cure rates for NODs; I haven’t seen info on the “merely late” cure rate. My GUT (ie, no evidence to back it up at all) suspicion is that the NODs aren’t coming on day 91 now, because banks are both overworked on these AND they don’t want to foreclose in this market (as IR has demonstrated quite often how much money they lose when they do so)–I suspect that some banks are still high on the Kool-Aid and are simply shutting their eyes and wishing it all away.
Today’s featured RE agent: Kevin Sanchez.
http://www.homethinking.com/20378-Kevin-Sanchez-Preferred-Group-Properties.html
He “owns” Preferred Group Properties, but I cannot actually locate the group’s website:
http://www.homethinking.com/office/view/106609
Is this like a flippers group? Anyway, he’s got an invite.
IR: Not ONE agent has posted a thanks for being notified of their listing making the featured property of the day. They all seem so outgoing, so it’s a mystery why no one has bothered to show up and say hi. Just saying ~~
“They all seem so outgoing, so it’s a mystery why no one has bothered to show up and say hi. Just saying ~~ ”
Because they are ALL big fat PHONIES.
Corporate owned? Not according to the records. Perhaps she has a corporate deal where they will make up all the losses. I don’t know.
Maybe she put together a little LLC and became a Real Estate mogul. LLC = Corporate to some folks.
“Corporate owned”
I see that alot now in listing descriptions for props that are REOs. Technically, if a home is owned by the bank, then it is corporate owned. Just a little trick by the agents. I still say “nestled” is the all-time classic.
Someone earlier mentioned the neighbors window looking into the patio, and I agree, that would kill the deal for me.
I saw this foreclosure chart yesterday on LA Land and wondered what the population-adjusted chart would look like; i.e. The population of CA and the number of homes has grown since 1988, so you would expect more raw foreclosures 20 years later. The question is how many more proportionally?
Rich Toscano over at Piggington.com has done some population adjusted charts. It doesn’t look much different. We have 20% more people and 400% more foreclosures.
Maybe the immorality comes in when the last bagholder loses the property with losses to the bank and is not held accountable. I think that is why so many people opject to governmental intervention. — Cal’s Caddy
“Here comes Santa Claus,
Here comes Santa Claus,
Right down Mortgage-Bailout Lane…”
I’d have better opinion of this condo if it had a full drive way, and at least 1 bedroom & full bath is downstairs, instead of all bedrooms upstairs.
Well, immoral in the sense that the original owners went deeper into debt (if you believe the Bible that debt is a bad thing) and ill-advised because instead of paying down their debt they continued to increase their debt. But the real immorality is that this was all a Ponzi scheme and they managed to bring in their replacement (the new owner) so that they could get out. Good timing for them; bad timing for the new owner. So their level of participation in the Ponzi scheme would have to be immoral.
Of course it’s Corporate Owned: Wells Fargo Bank is a Corporation, as is the Federal Deposit Insurance Corporation.
Realtards…. it’s whats for dinner.
I hope someone can help explain this to me.
Yesterday’s LA Times reported that yoy foreclosures jumped 33.5% in the second quarter but 2Q NOD’s increased only 6.6%, down from a 39% spike in the 1Q. The story quoted a guy from ForeclosureRadar.com saying the leveling off of NOD’s may be nearing a peak. Others suggested that bank’s are overwhelmed and late on processing NOD’s.
Then there’s this in today’s LAT: A 53-year-old Massachusetts wife and mother fatally shot herself after faxing a letter to her mortgage company, saying by the time it foreclosed on her house that day she would be dead. She reportedly had not paid the mortgage in 42 months. That’s three and a half years and the foreclosure is just happening?
It seems to me that I’ve read reports on other blogs (and perhaps IHB, too) that people know of folks who haven’t made a mortgage payment for six months or more and have heard nothing from their mortgage holder. They claim that banks intentionally are holding off declaring NOD’s because it affects their loan-loss reserves, or some such.
I suppose my question is whether anyone has a better version of the truth? Are banks overwhelmed and can’t keep up with pace of defaults or are they playing bookkeeping games?
I think it is just getting started. I know many people are still hanging on. They moved up or refied a few years ago and “Got a great loan”, which translates to……..1% negative am loan that is going to reset very soon.
These people can’t do anything buy pray something happens between now and the next year or two because selling now would be taking a 25-30% loss and they just cant picture themselves being that stupid.
Totally agree. I mentioned my cousins situation last week. My uncle refinanced a paid off house and now the money is gone. He passed away and she is living in a house in Santa Ana with a 520k mortgage. The reset adjust on January 1, 2010 from 1700.000 a month to 4300.00 a month. She is just going to make the payments until the reset because it is cheaper to do that than let it go into default now and rent a house that would be more expensive. I figure she probably can live payment free for a year because the banks are so behind. Don’t get me wrong, the whole situation disgust me but my uncle must not have been all together there. He had told all of us even in his last hours that the house was almost paid off. I have no doubt there are hundreds if not thousands of people in Orange County in the same situation. I would think about that reset date every day of my life. It would be like a ticking time bomb or the great classic that skips my mind where the man kills someone and he puts the mans heart under the floor boards of his home and all he can hear is that heart beating day in and day out. Was it The Tell Tale Heart? Maybe I’m being too dramatic, one can always rent. Like me.
Awesome imagery. Where’s AZDavidPhx when you need him to provide illustrations!
I love the foreclosure chart. Is there any way to profit on this? I mean, it’s on a skyrocket to the moon and I’m sure it has much, much farther to rise (maybe to Saturn). Is there any way to take a position on this, other than shorting the banks.
” Is there any way to take a position on this, other than shorting the banks.
”
Yes, there is. Look into the ETF that shorts real estate SRS -> Ultrashort RealEstate Proshares. 🙂
Too bad there isnt and ETF that shorts realtors…. 😉
SRS up +14.16% today alone! Good call !
I short realtors to ground, using heavy copper braid. Affix copper helmet with multiple spiky antennae to realtor head, complex lightning-attracting infrastructure to body, and thimbles to fingers. Place in yard, and enjoy peace of mind during thunderstorms.
IR,
“Today’s featured property was purchased with 100% financing at the top of the bubble from a HELOC abuser. Of course, the lender is left holding the bag.”
Correction: “…. Of course, the American taxpayer (present and future) is left holding the bag.”
Not all short sales are being approved by the lenders. Most of the time the secondary lenders are not agreeing to the offer since they are losing everything. So, they don’t accept the low offers by the buyer and then the foreclosure happens.
Eventually more and more foreclosed properties will show up in the market and drive price down.
Gas price is fueling the downward glide which soon will be become a downward avalanche. Does not look good at all for the overall economy.
I was at a Pizza place last night, chatting with the manager while waiting for my pizza. He said sales are way down and business is slow due to the gas prices. People are not spending on pizza any more. And he also said that his drivers can now easily make left turns into his store because the traffic is light, again high gas price was the reason according to him.
“Most of the time the secondary lenders are not agreeing to the offer since they are losing everything.”
A component of the housing bail-out (if I understand it correctly) is the agreement of lenders to a reduced mortgage amount. That there is resistance to this now does not bode well for the plan.
Another feature is that the bail-out participant will have to share the profits of the future house sale. Therefore, she/he will undersell the competition and suppress the prevailing market value.
Socialism and capitalism don’t mix well.
How/Why is diTech pop-up ad showing up on this site – since they were a big ‘purveyor of kool aid” I’m not sure there are alot of takers here?
BTW I’m totally cool with IR selling ads to cover his time and cost for this great site, just thought it was odd that DiTech would pop up here of all places, sort of like like seeing an Obama ad on Fox News.
“…sort of like like seeing an Obama ad on Fox News…”
Conversely, like seeing the media on every other network fawning over McCain…
Google adsense picks the ads based on site content. It scans for key words on the site and places ads. I encourage everyone to click on these ads, particularly the image ones, it makes money for us, and it comes out of diTechs pocket.
The irony and hypocrisies in this country have no bounds. LOL!
Some good news, you will soon be able to get a tax break for loosing you ass in real estate:
Lawrence Yun, chief economist for the Realtors, said that the housing rescue bill should play a major role in helping the housing market to rebound. He said an especially significant feature is a tax break worth up to $7,500 for first-time home buyers who purchase between April 9 of this year and July 1, 2009.
Yun estimated that up to 3 million first-time home buyers could qualify for that tax break, providing a significant boost to sales at a critical time.
“I think we are very near to the end of the housing downturn,” Yun said.
Full article:
http://www.businessweek.com/ap/financialnews/D924BIGG0.htm?chan=top+news_top+news+index_news+++analysis
“…a tax break worth up to $7,500 for first-time home buyers who purchase between April 9 of this year and July 1, 2009.”
“We (Uncle Sam) will GIVE you $7,500.00…for losing 100K+”
That should fix the housing slump.
““I think we are very near to the end of the housing downturn,” Yun said. ”
It has been a few months since he called the bottom. Not that anyone listens as he has no credibility.
It’s not a tax rebate but a tax incentive….the $7500 comes over two years (so $3750 in year 1 and $3750 in year 2) but you have to pay it back, without interest, over 15 years (or -$500 a year).
If you think about it, it’s actually a lot like a teaser rate….talk about Congress not learning! Lower your payments by $271 for 2 years, then raise them by $42 for 13 years after that.
(On the other hand, it’s an interest-free loan, so you beat it on inflation hands-down)
The fully rational buyer will practically ignore this, but the Kool-Aid drinker just got some extra sugar in their drink.
Anyone know what happened to Keith at housingpanic.blogspot.com? The blog hasn’t been updated in a week!
He is one vacation until the 25th.
One more time for all the sellers reading this…
“Pssst…. its STILL NOT AFFORDABLE “
That Tell-Tale Heart Edgar Allen Poe reference is so appropriate. These charts and inventory numbers, just like the NODOC loan income claims are being massaged.
Who wants their dirty laundry in the street. Everyone is waiting this out. If i had an incredibly low arm that doesn’t adjust until 2012 I would do the same.
Its human nature, a calculated gamble, and sometimes good short-term business sense.
I believe while possible never said what company wants to see their stock price and salaries decimated by feverishyly foreclosing on properties and dessroyng their balance sheet.
This is the norm not an exception.