Housing: 2007 Thread.

[WhipperSnapper]

Originally posted by: BarneyFife
Michigan is experiencing the same problem. The market is flooded with homes and the prices are dropping like crazy. One house in my area was 290k in the summer and now the owner is asking for $245k. Another house down my street has been for sale for the last 2 years. McMansions in good neighborhoods can be had for $300-375k. The thing is that the economy in Michigan is getting worse with all the layoffs from the auto companies so I expect things to get worse. It is definately a buyers market.

The prices are still inflated as far as I'm concerned. I guess, as I see it, you should be able to purchase an 1500 ft house for $100,000. Maybe I'm just behind the times, but I remember looking at Homes magazines years ago when I was a kid and you used to be able to get a 2000 ft house for $100,000.

I really hope that prices come back down to earth nationwide.

 

[nullzero]

Originally posted by: ntdz

Originally posted by: dmcowen674

Originally posted by: ntdz
It's really about time that the housing prices started to fall back down to earth, hopefully the fall is slow and relatively painless. This correction was sorely needed, I'm just hoping it doesn't hurt the overall economy too much.

The house of borrowing cards the Repubs set up?

Of course the crash will all be the Dems fault since they are in control now.

It's not either party's fault. If you want to blame it on someone, blame the fed for putting interest rates at 1%. I'm not sure this crash is going to hurt the economy all that much though.

Yeah the fed lowered the interest rate way to much to off set the economic slow down caused after the tech crash and 9/11. People basically went from the stock market to the housing market. Vic you can keep trying to ignore the fact and reality. Housing is and will continue to decline across the country. The demand was never as high as it was percieved. Because you cant short housing like a stock we get total Boom and Bust cycles, because you can only buy and sell in one direction. So as long as the trend is neutral to negative it will continue its downside until demand and supply meet a equilibrium.

 

[Slew Foot]

On a side note, from another website I visit. This is how you screw up a house you've owned for many years(chasing the market down to the bottom, hope they enjoyed the home equity loans):

Just looked the property up in MLS. From the tax records, here's what I show:

12/9/94 - Paid $142,500 for house

2/21/03 - Took two loans out, one for $191,250 and one for $51,000.

10/24/05 - Took out $140,000 loan.

Based on that, I would say they owe about $400,000 on the house.

MLS Stats:

3/31/06 - Listed for $515,000
5/3/06 - Reduced to $505,000
5/24/06- Reduced to $485,000
7/13/06- Listing expired

7/13/06- Relisted at $479,950 (same company)
9/1/06 - Expired at $479,950

9/14/06 - Relisted at $429,996 (new company)
10/20/06 - Pending sale
10/24/06 - Fell out of escrow
10/25/06 - Reduced to $409,996
2/13/07 - Reduced to $399,996

 

[ntdz]

Originally posted by: dmcowen674

Originally posted by: Vic

Originally posted by: dmcowen674

Originally posted by: ntdz
It's really about time that the housing prices started to fall back down to earth, hopefully the fall is slow and relatively painless. This correction was sorely needed, I'm just hoping it doesn't hurt the overall economy too much.

The house of borrowing cards the Repubs set up?

Of course the crash will all be the Dems fault since they are in control now.

You are a moron. The trend in rising home values has been ongoing in most markets since interest rates began to fall from double digits in the early '90s.

Originally posted by: ntdz

Originally posted by: dmcowen674

Originally posted by: ntdz
It's really about time that the housing prices started to fall back down to earth, hopefully the fall is slow and relatively painless. This correction was sorely needed, I'm just hoping it doesn't hurt the overall economy too much.

The house of borrowing cards the Repubs set up?

Of course the crash will all be the Dems fault since they are in control now.

It's not either party's fault. If you want to blame it on someone, blame the fed for putting interest rates at 1%. I'm not sure this crash is going to hurt the economy all that much though.

Yes, we know I am a moron but that doesn't change the fact it was Republican policy to give away money only to place a call on it later.

I didn't call you a moron in this thread. It was Greenspan's policy, I didn't see Bush or Congress lowering interest rates.

 

[Slew Foot]

http://www.sddt.com/Finance/EconomicIndicators.cfm?Report_ID=2

San Diego 1 month away from an ALL TIME high in foreclosures. Check the link and change the date range to 1982 to now, the rate of foreclosure is rising almost vertically.

 

[LegendKiller]

Originally posted by: ntdz

Originally posted by: dmcowen674

Originally posted by: Vic

Originally posted by: dmcowen674

Originally posted by: ntdz
It's really about time that the housing prices started to fall back down to earth, hopefully the fall is slow and relatively painless. This correction was sorely needed, I'm just hoping it doesn't hurt the overall economy too much.

The house of borrowing cards the Repubs set up?

Of course the crash will all be the Dems fault since they are in control now.

You are a moron. The trend in rising home values has been ongoing in most markets since interest rates began to fall from double digits in the early '90s.

Originally posted by: ntdz

Originally posted by: dmcowen674

Originally posted by: ntdz
It's really about time that the housing prices started to fall back down to earth, hopefully the fall is slow and relatively painless. This correction was sorely needed, I'm just hoping it doesn't hurt the overall economy too much.

The house of borrowing cards the Repubs set up?

Of course the crash will all be the Dems fault since they are in control now.

It's not either party's fault. If you want to blame it on someone, blame the fed for putting interest rates at 1%. I'm not sure this crash is going to hurt the economy all that much though.

Yes, we know I am a moron but that doesn't change the fact it was Republican policy to give away money only to place a call on it later.

I didn't call you a moron in this thread. It was Greenspan's policy, I didn't see Bush or Congress lowering interest rates.

No, but they could have prodded certain regulatory agencies to raise borrowing requirements for exotic mortgages, like they have done now after the cows are out of the barn.

 

[LegendKiller]

Originally posted by: Vic

Originally posted by: Slew Foot

Originally posted by: dullard


You are correct, MOST in a poor equity position will not need to sell. The problem we get are those people who got a 1-year ARM (or other short term ARM) hoping they would earn more down the line and then that didn't pan out. These people cannot really afford the house they are in. Yes, it is a small group of people. But that small group will be severely harmed.

If by "small group of people" you men 70% of CA mortgages in the last 3 years, then yeah. SD, and the central valley are already at mid-2004 prices and the hurting here is going to get worse. Your locality may vary.

And first-time homebuyers/investors in the last 3 years who will absolutely/positively need to sell their house make up what percentage of the total homeownership market?
Not nearly as much as you think.

Case in point: my GF's mother bought her house in the Sac market in 1997 for $120k. It was worth $400k a year ago, and about $320k today. Rates were decent in late '97 (high 6's), so she's never refi'ed or even taken out a HELOC. Do you think she really cares about that $80k she "lost"? No. Or a couple of my best friends own a house in Seattle in '95 for $180k that was worth $600k last year and about $540k today. Do they care about that $60k? No. It was money they never had in the first place. And I work in the industry and you don't. I talk to actual real-life homeowners day in and day out. You read internet blogs. These people are far more typical of the average homeowner in today's market than the examples you give.

And I see the fact that large pools of sub-prime mortgages are starting to head south. Delinquencies on more than 60% of all securitized pools are *MUCH* higher than they should be. Defaults, BK, and as a result, charge-offs are increasing dramatically. Lets not even mention the amount of negative LTV loans that are starting to pop into securitized pools.

People will lie and obfuscate reality, but the fact is, tens of billions of dollars of mortgages are utter trash. Those mortgages, when they go, will cause rates to raise. As people who took out exotic mortgages need to get out of them they won't find any safe haven and as the prices go down, they will further be effected.

Your GF's mom might not feel the hurt of that 80k, but 80k is a hell of a lot of money to somebody who was at a 100% financed 400k mortgage, because now they are 80k in the hole and their option arm is about to crap a brick.

You may say that there aren't many option arms out there, but there are enough. The reality of the situation is that this isn't going to stop at 2.7%, it's going to stop at 20% or some other number like that.

Then layer on top of that the fact it's going to slow down the economy, equating to less disposable income and less ability to absorb ARM and/or increased fixed-rate mortgage payments.

 

[Zorba]

Anyone know a good website to find foreclosure properties?

 

[cliftonite]

Originally posted by: Zorba
Anyone know a good website to find foreclosure properties?

http://www.realtytrac.com/

 

[OS]

some more interesting news;

http://biz.yahoo.com/ap/070220/earns_home_depot.html?.v=1

http://www.economist.com/finance/displaystory.cfm?story_id=8706627

 

[dmcowen674]

Originally posted by: OS
some more interesting news;

http://biz.yahoo.com/ap/070220/earns_home_depot.html?.v=1

http://www.economist.com/finance/displaystory.cfm?story_id=8706627

Bets on Home Depot surviving?

 

[LegendKiller]

Originally posted by: dmcowen674

Originally posted by: OS
some more interesting news;

http://biz.yahoo.com/ap/070220/earns_home_depot.html?.v=1

http://www.economist.com/finance/displaystory.cfm?story_id=8706627

Bets on Home Depot surviving?

They'll survive, it's just going to be tough. Your average consumer will continue to do home improvement work.

 

[Starbuck1975]

The wife and I went house hunting over the weekend in Orange Country (SoCal), and stumbled upon an Open House for a 1 level, 3BR, 2B, 1600 sq ft ranch style home built in the early 60s...I am talking puke orange sinks in the bathrooms, wood paneling in every room, a swanky mirror covered bar...hasn't been updated since the Brady bunch era, and sits on a relatively small lot.

Asking price for this little gem of a fixer...800K.

Stumbled upon another home...built in 2001, and sold at the time as new construction for $330k...asking price for this home...$850k...3 BR 2.5B, 2400 sq ft dual level home.

Thank you to all the real estate speculators and flippers for making the market so outrageous that a white collar recently married couple can't even afford a starter home.

In a realistic world, the former home is worth about 350-400k, and the latter home is worth, at most, 550k.

Sorry but I refuse to drink the SoCal Cool-Aid and go into a 500k shoebox sized townhouse in a "pre-planned community."

 

[Ronstang]

Originally posted by: Starbuck1975

In a realistic world, the former home is worth about 350-400k, and the latter home is worth, at most, 550k.

Sorry, but in a realistic world the former should be no more than $100K and the latter no more than $150K.

 

[Vic]

Originally posted by: Ronstang

Originally posted by: Starbuck1975

In a realistic world, the former home is worth about 350-400k, and the latter home is worth, at most, 550k.

Sorry, but in a realistic world the former should be no more than $100K and the latter no more than $150K.

Sorry, but it's not realistic to think you should be able to buy a home for less than what it would cost to rent it (and with those prices you're talking about roughly $750 and $1000 mortgage payments, respectively, on zero-down 30 year fixed fully amortized mortgages including taxes and insurance). In the meantime, those homes rent for probably more than twice that, respectively, per month.

 

[Slew Foot]

In the real world the price to buy should be slightly higher then the cost to rent. And by buying, I dont mean with some exotic 100 year I/O neg am loan, but with something more traditional.
CA is for the most part, selling at 2-4x rental prices, so naturally, prices are heading lower. Especially with the net exodus out of the state.

 

[WhipperSnapper]

Originally posted by: Ronstang

Sorry, but in a realistic world the former should be no more than $100K and the latter no more than $150K.

I agree, and that would definitely be the case in the Midwest, but he's talking about overcrowded California here. (Why the big cities in California have any school teachers or firemen or policemen or people who earn below $50,000/year, I don't know...better to move to another state, take a 20% pay cut, get an increase in buying power and a higher quality of life.)

 

[Vic]

Originally posted by: Slew Foot
In the real world the price to buy should be slightly higher then the cost to rent. And by buying, I dont mean with some exotic 100 year I/O neg am loan, but with something more traditional.
CA is for the most part, selling at 2-4x rental prices, so naturally, prices are heading lower. Especially with the net exodus out of the state.

I agree. There's never been a doubt in my mind that the urban CA home market is in for some serious trouble. But hey, you guys go through something like this every decade or so, I'd think you'd be used to it.

 

[ntdz]

Originally posted by: dmcowen674

Originally posted by: OS
some more interesting news;

http://biz.yahoo.com/ap/070220/earns_home_depot.html?.v=1

http://www.economist.com/finance/displaystory.cfm?story_id=8706627

Bets on Home Depot surviving?

I think the 2nd largest retailer in the world will survive.

 

[ericlp]

Originally posted by: ntdz

Originally posted by: dmcowen674

Originally posted by: OS
some more interesting news;

http://biz.yahoo.com/ap/070220/earns_home_depot.html?.v=1

http://www.economist.com/finance/displaystory.cfm?story_id=8706627

Bets on Home Depot surviving?

I think the 2nd largest retailer in the world will survive.

I think no matter what home owners and rentals will still have to paint and repair their investment. If anything home depot will do even better...

I know a lot of companies that build homes and they don't even buy stuff from HD, maybe screws or odd parts or whatever... HD and lowels is geared towards the home owner. Anyone that owns a home knows that the work is never ending process ... all homes are just big money pits sadly.

 

[Trianon]

And so the trip downward continues, with no end in sight:

USA TODAY

Toll Brothers profit slides 67%; CEO says no real estate upturn yet
Updated 2/22/2007 9:54 AM ET
HORSHAM, Pa. (AP) ? Luxury home builder Toll Brothers (TOL) said Thursday that its first-quarter profit dropped 67% due to hefty write-downs and other costs, and CEO Robert Toll said there are still too many soft home markets.

Quarterly earnings declined to $54.3 million, or 33 cents a share, from $163.9 million, or 98 cents a share, in the period a year ago.

U.S. housing demand has dropped over the course of the year on higher prices and interest rates and Toll Bros. said it could not yet see a rebound going into the industry's spring selling season.

"There are too many soft markets at this stage of the selling season to call a general upturn in the new home market. Demand varies greatly from week to week in individual markets," Chairman and Chief Executive Robert Toll said.

"We believe that pent-up demand is building in many markets as potential buyers bide their time until they are confident prices have firmed."

Looking ahead, Toll expects to deliver 6,000 to 7,000 homes this year, down from the prior projection of 6,300 to 7,300.

It expects home building revenue of $4.2 billion to $4.96 billion and net income of $240 million to $305 million, or $1.46 to $1.85 a share. Wall Street analysts were expecting profit of $1.46 a share.

But the company cautions that the earnings projection is based on $60 million in estimated write-downs for the remaining three quarters, but the actual figure could be "significantly" higher or lower.

The year's strongest selling period is in its early days and will pick up over the spring quarter. The industry is looking to the spring for an indication of a recovery or a protracted slump.

"It will be an important quarter for them and the industry," Majestic Research analyst John Tomlinson said.

The latest quarter's results include a goodwill impairment charge of $9 million related to Toll's 1999 acquisition of the Silverman Cos. in Detroit. Results also were hurt by $96.9 million in charges to write down the value of land or housing the company no longer believes it can sell at a profit, versus write-downs of just $1.1 million in the prior-year period.

Analysts polled by Thomson Financial were looking for net income of 29 cents a share.

Quarterly revenue slipped 19% to $1.09 billion vs. $1.34 billion in the previous year, meeting Wall Street's expectations.

First-quarter net signed contracts slid 34% to $748.7 million.

The company's first-quarter cancellations totaled 436 units, down from 585 units in fourth quarter 2006. Toll said its cancellation rate of 29.8% was lower than the fourth-quarter's 36.9% rate but still well above the company's historical average of about 7%.

Contributing: Reuters
Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed

I am in NW Chicago suburbs, and lately it's been very tempting to upgrade my living conditions, but looking at the prices of existing and uder-construction homes, I believe we are still long way from the bottom of this slide. So for now I am waiting it out in my 2-br, 1.5 bath townhome...

 

[Trianon]

More news from the front:

Text

U.S. subprime woes seen worsening if oil pinches borrowers

By Ellis Mnyandu 59 minutes ago

Troubles buffeting the U.S. mortgage market could get worse as resurgent crude oil prices squeeze the finances of already hard-pressed borrowers, analysts say, and that could spell more trouble for Wall Street.

The fallout from subprime mortgage lending industry could even trigger a long-anticipated correction in the U.S. stock market, they said.

Rising energy prices could lead to a cash crunch among borrowers with riskier credit profiles, many of whom are already grappling with rising interest rates on their mortgages.

Subprime loans are mortgages aimed at such lower-income and lower-credit-rated home buyers. This sector has been hit hardest by the recent downturn of housing values.

Mortgage delinquencies are rising as adjustable-rate mortgages reset higher and home price appreciation slows, and after weakened underwriting standards left many homeowners with home loans they could not afford.

"The subprime borrower is the one who would be hurt the most if gas and heating oil prices went up further," said Jim Awad, chairman of Awad Asset Management in New York.

"The thinking is that if you are going to have a spike in energy prices here, it would hurt the poor consumer who is already at risk."

For the stock market, he said, the further hits to the mortgage markets "could give you the excuse for a correction."

On Friday, investors pummeled shares of subprime lenders further, with shares of New Century Financial Corp. (NYSE:NEW - news) and NovaStar Financial Inc. (NYSE:NFI - news) extending declines seen from earlier in the week.

The sell-off, which came as U.S. crude for April delivery rose above $61 a barrel, the 2007 high, sending the S&P Financial index (^GSPF - news) to its biggest slide in a month.

During the session, crude peaked at $61.80 a barrel, a jump which analysts said could dissuade the Federal Reserve from contemplating a cut in benchmark U.S. interest rates.

Until recently oil prices had been declining, creating a cushion for hard-pressed homeowners.

"Declining gas prices had offset the drag on confidence and spending that came from the slowdown in housing," said Hugh Johnson, chief investment officers at Johnson Illington Advisors, in Albany, New York. "Now that oil prices are edging higher it means (the market and the consumer) won't get that helping hand."

H&R Block Inc. (NYSE:HRB - news) is among companies that have brought the subprime mortgage woes into sharper focus as the largest U.S. income tax preparer posted a quarterly loss on Thursday, blaming fallout from a suprime mortgage unit it has put up for sale.

In addition, Impac Mortgage Holdings Inc. (NYSE:IMH - news), which like other subprime lenders makes home loans to people with sketchy credit histories, posted a $64 million quarterly loss on Friday amid defaults and writedowns of mortgage holdings.

The disappointing news follows HSBC Holdings Plc.'s (HSBA.L)(NYSE:HBC - news) warning on February 7 that rising loan defaults in its U.S. suprime mortgage lending business would force it to put aside about $10.6 billion to cover bad debts for 2006.

"The subprime market is under tremendous pressure," said Awad.

(Additional reporting by Jennifer Coogan)

 

[LegendKiller]

http://money.cnn.com/blogs/generationri...2/will-housing-bring-down-economy.html

Roubini's a bigger bear than most, for what it's worth. UPDATE 2/23: And here's an opposing view from Morgan Stanley. Richard Berner writes: "...the balance sheets of most prime lenders are strong, investors are differentiating among rungs of the mortgage credit ladder, and a limited incipient spillover into prime loans and other asset classes signals that a credit crunch is remote." Again, here's the translation: As long as the bankers and Wall Street are still making good money, you'll still be able to get a mortgage at a decent rate.

The problem with this is that while the balance sheets of subprime lenders look OK, thats without the buyback puts that subprime mortgage purchasers own. Thus, while they look OK now, once the defaults skyrocket, it won't look so great.

 

[thegimp03]

This is all good news for those wanting to buy a house this year. Too bad the Bay Area housing prices are "perma-high" and will never drop a significant amount.

 

[LegendKiller]

Originally posted by: thegimp03
This is all good news for those wanting to buy a house this year. Too bad the Bay Area housing prices are "perma-high" and will never drop a significant amount.

Not this year, perhaps next.