The embedded video illustrates how even the analysts refused to see the obvious truth of what was to come (the television program aired in 2006). Some of these analysts even laughed at Peter Schiff as he warned of what was then an impending mortgage crisis.
Tuesday, December 2, 2008
Sunday, October 26, 2008
The Slot Machine
A guy is walking through the casino, and stops in front of a slot machine because he noticed a silver dollar on the floor. He picks it up, places it in the slot machine, and pulls the lever. The machine goes crazy!!! He hit the $1,000 Jack Pot!!! 
People start clapping, whistling, and yelling. He feels like a super star. Although he could collect his winnings and move on, he decides to continue playing; reasoning, I won $1,000 in one roll, who knows how much I could win! The man continues playing for a few hours until finally, the money is all gone. He walks away from the machine disappointed, saying "I can't believe I lost $1,000." But did he really lose $1000? 
Or was it all funny money? Remember, he found a silver dollar on the floor which he simply put into the machine and won cash. Had he not played he'd be no better or worse off.
This analogy has direct applications to the current housing market. How often have you heard statements like: "I've left so much money on the table" or "I've lost so much equity"? But the question is... Did they really lose money? Real money? Or was it funny money?
In many cases, although not all, it was funny money. Consider that most non-first time buyers sold a home and used the equity as a down payment for their new home. So, although the market has fallen substantially, you must take in account that if you sold a home at an inflated price, then bought a new home at an inflated price then all you've really done was exchanged the debt you had in one home toward that of another. And in many cases, if the homeowner did not choose a risky mortgage loan they're no worse off. I realize it's hard coming to grips your home not being worth what homes were listing and selling for during the Great Housing Boom, but hey, it was the casino's money anyway right?
People start clapping, whistling, and yelling. He feels like a super star. Although he could collect his winnings and move on, he decides to continue playing; reasoning, I won $1,000 in one roll, who knows how much I could win! The man continues playing for a few hours until finally, the money is all gone. He walks away from the machine disappointed, saying "I can't believe I lost $1,000." But did he really lose $1000? 
Or was it all funny money? Remember, he found a silver dollar on the floor which he simply put into the machine and won cash. Had he not played he'd be no better or worse off.This analogy has direct applications to the current housing market. How often have you heard statements like: "I've left so much money on the table" or "I've lost so much equity"? But the question is... Did they really lose money? Real money? Or was it funny money?
In many cases, although not all, it was funny money. Consider that most non-first time buyers sold a home and used the equity as a down payment for their new home. So, although the market has fallen substantially, you must take in account that if you sold a home at an inflated price, then bought a new home at an inflated price then all you've really done was exchanged the debt you had in one home toward that of another. And in many cases, if the homeowner did not choose a risky mortgage loan they're no worse off. I realize it's hard coming to grips your home not being worth what homes were listing and selling for during the Great Housing Boom, but hey, it was the casino's money anyway right?
Saturday, October 18, 2008
Housing Market Watch #13
This is the 13th episode of Housing Market Watch (see the previous episode here), where I focus on what's happening with home prices in Southern California using specific examples from the Multi-Listing Service (MLS).Today's property is in the uber exclusive city of Malibu... Yes Malibu! (Los Angeles County) .
Description
REO/BANK OWNED FORECLOSURE!!! LET'S SEE THOSE OFFERS! EXCELLENT, PRIVATE LOCATION IN THE HILLS OF MALIBU, JUST MINUTES TO PCH & THE BEACH. NEWER BUILT CONSTRUCTION W/LARGE ROOMS, OPEN FLOOR PLAN & HIGH CEILINGS. SPECTACULAR CANYON, MOUNTAIN, & PEEK-A-BOO OCEAN VIEWS FROM NEARLY ALL ROOMS & BALCONIES. LUXURIOUS MASTER SUITE W/FIREPLACE, PVT. BALCONY, DUAL VANITIES, LARGE WALK-IN CLOSET, & A LIMESTONE BATH W/SEPARATE STALL SHOWER & SPA TUB. ALL BEDROOMS EN-SUITE W/EUROPEAN STYLE BATHS. SPACIOUS COOKS KITCHEN & MUCH MORE.The Specs:
| Type: SFR Status: Active MLS#: F1754027 | Sq. Ft.: 2,637 Lot Size: 5,990 Sq.Ft. Year Built: 1999 | Beds: 2 Baths: 4 Stories: 2 On Market: 246 days |
Sales History
| Date | Sold Price | $/SqFt | Gross Gain | Change ($) | Change (%) |
| 10/29/07 | $903,795 | 342.74 | N/A | N/A | N/A |
Pricing History
| Date | List Price | $/SqFt | Gross Gain | Change ($) | Change (%) |
| 02/13/08 | $1,299,900 | 492.95 | +$396,105 | +396,105 |  43.83% |
| 03/18/08 | $1,275,000 | 483.50 | +$371,205 | -24,900 |  1.92% |
| 04/19/08 | $1,174,900 | 445.54 | +$271,105 | -100,100 | 7.85% |
| 09/02/08 | $1,099,000 | 416.76 | +$195,205 | -75,900 | 6.46% |
| ??/??/08 | $975,000 | 369.74 | +$71,205 | -124,000 | 11.28% |
This episode's home is currently listed for 17.76% more than it was purchased for in October 2007. However, it is clear that the lender owned property's price will have to be reduced significantly in order to get this property off the bank's books.
UPDATE (date unknown): Price reduced to $975,000.
Thursday, October 16, 2008
Do you see what I see?
Previously, I wrote an article entitled Explosive Opportunities, that discussed my prediction that there would soon be numerous opportunities to buy very affordable homes and perhaps one's dream home over the next few years. I've decided to write a follow up to expand upon what I previously said. Do you see what I see? Lately, I've been discussing where we may want to purchase a home with my wife. It's actually a tough decision because the housing market has dropped by such a large amount that cities that were previously unaffordable are now becoming within reach. As a result, we've decided to be very calculated in terms of our decision of what to buy.
On the one hand, there may be an opportunity to purchase a home and have a very small mortgage payment which is definitely preferable. This would afford us the opportunity to enjoy higher quality of life, save more money and concentrate on retirement planning. At the same time we're mindful that once the market recovers, not all areas will increase in value by the same rate. Some areas will increase by large percentages compared to neighboring cities that may soon be very close in price. So the challenge ahead is to balance how much to spend versus buying in cities where one will get the largest return on investment (ROI). 
If you don't currently own a home than you potentially share in our plight; however, I would caution you not to take the decision lightly. There is no crystal ball that can predict the future, and no way to guarantee that the purchase you make will yield the intended result. That being said, RESEARCH, RESEARCH, RESEARCH!!! Do your homework before running head long into one of the biggest financial decisions one can make.
Wednesday, October 15, 2008
The domino effect
Back in April, I wrote an article discussing the property tax problem that the Great Housing Boom created. Yesterday, CNNMoney.com published an article entitled "Home prices may plummet, but taxes won't", where they discuss in detail what this means for home owners.Consider the quote from the CNNMoney.com article:
"For my first 25 years [as an assessor], nobody ever asked me to lower the assessment based on a home selling for less down the street. There are many such inquiries this year," said Ken Wilkinson, the tax assessor for Lee County Fla., which includes Cape Coral and Ft. Myers.The article goes on to say:
He estimates that 80% of county residents have seen the value of their homes decline. The median price of existing homes fell more than 25% in the 12 months ending June 30, according to the Housing Opportunity Index compiled by Wells Fargo (WFC, Fortune 500) for the National Association of Home Builders.
But even if local prices are way down, taxpayers may not win a lower assessment, because there can be a big lag time between when the home sales used to calculate them take place and when the assessment is actually issued.This is becoming a very serious issue as many homeowners struggle to just pay their mortgages; thus, relief there would be welcomed. One thing is certain, you won't get any decrease if you don't demand it! So, if you've bought a home in the last three years, when you receive your property tax bill, be ready to site examples of sold homes in your neighborhood to contest the amount. You may be very glad you did.
To calculate 2009 assessments, for example, assessors will use home sale prices from 2008 or even earlier, according to Sepp. Usually this works to taxpayers's advantage, since price increases take a while before they are fully reflected in assessments.
Sunday, October 12, 2008
Times have changed...
Over the last four years, I have noticed significant changes in the socioeconomic climate of this country. The Great Housing Boom Crash is causing record numbers of foreclosures, which is driving housing prices back to what they were in the late 1990's (see It's all happened before). The Credit Crunch has all but crippled the credit markets, and at this point only those with the best credit scores can even attain mortgages (see The Good, the Bad, and the Ugly). But that's the obvious stuff, what I'd like to discuss today are the changes that have been more subtle.
So what's different?
Recently, it seems that companies have changed their view of what makes a good job candidate. This can be seen in a number of ways:
For over a decade, I have been employed as an Information Technology professional, and I like to keep a close eye on what's happening in the employment market for my area of concentration. What I've noticed is that there is a growing trend for Software Engineering Managers and Directors of Technology to have recent hands-on experience developing software. Why is this significant? Because traditionally, at the manager level, and especially at the director level, there has not been a requirement for them to participate in the actual coding of an application, even at times when the company is short-staffed.
So what does this mean for you and me?
As the economy worsens, there will be fewer jobs available; meaning more competition for each available position. This means the better your educational background and experiences, the better your chances will be of getting the job. So, For those of you who don't have a Degree of any kind, you may want to consider one of the schools with accelerated degree programs for working adults. For those of you that have finished an Associates Degree, go back to school for two years, and finish your bachelors. Finally, for those of you who've completed a Bachelor's Degree, you may want to consider a Master's Degree if your circumstances allow it.
Just some food for thought...
So what's different?
Recently, it seems that companies have changed their view of what makes a good job candidate. This can be seen in a number of ways:
- Having a bachelor's degree are more important than ever, and as the number of candidates for any given position increases, so does the necessity to have what the other guy doesn't.
- For management positions, employers are increasingly insistent on managers that can act in a hands-on capacity if the situation calls for it.
For over a decade, I have been employed as an Information Technology professional, and I like to keep a close eye on what's happening in the employment market for my area of concentration. What I've noticed is that there is a growing trend for Software Engineering Managers and Directors of Technology to have recent hands-on experience developing software. Why is this significant? Because traditionally, at the manager level, and especially at the director level, there has not been a requirement for them to participate in the actual coding of an application, even at times when the company is short-staffed.
So what does this mean for you and me?
As the economy worsens, there will be fewer jobs available; meaning more competition for each available position. This means the better your educational background and experiences, the better your chances will be of getting the job. So, For those of you who don't have a Degree of any kind, you may want to consider one of the schools with accelerated degree programs for working adults. For those of you that have finished an Associates Degree, go back to school for two years, and finish your bachelors. Finally, for those of you who've completed a Bachelor's Degree, you may want to consider a Master's Degree if your circumstances allow it.Just some food for thought...
Monday, October 6, 2008
Congratulations
Congratulations Corporate America,You've received the bailout you've been waiting for, and I'm sure it will allow you to continue in the lifestyle you've become accustomed to. Many homeowners will still lose their homes, due to the toxic mortgage products you sold them, but hey, nobody's perfect. Best of all, you don't even have to pay the money back, the U.S. tax payers will gladly pick up the bill for you. Why? Because we understand that you can't be held accountable for your actions.
Why so sarcastic, you ask? It's because once again the American people are burdened with paying off either the Government's or Corporate America's mess.
What would I have proposed?
I would have proposed low interest rate loans to the banks, which they'd have to pay back over let's say 30 years. This way, the banks learn a lesson, and would be far less likely to have something like this happen again. As it stands, what will they take from what just happened? Honestly, the government just indicated that they can go out and do whatever they want, and if they get in trouble, "we're here for you."
Thursday, September 4, 2008
Housing Market Watch #12
This is the 12th episode of Housing Market Watch (see the previous episode here), where I focus on what's happening with home prices in Southern California using specific examples from the Multi-Listing Service (MLS).Today's property is in the family friendly community of Simi Valley (Ventura County) and has a private pool.
Description
Remarkable Value! One of the BEST priced homes in ALL of Simi !! Large 6+3 with surprising privacy in front and back yards! Private gated front yard with brick-lined planters and fruit trees! Well landscaped! Brick lined walkway to newer double door entry! 2 master suites! Large balcony overlooking yard! Tile floors and smooth ceilings! One bedroom/bath downstairs! Updated kitchen and baths! Indoor laundry! Private entertainers yard with blue-bottom pool, gazebo, fruit trees and side yards! Home enlarged nearly 1000 permited sqft by pushing out the family room and upstairs master!The Specs:
| Type: SFR Status: Active MLS#: F1779006 | Sq. Ft.: 2,616 Lot Size: 7,600 Sq.Ft. Year Built: 1964 | Beds: 5 Baths: 2.5 Stories: 2 On Market: 139 days |
Sales History
| Date | Sold Price | $/SqFt | Gross Gain | Change ($) | Change (%) |
| 07/09/90 | $236,500 | 90.4 | N/A | N/A | N/A |
| 07/25/05 | $650,000 | 248.5 | +$413,500 | +413,500 | 174.48 |
Pricing History
| Date | List Price | $/SqFt | Gross Gain | Change ($) | Change (%) |
| 05/20/08 | $495,000 | 189 | -$155,000 | -155,000 | 23.85% |
| 08/13/08 | $459,900 | 176 | -$190,100 | -35,100 | 7.09% |
| 09/05/08 | $449,000 | 172 | -$201,000 | -10,900 | 2.37% |
| 09/12/08 | $448,900 | 172 | -$201,100 | -100 | 0.002% |
| 09/20/08 | $448,500 | 171 | -$201,500 | -400 | 0.009% |
| 10/02/08 | $448,200 | 171 | -$201,800 | -300 | 0.007% |
| 12/18/08 | $420,000 | 160 | -$230,000 | -28,200 | 6.29% |
This episode's home is currently listed for 31.05% less than it was purchased for in July 2005. This home has fallen in price by a whopping $201,800!!! For some the current asking price of $448,200 may look like a deal, but I believe these homes will fall into at least the low $300,000's before we're at the bottom of the market.
UPDATE 09/20: Price dropped to $448,500
UPDATE 10/02: Price dropped to $448,200
UPDATE 12/18: This property was sold for $420,000
Friday, June 27, 2008
An Open Letter to Mortgage Borrowers Waiting for a Bailout
I found the letter (quoted below) while searching for housing market related news. The statements are so timely and powerful, that I decided to repost it here:
This open letter is addressed to all of the struggling mortgage borrowers (and their lenders) who are sitting on their haunches waiting for the government to come to their rescue.
BY PAT SUMMERS
Dear Mortgage Borrower:
I understand that you have gotten yourself into some trouble. As someone who has made more than a few mistakes, I sympathize with you. I really do.
However, I am more than a little concerned by how eager our government is to intervene on your behalf. They want to bail you out with taxpayer-backed programs and loans. They also want to violate the sanctity of U.S. contracts by allowing courts to alter terms on mortgages. While this may seem like good news to you, it feels terribly unjust to me.
Unlike you, I didn't ride the wave of insanity and buy more house than I could reasonably afford with a loan that I couldn't feasibly pay back. Nor did I sign a legally binding contract to claim responsibility for your questionable real estate transaction. Nevertheless, there is a good chance that I will be forced to resign myself to the risk you wholeheartedly accepted not that long ago.
In fact, I am already paying for your mistakes. The Federal Reserve has made the unethical decision to weaken our dollar so that they could give discounted money to struggling banks, a.k.a. your partners in crime. If something isn't done soon, who knows how far they will take their unethical plan.
Now, you may be asking yourself: why doesn't this nutter just write to the government--the shady folks who are forming and allowing all of these diabolical plans. The truth is that like many people I have already wrote numerous letters to my representatives to let them know how I feel about mortgage bailouts. But until you do the same, I'm afraid that they will continue on with their destructive, election-year plans to intervene on your behalf.
You must know that it is morally irresponsible for you to expect other people to pay for your mistakes. Please do the right thing. It's not too late to take responsibility for your own actions.
Sincerely,
Pat Summers, Frustrated Taxpayer
Wednesday, June 25, 2008
Who can you trust for investment advice?
The embedded video demonstrates how successful you would been if you followed Jim Cramer's investment advice to the letter, starting before the current declining economy.
May Foreclosure Numbers
Below are the ten states that had the highest number of foreclosures for the month of May. Our Foreclosure Report for the month of April can be found here.
Click on the image below to enlarge
For those who have been activity reading the articles on this blog, May's foreclosure numbers should be no surprise. We will follow up shortly with an analysis of the last 3 months of reported foreclosure activity.
See the complete foreclosure report here
| State | # of Foreclosures | % +/- Apr '08 | % +/- May '07 | % of Total |
| United States | 261,225 | 7.36 | 48.32 | 100.00 |
| California | 71,930 | 11.20 | 81.37 | 27.54 |
| Florida | 37,364 | 5.96 | 72.15 | 14.30 |
| Arizona | 12,959 | 11.52 | 118.98 | 4.96 |
| Michigan | 12,792 | 24.57 | 35.21 | 4.90 |
| Ohio | 12,295 | 5.27 | -6.95 | 4.71 |
| Georgia | 10,241 | 11.45 | 23.47 | 3.92 |
| Texas | 10,063 | -11.77 | 4.25 | 3.85 |
| Illinois | 9,670 | 15.35 | 41.71 | 3.70 |
| Nevada | 9,009 | 23.82 | 72.09 | 3.45 |
| New Jersy | 7,430 | 44.47 | 89.15 | 2.84 |
Click on the image below to enlarge
For those who have been activity reading the articles on this blog, May's foreclosure numbers should be no surprise. We will follow up shortly with an analysis of the last 3 months of reported foreclosure activity.
See the complete foreclosure report here
Friday, June 13, 2008
REO Safari #2
This is the second episode of the REO Safari Series (see the previous episode here). The embedded video (2 min 21 sec) takes place in Valley Center (near Escondido). Jim the Realtor mentions the Cash for Keys program (he is offering the previous owners $2500 for their keys). The home previously sold for $927,500 in 2005.
REO Safari #1
Today's post is the first episode of a planned series of articles which endeavor to showcase the role of lender owned properties (REO) in the current housing crisis.
For months, I've been writing about the fact that REO's have overtaken the market, and are driving prices down. The embedded video follows Jim the Realtor, as he drives around Oceanside to survey the neighborhood where he has a new listing. Watch as he encounters REO after REO within only a two block radius.
For months, I've been writing about the fact that REO's have overtaken the market, and are driving prices down. The embedded video follows Jim the Realtor, as he drives around Oceanside to survey the neighborhood where he has a new listing. Watch as he encounters REO after REO within only a two block radius.
Monday, June 9, 2008
Housing Market Watch #11
This is the 11th episode of Housing Market Watch (see the previous episode here), where I focus on what's happening with home prices in Southern California using specific examples from the Multi-Listing Service (MLS).Today's property is a newer home located in the city of Harbor City (Los Angeles County) .
The Specs:
| Type: SFR Status: Active MLS#: Y803183 | Sq. Ft.: 2,057 Lot Size: 3,000 sqft Year Built: 1992 | Beds: 4 Baths: 3 Stories: 2 On RedFin: 23 days |
THIS IS A *SHORT SALE* SUBJECT TO LENDER'S APPROVAL This is a nice and well-mantained PUD. It does not have HOA! Huge master bathroom with nice jacuzzi tub. Walk in closet in master bedroom *****NO MORE SHOWINGS UNTIL FURTHER NOTICE*****
Sales History
| Date | Sold Price | $/SqFt | Gross Gain | Change ($) | Change (%) |
| 03/30/94 | $290,000 | 141 | N/A | N/A | N/A |
| 06/22/05 | $549,000 | 267 | +$259,000 | +$259,000 | 89.31% |
| 10/20/05 | $580,000 | 282 | +$290,000 | +$31,000 | 5.65% |
Pricing History
| Date | List Price | $/SqFt | Gross Gain | Change ($) | Change (%) |
| 04/30/08 | $380,000 | 185 | -$200,000 | -$200,000 | 34.48% |
This episode's seller decided to be aggressive right out of the gate in listing their home. Unfortunately, given the current slow home sales market, and buyers' fear that they too could end up underwater, additional price cuts will likely be necessary to sell this home.
Friday, June 6, 2008
Housing Market Watch #10
This is the 10th episode of Housing Market Watch (see the previous episode here), where I focus on what's happening with home prices in Southern California using specific examples from the Multi-Listing Service (MLS).Today's property is in the prestigious community of Coto De Caza (Orange County) on the golf course with a private pool.
Description
A Beautiful home on the Golf Course the South Court #3 even with the Tee-Box located on a Quiet Single Loaded Street. Very bright and open floorplan with Plantation shutters thru-out. Perfect size Loft area for relaxing or entertaining. Office downstairs has custon built-ins. Stone flooring through out the downstairs. Entertaining backyard with Pool and Spa, Built in BBQ Island and Gas Firepit. Child proof pool gate is removable. A Must See and Priced to sell!The Specs:
| Type: SFR Status: Active MLS#: S523392 | Sq. Ft.: 2,200 Lot Size: N/A Year Built: 1997 | Beds: 4 Baths: 3 Stories: 2 On RedFin: 92 days |
Sales History
| Date | Sold Price | $/SqFt | Gross Gain | Change ($) | Change (%) |
| 04/03/97 | $309,500 | 141 | N/A | N/A | N/A |
| 05/18/98 | $399,500 | 182 | +$90,000 | +90,000 | 29.08% |
| 09/21/99 | $425,000 | 193 | +$115,500 | +25,500 | 6.38% |
| 04/27/01 | $479,000 | 218 | +$169,500 | +54,000 | 12.71% |
| 03/02/07 | $810,000 | 368 | +$500,500 | +331,000 | 69.10% |
| 09/18/08 | $660,000 | 300 | +$350,500 | -150,000 | 18.52% |
Pricing History
| Date | List Price | $/SqFt | Gross Gain | Change ($) | Change (%) |
| 02/29/08 | $839,900 | 382 | +$29,900 | +29,900 | 3.69% |
| 03/18/08 | $819,000 | 372 | +$9,000 | -20,900 | 2.49% |
| 04/12/08 | $749,000 | 340 | -$61,000 | -70,000 | 8.55% |
| 04/27/08 | $709,000 | 322 | -$101,000 | -40,000 | 5.34% |
This episode's home is currently listed for 12.47% less than it was purchased for in March 2007. If this home had increased naturally along the mean (4%/year) since it's sale in April 1997, it would be worth approximately $476,000 ($216/sqft), or 32.86% ($233,000) less than its current asking price. If an unwitting buyer were to have purchased this home for the asking price before April 27th, they would have lost $40,000 (5.34%) of real money. To put those savings into perspective, one could purchase a loaded Infiniti FX35! As I've said before, very few areas have remained unaffected by the Great Housing Crisis.UPDATE 09/18: This property has been sold for $660,000.
Thursday, June 5, 2008
California Housing Inventory... the Real Story
Highlights
- The total loss, over the past 9-months, of most ‘affordable/exotic’ loan programs relied upon so heavily over the past five-years.
- Out-of-control supply with Foreclosure and Bank REO inventory surging to levels that now make the foreclosure market, ‘the real estate market’. In CA in April, 2008 Total Sales equaled 31,250, banks took back 22,328 homes from foreclosure auctions, and Foreclosure Resale’s were 38% of Total Sales. In April 2007, they were 5% of Total Sales.
- The ‘mortgage crisis’ moving up the credit spectrum from subprime to alt-a, and finally to a much larger percentage of the prime market than ever before thought…the latter primarly being due to the ‘negative equity effect’ and what was considered ‘Prime’ over the past five years, being far from it.
- A catastrophic 27% fall in CA median housing prices in the past 11-months, pushing a massive amount of home owners into a negative-equity position and increasing their likelihood of loan default across all borrower types.
- New home buyers not having a large enough down payment or income/credit level to be able to qualify for new-vintage fixed-rate, fully documented mortgages.
- Potential, qualified buyers not being able to sell their present home to raise the down payment; not wanting to rent or yielding enough from renting their present home to buy a new home; or just not wanting to enter the market due to depressed confidence levels. Remember, most home buyers are existing home owners and not first-time home buyers or renters.
- A large percentage of home owner who used second mortgages or high-LTV single-lien financing to avoid a down payment and existing home owners who leveraged-up their homes by pulling cash-out to maximum LTV/CLTV levels having no ‘skin in the game’, defaulting and moving to the rental pool.
- Homes are still too expensive and it is still cheaper to rent in most cases. Buy vs rent ratios are still closer to peak levels than historic norms in many major metropolitan areas around the nation, especially in the bubble states.
Housing Crisis Over Seas
Believe it or not, the United States was not alone in the Housing Boom of the new millennium, nor is it alone in its Housing Crisis. Below are two videos (8 minutes in duration each) of news program in Northern Ireland, which is reporting the current housing market conditions there.
Video 1 of 2
Video 2 of 2
Video 1 of 2
Video 2 of 2
Wednesday, June 4, 2008
Ground Zero
USA Today has called Las Vegas 'mortgage fraud ground zero', and by briefly examining the percentage of total homes in foreclosure there, it's easy to see how they could come to this conclusion. Please read the following quote taken from their article on the subject:In the shadow of Sunrise Mountain, where Rolling Hills Drive turns into Gold Mine Drive, a plain two-story home sits unoccupied, like thousands of other houses here in southern Nevada.Some of these empty homes have "for sale" signs. Others bear signs saying "foreclosure." Authorities say hundreds of them, including this one on Rolling Hills Drive, should have a different sign out front, one that reads "fraud."
Prosecutors contend this house was sold last year to a straw buyer as part of a sprawling mortgage fraud perpetrated by a husband-and-wife team involving 277 properties in greater Las Vegas.
Prosecutors have charged Eve Mazzarella, 30, and Steven Grimm, 45, with bank fraud, alleging the two caused banks to make more than $107 million in dubious loans and netted a profit of at least $15 million. Both defendants pleaded not guilty to the charges. A trial has been scheduled for October.
To the untrained eye, the size, scope and sophistication of the alleged scheme is noteworthy. But to the FBI in Las Vegas, the problem is the opposite: In recent years, there have been so many mortgage fraud cases, the bureau and local prosecutors have had to establish a special task force to combat the problem.
Read the full article here.
Tuesday, June 3, 2008
Homes: Buy One, Get One Free!
As the housing market continues to worsen we'll see more ads from builders and distressed sellers alike to unload their increasingly devalued properties. The image below is from an actual ad by a builder in Escondido (San Diego County), and is a firm reminder that we are not at the bottom of the market yet.
Below is a direct quote from the advertisement:
Below is a direct quote from the advertisement:
Michael Crews Development is offering new, 2000-square foot cityscape row-homes worth $400,000 in Escondido for free -- if you buy one Royal View Estate home in San Pasqual Valley starting at $1.6 million.
Monday, June 2, 2008
March vs. April Foreclosure Comparison
Below is the comparison of the foreclosure report produced this month versus the previous report produced in April.
Top 10 States for Foreclosures for April 2008 (By Total)
Top 10 States for Foreclosures for March 2008 (By Percentage)
NOTE: The two charts above report the foreclosures using different criteria. The chart for April 2008 examines the states with the highest number of foreclosures nationally; whereas the chart for March 2008 examines the states with the highest percentage for foreclosures relative to the number of existing homes in the state.
Top 10 States for Foreclosures for April 2008 (By Total)
| Rank | State | # of Foreclosures | % +/- Mar '08 | % +/- Apr '07 | % of Total |
| United States | 243,353 | 4.40 | 64.75 | 100.00 | |
| 1. | California | 64,683 | -0.04 | 112.04 | 26.58 |
| 2. | Florida | 35,264 | 16.56 | 146.29 | 14.49 |
| 3. | Ohio | 11,680 | 3.61 | 2.18 | 4.80 |
| 4. | Arizona | 11,620 | 26.32 | 181.42 | 4.77 |
| 5. | Texas | 11,406 | 6.60 | -0.16 | 4.69 |
| 6. | Michigan | 10,269 | 8.16 | 49.35 | 4.22 |
| 7. | Georgia | 9,189 | -16.82 | 28.50 | 3.78 |
| 8. | Illinois | 8,383 | -2.78 | 1.02 | 3.44 |
| 9. | Nevada | 7,276 | -5.00 | 94.70 | 2.99 |
| 10. | Maryland | 6,052 | 41.57 | 479.14 | 2.49 |
Top 10 States for Foreclosures for March 2008 (By Percentage)
| Rank | State | # of Foreclosures | %+/- Feb '08 | %+/- Mar '07 | % of Total |
| United States | 234,685 | 4.93 | 57.35 | 100.00 | |
1. | Nevada | 7,659 | 24.19 | 61.65 | 3.26 |
| 2. | California | 64,711 | 20.66 | 105.86 | 27.57 |
| 3. | Florida | 30,254 | -6.76 | 111.52 | 12.89 |
| 4. | Arizona | 9,199 | -4.67 | 105.52 | 3.92 |
| 5. | Colorado | 6,180 | -8.27 | -1.39 | 2.63 |
| 6. | Georgia | 11,047 | 44.76 | 63.20 | 4.71 |
| 7. | Ohio | 11,273 | 8.54 | 37.11 | 4.80 |
| 8. | Michigan | 9,494 | -13.35 | 10.27 | 4.05 |
| 9. | Massachusetts | 5,573 | 42.68 | 59.37 | 2.37 |
| 10. | Maryland | 4,275 | 6.45 | 343.01 | 1.82 |
NOTE: The two charts above report the foreclosures using different criteria. The chart for April 2008 examines the states with the highest number of foreclosures nationally; whereas the chart for March 2008 examines the states with the highest percentage for foreclosures relative to the number of existing homes in the state.
April Foreclosure Numbers
Below are the ten states that had the highest number of foreclosures for the month of April. My Foreclosure Report for the month of March can be found here.
Top 10 States for Foreclosures
Click image to enlarge
Additional Details
RealtyTrac posted the foreclosure activity for April in mid-May; however, I decided to delay reporting on those numbers as I wanted to include additional relevant news articles in my posting. In retrospect, that decision seems rather foolish as the foreclosure numbers don't require any additional information for their impact to be realized.
Top 10 States for Foreclosures
| State | # Foreclosures | % +/- Mar '08 | % +/- Apr '07 | % Total |
| United States | 243,353 | 4.40 | 64.75 | 100.00 |
| California | 64,683 | -0.04 | 112.04 | 26.58 |
| Florida | 35,264 | 16.56 | 146.29 | 14.49 |
| Ohio | 11,680 | 3.61 | 2.18 | 4.80 |
| Arizona | 11,620 | 26.32 | 181.42 | 4.77 |
| Texas | 11,406 | 6.60 | -0.16 | 4.69 |
| Michigan | 10,269 | 8.16 | 49.35 | 4.22 |
| Georgia | 9,189 | -16.82 | 28.50 | 3.78 |
| Illinois | 8,383 | -2.78 | 1.02 | 3.44 |
| Nevada | 7,276 | -5.00 | 94.70 | 2.99 |
| Maryland | 6,052 | 41.57 | 479.14 | 2.49 |
Click image to enlarge
Additional Details
- Notice of Defaults (NOD = pre-foreclosures) were up 2.6% to a record high of 44,100 from 42,700 last month.
- Notice of Trustee Sales (NTS = Foreclosure Notices) were up 7.8% to a record high of 28,892.
- Foreclosure Sales at Auction jumped 44% for a total of approx $9.5 Billion from $6.87 Billion last month.
- Discounts were at a record pace. 84% were discounted by 25% or more off the original note amount. 47% were discounted by a whopping 30% or more.
- 97.75% of the homes failed to sell at auction so the banks bought the them back.
RealtyTrac posted the foreclosure activity for April in mid-May; however, I decided to delay reporting on those numbers as I wanted to include additional relevant news articles in my posting. In retrospect, that decision seems rather foolish as the foreclosure numbers don't require any additional information for their impact to be realized.
Friday, May 30, 2008
Ghost Towns
The decline of home prices seems set to accelerate as the number of vacant homes across the United States has increased by 1 million over the past year, up to a record setting 18.6 million, according to recently released government data.
Below is a quote from the Market Watch article which reported the news:
I've read that entire subdivisions in parts of California (Stockton was among the cities mentioned) are literally ghost towns; where no one lives there. It's funny, I've frequently been called a doom sayer for some of my thoughts on this blog. One friend even went so far as to nick name me Dr. Doom; however, the more news like this that comes out, the less I think those comments will be made.
Below is a quote from the Market Watch article which reported the news:
My Thoughts
The vacancy rate for homes usually occupied by the owners rose to a record 2.3 million homes from 2.2 million in the fourth quarter, and was at about 1 million more than was typical before the housing bubble burst.
Analysts say the housing market won't recover until the glut of vacant homes on the market can be worked down. "There is clearly still substantial excess housing supply that will take time to work off," wrote economists for Goldman Sachs. "We think it unlikely that prices begin to stabilize until vacancy rates start declining."
.
.
For all owner-occupied buildings with two to four housing units, 9.4% were vacant, up from 8.1% last quarter. In all owner-occupied buildings with five to nine housing units, the vacancy rate was 15.2%, up from 12.2% last quarter and double the rate of two years earlier.
Vacancy rates in larger condo buildings have fallen from 8.7% a year ago to 6.3%.
I've read that entire subdivisions in parts of California (Stockton was among the cities mentioned) are literally ghost towns; where no one lives there. It's funny, I've frequently been called a doom sayer for some of my thoughts on this blog. One friend even went so far as to nick name me Dr. Doom; however, the more news like this that comes out, the less I think those comments will be made.
Wednesday, May 28, 2008
The Knows knows
Monday I posted the article “Relief at the pump”, where I discussed the oil market bubble, and the part speculators are playing.Tuesday CNBC spent a good part of the day talking about oil (see their related article here), the speculators, and the bubble that oil appears to be in, as well as the possible correction in the oil market.
If I didn’t know better, I would have thought that CNBC read The Knows on Monday, because they talked about everything that I wrote in that post.
Since CNBC agrees that there is a bubble in the oil market, and they also agree that speculators are pushing up the price of oil, now let's see how soon the correction in the oil market takes place.
The Knows knows!!!
Housing Market Watch #9
This is the nineth episode of Housing Market Watch (see the previous episode here), where I focus on what's happening with home prices in Southern California using specific examples from the Multi-Listing Service (MLS).Today's property is located in the city of Camarillo (Ventura County) , and is part 2 of a two part series called Something Old and Something New. Since this home was built in 2006, it should be obvious that it's the Something New. Additionally, if you've been following this series, you'll notice the new layout beginning with this episode.
The Specs:
| Type: SFR Status: Active MLS#: 80005721 | Sq. Ft.: 1,858 Lot Size: 6,621 sqft Year Built: 2006 | Beds: 3 Baths: 3.5 Stories: 2 On RedFin: 69 days |
Beautiful Plan II 3 Story townehome in Village at the park. One of the best locations just a few yards from entrance to the new proposed 55 acre park! This is an end unit in a 3-plex, which means lots of light and space around you! Granite countertops, high ceilings, recessed lighting, all bedrooms wired for overhead lights, jacuzzi tub, walk-in closet, fiber optic high speed internet, and lots more!Walking distance to new elementary school and YMCA. Show cold-- It's immaculate.
Sales History
| Date | Sold Price | $/SqFt | Gross Gain | Change ($) | Change (%) |
| 02/23/06 | $557,000 | 299.78 | N/A | N/A | N/A |
| 05/27/08 | $442,000 | 237.89 | -$115,000 | -115,000 | 20.65 |
Pricing History
| Date | List Price | $/SqFt | Gross Gain | Change ($) | Change (%) |
| 03/20/08 | $489,000 | 263 | -$68,000 | -$68,000 | 12.21% |
| 04/18/08 | $429,900 | 231 | -$127,100 | -$59,100 | 12.09% |
Today's home is currently listed for $127,000 (22.82%) lower than it sold for in February of 2005; thus, it seems the seller has been made very aware that the market is a much different place than the one they bought in. Unfortunately, looking at what's available on the MLS, that home is still priced to sit as opposed to priced to sell.
UPDATE 05/27: This property has been sold for $442,000
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