HOUSING RECOVERY PERSPECTIVE

19 comments

Posted on 11th October 2012 by Administrator in Economy |Politics |Social Issues

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19 Comments

  1. ThePessimisticChemist says:

    My wife and I put a bid in on a house yesterday, but didn’t get it.

    Why? Because some moron young couple paid the fucking asking price. Thats been going on a lot actually. People with low income jobs (house keepers for example) “buy” a house for the maximum amount of loan they can get, with their 3% down.

    Then they lose the house barely a year later because they can’t afford everything else that goes with it.

    I swear the whole world is full of fucking retards.

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    11th October 2012 at 3:08 pm

  2. Muck About says:

    The banks and financial “pushers” are doing the same damn thing that brought on the crash of 2008. They are giving out liar loans, using the same practices that dug us the current pit we’re in.

    We never learn and the politicos look the other way as they are frantically trying to kick the can yet another few feet down the alley to destruction and they hope maybe doing the same thing that got us where we are today will have a different outcome. Insanity.

    It will not end well – again.

    MA

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    11th October 2012 at 4:19 pm

  3. Eddie says:

    PessimisticChemist

    I got outbid on a house I really wanted less than a month ago…same situation. I’m waiting for the off season now. It’s never wise to get ina bidding war. Here in Austin there are two markets…the burbs, where it’s still a buyers market…and the more desirable central city , which is in a bubble.

    It’s hard for me to believe that the market is so hot…..it’s probably a sign we’re cruising for a crash.

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    11th October 2012 at 4:43 pm

  4. Chicago999444 says:

    I’m noticing the same thing, Chemist.

    After years of financial instability due to being in business for myself, I looked forward to finally buying in 2000- just to watch prices ratchet out of range because of the EZ money and liar’s loans and Pay Option ARMs and other crap that gave us 2008…. which skewered my income, for my firm lost so much money that year that my hours and pay had to be reduced, which destroyed my best laid plans to purchase the newly cheap condos available.

    Now the prices are starting up the hill again, as the FHA buyers crowd in. My only hope is to sit here and live very cheaply while packing away enough money for a “distressed” property that doesn’t pass FHA inspection…. and hope the whole thing falls apart again.

    I have confidence that it will. There was a slight bump up in 2009-10 because of the $8000 tax credit that was allowed to be monetized to make the down payment on FHA ARM loans 4X the borrower’s salaries. Well, that vintage of FHA loans is now going bad very rapidly. There is still about 5X as much “shadow” delinquent and foreclosed inventory that the banks are hoarding in hopes of keeping prices levitated. Meanwhile, borrowers seeking a “conventional” loan have to have a FICO of 750 or higher and at least 20% down as Fannie and Freddie will no longer buy any loans from borrowers less qualified than that. Many sales are falling through because many borrowers who would have had no problems even 3 years ago cannot get financed.

    So don’t get antsy. Keep putting your money away and be very, very picky.

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    11th October 2012 at 4:48 pm

  5. DaveL says:

    I’ve got to get out and about here and take a few pictures and e-mail them to you, of the “housing boom” going on here. These builders must know something we don’t. Be damned if I can figure out what.

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    11th October 2012 at 5:05 pm

  6. sangell says:

    If things go further south in Europe, especially if social disorder gets worse, and or if the Chinese political transition gets rocky there could be a lot of foreign buyers looking to buy US real estate especially in the more popular ( to them ) areas in the US.

    18 months ago when I was looking to move to the Tampa/Sarasota area there were lots of condos available in downtown Tampa in two highrise projects and the prices were as low as $200 sq ft in these new towers for units on upper floors. Just checked on zillow and there is only 1 unit for sale now and they want $275/sf for a 16th floor in the Channelside project and Skypoint has no units listed whereas 18 months ago there were so many for sale it made me leery of the place as I didn’t want to get into a bad condo association situation. They didn’t go rental either as they strictly limit the number of units that can be rented in both developments.

    In the event I moved to the Sarasota area but something definitely has changed in the hi-rise condo market in Tampa. I heard the same happened in Miami where lots of formerly vacant hi-rise towers are now selling, many to foreigners. Ft. Myers, famously had a twin 33 story condo
    development where there was only one person living in the second tower and another new twin tower project where you could get a 2000 sq foot unit on the upper floors for $100/sf. Ugly building though and the appliance had been looted from it.

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    11th October 2012 at 5:50 pm

  7. WIP says:

    Hurry, everyone go out and buy a house before you get priced out FOEVER!!!!!!!!!!!

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    11th October 2012 at 5:52 pm

  8. Chicago999444 says:

    Dave L: A better question is what are these builders GETTING that we aren’t.

    What they’re getting is FHA and HUD home builders’ loans.

    The housing market hasn’t been a free market since the 1930s, but never has it been so manipulated by the government as now. 95% of all home loans are one way or the other government-backed, either directly as with FHA, or indirectly, with bailed-out Fannie and Freddie as the buyers. Almost all new home builders now are getting some kind of government financing- would any bank with tens of millions in “shadow” delinquent and foreclosed inventory sitting on its books write a loan for a builder without being able to sell it, while there are still empty subdivisions all over the country?

    The sickest part is that our prez can talk out of one side of his mouth about keeping housing “affordable” while doing everything possible to keep housing prices elevated beyond middle income affordability. A shitbox bungalow in the more “marginal” north side nabes of Chicago will cost at least $225K, while a little frame cottage in a “prime” or “green zone” north side nabe will run at least $400K. Everything in the way of a SFH that is “affordable”- that is, within the means of a family with a $75K income that spends prudently- is in distant suburbs far from jobs, meaning what you “save” on housing you will more than offset with transportation costs. 50 mile-each-direction commutes are common in Chicagoland. Do you really want some pressboard and drywall crackerbox in an exurb 78 miles out of the city that is destined to revert to farmland as oil depletes?

    Unwind government involvement of all kinds in the housing market, whether direct or indirect, whether Section 8 rental vouchers, VA and FHA loans, backup for the GSE’s, sunset the FHA and HUD, pull support away from the banks sitting atop hundreds of billions in shadow inventory and let the inevitable foreclosures happen…. and I can almost guarantee that housing will drop another 60%, rentals included, and many of our homeless will be able to find housing they can afford. There’s no need for any sane, working person to be homeless in this country and the only reason housing is unaffordable for so many of the working poor and, increasingly, the lower middle class, is because of government subsidies and manipulation that skew the market northward.

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    11th October 2012 at 6:04 pm

  9. Stucky says:

    Crybabies! You newbie home buyers, this is for you.

    Kathie-DeBord-Real-Estate-DeBord-Group-National-Association-of-REALTORS-Logo-x400.jpg
    now1.png

    Please email this guy, the NEW incoming NAR President, Gary Thomas
    thomas2-thumb-200×258-16049.jpg

    …. who recently filed for personal and corporate bankruptcy, with combined debts of $13.2 million and assets of $1.7 million.

    Yes. He will give you the truth.

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    11th October 2012 at 6:25 pm

  10. Stucky says:

    Apparently, Gary Thomas, is hiding his cur ass in shame.

    I have enlisted the Chatham Police to help me find him. Normally, this type thing take about 8 weeks, they told me. But they just got a new iPhone with the FindLyingShitheads App.

    So, this will be the man you guys will HATE for the next few years. Help him out, and send him a couple dolars for his BK.

    mb2w0r-b781009272z.120120928140337000gpa1ahvib.2.jpg

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    11th October 2012 at 6:31 pm

  11. Thinker says:

    Sangell, I just completed some research on the Europe consumer market, and it scared the shit out of me. Major companies are “adopting a developing market strategy there,” for lack of a better term. They’re finding that consumers can’t afford to spend half their weekly budget on shampoo or laundry detergent, so they’re selling that stuff like they would in Indonesia — in single-use packages that cost a few cents but still have an acceptable margin. Think about it… Spain is now like Indonesia.

    Everything, from meat to coffee to soup, is being sold in 1-2 serving packages, because people can’t afford any more. Even packaging is changing; measuring cups no longer provided on detergent, carrying handles removed from other bottles. All that costs money, so they can offer cheaper products without features consumers didn’t realize they were paying for. But, operationally, these are HUGE changes to the CPG companies; they don’t make them lightly, so it means they’re preparing for Europe to be a “developing economy” for the long haul.

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    11th October 2012 at 6:46 pm

  12. Cynical30 says:

    Yep you gents are on the money. Lots of product getting absorbed down here in Miami by Russians and Venezuelans. Hugo’s reelection should spur another boom. They buy in bulk and totally overpay. Not really a yield play for them. It’s a “get your cash the fuck outta dodge and buy a tangible asset” play. Actually I rent a condo and I think the landlord is Venezuelan running a Flodria LLC. Never met them, but since I pay my rent on time it’s alll good in the hood.

    This also goes for commercial real estate, with multifamily in particular. TONS of cash scooping up small Class C assets and generally paying full list price all cash. Not that I’m in the market to buy a house or anything, but the prices for pretty much anything that has to do with housing are astronomically stupid and outlandish here and I make decent $. Which brings me to a thought I had the other day:

    Right this second I make 153% of what my dad made when I was a young kid and he managed to have a decent house with a yard, two kids who really didn’t want for anything technically (like food or a dry place to sleep) and a wife who could stay home, not work and put a boot up our ass. At 153% of his gross I have a rental, a 13 year old Honda (which I LOVE btw) and a shit ass ton of student loan debt jamming up a good chunk of my savings and potential capital to start up my own business and employ people – and believe me, I have some great ideas.

    Running a couple quick calculations as I type, all of the taxes that I’ve paid so far this year, I could have 9.25 months worth of rent paid or 66 months of student loans. If I could someow get this cash back in a lump sum, I would immediately go out, take some risks and try to be my own boss…

    But I digress. The fact of the matter is when I really sit down and think about it, I can draw a true personal parallel to the fact that there really is no “middle class” in the true sense of the term anymore. There’s the FSA, the Sucker Class/Upper-Lower Class, and the very miniscule Fuck You Class. Sucks being a sucker.

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    11th October 2012 at 6:57 pm

  13. sangell says:

    There are several vectors for housing prices ( going up dramatically is not one of them though). If they fall dramatically as some here seem to think either good or their natural direction then it will be because the economy worsens further and or interest rates shoot up. Either way a house does not become more affordable except for those few whose income is not affected by a recession or who can pay cash or mostly cash.

    Government policy is not going to try and weaken the housing market just to accomodate the dreams of wanna be buyers because A. They are outnumbered by homeowners and B. Local and state government depend heavily on property tax revenue. C. government exposure to bank losses. D. government exposure to mortgage losses. Rule this out.

    On the other hand a gradual strengthening of the housing market could occur as the natural attrition of the housing stock ( accelerated in some places by prolonged vacancy or rental use)
    and the low level of new construction deplete the single family residential inventory. There will also be a gradual recovery in the credit ratings of the millions of people who were forceclosed upon or had to short sell their homes since 2007 many of whom will, at some point, tire of living in rental property and seek to buy again. Women in particular want a ‘nest’. Immigration may slow but it is unlikely to stop and we could see a rapid rise in foreign buyers in some markets due to adverse political and economic events abroad. These are positive for housing prices. Mitigating against this is the need for many baby boomers to either downsize or cash out their equity to retire. On balance I’d say we’ve reached equilibrium with more upside than down .

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    11th October 2012 at 6:59 pm

  14. Cynical30 says:

    I’m not so sure Sangell, but then again I suppose it varies from market to market. Personally I think it’s all just the exciting parts of the Communist Manifesto being enacted in real time. Virtually all loans are already backed by the government in one way or another, artificially inflating price/value. As more Americans sink into hopeless dependency, I foresee mass foreclosures or large packaged note sales to private connected firms and rentals to the vassals at “market rate”. That way the serfs don’t own the Lord’s land, crony companies gobble up large servicing/management fees and taxes/rents may be extracted from tenants by connected crony banksters. Politicians get more FSA purchased votes by fostering even more dependency. Everybody wins!

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    11th October 2012 at 7:09 pm

  15. TPC says:

    My wife and I are get a FHA loan, its too good of a deal to pass up for us. The difference between us and the others is that we are getting a house for FAR less than we need. The only reason we are going the FHA route is so we can have have enough liquid capital to erase our remaining credit cards, and still be able to absorb any financial difficulties.

    Our income = ~115k

    The TOP we are willing to pay for a house is 85k…and it better be damned good.

    In short, we are being responsible and our realtor loves us for it. She’s getting sick of trying to sell the same houses over and over because nobody ever owns them for long.

    The American Dream to me is a life without debt. I guess I’m just old fashioned that way though…

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    11th October 2012 at 7:48 pm

  16. John A says:

    TPC,

    Where are you buying? Just curious as I’m trying to process all comments for this thread. Interesting comments for this article.

    Like or Dislike: Thumb up 1 Thumb down 0

    11th October 2012 at 8:09 pm

  17. ThePessimisticChemist says:

    In the Kansas City area. (its a big area, I try to keep my internet life and home life separate so thats as specific as I’ll get).

    In our area 85 grand will net you a 2 bedroom house (possibly 3) with 1 bath and a partially finished basement.

    Usually a 2 car garage as well, and all in a decent neighborhood.

    Like or Dislike: Thumb up 3 Thumb down 0

    11th October 2012 at 9:49 pm

  18. John A says:

    TPC,

    85K sounds like a good price but I’m not that familiar with KC. There have been some very unusual trends in residental housing in 2012 in several states and I still don’t understand what’s going on. Thanks.

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    11th October 2012 at 10:04 pm

  19. TeresaE says:

    @TPC, my son just bought a house for $15k, not in Detroit. It needs tons of work, but less than $5k to make it habitable and nice – just dated. He had the best realtors I’ve ever seen, but they sadly can’t help you in KC

    What cracks me up is the realtor, doesn’t he/she know that their job is to talk you into more than you can afford? Back during the boom (but recession, so weird), we were fired by a family-friend mortgage guy because we refused to even look at houses at the top end of our qualifications. Realtors wouldn’t return our calls – even as tons of houses were selling in our price bracket.

    Flash forward a few years and we are still here, while overpriced buyers that surrounded us folded long ago.

    A fool and his money and all that…lol

    I wish you all the luck on finding the best home for your family.

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    11th October 2012 at 5:37 pm

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