So I just got back from the annual family road trip a day or so ago. Last year we did Yellowstone and Jackson Hole, this year Disneyland and a quickie Carnival Cruise. It was a stealth vacation (do I admit to people that I take time off now and then, or do I just pretend to work all the time?) and coming back has been, well, rather interesting.
One of my favorite lenders had to switch brokers twice this week because the first one couldn’t pay her (the boss had, um, a few too many real estate investments gone bad and was running out of cash) as the second one developed a similar issue within days. But now she’s settled at Fidelity National, a hundred-year-plus company still standing: Ready, willing and able to deliver the funds on time.
I don’t even know how many lenders went out of business during my two-week hiatus, but hopefully next week’s closing will actually occur, fingers crossed, praying to the money gods, and in the words of Homer Simpson: Oh please, please, please.
Another agent I ran into today mentioned that he’s had one deal extend four times now because each time the buyers get to the closing table, the lender goes out of business, and they have to repackage the thing all over again. And again, and again. It’s a real circus out there.
File this under random data point: one reader tells me that he can’t get a window repaired because Lennar hasn’t paid the window contractor, who is now closing down, just as another major window manufacturer who supplies the building industry is forced to auction off assets and shut down as well. And you think recession is too harsh a word?
But thanks to Perry, Incline Village Jim, and our old friend, Reno Ignoramus, all the best links have been conveniently assembled for your reading pleasure. (BTW, if I’m a little slow responding to any personal email you may have sent, please forgive me as I have 662 of them to sort through, plus another 69. I’ll get there, I promise!)
As always, thanks to Guy for a masterful job managing the blog during my absence, welcome to Jeff Peterson (I think he may actually survive), and thanks to everyone contributing to the ongoing conversation. Coming home to the blog was like reconnecting with my quirky, offbeat, super-smart, dysfunctional family. Seriously, that’s a compliment… 😉
Mortgage Industry Layoffs Surpass 40,000
GreenPoint Closes: 430 Layoffs
First Magnus Financial Goes Chapter 11
Should LA Bail Homeowners Out?
Recovery That Will Lead to Relapse
Credit Crunch Squeezing Buyers
Lawmakers Call for Fannie, Freddie Jumbo CPR
Jumbo Mortgage Crunch Hits Bay Area Hard
Housing Bubble vs Great Depression Video
Top 40 Words From Hedge Fund Apologies
How to Kill Your Mortgage Company in 15 Easy Steps
Loopnet: Developers Change Focus to Apartments
Developers, who had
focused on constructing condominiums and single-family homes, have shifted their
focus to the multifamily sector, with the cool down in residential real estate.
As a result, Reis Inc. expects the national inventory of apartment rental units
to climb by 94,700 this year, the highest level since 2004. Those additions,
coupled with added supply coming from units that had been slated for
condominiums but have become rentals, should result in an increase in vacancies
to 6.2% in the second half of 2007 from 5.8% in the first half of the year.
Additionally, condo conversions have just about stopped as the country has a
nine-month supply of condo units up for sale – that’s a greater supply than
single-family homes. Loopnet
GuyJohnson
Welcome Back, Diane. We’ve missed you. I trust you had an enjoyable holiday.
Not much news since you were gone…other than the collapse of the mortgage industry. The blog is intact. Our readership is up. And our commenters have behaved themselves.
– Guy
P.S. I like the movie reference in the title of your post. I recall thinking that was the funniest movie of all time when I was a kid. But we’re both dating ourselves.
Reno Ignoramus
Hey Guy,
I think when you were a kid that was already an old movie. Now I remember seeing that movie as a kid when it was a new movie. Talk about dating yourself.
Mike Van H
Yikes more bad news. The solution in theory seems simple. Roll back home values back to 2003 before this mess began, and force home builders to stop building new homes (like that will ever happen). Oh whoops that’s right we CAN’T roll back home values to 2003 levels because that means people who bought homes in 2005 and 2006 instantly lost $50,000-$100,000+ in their home value. Silly me!
It’s so funny, you know. In 1985 the person that owned my house before me bought it for $90,000. Then in 2003, 17 YEARS LATER, I bought it for $147,000, a roughly $60,000 appreciation over 17 YEARS. Then, in 2004, 2005, and 2006, I have realtors, mortgage lenders, appraisors etc telling me my house is worth $250,000. Hmm, a magical $100,000+ gain in a mere 4 years of owning it? Yeah right. All these people need to do is look at that one simple scenario and see that something is horribly wrong with it. Thank God I didnt do something stupid like getting some ‘quick cash’ by refinancing. I enjoy my $670 a month mortgage payment 🙂 Not about to give that up to overly inflate the value of my house and get a mortgage payment I can’t afford.
Mike Van H
But then on the other hand, I read an article like this http://news.yahoo.com/s/nm/20070824/bs_nm/usa_economy_newhomes_dc_3 and get confused because it totally conflicts with half the articles listed above?
Reno Ignoramus
Mike, that a house would “only” appreciate from $90,000 to $147,000 in 17 years is in no way remarkable. There are legions of examples of this all over Reno-Sparks. Anybody can take the time to analyze house sales prices in Reno in decades past and they will discover that is in the norm in an ordinary housing market.
Your house, before you bought it, barely kept pace with inflation over those 17 years. Again, that is the historical norm.
Today, we still have a bunch of realtors/mortgage types who think that what happened in 2001-2005 was normal (although they are going away). They stood in the midst of the biggest Voodoo money driven speculative bubble in history and thought that’s just the way it is. As values revert to the norm they will go back to selling cell phone contracts in the mall.
Reno Ignoramus
And Mike, as has been posted here about 47 times before, the new home sales data is misleading. The builders report contracts, not closed deals. This report does not mean that the number of new homes actually sold, as in real closed deals, went up last month. Three months from now, when all the cancellations are reported, we will know the true story. And, there has even been some recent history of the number of contracts signed being revised downward in the days following the original release of info.
GreenNV
I really wanted to kick the dog tonight and report on how the lender bankruptcies and credit crunch have devistated the Reno market So I looked at ALL the deeds of trust recorded on 20 Aug 2007, the last day I could verify everthing had closed out, a total of 96. Some were re-recordings, commercial, 2 were piggyback 2nd mortgages (way lower ratio than the old days), and there were a couple I couldn’t trace. So for the 84 I could track info on, here is what it looked like:
32 HELOC’s
27 Refi’s
9 New 2nd Mortgages
16 New Sales
If I accept this day as about average, and multiply it by 23 business days this month, it would point to about 368 estimated sales for the month. Guy’s sales figure for last month was 376. Well shut my mouth! Stability in the midst of turmoil? Now that is sales stability, not price stability mind you. But not as dire as I expected to find.
Where is everyone? Let’s get some conversations started again! What are you interested in hearing about? Dr. Death with 5 homes lost to Trustee’s Deeds? Investor with 13 down and dirty Spanish Springs holdings? Kristina at Realty Exec’s holdings (insider reference for CL devotees)?
Chase just closed a deal in my ‘hood that killed my comp by 50K of so. So it is a 3 piece breast and wing conbo from KFC tonight. Kidding. Hate the comp, LOVE the crispy once in a while! And eat my comp!
Later, skaters.
Reno Ignoramus
Hey Green, I agree that there seems to be a certain lethargy that has set in here. This is starting to remind me of the days when I was the only person who posted here. Bantering Bear and Lindie haven’t been as active recently and so there is nobody to torment derrick. Or maybe, the story of the market decline just isn’t very interesting news anymore. Even bagboys at Raleys know the market is deteriorating. There are about 100 blogs dedicated to the market decline, and so news is easy to come by now. And it’s a housing market decline which, unlike a stock market decline, is not given to dramatic single day events. It is, indeed, like watching paint dry. Maybe if you want to share what some of your terrific sleuthing has uncovered, we might get the pulse up again.
derrick
Gee I wonder when my house is going to be selling for 250k or less like a few of the posters here have suggested.. Hey bb or RI any updates on comparable sales to my house? My neighbor’s house which had been on the market for 4 months finnally went into contract at an agreed price of 378k. If my memory serves me correct it is a 3bed/2.5bath 2,500 sq/ft or so 1/4 acre lot, landscaped but inside it is so so .. sort of outdated. Does this comparable help value my house ?
So when exactly did home prices/appreciation get to unsustainable levels? I would have figured it to be somewhere around 2003 give or take..
Reno Ignoramus
derrick:
It stared in 2002, but you are correct that 2003 was the start of the major move toward unsustainablility. However, 2004 was the year that pushed prices beyond any semblance of rationality. 2004 was the year that Voodoo loans came into full bloom, including the use of the 2/28 and neg am loans to enable unqualified buyers to purchase houses they could not afford. In 2004 more than any other year we saw the flippers armed with their ARMs create a false demand for houses,and we saw Voodoo money fueled Fools pay anything because “real estate always goes up”. The frenzy continued into 2005, but as a whole that year cannot be compared to 2004 because in the middle of 2005 the nonsense just died.
Today we are back to 2004 prices in some neighborhoods and 2003 prices in others. Diane herself has suggested we are back to 2003 prices in Somersett, which seems accurate if we look at what actually sells and what it actually sells for, and not what the dream on asking prices continue to be as they languish month after month. In more established neighborhoods, that were not built on the bubble, like Caughlin Ranch, actual sales prices suggest that we are back to mid 2004 levels.
BanteringBear
“Today, we still have a bunch of realtors/mortgage types who think that what happened in 2001-2005 was normal (although they are going away). They stood in the midst of the biggest Voodoo money driven speculative bubble in history and thought that’s just the way it is.”
Hey, easy there RI, you’re going to harsh out their Jamba Juice trip. And, you know that those annoying stagnant home values over that 17 year span were an anomaly; a freak occurrence. The double digit yearly appreciation served to get us back to “normal” values. Quit trying to fight the new paradigm. Stop kicking and screaming and go quietly. Sanity is so totally yesterday.